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<SEC-DOCUMENT>0000096287-04-000006.txt : 20040412
<SEC-HEADER>0000096287-04-000006.hdr.sgml : 20040412
<ACCEPTANCE-DATETIME>20040412161557
ACCESSION NUMBER: 0000096287-04-000006
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 8
CONFORMED PERIOD OF REPORT: 20040131
FILED AS OF DATE: 20040412
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: BOMBAY COMPANY INC
CENTRAL INDEX KEY: 0000096287
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FURNITURE STORES [5712]
IRS NUMBER: 751475223
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0128
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-07288
FILM NUMBER: 04728749
BUSINESS ADDRESS:
STREET 1: 550 BAILEY AVE STE 700
CITY: FORT WORTH
STATE: TX
ZIP: 76107
BUSINESS PHONE: 8173478200
MAIL ADDRESS:
STREET 1: 550 BAILEY AVENUE
STREET 2: SUITE 700
CITY: FORT WORTH
STATE: TX
ZIP: 76107
FORMER COMPANY:
FORMER CONFORMED NAME: TANDY BRANDS INC
DATE OF NAME CHANGE: 19901114
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>final200310-k.txt
<DESCRIPTION>FISCAL 2003 10-K
<TEXT>
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, 2004
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 75-147522
(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.____
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes X No __
The aggregate market value of the voting stock held by nonaffiliates of the
registrant based on the closing price of the stock on August 1, 2003 was
approximately $337,760,038.
Shares outstanding at April 3, 2004: Common Stock, $1 Par Value: 35,533,305
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Definitive Proxy Statement for the Annual Meeting to be held
May 26, 2004 (as expressly incorporated by reference in Part III).
Page 1 of 43
<PAGE> 2
FORM 10-K
PART I
ITEM 1. BUSINESS.
(a) General Development of Business
The Bombay Company, Inc. and its wholly-owned subsidiaries design, source and
market a unique line of fashionable home accessories, wall decor and furniture
through a network of retail locations throughout the United States and Canada,
through specialty catalogs, the Internet and international licensing
arrangements. We also have a small wholesale operation that distributes a
separate line of occasional furniture. Throughout this report, the terms
"our," "we," "us" and "Bombay" refer to The Bombay Company, Inc., including
its subsidiaries.
Bombay's unique position in the market place is a result of our core
competencies in design, sourcing and importing. Over 90% of our product is
sourced from over 20 foreign countries. Over 90% of the product has been
designed or styled to Bombay's specifications.
During Fiscal 2001, we expanded our product offering to include a line of
children's furniture, textiles and accessories via catalog and Internet. As of
January 31, 2004, BombayKIDS has expanded to 35 stores of which thirty-one are
combination locations, with a BombayKIDS store adjacent to a core Bombay store.
We intend to open approximately 15 additional BombayKIDS stores in Fiscal 2004
and approximately 30 in Fiscal 2005.
In addition to our primary retail operations, Bombay has other operating
enterprises which contributed incrementally to profitability but which were not
significant to our operations in Fiscal 2003. Unless specified otherwise, the
discussions in this Annual Report on Form 10-K relate to the Bombay retail
operations, including BombayKIDS, outlets, Internet and catalog.
(b) Financial Information About Segments
Bombay operates primarily in one business segment as a multi-channel retailer
selling decorative home furnishings, furniture and related items.
(c) Narrative Description of Business
Merchandise Sales, Purchasing and Distribution
Bombay operates stores, primarily located in regional shopping malls, certain
secondary malls and selected urban and suburban locations. As of January 31,
2004, there were 415 stores in 42 states in the United States and 56 stores in
nine Canadian provinces. We also market our products through our mail order
operations in the United States and Canada and over the Internet at
www.bombaycompany.com and www.bombay.ca.
We offer a diverse selection of products consisting of approximately 4,800
stock keeping units ("SKUs") of which over 90% of the product has been designed
or styled to our specifications. Bombay's proprietary product offers unique
design, quality and exceptional value to a wide audience of consumers. We
regularly update our merchandise assortment by introducing new products while
discontinuing others. We have a fashion component to our product offerings,
primarily in the accessory and wall decor areas, which is introduced
seasonally. Other products with longer lives are discontinued as they approach
the end of their life cycles. Approximately 2,600 and 2,300 new SKUs were
introduced in Fiscal 2003 and Fiscal 2002, respectively. Typically, new
product introductions have been concentrated during our spring, fall and
Christmas selling periods. Going forward, we intend to introduce product more
frequently to increase newness in the store and to level spikes in inventory as
new product is introduced. The principal categories of merchandise include the
following:
Furniture - We sell two broad categories of furniture as described
below. Our furniture is manufactured by third party vendors located
principally in China, Malaysia, Taiwan, Vietnam, Indonesia and India.
Large Furniture - This category includes both wood and metal
furniture focusing on the bedroom, living room, dining room and home
office. Many of the larger items are displayed in store and stocked in
our distribution centers and are available for store delivery typically
within ten days. Large furniture represented 31%, 32% and 31% of total
sales in Fiscal 2003, 2002 and 2001, respectively.
Occasional Furniture - This category includes wood and metal hall
tables, end and coffee tables, plant stands and other small accent tables,
stands and curios that are ready-to-assemble, take home products.
Occasional furniture represented 14%, 12% and 12% of total sales in Fiscal
2003, 2002 and 2001, respectively.
<PAGE> 2
Accessories - This is the broadest category and represented 43% of
total sales in Fiscal 2003, 2002 and 2001. This category includes both
functional and decorative accessories including lamps, jewelry and
memorabilia boxes, crystal, ceramics, frames and desktop items, textiles,
floral, candles and holiday. The items are imported from over 20
countries in Asia, North America and Europe.
Wall Decor - This category includes prints, mirrors and wall
accessories that represented 12%, 13% and 14% of total sales in Fiscal
2003, 2002 and 2001, respectively. This merchandise is sourced primarily
from the United States and various countries in Asia.
Merchandise is manufactured to Bombay's specifications through a network of
third party vendors principally located in Asia and North America. Over 90% of
production needs are sourced from foreign countries. We have branch offices in
Taiwan, Malaysia, China, Vietnam and India, and utilize agents in various
countries to locate prospective vendors, coordinate production requirements
with manufacturers and provide technical expertise and quality control.
We are not dependent on any particular supplier and have had long standing
relationships with many of our vendors. Thirty manufacturers in eight countries
supply almost 65% of our merchandise requirements. Bombay has no long-term
production agreements; however, we generally have agreements with major
manufacturers that prohibit the production of proprietary product for other
parties. Additional manufacturing capacity and alternative sources, both
domestic and international, continue to be added through new vendors and plant
expansions by existing vendors. We do business with our vendors principally in
United States currency and historically have not experienced any material
disruptions as a result of any foreign political, economic or social
instabilities.
The product development process takes between three months and twelve months,
beginning with the original idea and concluding with the final product received
at regional distribution centers in the United States and Canada. Depending on
the category, the source country and whether an item is new or reordered, lead
times generally vary from two to six months from order placement until arrival
at the stores. Order times are slightly less for North American manufacturers
principally due to shorter shipping times. Lead times may also be impacted by
seasonality factors especially in months when manufacturers are producing at,
or near, peak capacity to meet seasonal demands. As a result, we strive to
maintain an adequate inventory position in our distribution centers to ensure a
sufficient supply of products to our customers.
We have regional distribution centers in Fort Worth, Texas; McDonough, Georgia;
Gilbertsville, Pennsylvania; Mira Loma, California; Plainfield, Indiana and
Mississauga, Ontario. The distribution centers are strategically located and
provide the capability to replenish the majority of store inventories within 48
hours of when the order is processed. We use dedicated trucks and less-than-
truckload carriers to transport product from our distribution centers to the
stores.
Channels of Distribution
RETAIL
Stores and Real Estate
Historically, we have located our stores primarily in regional shopping malls,
certain secondary malls and selected urban and suburban locations that
satisfied our demographic and financial return criteria. Approximately one
hundred of our store leases expired in Fiscal 2003, and approximately 80 are
scheduled to expire in Fiscal 2004. We are currently pursuing an off-mall
strategy for new and relocated stores focusing on open-air lifestyle centers
and high-end strip centers (especially those with a concentration of home
furnishings retailers). Such locations offer us the opportunity to lower
occupancy costs, improve operating efficiencies and provide a more convenient
shopping experience for our customer. Our preference is to identify locations
where we can operate a combined Bombay and BombayKIDS store, thereby realizing
economies that come with a larger location while attracting a new and younger
customer to Bombay. As of January 31, 2004, approximately 26% of our stores,
excluding outlets, were in off-mall locations.
In selecting store locations, our real estate department conducts extensive
analyses of potential store sites. We base our selection on the existing or
planned co-tenancy of the center, the size of the market and the demographics
of the surrounding area. In evaluating a store location, placement of the
store relative to retail traffic patterns and customer base of other retailers
in the nearby vicinity are important considerations. Significant attention is
given to visual merchandising opportunities to maximize the ability to display
product in the most attractive setting. We seek out the most potentially
profitable locations for the opening of new stores regardless of the venue. We
are currently targeting 8,500 to 9,000 square foot locations where we can
construct a Bombay store of approximately 4,500 square feet and a BombayKIDS
store of approximately 4,000 square feet. Bombay mall stores are slightly
smaller in size, currently averaging approximately 3,600 square feet. New
Bombay off-mall locations are expected to be in the 4,000 to 5,000 square foot
range. In addition to building new stores, we continue to selectively convert
our
<PAGE> 4
existing regular stores, which average approximately 1,800 square feet to the
larger format. As of January 31, 2004, there were 25 regular stores left in
the chain.
At January 31, 2004, the store chain included a total of 46 outlet stores. We
view the use of outlets as an opportunity to increase sales to a different
customer base, to assist in the orderly clearance of merchandise and to further
capitalize on our strength in designing and sourcing proprietary product.
Following is a table summarizing our store activity and composition:
<TABLE>
<CAPTION>
January 31 February 1 February 2
2004 2003 2002
<S> <C> <C> <C>
Number of stores:
Beginning of year............................ 422 419 408
Opened....................................... 84 28 32
Closed....................................... 35 25 21
End of year.................................. 471 422 419
Store composition:
Large format................................ 365 334 324
Regular..................................... 25 37 59
Outlet...................................... 46 46 36
BombayKIDS.................................. 35 5 -
Retail square footage (in thousands):
Large format................................. 1,459 1,297 1,244
Regular...................................... 46 68 107
Outlet....................................... 198 193 151
BombayKIDS................................... 144 20 -
Total........................................ 1,847 1,578 1,502
</TABLE>
During Fiscal 2004, we plan to open approximately 75 to 80 new stores,
including approximately 15 BombayKIDS stores. We plan to close 35 to 40
stores, ending the year with approximately 510 stores. For store count
purposes, a combined Bombay and BombayKIDS location represents two stores.
Our average cost of leasehold improvements, furniture, fixtures and machinery
for Bombay stores opened in Fiscal 2003, net of landlord construction
allowances, was approximately $205,000 per store, or $44 per square foot. In
addition, other investments, which consist primarily of inventory in the store
location, averaged approximately $100,000 per large format store. The average
net cost of a BombayKIDS store is approximately $195,000 but, at $47, is
slightly higher than a Bombay large format store on a per square foot basis due
to higher fixturing costs. During Fiscal 2003, inventory investment averaged
$100,000 for a BombayKIDS store. During Fiscal 2003, average inventory
physically in store was approximately 40% of the total inventory investment.
Our mall-based stores typically achieve store level operating profitability
during their first full year of operations and reach maturity in three years.
Off-mall stores are typically profitable during their first year of operation.
However, based upon our limited experience, it appears that it may take
slightly longer for these stores to mature. Further, whether a store was
relocated from a local mall or is a new store in a market may also be an
influencing factor as to profitability and maturity.
