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 November 1, 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 November 29, 2003
Common stock, $1 par value 35,273,625
Page 1 of 21
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Form 10-Q
Quarter Ended November 1, 2003
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item Page No.
1.Financial Statements........................................... 3-9
2.Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 10-14
3.Quantitative and Qualitative Disclosures About Market Risk..... 15
4.Controls and Procedures........................................ 15
PART II - OTHER INFORMATION
6.Exhibits and Reports on Form 8-K............................... 16
Signatures...................................................... 17
Certifications.................................................. 18-21
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3
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
November 1, November 2, November 1, November 2,
2003 2002 2003 2002
Net revenue $135,361 $113,841 $384,871 $304,736
Costs and expenses:
Cost of sales, buying
and store occupancy costs 96,146 80,971 276,908 225,601
Selling, general and
administrative expenses 39,087 32,659 111,344 90,199
Interest expense (income), net 374 73 238 (115)
Total costs and expenses 135,607 113,703 388,490 315,685
Income (loss) before income taxes (246) 138 (3,619) (10,949)
Income tax expense (benefit) (98) 54 (1,430) (4,325)
Net income (loss) ($148) $84 ($2,189) ($6,624)
Basic earnings per share ($.00) $.00 ($.06) ($.20)
Diluted earnings per share ($.00) $.00 ($.06) ($.20)
Average common shares outstanding 35,130 32,895 34,436 32,994
Average common shares outstanding
and dilutive potential
common shares 35,130 33,025 34,436 32,994
The accompanying notes are an integral part of these consolidated financial
statements.
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4
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
November 1, February 1, November 2,
2003 2003 2002
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $10,006 $56,608 $13,511
Inventories 189,757 102,768 125,030
Other current assets 29,130 21,123 23,159
Total current assets 228,893 180,499 161,700
Property and equipment, net 62,863 45,301 47,080
Goodwill, less amortization 423 423 423
Other assets 10,916 9,966 11,356
Total assets $303,095 $236,189 $220,559
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank borrowings $ 55,150 $ -- $17,938
Accounts payable and accrued expenses 43,531 37,202 32,239
Income taxes payable -- 6,673 358
Accrued payroll and bonuses 5,896 7,192 3,739
Gift certificates redeemable 5,403 5,923 4,683
Accrued insurance 4,116 3,609 2,535
Total current liabilities 114,096 60,599 61,492
Accrued rent and other noncurrent liabilities 13,406 6,182 6,249
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 75,837 75,446 75,301
Retained earnings 74,172 76,361 62,520
Accumulated other comprehensive
income (loss) 229 (1,394) (1,591)
Common shares in treasury, at cost,
2,879,341; 4,621,440 and 5,259,048
shares, respectively (11,819) (18,918) (21,528)
Deferred compensation (976) (237) (34)
Total stockholders' equity 175,593 169,408 152,818
Total liabilities and
stockholders' equity $303,095 $236,189 $220,559
The accompanying notes are an integral part of these consolidated financial statements.
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
(Dollars in thousands)
(Unaudited)
Nine Months Ended
November 1, November 2,
2003 2002
Cash flows from operating activities:
Net loss ($2,189) ($6,624)
Adjustments to reconcile net loss
to net cash from operations:
Depreciation and amortization 12,822 10,897
Compensation expense, net -
restricted stock 204 (98)
Deferred taxes and other 220 264
Change in assets and liabilities:
Increase in inventories (84,980) (35,002)
Increase in other current assets (7,245) (5,195)
Increase (decrease) in current liabilities (2,817) 1,233
Increase in noncurrent assets (55) (4)
Increase (decrease) in noncurrent liabilities 39 (456)
Net cash used by operations (84,001) (34,985)
Cash flows from investing activities:
Purchases of property and equipment (31,018) (8,227)
Landlord reimbursements 7,383 --
Sales of property and equipment 151 128
Net cash used by investing activities (23,484) (8,099)
Cash flows from financing activities:
Net bank borrowings 55,150 17,938
Purchases of treasury stock (83) (895)
Sale of stock to employee benefit plans 163 77
Collection of stock purchase loans -- 968
Proceeds from the exercise of employee stock options 6,155 213
Net cash provided by financing activities 61,385 18,301
Effect of exchange rate change on cash (502) (121)
Net decrease in cash and cash equivalents (46,602) (24,904)
Cash and cash equivalents at beginning of period 56,608 38,415
Cash and cash equivalents at end of period $10,006 $13,511
Supplemental disclosure of cash flow information:
Interest paid $ 276 $ 153
Income taxes paid 5,531 2,131
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.
