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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 1, 1997
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 offices) (Zip Code)
(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 21, 1997 was
approximately $111,965,242.
Shares outstanding at April 21,1997: Common Stock, $1 Par Value: 38,028,371
DOCUMENTS INCORPORATED BY REFERENCE:
(a) Portions of the Annual Report to Shareholders for the Fiscal Year Ended
February 1, 1997 (as expressly incorporated by reference in Parts I, II, and
IV).
(b) Portions of the Definitive Proxy Statement for the Annual Meeting to be
held May 22, 1997 (as expressly incorporated by reference in Part III).
FORM 10-K
PART I
ITEM 1. BUSINESS.
General
The Bombay Company, Inc. (the "Company") is a specialty retailer which
markets classic and traditional furniture, prints and accessories through a
network of 427 retail stores in the United States and Canada. For financial
information by geographic areas, see Note 7 of Notes to Consolidated Financial
Statements, located on page 23 of the 1996 Annual Report to Shareholders, filed
as Exhibit 13 to this Form 10-K Annual Report. Such Exhibit is incorporated
herein by reference.
The Company has experienced declining profitability over the past several
years which it believes is the result of its previous rapid expansion with
increased expense structure and failure to introduce the appropriate quantity of
new successful products at a sufficient rate to improve the productivity of the
larger stores. Management is addressing these issues and believes that its
current focus on introducing classic and traditional furnishings to offer more
complete, cohesive collections with a broader market appeal will help improve
the profitability of the Company.
Merchandise Sales, Purchasing and Distribution
The fiscal 1996 sales mix consisted of: 49% furniture, 27% accessories, 16%
wall decor (principally prints, mirrors and sconces) and 8% lamps and other
categories. Bombay products internally designed or styled represent
approximately 95% of total sales. During fiscal year 1996, the Company's
merchandise assortment consisted of approximately 2,600 SKU's. The Company
regularly updates its merchandise assortment through introducing new products
and discontinuing others as they approach the end of their life cycles. During
the year, approximately 1,000 new SKU's were introduced as compared to
approximately 1,500 in fiscal year 1995. While new product is critical to the
Company's success, management also has recognized the need to present a more
cohesive collection for the customer. The Company has made some strides in this
direction during fiscal 1996 and stronger efforts are continuing toward the
development of more appropriate mixes of furniture and accessory offerings.
Merchandise is manufactured to Company specifications through a network of
contract manufacturers located principally in Asia and North America.
Approximately 60% of production needs are provided from overseas sources.
Branch offices located in Taiwan, Malaysia and Indonesia and agents in various
countries locate prospective vendors, coordinate production requirements with
manufacturers, provide technical expertise and quality control.
Approximately 70% of the Company's merchandise requirements are supplied by
35 contract manufacturers in seven countries. Although no long-term production
agreements exist with manufacturers, there are long standing relationships with
many of the major vendors. Formal agreements with major manufacturers are in
place which prohibit production of proprietary products for any other party.
Additional manufacturing capacity and alternative sources, both domestic and
international, continue to be added through new vendors and plant expansions by
existing vendors.
Usually, it takes several months from the time a merchandise order is placed
with an overseas manufacturer until the goods are received at centralized
distribution centers. Order lead times are slightly less for domestic
manufacturers principally due to shorter shipping time. Lead times can vary
depending on seasonality factors especially in months when factories are
producing at or near peak capacity to meet seasonal demands. While overseas
purchases are principally denominated in U.S. dollars, significant foreign
currency fluctuations could adversely affect the Company's ability to source
product in any one country.
Store inventories are replenished from three distribution centers in the
United States and one in Canada. The distribution centers are strategically
located and provide the capability to replenish the majority of store
inventories within 48 hours of the time when the order is processed.
Stores and Real Estate
The stores offer a wide variety of attractively styled, ready-to-assemble
furniture, prints and accessories, with a strong emphasis on value and quality.
