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 April 29, 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 April 29, 2000
Common stock, $1 par value 33,554,489
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Form 10-Q
Quarter Ended April 29, 2000
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
April 29, May 1,
2000 1999
<S> <C> <C>
Net sales $85,288 $75,286
Costs and expenses:
Cost of sales, buying and store 61,809 55,680
occupancy costs
Selling, general and administrative 26,645 23,999
expenses
Interest income, net (397) (374)
Total costs and expenses 88,057 79,305
Loss before income taxes (2,769) (4,019)
Income tax benefit (1,094) (1,588)
Net loss ($1,675) ($2,431)
Basic earnings per share ($0.05) ($0.07)
Diluted earnings per share ($0.05) ($0.07)
Average common shares outstanding and
dilutive potential common shares 34,878 36,737
<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>
April 29, January 29, May 1,
2000 2000 1999
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $26,982 $39,174 $34,632
Inventories 87,673 90,583 87,282
Other current assets 10,727 9,365 16,603
Total current assets 125,382 139,122 138,517
Property and equipment, net 47,036 47,544 43,222
Goodwill, less amortization 478 485 505
Other assets 15,616 14,721 12,556
Total assets $188,512 $201,872 $194,800
<CAPTION>
LIABILITIES AND STOCKHOLDERS'
EQUITY
<S> <C> <C> <C>
Current liabilities:
Accounts payable and accrued $23,156 $24,459 $28,593
expenses
Income taxes payable 4,229 5,192 306
Accrued payroll and bonuses 2,512 4,519 3,126
Gift certificates redeemable 3,893 4,184 3,351
Total current liabilities 33,790 38,354 35,376
Accrued rent and other liabilities 7,055 7,270 6,999
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 issued 38,150 38,150 38,150
Additional paid-in capital 76,067 76,082 76,055
Retained earnings 55,100 56,775 47,002
Accumulated other comprehensive (1,244) (1,013) (1,195)
loss
Common shares in treasury, at
cost, 4,595,157;
2,677,236 and 1,562,725 shares, (19,712) (13,129) (7,587)
respectively
Stock purchase loans (694) (617) --
Total stockholders' equity 147,667 156,248 152,425
Total liabilities and stockholders' $188,512 $201,872 $194,800
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
April 29, May 1,
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net loss ($1,675) ($2,431)
Adjustments to reconcile net loss
to net cash from operations:
Depreciation and amortization 3,439 2,852
Deferred taxes and other (9) (197)
Change in assets and liabilities:
(Increase) decrease in inventories 2,605 (12,514)
Increase in other current assets (1,194) (6,794)
Increase (decrease) in current liabilities (4,668) 4,950
(Increase) decrease in noncurrent assets (13) 11
Increase (decrease) in noncurrent liabilities (59) 67
Net cash used by operations (1,574) (14,056)
Cash flows from investing activities:
Purchases of property and equipment (3,987) (2,335)
Sales of property and equipment 68 114
Net cash used by investing activities (3,919) (2,221)
Cash flows from financing activities:
Purchases of treasury stock (6,869) (1,762)
Sale of stock to employee benefit plans 58 43
Proceeds from the exercise of employee stock -- 5
options
Net cash used by financing activities (6,811) (1,714)
Effect of exchange rate change on cash 112 (186)
Net decrease in cash and cash equivalents (12,192) (18,177)
Cash and cash equivalents at beginning of period 39,174 52,809
Cash and cash equivalents at end of period $26,982 $34,632
<CAPTION>
Supplemental disclosure of cash flow
information:
<S> <C> <C>
Income taxes paid $24 $1,588
Non-cash financing activities:
Distributions of deferred director fees -- 58
Issuance of restricted stock 136 64
Loans issued to purchase Company stock 77 --
<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 April 29,
2000 and May 1, 1999, and the results of operations and cash flows for the three
months then ended. The results of operations for the three month periods ended
April 29, 2000 and May 1, 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. There were no borrowings under these
revolving credit facilities during the quarter ended April 29, 2000.
