1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended February 2, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to ___________________
Commission file number 1-7288
The Bombay Company, Inc.
(Exact name of registrant as specified in its charter)
A Delaware Corporation 75-1475223
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
550 Bailey Avenue
Fort Worth, Texas 76107
(Address of principal executive (Zip Code)
offices)
(Registrant's telephone number, including area code)
(817) 347-8200
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on
Which Registered
Common Stock, Par Value, $1 Per
Share New York Stock Exchange
Securities registered pursuant to
Section 12(g) of the Act:
NONE
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.____
The aggregate market value of the voting stock held by nonaffiliates of the
registrant based on the closing price of the stock on April 1, 2002 was
approximately $71,012,438.
Shares outstanding at April 1, 2002: Common Stock, $1 Par Value:
33,082,542
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Definitive Proxy Statement for the Annual Meeting to be
held May 16, 2002 (as expressly incorporated by reference in Part III).
Page 1 of 37
2
Form 10-K
PART I
ITEM 1. Business.
(a) General Development of Business
The Bombay Company, Inc. and its wholly-owned subsidiaries (the "Company"
or "Bombay") design, source and market a unique line of home accessories,
wall decor and furniture through a network of retail locations throughout
the United States and Canada, through specialty catalogs, over the internet
and internationally through licensing arrangements.
Bombay's unique position in the market place is a result of its core
competencies in design and sourcing. Approximately 80% of its product is
sourced from over 20 foreign countries. Over 95% of the product has been
designed or styled to Bombay's specifications.
To capitalize on its strengths in design and sourcing, the Company is
developing other business opportunities in addition to its core retail
operations. Bailey Street Trading Company, the Company's wholesale
operations, was introduced in Fiscal 2000 and reached sales of
approximately $2 million in Fiscal 2001. Bailey Street is proving to be a
viable, low-risk growth vehicle for the Company, with sales projected at $5
million for Fiscal 2002.
International expansion has progressed with licensed international stores
currently operating in the Dominican Republic, Puerto Rico and Kuwait.
There are commitments with the Company's current international licensees to
open three additional stores in Fiscal 2002 including one each in the
Dominican Republic, Saudi Arabia and Turkey. The Company plans to continue
expansion abroad through licensing and distribution agreements in markets
identified as appropriate for the Bombay brand.
In the third quarter of Fiscal 2001, the Company launched Bombay KIDS, its
new line of children's furniture, textiles and accessory collections, with
initial offerings exclusively through separate catalog and internet
channels. During Fiscal 2002, Bombay KIDS will be tested in several retail
stores with the first opening in Dallas, TX in March.
To date, the operations and financial results of the wholesale operations,
international licenses and Bombay KIDS have been immaterial to the Company
as a whole. Unless specified otherwise, the discussions in this Annual
Report on Form 10-K relate to the Bombay retail operations.
(b) Financial Information About Segments
The Company operates primarily in one business segment consisting of the
retail sale of decorative home furnishings, furniture and related items.
(c) Narrative Description of Business
Merchandise Sales, Purchasing and Distribution
Bombay operates a chain of stores, located primarily in regional shopping
malls, certain secondary malls and selected urban and suburban locations.
As of February 2, 2002, there were 365 Bombay stores in 41 states in the
United States and 54 stores in nine Canadian provinces. Bombay also
markets its products through its mail order operations in the United States
and Canada and through e-commerce over the internet at
www.bombaycompany.com.
The Company offers a diverse selection of products consisting of
approximately 5,000 SKUs (stock keeping units) of which over 95% of the
product has been designed or styled to Bombay's specifications. Bombay's
proprietary product offers unique design, quality and exceptional value to
a wide audience of consumers. While furniture has always been a
significant part of the business and will continue to play an important
role in the merchandise assortment, more focus has recently and will
continue to be given to the smaller "take with" items such as wood and
decorative accessories, crystal, florals, candles and a wide assortment of
gift items.
The Company regularly updates its merchandise assortment by introducing new
products and discontinuing others as they approach the end of their life
cycles. Approximately 2,600 new SKUs were introduced in both Fiscal 2001
and Fiscal 2000. Typically, new product introductions are concentrated
during the Company's spring, fall and Christmas marketing periods. The
principal categories of merchandise include the following:
3
Furniture - This category includes both wood and metal ready-to-assemble
furniture focusing on the bedroom, living room, dining room and home office
as well as occasional pieces. Furniture represented 43%, 45% and 45% of
total sales in Fiscal 2001, 2000 and 1999, respectively. Bombay's
furniture is manufactured by contract manufacturers located principally in
China, Taiwan, Malaysia, Mexico, the Philippines, Indonesia, India and the
United States.
Accessories - This is the broadest category and represented 43%, 41% and
40% of total sales in Fiscal 2001, 2000 and 1999, respectively. This
category includes both functional and decorative accessories including
lamps, jewelry and memorabilia boxes, baskets, candles and scents, crystal,
ceramics, frames and desktop, textiles, floral and holiday. The items are
imported from over 15 countries in Asia, North America and Europe.
Wall Decor - This category includes prints, mirrors and wall accessories
which represented 14%, 14% and 15% of total sales in Fiscal 2001, 2000 and
1999, respectively. This merchandise is sourced primarily from the United
States, various countries in Asia, Canada and Italy.
Merchandise is manufactured to Company specifications through a network of
contract manufacturers located principally in Asia and North America.
Approximately 80% of production needs are provided from foreign countries.
Branch offices located in Taiwan, Malaysia, Indonesia, China and Vietnam
and agents in various countries locate prospective vendors, coordinate
production requirements with manufacturers and provide technical expertise
and quality control.
Bombay is not dependent on any particular supplier and has had long
standing relationships with many of its vendors. Approximately 70% of the
Company's merchandise requirements are supplied by 35 contract
manufacturers in seven countries. No long-term production agreements are
in place; however, agreements are in place with major manufacturers that
prohibit the production of proprietary product for other parties.
Additional manufacturing capacity and alternative sources, both domestic
and international, continue to be added through new vendors and plant
expansions by existing vendors. The Company does business with its vendors
principally in United States currency and has not historically experienced
any material difficulties as a result of any foreign political, economic or
social instabilities.
Usually it takes several months from the time a merchandise order is placed
with a manufacturer until the goods are received at centralized
distribution centers in the United States and Canada. Depending on the
category, the source country and whether an item is new or a reordered
product, lead times can vary from as little as two months to as much as
twelve months from order placement until arrival at the stores. Order
times are slightly less for North American manufacturers principally due to
shorter shipping times. Lead times may also be impacted by seasonality
factors especially in months when manufacturers are producing at or near
peak capacity to meet seasonal demands. As a result, Bombay strives to
maintain an adequate inventory position in its distribution centers to
ensure a sufficient supply of products to its customers.
Store inventories are replenished from regional distribution centers
located in Fort Worth, Texas; Atlanta, Georgia; Gilbertsville,
Pennsylvania; Mira Loma, California and Mississaugua, Ontario. The
distribution centers are strategically located and provide the capability
to replenish the majority of store inventories within 48 hours of when the
order is processed. The Company uses dedicated trucks and less-than-
truckload carriers to transport its product from its distribution centers
to the stores.
Channels of Distribution
Stores and Real Estate
The Company locates its stores primarily in regional shopping malls,
certain secondary malls and selected urban and suburban locations that
satisfy its demographic and financial return criteria. Significant
attention is given to visual merchandising opportunities to maximize the
ability to display product in the most attractive setting.
In selecting store locations, the Company's real estate department conducts
extensive analyses of potential store sites and bases its selection on the
performance of other specialty retail tenants, the size of the market and
the demographics of the surrounding area. In evaluating a store location,
placement of the store relative to retail traffic patterns and customer
base of other retailers in the nearby vicinity are important
considerations.
During Fiscal 2000, the Company, working closely with Thompson Associates,
the largest, independent full-service retail-consulting firm in the United
States specializing in store location and market research, developed a
comprehensive real estate strategy. Based upon the analysis, the Company
believes that it has the opportunity to increase its total square footage
through both an increase in store counts and through larger stores. The
strategy incorporates an off-mall opportunity that will complement the
current real estate portfolio. Currently 83% of the stores are mall based,
down from approximately 90% last year, reflecting the Company's current
real estate strategy. The Company has opened stores in, and will continue
4
to seek alternative locations including street and upscale, open air
lifestyle centers. The Company will seek out the most potentially
profitable locations for the opening of new stores regardless of the venue.
The Company is currently targeting store sizes in the 4,000 to 5,000 square
foot range. In addition to building new stores, the Company will continue
to selectively convert its existing regular stores which average
approximately 1,800 square feet to the larger format. As of February 2,
2002, there were 59 regular stores left in the chain.
During Fiscal 2001, 2000 and 1999, the Company opened 32 new stores, 10 new
stores and 19 new stores, respectively. An additional 18 stores were
converted to the larger format in Fiscal 2001, 20 in Fiscal 2000 and 11 in
Fiscal 1999. The store expansion plan includes approximately 25 new store
openings and four to six conversions in Fiscal 2002.
During Fiscal 2001, 2000 and 1999, the Company's store openings included
twelve, four and eight outlet stores, respectively, which were typically
located in traditional outlet malls. At February 2, 2002, the store chain
included a total of 36 outlet stores. The Company views the use of outlets
as an opportunity to increase sales to a different customer base, to assist
in the orderly clearance of merchandise and to further capitalize on its
strength in designing and sourcing proprietary product. Of the estimated
25 stores planned for Fiscal 2002, Bombay expects to open approximately
seven outlet locations.