<PAGE> 5
As of January 31, 2004, 415 stores were operating in 42 states in the United
States and 56 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 - 6 KY - 3 NY - 18
AR - 1 LA - 8 OH - 14
AZ - 6 MA - 9 OK - 4
CA - 58 MD - 11 OR - 3
CO - 6 MI - 9 PA - 16
CT - 7 MN - 4 RI - 1
DE - 2 MO - 5 SC - 6
FL - 39 MS - 2 TN - 10
GA - 20 NC - 13 TX - 46
IA - 1 NE - 1 UT - 3
ID - 1 NH - 4 VA - 19
IL - 21 NJ - 18 WA - 4
IN - 6 NM - 1 WI - 3
KS - 2 NV - 3 WV - 1
CANADA:
AB - 4 NB - 1 ON - 30
BC - 7 NF - 1 PQ - 8
MB - 2 NS - 2 SK - 1}
<PAGE> 6
Direct
We offer virtually all our retail SKUs for electronic commerce through our U.S.
websites at http://www.bombaycompany.com for Bombay, http://www.bombaykids.com
for BombayKIDS and http://www.bombayoutlet.com for Bombay Outlets. During
Fiscal 2003, we launched our Bombay Canada website at http://www.bombay.ca
which currently sells core product and a limited selection of outlet product,
with plans to add a BombayKIDS site in the future. We continue to pursue
online marketing partnerships to broaden our reach to additional customers.
Business-to-consumer revenues over the Internet were approximately $17 million
in Fiscal 2003. We also maintain websites supporting our wholesale activities.
Bombay has a catalog business which primarily serves as a marketing vehicle to
drive customers into stores and to the Internet. Direct catalog sales
represent less than 2.5% of revenues.
WHOLESALE
Bailey Street Trading Company - During Fiscal 2000, we created a wholesale
subsidiary, Bailey Street Trading Company ("Bailey Street"). The brand is
separate from Bombay and allows us to capitalize on our strengths in product
design, sourcing and importing. Current product offerings are focused on
furniture but may be expanded to include wall decor and accessories in the
future. We distribute our Bailey Street merchandise to a variety of customers
including independent gift stores, catalogers, department stores, furniture
stores and mass merchants through a network of independent regional sales
representatives. During Fiscal 2003, Bailey Street revenues increased to $15.8
million compared to $8.4 million in Fiscal 2002.
International - Bombay International, Inc. ("International") is our
international licensing and distribution channel. International operations
have extended to 14 licensed stores as of the end of Fiscal 2003, operating in
the Middle East and the Caribbean. International revenues totaled $3.7 million
compared to $3.5 million in Fiscal 2002. In the short-term, we plan to
continue expansion abroad through licensing and distribution agreements in
existing markets or with current partners. During Fiscal 2004, approximately
five to six additional International stores are planned to be opened by our
licensees.
Intangibles
We own a number of the trademarks and service marks used in our business,
including federal registrations for the marks The Bombay
Company{reg-trade-mark}, Bombay{reg-trade-mark}, the palm tree logo,
BombayKIDS{reg-trade-mark} and Bailey Street Trading Company{reg-trade-mark}.
Our trademarks are also registered or are the subject of pending applications
in a number of foreign countries. Each registration is renewable indefinitely
if the mark is still in use at the time of renewal.
We believe that our trademarks have significant value and that these marks
enhance the Bombay{reg-trade-mark} brand and are instrumental in our ability to
create, sustain demand for and market our product. From time to time, we
discover products in the marketplace that are counterfeit reproductions of our
product or that otherwise infringe upon our trademark or tradedress rights. We
have and will continue to vigorously defend our rights under the marks as
necessary.
Seasonality
Operating results are subject to seasonal variation. Historically, the largest
proportion of sales and substantially all of the income occur in the fourth
fiscal quarter, which includes the Christmas season. Inventory balances are
generally built to their highest levels prior to the Christmas selling season.
Inventories decline, short-term borrowings are repaid and cash balances
increase significantly in December due to the Christmas business.
Competition
The home furnishings and decorative accessories market is highly fragmented and
very competitive. We face competition from furniture stores, department stores
and other specialty retailers, including national chains and independent
retailers. We believe that we compete primarily on the basis of style,
selection, quality and value of merchandise.
Employees
We have approximately 5,500 employees, which include approximately 3,000 part-
time employees, and are not a party to any union contract. Employee relations
are considered to be good.
<PAGE> 7
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 actual results, performance or achievements 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: general economic and financial market conditions which
affect consumer confidence in the spending environment for home-related
purchases; 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 for retail and distribution real estate sites; 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;
fluctuations in foreign currency exchange rates; potential travel or
import/export restrictions due to communicable diseases; terrorism; war or
threat of war; regional weather conditions; and hiring and retention of key
management personnel.
(d) Financial Information About Geographic Areas
Bombay operates in one industry segment, specialty retailing. Substantially
all revenues result from the sale of home furnishings and accessories through
retail stores, mail order and Internet in the United States and Canada. Our
wholesale operations have been immaterial to our operations and financial
results to-date. Long-lived assets include all non-current assets except
deferred taxes.
The following table shows net revenues and long-lived assets by geographic area
(in thousands):
<TABLE>
<CAPTION>
Year Ended
January 31 February 1 February 2
2004 2003 2002
<S> <C> <C> <C>
Net revenues:
United States.............. $526,219 $442,339 $388,789
Canada..................... 70,216 51,661 48,668
Total.................. $596,435 $494,000 $437,457
Long-lived assets:
United States.............. $68,031 $46,201 $51,367
Canada.................. 5,992 4,040 4,226
Total..................... $74,023 $50,241 $55,593
</TABLE>
(e) Available Information
We make available free of charge through our website,
http://www.bombaycompany.com, all materials that we file electronically with
the SEC, including our annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K, amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, and Section 16 filings as soon as reasonably practicable after
electronically filing such materials with, or furnishing them to, the SEC.
During the period covered by this Form 10-K, we made all such materials
available through our website as soon as reasonably practicable after filing or
furnishing such materials with the SEC.
Any materials filed by the Company with the SEC may also be read and copied at
the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549.
Information on the operation of the Public Reference Room may be obtained by
calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website,
http://www.sec.gov, that contains reports, proxy and information statements and
other information which we file electronically with the SEC.
<PAGE> 8
ITEM 2. PROPERTIES.
We own our United States headquarters office complex of which we occupy
approximately 87,000 square feet. We lease stores, distribution centers,
regional and Canadian offices under numerous operating leases. Owned and
leased facilities are summarized following:
<TABLE>
<CAPTION>
Square Feet
Description Owned Leased
<S> <C> <C>
Stores:
Large format...................... - 1,459,000
Regular........................... - 46,000
Outlet............................ - 198,000
BombayKIDS........................ - 144,000
Distribution centers:
Mira Loma, CA..................... - 156,000
Gilbertsville, PA................. - 200,000
Fort Worth, TX.................... - 250,000
McDonough, GA..................... - 254,000
Plainfield, IN. .................. - 300,000
Mississauga, ON, CAN.............. - 114,000
Offices and storage:
Mississauga, ON, CAN.............. - 9,000
Regional sites.................... - 2,000
Fort Worth, TX.................... 121,000 35,000
121,000 3,167,000
</TABLE>
Leases generally have 10-year terms, expiring between 2004 and 2015. Rents
under the store leases are generally based upon a minimum rental plus a
percentage of the store sales in excess of specified levels. Store lease terms
generally require additional payments covering taxes, common area charges and
certain other costs. Rental expense for Fiscal 2003, Fiscal 2002 and Fiscal
2001 totaled $58,712,000, $50,669,000 and $47,366,000, respectively.
The minimum rental commitments for future fiscal years related to real estate
properties are as follows (in thousands):
<TABLE>
<CAPTION>
Fiscal
<S> <C>
2004........................ $ 44,056
2005........................ 37,091
2006........................ 35,303
2007........................ 34,180
2008........................ 31,599
There....................... 101,482
$283,711
</TABLE>
We believe that the insurance coverage maintained on all properties is
adequate.
ITEM 3. LEGAL PROCEEDINGS.
We have certain contingent liabilities resulting from litigation and claims
incident to the ordinary course of business. Management believes that the
probable resolution of such contingencies will not materially affect our
financial position or results of operations.
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 Fiscal 2003.
<PAGE> 9
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
(a) The principal market for Bombay's common stock is the New York Stock
Exchange. The high and low trading prices, quoted by fiscal quarter,
follow:
<TABLE>
<CAPTION>
Year ended January 31, 2004 High Low Year ended February 1, 2003 High Low
<S> <C> <C> <C> <C> <C>
First quarter.................... $ 8.69 $4.34 First quarter................... $4.45 $2.14
Second quarter................... 12.65 7.80 Second quarter.................. 5.25 2.61
Third quarter.................... 14.11 9.20 Third quarter................... 3.10 2.15
Fourth quarter................... 13.80 6.30 Fourth quarter.................. 5.95 2.96
</TABLE>
(b) The approximate number of record holders of common stock on March 12,
2004 was 1,800.
(c) We have bank credit agreements with restrictions related to payment of
dividends. We have not paid dividends the past two years and will continue
to utilize available funds primarily for the expansion of our retail stores
and operating purposes.
(d) The information required by this item appears under the caption "Equity
Compensation Plan Information" 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.
<PAGE> 10
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data has been derived from our consolidated
financial statements. The data set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and our consolidated financial statements and notes thereto.
Year Ended
<TABLE>
<CAPTION>
January 31 February 1 February 2 February 3 January 29
Financial Data: 2004 2003 2002 2001 2000
<S> <C> <C> <C> <C> <C>
Net revenues*......................... $596,435 $494,000 $437,457 $423,459 $392,578
Net revenues increase................. 21% 13% 3% 8% 9%
Same store sales increase (decrease).. 13% 5% (2)% 5% 5%
Net income*........................... $9,951 $7,217 $3,724 $8,645 $7,342
Basic earnings per share.............. $.29 $.22 $.11 $.26 $.20
Diluted earnings per shares........... $.28 $.22 $.11 $.26 $.20
Total assets*......................... $264,933 $236,189 $206,889 $206,651 $201,872
Stockholders' equity*................. $191,387 $169,408 $158,707 $154,727 $156,248
Return on average assets.............. 4.0% 3.3% 1.8% 4.2% 3.7%
Return on average equity.............. 5.5% 4.4% 2.4% 5.6% 4.7%
Operating Data:
Average sales per store open
for full fiscal year* $1,249 $1,098 $1,012 $1,012 $926
Average sales per square foot........ $322 $296 $288 $306 $288
Number of stores:
Beginning of year................ 422 419 408 415 412
Opened........................... 84 28 32 10 19
Closed........................... 35 25 21 17 16
End of year...................... 471 422 419 408 415
Store composition:
Large format.................... 365 334 324 291 270
Regular......................... 25 37 59 93 125
Outlet.......................... 46 46 36 24 20
BombayKIDS...................... 35 5 - - -
Retail square footage:*
Large format.................... 1,459 1,297 1,244 1,116 1,049
Regular......................... 46 68 107 163 216
Outlet.......................... 198 193 151 92 72
BombayKIDS...................... 144 20 - - -
Total........................... 1,847 1,578 1,502 1,371 1,337
</TABLE>
<FN>
Bombay has paid no cash dividends during the periods presented.
* In thousands.
<PAGE> 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Special Note Regarding Forward-Looking Statements
Certain statements in this Annual Report to Shareholders under "Management's
Discussion and Analysis" 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 our actual results, performance or achievements 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: general economic and financial market conditions
which affect consumer confidence in the spending environment for home-related
purchases; 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;
fluctuations in foreign currency exchange rates; potential travel or
import/export restrictions due to communicable diseases; terrorism; war or
threat of war; regional weather conditions and hiring and retention of key
management personnel.
