-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NY5Q7DZ0J2B26jW0xme1o9vT942Mu1Xu+xl/GnXDC1GpGh4PJXMpj9Q4ZpkafC6+ 0Icoc1RldGt0nB8HKTXOuw== 0000096287-98-000008.txt : 19980916 0000096287-98-000008.hdr.sgml : 19980916 ACCESSION NUMBER: 0000096287-98-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980801 FILED AS OF DATE: 19980915 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOMBAY COMPANY INC CENTRAL INDEX KEY: 0000096287 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FURNITURE STORES [5712] IRS NUMBER: 751475223 STATE OF INCORPORATION: DE FISCAL YEAR END: 0128 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07288 FILM NUMBER: 98709506 BUSINESS ADDRESS: STREET 1: 550 BAILEY AVE STE 700 CITY: FORT WORTH STATE: TX ZIP: 76107 BUSINESS PHONE: 8173478200 MAIL ADDRESS: STREET 1: 550 BAILEY AVENUE STREET 2: SUITE 700 CITY: FORT WORTH STATE: TX ZIP: 76107 FORMER COMPANY: FORMER CONFORMED NAME: TANDY BRANDS INC DATE OF NAME CHANGE: 19901114 10-Q 1 1ST QUARTER 10-Q 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 1, 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 common stock as of the latest practicable date. Class Number of shares outstanding at August 1, 1998 Common stock, $1 par value 37,857,402 THE BOMBAY COMPANY, INC. AND SUBSIDIARIES Form 10-Q Quarter Ended August 1, 1998 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 4. Submission of Matters to a Vote of Security Holders................ 10 6. Exhibits and Reports on Form 8-K................................... 10 Signatures......................................................... 11 THE BOMBAY COMPANY, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended August 1, August 2, August 1, August 2, 1998 1997 1998 1997 Net sales $82,011 $68,743 $150,354 $135,974 Costs and expenses: Cost of sales, buying and store occupancy costs 60,326 49,095 112,960 101,494 Selling, general and 22,978 21,965 45,716 45,179 administrative expenses Interest (income), net (503) (644) (1,120) (1,381) Total costs and expenses 82,801 70,416 157,556 145,292 Loss before income taxes (790) (1,673) (7,202) (9,318) Benefit for income taxes (314) (678) (2,845) (3,698) Net loss ($476) ($995) ($4,357) ($5,620) Basic earnings per share ($0.01) ($0.03) ($0.11) ($0.15) Diluted earnings per share ($0.01) ($0.03) ($0.11) ($0.15) Average common shares outstanding and dilutive potential common 38,057 38,049 38,089 38,036 shares Cash dividends per common share -- -- -- -- The accompanying notes are an integral part of these financial statements.
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Dollars in thousands)
August 1, January 31, August 2, 1998 1998 1997 ASSETS (Unaudited) (Unaudited) Current assets: Cash and cash equivalents $37,010 $56,110 $52,664 Inventories 84,314 85,861 72,248 Other current assets 15,913 7,142 14,657 Total current assets 137,237 149,113 139,569 Property and equipment, net 40,477 36,753 37,775 Goodwill, less amortization 526 540 554 Other assets 9,994 9,056 8,750 Total assets $188,234 $195,462 $186,648 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued $23,140 $23,019 $26,467 expenses Accrued payroll and bonuses 3,215 4,390 3,313 Gift certificates redeemable 2,718 3,008 2,088 Total current liabilities 29,073 30,417 31,868 Accrued rent and other liabilities 6,755 6,807 6,432 Stockholders' equity: Preferred stock, $1 par value, 1,000,000 shares authorized -- -- -- Common stock, $1 par value, 50,000,000 shares authorized 38,139,002; 38,114,187 and 38,052,870 shares issued, 38,139 38,114 38,053 respectively Additional paid-in capital 76,011 75,904 75,657 Retained earnings 41,066 45,423 35,353 Cumulative effect of foreign (1,424) (1,203) (715) currency translation Common shares in treasury at cost, 281,600; 0 and 0 shares, (1,386) -- -- respectively Total stockholders' equity 152,406 158,238 148,348 Total liabilities and stockholders' $188,234 $195,462 $186,648 equity The accompanying notes are an integral part of these financial statements.