The Company's average cost of leasehold improvements, furniture, fixtures
and machinery for stores (excluding outlets) opened or converted in Fiscal
2001, net of landlord allowances, was approximately $220,000 per store or
$55 per square foot. In addition, other investments which consist
primarily of inventory in the store location, averaged approximately
$115,000 per large format store. The average cost of leasehold
improvements, furniture, fixtures and machinery for outlet stores opened in
Fiscal 2001, net of landlord allowances, was approximately $95,000 per
store while the inventory investment averaged approximately $80,000 per
store. Bombay stores typically achieve store level operating profitability
during their first year of operations.
As of February 2, 2002, 365 stores were operating in 41 states in the
United States and 54 stores were operating in nine provinces in Canada as
illustrated in the map below.
{The paper version of the Annual Report on Form 10-K contains herein a map
of the United States and Canada with states and provinces outlines, labeled
with the appropriate number of Bombay stores located in each, as follows:
UNITED STATES:
AL - 6 LA - 7 OH - 14
AR - 1 MA - 10 OK - 4
AZ - 6 MD - 11 OR - 3
CA - 49 MI - 8 PA - 15
CO - 6 MN - 5 RI - 1
CT - 7 MO - 5 SC - 5
DE - 2 MS - 2 TN - 11
FL - 35 NC - 11 TX - 29
GA - 17 NE - 1 UT - 4
ID - 1 NH - 3 VA - 14
IL - 14 NJ - 17 WA - 4
IN - 5 NM - 1 WI - 2
KS - 4 NV - 3 WV - 1
KY - 3 NY - 18
CANADA:
AB - 3 NB - 1 ON - 27
BC - 8 NF - 1 PQ - 9
MB - 1 NS - 3 SK - 1 }
5
Internet
The Company has maintained a conservative posture on its investment in the
internet. The current site utilizes IBM's net.commerce software running on
an AS400 platform and is designed to be scaleable in order to respond to
the growing e-commerce demand. Typically, the Company offers up to 1,200
SKUs for sale on its website each season. Business to consumer revenues
over the internet were approximately $4.5 million in Fiscal 2001 and are
expected to grow to approximately $8 million in Fiscal 2002. The Company
is also developing supporting websites to support its international growth
and wholesale distribution business.
Wholesale
During Fiscal 2000, the Company created a new wholesale division, Bailey
Street Trading Company. The brand is separate from Bombay and allows the
Company to capitalize on its strengths in product design and sourcing. The
initial product offerings are focused on furniture but may be expanded to
include wall decor and accessories in the future. Bailey Street Trading
Company distributes its merchandise to specialty gift stores, furniture
stores, department stores, customer-direct merchants and mass merchandisers
through a network of independent regional sales representatives. To date,
the operations and financial results of Bailey Street Trading Company have
been immaterial to the Company as a whole.
International
International expansion has progressed with licensed international stores
currently operating in the Dominican Republic, Puerto Rico and Kuwait.
There are commitments with the Company's current international partners to
open three additional stores in Fiscal 2002 including one each in the
Dominican Republic, Saudi Arabia and Turkey. The Company plans to continue
expansion abroad through licensing and distribution agreements with local
partners in markets identified as appropriate for the Bombay brand,
limiting the Company's risk and capital requirements.
Intangibles
The Company owns a number of the trademarks and service marks used in its
business, including federal registrations for the marks "The Bombay
Company" and "Bombay", and the palm tree logo. The Company's trademarks
are also registered or are the subject of pending applications in a number
of foreign countries. Each registration is renewable indefinitely if the
mark is still in use at the time of renewal. Appropriate applications are
on file for the new wholesale business.
The Company believes that its trademarks have significant value and that
these marks enhance the Bombay brand and are instrumental in the Company's
ability to create, sustain demand for and market its product. From time to
time, the Company discovers products in the marketplace that are
counterfeit reproductions of the Company's product or that otherwise
infringe upon trademark or tradedress rights held by the Company. The
Company has and will continue to vigorously defend it rights under the
marks as necessary.
Seasonality
Operating results are subject to seasonal variation. Historically, the
largest proportion of sales and substantially all of the income occurs in
the fiscal quarter that includes the Christmas season. Inventory balances
are generally built to their highest levels prior to the Christmas selling
season. Inventories decline and cash balances increase significantly in
December due to the Christmas business.
Competition
The home furnishings and decorative accessories market is highly
fragmented. The Company faces competition from furniture stores,
department stores and other specialty retailers. The Company believes that
it competes primarily on the basis of selection, quality and value of
merchandise.
6
Employees
The Company has approximately 5,000 employees, which include approximately
3,000 part-time employees, and is not a party to any union contract.
Employee relations are considered to be good.
Risks and Uncertainties
All statements in this Annual Report on Form 10-K, including those
incorporated herein by reference, that do not reflect historical
information are forward-looking statements made in reliance upon the "safe
harbor" provisions 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 Company to be materially different from
any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, but are not limited
to, the following: the impact on consumer spending generally, and on the
Company, in particular, in light of the events of September 11, 2001;
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 and regional weather conditions.
(d) Financial Information About Geographic Areas
The Company operates in one industry segment, specialty retailing.
Substantially all revenues result from the sale of home furnishings and
accessories through retail stores in the United States and Canada. The
Company's wholesale operations have been immaterial to the operations and
financial results of the Company to date. Long-lived assets include all
non-current assets except deferred taxes.
The following table shows net revenues and long-lived assets by geographic
area (in thousands):
Year Ended
February 2 February 3 January 29
2002 2001 2000
Net revenues:
United States $388,789 $375,275 $351,225
Canada 48,668 48,184 41,353
Total $437,457 $423,459 $392,578
Long-lived assets:
United States $ 51,367 $ 53,448 $ 51,992
Canada 4,226 4,006 4,010
Total $ 55,593 $ 57,454 $ 56,002
7
ITEM 2. Properties.
The Company owns its United States headquarters office complex of which it
occupies approximately 85,000 square feet. The Company leases stores,
distribution centers, regional and Canadian offices under numerous
operating leases. Owned and leased facilities are summarized following:
Square Feet
Description Owned Leased
Stores:
Outlet -- 151,000
Regular -- 107,000
Large format -- 1,244,000
Distribution
centers:
Mira Loma, CA -- 156,000
McDonnaugh,GA -- 254,000
Gilbertsville,PA -- 200,000
Fort Worth, TX -- 250,000
Mississauga,ON CAN -- 114,000
Offices and storage:
Mississauga,ON,CAN -- 9,000
Regional sites -- 2,000
Fort Worth, TX 121,000 35,000
121,000 2,522,000
Leases generally have 10 year terms, expiring between 2002 and 2013. The
store leases are generally based upon a minimum rental plus a percentage of
the store sales in excess of specified levels. Store lease terms generally
require additional payments covering taxes, common area charges and certain
other costs. Rental expense for Fiscal 2001, Fiscal 2000 and Fiscal 1999
totaled $47,366,000, $45,137,000 and $42,991,000, respectively.
The minimum rental commitments for future fiscal years are as follows (in
thousands):
Fiscal
2002 $44,422
2003 39,535
2004 28,819
2005 21,400
2006 19,406
Thereafter 63,196
$216,778
Bombay believes that the insurance coverage maintained on all properties is
adequate.
ITEM 3. Legal Proceedings.
The Company has certain contingent liabilities resulting from litigation
and claims incident to the ordinary course of business. Management believes
that the probable resolution of such contingencies will not materially
affect the financial position or results of operations of the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders during the
fourth quarter of Fiscal 2001.
8
PART II
ITEM 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
(a) The principal market for the registrant's common stock is the New York
Stock Exchange. The high and low trading prices, quoted by fiscal quarter,
follow:
Year ended Year ended
February 2, 2002 High Low February 3, 2001 High Low
First quarter $3.29 $2.26 First quarter $4.44 $2.63
Second quarter 3.65 2.50 Second quarter 4.13 2.56
Third quarter 3.13 2.01 Third quarter 3.06 2.25
Fourth quarter 2.88 2.10 Fourth quarter 3.06 1.50
(b) The approximate number of record holders of common stock on March 31,
2002 was 2,000.
(c) The Company has bank credit agreements with restrictions related to
payment of dividends. The Company has not paid dividends the past two
years and will continue to utilize available funds primarily for the
expansion of its retail stores and operating purposes.
9
ITEM 6. Selected Financial Data.
The following selected financial data has been derived from the
consolidated financial statements of The Bombay Company, Inc. The data set
forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the
Company's consolidated financial statements and notes thereto.
Year Ended
Financial Data: February 2 February 3 January 29 January 30 January 31
2002 2001 2000 1999 1998
Net revenues $437,457 $423,459 $392,578 $358,565 $333,645
Net revenues increase
(decrease) 3% 8% 9% 7% (1)%
Same store sales increase
(decrease) (2)% 5% 5% 6% -%
Net income* $ 3,724 $ 8,645 $ 7,342 $ 4,010 $ 4,450
Basic and diluted earnings
per share .11 .26 .20 .11 .12
Total assets* 206,889 206,651 201,872 193,519 195,462
Stockholders' equity* 158,707 154,727 156,248 156,143 158,238
Return on average assets 1.8% 4.2% 3.7% 2.1% 2.3%
Return on average equity 2.4% 5.6% 4.7% 2.6% 2.9%
Operating Data:
Average sales per store $1,012 $1,012 $926 $863 $788
open for full fiscal year*
Average sales per square foot $288 $306 $288 $278 $263
Number of stores:
Beginning of year 408 415 412 415 427
Opened 32 10 19 15 2
Closed 21 17 16 18 14
End of year 419 408 415 412 415
Store composition:
Outlet 36 24 20 13 8
Regular 59 93 125 148 179
Large format 324 291 270 251 228
Retail square footage:*
Outet 151 92 72 50 30
Regular 107 163 216 253 303
Large format 1,244 1,116 1,049 989 910
Total 1,502 1,371 1,337 1,292 1,243
The Company has paid no cash dividends during the periods presented.
