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 2, 2003
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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). 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 30, 2003
Common stock, $1 par value 35,086,871
Page 1 of 21
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Form 10-Q
Quarter Ended August 2, 2003
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item
Page No.
1.Financial Statements........................................... 3-8
1.Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 9-13
3.Quantitative and Qualitative Disclosures About Market Risk..... 14
4.Controls and Procedures........................................ 14
PART II - OTHER INFORMATION
4.Submission of Matters to a Vote of Security Holders............ 15
6.Exhibits and Reports on Form 8-K............................... 16
Signatures...................................................... 17
Certifications.................................................. 18-21
2
3
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
August 2, August 3, August 2, August 3,
2003 2002 2003 2002
Net revenue $130,273 $100,040 $249,510 $190,895
Costs and expenses:
Cost of sales, buying
and store occupancy costs 94,863 76,155 180,762 144,630
Selling, general and
administrative expenses 36,673 29,386 72,257 57,540
Interest expense (income), net 6 (87) (136) (188)
Total costs and expenses 131,542 105,454 252,883 201,982
Loss before income taxes (1,269) (5,414) (3,373) (11,087)
Benefit for income taxes (501) (2,138) (1,332) (4,379)
Net loss ($768) ($3,276) ($2,041) ($6,708)
Basic earnings per share ($0.02) ($0.10) ($0.06) ($0.20)
Diluted earnings per share ($0.02) ($0.10) ($0.06) ($0.20)
Average common shares outstanding 34,556 33,004 34,088 33,043
Average common shares outstanding and
dilutive potential common shares 34,556 33,004 34,088 33,043
The accompanying notes are an integral part of these consolidated financial
statements.
3
4
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
August 2, February 1, August 3,
2003 2003 2002
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $8,914 $56,608 $16,112
Inventories 161,776 102,768 104,337
Other current assets 22,795 21,123 22,362
Total current assets 193,485 180,499 142,811
Property and equipment, net 46,961 45,301 45,883
Goodwill, less amortization 423 423 423
Other assets 10,318 9,966 11,580
Total assets $251,187 $236,189 $200,697
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank borrowings $ 13,847 $ -- $ --
Accounts payable and accrued expenses 42,104 37,202 30,557
Income taxes payable -- 6,673 212
Accrued payroll and bonuses 6,181 7,192 3,592
Gift certificates redeemable 5,251 5,923 4,735
Accrued insurance 3,908 3,609 2,816
Total current liabilities 71,291 60,599 41,912
Accrued rent and other liabilities 5,954 6,182 6,302
Stockholders' equity:
Preferred stock, $1 par value,
1,000,000 shares authorized -- -- --
Common stock, $1 par value, 50,000,000
shares authorized, 38,149,646 shares issued 38,150 38,150 38,150
Additional paid-in capital 75,735 75,446 75,232
Retained earnings 74,320 76,361 62,436
Accumulated other comprehensive loss (547) (1,394) (1,743)
Common shares in treasury, at cost, 3,073,478
4,621,440 and 5,173,241 shares respectively (12,615) (18,918) (21,226)
Stock purchase loans -- -- (231)
Deferred compensation (1,101) (237) (135)
Total stockholders' equity 173,942 169,408 152,483
Total liabilities and stockholders' equity $251,187 $236,189 $200,697
The accompanying notes are an integral part of these consolidated financial statements.