6
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 November
1, 2003 and November 2, 2002, the results of operations for the three and nine
months then ended, and cash flows for the nine months then ended. The results
of operations for the three and nine month periods ended November 1, 2003 and
November 2, 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.
During the year, the Company's obligations commenced under leases which
include provisions for landlord construction cost reimbursements to the Company
as inducement to enter into such new leases. The amounts, aggregating
$7,383,000 for the nine months ended November 1, 2003, have been included in
other noncurrent liabilities and are being amortized over the lives of the
related leases. Such amounts were immaterial in prior years.
(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 income for the three months ended November 1, 2003 and November
2, 2002 was $628,000 and $236,000, respectively. Comprehensive loss for the
nine months ended November 1, 2003 and November 2, 2002 was $566,000 and
$6,439,000, 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.
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The computations for basic and diluted earnings per share are as follows (in
thousands, except per share amounts):
Three Months Ended Nine Months Ended
November 1, November 2, November 1, November 2,
2003 2002 2003 2002
Numerator:
Net income (loss) ($148) $84 ($2,189) ($6,624)
Denominator, basic earnings per share:
Average common shares outstanding 35,130 32,895 34,436 32,994
Denominator, diluted earnings per share:
Average common shares outstanding 35,130 32,895 34,436 32,994
Stock options -- 87 -- --
Deferred director compensation -- 43 -- --
35,130 33,025 34,436 32,994
Basic earnings per share ($0.00) $0.00 ($0.06) ($0.20)
Diluted earnings per share ($0.00) $0.00 ($0.06) ($0.20)
During periods where the Company reported a net loss, common stock
equivalents would be anti-dilutive and, thus, are not included in the
computation of diluted earnings per share.
(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 November 1,
2003, the bank commitment was $75,000,000. Letters of credit totaling
$5,839,000 and borrowings of $55,150,000, primarily to support inventory
purchases, were outstanding under the facility, and $14,011,000 was available
for additional borrowings or letters of credit.
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (cont'd)
(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 Nine Months Ended
November 1, November 2, November 1, November 2,
2003 2002 2003 2002
Net income (loss), as reported ($148) $84 ($2,189) ($6,624)
Stock-based compensation
expense determined under
FAS 123, net of tax (320) (190) (868) (620)
Net loss, pro forma ($468) ($106) ($3,057) ($7,244)
Basic earnings per share,
as reported ($.00) $.00 ($.06) ($.20)
Diluted earnings per share,
as reported ($.00) $.00 ($.06) ($.20)
Basic earnings per share,
pro forma ($.01) ($.00) ($.09) ($.22)
Diluted earnings per share,
pro forma ($.01) ($.00) ($.09) ($.22)
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.
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (cont'd)
(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 Company will adopt FIN 46 during the fourth quarter of
Fiscal 2003 for variable interests and variable interest entities to which the
provisions of the standard apply. The Company is evaluating the impact, if
any, that this standard may have with regard to possible consolidation of its
international licensees.
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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
uncertainty; 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 including proposed duties on bedroom
furniture imports from China; 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 449 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 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
19 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 thirteen 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.