* In thousands.
10
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General
The Bombay Company, Inc. ("Company" or "Bombay") designs, sources and
markets a unique line of home accessories, wall decor and furniture through
419 retail stores in 42 states in the United States and nine Canadian
provinces, through specialty catalogs and over the Internet in the U.S. and
internationally. Merchandise is manufactured to Company specification
through a network of contract manufacturers located principally in Asia and
North America.
In addition to its primary retail operations, the Company has several other
initiatives underway. Bailey Street Trading Company ("Bailey Street")
represents the Company's wholesale operations, begun in Fiscal 2000.
Bailey Street reached the $2 million sales mark in Fiscal 2001 and is
proving to be a viable, low-risk growth vehicle for the Company. Sales are
projected at $5 million for 2002 and modest, positive earnings per share
contributions are expected as early as the current year.
International expansion has progressed with licensed international stores
currently operating in the Dominican Republic, Puerto Rico and Kuwait.
There are commitments with the Company's current international partners to
open three additional stores in Fiscal 2002 including one each in the
Dominican Republic, Saudi Arabia and Turkey. The Company plans to continue
expansion of the Bombay brand abroad through licensing and distribution
agreements with local partners in various markets, limiting the Company's
risk by initially entering smaller, opportunistic markets with growth
potential.
Finally, in the third quarter of Fiscal 2001, the Company launched Bombay
KIDS ("KIDS"), its new line of children's furniture, textile and accessory
collections, with initial offerings exclusively through separate catalog
and Internet channels. During Fiscal 2002, KIDS will be tested in several
retail stores.
The largest percentage of the Company's sales and operating income is
realized in the fiscal quarter that includes December (Christmas season).
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.
The Company has a retail (52-53 week) fiscal year which ends on the
Saturday nearest January 31. Fiscal 2001 and Fiscal 1999 represent 52 week
periods while Fiscal 2000 included 53 weeks.
Special Note Regarding Forward-Looking Statements
Certain statements in this Annual Report to Shareholders under
"Management's Discussion and Analysis" 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 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:
the impact
on consumer spending generally, and on the Company, in particular, in light
of the events of September 11, 2001; downward pressure in retail due to
continuing economic pessimism; 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 and regional weather conditions.
11
Net Revenues
Net revenues consist of sales to retail customers and wholesale sales
through Bailey Street and to our international licensees as well as
shipping fees. Shipping fees reflect revenue from customers for delivery of
merchandise. Wholesale sales are immaterial for all periods, representing
less than 1% of total revenue and as such are not separately reported.
(In millions)
Fiscal 2001 Fiscal 2000 Fiscal 1999
Sales $434.7 $421.5 $390.9
Shipping 2.8 2.0 1.7
Total $437.5 $423.5 $392.6
Fiscal 2001
Net revenues increased $14.0 million, or 3%, to $437.5 million, compared
to $423.5 million in Fiscal 2000 primarily due to new store openings.
During the year, the Company opened 32 new stores, including 12 outlets,
and 18 regular stores were converted to the large store format. These
increases were partially offset by the closure of 21 stores. Same store
sales (stores in existence for one year or more) declined 2% for the year.
The lack of a 53rd week during Fiscal 2001 adversely impacted sales
comparisons by approximately 2%. At the end of Fiscal 2001, the Company
had 324 large stores, 59 regular stores and 36 outlets resulting in a 10%
increase in retail square footage.
Our customer's resistance to big-ticket purchases during the year resulted
in a shift in the overall product mix. Furniture sales were 43% of the
total during Fiscal 2001 compared to 45% in Fiscal 2000. Accessories
represented 43% in the current year compared to 41% last year, while wall
decor (principally prints, mirrors and sconces) accounted for 14% in both
years. Total transactions for the year increased 2% while the average
ticket remained constant at $79. The growth in the accessories business
resulted in an increase in the average number of items per transaction year
over year, offsetting the impact of shifts in the product mix.
All regions of the U.S. and Canada reported low single-digit same store
sales declines for the year. Outlet stores continued to perform well during
Fiscal 2001, reporting low single-digit same store sales gains.
Fiscal 2000
Net revenues increased $30.9 million, or 8%, to $423.5 million, compared to
$392.6 million in Fiscal 1999. Sales increases were attributable to a 5%
increase in same store sales. A 53rd week in the Fiscal 2000 calendar added
less than 2% to the total sales increase. Sales increases were also
realized with the opening of 10 new stores during the year and the
conversion of another 20 regular stores to the larger store format. These
increases were partially offset by the closure of 17 stores which were
either under-performing or at the end of their lease lives. On a net basis,
the number of stores went from 415 at the end of Fiscal 1999 to 408 at the
end of Fiscal 2000, including 291 large stores, 93 regular stores and 24
outlet stores, while total retail square footage increased approximately
2.5%.
Sales growth was fairly consistent across all categories with the product
mix remaining virtually unchanged. Sales in Fiscal 2000 consisted of 45%
furniture, 41% accessories and 14% wall decor. In Fiscal 1999 the product
mix was 45% furniture, 40% accessories and 15% wall decor. The number of
transactions increased by 9% and the average ticket remained virtually
unchanged at $79.
Same store sales gains were strongest in the Company's Canadian subsidiary,
with other strong performances in the western and northeastern portions of
the U.S. All regions reported positive or flat same store sales. Outlets
also performed well, driven by the continued infusion of outlet only
merchandise.
12
Cost of Sales, Buying and Store Occupancy Costs
(In millions)
Fiscal 2001 Fiscal 2000 Fiscal 1999
Cost of sales, buying
and occupancy costs $309.6 $291.7 $273.5
Shipping 3.9 2.3 2.0
Total $313.5 $294.0 $275.5
Fiscal 2001
Cost of sales, including buying and store occupancy costs, for Fiscal 2001
was $313.5 million or 71.7% of revenues.
As a percentage of revenues, these costs increased from 69.4% of revenues
in Fiscal 2000. Product margins declined 130
basis points as a result of the more promotionally driven retail
environment. Same stores sales declines which contributed to a lower sales
per square foot resulted in negative leverage of the buying and occupancy
costs. These costs were 20.4% of revenues, an increase of 90 basis points
compared to the prior year. Buying and occupancy costs included an
impairment charge of $715,000 to write down the fixed assets related to
eleven unprofitable stores.
Fiscal 2000
Cost of sales, including buying and store occupancy costs, for Fiscal 2000
was $294.0 million or 69.4% of revenues. As a percentage of revenues, these
costs decreased from 70.2% of revenues in Fiscal 1999. Product margins
improved 20 basis points from the prior year due to an improved product mix
and good in-stock positions of key merchandise, more than offsetting higher
distribution center and domestic freight costs. Buying and occupancy costs
declined 60 basis points to 19.5% of revenues while increasing $3.4
million. The higher dollar costs were primarily driven by investments in
new stores and technology. The improvement in buying and occupancy costs as
a percentage of revenues is due to the relatively fixed nature of these
costs measured against a higher revenue base.
Selling, General and Administrative Expenses
Fiscal 2001
Selling, general and administrative expenses were $117.6 million compared
to $115.6 million in Fiscal 2000. Although the dollars increased $2.0
million or 1.8%, as a percentage of revenues, selling, general and
administrative costs declined from 27.3% in Fiscal 2000 to 26.9% in Fiscal
2001. The 40 basis point decline is the result of strong controls over
expenses throughout the year.
Fiscal 2000
Selling, general and administrative expenses were $115.6 million, an
increase of $9.6 million or 9%, compared to $106.0 million in Fiscal 1999.
The largest component of the dollar increase was higher payroll and related
costs. However, as a percentage of revenues these costs remained relatively
constant. The Company's investments in infrastructure and technology also
contributed to higher selling, general and administrative expenses with
increased depreciation, amortization and related costs. As a percentage of
revenues, selling, general and administrative expenses increased from 27.0%
in Fiscal 1999 to 27.3% in Fiscal 2000.
13
Interest
Fiscal 2001
The Company had interest income of $248,000 and interest expense of
$566,000, compared to interest income of $967,000 and interest expense of
$424,000 in Fiscal 2000. Changes in interest amounts resulted from lower
average cash balances and greater utilization of credit facilities due to
the Company's lower operating profits, higher average inventory levels and
capital expenditures.
Fiscal 2000
The Company had interest income of $967,000 and interest expense of
$424,000, compared to interest income of $1.1 million and interest expense
of $59,000 in Fiscal 1999. The changes in these amounts are due to lower
average cash balances and greater utilization of seasonal borrowings to
support the Company's investments in store expansion, infrastructure and
technology, the stock repurchase program and higher inventory levels.