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Six Months Ended
August 2, August 3,
2003 2002
Cash flows from operating activities:
Net loss ($2,041) ($6,708)
Adjustments to reconcile net loss
to net cash from operations:
Depreciation and amortization 8,943 7,261
Restricted stock expense, net 79 22
Deferred taxes and other 156 256
Change in assets and liabilities:
Increase in inventories (58,569) (14,517)
Increase in other current assets (999) (4,554)
Decrease in current liabilities (4,009) (268)
Increase in noncurrent assets (4) (38)
Decrease in noncurrent liabilities (108) (392)
Net cash used by operations (56,552) (18,938)
Cash flows from investing activities:
Purchases of property and equipment (10,765) (3,612)
Sales of property and equipment 71 74
Net cash used by investing activities (10,694) (3,538)
Cash flows from financing activities:
Net bank borrowings 13,847 --
Purchases of treasury stock (82) (800)
Sale of stock to employee benefit plans 147 69
Collection of stock purchase loans -- 736
Proceeds from the exercise of employee stock
options 5,291 146
Net cash provided by financing activities 19,203 151
Effect of exchange rate change on cash 349 22
Net decrease in cash and cash equivalents (47,694) (22,303)
Cash and cash equivalents at beginning of period 56,608 38,415
Cash and cash equivalents at end of period $8,914 $16,112
Supplemental disclosure of cash flow information:
Interest paid $ 97 $ --
Income taxes paid 5,483 2,806
Non-cash financing activities:
Distributions of deferred director fees 179 250
Issuance of restricted stock 1,035 --
The accompanying notes are an integral part of these consolidated financial statements.
5
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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 2,
2003 and August 3, 2002, the results of operations for the three and six months
then ended, and cash flows for the six months then ended. The results of
operations for the three and six month periods ended August 2, 2003 and August
3, 2002 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
2002 Annual Report on Form 10-K.
(2) Comprehensive Income/Loss
Comprehensive income or loss 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.
Comprehensive loss for the three months ended August 2, 2003 and August 3,
2002 was $653,000 and $3,382,000, respectively. Comprehensive loss for the six
months ended August 2, 2003 and August 3, 2002 was $1,194,000 and $6,675,000,
respectively. Other comprehensive income or loss consists of the cumulative
effect of foreign currency translation adjustments.
(3) 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.
During the three and six month periods ended August 2, 2003 and August 3,
2002, the Company reported a loss. Accordingly, during these periods common
stock equivalents would be anti-dilutive and, thus, are not included in the
computation of diluted earnings per share.
6
7
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (cont'd)
(4) Credit facility and debt
The Company has an unsecured, revolving credit agreement with a group of
banks. On July 10, 2003, the credit agreement was amended to increase the
aggregate commitment by $25 million to $75 million through the addition of one
lending party and an increased commitment on the part of two existing banks.
Other provisions of the agreement remained substantially unchanged. The
facility, which expires July 5, 2005, is for working capital, inventory
financing and letter of credit purposes.
Availability of the bank commitment is limited to the lesser of $75 million
or 45% of eligible inventory as defined by the credit facility. At August 2,
2003, the bank commitment was $72,648,000. Letters of credit totaling
$12,126,000 and borrowings of $13,847,000, primarily to support inventory
purchases, were outstanding under the facility, and $46,675,000 was available
for additional borrowings or letters of credit.
(5) Stock-Based Compensation
The Company applies the recognition and measurement principles of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees",
and related interpretations and the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" in accounting for its stock-based
incentive plans. No compensation expense related to grants of stock options
has been reflected in net income, as all options granted under the plans had an
exercise price not less than the market price of the Company's common stock on
the date of grant. Compensation expense related to grants of restricted stock
is measured as the quoted market price of the Company's common stock at the
measurement date, amortized to expense over the vesting period. The following
table illustrates the effect on net income and earnings per share if the
Company had applied the fair value recognition provisions of SFAS 123 to stock-
based compensation (in thousands):
Three Months Ended Six Months Ended
August 2, August 3, August 2, August 3,
2003 2002 2003 2002
Net loss as reported ($768) ($3,276) ($2,041) ($6,708)
Stock-based compensation expense
determined under FAS 123, net of tax (325) (224) (549) (430)
Net loss, pro forma ($1,093) ($3,500) ($2,590) ($7,138)
Basic earnings per share, as reported ($.02) ($.10) ($.06) ($.20)
Diluted earnings per share, as reported ($.02) ($.10) ($.06) ($.20)
Basic earnings per share, pro forma ($.03) ($.11) ($.08) ($.22)
Diluted earnings per share, pro forma ($.03) ($.11) ($.08) ($.22)
7
8
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (cont'd)
During the second quarter of Fiscal 2003, the Company awarded restricted
stock grants aggregating 81,256 shares to two executive officers. The
respective shares will become vested in designated increments contingent upon
continued employment of the respective executive based upon specified vesting
periods of at least 12 months and not more than 36 months. Deferred
compensation of $1,035,000 was recorded in conjunction with the grants, and
will be expensed over the respective vesting periods.
