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 October 28, 2000
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
common stock as of the latest practicable date.
Class Number of shares outstanding at
October 28, 2000
Common stock, $1 par value 32,639,631
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Form 10-Q
Quarter Ended October 28, 2000
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
Item Page No.
1. Financial Statements 3-6
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
PART II -- OTHER INFORMATION
6. Exhibits and Reports on Form 8-K 10
Signatures 11
<TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
October 28, October 30, October 28, October 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net sales $90,382 $85,256 $264,871 $251,304
Costs and expenses:
Cost of sales, buying and store occupancy 64,502 63,137 191,565 183,859
costs
Selling, general and administrative 28,387 26,124 81,001 75,467
expenses
Interest (income) expense, net 199 (84) (511) (787)
Total costs and expenses 93,088 89,177 272,055 258,539
Loss before income taxes (2,706) (3,921) (7,184) (7,235)
Income tax benefit (1,069) (1,563) (2,838) (2,859)
Net loss ($1,637) ($2,358) ($4,346) ($4,376)
Basic earnings per share ($0.05) ($0.06) ($0.13) ($0.12)
Diluted earnings per share ($0.05) ($0.06) ($0.13) ($0.12)
Average common shares outstanding 32,631 36,369 33,477 36,533
Average common shares outstanding and
dilutive potential common shares 32,631 36,369 33,477 36,533
<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>
October 28, January 29, October 30,
2000 2000 1999
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $6,283 $39,174 $5,498
Inventories 119,242 90,583 109,416
Other current assets 13,662 9,365 14,863
Total current assets 139,187 139,122 129,777
Property and equipment, net 48,731 47,544 48,246
Goodwill, less amortization 464 485 492
Other assets 15,540 14,721 13,389
Total assets $203,922 $201,872 $191,904
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $24,785 $ -- $3,535
Vendor payables and accrued expenses 24,519 24,459 27,798
Income taxes payable -- 5,192 --
Accrued payroll and bonuses 2,189 4,519 1,883
Gift certificates redeemable 4,005 4,184 3,431
Total current liabilities 55,498 38,354 36,647
Accrued rent and other liabilities 6,997 7,270 7,171
Stockholders' equity:
Preferred stock, $1 par value,
1,000,000 shares authorized -- -- --
Common stock, $1 par value, 50,000,000
shares authorized, 38,149,646 shares 38,150 38,150 38,150
issued
Additional paid-in capital 75,875 76,082 76,154
Retained earnings 52,429 56,775 45,057
Accumulated other comprehensive income (1,493) (1,013) (1,234)
Common shares in treasury, at cost,
5,510,015;
2,677,236 and 1,850,031 shares, (22,558) (13,129) (9,517)
respectively
Stock purchase loans (976) (617) (524)
Total stockholders' equity 141,427 156,248 148,086
Total liabilities and stockholders' equity $203,922 $201,872 $191,904
<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 Flow
(Dollars in thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
October 28, October 30,
2000 1999
<C> <S> <S>
Cash flows from operating activities:
Net loss ($4,346) ($4,376)
Adjustments to reconcile net loss
to net cash from operations:
Depreciation and amortization 10,740 9,138
Deferred taxes and other 4 (16)
Change in assets and liabilities:
Increase in inventories (29,382) (35,166)
Increase in other current assets (4,135) (3,721)
Increase (decrease) in current liabilities (7,694) 1,606
Decrease in noncurrent assets 53 154
Increase (decrease) in noncurrent liabilities (95) 339
Net cash used by operations (34,855) (32,042)
Cash flows from investing activities:
Purchases of property and equipment (13,220) (14,724)
Sales of property and equipment 149 206
Net cash used by investing activities (13,071) (14,518)
Cash flows from financing activities:
Net proceeds from bank borrowings 24,785 3,535
Purchases of treasury stock (10,281) (4,466)
Sale of stock to employee benefit plans 195 159
Issuance of stock purchase loans -- (43)
Proceeds from the exercise of employee stock -- 188
options
Net cash used by financing activities 14,699 (627)
Effect of exchange rate change on cash 336 (124)
Net decrease in cash and cash equivalents (32,891) (47,311)
Cash and cash equivalents at beginning of period 39,174 52,809
Cash and cash equivalents at end of period $6,283 $5,498
Supplemental disclosure of cash flow information:
Income taxes paid $4,333 $1,688
Non-cash financing activities:
Distributions of deferred director fees -- 122
Issuance of restricted stock 153 72
Loans issued to purchase Company stock 314 481
<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 October
28, 2000 and October 30, 1999, the results of operations for the three and nine
months then ended, and cash flows for the nine months then ended. The results
of operations for the three and nine month periods ended October 28, 2000 and
October 30, 1999 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 1999 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 May 12, 2001, are for working capital and letter of
credit purposes, primarily to fund seasonal merchandise purchases, and bear
interest at market rates based on prime. Borrowings of $24,785,000 and letters
of credit totaling $5,822,000 were outstanding under these facilities at October
28, 2000.