Significant attention is given to visual merchandising in order to display
products in the most attractive setting.
To accommodate the increasing number of products, the Company introduced a
large format Bombay store in late fiscal 1992. The large format stores
average 4,000 square feet, while the regular stores average 1,700 square feet.
Presently, the Company's store opening program calls for large format stores
ranging in size from 2,500 to 3,500 square feet. At February 1, 1997, 224 large
format Bombay stores were in operation, including 134 stores that have been
converted from regular stores since fiscal 1992. Over 90% of all stores are
located in major shopping malls. At February 1, 1997, stores were operating in
42 states in the United States and nine of ten 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 outlined, labeled
with the appropriate number of Bombay stores located in each, as follows:
United States:
WA - 8 OR - 4 CA - 49
NV - 3 UT - 3 AZ - 5
NM - 1 CO - 4 NE - 1
KS - 4 OK - 4 TX - 23
MN - 6 IA - 1 MO - 7
AR - 1 LA - 7 WI - 3
IL - 18 MS - 1 MI - 11
IN - 4 KY - 2 TN - 12
AL - 5 OH - 20 NH - 3
MA - 10 RI - 2 CT - 6
NY - 24 PA - 20 NJ - 15
DE - 3 MD - 11 DC - 1
WV - 1 VA - 14 NC - 9
SC - 4 GA - 12 FL - 31
Canada:
BC - 7 AB - 4 SK - 1
MB - 2 ON - 25 PQ - 9
NB - 3 NF - 1 NS - 2}
Bombay store locations by geographic
region are as follows:
South 102
Northeast 93
Midwest 88
West 90
Canada 54
---
Total 427
---
---
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.
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.
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 December (the Christmas season). Cash balances
increase significantly in December due to the Christmas business.
Intangibles
The Company owns a number of copyright, trademark and tradename
registrations. Management considers these intangibles to be valuable assets and
defends them as necessary.
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 ``afe 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: 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.
ITEM 2. PROPERTIES.
The Company owns its United States headquarters office complex, and leases
stores and distribution centers under numerous operating leases, generally with
10 year terms. At February 1, 1997, owned office space was approximately
121,000 square feet of which the Company occupies approximately 71,000 square
feet. Leased distribution/office and retail space was approximately 807,000 and
1,260,000 square feet, respectively, with leases expiring between 1997 and 2011.
Distribution facilities are located in the Atlanta, Fort Worth, Philadelphia and
Toronto areas. Office facilities are located in the Fort Worth and Toronto
areas. Adequate insurance coverage is carried on all leased properties.
For additional lease information, see Note 4 of Notes to Consolidated
Financial Statements, located on page 21 of the 1996 Annual Report to
Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report. Such Exhibit
is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS.
The information in response to Item 3 is contained in Note 4 of Notes to
Consolidated Financial Statements, located on page 21 of the 1996 Annual Report
to Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report. Such
Exhibit is incorporated herein by reference.
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 the 1996 fiscal year.
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 are contained in the section
entitled `Price Range of Common Stock,' located on page 26 of the 1996 Annual
Report to Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report.
Such Exhibit is incorporated herein by reference.
(b) The approximate number of record holders of common stock on April 15,
1997 was 2,700.
(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.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial and operating data in response to Item 6 is contained
in the section entitled "Selected Financial Data," located on page 12 of the
1996 Annual Report to Shareholders, filed as Exhibit 13 to this Form 10-K
Annual Report. Such Exhibit is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information in response to Item 7 is contained in the section entitled
"Management's Discussion and Analysis," located on pages 13 to 15 of the 1996
Annual Report to Shareholders, filed as Exhibit 13 to this Form 10-K Annual
Report. Such Exhibit is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information in response to Item 8 is contained in the 1996 Annual Report
to Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report. Such
Exhibit is incorporated herein by reference. A cross-reference for location of
the requested information is below.