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11
Results of Operations
Quarters Ended November 1, 2003 and November 2, 2002
Net revenue increased 19% to $135,361,000 for the quarter ended November
1, 2003 compared to $113,841,000 for the quarter ended November 2, 2002. Same
store sales increased 13% for the quarter on top of a 9% same store sales gain
in the comparable period of the prior year. Of the total sales growth for the
quarter, 11% was attributable to same stores, 5% from new stores net of
closures and 3% from non-store activities, including Internet, mail order,
International and Bailey Street Trading Company operations. Revenue from non-
store operations represented 9% of total revenue compared to 8% last year.
On a geographical basis, all regions of the United States reported
positive same store sales gains, with the Midwest and Northeast regions posting
double digit gains. Canada reported mid-single digit same store sales gains,
and benefited from favorable currency exchange. From a sales mix standpoint,
large furniture represented 37% of the business, occasional furniture was 13%,
wall d{e'}cor was 14% and accessories were 36%, compared to 35% large
furniture, 14% occasional furniture, 13% wall d{e'}cor and 38% accessories in
the third 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 10% to $89 for the quarter
compared to $81 in the same quarter last year, while the number of transactions
increased 7%.
Cost of sales, including buying and store occupancy costs, was $96,146,000
for the third fiscal quarter compared to $80,971,000 for the same period last
year. As a percentage of revenue, cost of sales decreased to 71.0% for the
quarter compared to 71.1% for the prior year period. Buying and store
occupancy costs declined as a percentage of revenue to 18.5% from 20.6% in the
prior year, reflecting the significant leverage gained as a result of higher
same store sales. Buying and store occupancy costs increased to $24,977,000 in
the third fiscal quarter from $23,485,000 in the comparable quarter of the
prior year, an increase of 6% while square footage increased 10% between these
periods. Product margins (revenue less cost of sales, excluding buying and
store occupancy costs) declined approximately 210 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 $39,087,000 or 28.9% of
revenues during the third quarter of the current fiscal year compared to
$32,659,000 or 28.7% of revenues in the comparable prior year period.
Advertising costs increased approximately 100 basis points during the period
due to an increase in distribution of the monthly Sunday newspaper inserts from
three markets last year to 21 markets this year; the rollout of the new
branding project and grand opening support for our new stores. Increases in
other pre-opening and store closing costs, including store payroll, supplies,
telephone and travel, resulted in reduced leverage in selling, general and
administrative costs as the Company grows its store count and moves from mall
to off-mall locations.
For the quarter ended November 1, 2003, net interest expense was $374,000
compared to $73,000 in the third quarter of Fiscal 2002. The additional
expense is primarily a result of higher seasonal borrowings to support
investments in inventory and capital expenditures. The seasonal inventory build
in the current year was significantly increased to support sales growth, both
from strong same store sales gains and new store openings, and to improve in-
stock position. Additionally, seasonal borrowings were used to fund capital
expenditures relating to the Company's store growth, investment in systems and
distribution center expansion.
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Nine Months Ended November 1, 2003 and November 2, 2002
For the nine months ended November 1, 2003, net revenue increased 26% to
$384,871,000 compared to $304,736,000 in the first nine months of the prior
fiscal year. Same store sales increased 21% for the year-to-date comparison.
All regions of the United States and Canada reported double-digit same store
sales gains on a year-to-date basis. Large furniture represented 36% of the
business, occasional furniture was 15%, wall d{e'}cor was 14% and accessories
were 35%, compared to 34% large furniture, 15% occasional furniture, 14% wall
d{e'}cor and 37% accessories in the prior fiscal year period. The average
transaction was approximately $89 during the first nine months of the year,
approximately $7 or 8% higher than in the comparable prior year period, and the
number of transactions increased approximately 16%.
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 9% of total revenue
for the nine-month period, compared to 7% in the prior year period.
