ITEM 1. Business.
General -------
The Bombay Company, Inc. (the "Company") is a specialty retailer which markets lifestyle furniture, prints and accessories through a network of 434 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 21 of the 1995 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 ----------------------------------------------
Bombay products internally designed or styled represent approximately 95% of total sales. New products are introduced each year, with over 1,500 new items introduced in fiscal year 1995. The fiscal 1995 sales mix consisted of: 47% furniture, 27% accessories, 17% wall decor (principally prints, mirrors and sconces) and 9% lamps and other categories.
Merchandise is manufactured to Company specifications through a network of manufacturers located principally in Asia, the United States, Canada, Mexico and South America. Approximately 60% of production needs are provided from overseas sources. Branch offices located in Taiwan and Malaysia, and agents in various countries coordinate production requirements with manufacturers, provide technical expertise and ensure quality standards are met.
Approximately 75% 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 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 affect landed cost.
Store inventories are replenished from four distribution centers, three of which are located in the United States and one in Canada. The Company replenishes the majority of store inventories within 48 hours of receipt of a store order and replenishes over 90% of stores within 72 hours.
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. Stores are completely remerchandised several times a year coincident with the mailing of each catalogue. To accommodate the increasing number of products, the Company introduced a large format Bombay store in late fiscal 1992. The large format Bombay stores are approximately 4,000 square feet, while the regular stores average 1,700 square feet. At February 3, 1996, 218 large format Bombay stores were in operation, including 131 stores that have been converted from regular stores since fiscal 1992. Over 90% of all stores are located in major shopping malls. At February 3, 1996, 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 - 3 CA - 50 NV - 3 UT - 3 AZ - 5 NM - 1 CO - 3 NE - 1 KS - 3 OK - 4 TX - 21 MN - 7 IA - 1 MO - 8 AR - 1 LA - 7 WI - 3 IL - 18 MS - 1 MI - 10 IN - 4 KY - 2 TN - 12 AL - 5 OH - 20 NH - 3 MA - 11 RI - 2 CT - 6 NY - 28 PA - 20 NJ - 15 DE - 3 MD - 11 DC - 2 WV - 1 VA - 15 NC - 9 SC - 4 GA - 13 FL - 31
Canada: BC - 8 AB - 4 SK - 1 MB - 2 ON - 26 PQ - 9 NB - 3 NF - 1 NS - 2}
Bombay store locations by geographic region are as follows: South 102 Northeast 94 Midwest 94 West 88 Canada 56 --- Total 434
COMPETITION
The home furnishings and decorative accessories market is highly fragmented. The Company faces competition from furniture stores, department stores and other specialty retailers. However, direct competition with these stores is limited to some extent because such stores are not principally focused on lifestyle furnishings and household accessories at moderate prices and do not offer the same broad selection. 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 income occurs in the fiscal quarter that includes December (the Christmas season). Cash increases 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. Important factors that could cause actual results to differ materially from those discussed in such forward looking statements include, but are not limited to, competition, economic downturns, dependence upon product development, international business risks and seasonality of business.
ITEM 2.
ITEM 2. Properties.
The Company owns its headquarters office complex, but all stores and distribution centers are leased under numerous operating leases, generally with 10 year terms. At February 3, 1996, owned and occupied office space was approximately 72,000 square feet, and leased distribution/office and retail space was approximately 821,000 and 1,256,000 square feet, respectively. Leased property consists of stores, distribution centers, administrative offices, and various equipment, with leases expiring between 1996 and 2006. 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 19 of the 1995 Annual Report to Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report. Such Exhibit is incorporated herein by reference.
ITEM 3.
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 19 of the 1995 Annual Report to Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report. Such Exhibit is incorporated herein by reference.
ITEM 4.
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 1995 fiscal year.
PART II
ITEM 5.
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 entitle "Price Range of Common Stock," located on page 24 of the 1995 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, 1996 was 3,300.
(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.
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 10 of the 1995 Annual Report to Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report. Such Exhibit is incorporated herein by reference.
ITEM 7.
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 11 to 13 of the 1995 Annual Report to Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report. Such Exhibit is incorporated herein by reference.
ITEM 8.
ITEM 8. Financial Statements and Supplementary Data.
The information in response to Item 8 is contained in the 1995 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.
ITEM 9.
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.
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 "Compliance with Section 16(a) of the Securities Exchange Act of 1934" 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.
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.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item appears under the captions "Security Ownership" and "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.
ITEM 13.
ITEM 13. Certain Relationships and Related Transactions.
The information required by this item appears under the captions "Terms of Office; Relationships" and "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.
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 6, 1996, appearing in the accompanying 1995 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 1995 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 1995 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 February 3,1996, July 3, 1994 and July 4,1993 and the Seven Months Ended January 28, 1995..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 February 3, 1996.
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 6, 1996, appearing on page 23 of the 1995 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 6, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE BOMBAY COMPANY, INC. (Registrant)
Date: April 17, 1996 /s/ ROBERT E. M. NOURSE ----------------------------
Robert E. M. Nourse President, Chief Executive Officer and 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 ---- -------- ---- /s/ CARSON R. THOMPSON Chairman of the Board April 19 , 1996 ----------------------- Carson R. Thompson
Director ----------------------- Barbara Bass
Director ----------------------- Edmund H. Damon
/s/ ROBERT S. JACKSON Director April 18, 1996 ---------------------- Robert S. Jackson
Director ---------------------- A. Roy Megarry
/s/ CLAYTON E. NILES Director April 22, 1996 ---------------------- Clayton E. Niles
/s/ ROBERT E. RUNICE Director April 25, 1996 ---------------------- Robert E. Runice
Director ---------------------- Shirley Young
Executive Vice President and Chief Financial /s/ JAMES E. HERLIHY Officer April 26, 1996 ---------------------- James E. Herlihy
/s/ ELAINE D. CROWLEY Treasurer April 26, 1996 ---------------------- Elaine D. Crowley
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES INDEX TO EXHIBITS
Filed with the Annual Report on Form 10-K for the fiscal year ended February 3, 1996.
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)
10(a) - The Bombay Company, Inc. 1986 Stock Option Plan. (2)
10(b) - Form of Stock Option Agreement used to evidence stock options granted under The Bombay Company, Inc. 1986 Stock Option Plan. (3)
10(c) - Executive Officers Incentive Compensation Plan. (7)
10(d) - Form of Indemnification Agreement. (2)
10(e) - The Bombay Company, Inc. 1991 Director Stock Option Plan. (4)
10(f) - Form of Director Stock Option Agreement used to evidence stock option grants under The Bombay Company, Inc. 1991 Director Stock Option Plan. (5)
10(g) - The Bombay Company, Inc. Supplemental Stock Program. (5)
10(h) - Consulting Agreement dated April 1, 1991 between Carson R. Thompson and the Registrant. (5)
10(i) - The Bombay Company, Inc. 1993 Stock Deferral Plan for Non-Employee Directors. (6)
10(j) - Form of Executive Severance and Non-Competition Agreement dated December 8, 1992 between Robert E. M. Nourse, Aagje M. T. Nourse, and James E. Herlihy and the Registrant. (1)
10(k) - Executive Long Term Disability Plan. (8)
10(l) - The Bombay Company, Inc. 1996 Long-Term Incentive Stock Plan. (9)
13 - The Bombay Company, Inc. 1995 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). (10)
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 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.
(3) Filed with the Co mmission 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.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
(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 May 16, 1996, which Proxy Statement was filed with the Commission on April 3, 1996. Such Exhibit is incorporated herein by reference.
(10)Filed with the Commission on April 3, 1996.