Executive Overview
Bombay markets a line of proprietary home furnishings that includes large
furniture, occasional furniture, wall decor and decorative accessories that is
timeless and classic in its styling. Over 90% of the items are imported, with
more than half of the product coming from China. We are a multi-channel
retailer with store locations, Internet and mail order operations, so that the
customer can shop at her convenience. We have a small wholesale operation that
is immaterial to overall revenue but contributes incrementally to
profitability.
We focus on several key metrics in managing and evaluating our operating
performance and financial condition including the following: same store sales,
sales and gross margins by merchandise categories, operating margins as a
percentage of revenues, earnings per share, cash flow, return on assets and
inventory turn.
We are currently executing a multi-phase turnaround intended to improve
Bombay's profitability and generate competitive operating results in-line with
current market leaders in the sector. For the year, our operating margin was
2.7% of revenues compared to industry leaders in the 8% to 12% range. We do
not believe that, long-term, there is anything structurally that would prevent
us from improving our operating results to approach those of industry leaders.
Phase I of the turnaround commenced during the third quarter of Fiscal 2002 and
continued into Fiscal 2003. Our goal was to reclaim market share, generating
above average same store sales and validating our positioning within the market
place. We reported 13 consecutive months of double-digit same store sales
increases beginning in September 2002 and continuing through September 2003.
As a result of the strength of these sales, we were able to leverage many of
our fixed costs including our buying and occupancy costs, which declined to
16.8% of revenues during Fiscal 2003 from 19.1% of revenues during Fiscal 2002.
Phase I was also characterized by the aggressive repositioning of our real
estate portfolio. During the 1980s and 1990s, our focus was on opening stores
in "A" malls throughout North America. As shopping habits have evolved, with
alternative venues such as lifestyle centers and big box strip centers gaining
popularity, we have begun to migrate our stores to off-mall locations. In
addition to being more convenient for customers and suitable for the sale of
large items, such locations typically have lower cost structures, both from a
fixed rent perspective and for other common area expenses billed by landlords.
Management believes that the movement to the off-mall locations will ultimately
result in lower fixed costs for Bombay and will help improve profitability.
During Fiscal 2003, approximately 100 leases expired, and we took advantage of
that opportunity to close some of our mall stores and move to nearby off-mall
locations. We are currently focusing on our top 25 markets to obtain market
density and leverage fixed logistics and advertising costs in those areas.
Additionally, we have restarted net store growth, which has been relatively
flat in number since 1996. A total of 88 real estate projects, including new
stores and relocations, were completed during the year resulting in opening 75
new off-mall locations. The total number of stores grew to 471, a net increase
of 49 stores.
<PAGE> 12
The following table reflects the real estate portfolio at each fiscal year end:
<TABLE>
<CAPTION>
January 31 February 1 February 2
2004 2003 2002
Units % of total Units % of total Units % of total
<S> <C> <C> <C> <C> <C> <C>
Mall......... 302 64% 328 78% 348 83%
Off-mall..... 123 26 48 11 35 8
Outlet....... 46 10 46 11 36 9
Total..... 471 100% 422 100% 419 100%
</TABLE>
Another key aspect of Phase I included aggressively investing in marketing to
attract new customers to Bombay and support the move from mall to off-mall.
During the late 1990s and early 2000s, we had become increasingly reliant on
periodic catalogs to drive customers into the store and did not have marketing
vehicles with a broader reach. In Fiscal 2001, the marketing expenditures
reached their historical low of 3.4% of revenues. During Fiscal 2002 and
Fiscal 2003, we increased our marketing to 4.1% and 4.6% of revenues,
respectively, with much of the incremental spending going to support a program
for monthly inserts in Sunday newspapers in our top 21 markets.
In addition to investing in new stores, we began making some key investments in
our infrastructure that will serve as the foundation upon which we plan to grow
to become a billion dollar company with competitive operating margins. During
Fiscal 2003, we rolled out a new point-of-sale system and a broadband
communication network to our U.S. stores, completed the implementation of the
first phase of a new planning and allocation system, opened a new 300,000
square foot distribution center in the Midwest and made key investments in
leadership positions, including the appointment of a new Chief Executive
Officer and a new Chief Information Officer.
Investments in product margin, inventory, infrastructure and advertising led to
a 21% increase in revenues, improvement in operating margins from 2.5% to 2.7%
of revenue, and improvement in return on assets from 3.3% to 4.0%.
As we enter Fiscal 2004 and the second phase of the turnaround, we are focused
on six critical success factors .
DRIVE SAME STORE SALES AT A COMPETITIVE RATE - Average store level
productivity was increased as a result of last year's 13% same store sales
performance. Longer-term, we need to continue to defend our market share
and ultimately grow sales at a rate at, or above, the competition.
SUCCESSFULLY CONTINUE THE MIGRATION OF OUR STORES FROM MALL TO OFF-
MALL LOCATIONS - We expect to improve operating margins 200 to 500 basis
points over time as stores are relocated to lower-cost, off-mall
locations. During Fiscal 2004, approximately 80 additional leases will
expire and the migration will continue at an accelerated pace with plans
to end the year with over 40% of our stores being off-mall.
GROW STORE COUNT - Our goal is to increase the number of core Bombay
stores 5% annually and continue to open new concepts such as BombayKIDS.
The focus will be on our top 25 markets where we believe we can add almost
100 Bombay stores without exceeding current penetration limits. Market
density is expected to result in leveraging fixed costs and improving
operating efficiencies.
DEVELOP BOMBAYKIDS - By the end of Fiscal 2004, we expect to have 50
BombayKIDS stores, providing the critical mass to yield better returns for
the business. Success in the BombayKIDS business will enable us to
demonstrate our ability to organically develop other concepts that
leverage our core competencies and provide new growth vehicles.
BUILD THE PROPER INFRASTRUCTURE TO SUPPORT FUTURE GROWTH - It is
essential that we invest in systems, our logistics network and corporate
competencies in order to avoid the pitfalls that scale and complexity can
create. While it is tempting to forego such investments in favor of
short-term profits, we believe that they are critical for long-term growth
and will be accretive to future earnings. Planned infrastructure
investments will include supply chain improvements, further enhancements
to the U.S. point-of-sale system and its rollout to the Canadian
subsidiary, SKU level planning and plannogramming, expansion of
distribution facilities in the Northeast, and the addition of a new
general merchandise manager and a new vice president of financial planning
and analysis.
GENERATE PROFIT MARGIN EXPANSION - This, in many ways, will be the
result of executing the first five critical success factors well. The key
to profit margin expansion will be the focus on and delivery of profit
flow-through and return on new stores. Half of the opportunity lies in
migrating to off-mall as we reduce fixed occupancy costs and lower our
overall cost structure. Approximately 25%-30% of our future improvement
lies in leveraging our top line growth in the areas of selling, general
and administrative expenses and logistics. The remainder will come from
<PAGE> 13
improving product margins as we reap the benefits of new systems designed
to help ensure better flow of product from source to store, improve
inventory turn and manage promotional activities.
The infrastructure that we develop and the investments that we make will be
critical to the third phase of our turnaround strategy. Our plan is to
organically develop other retail concepts and areas of operations that would
leverage our core competencies and become new growth vehicles for Bombay.
This longer term strategy is several years in the future and is dependent on
successfully accomplishing earlier phases, which will be the focus for Fiscal
2004 and beyond.
Fiscal 2004 will result in the second consecutive year of accelerated
investment in Bombay with capital expenditures planned to be in the $30 to $35
million range. Our strategy from a balance sheet perspective is to utilize our
credit facilities with banks to finance our seasonal working capital needs, and
to fund our capital growth from working capital from operations and from our
balance sheet.
Other Disclosures
The largest percentage of our sales and operating income is realized in the
fourth fiscal quarter, which includes December (Christmas season).
The impact of inflation on operating results is typically not significant
because the majority of our products are proprietary. We attempt to alleviate
inflationary pressures by improving designs, finding alternative production
sources in lower cost countries and increasing selling prices (subject to
competitive conditions).
One of the risks we are currently facing relates to the recent anti-dumping
petition against Chinese furniture makers for alleged dumping of wooden bedroom
furniture. The petition is currently working its way through the United States
International Trade Commission and the United States Department of Commerce.
The final determinations of the Commission will not be made until 2005 but
imposition of preliminary duties will begin in Spring 2004. Slightly more than
10% of our assortment is classified as bedroom furniture, not all of which is
imported from China or may be subject to such duties. Our sourcing offices in
Asia have been identifying alternative vendors in other countries including
Vietnam, where some of our existing vendors have chosen to open manufacturing
facilities. We have already begun to move production of many of the bedroom
furniture items to these alternate factories. We cannot predict what amount,
if any, of disruption there might be as manufacturers shift their production to
other locales or what level of duties-related price increases we will be able
to pass on to our customers for those items that we choose to continue to
source from China. We believe that, with our established network of offices
throughout Asia and the strength of our relationships with our vendors, we will
be able to negotiate arrangements that will allow us to continue offering all
product categories on a competitive basis.
We have a retail (52-53 week) fiscal year that ends on the Saturday nearest
January 31. All periods presented reflect 52 weeks.
NET REVENUES
Net revenues consist of sales to retail customers, through store, mail order
and Internet, and wholesale sales, through Bailey Street and to our
international licensees, as well as shipping fees and other revenues. Shipping
fees reflect revenue from customers for delivery of merchandise. Other
includes royalties and territory fees from international licensees.
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
Net revenues (in millions) 2003 2002 2001
<S> <C> <C> <C>
Retail....................... $571.8 $478.3 $431.2
Wholesale.................... 17.7 10.8 3.3
Shipping..................... 6.6 4.6 2.8
Other........................ .3 .3 .2
Total..................... $596.4 $494.0 $437.5
</TABLE>
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
Merchandise Category 2003 2002 2001
<S> <C> <C> <C>
Accessories.................. 43% 43% 43%
Large furniture.............. 31 32 31
Occasional furniture......... 14 12 12
Wall decor................... 12 13 14
Total..................... 100% 100% 100%
</TABLE>
<PAGE> 14
Fiscal 2003
Net revenues increased $102.4 million, or 21%, to $596.4 million, compared to
$494.0 million in Fiscal 2002. Revenues from retail operations increased $94.9
million, or 20%, from the prior year. Both new stores and same store sales
increases contributed to the growth. Same store sales increased 13% for the
year as we increased the number of stores by 49. During the year, we opened 53
large format stores, 30 BombayKIDS stores and one outlet. In addition, we
converted four regular stores to the large format. Increases from additional
stores were partially offset by the closing of 26 large format stores, eight
regular stores and one outlet. Direct-to-customer revenues increased 44% to
$29.8 million, from $20.6 million, due to strong Internet sales, partially
offset by a decrease of approximately 10% in mail order sales. The remainder
of the increase relates to growth in our wholesale operations, in particular,
Bailey Street, where revenues increased 88%, to $15.8 million from $8.4 million
in Fiscal 2002.
All regions of the U.S. and Canada reported positive same store sales, with all
but the Midwest reporting double-digit sales increases. At the end of Fiscal
2003, we had 365 large format stores, 25 regular stores, 46 outlets and 35
BombayKIDS stores. Total retail square footage increased 17% compared to year-
end Fiscal 2002, while the store count increased by a net 49 units. The number
of retail transactions for the year increased by almost 15% and the average
ticket increased to $86 from $82 in Fiscal 2002.
Fiscal 2002
Net revenues increased $56.5 million, or 13%, to $494.0 million, compared to
$437.5 million in Fiscal 2001. Revenues from retail operations increased $48.3
million, or 11%, from the prior year. Same store sales increased 5% for the
year. New stores also contributed to revenue growth, as we opened 14 large
format stores, 9 outlets and 5 BombayKIDS stores while expanding two stores
from the regular to the large format. Sales growth from new real estate
activity was partially offset by store closures. Internet and mail order
revenues grew 73% to $20.6 million from $11.9 million in the prior year, fueled
by sales of BombayKIDS product and improvement made to our website. The
remainder of the increase was the result of growth in our wholesale operations.