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited)
Six Months Ended August 1, August 2, 1998 1997 Cash flows from operating activities: Net loss ($4,357) ($5,620) Adjustments to reconcile net loss to net cash from operations: Depreciation and amortization 4,836 5,068 Deferred taxes and other (3) 1,892 Noncash contributions to employee benefit plans - 18 Change in assets and liabilities: (Increase) decrease in inventories 1,277 (2,655) Increase in other current assets (8,309) (4,223) Decrease in current liabilities (1,830) (3,698) Increase in noncurrent assets (1,498) (329) Increase (decrease) in noncurrent liabilities (31) 80 Net cash used by operations (9,915) (9,467) Cash flows from investing activities: Purchases of property and equipment (8,419) (1,453) Sales of property and equipment 332 129 Net cash used by investing activities (8,087) (1,324) Cash flows from financing activities: Purchase of treasury stock (1,386) -- Sale of stock to employee benefit plans 79 233 Proceeds from the exercise of employee stock 53 22 options Net cash provided by financing activities (1,254) 255 Effect of exchange rate change on cash 156 70 Net decrease in cash and cash equivalents (19,100) (10,466) Cash and cash equivalents at beginning of 56,110 63,130 period Cash and cash equivalents at end of period $37,010 $52,664 Supplemental disclosure of cash flow information: Income taxes paid (refunded) $1,914 ($561) The accompanying notes are an integral part of these consolidated financial statements.
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 1, 1998 and August 2, 1997, 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 1, 1998 and August 2, 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 August 1, 1998 and August 2, 1997 was $898,000 and $959,000, respectively, and for the six months ended August 1, 1998 and August 2, 1997 was $4,578,000 and $5,832,000, respectively. (4) Stock Buy Back Program On June 17, 1998, the Company announced that its Board of Directors had approved a stock buy back program with initial authorization to purchase up to $10 million of the Company's stock. The shares may be purchased from time to time, through open market purchases and privately negotiated transactions. As of August 1, 1998, 281,600 shares had been purchased at a cost aggregating $1,386,000. 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 reference 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 408 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 August 1, 1998, 236 large format Bombay stores were in operation, including 147 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 1, 1998 and August 2, 1997 Net sales were $82,011,000 for the quarter ended August 1, 1998 compared to $68,743,000 for the same period last year, an increase of 19.3%. Same store sales increased 20% for the comparative periods. Sales increases were primarily attributable to an aggressive sales posture taken by new management particularly with regard to purging seasonal and discontinued inventories. Cost of sales, including buying and store occupancy costs, was $60,326,000 for the second fiscal quarter compared to $49,095,000 for the same period last year. As a percentage of sales, cost of sales increased to 73.6% for the quarter compared to 71.4% for the prior year period. The 220 basis point decline in margin is due to lower product margin (620 basis points) partially offset by lower buying occupancy costs relative to sales (400 basis points). The lower product margins are a result of the aggressive sales in purging seasonal and discontinued merchandise. The percentage decrease in buying and store occupancy costs reflects their relatively fixed nature measured against sales increases. Selling, general and administrative expenses were $22,978,000 or 28.0% of sales for the quarter compared to $21,965,000 or 32.0% of sales for the comparable prior year period. The 400 basis point improvement is due to strong controls over these expenses as well as economies of scale realized on the higher sales volumes. The actual dollar increase in the expense is related to higher payroll costs and other selling expense directly related to the higher sales volumes. Six Months Ended August 1, 1998 and August 2, 1997 Net sales were $150,354,000 for the six months ended August 1, 1998 compared to $135,974,000 for the same period last year. Same store sales increased 11% for the year to date. Sales increases reflect the aggressive promotional activity of the second fiscal quarter this year. Cost of sales, including buying and store occupancy costs, was $112,960,000 or 75.1% of sales for the six months compared to $101,494,000 or 74.6% of sales for the prior year to date. The 50 basis point increase is due to lower product margin (290 basis points) partially offset by lower buying and occupancy costs relative to sales (240 basis points). The lower product margin is a reflection of the more aggressive promotional sales activity during the second fiscal quarter relative to last year. The percentage decrease in buying and store occupancy costs is due to their relatively fixed nature measured against sales increases. Selling, general