(6) New Accounting Pronouncements
During the first fiscal quarter of 2003, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations". SFAS 143 requires that the fair value of a liability
for an asset retirement obligation be recognized in the period in which it is
incurred if a reasonable estimate of fair value can be made. The adoption of
SFAS 143 did not have a material impact on the Company's consolidated financial
position or results of operations.
The Company has also adopted the provisions of SFAS 146, "Accounting for
Costs Associated with Exit or Disposal Activities" for exit or disposal
activities initiated after December 31, 2002. SFAS No. 146 requires that
certain costs associated with exit or disposal activities be recognized when
they are incurred rather than at the date of commitment to an exit or disposal
plan. The adoption of SFAS 146 did not have a material impact on the Company's
consolidated financial position or results of operations.
In November 2002, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation ("FIN") No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Guarantees of Indebtedness of Others."
FIN 45 is effective for guarantees issued or modified after December 31, 2002.
The disclosure requirements were effective for certain guarantees existing at
December 31, 2002, and expand the disclosures required by a guarantor about its
obligations under a guarantee. FIN 45 also requires recognition of guarantees
entered into or modified after December 31, 2002 as a liability for the fair
value of the obligation undertaken in the issuance of the guarantee. The
Company adopted FIN 45 on January 1, 2003, its effective date. The Company has
no material guarantees and, therefore, has made no adjustments to its
consolidated financial statements as a result of this adoption.
In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest
Entities - An Interpretation of ARB No. 51." FIN 46 addresses consolidation by
business enterprises of variable interest entities that have certain
characteristics. The consolidation requirement of FIN 46 is applicable
immediately to variable interest entities created or obtained after January 31,
2003 and, as of July 1, 2003, for variable interest entities acquired before
February 1, 2003. The Company does not have any variable interest entities
and, therefore, has made no adjustments to its consolidated financial
statements as a result of this adoption.
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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. (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: downward pressure in retail due to economic
pessimism and declining consumer sentiment; competition; seasonality; success
of operating initiatives; new product development and introduction schedules;
uninterrupted flow of product from overseas sources; acceptance of new product
offerings including children's merchandise; inherent safety of product
offerings; advertising and promotional efforts; adverse publicity; expansion of
the store chain; availability, locations and terms of sites for store
development; ability to renew leases on an economic basis; changes in business
strategy or development plans; availability and terms of borrowings or capital
for operating purposes; labor and employee benefit costs; ability to obtain
insurance at a reasonable cost; reliance on technology; security of the
technological infrastructure; changes in government or trade regulations; risks
associated with international business; impact of foreign currency
fluctuations; potential business interruptions due to communicable diseases;
terrorism; war or threat of war; regional weather conditions; hiring and
retention of key management personnel and other risks and uncertainties
contained in the Company's 2002 Annual Report on Form 10-K and other SEC
filings as they occur.
General
The Bombay Company, Inc. and its wholly-owned subsidiaries (the "Company" or
"Bombay") design, source and market a unique line of fashionable home
accessories, wall d{e'}cor and furniture through 421 retail locations in 42
states in the United States and nine Canadian provinces, through specialty
catalogs, over the Internet and internationally. The Company's primary
business consists of its Bombay retail operations. In addition, the Company
operates Bombay KIDS ("KIDS"), Bailey Street Trading Company and Bombay
International, which are all relatively new and immaterial to the overall
results and, therefore, are not discussed separately under "Results of
Operations". KIDS, a line of children's furniture, textiles and accessories,
is currently being offered in six Bombay KIDS store locations as well as
through catalog and Internet channels. The Company's wholesale operation,
Bailey Street Trading Company, markets a limited number of furniture and
accessory SKUs under a separate brand to specialty gift stores, furniture
stores, department stores, catalogers and mass merchants. The Company also has
international licensing agreements under which a total of twelve licensed
international stores are operating in the Middle East and the Caribbean.