All regions of the U.S. and Canada reported mid single-digit same store sales
increases. At the end of Fiscal 2002, we had 334 large stores, 37 regular
stores, 46 outlets and five BombayKIDS stores. During the year, we closed 25
stores. Total retail square footage increased 5% compared to year-end Fiscal
2001, while the number of stores increased by a net 3 units. The number of
retail transactions for the year increased 7% and the average ticket increased
4% to $82 from $79 in the prior year.
COST OF SALES, BUYING AND STORE OCCUPANCY COSTS
<TABLE>
<CAPTION>
(IN MILLIONS) Fiscal Fiscal Fiscal
2003 2002 2001
<S> <C> <C> <C>
Cost of sales, buying
and occupancy costs...... $412.5 $344.0 $309.6
Shipping..................... 8.8 5.6 3.9
Total..................... $421.3 $349.6 $313.5
</TABLE>
Fiscal 2003
Cost of sales, including buying and store occupancy costs, for Fiscal 2003 was
$421.3 million, or 70.6% of revenues. As a percentage of revenues, these costs
improved from 70.8% in Fiscal 2002. Product margins declined 210 basis points
as we focused on our value offerings at key price points designed to increase
market share and drive sales volumes. Buying and store occupancy costs
declined as a percentage of revenues to 16.8% from 19.1% in Fiscal 2002,
reflecting the significant leverage gained as a result of higher same store
sales. Buying and store occupancy costs included impairment charges totaling
$.2 million to write down the fixed assets related to eight unprofitable
stores.
Fiscal 2002
Cost of sales, including buying and store occupancy costs, for Fiscal 2002 was
$349.6 million, or 70.8% of revenues. As a percentage of revenues, these costs
declined from 71.7% in Fiscal 2001. Product margins declined 40 basis points
as we targeted key price points to drive volume. Buying and occupancy costs
were 19.1% of revenues, a 130 basis points decline, as a result of leveraging
costs against the stronger sales levels. Buying and occupancy costs included
impairment charges totaling $.7 million to write down the fixed assets related
to six unprofitable stores.
<PAGE> 15
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Fiscal 2003
Selling, general and administrative expenses were $158.4 million compared to
$132.3 million in Fiscal 2002. As a percentage of revenues, expenses were
slightly lower at 26.6% in Fiscal 2003 compared to 26.8% in Fiscal 2002.
Excluding charges related to the departure of the Chief Executive Officer and
the settlement of a California wage and hour lawsuit in Fiscal 2002, selling,
general and administrative expenses in Fiscal 2002 were 26.3% of revenues. At
the store level, costs declined slightly as a percentage of sales. Store
payroll productivity gains were offset by higher costs associated with the new
broadband communication network and store opening and closing expenses.
Marketing costs increased over $7 million, or 50 basis points, as we increased
our distribution of monthly Sunday newspaper inserts from three markets in late
Fiscal 2002 to 21 markets in Fiscal 2003, in order to attract new customers and
drive traffic into the stores. Corporate office general and administrative
expenses declined approximately 40 basis points as we leveraged insurance and
payroll costs against the higher revenue base. Foreign exchange gains related
to the strengthening of the Canadian dollar also helped offset costs associated
with infrastructure investment in systems.
Fiscal 2002
Selling, general and administrative expenses were $132.3 million compared to
$117.6 million in Fiscal 2001. As a percentage of revenues, expenses were
slightly lower at 26.8% in Fiscal 2002 compared to 26.9% in Fiscal 2001.
Fiscal 2002 included a charge of $1.1 million relating to the departure of the
Chief Executive Officer and a $1.3 million charge related to the settlement of
a California wage and hour lawsuit. Excluding these charges, selling, general
and administrative costs were 26.3% of revenues, a 60 basis point decline. At
the store level, we were able to successfully leverage payroll costs against
the higher revenue base. Marketing costs increased by over $5 million or 70
basis points to 4.1% of revenues as we invested in advertising to drive sales
through increased direct marketing and testing broader reach vehicles including
a color newspaper insert. Corporate general and administrative costs declined
slightly as a percentage of revenue primarily due to leverage in payroll and
depreciation and amortization of systems partially offset by higher insurance
costs.
INTEREST
Fiscal 2003
During Fiscal 2003, we had interest income of $176,000 and interest expense of
$621,000, compared to interest income of $331,000 and interest expense of
$152,000 in Fiscal 2002. Decline in interest income and increase in expense
are the result of lower invested cash balances and greater utilization of the
credit facility in the current year. Funds were primarily used to finance our
capital expansion plan, with the addition of 49 locations, and higher inventory
levels to support both the higher store count and the increase in same store
sales.
Fiscal 2002
During Fiscal 2002, we had interest income of $331,000 and interest expense of
$152,000, compared to interest income of $248,000 and interest expense of
$566,000 in Fiscal 2001. Improvement resulted from higher average cash
balances generated through higher sales and profits, lower capital expenditures
and lower average inventory levels, resulting in lower utilization of the
credit facility. In addition, borrowings were at lower interest rates.
INCOME TAXES
We provided income taxes of $6.3 million, $5.1 million and $2.3 million in
Fiscal 2003, Fiscal 2002 and Fiscal 2001, respectively. The effective rates
were 38.7%, 41.2% and 38.6% in the respective periods. Fluctuations in the
effective rate were primarily related to foreign taxes that change in
accordance with earnings in the Canadian subsidiary and in state tax expenses
that have not changed proportionately to income before income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The primary sources of liquidity and capital resources are cash flows from
operations and a line of credit with banks. We have an unsecured, revolving
credit agreement with a group of banks, with an aggregate commitment of up to
$75 million for working capital and letter of credit purposes. The bank
commitment is limited to 45% of saleable inventory. At January 31, 2004, the
bank commitment was $62.2 million, and $55.3 million was available for
borrowings or additional letters of credit. The credit facility expires July
5, 2005.
Fiscal 2003
During Fiscal 2003, we used $31.0 million of cash, ending the year with $25.6
million in cash and long-term investments. The decline in the level of cash
from Fiscal 2002, for both year-end comparisons and throughout the period, is
due to our higher capital expenditures and corresponding inventory levels in
Fiscal 2003 to support the additional stores and growth in same store sales.
The primary sources of cash were net income, including non-cash depreciation,
amortization expense and deferred tax expense, as well as the exercise of stock
options. Cash was primarily used for capital expansion, partially offset by
construction allowances granted by landlords, and to purchase additional
inventory to support the larger store base and increased same store sales.
<PAGE> 16
Other significant uses of cash included the payment of federal income taxes and
a decrease in other current assets, primarily due to a decrease in prepaid rent
resulting from the timing of the end of the fiscal period.
Capital expenditures totaled $41.1 million and included the costs of opening 53
large format stores, 30 KIDS stores, one outlet, a distribution center in
Plainfield, Indiana, investments in new point-of-sale, planning and allocation
and other systems and routine purchases of equipment. These expenditures were
partially offset by construction allowances of $11.9 million granted by
landlords.
At January 31, 2004, inventory levels were $138.9 million or $36.2 million
higher than at February 1, 2003. This increase represents investments to
support the additional number of stores and higher sales levels. The year end
level was above desired levels as a result of aggressively buying to Christmas
sales that did not materialize. The investments were made primarily in core
merchandise which will continue to be offered as part of the product offering.
As a result, future orders will be adjusted to reflect the higher on hand
quantities. We do not expect the higher inventory levels to have a material
impact on gross margins. However, we will closely monitor inventory sell-
through and take appropriate actions, as necessary, to maximize inventory
productivity.
Long-term, our strategy is to utilize our credit facility to finance seasonal
borrowings and to utilize cash flow from operations and our balance sheet to
finance our capital programs. For Fiscal 2004, the capital expenditures plan
is estimated to be $30 to $35 million and includes the addition 64 large format
stores and 15 BombayKIDS stores. We expect to close 35 large format and 4
regular stores, and to end Fiscal 2004 with approximately 511 locations. Other
capital expenditure plans include further enhancements to the point-of-sale
system and its roll out to the Canadian subsidiary, expansion of distribution
facilities in the Northeast and routine purchases of equipment.
In connection with continuing operations, we have various contractual
obligations and commercial commitments requiring payment in future periods,
summarized in the table below.
<TABLE>
<CAPTION>
Payments Due by Period
(In thousands) Total Less than 1 - 3 4 - 5 After 5
1 Year Years Years Years
<S> <C> <C> <C> <C> <C>
CONTRACTUAL OBLIGATIONS
Real estate operating leases............ $283,711 $ 44,056 $106,574 $60,682 $72,399
Unconditional purchase orders........... 81,347 81,347 * * *
Equipment operating leases.............. 2,945 731 2,173 41 *
Employment contracts.................... 3,647 3,332 315 * *
Other contractual obligations........... 13,978 7,994 5,984 * *
Total contractual cash obligations.. $385,628 $137,460 $115,046 $60,723 $72,399
COMMERCIAL COMMITMENTS
Import letters of credit................ $3,898 $3,898 $ * $ * $ *
Standby letters of credit............... 2,942 2,942 * * *
Guarantees of travel cards.............. 135 135 * * *
Total commercial commitments........ $6,975 $6,975 $ * $ * $ *
</TABLE>
With our current growth plans, we anticipate that we will need to increase our
borrowing capabilities to finance our pre-holiday build up of inventory in
Fiscal 2004. We currently intend to take advantage of the favorable credit
environment to increase our overall borrowing capabilities. We are exploring
various alternatives, including increasing our existing facility, and will
assess our options during the upcoming months.
Fiscal 2002
At February 1, 2003, cash and short-term investments were $56.6 million, $18.2
million higher than at February 2, 2002. The primary sources of cash were net
income including non-cash depreciation and amortization expense, increases in
payables including those related to higher inventory purchases, taxes, payroll
and insurance as well as proceeds from the exercise of stock options. These
sources were partially offset by higher inventory levels and capital
expenditures for store construction and routine equipment purchases.
At February 1, 2003, inventory levels were $13.0 million higher than at the
previous year end due to improved flow of product to support the strong sales
trend experienced during the second half of Fiscal 2002, and to support
continued growth into Fiscal 2003.
Capital expenditures totaled $10.2 million and included the costs of 28 new
stores and the conversion of two regular stores to the larger format, as well
as continued investments in software and equipment.
<PAGE> 17
CRITICAL ACCOUNTING POLICIES
In the course of preparing the financial statements, management makes certain
judgments relative to accounting policies that are appropriate in the
circumstances and the application of those policies. The following policies
are those deemed to be most critical.
Inventory Valuation Policy
Inventories are valued at the lower of cost or market, cost being determined
based upon the weighted average inventory method. Cost is calculated based upon
the actual landed cost of an item at the time it is received in the warehouse
based upon actual vendor invoices or estimates of costs for which an invoice is
not present or for which an allocation of shared costs is required. In
addition, we include the cost of warehousing and transporting product to the
stores in our costs.
We regularly evaluate our compliance with the lower of cost or market
principle. Items are evaluated by SKU and to the extent that the cost of the
item exceeds the current selling price, provision is made to reduce the
carrying cost of the item. Additionally, we review the aging of our inventory
by SKU. The carrying cost of the item is reduced based upon certain age
criteria and product category. Since the determination of carrying value of
inventory involves both estimation and judgment of cost and market value,
differences in these estimates could result in valuations that vary from the
recorded asset.
Each month, we record an allowance for shrinkage to provide for the cost of
lost or stolen inventory. The amount of the allowance is determined based upon
the historical shrinkage results and is adjusted at least annually to reflect
current circumstances. Inventory is physically counted at all locations at
least once each year, at which time actual results are reflected in the
financial statements. Physical counts were taken at all stores and all the
distribution centers during January 2004.