Income Taxes
The Company provided income taxes of $2.3 million, $5.8 million and $4.8
million in Fiscal 2001, Fiscal 2000 and Fiscal 1999, respectively. The
effective rates were 38.6%, 40.0% and 39.6% in the respective periods.
Fluctuations in the effective rate are primarily related to foreign taxes
which change in accordance with earnings in the Canadian subsidiary and in
state tax expenses which have not changed proportionately to income before
income taxes.
Liquidity and Capital Resources
The primary sources of liquidity and capital resources are cash flows from
operations and a line of credit with banks.
The Company has an unsecured, revolving credit agreement with a group of
banks, with an aggregate commitment of up to $50.0 million for working
capital and letter of credit purposes. The bank commitment is limited to
45% of eligible inventory. At February 2, 2002, the bank commitment was
$40.2 million, and $32.5 million was available for borrowings or additional
letters of credit. The credit facility expires June 5, 2002. The Company
expects to be able to renew or replace its current facility under similar
or more favorable terms upon expiration.
Fiscal 2001
At February 2, 2002, cash and short-term investments were $38.4 million,
$16.3 million higher than at February 3, 2001. The primary sources of cash
were net income, including non-cash depreciation and amortization expense,
and decreases in inventory levels. These sources were partially offset by
capital expenditures for store construction and routine equipment
purchases.
At February 2, 2002, inventory levels were $15.1 million lower than at the
previous year end reflecting the Company's conservative balance sheet
management during the second half of the year in light of economic
uncertainties and the events of September 11th. The lower inventory levels
resulted in less clearance product as of the end of the year and are
expected to contribute to improved gross margins and inventory turns for
Fiscal 2002. Capital expenditures totaled $14.1 million and included the
costs of 32 new stores and the conversion of 18 regular stores to the
larger format, as well as continued investments in software and equipment.
The capital expenditures program for Fiscal 2002 is planned at
approximately $12 million and includes approximately 25 store openings,
including 7 outlets and 6 KIDS stores. Additionally, approximately 4 to 6
stores are expected to be converted to the larger format. Generally, a new
or converted store is profitable in its first full year of operations.
The Company's development of its wholesale business and international
opportunities are expected to have modest capital requirements during
Fiscal 2002. The Company anticipates funding the growth of these
initiatives through working capital.
In connection with continuing operations, the Company has various
contractual obligations and commercial commitments requiring payment in
future periods, summarized in the table below.
The Company did not incur any direct losses or significant expenses in
connection with the events of September 11, 2001. However, as a result of
those events and the surrounding economic uncertainties, the Company took a
conservative approach to managing its balance sheet. Inventory levels were
more tightly managed and less new product was introduced during January and
February 2002, which may have adversely impacted sales. After the first
quarter of Fiscal 2002, inventory receipts are expected to return to more
normalized levels and the Company expects the negative trend in same store
sales to reverse.
14
The Company believes that its current cash position, cash flows from
operations and credit line facilities will be sufficient to fund its
current operations and capital expenditures program.
(In thousands)
Payments Due by Period
Less than 1-3 4-5 After 5
Total 1 Year Years Years Years
Contractual Obligations
Real estate operating leases $216,778 $44,422 $89,754 $37,718 $44,884
Unconditional purchase orders 61,822 61,822 - - -
Equipment operating leases 2,070 632 1,438 - -
Employment contracts 1,581 1,581 - - -
Other contractual obligations 1,135 912 223 - -
Total contractual cash
obligations $283,386 $109,369 $91,415 $37,718 $44,884
Commercial Commitments
Import letters of credit $6,520 $6,520 $ - $ - $ -
Standby letters of credit 1,206 1,206 - - -
Guarantees of travel cards 88 88 - - -
Total commercial commitments $7,814 $7,814 $ - $ - $ -
Fiscal 2000
As of February 3, 2001, cash and short-term investments were $22.2 million,
a decrease of $17.0 million from January 29, 2000. The primary uses of cash
were inventory purchases, new store construction and information technology
upgrades, as well as purchases of treasury stock. These uses were partially
offset by net income, including non-cash depreciation and amortization
expense, and by increases in payables.
At February 3, 2001, inventory levels were $14.3 million higher than at
January 29, 2000, an increase of 16% compared to an 8% growth in sales.
Several factors contributed to this increase. Spring product arrived
earlier than in the previous year in order to ensure a good in-stock
position for the introduction of the catalog in early March.
Additionally, the timing of Chinese New Year shifted from February to
January resulting in more of this season's inventory requirement being
shipped just prior to the Company's fiscal year end. Finally, the inventory
mix changed with a larger investment in bedroom furniture and a refined
furniture assortment, which resulted in higher average price per unit.
Capital expenditures totaled $16.7 million and included the costs of 10 new
stores and the conversion of 20 regular stores to the larger format, as
well as routine purchases of machinery and equipment.
During Fiscal 2000, the Company spent $10.3 million under its stock
repurchase program to acquire approximately 3.0 million shares of the
Company's common stock.
Critical Accounting Policies
In the course of preparing the financial statements, management makes
certain judgments relative to accounting policies that are appropriate in
the circumstances and the application of those policies. The following
policies are those deemed to be most critical.
Inventory Valuation Policy
Inventories are valued at the lower of cost or market, cost being
determined based upon the weighted average inventory method. Cost is
calculated based upon the actual landed cost of an item at the time it is
received in the warehouse based upon actual vendor invoices or estimates of
costs for which an invoice is not present or for which an allocation of
shared costs is required.
In addition, the Company includes the cost of warehousing and transporting
product to the stores in its costs.
The Company regularly evaluates its compliance with the lower of cost or
market principle. Items are evaluated by SKU (stock keeping unit) and to
the extent that the cost of the item exceeds the current selling price,
provision is made to reduce the carrying cost of the item. Additionally,
the Company reviews the aging of its inventory by SKU. The carrying cost of
the item is reduced based upon certain age criteria and product category.
Since the determination of carrying value of inventory involves both
estimation and judgment of cost and market value, differences in these
estimates could result in valuations that vary from the recorded asset.
15
Each month, the Company records an allowance for shrinkage to provide for
the cost of lost or stolen inventory. The amount of the allowance is
determined based upon the historical shrinkage results and is adjusted at
least annually to reflect current circumstances. Inventory is physically
counted at all locations at least once each year, at which time actual
results are reflected in the financial statements. Physical counts were
taken at all stores and the distribution centers during January 2002.
Impairment of Long-Lived Assets
Long-lived assets are reviewed at least annually and whenever events or
changes in circumstances indicate that the carrying value of the asset may
not be recoverable. This review includes the evaluation of individual under
- -performing retail stores and assessing the recoverability of the carrying
value of the fixed assets related to the store. Future cash flows are
projected for the remaining lease life considering such factors as future
sales levels, gross margins, changes in rent and other expenses as well as
the overall operating environment specific to that store. If the future
undiscounted cash flows are less than the carrying value of the assets, a
charge is recorded to write down the cost of the assets. Since the
projection of future cash flows involves judgment and estimates,
differences in circumstances or estimates could produce different results.
During Fiscal 2002, the Company will adopt the provisions of Statement of
Accounting Standards No.144, Accounting for Impairment or Disposal of Long-
Lived Assets ("FAS 144"). FAS 144 modifies previous guidance on the
impairment of long-lived assets. Among other provisions, it permits the use
of a probability-weighted estimation approach in evaluating future cash
flows for a group of assets. The impact of the adoption of FAS 144 is not
expected to have a material impact on the Company's consolidated financial
position or results of operations.
Deferred Taxes
The Company currently has recorded $9.7 million of deferred tax assets
representing the difference between the timing of deductions taken for
financial statement purposes and for tax purposes. Underlying the
assumption that the benefit of those assets will be recoverable in some
future period is the concept that the Company will have future taxable
income. If future conditions indicate that the benefit of the deferred tax
assets will not be fully realized, a valuation allowance will be recorded
to reduce the assets to their estimated realizable value.
Insurance
The Company is self-insured with respect to medical and dental insurance
coverage offered to its eligible employees, up to a maximum of $125,000 per
claim. Above that amount, medical insurance coverage is in place. In
connection with the self-insured portion, the Company maintains a liability
for claims that are in the process of being paid and those that have been
incurred but not yet reported to the Company's insurance carrier. The
amount of the liability is estimated based upon historical claims
experience and upon information provided by the Company's independent
benefits broker regarding other similar insurance programs. At February 2,
2002, the balance of the medical and dental liability was $1.4 million.
Beginning in Fiscal 2001, the Company also maintains workers' compensation
insurance coverage with a deductible of $100,000 per claim. At February 2,
2002, the Company has a liability of $644,000 representing the estimated
amount that will have to be paid in future periods related to the
settlement of claims under the insurance policy. The amount of the
liability reflects expected remaining workers' compensation claims based
upon historical claims experience and other information obtained by the
Company, including projections made by the underwriters of the Company's
insurance carrier. As these claims are paid, the liability will be reduced.
Furthermore, the liability will be adjusted if circumstances change or if
information becomes available that would indicate that the future payments
would be different than what was previously estimated. Prior to Fiscal
2001, the Company's workers' compensation insurance was not subject to a
deductible.
Since the amounts recorded for insurance liabilities are based upon various
estimates, actual future requirements could vary from the recorded
liabilities.
16
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.
As of February 2, 2002, the Company had no market risk sensitive
instruments.
ITEM 8. Financial Statements and Supplementary Data.
The index to the consolidated financial statements is found on page 20.