The Company's business is seasonal and the largest percentage of its sales
and virtually all of operating income is realized in the fourth fiscal quarter,
which includes December (Christmas season). Merchandise is manufactured to
Company specifications through a worldwide network of contract manufacturers.
Sourcing is subject to competitive conditions, which may include, among other
things, inflation in certain countries. The Company attempts to alleviate
inflationary pressures by adjusting selling prices (subject to market
conditions), improving designs and finding alternative lower cost production
sources. The impact of inflation on operating results is currently not
significant.
9
10
Results of Operations
Quarters Ended August 2, 2003 and August 3, 2002
Net revenue increased 30% to $130,273,000 for the quarter ended August 2,
2003 compared to $100,040,000 for the quarter ended August 3, 2002. Same store
sales increased 26% for the quarter as the Company has improved its value
proposition and invested in inventory and marketing to support the growth. In
addition to the same store sales growth, the revenue increase is attributable
to growth from new stores and stores converted to the large format as well as
Internet, International and Bailey Street Trading Company operations. Revenue
from non-store operations represented 9% of total revenue compared to 6% last
year.
On a geographical basis, all regions of the United States and Canada
reported positive double-digit same store sales gains in the core retail
business. From a sales mix standpoint, large furniture represented 33% of the
business, occasional furniture was 18%, wall d{e'}cor was 13% and accessories
were 36%, compared to 33% large furniture, 17% occasional furniture, 14% wall
d{e'}cor and 36% accessories in the second quarter of the prior year. All
categories experienced improvement in sales, with furniture and accessories
showing the strongest growth. The average retail ticket increased
approximately 7% to almost $100 for the quarter compared to $93 in the same
quarter last year, while the number of transactions increased almost 21%.
Cost of sales, including buying and store occupancy costs, was $94,863,000
for the second fiscal quarter compared to $76,155,000 for the same period last
year. As a percentage of revenue, cost of sales decreased to 72.8% for the
quarter compared to 76.1% for the prior year period. Buying and store
occupancy costs declined as a percentage of revenue to 18.6% from 23.3% in the
prior year, reflecting the significant leverage gained as a result of higher
same store sales. Buying and store occupancy costs increased to $24,245,000 in
the second fiscal quarter from $23,310,000 in the comparable quarter of the
prior year. This 4% increase corresponds to the increase in square footage
between these periods. Product margins (revenue less cost of sales, excluding
buying and store occupancy costs) declined approximately 140 basis points from
the comparable prior year quarter due to the Company's continued focus on its
value offering at key price points designed to increase market share and drive
sales.
Selling, general and administrative expenses were $36,673,000 during the
second quarter of the current fiscal year compared to $29,386,000 in the
comparable prior year period. Increased expenses are primarily attributable to
higher payroll costs to support the higher sales volumes as well as performance
based compensation. Additionally, the Company accelerated $1.1 million of
amortization related to its current point-of-sale and merchandise planning and
allocation systems as they are being replaced. Investments in marketing and
increased insurance costs also contributed to the increase. As a percentage of
revenue, selling, general and administrative expenses declined to 28.2% in the
current quarter compared to 29.4% in the prior year as a result of the
significant increase in revenue.
For the quarter ended August 2, 2003, net interest expense was $6,000
compared to $87,000 net interest income in the second quarter of Fiscal 2002.
The decline is a result of lower cash balances and earlier seasonal borrowings
to support investments in inventory related to the seasonal inventory build,
increased same store sales and new store openings as well as higher capital
expenditures relating to the Company's store growth and investment in systems
and distribution center expansion.
10
11
Six Months Ended August 2, 2003 and August 3, 2002
For the six months ended August 2, 2003, net revenue increased 31% to
$249,510,000 compared to $190,895,000 in the first six months of the prior
fiscal year. Same store sales increased 25% for the year-to-date comparison.
