FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 4, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-7288
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THE BOMBAY COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 75-1475223
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
550 Bailey Avenue, Suite 700, Fort Worth, Texas 76107
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(Address of principal executive offices) (Zip Code)
(817) 347-8200
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(Registrant's telephone number, including area code)
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Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceeding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such fiing requirements for the past 90 days.
Yes (X) No
Class Number of shares outstanding at May 4, 1996
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Common stock, $1 par value 37,549,761
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Form 10-Q
Quarter Ended May 4, 1996
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II -- OTHER INFORMATION
Exhibits and Reports on Form 8-K
Signatures
<TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended
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May 4, April 29,
1996 1995
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<S> <C> <C>
Net sales $68,082 $77,943
Costs and expenses:
Cost of sales, buying and store 48,326 54,629
occupancy
Selling, general and 23,878 25,100
administrative
Interest, net (102) (318)
Store closing costs adjustment -- (4,400)
Total costs and expenses 72,102 75,011
Income (loss) before income taxes (4,020) 2,932
Provision (benefit) for income (1,580) 1,152
taxes
Net income (loss) ($2,440) $1,780
Net income (loss) per average
common share
and common equivalent share ($0.06) $0.05
Average common shares and common
equivalent shares outstanding 38,198 37,441
Cash dividends per common share -- --
<FN>
The accompanying notes are an integral part of
these consolidated financial statements.
</TABLE>
<TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
<CAPTION>
May 4, February 3, April 29,
1996 1996 1995
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ASSETS (Unaudited) (Unaudited)
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<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $7,470 $24,079 $28,867
Inventories 102,987 88,341 68,122
Income taxes receivable 4,535 7,249 2,647
Deferred taxes 2,356 3,252 11,749
Other current assets 9,636 10,214 6,091
Total current assets 126,984 133,135 117,476
Property and equipment, net 44,903 46,265 50,500
Goodwill, less amortization 589 596 617
Other assets 10,306 10,700 10,225
Total assets $182,782 $190,696 $178,818
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
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<S> <C> <C> <C>
Current liabilities:
Accounts payable and
accrued expenses $21,499 $28,275 $17,491
Accrued payroll and bonuses 3,396 3,394 3,374
Store closing reserves (Note 2) -- -- 12,667
Total current liabilities 24,895 31,669 33,532
Accrued rent and other 6,818 6,559 5,335
liabilities
Stockholders' equity:
Preferred stock, $1 par value,
1,000,000 shares authorized -- -- --
Common stock, $1 par value,
50,000,000
shares authorized,
37,549,761, 37,362,027
and 37,068,482 shares
issued, 37,550 37,362 37,068
respectively
Additional paid-in capital 73,561 72,781 71,066
Retained earnings 40,538 42,978 32,365
Cumulative effect of foreign (580) (653) (548)
currency translation
Total stockholders' equity 151,069 152,468 139,951
Total liabilities and $182,782 $190,696 $178,818
stockholders' equity
<FN>
The accompanying notes are an integral part of
these consolidated financial statements.
</TABLE>
<TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<CAPTION>
Three Months Ended
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May 4, April 29,
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($2,440) $1,780
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 2,937 3,264
Deferred income taxes and other 1,064 (92)
Noncash contributions to employee 421 438
benefit plans
Store closing reserve adjustment -- (4,400)
Change in assets and liabilities:
(Increase) decrease in inventories (14,560) 4,153
Decrease in other current assets 3,305 3,141
Decrease in current liabilities (6,684) (11,001)
Increase in noncurrent assets (193) (47)
Increase in noncurrent liabilities 349 477
Net cash used by operations (15,801) (2,287)
Cash flows from investing activities:
Purchases of property and equipment (1,259) (1,840)
Sales of property and equipment 58 148
Net cash used by investing activities (1,201) (1,692)
Cash flows from financing activities:
Sale of stock to employee benefit plans 209 218
Proceeds from the exercise of employee
stock options 228 2,026
Net cash provided by financing activities 437 2,244
Effect of exchange rate change on cash (44) (68)
Net decrease in cash (16,609) (1,803)
Cash at beginning of period 24,079 30,670
Cash at end of period $7,470 $28,867
<CAPTION>
Supplemental disclosures of cash flow
information:
<S> <C> <C>
Cash paid during the period for income taxes $595 $333
<FN>
The accompanying notes are an integral part of
these consolidated financial statements.
</TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1)Accounting Principles
---------------------
In the opinion of the Company, the accompanying consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments other than as described below) necessary to present fairly
the financial position as of May 4, 1996 and April 29, 1995, and the
results of operations and cash flows for the three months then ended.
The results of operations for the three month periods ended May 4, 1996
and April 29, 1995 are not necessarily indicative of the results to be
expected for the full fiscal year. The consolidated financial statements
should be read in conjunction with the financial statement disclosures
contained in the Company's 1995 Annual Report to Shareholders.
(2) Inventory Capitalization
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During the quarter ended May 4, 1996, the Company recorded a one time
credit to cost of goods sold relating to the refinement of its method of
allocating overhead to inventory. Such adjustment reduced cost of goods
sold for the period by $1,284,000 and decreased the loss per share by $.02.
