FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 2, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 1-7288
THE BOMBAY COMPANY, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 75-1475223
- ------------------------------ -----------------
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer
Identification No.)
550 Bailey Avenue, Fort Worth, Texas 76107
- -------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(817) 347-8200
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(Registrant's telephone number, including area code)
- ---------------------------------------------------------------------
(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 preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Class Number of shares outstanding at August 2, 1997
Common stock, $1 par value 38,052,870
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Form 10-Q
Quarter Ended August 2, 1997
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
Item
1. Financial Statements
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II -- OTHER INFORMATION
4. Submission of Matters to a Vote of Security Holders
6. 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 Six Months Ended
--------------------- --------------------
August 2, August 3, August 2, August 3,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $68,743 $71,203 $135,974 $139,285
------- ------- -------- --------
Costs and expenses:
Cost of sales, buying and
store occupancy costs 49,095 51,863 101,494 101,474
Selling, general and
administrative expenses 21,965 23,178 45,179 47,055
Interest (income), net (644) (19) (1,381) (122)
-------- ------ ------- -------
Total costs and expenses 70,416 75,022 145,292 148,407
Loss before income taxes and
accounting change (1,673) (3,819) (9,318) (9,122)
Benefit for income taxes (678) (1,511) (3,698) (3,540)
-------- ------ ------ ------
Loss before accounting change (995) (2,308) (5,620) (5,582)
Cumulative effect of accounting
change, net of tax -- -- -- 835
-------- ------ ------ ------
Net loss ($995) ($2,308) ($5,620) ($4,747)
-------- ------ ------ ------
-------- ------ ------ ------
Per average common share and common
equivalent share:
Loss before acounting change ($0.03) ($0.06) ($0.15) ($0.15)
Cumulative effect of accounting
change, net of tax -- -- -- 0.02
------ ------ ------ ------
Net loss ($0.03) ($0.06) ($0.15) ($0.13)
------ ------ ------ ------
------ ------ ------ ------
Average common shares and common
equivalent shares outstanding 38,049 37,572 38,036 37,885
------ ------ ------ ------
------ ------ ------ ------
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>
August 2, February 1, August 3,
1997 1997 1996
---------- ---------- ---------
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $52,664 $63,130 $1,755
Inventories 72,248 69,816 103,321
Income taxes receivable 2,236 102 6,828
Deferred taxes 3,428 3,429 2,120
Other current assets 8,993 8,223 8,635
------- ------- -------
Total current assets 139,569 144,700 122,659
Property and equipment, net 37,775 41,211 43,884
Goodwill, less amortization 554 569 582
Other assets 8,750 8,883 9,737
-------- -------- --------
Total assets $186,648 $195,363 $176,862
-------- -------- --------
-------- -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $28,555 $30,052 $17,682
Accrued payroll and bonuses 3,313 5,008 2,986
------- ------- -------
Total current liabilities 31,868 35,060 20,668
------- ------- -------
Accrued rent and other liabilities 6,432 6,370 6,958
------- ------- -------
Stockholders' equity:
Preferred stock, $1 par value,
1,000,000 shares authorized -- -- --
Common stock, $1 par value,
50,000,000 shares authorized,
38,052,870, 37,997,676
and 37,609,003 shares issued,
respectively 38,053 37,998 37,609
Additional paid-in capital 75,657 75,465 74,039
Retained earnings 35,353 40,973 38,231
Cumulative effect of foreign
currency translation (715) (503) (643)
------- ------- -------
Total stockholders' equity 148,348 153,933 149,236
------- ------- -------
Total liabilities and
stockholders' equity $186,648 $195,363 $176,862
-------- -------- --------
-------- -------- --------
<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>
Six Months Ended
---------------------------
August 2, August 3,
1997 1996
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($5,620) ($4,747)
Adjustments to reconcile net loss
to net cash from operations:
Depreciation and amortization 5,068 5,756
Deferred taxes and other 1,892 1,708
Noncash contributions to employee
benefit plans 18 848
Change in assets and liabilities:
(Increase) decrease in inventories (2,655) (14,964)
(Increase) decrease in other current
assets (4,223) 3,019
Decrease in current liabilities (3,698) (12,607)
Increase in noncurrent assets (329) (318)
Increase (decrease) in noncurrent
liabilities 80 517
------ -------
Net cash used by operations (9,467) (20,788)
------ -------
Cash flows from investing activities:
Purchases of property and equipment (1,453) (2,330)
Sales of property and equipment 129 163
------ -----
Net cash used by investing activities (1,324) (2,167)
Cash flows from financing activities:
Sale of stock to employee benefit plans 233 407
Proceeds from the exercise of employee
stock options 22 228
--- ---
Net cash provided by financing activities 255 635
--- ---
Effect of exchange rate change on cash 70 (4)
--- ---
Net decrease in cash and cash equivalents (10,466) (22,324)
Cash and cash equivalents at beginning
of period 63,130 24,079
------- ------
Cash and cash equivalents at end of period $52,664 $1,755
------- ------
------- ------
<CAPTION>
Supplemental disclosure of cash flow information:
<S> <C> <C>
Income taxes paid (refunded) ($561) $735
<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) necessary to present fairly the financial position as of
August 2, 1997 and August 3, 1996, and the results of operations and cash
flows for the six months then ended. The results of operations for the
six month and three month periods ended August 2, 1997 and August 3, 1996
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 1996 Annual Report to Shareholders.
(2) Financing Arrangements
----------------------
The Company has renewed its unsecured revolving credit agreements with
banks, aggregating $40,000,000, of which $30,000,000 is committed. These
credit facilities, which expire April 14, 1998, are for working capital
and letter of credit purposes, primarily to fund seasonal merchandise
purchases, and bear interest at market rates based on prime.
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Special Note Regarding Forward-Looking Statements
- -------------------------------------------------
Certain statements in this Form 10-Q under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of The Bombay Company, Inc.
("Company") to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the following: competition; seasonality;
success of operating initiatives; new product development and introduction
schedules; acceptance of new product offerings; advertising and promotional
efforts; adverse publicity; expansion of the store chain; availability,
locations and terms of sites for store development; changes in business
strategy or development plans; availability and terms of capital; labor and
employee benefit costs; changes in government regulations; risks associated
with international business; regional weather conditions; and other factors
referenced in the Company's 1996 Form 10-K Annual Report.
General
- -------
The Bombay Company, Inc. is a specialty retailer which markets traditional
and classic furniture, prints and accessories through its 421 locations of
The Bombay Company ("Bombay") retail stores in 42 states in the United
States and nine Canadian provinces. To accommodate the increasing
number of products, the Company introduced a large format Bombay stores in
late fiscal 1992. The large format stores average 4,000 square feet, while
the regular stores average 1,700 square feet. Presently, the Company's
store opening program calls for large format stores ranging in size from
2,500 to 3,500 square feet. At August 2, 1997, 225 large format Bombay
stores were in operation, including 136 stores that have been converted
from regular stores since fiscal 1992.
The largest percentage of the Company's sales and operating income is
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 impact on
sales or results of operations.
Results of Operations
- ---------------------
Quarters Ended August 2, 1997 and August 3, 1996
- ------------------------------------------------
Net sales were $68,743,000 for the quarter ended August 2, 1997 compared
to $71,203,000 for the same period last year, a decrease of 3.5% with same
store sales declining 3%. The decline is primarily related to a change
in a significant marketing event, going from a store wide sale in May
previously called Customer Appreciation Day, to a Preferred Customer Event
in June emphasizing the Bombay credit card. The Company had hoped that the
June sales increase would have offset the May decline, however, the Company
believes that the marketing shift is the correct long-term strategy as we
develop marketing events and programs supporting our Preferred Customer.
Cost of sales, including buying and occupancy costs, was $49,095,000 for
the quarter compared to $51,863,000 for the same period last year. As a
percentage of sales, cost of sales decreased to 71.4% for the quarter
compared to 72.8% for the comparable prior year period. The 1.4% decrease
is due to higher product margin (2.5%) partially offset by higher buying
and occupancy costs relative to sales (1.1%). The higher product margins
reflect lower levels of necessary promotional activity compared to the prior
year. The percentage increase in buying and occupancy costs reflects
their relative fixed nature measured against sales declines.