Impairment of Long-Lived Assets
We review long-lived assets with definite lives at least annually and whenever
events or changes in circumstances indicate that the carrying value of the
asset may not be recoverable. This review includes the evaluation of
individual under-performing retail stores and assessing the recoverability of
the carrying value of the fixed assets related to the store. Future cash flows
are projected for the remaining lease life using a probability-weighted
approach to estimate the fair value of the store assets. These projections
consider such factors as future sales levels, gross margins, changes in rent
and other expenses as well as the overall operating environment specific to
that store. If the estimated future cash flows are less than the carrying
value of the assets, we record a charge equal to the difference between the
assets' fair value and carrying value as an impairment. Since the projection
of future cash flows involves judgment and estimates, differences in
circumstances or estimates could produce different results.
Deferred Taxes
We currently have recorded $8.1 million of deferred tax assets representing the
difference between the timing of deductions taken for financial statement
purposes and for tax purposes. In order to take the benefit of those assets,
we must have future taxable income. If future conditions indicate that the
benefit of the deferred tax assets will not be fully realized, we will record a
valuation allowance to reduce the assets to their estimated realizable value.
Insurance
We are self-insured with respect to medical and dental insurance coverage
offered to our eligible employees, up to a maximum of $125,000 per claim.
Above that amount, medical insurance coverage is in place. In connection with
the self-insured portion, we maintain a liability for claims that are in the
process of being paid and those that have been incurred but not yet reported to
our insurance carrier. We base the amount of the liability upon historical
claims experience and actuarial estimates regarding the exposure for claims
incurred but not yet reported. At January 31, 2004, the balance of the medical
and dental liability was $772,000.
Since Fiscal 2001, we have also maintained workers' compensation insurance
coverage with a deductible of up to $150,000 per claim. At January 31, 2004,
we had recorded a liability of $2.9 million representing the estimated amount
that will have to be paid in future periods related to the settlement of claims
under the insurance policies for Fiscal 2001 through Fiscal 2003. The amount
of the liability reflects expected remaining workers' compensation claims based
upon actuarial estimates, utilizing historical claims experience and other
relevant information and trends. Prior to Fiscal 2001, our workers'
compensation insurance was not subject to a deductible.
If circumstances change or if information becomes available that would indicate
that future payments with respect to insurance liabilities would be different
than what was previously estimated, we will adjust such liabilities
accordingly. Since the amounts recorded for insurance liabilities are based
upon various estimates, actual future requirements could vary from the recorded
liabilities.
<PAGE> 18
New Accounting Pronouncements
During Fiscal 2003, we 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 our consolidated financial position or results of operations.
We have 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 our consolidated
financial position or results of operations.
In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation Number ("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.
In December 2003, the FASB amended and clarified FIN 46 by issuing FIN 46R.
The FASB has postponed the effective date of FIN 46R to the first quarter of
Fiscal 2004, at which time we will adopt the provisions of the standard. We do
not expect the adoption of the standard to have a material impact on our
consolidated financial position or results of operations.
<PAGE> 19
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market risk represents the potential loss arising from adverse changes in the
value of financial instruments. The risk of loss is assessed based upon the
likelihood of adverse changes in fair values, cash flows or future earnings.
We have exposure to interest rate risk, as borrowings under our credit facility
are based upon LIBOR, prime and other benchmark rates which may fluctuate with
market conditions. Based upon our seasonal borrowing levels, management does
not believe that a change in interest rates of 100 basis points would have a
significant impact on our consolidated financial position or results of
operations.
As of January 31, 2004 we had no debt or other market risk sensitive
instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The index to the consolidated financial statements is found on page 26. Our
consolidated financial statements and notes to the consolidated financial
statements follow the index.
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.
ITEM 9A. 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 Bombay's management,
including the Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.
Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were effective in
timely alerting them to material information relating to Bombay that is
required to be included in periodic filings with the Securities and Exchange
Commission. There have been no significant changes in our internal controls or
in other factors that could significantly affect internal controls subsequent
to the date of the evaluation.
<PAGE> 20
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
We have adopted a code of ethics that applies to all employees including our
principal executive officer and principal financial and accounting officer. A
copy of the Code of Business Conduct and Ethics is filed as an Exhibit to this
Annual Report on Form 10-K and is incorporated herein by reference. In
addition, the code is posted on our website at http://bombaycompany.com or can
be obtained, free of charge, upon request from the office of the Corporate
Secretary.
Other information required under Item 10 appears under the captions "Election
of Directors", "Executive Officers of the Company", "Meetings and Committees of
the Board" 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 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 AND
RELATED STOCKHOLDER MATTERS.
EQUITY COMPENSATION INCENTIVE PLAN INFORMATION
Bombay currently maintains The Bombay Company, Inc. Employee Stock Purchase
Plan (the "ESPP"), The Bombay Company, Inc. 1996 Long-Term Incentive Stock Plan
(the "1996 Plan"), and The Bombay Company, Inc. Supplemental Stock Program (the
"SSP"), all of which were originally approved by our shareholders. We also
maintain The Bombay Company, Inc. Amended and Restated 2001 Non-Employee
Directors' Equity Plan (the "Directors' Equity Plan"), which was not subject to
shareholder approval.
The following table gives information about equity awards under the above-
mentioned plans as of January 31, 2004.
<TABLE>
<CAPTION>
Plan Category Number of securities Weighted-average Number of securities remaining
to be issued upon exercise price of available for future issuance
exercise of outstanding options, under equity compensation
outstanding options, warrants and rights plans (excluding securities
warrants and rights reflected in column (a))
<S> <C> <C> <C>
(a) (b) (c)
Equity compensation 2,458,570 $5.09 2,272,009 (2) (3)
plans approved by
security holders (1)
Equity compensation 252,750 $4.61 116,469
plans not approved by
security holders (4)
Total 2,711,320 $5.03 2,388,478
</TABLE>
<FN>
(1) Consists of the ESPP, 1996 Plan and SSP.
(2) Of these shares, 234,274 remain available for purchase under the ESPP and
96,504 remain available for purchase under the SSP.
<PAGE> 21
(3) The 1996 Plan includes an "evergreen" feature which replenishes the Plan
with newly available shares on an annual basis. The added shares equal
1.25% of the total number of issued shares of Bombay common stock as of the
last day of each fiscal year.
(4) Consists of the Directors' Equity Plan. The material features of the
Directors' Equity Plan are as follows:
Members of the Board receive stock options and may opt to receive fees in the
form of Bombay common stock or to defer those fees in the form of stock units
pursuant to the Directors' Equity Plan. The Directors' Equity Plan provides
for an initial grant of a nonqualified option to new directors and an automatic
annual grant of nonqualified options to continuing directors on the third
business day after Bombay issues its press release summarizing our operating
results for the prior fiscal year. The initial and automatic annual option
grants are 10,000 shares. Committee chairs are awarded an additional option
grant covering 2,500 shares on an annual basis beginning in Fiscal 2004. The
initial grant vests 20% per year over a five-year period and the annual grants
vest in full six months after the grant.
Non-employee directors may opt to be paid their fees in the form of Bombay
common stock distributed to such director on a quarterly basis. Alternatively,
non-employee directors may choose to defer the receipt of annual and committee
chair retainers and meeting fees, which are then credited in stock units
equivalent to Bombay common stock and held by Bombay in an account for the
benefit of each participating director. The stock units, which are fully
vested, become payable in the form of Bombay common stock upon retirement from
the Board or otherwise as specified in the director's election notice. The
stock units are adjusted for stock dividends, stock splits, combinations,
reclassifications, recapitalizations or other capital adjustments.
Other information required under Item 12 appears under the captions "Security
Ownership" 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 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There were no relationships or related transactions during the reporting period
which require disclosure.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required by this item appears under the captions "Independent
Auditors' Fees" and "Audit Committee's Pre-approval Policy and Procedures" 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.
<PAGE> 22
PART IV
ITEM 15. 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) Financial Statements:
Report of Independent Auditors
Consolidated Statements of Income for the Years Ended January 31,
2004, February 1, 2003 and February 2, 2002
Consolidated Balance Sheets at January 31, 2004 and February 1, 2003
Consolidated Statements of Stockholders' Equity for the Years Ended
January 31, 2004, February 1, 2003 and February 2, 2002
Consolidated Statements of Cash Flows for the Years Ended January 31,
2004, February 1, 2003 and February 2, 2002
Notes to Consolidated Financial Statements
(2) 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.
(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.
The Securities and Exchange Commission requires the filing of a Form 8-K
for certain events specified under Sections 13 or 15(d) of the Securities
Exchange Act of 1934, for nonpublic information required to be disclosed
by Regulation FD, or for any other information which the Company deems of
importance to security holders. During the quarter ended January 31,
2004, the following Reports on Form 8-K were filed:
(1)On November 21, 2003, we filed a Form 8-K reporting the results of our
earnings for the fiscal quarter ended November 1, 2003.
(2)On November 21, 2003, we filed a Form 8-K issuing guidance regarding
our expected real estate strategy for the remainder of Fiscal 2003 and
Fiscal 2004.
<PAGE> 23
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 9, 2004
/s/ JAMES D. CARREKER
James D. Carreker
Chairman of the Board and
Chief Executive Officer
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/ JAMES D. CARREKER Chairman of the Board and April 9, 2004
James D. Carreker Chief Executive Office
/s/ NIGEL TRAVIS Lead Director April 7, 2004
Nigel Travis
Director
John H. Costello
/s/ SUE T. GROENTEMAN Director April 8, 2004
Sue T. Groenteman
Director
Paul J. Raffin
/s/ JULIE L. REINGANUM Director April 7, 2004
Julie L. Reinganum
/s/ LAURIE M. SHAHON Director April 7, 2004
Laurie M. Shahon
Director
Bruce R. Smith
/s/ ELAINE D. CROWLEY Senior Vice President, April 8, 2004
Elaine D. Crowley Chief Financial Officer
and Treasurer
<PAGE> 24
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page No.