The Company's consolidated financial statements and notes to the
consolidated financial statements follow the index.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
There have been no changes in or disagreements with accountants on
accounting or financial disclosures.
17
PART III
ITEM 10. Directors and Executive Officers of the Registrant.
The information required by this item appears under the captions "Election
of Directors", "Executive Officers of the Company" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Definitive Proxy
Statement of The Bombay Company, Inc. relating to the Company's Annual
Meeting of Shareholders, which information is incorporated herein by
reference.
ITEM 11. Executive Compensation.
The information required by this item appears under the captions "Executive
Compensation" and "Compensation of Directors" in the Definitive Proxy
Statement of The Bombay Company, Inc. relating to the Company's Annual
Meeting of Shareholders, which is incorporated herein by reference.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item appears under the caption "Security
Ownership" and in the Definitive Proxy Statement of The Bombay Company,
Inc. relating to the Company's Annual Meeting of Shareholders, which
information is incorporated herein by reference.
ITEM 13. Certain Relationships and Related Transactions.
The information required by this item appears under the caption "Certain
Transactions" in the Definitive Proxy Statement of The Bombay Company, Inc.
relating to the Company's Annual Meeting of Shareholders, which information
is incorporated herein by reference.
18
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as a part of this Annual Report for
The Bombay Company, Inc. and its subsidiaries:
(1) Financial Statements:
Report of Independent Accountants
Consolidated Statements of Income for the years ended February 2,
2002, February 3, 2001 and January 29, 2000
Consolidated Balance Sheets at February 2, 2002 and February 3,
2001
Consolidated Statements of Cash Flows for the years ended February
2, 2002, February 3, 2001 and January 29, 2000
Consolidated Statements of Stockholders' Equity for the years
ended February 2, 2002, February 3, 2001, and January 29, 2000
Notes to Consolidated Financial Statements
(2) Financial statement schedules not included in this Form 10-K
Annual Report have been omitted because they are not applicable or
the required information is shown in the financial statements or notes
thereto.
(3) Exhibits:
A list of exhibits required to be filed as part of this report is
set forth in the Index to Exhibits, which immediately precedes such
exhibits, and is incorporated herein by reference.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended February
2, 2002.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
Date: April 17, 2002
/s/ CARMIE MEHRLANDER
Carmie Mehrlander
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Position Date
Director
Barbara Bass
/s/ JOHN H. Director April 15, 2002
COSTELLO
John H. Costello
/s/ GLENN E. Director April 16, 2002
HEMMERLE
Glenn E. Hemmerle
/s/ JAMES A. Director April 15, 2002
MARCUM
James A. Marcum
/s/ CARMIE President, Chief April 17, 2002
MEHRLANDER Executive Officer
Carmie Mehrlander and Director
Director
Julie L. Reinganum
Director
Bruce R. Smith
/s/ NIGEL TRAVIS Director April 17, 2002
Nigel Travis
/s/ ELAINE D. Sr. Vice President, April 17, 2002
CROWLEY Chief Financial
Elaine D. Crowley Officer and Treasurer
20
Index to Financial Statements and Supplementary Data
Page No.
Report of Independent Accountants 21
Consolidated Statements of Income for the Years Ended
February 2, 2002,February 3, 2001 and January 29, 2000 22
Consolidated Balance Sheets at February 2, 2002 and
February 3, 2001 23
Consolidated Statements of Cash Flows for the Years Ended
February 2, 2002,February 3, 2001 and January 29, 2000 24
Consolidated Statements of Stockholders' Equity for the
Years Ended February 2, 2002, February 3, 2001
and January 29, 2000 25
Notes to Consolidated Financial Statements 26-34
Unaudited Quarterly Financial Data 35
21
Report of Independent Accountants
To the Board of Directors and Stockholders of
The Bombay Company, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index on page 20 present fairly, in all material respects, the
financial position of The Bombay Company, Inc. and its subsidiaries at
February 2, 2002 and February 3, 2001, and the results of their operations
and their cash flows for each of the three years in the period ended
February 2, 2002, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States of America which require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
March 12, 2002
Fort Worth, Texas
22
Consolidated Statements of Income
The Bombay Company, Inc. and Subsidiaries
(In thousands, except per share amounts)
Year Ended
February 2 February 3 January29
2002 2001 2000
Net revenues $437,457 $423,459 $392,578
Costs and expenses:
Cost of sales, buying and store
occupancy costs 313,484 294,043 275,496
Selling, general and administrative
expenses 117,589 115,559 105,958
Interest expense (income), net 318 (543) (1,029)
431,391 409,059 380,425
Income before income taxes 6,066 14,400 12,153
Provision for income taxes 2,342 5,755 4,811
Net income $3,724 $8,645 $7,342
Basic earnings per share $.11 $.26 $.20
Diluted earnings per share $.11 $.26 $.20
Average common shares outstanding 32,967 33,262 36,408
Average common shares outstanding and
dilutive potential common shares 32,992 33,292 36,672
The accompanying notes are an integral part of these consolidated financial
statements.
23
Consolidated Balance Sheets
The Bombay Company, Inc. and Subsidiaries
(In thousands, except shares)
February 2 February 3
2002 2001
Assets
Current assets:
Cash and cash equivalents (short-term investments
of $31,437 and $15,244,respectively) $38,415 $22,157
Inventories, at lower of cost or market 89,798 104,914
Other current assets 16,893 15,380
Total current assets 145,106 142,451
Property and equipment, at cost:
Land 892 990
Building 5,198 5,198
Leasehold improvements 80,291 76,991
Furniture and equipment 30,622 28,844
117,003 112,023
Accumulated depreciation (68,290) (63,517)
Net property and equipment 48,713 48,506
Deferred taxes and other assets 12,640 15,237
Goodwill, less amortization of $604 and $577,
respectively 430 457
Total assets $206,889 $206,651
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $27,281 $28,445
Income taxes payable 3,220 5,969
Accrued payroll and bonuses 5,015 5,649
Gift certificates redeemable 5,724 4,765
Total current liabilities 41,240 44,828
Accrued rent and other liabilities 6,942 7,096
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
Additional paid-in capital 75,267 75,735
Retained earnings 69,144 65,420
Accumulated other comprehensive income (loss) (1,776) (1,267)
Common shares in treasury, at cost, 5,112,696
and 5,455,919 shares, respectively (20,861) (22,320)
Stock purchase loans and accrued interest (950) (991)
Deferred compensation (267) -
Total stockholders' equity 158,707 154,727
Commitments and contingencies (Note 5)
Total liabilities and stockholders' equity $206,889 $206,651
The accompanying notes are an integral part of these consolidated financial
statements.
24
Consolidated Statements of Cash Flows
The Bombay Company, Inc. and Subsidiaries
(In thousands)
Year Ended
February 2 February 3 January 29
2002 2001 2000
Cash flows from operating activities:
Net income $3,724 $8,645 $7,342
Adjustments to reconcile net income
to net cash from operations:
Depreciation 13,000 11,748 10,706
Amortization 3,472 3,003 1,955
Restricted stock compensation 298 98 174
Deferred taxes and other (707) 248 (491)
Change in assets and liabilities:
(Increase) decrease in inventories 14,090 (14,692) (15,615)
(Increase) decrease in other current assets (807) (2,113) 38
Increase in accounts payable and
accrued expenses 50 256 3,081
Increase (decrease) in income taxes payable (2,700) 764 3,477
Increase (decrease) in accrued payroll and
bonuses (607) 1,137 1,291
(Increase) decrease in noncurrent assets 74 62 (84)
Increase in noncurrent liabilities (563) 9 462
Net cash provided by operations 29,324 9,165 12,336
Cash flows from investing activities:
Purchases of property, equipment and other (14,127) (16,721) (18,011)
Proceeds from sale of property and equipment 614 375 249
Net cash used by investing activities (13,513) (16,346) (17,762)
Cash flows from financing activities:
Purchases of treasury stock (103) (10,303) (8,527)
Sale of stock to employee benefit plans 193 291 269
(Issuance) collection of stock purchase loans 86 - (43)
Exercise of stock options - - 290
Net cash provided (used) by financing
activities 176 (10,012) (8,011)
Effect of exchange rate change on cash 271 176 (198)
Net increase (decrease) in cash and cash
equivalents 16,258 (17,017) (13,635)
Cash and cash equivalents at beginning of year 22,157 39,174 52,809
Cash and cash equivalents at end of year $38,415 $22,157 $39,174
Supplemental disclosures of cash flow information:
Interest paid $566 $424 $48
Income taxes paid 5,687 4,254 1,490
Non-cash financing activities:
Distributions of director fees 75 6 189
Issuance of restricted stock 826 154 73
Loans issued to purchase Company stock - 314 574
The accompanying notes are an integral part of these consolidated financial
statements.