and administrative expenses were $45,716.000 or 30.4% of sales for the year to date compared to $45,179,000 or 33.2% of sales for the same period last year. While costs remained virtually unchanged from the prior year through on-going expense control efforts, as a percentage of sales they improved by 280 basis points as a result of growth in sales. Liquidity and Capital Resources The primary sources of liquidity and capital resources are cash flows from operations and bank lines of credit. Bank lines total $45,000,000, of which $30,000,000 is committed, under revolving credit agreements expiring April 13, 1999. The bank credit lines are being utilized to support inventory purchases under letters of credit and may be utilized to fund seasonal inventory purchases. Letters of credit totaling $21,385,000 were outstanding at August 1, 1998. Based upon available cash balances at August 1, 1998 of over $37,000,000 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 store expansion program for the remainder of the fiscal year anticipates approximately 13 new stores and nine 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 year to date, totaling $8,419,000, included eight store conversions and eight retrofit projects as well as routine purchases of machinery and equipment. The total estimated capital expenditures for fiscal 1998 are approximately $20,000,000. 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. Year 2000 Conversion The Company recognizes the need to ensure that it will be prepared for Year 2000 issues. It has evaluated internal systems and programs and has identified those which it believes are not currently compliant. With respect to mission critical systems, the Company has approached the problem in a variety of ways. During the second quarter, the Company implemented a new payroll system and has recently gone live on a new human resources system, both of which are Year 2000 compliant and which replace a non-compliant system. The existing financial software has recently been upgraded to a Year 2000 compliant version. The Company is in the process of developing a new point of sale system which contemplates both hardware and software replacements which will be compliant. This system is currently in the process of being tested as development continues and a chain wide rollout is planned for the summer of 1999. The Company's merchandising system was implemented in 1994 and was designed to be Year 2000 compliant; however, testing was not performed at that time to determine its readiness. The merchandising system as well as other ancillary systems are currently being reviewed and programs modified where necessary. Incremental costs of ensuring the systems' readiness are not expected to be significant as most of the work will be performed through redirecting existing internal programming resources. Purchased software packages and hardware are capitalized and amortized over their useful lives while other costs associated with the Year 2000 conversion are being expensed as incurred. The major components of the conversion are expected to be completed by the middle of 1999; however, there will be additional refinements that will continue for the remainder of the year. The Company is also communicating with vendors, financial institutions and others with which it does business to coordinate Year 2000 conversion issues. There can be no assurance that the systems of other companies and agencies on which the Company relies will be timely converted or that such failure to convert by another entity would not have an adverse impact on the Company's operations. 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 21, 1998. (b) Directors elected to hold office are listed in the attached Proxy Statement which is incorporated herein by reference. Directors elected: Barbara Bass, Robert S. Jackson and A. Roy Megarry. Directors continuing: Edmund H. Damon, Robert E. Runice, Glenn E. Hemmerle, Carmie Mehrlander, Clayton E. Niles and Carson R. Thompson. Election of Directors: Barbara Bass - For: 33,624,989 Withheld: 1,503,932 Robert S. Jackson - For: 33,512,373 Withheld: 1,616,549 A. Roy Megarry - For 33,544,165 Withheld: 1,584,756 (c) Other matters voted upon: Approval of amendment to 1991 Director Stock Option Plan to increase available shares by 90,000 shares. For: 27,383,931 Against: 7,348,915 Withheld: 396,076 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 10, 1998. Such Exhibit is incorporated herein by reference. (b) No reports on Form 8-K were filed during the quarter ended August 1, 1998. 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: September 15, 1998 EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from The Bombay Company, Inc. quarterly report on Form 10-Q for the six months ended August 1, 1998 and is qualified in its entirety by reference to such 10-Q. 0000096287 THE BOMBAY COMPANY, INC. 1000 6-MOS JAN-30-1999 FEB-01-1998 AUG-01-1998 37010 0 0 0 84314 137237 94780 54303 188234 29073 0 0 0 38139 114267 188234 150354 150354 112960 158676 0 0 (1120) (7202) (2845) (4357) 0 0 0 (4357) (.11) (.11)
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