Report of Independent Auditors.............................. 25
Consolidated Statements of Income for the Years Ended
January 31, 2004, February 1, 2003 and February 2, 2002 .. 26
Consolidated Balance Sheets at January 31, 2004 and
February 1, 2003.......................................... 27
Consolidated Statements of Stockholders' Equity for
the Years Ended January 31, 2004, February 1, 2003
and February 2, 2002...................................... 28-29
Consolidated Statements of Cash Flows for the Years
Ended January 31, 2004, February 1, 2003 and
February 2, 2002.......................................... 30
Notes to Consolidated Financial Statements.................. 31-39
Unaudited Quarterly Financial Data.......................... 40
<PAGE> 25
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
The Bombay Company, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index on page 24 present fairly, in all material respects, the
financial position of The Bombay Company, Inc. and its subsidiaries at January
31, 2004 and February 1, 2003, and the results of their operations and their
cash flows for each of the three years in the period ended January 31, 2004, in
conformity with accounting principles generally accepted in the United States
of America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Fort Worth, Texas
April 9, 2004
<PAGE> 26
CONSOLIDATED STATEMENTS OF INCOME
The Bombay Company, Inc. and Subsidiaries
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended
January 31 February 1 February 2
2004 2003 2002
<S> <C> <C> <C>
Net revenues................................................ $596,435 $494,000 $437,457
Costs and expenses:
Cost of sales, buying and store occupancy costs.......... 421,322 349,599 313,484
Selling, general and administrative expenses............. 158,446 132,305 117,589
Interest expense (income), net........................... 445 (179) 318
580,213 481,725 431,391
Income before income taxes.................................. 16,222 12,275 6,066
Provision for income taxes.................................. 6,271 5,058 2,342
Net income............................................... $ 9,951 $ 7,217 $ 3,724
Basic earnings per share.................................... $.29 $.22 $.11
Diluted earnings per share.................................. $.28 $.22 $.11
Average common shares outstanding........................... 34,649 33,048 32,967
Average common shares outstanding and
dilutive potential common shares......................... 34,966 33,298 32,992
</TABLE>
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 27
CONSOLIDATED BALANCE SHEETS
The Bombay Company, Inc. and Subsidiaries
(In thousands, except shares)
<TABLE>
<CAPTION>
January 31 February 1
2004 2003
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (short-term investments of $15,421 and $46,622 respectively)..... $ 25,619 $ 56,608
Inventories, at lower of cost or market.................................................... 138,908 102,768
Other current assets....................................................................... 26,012 21,123
Total current assets.................................................................. 190,539 180,499
Property and equipment, at cost:
Land....................................................................................... 892 892
Building................................................................................... 5,198 5,198
Leasehold improvements..................................................................... 103,295 81,827
Furniture and equipment.................................................................... 40,756 33,345
150,141 121,262
Accumulated depreciation............................................................... (82,034) (75,961)
Net property and equipment............................................................. 68,107 45,301
Deferred taxes and other assets............................................................... 5,864 9,966
Goodwill, less amortization of $611........................................................... 423 423
Total assets........................................................................ $264,933 $236,189
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses...................................................... $ 35,348 $ 37,202
Income taxes payable....................................................................... 1,103 6,673
Accrued payroll and bonuses................................................................ 8,019 7,192
Gift certificates redeemable............................................................... 7,129 5,923
Accrued insurance.......................................................................... 3,730 3,609
Total current liabilities.............................................................. 55,329 60,599
Accrued rent and other liabilities............................................................ 18,217 6,182
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
Additional paid-in capital................................................................. 79,210 75,446
Retained earnings.......................................................................... 86,312 76,361
Accumulated other comprehensive income (loss).............................................. 122 (1,394)
Common shares in treasury, at cost, 2,816,772 and
4,621,440 shares, respectively......................................................... (11,555) (18,918)
Deferred compensation...................................................................... (852) (237)
Total stockholders' equity............................................................. 191,387 169,408
Commitments and contingencies (Note 5)
Total liabilities and stockholders' equity.......................................... $264,933 $236,189
</TABLE>
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 28 & 29
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
The Bombay Company, Inc. and Subsidiaries
(In thousands)
<TABLE>
<CAPTION>
Accumulated
Common Stock Treasury Stock Additional Stock Other Annual
Paid-In Purchase Deferred Retained Comprehensive Comprehensive
Shares Amount Shares Amount Capital Loans Comp. Earnings Income (Loss) Income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total, February 3, 2001.... 38,150 $38,150 (5,456) $(22,320) $75,735 $(991) $ * $65,420 $(1,267)
Purchases of treasury
shares................... * * (39) (103) * * * * *
Shares contributed or
sold to employee benefit
plans.................... * * 102 418 (225) * * * *
Director fee distributions. * * 30 123 (48) * * * *
Restricted stock
distributions............ * * 250 1,021 (195) * (552) * *
Deferred compensation
expense.................. * * * * * * 285 * *
Collections of stock
purchase loans........... * * * * * 86 * * *
Interest (charges)
collections on stock
purchase loans, net...... * * * * * (45) * * *
Net income................. * * * * * * * 3,724 * $3,724
Foreign currency
translation adjustments.. * * * * * * * * (509) (509)
Total, February 2, 2002.... 38,150 38,150 (5,113) (20,861) 75,267 (950) (267) 69,144 (1,776) $3,215
Purchases of treasury
shares................... * * (202) (895) * 864 * * *
Shares contributed or
sold to employee
benefit plans............ * * 66 271 (89) * * * *
Exercise of stock options.. * * 596 2,438 45 * * * *
Director fee distributions. * * 77 313 3 * * * *
Restricted stock
distributions............ * * (45) (184) 220 * (44) * *
Deferred compensation
expense.................. * * * * * * 74 * *
Net repayments of stock
purchase loans........... * * * * * 103 * * *
Interest charges on stock
purchase loans, net...... * * * * * (17) * * *
Net income................. * * * * * * * 7,217 * $7,217
Foreign currency
translation adjustments.. * * * * * * * * 382 382
Total, February 1, 2003.... 38,150 38,150 (4,621) (18,918) 75,446 * (237) 76,361 (1,394) $7,599
Purchases of treasury
shares................... * * (9) (69) * * * * *
Shares contributed or
sold to employee benefit
plans.................... * * 64 262 113 * * * *
Exercise of stock options.. * * 1,613 6,610 3,007 * * * *
Director fee distributions. * * 55 227 33 * * * *
Restricted stock
distributions............ * * 81 333 611 * (974) * *
Deferred compensation
expense.................. * * * * * * 359 * *
Net income................. * * * * * * * 9,951 * $ 9,951
Foreign currency
translation adjustments.. * * * * * * * * 1,516 1,516
Total, January 31, 2004.... 38,510 $38,510 (2,817) $(11,555) $79,210 $ * $(852) $86,312 $ 122 $11,467
</TABLE>
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 30
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Bombay Company, Inc. and Subsidiaries
(In thousands)
<TABLE>
<CAPTION>
Year Ended
January 31 February 1 February 2
2004 2003 2002
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.............................................................. $ 9,951 $ 7,217 $ 3,724
Adjustments to reconcile net income to net cash from operations:
Depreciation......................................................... 13,217 12,740 13,000
Amortization........................................................ 4,248 2,743 3,472
Restricted stock compensation....................................... 328 66 298
Deferred taxes and other............................................ 5,108 (1,543) (707)
Change in assets and liabilities:
(Increase) decrease in inventories.................................. (34,833) (12,430) 14,090
Increase in other current assets.................................... (3,943) (2,033) (807)
Increase (decrease) in accounts payable and accrued expenses....... (1,843) 13,624 50
Increase (decrease) in income taxes payable........................ (2,276) 3,608 (2,700)
Increase (decrease) in accrued payroll and bonuses................. 725 2,156 (607)
Decrease in noncurrent assets...................................... 19 13 74
Increase (decrease) in noncurrent liabilities...................... 617 (535) (563)
Net cash provided (used) by operations.......................... (8,682) 25,626 29,324
Cash flows from investing activities:
Purchases of property, equipment and other............................. (41,062) (10,224) (14,127)
Landlord construction allowances....................................... 11,900 * *
Proceeds from sale of property and equipment........................... 172 289 614
Net cash used by investing activities.......................... (28,990) (9,935) (13,513)
Cash flows from financing activities:
Purchases of treasury stock............................................ (83) (31) (103)
Sale of stock to employee benefit plans................................ 387 182 193
Collection of stock purchase loans..................................... * 104 86
Exercise of stock options.............................................. 6,310 2,328 *
Net cash provided by financing activities...................... 6,614 2,583 176
Effect of exchange rate change on cash .................................... 69 (81) 271
Net increase (decrease) in cash and cash equivalents....................... (30,989) 18,193 16,258
Cash and cash equivalents at beginning of year............................. 56,608 38,415 22,157
Cash and cash equivalents at end of year................................... $ 25,619 $ 56,608 $ 38,415
Supplemental disclosures of cash flow information:
Interest paid.......................................................... $ 597 $ 152 $ 566
Income taxes paid...................................................... 4,191 2,298 5,687
Non-cash financing activities:
Distributions of director fees....................................... 260 316 75
Distributions of restricted stock.................................... 943 368 826
Repurchase of shares from stock purchase loans....................... * 864 *
</TABLE>
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Bombay Company, Inc. and Subsidiaries
NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
The Bombay Company, Inc. and its wholly-owned subsidiaries design, source and
market a unique line of fashionable home accessories, wall decor and furniture
through a network of retail locations throughout the United States and Canada,
through specialty catalogs, over the Internet and internationally through
licensing arrangements. We also have a small wholesale operation that
distributes a separate line of occasional furniture. Throughout this report,
the terms "our," "we," "us" and "Bombay" refer to The Bombay Company, Inc.,
including its subsidiaries.
The consolidated financial statements include the accounts of Bombay and its
wholly-owned subsidiaries. All significant intercompany transactions, balances
and profits have been eliminated. Bombay has a retail (52-53 week) fiscal
year, which ends on the Saturday nearest January 31. All periods presented
reflect 52 weeks.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates. These estimates
affect reported amounts of assets, liabilities, revenues, expense and related
disclosures. Actual results could differ from those estimates.
FOREIGN CURRENCY TRANSLATION
The functional currency of our Canadian operations is the Canadian dollar.
Fiscal year end exchange rates are used to translate assets and liabilities to
U.S. dollars. Monthly average exchange rates are used to translate income and
expenses. We record the cumulative effect of foreign currency translation
adjustments in accumulated other comprehensive income (loss) within
stockholders' equity.
CASH AND CASH EQUIVALENTS
We consider cash in stores, deposits in banks and short-term investments with
original maturities of three months or less as cash and cash equivalents for
the purposes of the financial statements. Short-term investments are recorded
at the lower of cost or fair market value.
INVENTORIES
Inventories are primarily finished merchandise and are valued at the lower of
cost or market, cost being determined based upon the weighted average inventory
method.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and are depreciated over the
estimated useful lives of the assets using the straight-line method over the
lives shown:
Building............... Forty years
Furniture and equipment Two to ten years
Leasehold improvements. The lesser of the life of the lease or asset
Landlord construction allowances are recorded as other liabilities and are
amortized as a reduction of rent expense over the life of the related lease.
We charge maintenance and repairs to expense as they are incurred. We
capitalize renewals and betterments which materially prolong the useful lives
of the assets. As property is retired or sold, we remove the cost and related
accumulated depreciation from the accounts, and we recognize gains or losses in
the statements of income.
CAPITALIZED SOFTWARE COSTS
We capitalize certain external and internal costs associated with computer
software and significant enhancements to software features of existing
products. We amortize the costs utilizing the straight-line method over the
estimated economic lives of the software, which range from three to seven
years. Total costs capitalized were $15,128,000 and $19,500,000 at January 31,
2004 and February 1, 2003, respectively. Accumulated amortization related to
these assets was $10,016,000 and $15,236,000 in Fiscal 2003 and Fiscal 2002,
respectively.
IMPAIRMENT OF LONG-LIVED ASSETS
During Fiscal 2002, we adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 144, Accounting for Impairment or Disposal of
Long-Lived Assets. SFAS 144 requires that long-lived assets with definite
lives be evaluated for impairment whenever conditions indicate that the
carrying value of the assets may not be recoverable. In determining if an
impairment exists, assets must be grouped at the lowest level for which there
are identifiable cash flows that are largely independent of cash flows from
other groups of assets. In performing this impairment test, we group our
assets at the store level. If an impairment exists, the amount of the
impairment is measured as the difference between the carrying value and the
estimated fair value of the assets. The adoption of SFAS 144 did not have a
significant impact on our financial position or results of operations.
For periods prior to Fiscal 2002, we assessed impairment of long-lived assets
in accordance with the provisions of SFAS No. 121, which were similar to the
provisions of SFAS 144.
GOODWILL
During Fiscal 2002, we adopted the provisions of SFAS No. 142, Accounting for
Goodwill and Other Intangibles. SFAS 142 provides that goodwill should no
longer be amortized, but should be tested for impairment at least annually, and
whenever conditions indicate that such an impairment could exist. Goodwill is
tested for impairment by comparing the estimated fair value of our net assets
to their carrying value. If the carrying value exceeds the estimated fair
value, we calculate the implied value of goodwill and recognize an impairment
loss. No impairment was recorded in Fiscal 2003 or Fiscal 2002. The adoption
of SFAS 142 did not have a significant impact on our financial statements, nor
would it have had a significant impact on prior years if the provisions of SFAS
142 had been applied.