(3) Comprehensive Income/Loss
Comprehensive loss for the three months ended October 28, 2000 and October 30,
1999 was $1,894,000 and $2,182,000, respectively. Comprehensive loss for the
nine months ended October 28, 2000 and October 30, 1999 was $4,826,000 and
$4,109,000, respectively. Other comprehensive income consists of the cumulative
effect of foreign currency translation adjustments.
(4) Stock Repurchase Program
On July 5, 2000, the Company announced that its Board of Directors had
approved an increase to the Company's stock repurchase program of $5,000,000,
bringing the aggregate authorized to $30,000,000. Under the program, the
Company is authorized to purchase shares of its common stock, from time to time,
through open market purchases and privately negotiated transactions. As of
October 28, 2000, the Company had purchased 6,014,916 shares at a cost
aggregating $24,978,000 of which 504,901 shares had been utilized to fund stock
transactions pursuant to employee and director stock programs.
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 1999 Form 10-K
Annual Report.
General
The Bombay Company, Inc. ("Company") is a specialty retailer which markets
timeless and classic furniture, prints and accessories through over 400
locations of The Bombay Company ("Bombay") retail stores in 42 states in the
United States and nine Canadian provinces, through mail order and over the
Internet at www.bombayco.com.
The largest percentage of the Company's sales and operating income is realized
in the fiscal quarter that includes December (Christmas season). Substantially
all merchandise is manufactured to Company specification through a network of
contract manufacturers located principally in Asia and North America. Because
the majority of the Company's products are proprietary, the impact of inflation
on operating results is typically not significant. The Company attempts to
alleviate inflationary pressures by adjusting selling prices (subject to
competitive conditions), improving designs and finding alternative production
sources in lower cost countries.
Results of Operations
Quarters Ended October 28, 2000 and October 30, 1999
Net sales were $90,382,000 for the arter ended October 28, 3000 compared
to $85,256,000 for the quarter ended October 30,1999, an increase of 6%. Same
store sales increased 4% from the prior year. For the quarter, furniture,
accessories and wall decor sales represented 50%, 34% and 16% of the business,
respectively, which is virtually the same as last year's third quarter product
mix. Sales increases were driven by higher priced furniture pieces, as the
Company had a good in-stock position on bedroom and other furniture categories,
and as new furniture introductions were well received.
From a geographic standpoint, the Canadian operations continued to have the
strongest performance, recording double-digit same store sales gains during the
third quarter. In the U.S., same store sales gains were strong on the West
Coast and in the Northeast. Business in the outlets continues to be strong,
driven by outlet-only special purchases. During the quarter ended October 28,
2000, the number of sales transactions decreased by approximately 2% from the
third fiscal quarter of last year, while the average transaction increased from
$89 to $96.
Cost of sales, including buying and occupancy costs, was $64,502,000 for the
third fiscal quarter compared to $63,137,000 for the same period last year. As
a percentage of sales, cost of sales declined to 71.4% for the quarter compared
to 74.1% for the prior year period. Product margins improved by 210 basis
points due primarily to less aggressive discounting during promotions. Consumer
acceptance of new product introductions and a good in-stock position also
contributed to the margin improvement. Buying and occupancy costs decreased
from 23.7% of sales to 23.1% as these costs were leveraged against a higher
sales base.