All regions of the United States and Canada reported double-digit same store
sales gains in the core retail business on a year-to-date basis. Large
furniture represented 34% of the business, occasional furniture was 18%, wall
d{e'}cor was 14% and accessories were 34%, compared to 31% large furniture, 18%
occasional furniture, 15% wall d{e'}cor and 36% accessories in the prior fiscal
year. The average transaction was approximately $105 during the first six
months of the year, over $8 or 9% higher than in the comparable prior year
period, and the number of transactions increased approximately 19%.
In addition to same store sales gains, revenue increases were a result of
sales from new stores and stores converted to the large format as well as
revenue from Internet, International, and Bailey Street Trading Company
operations. Revenues from non-store operations represented 8% of total revenue
for the six-month period, compared to 7% in the prior year period.
Cost of sales, including buying and store occupancy costs, was
$180,762,000 during the six months ended August 2, 2003 compared to
$144,630,000 for the same period last year. As a percentage of revenue, cost
of sales declined to 72.4% from 75.8% for the prior year period. Buying and
store occupancy costs declined as a percentage of revenue to 19.2% from 24.2%
in the prior year, reflecting the significant leverage gained as a result of
higher same store sales. Buying and store occupancy costs increased to
$48,014,000 for the six months from $46,163,000 in the comparable prior year
period, consistent with the 4% increase in retail square footage since August
3, 2002. Product margins declined 160 basis points as a result of the
Company's continued focus on its value offering at key price points designed to
increase market share and drive sales volumes.
Selling, general and administrative expenses were $72,257,000 for the six
months compared to $57,540,000 in the prior year period. Expense increases are
primarily related to payroll and performance based compensation, accelerated
depreciation related to the replacement of point-of-sales and merchandise
planning systems, and higher advertising expenditures. As a percentage of
revenue, expenses improved to 29.0% in the current period compared to 30.1%
last year. Improvement as a percentage of revenue is primarily related to
payroll and related costs.
For the six months ended August 2, 2003, net interest income was $136,000
compared to $188,000 in the six months ended August 3, 2002. The decline is a
result of lower cash balances and earlier seasonal borrowings to support
investments in inventory related to the seasonal inventory build, increased
same store sales and new store openings as well as higher capital expenditures
relating to the Company's store growth and investment in systems and
distribution center expansion.
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12
Liquidity and Capital Resources
The primary sources of liquidity and capital resources are cash flows from
operations and a bank line of credit. The Company has an unsecured, revolving
credit agreement with a group of banks. On July 10, 2003, the credit agreement
was amended to increase the aggregate commitment by $25 million to $75 million
through the addition of one lending party and an increased commitment on the
part of two existing banks. Other provisions of the agreement remained
substantially unchanged. The facility, which expires July 5, 2005, is for
working capital, inventory financing and letter of credit purposes.
Availability of the bank commitment is limited to the lesser of $75 million or
45% of eligible inventory as defined by the credit facility. At August 2,
2003, the bank commitment was $72,648,000. Letters of credit, bankers'
acceptances and overnight borrowings totaling $12,126,000, $12,422,000 and
$1,425,000, respectively, primarily to support inventory purchases, were
outstanding, and $46,675,000 was available for additional borrowings or letters
of credit.
The Company's inventory balance increased $57,439,000 compared to the same
period last year. The Company has made investments in inventory to support
the growth in same store sales, store expansion and to improve inventory
availability particularly in core merchandise and in merchandise featured in
promotions. Over 65% of the increase in on-hand inventory relates to the
furniture category and KIDS product. The Company expects to end the year with
$130 million to $135 million in total inventory.