REVENUE RECOGNITION
We recognize revenue when delivery has occurred, the sales price is fixed or
determinable, and collectibility is reasonably assured. Revenues are net of
returns and exclude sales tax.
We include in revenues amounts collected from customers for shipping and
handling orders. In Fiscal 2003, Fiscal 2002 and Fiscal 2001, these revenues
totaled $6,566,000, $4,626,000 and $2,779,000, respectively. The associated
shipping and handling expenses are included in cost of sales.
GIFT CERTIFICATES
We record proceeds from the sale of gift cards and certificates as a liability
at the time we receive them. When the holder of the card or certificate
redeems it for merchandise, we relieve the liability and recognize revenue.
ADVERTISING COSTS
We expense advertising cost the first time the advertising takes place. During
Fiscal 2003, Fiscal 2002 and Fiscal 2001, advertising expense was $27,604,000,
$20,258,000 and $14,597,000, respectively.
INCOME TAXES
We use the liability method of computing deferred income taxes on all material
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. We assess the
realizability of deferred tax assets and, if necessary, provide a valuation
allowance.
All unremitted earnings of the foreign subsidiary are considered to be
permanently reinvested. Accordingly, no U.S. deferred taxes have been provided
on such earnings.
COMPREHENSIVE INCOME
Comprehensive income 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.
Such amounts are included in accumulated other comprehensive income (loss)
within stockholders' equity and consist of the cumulative effect of foreign
currency translation adjustments.
NEW ACCOUNTING PRONOUNCEMENTS
During Fiscal 2003, we adopted 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 our consolidated financial position or results of
operations.
We have 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 our consolidated
financial position or results of operations.
In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation Number ("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.
In December 2003, the FASB amended and clarified FIN 46 by issuing FIN 46R.
The FASB has postponed the effective date of FIN 46R to the first quarter of
Fiscal 2004, at which time we will adopt the provisions of the standard. We do
not expect the adoption of the standard to have a material impact on our
consolidated financial position or results of operations.
<PAGE> 33
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.
The computation for basic and diluted earnings from continuing operations per
share are as follows (in thousands, except per share amounts):
<TABLE>
<CAPTION> Year Ended
January 31 February 1 February 2
2004 2003 2002
<S> <C> <C> <C>
Numerator:
Net income..................................... $9,951 $7,217 $3,724
Denominator for basic earnings per share:
Average common shares outstanding.............. 34,649 33,048 32,967
Denominator for diluted earnings per share:
Average common shares outstanding.............. 34,649 33,048 32,967
Stock options.................................. 314 227 1
Deferred director compensation................. 3 23 24
34,966 33,298 32,992
Basic earnings per share........................... $.29 $.22 $.11
Diluted earnings per share......................... $.28 $.22 $.11
</TABLE>
STOCK-BASED COMPENSATION
We apply 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 123, Accounting for
Stock-Based Compensation, in accounting for our 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
equal to the market price of Bombay's common stock on the date of grant.
Compensation expense related to grants of restricted stock is measured as the
quoted market price of Bombay'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 we had applied the fair value
recognition provisions of SFAS 123 to stock-based compensation (in thousands):
<TABLE>
<CAPTION>
Year Ended
January 31 February 1 February 2
2004 2003 2002
<S> <C> <C> <C>
Net income as reported...................... $ 9,951 $7,217 $3,724
Stock-based compensation expense
determined under FAS 123, net of tax...... (1,196) (925) (964)
Net income, pro forma....................... $ 8,755 $6,292 $2,760
Basic earnings per share, as reported....... .29 .22 .11
Diluted earnings per share, as reported..... .28 .22 .11
Basic earnings per share, pro forma......... .25 .19 .08
Diluted earnings per share, pro forma....... .25 .19 .08
</TABLE>
<PAGE> 34
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model based upon the following assumptions:
<TABLE>
<CAPTION>
Year Ended
January 31 February 1 February 2
2004 2003 2002
<S> <C> <C> <C>
Expected volatility........... 65.7% 63.9% 59.9%
Expected life years........... 5 6 6
Expected dividends............ * * *
Risk-free interest rate....... 3.3 - 4.5% 3.8 - 5.8% 5.0 - 5.5%
</TABLE>
The weighted average fair value of options granted during Fiscal 2003, Fiscal
2002 and Fiscal 2001 was $3.95, $1.71 and $1.69, respectively.
NOTE 2 - STORE IMPAIRMENTS
Following the holiday selling season, we reviewed our real estate portfolio for
impairment, focusing on store locations with operating losses. Of the 471
company-owned stores open as of January 31, 2004, eight stores were identified
for which the carrying amounts of the store assets were not expected to be
recoverable. As a result of the review, we recorded an impairment charge to
buying and occupancy costs of $244,000. Similar reviews, performed in Fiscal
2002 and Fiscal 2001, resulted in charges to buying and occupancy costs of
$693,000 and $715,000, respectively.
NOTE 3 - DEBT
We have 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 $25,000,000 to $75,000,000 through the addition of one lending
party and an increased commitment on the part of two existing banks. We have
the option to request an increase in the aggregate commitment to $100,000,000,
subject to approval by the banks, through the addition of another lending bank
or increased commitment by the existing lending banks. The facility, which
expires July 5, 2005, is for working capital, inventory financing and letter of
credit purposes. Borrowings under the facility can be made, at our option and
subject to certain limitations, in the form of loans or by the issuance of
bankers' acceptances with respect to inventory purchases. Loans under the
facility bear interest, at our option, at either the lead bank's prime lending
rate plus a margin of .25% to 1.25% or the LIBOR rate plus a margin of 1.75% to
2.75%, with the margin depending on our leverage ratio. Under the terms of the
agreement, we are required to maintain certain financial ratios and other
financial conditions. The agreement prohibits us from making certain
investments, advances or loans, and limits the dollar amounts of capital
expenditures, purchases of treasury shares, cash dividends and asset sales. In
the event that we are in default of certain provisions of the agreement, the
lenders would be permitted to file liens against our inventory located in the
United States and perfect the pledge of 65% of the stock of our Canadian
subsidiary, thereby securing the indebtedness.
The bank commitment is limited to 45% of saleable inventory. At January 31,
2004, the bank commitment was $62,157,000. Letters of credit totaling
$6,840,000 were outstanding under the facility, and $55,317,000 was available
for borrowings or additional letters of credit. Interest expense and
negotiated fees for Fiscal 2003, Fiscal 2002 and Fiscal 2001, totaled
$1,086,000, $617,000 and $884,000, respectively.
<PAGE> 35
NOTE 4 - INCOME TAXES
The components of the provision for domestic and foreign income taxes are shown
below (in thousands):
<TABLE>
<CAPTION>
Year Ended
January 31 February 1 February 2
2004 2003 2002
<S> <C> <C> <C>
Income before income taxes:
Domestic................................. $11,920 $11,146 $5,447
Foreign.................................. 4,302 1,129 619
$16,222 $12,275 $6,066
Provision (benefit) for income taxes:
Current:
Federal.............................. $(1,019) $ 5,065 $2,290
Foreign.............................. 1,729 884 339
State and local...................... (176) 498 147
534 6,447 2,776
Deferred (prepaid):
Federal.............................. 5,054 (1,303) (423)
Foreign.............................. 45 57 29
State and local...................... 638 (143) (40)
5,737 (1,389) (434)
Total provision for income taxes............ $ 6,271 $ 5,058 $2,342
</TABLE>
The effective tax rate differs from the federal statutory tax rate for the
following reasons:
<TABLE>
<CAPTION>
Year Ended
January 31 February 1 February 2
2004 2003 2002
<S> <C> <C> <C>
Federal statutory tax rate............... 34.0% 34.0% 34.0%
Increase in effective tax rate
rate due to:
Foreign income taxes............. 1.7 4.5 2.6
State and local taxes,
net of federal income
tax benefit.................. 1.9 1.9 1.1
Other, net....................... 1.1 .8 .9
Effective tax rate.......... 38.7% 41.2% 38.6%
</TABLE>
Deferred taxes reflect the net tax impact of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
amounts used for income tax purposes. Deferred tax assets (liabilities) are
comprised of the following (in thousands):
<TABLE>
<CAPTION>
January 31 February 1
2004 2003
<S> <C> <C>
Deferred tax liabilities:
Depreciation............................ $(2,709) $ *
Other................................... (1,357) (1,426)
(4,066) (1,426)
Deferred tax assets:
Inventory valuation..................... 2,505 1,625
Accrued rent............................ 2,343 2,374
Accrued insurance....................... 1,314 1,270
Depreciation............................ * 2,998
Other................................... 1,938 2,930
8,100 11,197
Net deferred tax assets.............. $ 4,034 $ 9,771
Deferred tax assets, net of liabilities:
Current................................. $4,188 $4,322
Non-current............................. (154) 5,449
Total.............................. $4,034 $9,771
</TABLE>
NOTE 5 - COMMITMENTS AND CONTINGENCIES
We have store, distribution and field office facilities and equipment leased
under operating leases expiring through 2015. The store leases are generally
based upon a minimum rental plus a percentage of the store sales in excess of
specified levels. Store lease terms generally require additional payments
covering taxes, common area charges and certain other costs. Rental expense
for Fiscal 2003, Fiscal 2002 and Fiscal 2001 totaled $58,712,000, $50,669,000
and $47,366,000, respectively.
The minimum rental commitments for future fiscal years are as follows (in
thousands):
<TABLE>
<CAPTION>
Fiscal
<S> <C>
2004.................... $ 44,787
2005.................... 37,817
2006.................... 36,026
2007.................... 34,903
2008.................... 31,640
Thereafter............. 101,483
$286,656
</TABLE>
We have certain contingent liabilities resulting from litigation and claims
incident to the ordinary course of business. Management believes that the
probable resolution of such contingencies will not materially affect our
financial position or results of operations.
We are party to employment agreements with certain executives which provide for
compensation and certain other benefits. The agreements also provide for
severance payments under certain circumstances.
NOTE 6 - EMPLOYEE BENEFIT PLANS
The Bombay Company, Inc. Employee 401(k) Savings and Stock Ownership Plan
("401(k) Plan") is open to substantially all employees who have been employed
for one year and who work at least 1,000 hours per year. Under the 401(k)
Plan, a participant may contribute up to 75% of earnings with Bombay matching
100% of the initial 3% contribution, and 50% of the next 2% contributed by the
participant. Participant contributions and Company match are paid to a
corporate trustee and invested in various funds or Bombay stock, as directed by
the participant. Company matching contributions made to participants' accounts
are fully vested immediately. Similar benefit plans are in effect for eligible
foreign employees.
To the extent employees are unable to contribute up to 5% of their earnings to
the 401(k) Plan because of limitations imposed by IRS regulations, a
Supplemental Stock Program was adopted. Under this program, employee
contributions in excess of IRS limitations, along with Company matching
contributions, are distributed annually in the form of Bombay common stock.
The Bombay Company, Inc. Stock Purchase Program ("SPP") is open to all full-
time employees who have at least 90 days of service. Each participant may
contribute 1% to 10% of qualifying compensation, to a maximum annual
contribution of $21,250. Contributions are used to purchase shares of Bombay
common stock at a discount of 15% from current market rates. The participants'
shares are fully vested upon purchase. Participants' shares are held by a
third-party administrator until the respective participant requests a
distribution.
Total Bombay contributions to these plans for Fiscal 2003, Fiscal 2002 and
Fiscal 2001 were $714,000, $723,000 and $644,000, respectively.
NOTE 7 - COMMON STOCK AND STOCK OPTIONS
Our Board of Directors has authorized a stock repurchase program to purchase up
to an aggregate of $30 million of Bombay's stock. The shares may be purchased
from time to time, through open market purchases and privately negotiated
transactions. During Fiscal 2003, Fiscal 2002 and Fiscal 2001, 9,000, 13,000
and 39,000 shares, respectively, were acquired at an aggregate cost of $70,000,
$31,000 and $103,000, respectively. Treasury shares are used for various
employee and director stock plans as the need arises.