Cost of sales, including buying and store occupancy costs, was
$276,908,000 during the nine months ended November 1, 2003 compared to
$225,601,000 for the same period last year. As a percentage of revenue, cost
of sales declined to 71.9% from 74.0% for the prior year period. Buying and
store occupancy costs declined as a percentage of revenue to 19.0% from 22.9%
in the prior year, reflecting the significant leverage gained as a result of
higher same store sales. Buying and store occupancy costs increased 5% to
$72,991,000 for the nine months from $69,648,000 in the comparable prior year
period, while total retail square footage increased 10% since November 2, 2002.
Product margins declined 180 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 $111,344,000 for the
nine months compared to $90,199,000 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 28.9% in the current period
compared to 29.6% last year. Improvement as a percentage of revenue is
primarily related to payroll and related costs.
For the nine months ended November 1, 2003, net interest expense was
$238,000 compared to $115,000 net interest income in the nine months ended
November 2, 2002. The decline is a result of lower cash balances, and earlier
and higher seasonal borrowings to support investments in inventory and capital
expenditures. The seasonal inventory build in the current year was
significantly increased to support sales growth, both from strong same store
sales gains and new store openings, and to improve in-stock position.
Additionally, seasonal borrowings were used to support capital expenditures
relating to the Company's store growth, investment in systems and distribution
center expansion.
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13
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 November 1,
2003, the bank commitment was $75,000,000. Letters of credit, bankers'
acceptances and short-term borrowings totaling $5,839,000, $36,050,000 and
$19,100,000, respectively, primarily to support inventory purchases, were
outstanding, and $14,011,000 was available for additional borrowings or letters
of credit.
The Company's inventory balance increased $64,727,000 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 50% 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 $140 million in total inventory.
During the first three quarters of Fiscal 2003, real estate activity was as
follows:
Store Count
Bombay KIDS Outlets Total
At 2/2/03 371 5 46 422
Openings 30 14 1 45
Closings (18) - - (18)
At 11/1/03 383 19 47 449
During the fourth quarter of Fiscal 2003, real estate activity is expected to
be as follows:
Store Count
Bombay KIDS Outlets Total
At 11/1/03 383 19 47 449
Openings 24 16 - 40
Closings (16) - - (16)
At 1/31/04 391 35 47 473
As a result of this activity, comparative retail square footage (in
thousands) is as follows:
Fiscal 2003 Fiscal 2002 Increase
At Third Quarter End 1,726 1,571 10%
At Year End (2003 projected) 1,865- 1,880 1,578 18% - 19%
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14
During Fiscal 2003, a total of 100 store leases have expired or are scheduled
to expire. Actions taken or planned for these leases are as follows:
Number
Action of Leases
Close and open in new location 12
Close 13
Renew long-term 15
Renew short-term 39
Extend month-to-month 21
Total 100
The Company's future capital needs will be primarily driven by its real
estate strategy. During Fiscal 2003 and 2004, the Company has had or 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 have 100 KIDS stores opened by the end of Fiscal 2005. In order to
support this growth, the Company expects to continue to make investments in
systems and expand its distribution center capacity. Capital expenditures, net
of landlord allowances, are expected to total approximately $35 million in
Fiscal 2003 and approximately $40 million in Fiscal 2004. 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 Fiscal 2004 expansion plans.
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15
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of November 1, 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 Chief Executive Officer 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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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
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
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 August 20, 2003, issuing
guidance relating to its planned real estate activity and expected store
counts for Fiscal 2003.
On August 21, 2003, the Company filed a Form 8-K reporting the results of
its earnings for the fiscal quarter ended August 2, 2003.
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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. CARREKER
Date: December 11, 2003 James D. Carreker
Chairman of the Board and
Chief Executive Officer
/S/ ELAINE D. CROWLEY
Date: December 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: December 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: December 11, 2003
/S/ ELAINE D. CROWLEY
Elaine D. Crowley
Senior Vice President, Chief
Financial Officer and Treasurer
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