Selling, general and administrative expenses were $21,965,000 or 32.0% of
sales for the quarter compared to $23,178,000 or 32.6% of sales for the
comparable prior year period. The decreases are the result of cost
containment initiatives and are primarily related to reduced payroll
expenses partially offset by increased advertising costs.
Six Months Ended August 2, 1997 and August 3, 1996
- --------------------------------------------------
Net sales were $135,974,000 for the six months ended August 2, 1997 compared
to $139,285,000
for the same period last year. Same store sales declined 2% for the year to
date.
Cost of sales, including buying and store occupancy costs, was $101,494,000
or 74.6% of sales for the six months compared to $101,474,000 or 72.9% for
the same period last year. The 1.7% increase is due to lower product
margins (1.0%) and higher buying and occupancy costs (.7%) relative to
sales. Product margins during the first quarter were adversely affected by
the residual effect of selling off older excess inventories. Margins have
improved since the beginning of the second quarter as the Company's need
for extra promotional activity has lessened. The percentage increase in
buying and occupancy costs reflects their relative fixed nature measured
against sales declines.
Selling, general and administrative expenses were $45,179,000 or 33.2% for
the six months compared to $47,055,000 or 33.8% for the same period last
year. The decreases are the result of cost containment initiatives and
are primarily related to reduced payroll expenses.
Liquidity and Capital Resources
- -------------------------------
The primary sources of liquidity and capital resources are cash flows from
operations and bank lines of credit. Bank borrowings are utilized to fund
seasonal inventory purchases. In addition, the bank credit lines are used
for overseas merchandise purchases. Letters of credit totaling $24,709,000
were outstanding at August 2, 1997. Bank lines total $40,000,000, of which
$30,000,000 is
committed, under revolving credit agreements expiring April 14, 1998.
Based on available cash balances at August 2, 1997 of over $52,000,000 and
cash forecasts for the year, the Company does not presently expect to be
in a borrowing position at any time during fiscal 1997. The bank credit
lines are, however, being utilized to support inventory purchases under
letters of credit.
Capital expenditures for the year to date, totaling $1,453,000, included
three new or converted stores, and routine purchases of machinery and
equipment. The store expansion program for the remainder of the fiscal
year anticipates approximately one new store and three store conversions.
The total estimated capital expenditures for fiscal 1997 are $5,500,000.
The Company believes that its current cash position, cash flow from
operations and credit line facilities will be sufficient to fund
current operations and its capital expenditure program.
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
(a) The Annual Meeting of Shareholders of the Company was held on
May 22, 1997.
(b) Directors elected to hold office are listed in the attached Proxy
Statement which is incorporated herein by reference. Directors
elected: Edmund H. Damon and Robert E. Runice. Directors
continuing: Barbara Bass, Robert S. Jackson, A. Roy Megarry,
Clayton E. Niles, Carson R. Thompson and Shirley Young.
Election of Directors:
Edmund H. Damon - For: 33,495,298 Withheld: 1,285,409
Robert E. Runice - For: 33,497,505 Withheld: 1,283,202
(c) Other matters voted upon: None
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) The Exhibits filed as a part of this report are listed below.
Exhibit No. Description
- ---------- ----------------------------------------
20 Notice of Annual Meeting of Shareholders
and Proxy Statement, filed with the
Commission on April 9, 1997. Such Exhibit
is incorporated herein by reference.
(b) No reports on Form 8-K were filed during the quarter ended
August 2, 1997.
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
SIGNATURES
-----------
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 S. Jackson
----------------------
Robert S. Jackson
Interim President and Chief Executive Officer
/s/ James E. Herlihy
---------------------
James E. Herlihy
Executive Vice President
and Chief Financial Officer
Date: September 16, 1997
<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 six months
ended August 2, 1997 and is qualified in its entirety by reference to
such 10-Q.
</LEGEND>
<CIK> 0000096287
<NAME> THE BOMBAY COMPANY, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-02-1997
<PERIOD-END> AUG-02-1997
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0
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</TABLE>