25
Consolidated Statements of Stockholders' Equity
The Bombay Company, Inc. and Subsidiaries
(In thousands)
Accumulated
Common Stock Treasury Stock Additional Stock Other Annual
Paid-In Purchase Deferred Retained Comprehensive Comprehensive
Shares Amount Shares Amount Capital Loans Comp. Earnings Income (Loss) Income
1999 38,150 $38,150 (1,171) $ (5,983) $76,044 $ - $ - $ 49,433 $(1,501)
Purchases of
treasury shares - - (1,777) (8,527) - - - - -
Shares contributed
or sold to
employee benefit
plans - - 80 405 (43) (93) - - -
Exercise of stock
options - - 66 336 (22) - - - -
Distributions of
deferred director
fees - - 31 153 36 - - - -
Restricted stock
distributions - - 13 65 8 - - - -
Shares sold to
officers with
stock purchase - - 81 422 59 (481) - - -
Loans to officers
for purchases
of Company stock - - - - - (43) - - -
Net income - - - - - - - 7,342 - $7,342
Foreign currency
translation 488
adjustments - - - - - - - - 488 488
Total, January 29,
2000 38,150 38,150 (2,677) (13,129) 76,082 (617) - 56,775 (1,013) $7,830
Purchases of
treasury shares - - (3,040) (10,303) - - - - -
Shares contributed
or sold to
employee
benefit plans - - 130 541 (250) - - - -
Director fee
distributions - - 2 7 (1) - - - -
Restricted stock
distributions - - 28 130 24 - - - -
Shares sold to
officers with
stock purchase
loans - - 101 434 (120) (314) - - -
Interest charged on
stock purchase
loans - - - - - (60) - - -
Net income - - - - - - - 8,645 - $8,645
Foreign currency
translation
adjustments - - - - - - - - (254) (254)
Total, February 3,
2001 38,150 38,150 (5,456) (22,320) 75,735 (991) - 65,420 (1,267) $8,391
Purchases of
treasury shares - - (39) (103) - - - - -
Shares contributed
or sold to
employee benefit
plans - - 102 418 (225) - - - -
Director fee
distributions - - 30 123 (48) - - - -
Restricted stock
distributions - - 250 1,021 (195) - (552) - -
Deferred
compensation
expense - - - - - - 285 - -
Collections of
stock purchase
loans - - - - - 86 - - -
Interest (charges)
collections on
stock purchase
loans, net - - - - - (45) - - -
Net income - - - - - - - 3,724 - $3,724
Foreign currency
translation
adjustments - - - - - - - - (509) (509)
Total, February 2,
2002 $38,150 $38,150 (5,113) $(20,861) $75,267 $(950) $(267) $69,144 $(1,776) $3,215
The accompanying notes are an integral part of these consolidated financial
statements.
26
Notes to Consolidated Financial Statements
Note 1 - Statement of Accounting Policies
______________________________________________________________
Basis of Presentation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany
transactions, balances and profits have been eliminated. The Company has a
retail (52 - 53 week) fiscal year which ends on the Saturday nearest
January 31. The periods ended February 2, 2002 ("Fiscal 2001") and January
29, 2000 ("Fiscal 1999") represent 52 weeks. The period ended February 3,
2001 ("Fiscal 2000") represents 53 weeks. Certain prior year amounts have
been reclassified to conform to current year presentation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates.
Actual results could differ from those estimates.
Foreign Currency Translation
The functional currency of the Company's Canadian operations is the
Canadian dollar. Fiscal year end exchange rates are used to translate
assets and liabilities to U.S. dollars. Monthly average exchange rates are
used to translate income and expenses. The cumulative effect of foreign
currency translation adjustments is reported in accumulated other
comprehensive income (loss) within stockholders' equity.
Cash and Cash Equivalents
Cash in stores, deposits in banks and short-term investments with original
maturities of three months or less are considered as cash and cash
equivalents for the purposes of the financial statements. Short - term
investments are recorded at the lower of cost or fair market value.
Inventories
Inventories are primarily finished merchandise and are valued at the lower
of cost or market, cost being determined based upon the weighted average
inventory method.
Property and Equipment
Property and equipment are depreciated over the estimated useful lives of
the assets using the straight - line method over the lives shown:
Building Forty years
Furniture and equipmen Two to ten years
Leasehold improvements The lesser of the life of the lease or asset
Maintenance and repairs are charged to expense as incurred. Renewals and
betterments which materially prolong the useful lives of the assets are
capitalized. The cost and related accumulated depreciation of property
retired or sold are removed from the accounts, and gains or losses are
recognized in the statements of income.
Capitalized Software Costs
The Company capitalizes certain external and internal costs associated with
computer software and significant enhancements to software features of
existing products, after technological feasibility has been established.
The costs are amortized utilizing the straight-line method over the
estimated economic lives of the software, which range from three to seven
years. Total costs capitalized were $18,703,000 and $17,287,000 at February
2, 2002 and February 3, 2001, respectively. Accumulated amortization
related to these assets was $12,517,000 and $9,103,000 in Fiscal 2001 and
Fiscal 2000, respectively.
27
Goodwill
Goodwill recorded in association with acquisitions accounted for using the
purchase method is amortized using the straight - line method over the
estimated useful life of 40 years.
Effective February 3, 2002, the Company will adopt the provisions of
Statement of Financial Accounting Standards No. 142, Accounting for
Goodwill and Other Intangibles ("FAS 142"). FAS 142 establishes accounting
and reporting standards for the valuation and impairment of goodwill and
other intangible assets. The adoption of FAS 142 is not expected to have a
material impact on the Company's consolidated financial position or results
of operations. With the adoption of FAS 142, the Company will cease
amortization of goodwill.
Impairment of Long-Lived Assets
Long-lived assets, including goodwill, are reviewed whenever events or
changes in circumstances indicate that the carrying value of the asset may
not be recoverable. An impairment loss is recognized if the expected future
undiscounted net cash flows are less than the net book value of the assets.
The amount of the impairment loss is measured as the difference between
carrying value and the estimated fair value of the assets.
Effective February 3, 2002, the Company will adopt the provisions of
Statement of Financial Accounting Standards No. 144, Accounting for
Impairment or Disposal of Long-Lived Assets ("FAS 144"). FAS 144 modifies
previous guidance on the impairment of long-lived assets. Among other
provisions, it permits the use of a probability-weighted cash flow
estimation approach in assessing the expected future undiscounted net cash
flows for a group of assets. The impact of the adoption of FAS 144 is not
expected to have a material impact on the Company's consolidated financial
position or results of operations.
Revenue Recognition
Revenue is recognized when delivery has occurred, the sales price is fixed
or determinable, and collectibility is reasonably assured. Revenues are net
of returns and exclude sales tax.
The Company includes in revenues amounts collected from customers for
shipping and handling orders. In Fiscal 2001, Fiscal 2000 and Fiscal 1999,
these revenues totaled $2,779,000, $1,945,000 and $1,697,000, respectively.
The associated shipping and handling expenses are included in cost of
sales.
Gift Certificates
Proceeds from the sale of gift cards and certificates are recorded as a
liability at the time they are received. When the holder of the card or
certificate redeems it for merchandise, the liability is relieved and
revenue is recognized.
Advertising Costs
Advertising costs are expensed the first time the advertising takes place.
During Fiscal 2001, Fiscal 2000 and Fiscal 1999 advertising expense was
$14,597,000, $14,701,000 and $14,645,000, respectively.
Income Taxes
The Company uses the liability method of computing deferred income taxes on
all material temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and
their tax bases. The Company assesses realizability of deferred tax assets
and, if necessary, a valuation allowance is provided.
Comprehensive Income
Comprehensive income represents 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. Such amounts are included in accumulated other
comprehensive income (loss) within stockholders' equity and consist of the
cumulative effect of foreign currency translation adjustments.
Earnings per Share
Basic earnings per share are based upon the weighted average number of
shares outstanding. Diluted earnings per share are based upon the weighted
average number of shares outstanding plus the shares that would be
outstanding assuming exercise of dilutive stock options and distribution of
deferred director compensation.
28
The computations for basic and diluted earnings from continuing operations
per share are as follows (in thousands, except per share amounts):
Year Ended
February 2 February 3 January 29
2002 2001 2000
Numerator:
Net income $3,724 $8,645 $7,342
Denominator for basic earnings per share:
Average common shares outstanding 32,967 33,262 36,408
Denominator for diluted earnings
earnings per share:
Average common shares outstanding 32,967 33,262 36,408
Stock options 1 - 217
Restricted stock - 11 23
Deferred director compensation 24 19 24
32,992 33,292 36,672
Basic earnings per share $.11 $.26 $.20
Diluted earnings per share $.11 $.26 $.20
Note 2 - Store Impairments and Closing Liability
Long-lived assets are reviewed at least annually and whenever events or changes
in circumstances indicate that the carrying value of the assets may not be
recoverable. Following the holiday selling season, the Company reviewed its
real estate portfolio focusing on stores for which store profitability was
negative. Of the 419 Company owned stores open as of February 2, 2002, eleven
stores were identified for which the expected undiscounted future cash flows
were less than the net book value of the fixed assets related to those stores.
As a result of the review, the Company has recorded a charge to buying and
occupancy costs of $715,000 to write down the assets to fair value.
The Company has established a liability for obligations associated with closing
under-performing stores. At February 2, 2002 and February 3, 2001, the
liability was $342,000 and $715,000, respectively. Costs of $373,000 and
$222,000 were charged against the liability in Fiscal 2001 and Fiscal 2000,
respectively.