Page Number(s) in
Annual Report*
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Operations for the Years Ended February 1, 1997,
February 3, 1996 and July 3, 1994 and
the Seven Months Ended January 28, 1995 16
Consolidated Balance Sheets at February 1, 1997 and February 3, 1996 17
Consolidated Statements of Cash Flows for the Years Ended February 1, 1997,
February 3, 1996 and July 3, 1994 and the Seven Months Ended
January 28, 1995 18
Consolidated Statements of Stockholders' Equity for the Years Ended
February 1, 1997, February 3, 1996 and July 3, 1994 and
Seven Months Ended January 28, 1995 19
Notes to Consolidated Financial Statements 20-24
Report of Independent Accountants 25
Unaudited Quarterly Financial Data 26
*The indicated pages of The Bombay Company, Inc. 1996 Annual Report to
Shareholders are filed as Exhibit 13 to this Annual Report on Form 10-K. Such
Exhibit is incorporated herein by reference.
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.
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" 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.
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 Report for The Bombay
Company, Inc. and its subsidiaries:
(1)The financial statements as cross-referenced in Item 8 of this Form 10-
K Annual Report, together with the report thereon of Price Waterhouse
LLP dated March 11, 1997, appearing in the accompanying 1996 Annual
Report to Shareholders are incorporated by reference in this Form 10-K
Report. With the exception of the aforementioned information and
information incorporated in Items 1, 2, 3, 5, 6 and 7, the 1996 Annual
Report to Shareholders is not deemed filed as part of this Report. The
following financial statement schedule should be read in conjunction
with the financial statements in such 1996 Annual Report to
Shareholders. 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.
(2)Financial Statement Schedule:
Report of Independent Accountants on Financial Statement Schedule
Schedule II-Valuation and Qualifying Accounts and Reserves for the
Years Ended February 1, 1997, February 3, 1996 and July 3, 1994
and the Seven Months Ended January 28, 1995
(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 1, 1997.
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of The Bombay Company, Inc.
Our audits of the consolidated financial statements referred to in our report
dated March 11, 1997, appearing on page 25 of the 1996 Annual Report to
Shareholders of The Bombay Company, Inc. (which report and consolidated
financial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the Financial Statement Schedule listed in Item
14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Fort Worth, Texas
March 11, 1997
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 23, 1997 /s/ROBERT S. JACKSON
-----------------------
Robert S. Jackson
Interim President and
Chief Executive Officer, Director
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
---- -------- ----
Chairman of the Board
- ------------------
Clayton E. Niles
/s/ BARBARA BASS Director April 23, 1997
- ------------------
Barbara Bass
/s/ EDMUND H. DAMON Director April 29, 1997
- -------------------
Edmund H. Damon
Director
- ------------------
A. Roy Megarry
/s/ ROBERT E. RUNICE Director April 25, 1997
- --------------------
Robert E. Runice
/s/ CARSON R. THOMPSON Director April 30, 1997
- ----------------------
Carson R. Thompson
- ---------------------- Director
Shirley Young
Executive Vice President and
/s/ JAMES E. HERLIHY Chief Financial Officer
- ----------------------
James E. Herlihy May 1, 1997
/s/ ELAINE D. CROWLEY Vice President, Finance and Treasurer
- -----------------------
Elaine D. Crowley May 1, 1997
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Dollars in Thousands)
Additions
----------------------
Charged to Charged to
Balance at Costs Other Balance at
Beginning and Accounts - Deductions - End of
Description of Period Expenses Describe Describe Period
------------ --------- -------- -------- ------------ ---------
Twelve Months Ended
July 3, 1994
- -------------------------
Store Conversion Reserve -
Asset Writedown $12,095 - - 3,669(1) $8,426
Seven Months Ended
January 28, 1995
- -------------------------
Store Conversion Reserve -
Asset Writedown $8,426 - - 1,473(1) $6,953
Store Closing Reserve:
Asset Writedown $ - 20,075 - 928(2) $19,147
Reserve:
Lease Obligations $ - 19,475 - - $19,475
Employee Separations $ - 1,450 - 101(3) $1,349
Twelve Months Ended
February 3, 1996
- -------------------------
Store Conversions Reserve:
Asset Writedowns $6,953 - - 1,630(1) $5,323
Store Closing Reserve:
Asset Writedown $19,147 - - 19,147(2,5) $ -
Reserve:
Lease Obligations $19,475 - - 19,475(4,5) $ -
Employee Separations $1,349 - - 1,349(3,5) $ -
Twelve Months Ended
February 1, 1997
- -------------------------
Store Conversions Reserve-
Asset Writedown $5,323 - - 1,683(1) $3,640
(1) Primarily remaining book value of leasehold improvements of Bombay
stores, written off as they were converted to the large store format.