During the first half of Fiscal 2003, real estate activity was as follows:
Store Count
Bombay KIDS Outlets Total
At 2/2/03 371 5 46 422
Openings 7 1 - 8
Closings (9) - - (9)
At 8/2/03 369 6 46 421
During the second half of Fiscal 2003, real estate activity is expected to be
as follows:
Store Count
Bombay KIDS Outlets Total
At 8/2/03 369 6 46 421
Openings 43-47 29 1 73-77
Closings (26) - - (26)
At 1/31/04 386-390 35 47 468-472
As a result of this activity, comparative retail square footage (in
thousands) is as follows:
Fiscal 2003 Fiscal 2002 Increase
At Second Quarter End 1,588 1,532 4%
At Year End (2003 projected) 1,865-1,880 1,578 18%-19%
12
13
During Fiscal 2003, a total of 100 leases have expired or are scheduled to
expire. Actions taken or planned for these leases are as follows:
Number of
Action Leases
Close and open in new location 13
Close 15
Renew long-term 16
Renew short-term 38
Extend month-to-month 18
Total 100
The Company's future capital needs will be primarily driven by its real
estate strategy. Over the next two years, the Company will have lease
expirations related to approximately 200 stores. The Company expects to renew
or replace substantially all of the stores as the leases expire and increase
store count by approximately 5% annually. In addition, the Company plans to
open a total of 100 KIDS stores during the next three years. In order to
support this growth, the Company expects to continue to make investments in
systems and expand its distribution center capacity. The Company believes that
its current cash position, cash flows from operations and expanded credit lines
will be sufficient to fund its operations and capital expenditure programs
during the current year. Additionally, the Company is currently investigating
financing alternatives to support expansion plans.
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14
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of August 2, 2003, the Company does not have any market risk sensitive
instruments.
Item 4. Controls and Procedures
Within 90 days prior to the date of this filing, an evaluation was performed
under the supervision and with the participation of Company's management,
including the Interim Executive Committee and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of
1934. Based on that evaluation, the Company's management, including the Chief
Executive Officer and Chief Financial Officer, concluded that the Company's
disclosure controls and procedures were effective in timely alerting them to
material information relating to the Company that is required to be included in
periodic filings with the Securities and Exchange Commission. There have been
no significant changes in the Company's internal controls or in other factors
that could significantly affect internal controls subsequent to the date of the
evaluation.
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15
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 15,
2003.
(b) Directors elected to hold office are listed in the attached Proxy
Statement, which is incorporated herein by reference.
Directors elected: James D. Carreker and Nigel Travis
Continuing directors: John H. Costello, Susan T. Groenteman, Paul J.
Raffin, Julie Reinganum,
Laurie M. Shahon and Bruce R. Smith.
(c)
(i) Election of directors:
Name For Withheld
James D. Carreker 29,330,207 311,355
Nigel Travis 29,225,987 415,575
(ii) Approval of Executive Management Incentive Compensation Plan:
For Against Abstain Broker Non-votes
27,751,670 1,007,156 881,636 1,100
15
16
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
10 (a) Employment Agreement with Executive
Officer.
10 (b) Restricted Stock Agreement with
Executive Officer.
10 (c) Stock Option Agreement with Executive
Officer.
20 Notice of Annual Meeting of
Shareholders and Proxy Statement, filed
with the Commission on April 10, 2003.
Such Exhibit is incorporated herein by
reference.
99 Certifications of Registrant Pursuant
to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) On May 29, 2003, the Company filed a Form 8-K reporting the results of its
earnings for the fiscal quarter ended May 3, 2003.
On July 14, 2003, the Company filed a Form 8-K relating to the amendment of
its bank credit facility.
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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 as both an officer of the registrant and
as the principal financial officer.
THE BOMBAY COMPANY, INC.
(Registrant)
/S/ JAMES D. CARRKER
Date: September 11, 2003 James D. Carreker
Chairman of the Board and
Chief Executive Officer
/S/ ELAINE D. CROWLEY
Date: September 11, 2003 Elaine D. Crowley
Senior Vice President, Chief
Financial Officer and Treasurer
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
CERTIFICATION PURSUANT TO 18 U.S.C.
SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James D. Carreker, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Bombay Company,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
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6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date:September 11, 2003
/S/ JAMES D. CARREKER
James D. Carreker
Chairman of the Board and
Chief Executive Officer
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
CERTIFICATION PURSUANT TO18 U.S.C.
SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Elaine D. Crowley, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Bombay Company,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
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6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date:September 11, 2003
/S/ ELAINE D. CROWLEY
Elaine D. Crowley
Senior Vice President, Chief
Financial Officer and Treasurer
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