FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
rk one)
[ 3 ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 2, 1998
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 (I.R.S. Employer
incorporation or organization) Identification No.)
550 Bailey Avenue, Fort Worth, Texas 76107
(Address of principal executive offices) (Zip Code)
(817) 347-8200
(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
commmon stock as of the latest practicable date.
Class Number of shares outstanding at May 2, 1998
Common stock, $1 par value 38,128,556
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Form 10-Q
Quarter Ended May 2, 1998
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
Page No.
Financial Statements............................................... 3-6
Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 7-8
PART II -- OTHER INFORMATION
Exhibits and Reports on Form 8-K................................... 9
Signatures......................................................... 10
<TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended
May 2, May 3,
1998 1997
<S> <C> <C>
Net Sales $68,343 $67,231
Costs and expenses:
Cost of sales, buying and store 52,634 52,399
occupancy costs
Selling, general and administrative 22,738 23,214
expenses
Interest income, net (617) (737)
Total costs and expenses 74,755 74,876
Loss before income taxes (6,412) (7,645)
Benefit for income taxes (2,531) (3,020)
Net loss ($3,881) ($4,625)
Basic earnings per share ($0.10) ($0.12)
Diluted earnings per share ($0.10) ($0.12)
Average common shares outstanding and
dilutive potential common shares. 38,121 38,022
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 2, January 31, May 3,
1998 1998 1997
ASSETS (Unaudited) Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $40,666 $56,110 $56,477
Inventories 87,787 85,861 65,843
Deferred taxes 3,400 3,400 3,428
Other current assets 12,213 3,742 10,874
Total current assets 144,066 149,113 136,622
Property and equipment, net 38,887 36,753 39,013
Goodwill, less amortization 533 540 561
Other assets 9,415 9,056 8,729
Total assets $192,901 $195,462 $184,925
<CAPTION>
LIABILITIES AND STOCKHOLDERS'EQUITY
<S> <C> <C> <C>
Current liabilities:
Accounts payable and accrued $25,260 $23,019 $23,707
expenses
Accrued payroll and bonuses 3,371 4,390 3,504
Gift certificates redeemable 2,737 3,008 2,103
Total current liabilities 31,368 30,417 29,314
Accrued rent and other liabilities 6,904 6,807 6,347
Stockholders' equity:
Preferred stock, $1 par value,
1,000,000 shares authorized -- -- --
Common stock, $1 par value,
50,000,000
shares authorized, 38,128,556;
38,114,187
and 38,042,509 shares issued, 38,129 38,114 38,043
respectively
Additional paid-in capital 75,960 75,904 75,624
Retained earnings 41,542 45,423 36,348
Accumulated other comprehensive (1,002) (1,203) (751)
loss
Total stockholders' equity 154,629 158,238 149,264
Total liabilities and stockholders' $192,901 $195,462 $184,925
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
May 2, May 3,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net loss ($3,881) ($4,625)
Adjustments to reconcile net loss
to net cash from operations:
Depreciation and amortization 2,350 2,554
Deferred taxes and other 7 68
Noncash contributions to employee benefit plans -- 243
Change in assets and liabilities:
(Increase) decrease in inventories (1,686) 3,710
Increase in other current assets (8,160) (2,213)
Increase (decrease) in current liabilities 586 (6,304)
Increase in noncurrent assets (599) (75)
Increase (decrease) in noncurrent liabilities 82 (2)
Net cash used by operations (11,301) (6,644)
Cash flows from investing activities:
Purchases of property and equipment (4,262) (397)
Sales of property and equipment 106 85
Net cash used by investing activities (4,156) (312)
Cash flows from financing activities:
Sale of stock to employee benefit plans 50 186
Proceeds from the exercise of employee stock 18 22
options
Net cash provided by financing activities 68 208
Effect of exchange rate change on cash (55) 95
Net decrease in cash and cash equivalents (15,444) (6,653)
Cash and cash equivalents at beginning of period 56,110 63,130
Cash and cash equivalents at end of period $40,666 $56,477
<CAPTION>
Supplemental disclosure of cash flow information:
<S> <C> <C>
Income taxes paid (refunded) $1,861 ($581)
<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 May 2,
1998 and May 3, 1997, 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 2, 1998 and May 3, 1997 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 1997 Annual Report to
Shareholders.
