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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 January 31, 1998
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 incorporatio (I.R.S. Employer Identification
or organization) 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 15, 1998 was
approximately $142,263,937.
Shares outstanding at April 15,1998: Common Stock, $1 Par Value: 38,120,579
DOCUMENTS INCORPORATED BY REFERENCE:
(a) Portions of the Annual Report to Shareholders for the Fiscal Year Ended
January 31, 1998 (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 21, 1998 (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 415 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 1997 Annual Report to Shareholders, filed
as Exhibit 13 to this Form 10-K Annual Report. Such Exhibit is incorporated
herein by reference.
Merchandise Sales, Purchasing and Distribution
The Fiscal 1997 sales mix consisted of: 49% furniture, 26% accessories, 17%
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 1997, the Company's merchandise
assortment consisted of approximately 3,000 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. Offering
better selections by developing complete collections was a priority during
Fiscal 1997. During the year, approximately 1,200 new SKU's were introduced as
compared to approximately 1,000 in Fiscal 1996. The focus on product assortment
continues into Fiscal 1998, with an emphasis on enhancing our non-furniture
items as the Company attempts to attract more impulse buying.
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, Indonesia and China and agents in
various countries locate prospective vendors, coordinate production requirements
with manufacturers, provide technical expertise and quality control.
Approximately 75% of the Company's merchandise requirements are supplied by
35 contract manufacturers in eight 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
locatedoandsprovide thehcapabilityetoireplenishhthermajorityrofestore
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 January 31, 1998, 228 large
format Bombay stores were in operation, including 139 stores that have been
converted from regular stores since fiscal 1992. Over 90% of all stores are
located in major shopping malls. At January 31, 1998, 364 stores were operating
in 42 states in the United States and 51 stores were operating in nine provinces
in Canada, as illustrated in the map below.
{The paper version of the Annual Report on Form 10-K contains herein a map of
the United States and Canada with states and provinces outlined, labeled with
the appropriate number of Bombay stores located in each, as follows:
United States:
AL - 5 LA - 7 NY - 23
AR - 1 KS - 4 OK - 4
AZ - 5 MA - 9 OH - 18
CA - 49 MD - 11 OR - 3
CO - 4 MI - 10 PA - 19
CT - 6 MN - 6 RI - 2
DC - 1 MO - 7 SC - 4
DE - 3 MS - 1 TN - 12
FL - 31 NC - 9 TX - 23
GA - 13 NE - 1 UT - 3
IA - 1 NH - 3 VA - 14
IL - 17 NJ - 15 WA - 8
IN - 4 NM - 1 WI - 1
KY - 2 NV - 3 WV - 1
Canada:
AB - 4 NB - 2 ON - 25
BC - 7 NF - 1 PQ - 8
MB - 1 NS - 2 SK - 1}
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 "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
but are not limited to, the following: 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. At January 31,
1998, owned office space was approximately 121,000 square feet of which the
Company occupies approximately 79,000 square feet. Leased office and retail
space was approximately 1,252,000 square feet. Office facilities are located in
the Fort Worth and Toronto areas. Leased distribution and storage facilities
are summarized following:
Location Square Feet
McDonnaugh, GA 250,000
Gilbertsville, PA 200,000
Fort Worth, TX 272,000
Mississauga, ON, CAN 105,000
827,000
Leases generally have 10 year terms, expiring between 1998 and 2011.
Adequate insurance coverage is maintained on all properties.
For additional lease information, see Note 4 of Notes to Consolidated
Financial Statements, located on page 21 of the 1997 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 1997 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 1997 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 1997 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,
1998 was 2,500.
(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
1997 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 1997
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 1997 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 January 31, 1998,
February 1, 1997 and February 3, 1996.................................................16
Consolidated Balance Sheets at January 31, 1998 and February 1, 1997....................17
Consolidated Statements of Cash Flows for the Years Ended January 31, 1998,
February 1, 1997 and February 3, 1996..................................................18
Consolidated Statements of Stockholders' Equity for the Years Ended January 31, 1998,
February 1, 1997 and February 3, 1996................................................. 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. 1997 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" and in the Definitive Proxy Statement of The Bombay Company, Inc.
relating to the Company's Annual Meeting of Shareholders, which information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item appears under the caption "Certain
Transactions" in the Definitive Proxy Statement of The Bombay Company, Inc.
relating to the Company's Annual Meeting of Shareholders, which information is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)The following documents are filed as a part of this Annual Report for The
Bombay Company, Inc. and its subsidiaries:
(1)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, 1998, appearing in the accompanying 1997
Annual Report to Shareholders are incorporated by reference in this
Form 10-K Annual Report. With the exception of the aforementioned
information and information incorporated in Items 1, 2, 3, 5, 6 and 7,
the 1997 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 1997 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 9
Schedule II-Valuation and Qualifying Accounts and Reserves for the
Years Ended January 31, 1998, February 1, 1997 and
February 3, 1996 11
(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 January 31,
1998.
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, 1998, appearing on page 25 of the 1997 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, 1998
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 29, 1998
/s/ ROBERT S. JACKSON
Robert S. Jackson
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 April 24, 1998
/s/ CLAYTON E. NILES
Clayton E. Niles
Director April 27, 1998
/s/ BARBARA BASS
Barbara Bass
Director April 23, 1998
/s/ EDMUND H. DAMON
Edmund H. Damon
Director April 25, 1998
/s/ GLENN E. HEMMERLE
Glenn E. Hemmerle
Director April 28, 1998
/s/ A. ROY MEGARRY
A. Roy Megarry
President, Chief Operating
Officer and Director
Carmie Mehrlander
Director April 21, 1998
/s/ ROBERT E. RUNICE
Robert E. Runice
Director April 29, 1998
/s/ CARSON R. THOMPSON
Carson R. Thompson
April 29, 1998
/s/ ELAINE D. CROWLEY Vice President, Finance and
Treasurer
Elaine D. Crowley
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Dollars in Thousands)
Additions
Charged Charged
to to
Balance at Costs Other Balance at
Beginning and Accounts - Deductions - End of
Description of Period Expenses Describe Describe Period
Year 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) $ --
Year Ended February 1, 1997
Store Conversions Reserve-
Asset Writedown $5,323 -- -- 1,683(1) $3,640
Year Ended January 31, 1998
Store Conversions Reserve-
Asset Writedown $3,640 -- -- 1,401(1) $2,239
(1)Primarily remaining book value of leasehold improvements and lease obligations of Bombay
stores written off in connection with the store conversion program.
(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 January 31,
1998.
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.
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) - The Bombay Company, Inc. 1993 Stock Deferral Plan for Non-Employee
Directors. (7)
10(i) - Form of Executive Severance and Non-Competition Agreement dated
December 8, 1992. (1)
10(j) - Executive Long Term Disability Plan. (8)
10(k) - The Bombay Company, Inc. 1996 Long-Term Incentive Stock Plan. (9)
10(l) - Form of Award Agreement under the 1996 Long-Term Incentive Stock
Plan. (10)
13 - The Bombay Company, Inc. 1997 Annual Report to Shareholders is filed
as exhibit hereto solely to the extent portions thereof are
expressly incorporated herein by reference.
22 - Subsidiaries of the Registrant. (8)
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 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 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.
(10) Filed with the Commission as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended February 1, 1997.
(11) Filed with the Commission on April 10, 1998.