Selling, general and administrative expenses were $28,387,000 or 31.4% of
sales for the quarter compared to $26,124,000 or 30.6% of sales for the
comparable period of the prior year. In dollars, the largest single component
of the increase relates to higher payroll and related costs in addition to
investments in infrastructure. With respect to store payroll, the Company has
maintained tight controls and has, in fact, improved productivity in this area
reducing costs almost 20 basis points as a percentage of sales. Investments in
technology have also contributed to the increase with higher depreciation,
amortization and other related expenses. During the quarter, there were
approximately $1 million in unusual expenses compared to last year including
costs associated with the death of the Company's Chairman, foreign exchange
losses as a result of the weakness in the Canadian dollar and higher credit card
processing costs.
For the quarter ended October 28, 2000, net interest expense was $199,000
compared to net interest income of $84,000 in the third quarter of fiscal 1999.
This change is due to overall lower levels of cash and greater utilization of
seasonal borrowings in the current year, attributable largely to the use funds
for capital expenditures, higher inventory levels and the Company's stock
repurchase program.
Nine Months Ended October 28, 2000 and October 30, 1999
Net sales were $264,871,000 for the nine months ended October 28, 2000
compared to $251,304,000 for the same period last year, an increase of 5%. Same
store sales increased 3% on a year to date basis. For the nine month periods
ended October 28, 2000 and October 30, 1999, furniture, accessories and wall
decor represented 50%, 34% and 16% of the business, respectively.
Sales increases were carried by strong performances in the first and third
quarters of furniture and new product introductions, partially offset by a weak
summer clearance event. For the year-to-date, the transaction count increased
by 6% over the comparable period last year and the average ticket remained
unchanged at $94.
Cost of sales, including buying and occupancy costs, was $191,565,000 or
72.4% of sales for the nine months compared to $183,859,000 or 73.2% of sales
for the comparable prior year period. The 80 basis point improvement is due to
a increase in product margin (40 basis points) as well as improvement in buying
and occupancy costs (40 basis points). Product margins improved primarily
due to improved merchandise selection and more selective promotions.
Improvement in buying and
occupancy costs from 23.4% to 23.0% is attributable to the relatively fixed
nature of these costs leveraged against a higher sales base.
Selling, general and administrative expenses were $81,001,000 or 30.6% of
sales for the nine months compared to $75,467,000 or 30.0% of sales for the
prior year comparable period. The largest component of the dollar increase
continues to be higher payroll and related costs. However, as a percentage of
sales these costs have remained relatively constant. Additionally, investments
in infrastructure and technology have contributed to higher selling, general and
administrative expenses with higher depreciation, amortization and related
costs. As a percentage of sales, increases are primarily related to
depreciation, amortization and related technology and infrastructure
investments.
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 available to fund
seasonal inventory purchases. In addition, the bank credit lines are used for
overseas merchandise purchases under letters of credit. Unsecured bank lines
aggregate $45,000,000, of which $30,000,000 are committed under revolving credit
agreements expiring May 12, 2001. Borrowings of $24,785,000 and letters of
credit totaling $5,822,000 were outstanding at October 28, 2000. Management
currently expects that the amount of outstanding borrowings will be repaid
during the fourth fiscal quarter as a result of anticipated higher sales and the
liquidation of seasonal inventory buildup during the Christmas season.
The store expansion plan for the remainder of the fiscal year anticipates
approximately one new store, three new outlets, and six conversions to the large
format. Capital expenditures for the year to date period included six new store
openings, one new outlet and 14 conversions as well as routine purchases of
furniture, equipment and software. The total estimated capital expenditures for
Fiscal 2000 are approximately $19,000,000.
The Company has in place a stock repurchase program approved by the Board of
Directors of up to $30,000,000. During the nine months ended October 28, 2000,
$10,281,000 was spent to acquire 3,030,300 shares of the Company's common stock.
From the inception of the program through October 28, 2000, $24,978,000 has been
spent to repurchase 6,014,916 shares. No shares were repurchased during the
quarter ended October 28, 2000.
The Company believes that its current cash position, cash flows from
operations and credit lines will be sufficient to fund its current operations,
capital expenditure and stock repurchase programs.
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 October 28,
2000. 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/ Carmie Mehrlander
Carmie Mehrlander
Chairman, President and
Chief Executive Officer
/s/ Elaine D. Crowley
Elaine D. Crowley
Vice President, Finance
and Treasurer
Date: December 4, 2000