(2) Write-off of sold or disposed assets.
(3) Severance payments related to the closure of the Alex & Ivy division.
(4) Lease termination payments related to the closure of the Alex & Ivy
division.
(5) Includes reversals of $952,000, $4,626,000 and $422,000 related to
Asset Writedown, Lease Obligations and Employee Separations, respectively,
reflecting lower costs than originally projected.
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Filed with the Annual Report on Form 10-K for the fiscal year ended February 1,
1997.
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 and
Bylaws, as amended and restated effective June 24,
1993. (1)
4 - Preferred Stock Purchase Rights Plan. (2)
10(a) -The Bombay Company, Inc. 1986 Stock Option Plan. (3)
10(b) -Form of Stock Option Agreement used to evidence stock
options granted under The Bombay Company, Inc. 1986
Stock Option Plan. (4)
10(c) -Executive Officers Incentive Compensation Plan. (8)
10(d) -Form of Indemnification Agreement. (3)
10(e) -The Bombay Company, Inc. 1991 Director Stock Option
Plan. (5)
10(f) -Form of Director Stock Option Agreement used to
evidence stock option grants under The Bombay Company,
Inc. 1991 Director Stock Option Plan. (6)
10(g) -The Bombay Company, Inc. Supplemental Stock Program. (6)
10(h) -Consulting Agreement dated April 1, 1991 between Carson
R. Thompson and the Registrant. (6)
10(i) -The Bombay Company, Inc. 1993 Stock Deferral Plan for
Non-Employee Directors. (7)
10(j) -Form of Executive Severance and Non-Competition
Agreement dated December 8, 1992. (1)
10(k) -Executive Long Term Disability Plan. (9)
10(l) -The Bombay Company, Inc. 1996 Long-Term Incentive Stock
Plan. (10)
10(m) -Form of Award Agreement under the 1996 Long-Term
Incentive Stock Plan.
13 -The Bombay Company, Inc. 1996 Annual Report to
Shareholders is filed as exhibit hereto solely to the
extent portions thereof are expressly incorporated
herein by reference.
18 -Letter re: change in accounting principles.
22 -Subsidiaries of the Registrant. (9)
23 -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). (11)
24 -Consent of Independent Accountants.
[FN]
(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 Registration
Statement on Form S-2, No. 33-26807, filed February 3, 1989. Such Exhibit is
incorporated herein by reference.
(5)Filed with the Commission as an Exhibit to the Company's Definitive Proxy
Statement dated October 8, 1991, 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, 1991. Such Exhibit is incorporated herein by reference.
(6)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.
(7) Filed with the Commission as an Exhibit to the Company's Definitive Proxy
Statement dated September 7, 1993, 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 July 4, 1993. Such Exhibit is incorporated
herein by reference.
(8)Filed with the Commission as an Exhibit to the Company's Definitive Proxy
Statement dated September 2, 1994, 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 July 3, 1994. 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 July 3, 1994. Such Exhibit is incorporated
herein by reference.
(10)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.
(11) Filed with the Commission on April 9, 1997.