(2) Financing Arrangements
The Company has renewed its unsecured revolving credit agreements with banks,
aggregating $45,000,000, of which $30,000,000 is committed. These credit
facilities, which expire April 13, 1999, are for working capital and letter of
credit purposes, primarily to fund seasonal merchandise purchases, and bear
interest at market rates based on prime.
(3) Comprehensive Income
Effective February 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("FAS 130").
Comprehensive income is defined as the change in equity (net assets) of a
business enterprise during a period from transactions and other events and
circumstances from non-owner sources. It includes all changes in equity
during a period except those resulting from investments by owners and
distributions to owners. Comprehensive loss for the three months ended
May 2, 1998 and May 3, 1997 was $3,680,000 and $4,873,000, respectively.
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 1997 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 409 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 store in late fiscal 1992.
The large format stores average 4,000 square feet, while the regular stores
average 1,800 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 May 2, 1998, 228 large format Bombay stores were in operation,
including 141 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 May 2, 1998 and May 3, 1997
Net sales were $68,343,000 for the quarter ended May 2, 1998 compared to
$67,231,000 for the same period last year, an increase of 1.7%. The increase is
primarily attributable to a 3% same store sales increase slightly offset by
there being 15 fewer stores than at May 3, 1997.
Cost of sales, including buying and occupancy costs, was $52,634,000 for the
first fiscal quarter compared to $52,399,000 for the same period last year.
As a percentage of sales, cost of sales decreased to 77.0% for the quarter
compared to 77.9% for the prior year period. The 90 basis point improvement
is due to higher product margin (30 basis points) as well as lower buying and
occupancy costs relative to sales (60 basis points). The higher product
margins reflect stronger margins in the non furniture merchandise
particularly for gift oriented product as the Company focused on the
Spring gift giving season. The percentage decrease in buying and occupancy
costs reflects their relatively fixed nature measured against sales increases.
Selling, general and administrative expenses were $22,738,000 or 33.3% of
sales for the quarter compared to $23,214,000 or 34.5% of sales for the
comparable prior year period. The decreases are the result of on-going
expense control efforts 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 $14,575,000
were outstanding at May 2, 1998. Bank lines total $45,000,000, of which
$30,000,000 is committed, under revolving credit agreements expiring
April 13, 1999. Based upon available cash balances at May 2, 1998 of over
$40,000,000 and cash forecasts for the year, the Company does not presently
expect to be in a borrowing position at any time during fiscal 1998. The
bank credit lines are,however, being utilized to support inventory purchases
under letters of credit.
The store expansion program for the remainder of the fiscal year anticipates
approximately 19 new stores and 14 conversions. New stores and conversions in
fiscal 1998 are in a new design which includes customer-friendly merchandise
displays and updated styling. The Company also intends to retrofit a number
of its existing larger format stores with certain of the more successful
elements of the new design. Capital expenditures for the quarter, totaling
$4,262,000,included two store conversions and eleven retrofit projects as
well as routine purchases of machinery and equipment. The total estimated
capital expenditures for fiscal 1998 are $22,000,000. 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 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended May 2, 1998.
No exhibits have been filed as a part of this report.
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
Chief Executive Officer
/s/ Elaine D. Crowley
Elaine D. Crowley
Vice President, Finance
and Treasurer
Date: June 15, 1998
<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 2, 1998 and is qualified in its entirety by reference to such
10-Q.
</LEGEND>
<CIK> 0000096287
<NAME> THE BOMBAY COMPANY, INC.
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