Note 3 - Income Taxes
_______________________________________________________________
The components of the provision for domestic and foreign income taxes are
shown below (in thousands):
Year Ended
February 2 February 3 January 29
2002 2001 2000
Income before income taxes:
Domestic $5,447 $12,503 $12,049
Foreign 619 1,897 104
$6,066 $14,400 $12,153
Provision (benefit)for income
taxes:
Current:
Federal $2,290 $3,950 $4,895
Foreign 339 919 (20)
State and local 147 527 387
2,776 5,256 5,402
Deferred (prepaid):
Federal (423) 389 (692)
Foreign 29 44 149
State and local (40) 66 (48)
(434) 499 (591)
Total provision for income taxes $2,342 $5,755 $4,811
29
The effective tax rate differs from the federal statutory tax rate for the
following reasons:
Year Ended
February 2 February 3 January 29
2002 2001 2000
Federal statutory tax rate 34.0% 35.0% 35.0%
Increase in effective tax rate due to:
Foreign income taxes 2.6 2.1 .8
State and local taxes,
net of federal income tax benefit 1.1 2.2 3.0
Other, net .9 .7 .8
Effective tax rate 38.6% 40.0% 39.6%
Deferred taxes reflect the net tax impact of temporary differences between
the carrying amounts of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes. Deferred tax assets
(liabilities) are comprised of the following (in thousands):
February 2 February 3
2002 2001
Deferred tax liabilities ($1,279) ($1,661)
Deferred tax assets:
Accrued rent 2,617 2,900
Depreciation 2,391 2,661
Inventory valuation 2,014 1,727
Other 2,639 2,321
9,661 9,609
Net deferred tax assets $8,382 $7,948
Deferred tax assets, net of liabilities:
Current $2,192 $1,202
Non-Current 6,190 6,746
Total $8,382 $7,948
Note 4 - Debt
______________________________________________________________
The Company has an unsecured, revolving credit agreement with a group of
banks, with an aggregate commitment of up to $50,000,000. The credit
facility is available for working capital and letter of credit purposes.
Borrowings under the facility bear interest, at the Company's option, at
either the lead bank's prime lending rate plus a margin of 0% to .5% or the
LIBOR rate plus a margin of 1.0% to 2.0%, with the margin depending on the
Company's leverage ratio. Under terms of the agreement, the Company is
required to maintain certain financial ratios and other financial
conditions. The agreement prohibits the Company from making certain
investments, advances or loans and limits the dollar amounts of capital
expenditures, purchases of treasury shares, cash dividends and asset sales.
In the event that the Company is in default of certain provisions of the
agreement, the lenders would be permitted to file liens against the
Company's inventory located in the United States and perfect the pledge of
65% of the stock of the Company's Canadian subsidiary, thereby securing the
indebtedness. The agreement expires June 5, 2002 and is expected to be
renewed under similar terms.
The bank commitment is limited to 45% of eligible inventory. At February 2,
2002, the bank commitment was $40,210,000. Letters of credit totaling
$7,726,000 were outstanding under the facility, and $32,484,000 was
available for borrowings or additional letters of credit. Interest expense
and negotiated fees for Fiscal 2001, Fiscal 2000 and Fiscal 1999 totaled
$884,000, $610,000 and $257,000, respectively.
30
Note 5 - Commitments and Contingencies
_____________________________________________________________
Store, distribution and field office facilities and equipment are leased
under operating leases expiring through 2013. The store leases are
generally based upon a minimum rental plus a percentage of the store sales
in excess of specified levels. Store lease terms generally require
additional payments covering taxes, common area charges and certain other
costs. Rental expense for Fiscal 2001, Fiscal 2000 and Fiscal 1999 totaled
$47,366,000, $45,137,000 and $42,991,000, respectively.
The minimum rental commitments for future fiscal years are as follows (in
thousands):
Fiscal
2002 $45,054
2003 40,225
2004 29,508
2005 21,459
2006 19,406
Thereafter 63,196
$218,848
The Company has certain contingent liabilities resulting from litigation
and claims incident to the ordinary course of business. Management believes
that the probable resolution of such contingencies will not materially
affect the financial position or results of operations of the Company.
The Company is party to employment agreements with certain executives which
provide for compensation and certain other
benefits. The agreements also provide for severance payments under certain
circumstances.
Note 6 - Employee Benefit Plans
_____________________________________________________________
The Bombay Company, Inc. Employee 401(k) Savings and Stock Ownership Plan
("401(k) Plan") is open to substantially all employees who have been
employed for one year and who work at least 1,000 hours per year. Under the
401(k) Plan, a participant may contribute up to 15% of earnings with the
Company matching 100% of the initial 3% contribution, and 50% of the next
2% contributed by the participant. Participant contributions and Company
match are paid to a corporate trustee and invested in various funds or
Company stock, as directed by the participant. Company matching
contributions made to participants' accounts are fully vested immediately.
Similar benefit plans are in effect for eligible foreign employees.
To the extent employees are unable to contribute up to 5% of their earnings
to the 401(k) Plan because of limitations imposed by IRS regulations, a
Supplemental Stock Program was adopted. Under this program, employee
contributions in excess of IRS limitations, along with Company matching
contributions, are distributed annually in the form of Company common
stock.
The Bombay Company, Inc. Stock Purchase Program ("SPP") is open to all full-
time employees who have at least 90 days of service. Each participant may
contribute 1% to 10% of qualifying compensation, to a maximum annual
contribution of $21,250. Contributions are used to purchase shares of
Company common stock at a discount of 15% from current market rates. The
participants' shares are fully vested upon purchase. Participants' shares
are held by a third-party administrator until the respective participant
requests a distribution.
Total Company contributions to these plans for Fiscal 2001, Fiscal 2000 and
Fiscal 1999 were $644,000, $738,000 and $480,000, respectively.
31
Note 7 - Common Stock and Stock Options
_______________________________________________________________
The Company's Board of Directors has authorized a stock repurchase program
to purchase up to an aggregate of $30 million of the Company' stock. The
shares may be purchased from time to time, through open market purchases
and privately negotiated transactions. During Fiscal 2001, Fiscal 2000 and
Fiscal 1999, 39,000, 3,039,550, and 1,777,416 shares, respectively, were
acquired at an aggregate cost of $103,000, $10,303,000 and $8,527,000,
respectively. Treasury shares are used for various employee and director
stock plans as the need arises.
Non - employee directors are eligible to participate in the Non-Employee
Director Equity Plan, which allows such directors the option to defer
receipt of retainer payments and meeting fees which are credited to an
account for such director in units equivalent to Company common stock.
The Bombay Company, Inc. 1986 Stock Option Plan and 1996 Long Term
Incentive Stock Plan ("Employee Plans") provide for the granting of options
(and other types of stock-related awards under the 1996 plan) to officers
and key management employees. At February 2, 2002, the option shares
reserved for the Employee Plans were 5,633,595. The option price is fixed
at the market price or higher on the date of the grant. Options are
generally exercisable annually at a rate of 33% per year beginning one year
after the grant date. Shares available for additional grants were
1,459,552; 1,732,538 and 2,046,273 at February 2, 2002, February 3, 2001
and January 29, 2000, respectively.
During Fiscal 1998, restricted stock aggregating 90,000 shares was granted
under the 1996 Long Term Incentive Stock Plan to three key executives. The
respective shares are issuable in designated increments contingent upon
continued employment of the respective executive after 12 months, 24 months
and 36 months. During Fiscal 2001, Fiscal 2000 and Fiscal 1999, 49,500,
27,500 and 13,000 shares, respectively, became vested and were issued under
these grants. Compensation expense of $13,000, $98,000 and $174,000 was
recognized during Fiscal 2001, Fiscal 2000 and Fiscal 1999, respectively,
in connection with the restricted stock.
During Fiscal 2001, restricted stock aggregating 200,000 shares was granted
and issued under the 1996 Long Term Incentive Stock Plan to three key
executives. The respective shares become vested in designated increments
contingent upon continued employment of the respective executive after 12
months, 24 months and 36 months. If each of the executives remains
employed by the Company under the terms of the grant, 40,000, 60,000 and
100,000 shares will be vested in Fiscal 2002, Fiscal 2003 and Fiscal 2004,
respectively. Compensation expense of $285,000 was recognized during
Fiscal 2001 in connection with the restricted stock.
The Bombay Company, Inc. Non-Employee Director Equity Plan ("Director
Plan") provides for the granting of options to members of the Board of
Directors who are neither employees nor officers of the Company. At
February 2, 2002, the option shares reserved for the Director Plan were
745,267. The option price is fixed at the market price on the date of the
grant. The option grant, initial and annual, is currently the lesser of
8,000 shares or $75,000 in face value. The initial grant becomes
exercisable at a rate of 20% per year beginning one year after the grant
date. Each additional annual grant becomes fully exercisable six months
after the grant date. Shares available for additional grants were 354,210,
481,696 and 10,946 at February 2, 2002, February 3, 2001 and January 29,
2000, respectively.
32
The following table includes option information for the Employee Plans and
Director Plan:
Option Price Weighted Average
Stock Option Activity Number of Shares Per Share Option Price
January 30, 1999 2,109,144 $3.33-25.75 $6.28
Options granted 1,151,610 3.81- 8.00 4.73
Options exercised (44,316) 4.00- 7.25 4.84
Options canceled (359,053) 3.33-17.94 6.36
January 29, 2000 2,857,385 3.60-25.75 5.67
Options granted 1,027,500 1.75- 5.00 3.77
Options canceled (207,644) 2.50-15.88 4.61
February 3, 2001 3,677,241 1.75-25.75 5.20
Options granted 1,157,200 2.35- 4.00 2.77
Options canceled (603,856) 2.31-25.75 4.83
February 2, 2002 4,230,585 1.75-25.75 4.59
Exercisable at:
January 29, 2000 827,492 3.60-25.75 7.15
February 3, 2001 2,100,473 3.60-25.75 5.60
February 2, 2002 2,502,548 1.75-25.75 5.27
The following table summarizes stock options outstanding at February 2,
2002:
Outstanding Exercisable
Exercise Weighted Average Weighted Average Weighted Average
Price Range Shares Remaining Life Exercise Price Shares Exercise Price
$ 1.75-2.75 154,500 9.1 $2.50 35,170 $ 2.50
2.76-2.94 894,000 9.0 2.77 46,168 2.83
3.00-3.75 170,475 8.8 3.25 51,676 3.67
3.81-3.94 1,195,202 7.6 3.88 857,360 3.88
4.00-4.94 635,641 5.9 4.51 600,008 4.51
5.00-5.95 379,438 6.4 5.55 311,704 5.53
6.00-6.94 556,986 6.4 6.56 384,519 6.58
7.25-25.75 244,343 3.4 11.21 215,943 11.61
4,230,585 7.2 $ 4.59 2,502,548 $ 5.27
The exercise of non-qualified stock options in Fiscal 1999 resulted in
income tax benefits of $25,000 which were credited to additional paid-in
capital. The income tax benefits are the tax effect of the difference
between the market price on the date of exercise and the option price.