(3) Comprehensive Income/Loss
Comprehensive loss for the three months ended April 29, 2000 and May 1, 1999
was $1,906,000 and $2,125,000, respectively. Accumulated other comprehensive
income consists of the cumulative effect of foreign currency translation
adjustments.
(4) Stock Repurchase Program
On June 17, 1998, the Company announced that its Board of Directors had
approved a stock repurchase program with initial authorization to purchase up to
$10 million of the Company's stock. On August 18, 1999 and on March 8, 2000,
the Board of Directors announced that it had extended this program by $5 million
and $10 million, respectively. The shares may be purchased from time to time,
through open market purchases and privately negotiated transactions. As of
April 29, 2000, 4,963,016 shares had been purchased at a cost aggregating
$21,565,000.
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). 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 increasing selling prices (subject to
competitive conditions), improving designs and finding alternative production
sources in lower cost countries.
Results of Operations
Quarters Ended April 29, 2000 and May 1, 1999
Net sales were $85,288,000 for the quarter ended April 29, 2000 compared to
$75,286,000 for the quarter ended May 1, 1999, an increase of 13%. Same store
sales increased 9% over the prior year with positive contributions from every
region. Sales increases for the quarter were primarily attributable to
furniture categories, followed by increases in accessories and wall decor. The
sales mix for the first quarter of Fiscal 2000 consisted of 50.4% furniture,
27.8% accessories, 16.8% wall decor and 5.0% lamps and other categories. During
the same period of last year, the sales mix was 49.6% furniture, 28.6%
accessories, 16.7% wall decor and 5.1% lamps and other. During the quarter
ended April 29, 2000, the transaction count increased by approximately 18% over
the first
fiscal quarter of last year, while the average transaction declined from $98 to
$94 during the applicable periods reflecting the impact of continued emphasis in
the accessories and take-with categories.
Cost of sales, including buying and occupancy costs, was $61,809,000 for the
first fiscal quarter compared to $55,680,000 for the same period last year. As
a percentage of sales, cost of sales decreased to 72.5% for the quarter compared
to 74.0% for the prior year period. Product margins declined by 60 points due
primarily to higher domestic freight costs resulting from last year's freight
rate increases, heavier shipping weights with more furniture sales and other
heavy items, and fuel surcharges. Buying and occupancy costs declined to 23.3%
from 25.4% as fixed costs are leveraged on the higher sales base.
Selling, general and administrative expenses were $26,645,000 or 31.2% of
sales for the quarter compared to $23,999,000 or 31.9% of sales for the
comparable prior year period. The largest component of the dollar increase
continues to be higher payroll costs driven by the higher sales volume and
higher store pay rates in the tight labor market. Amortization costs resulting
from investments made in technology and higher credit card expenses on the
increased sales volumes also contributed to increased selling, general and
administrative expenses, while advertising decreased slightly. However, as a
percentage of sales, selling, general and administrative expenses declined as
the Company continues to exercise strong controls and leverage these costs on
the higher sales base particularly in the areas of payroll costs and
advertising.
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, which were
renewed during the quarter, are used for overseas merchandise purchases under
letters of credit. Unsecured bank lines aggregate $45 million, of which $30
million are committed under revolving credit agreements expiring May 12, 2001.
Letters of credit totaling $15,078,000 were outstanding at April 29, 2000.
The store expansion plan for the remainder of the fiscal year anticipates
approximately 14 new stores and 19 conversions to the large format. Capital
expenditures for the quarter included one new store opening, one new outlet and
six conversions as well as routine purchases of furniture, equipment and
software. The total estimated capital expenditures for Fiscal 2000 are
approximately $20 million.
The Company also continues a stock repurchase program approved by the Board of
Directors of up to $25 million. During the quarter ended April 29, 2000,
$6,869,000 was spent to acquire 1,978,400 shares of the Company's common stock.
Through April 29, 2000, $21,565,000 has been spent to repurchase 4,963,016
shares.
The Company believes that its current cash position, cash flows from
operations and credit line facilities 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 April 29, 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
President and
Chief Executive Officer
/s/ Elaine D. Crowley
Elaine D. Crowley
Vice President, Finance
and Treasurer
Date: June 2, 2000