(3) Financing Arrangements
----------------------
The Company has committed lines of credit totaling $30,000,000 and
uncommitted lines of $25,000,000 with its banks under agreements which
expire on June 30, 1996. The Company is negotiating a new financing
agreement which will provide for a $30,000,000 committed and a $15,000,000
uncommitted facility expiring in June 1997. The agreement is expected to
be signed by the end of June. Such facility will be used primarily for
its seasonal working capital needs.
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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General
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The Bombay Company, Inc. (`Company'') is a specialty retailer which markets
lifestyle furniture, prints and accessories through its 433 locations of
The Bombay Company (`Bombay'') retail stores in 42 states in the United
States and nine Canadian provinces. At May 4, 1996, Bombay operated 221
stores which are in its large format of approximately 4,000 square feet.
Over the long term, it is the Company's intention to continue to open new
large format stores and convert the majority of the existing small stores
to the large format, but not necessarily at the same opening rates or as
large as the stores opened in the prior years. On January 13, 1995, the
Company announced the closing of the Alex & Ivy retail chain. The closure
of these 58 stores was completed on May 10, 1995.
The largest percentage of the Company's sales and operating income are
realized in the fiscal quarter that includes December (Christmas season).
Although the precise effect of inflation on operations cannot be accurately
determined, management does not believe inflation has a material effect
on sales or results of operations.
Results of Operations
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Quarters ended May 4, 1996 and April 29, 1995
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Net sales were $68,082,000 for the quarter ended May 4, 1996 compared to
$77,943,000 for the same period last year which included sales relating
to the closed Alex & Ivy division. Excluding Alex & Ivy, net sales were
$63,719,000 for the quarter ended April 29, 1995. Sales increases for
Bombay are primarily due to increased same store sales of 5% for the
quarter.
Cost of sales, including buying and occupancy costs, was $48,326,000 for
the fiscal quarter compared to $54,629,000 for the same period last year.
As a percentage of sales, cost of sales increased to 71.0% for the quarter
compared to 70.1% for the prior year. Excluding Alex & Ivy, the percentage
was 69.2% for the quarter ended April 29, 1995. The 1.8% increase for
Bombay, excluding Alex & Ivy, is due to lower product margin (4.4%)
partially offset by lower buying and occupancy costs (.7%) and a one time
credit of $1,284,000 relating to the refinement of the Company's method of
allocating overhead to inventory (1.9%). The lower product margin is a
result of a continuing shift in the sales mix as consumers tend to purchase
a greater portion of sale or special purchase merchandise compared to full
price merchandise as well as slightly higher freight and handling costs. The
percentage decrease in buying and occupancy costs reflects their relative
fixed nature measured against sales gains.
Selling, general and administrative expenses were $23,878,000 or 35.1% of
sales for the quarter compared to $25,100,000 or 32.2% for the comparable
prior year period. The percentage for Bombay, excluding Alex & Ivy, was
33.7% for the quarter ended April 29, 1995. The 1.4% increase for Bombay
is principally associated with payroll costs slightly offset by lower
advertising, relative to sales.
Liquidity and Capital Resources
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The primary sources of liquidity and capital resources are cash flows from
operations and bank borrowings. Historically, for approximately six months
of the year, bank borrowings have been utilized to fund seasonal inventory
purchases. In addition, the bank credit lines are used throughout the year
to support letters of credit which are used extensively for overseas
merchandise purchases. Letters of credit totaling $22,434,000 were
outstanding at May 4, 1996. Bank lines total $55,000,000, of which
$30,000,000 is committed under revolving credit agreements expiring
June 30, 1996. Based on current assessment of financing requirements,
the Company is negotiating a new financing agreement providing bank lines
totaling $45,000,000 of which $30,000,000 will be committed. The agreement
is expected to be signed by the end of June.
At May 4, 1996, cash was $7,470,000, a decrease of $16,609,000 since
February 3, 1996. Uses of cash for the three months ended May 4, 1996
were primarily due to increased inventory levels of $14,560,000 and
reductions in current liabilities of $6,684,000. The primary sources
of cash were operating results, adjusted for noncash items, of $1,982,000
and reductions of current assets of $3,305,000. Capital expenditures for
the quarter, totaling $1,259,000, included one new store opening and one
conversion.
The store expansion program for the remainder of the fiscal year anticipates
approximately four new stores and one store conversion. The total estimated
capital expenditures for fiscal 1996 are $5,000,000. The Company believes
that its current cash position, cash flow from operations and borrowings
available under credit lines will be sufficient to fund current operations
and its capital expenditure program.
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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No reports on Form 8-K have been filed during the quarter ended May 4,
1996. No exhibits have been filed as a part of this report.
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BOMBAY COMPANY, INC.
(Registrant)
/s/ Robert E. M. Nourse
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Robert E. M. Nourse
President and Chief Executive Officer
/s/ James E. Herlihy
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James E. Herlihy
Executive Vice President
and Chief Financial Officer
Date: June 18, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from The
Bombay Company, Inc. quarterly report on Form 10-Q for the three months
ended May 4, 1996 and is qualified in its entirety by reference to such
10-Q.
</LEGEND>
<CIK> 0000096287
<NAME> THE BOMBAY COMPANY, INC.
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</TABLE>