33
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, Accounting for Stock - Based
Compensation ("FAS 123"). Accordingly, no compensation cost has been
recognized for options granted. Had compensation cost for the Company's
stock option plans been determined based on the fair value at the grant
date for awards in Fiscal 1995 through Fiscal 2001 in accordance with the
provisions of FAS 123, the Company's net income and earnings per share
would have been reduced to the pro forma amounts indicated below (in
thousands, except per share amounts):
Year Ended
February 2 February 3 January 29
2002 2001 2000
Net income, as reported $3,724 $8,645 $7,342
Net income, pro forma 2,760 7,521 5,876
Basic earnings per share, as reported .11 .26 .20
Diluted earnings per share, as reported .11 .26 .20
Basic earnings per share,pro forma .08 .23 .16
Diluted earnings per share .08 .23 .16
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model based upon the following
assumptions:
Year Ended
February 2 February 3 January 29
2002 2001 2000
Expected volatility 59.9% 59.8% 59.4%
Expected life years 6 6 5
Expected dividends - - -
Risk-free interest rate 5.0-5.5% 5.2-6.8% 5.3-6.7%
The weighted average fair value of options granted during Fiscal 2001,
Fiscal 2000 and Fiscal 1999 was $1.69, $2.34 and $2.64, respectively.
Note 8 - Shareholders' Rights Plan
_______________________________________________________________
The Company has a shareholders' rights plan under which each share of
Company common stock includes one Preferred Share Purchase Right ("Right")
entitling the holder to buy one one-thousandth of a share of Series A
Junior Participating Preferred Stock of the Company at an exercise price of
$50. The Rights, which have ten year terms expiring in 2005, are
exercisable if a person or group acquires 15% or more of the common stock
of the Company or announces a tender offer for 15% or more of the common
stock. If a person or group acquires 15% or more of the outstanding common
stock of the Company, each Right will entitle the holder to purchase, at
the Right's exercise price, a number of shares of Company common stock
having a market value of twice the Right's exercise price. If the Company
is acquired in a merger or other business combination transaction after a
person or group acquires 15% or more of the Company's common stock, each
Right will entitle its holder to purchase, at the Right's exercise price, a
number of shares of the acquiring company's common stock having a market
value of twice the Right's exercise price. The Rights are redeemable at one
cent per Right at any time before they become exercisable.
34
Note 9 - Stock Purchase Loans
______________________________________________________________
On August 26, 1999, the Board of Directors adopted an executive stock
purchase program as a vehicle to enable executive officers to increase
their ownership in the Company by purchasing Company stock, further
aligning the interests of the officers with those of the shareholders.
Under the program, certain key executive officers may be given the
opportunity to purchase shares of the Company's common stock at market
prices from time to time over a specified period of time, and the Company
will finance 100% of the purchase price of such stock. The unsecured, full
recourse loans bear interest at Applicable Federal Rates and have due dates
ranging from August 31, 2002 to May 31, 2003. At February 2, 2002 and
February 3, 2001, $846,000 and $931,000, respectively, were outstanding
under these terms, and the notes receivable are reflected as a reduction in
stockholders' equity. Of the total, $43,000 was used to purchase shares
through open market transactions while the remainder was purchased from the
Company's treasury at then current market prices. The shares purchased
from the Company are unregistered and, therefore, are restricted when
received by participants. During Fiscal 2001 and Fiscal 2000, $53,000 and
$60,000, respectively, in interest income was recognized related to the
loans.
Note 10 - Geographic Areas
______________________________________________________________
The Company operates in one industry segment, specialty retailing.
Substantially all revenues result from the sale of home furnishings and
accessories through retail stores in the United States and Canada. Long-
lived assets include all non-current assets except deferred taxes.
The following table shows net revenues and long-lived assets by geographic
area (in thousands):
Year Ended
February 2 February 3 January 29
2002 2001 2000
Net revenues:
United States $388,789 $375,275 $351,225
Canada 48,668 48,184 41,353
Total $437,457 $423,459 $392,578
Long-lived assets:
United States $ 51,367 $ 53,448 $ 51,992
Canada 4,226 4,006 4,010
Total $ 55,593 $ 57,454 $ 56,002
35
Unaudited Quarterly Financial Data
The Bombay Company, Inc. and Subsidiaries
(In thousands, except per share amounts)
Unaudited quarterly financial data for the quarters ended:
February 2 November 3 August 4 May 5
2002 2001 2001 2001
Net sales $152,506 $96,945 $97,030 $90,976
Gross profit 51,150 25,156 24,180 23,487
Net income (loss) 11,673 (2,233) (2,680) (3,036)
Basic earnings (loss) per share .35 (.07) (.08) (.09)
Diluted earnings (loss) per share .35 (.07) (.08) (.09)
February 2 October 28 July 29 April 29
2001 2000 2000 2000
Net sales $157,285 $90,855 $89,594 $85,725
Gross profit 56,273 25,779 23,929 23,435
Net income (loss) 12,991 (1,637) (1,034) (1,675)
Basic earnings (loss) per share .40 (.05) (.03) (.05)
Diluted earnings (loss) per share .40 (.05) (.03) (.05)
36
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Filed with the Annual Report on Form 10-K for the fiscal year ended
February 2, 2002.
Number Description
3(a) - Restated Certificate of Incorporation dated January 1,
1993 and Certificate of Amendment of the Restated
Certificate of Incorporation dated March 31, 1993. (1)
3(b) - Bylaws, as amended and restated effective May 21, 1997. (9)
4 - Preferred Stock Purchase Rights Plan. (2)
10(a) - Form of Indemnification Agreement. (3)
10(b) - The Bombay Company, Inc. Supplemental Stock Program. (4)
10(c) - Executive Long Term Disability Plan. (5)
10(d) - The Bombay Company, Inc. 1996 Long-Term Incentive Stock Plan. (6)
10(e) - Form of Award Agreement under the 1996 Long-Term Incentive
Stock Plan.(8)
10(f) - Executive Officers Incentive Compensation Plan. (7)
10(g) - Employment Contract with Executive Officer. (8)
10(h) - Employment Contracts with Executive Officers. (9)
10(i) - The Bombay Company, Inc. Amended and Restated 2001 Non-Employee
Directors' Equity Plan.
10(j) - Form of Agreement used to evidence stock option grants under The
Bombay Company, Inc. Amended and Restated 2001 Non-Employee
Directors' Equity Plan.
21 - Subsidiaries of the Registrant. (9)
22 - Definitive Proxy Statement of the Company relating to Annual
Meeting of Shareholders (certain portions of such Proxy
Statement are incorporated herein by reference and are
identified by reference to caption in the text of this
report). (10)
23 - Consent of Independent Accountants.
37
(1)Filed with the Commission as an Exhibit to the Company's Annual Report
on Form 10-K for the year ended July 4, 1993. Such Exhibit is
incorporated herein by reference.
(2)Filed with the Commission as an Exhibit to the Company's Registration
Statement on Form 8A filed June 12, 1995. Such Exhibit is incorporated
herein by reference.
(3)Filed with the Commission as an Exhibit to the Company's Definitive
Proxy Statement dated October 10, 1986, which Proxy Statement was filed
with the Commission as an Exhibit to the Company's Annual Report on Form
10-K for the year ended June 30, 1986. Such Exhibit is incorporated
herein by reference.
(4)Filed with the Commission as an Exhibit to the Company's Annual Report
on Form 10-K for the year ended June 28, 1992. Such Exhibit is
incorporated herein by reference.
(5)Filed with the Commission as an Exhibit to the Company's Annual
Report on Form 10-K for the year ended July 3, 1994. Such Exhibit is
incorporated herein by reference.
(6)Filed with the Commission as an Exhibit to the Company's Definitive
Proxy Statement dated April 3, 1996, which Proxy Statement was filed
with the Commission as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended February 3, 1996. Such Exhibit is
incorporated herein by reference.
(7)Filed with the Commission as an Exhibit to the Company's Annual Report
on Form 10-K for the year ended January 31, 1998. Such Exhibit is
incorporated herein by reference.
(8)Filed with the Commission as an Exhibit to the Company's Annual Report
on Form 10-K for the year ended
January 30, 1999. Such Exhibit is incorporated herein by reference.
(9)Filed with the Commission as an Exhibit to the Company's Annual Report
on Form 10-K for the year ended January 29, 2000. Such Exhibit is
incorporated herein by reference.
(10) Filed with the Commission on April 11, 2002.