The Bombay Company, Inc. 1986 Stock Option Plan and 1996 Long Term Incentive
Stock Plan ("Employee Plans") provide for the granting of options (and other
types of stock-related awards under the 1996 plan) to officers and key
management employees. At January 31, 2004, the option shares reserved for the
Employee Plans were 4,492,494. The option price is fixed at the market price
or higher on the date of the grant. Options are generally exercisable annually
at a rate of 33% per year beginning one year after the grant date. Shares
available for additional grants were 1,795,138; 2,432,019 and 1,459,552 at
January 31, 2004, February 1, 2003 and February 2, 2002, respectively.
During Fiscal 2001, restricted stock aggregating 200,000 shares was granted
under the 1996 Long Term Incentive Stock Plan to three key executives. The
respective shares were to become vested in designated increments contingent
upon continued employment of the respective executive after 12 months, 24
months and 36 months. During Fiscal 2002, 40,000 of the shares became vested
and were distributed. Also in Fiscal 2002, two of the executives left the
employment of Bombay and 120,000 restricted shares expired unvested. During
Fiscal 2003, 15,000 of the shares became vested and were distributed. The
remaining 25,000 shares have become vested and will be distributed in Fiscal
2004. Compensation expense of $23,000 and $285,000 was recognized during
Fiscal 2003 and Fiscal 2001, respectively, and in Fiscal 2002 net expenses of
$87,000 were reversed in connection with the restricted stock.
During Fiscal 2002, 75,000 shares of restricted stock were granted and issued
to the Chairman of the Board. One third of the shares vested upon his
acceptance of the position. Contingent upon continued Board service, one third
of the shares was to become vested after 12 months and 24 months, respectively.
During Fiscal 2003, the Chairman of the Board accepted the appointment to also
become our Chief Executive Officer. Under the terms of his employment, the
unvested shares under his initial restricted stock grant were canceled and a
new grant of 81,256 shares was issued. Contingent upon his continued
employment, the shares will become fully vested after 36 months. During Fiscal
2003 and Fiscal 2002, $136,000 and $153,000, respectively, was recognized as
compensation expense in conjunction with the restricted stock grants.
During Fiscal 2003, 50,000 shares of restricted stock were granted and issued
under the 1996 Long Term Incentive Stock Plan to a key executive. The
respective shares are to become vested in designated increments contingent upon
continued employment of the executive after 12 months, 24 months and 36 months.
Compensation expense of $170,000 was recognized during Fiscal 2003 in
connection with the restricted stock.
The Bombay Company, Inc. Non-Employee Director Equity Plan ("Director Plan")
provides for the granting of options to members of the Board of Directors who
are neither Bombay employees nor officers. At January 31, 2004, the option
shares reserved for the Director Plan were 464,978. The option price is fixed
at the market price on the date of the grant. For Fiscal 2003, the option
grant, initial and annual, was the lesser of 10,000 shares or $75,000 in face
value. The initial grant becomes exercisable at a rate of 20% per year
beginning one year after the grant date. Each additional annual grant becomes
fully exercisable six months after the grant date. Shares available for
additional grants were 116,469; 325,196 and 354,210 at January 31, 2004,
February 1, 2003 and February 2, 2002, respectively.
The Director Plan also allows directors the option to receive retainer and
meeting fees in the form of Bombay common stock or to defer receipt of such
fees. Deferred amounts are credited to an account for such director in units
equivalent to Bombay common stock.
The following table includes option information for the Employee Plans and
Director Plan:
<TABLE>
<CAPTION>
Weighted
Number Option Price Average
Stock Option Activity Of Shares Per Share Option Price
<S> <C> <C> <C>
February 3, 2001............... 3,677,241 $1.75 - 25.75 $5.20
Options granted............ 1,157,200 2.35 - 4.00 2.77
Options canceled........... (603,856) 2.31 - 25.75 4.83
February 2, 2002............... 4,230,585 1.75 - 25.75 4.59
Options granted............ 1,200,388 2.38 - 5.02 2.71
Options exercised.......... (595,703) 2.65 - 5.44 3.91
Options canceled........... (1,547,000) 2.38 - 25.75 4.55
February 1, 2003............... 3,288,270 1.75 - 25.75 4.05
Options granted............ 1,248,800 4.54 - 13.52 6.75
Options exercised.......... (1,603,784) 1.75 - 15.88 3.93
Options canceled........... (221,966) 1.75 - 25.75 8.53
January 31, 2004............... 2,711,320 2.06 - 15.88 5.03
Exercisable at:
February 2, 2002........... 2,502,548 1.75 - 25.75 5.27
February 1, 2003........... 1,821,900 1.75 - 25.75 4.96
January 31, 2004........... 786,709 2.06 - 15.88 4.43
</TABLE>
The following table summarizes stock options outstanding at January 31, 2004:
<TABLE>
<CAPTION>
Outstanding Exercisable
Weighted Weighted Weighted
Exercise Average Average Average
Price Remaining Exercise Exercise
Range Shares Life Price Shares Price
<S> <C> <C> <C> <C> <C>
$2.06 - 2.48 457,980 8.0 $ 2.38 75,725 $ 2.37
2.55 - 2.94 383,548 7.4 2.75 163,890 2.75
3.00 - 3.94 270,246 7.1 3.55 172,581 3.55
4.00 - 4.97 601,988 7.9 4.56 208,955 4.56
5.00 - 5.63 357,308 8.8 5.39 25,308 5.39
6.00 - 7.89 117,800 5.6 6.54 93,300 6.54
9.13 - 15.88 522,450 8.7 11.57 46,950 11.57
2,711,320 7.9 $ 5.03 786,709 $ 4.43
</TABLE>
The exercise of non-qualified stock options in Fiscal 2003 and Fiscal 2002
resulted in income tax benefits of $3,283,000 and $155,000, respectively, which
were credited to additional paid-in capital. The income tax benefits are the
tax effect of the difference between the market price on the date of exercise
and the option price.
NOTE 8 - SHAREHOLDERS' RIGHTS PLAN
We have a shareholders' rights plan under which each share of Bombay common
stock includes one Preferred Share Purchase Right ("Right") entitling the
holder to buy one one-thousandth of a share of Series A Junior Participating
Preferred Stock of the Company at an exercise price of $50. The Rights, which
have ten year terms expiring in 2005, are exercisable if a person or group
acquires 15% or more of the common stock of Bombay or announces a tender offer
for 15% or more of the common stock. If a person or group acquires 15% or more
of the outstanding common stock of Bombay, each Right will entitle the holder
to purchase, at the Right's exercise price, a number of shares of Bombay common
stock having a market value of twice the Right's exercise price. If Bombay is
acquired in a merger or other business combination transaction after a person
or group acquires 15% or more of our common stock, each Right will entitle its
holder to purchase, at the Right's exercise price, a number of shares of the
acquiring company's common stock having a market value of twice the Right's
exercise price. The Rights are redeemable at one cent per Right at any time
before they become exercisable.
NOTE 9 - STOCK PURCHASE LOANS
On May 16, 2002, the Board of Directors elected to abolish our Executive Stock
Loan Program, which originated in August 1999. At that date, participants
owned 189,031 shares of Bombay common stock purchased under the program. We
reacquired, at then current market prices aggregating $864,000, the Bombay
common stock that was previously purchased by the executive officers under the
program, and the notes were extinguished. Amounts owed to Bombay or the
participants as a result of the difference between the market value of the
stock and the loan balance plus accrued interest were paid in full.
During Fiscal 2002 and Fiscal 2001, $17,000 and $53,000, respectively, in
interest income was recognized related to the loans.
<PAGE> 39
NOTE 10 - GEOGRAPHIC AREAS
We operate primarily in one industry segment, specialty retailing.
Substantially all revenues result from the sale of home furnishings and
accessories through retail stores in the united states and canada. Long-lived
assets include all non-current assets except deferred taxes.
The following table shows net revenues and long-lived assets by geographic area
(in thousands):
<TABLE>
<CAPTION>
Year Ended
January 31 February 1 February 2
2004 2003 2002
<S> <C> <C> <C>
Net revenues:
United States........... $526,219 $442,339 $388,789
Canada.................. 70,216 51,661 48,668
Total............... $596,435 $494,000 $437,457
Long-lived assets:
United States........... $68,031 $46,201 $51,367
Canada.................. 5,992 4,040 4,226
Total................ $74,023 $50,241 $55,593
</TABLE>
<PAGE> 40
UNAUDITED QUARTERLY FINANCIAL DATA
The Bombay Company, Inc. and Subsidiaries
(In thousands, except per share amounts)
Unaudited quarterly financial data for the quarters ended:
<TABLE>
<CAPTION>
January 31 November 1 August 2 May 3
2004 2003 2003 2003
<S> <C> <C> <C> <C>
Net revenues.......................... $211,564 $135,361 $130,273 $119,237
Gross profit.......................... 67,150 39,215 35,410 33,338
Net income (loss)..................... 12,140 (148) (768) (1,273)
Basic earnings (loss) per share....... .34 - (.02) (.04)
Diluted earnings (loss) per share..... .33 - (.02) (.04)
February 1 November 2 August 3 May 4
2003 2002 2002 2002
Net revenues.......................... $189,264 $113,841 $100,040 $90,855
Gross profit.......................... 65,266 32,870 23,885 22,380
Net income (loss)..................... 13,841 84 (3,276) (3,432)
Basic earnings (loss) per share....... .41 - (.10) (.10)
Diluted earnings (loss) per share..... .41 - (.10) (.10)
</TABLE>
<PAGE> 41
INDEX TO EXHIBITS
The Bombay Company, Inc. and Subsidiaries
Filed with the Annual Report on Form 10-K for the fiscal year ended January 31,
2004.
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. (1)
3(b) - Bylaws, as amended and restated effective May 21, 1997. (6)
4(a) - Preferred Stock Purchase Rights Plan. (2)
4(b) - Amendment to Preferred Stock Purchase Rights Plan. (11)
10(a) - Form of Indemnification Agreement.
10(b) - The Bombay Company, Inc. Supplemental Stock Program. (3)
10(c) - Executive Long Term Disability Plan. (4)
10(d) - The Bombay Company, Inc. 1996 Long-Term Incentive Stock Plan. (5)
10(e) - Form of Award Agreement under the 1996 Long-Term Incentive Stock
Plan. (6)
10(f) - The Bombay Company, Inc. Amended and Restated 2001 Non-Employee
Directors' Equity Plan. (8)
10(g) - Form of Agreement used to evidence stock option grants under The
Bombay Company, Inc. Amended and Restated 2001 Non-
Employee Directors' Equity Plan. (8)
10(h) - Executive Management Incentive Compensation Plan. (10)
10(i) - Employment Letter with Donald V. Roach. (9)
10(j) - Employment Letter with Stephen Farley. (9)
10(k) - Employment Letter with Brian N. Priddy. (9)
10(l) - Employment Agreement with James D. Carreker. (13)
10(m) - Restricted Stock Agreement with James D. Carreker. (13)
10(n) - Stock Option Agreement with James D. Carreker. (13)
10(o) - Employment Letter with Lucretia D. Doblado.
10(p) - Amended and Restated Credit Agreement among The Bombay Company, Inc.,
as Borrower, Bank of America, N.A., as Administrative Agent, Swing
Line Lender, and L/C Issuer, and the Other Lenders Party Hereto,
dated July 5, 2002. (9)
10(q) - First Amendment to Amended and Restated Credit Agreement, dated
July 10, 2003. (12)
14 - Code of Business Conduct and Ethics.
<PAGE> 42
INDEX TO EXHIBITS (CONT.)
The Bombay Company, Inc. and Subsidiaries
Number Description
21 - Subsidiaries of the Registrant. (7)
22 - 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). (14)
23 - Consent of Independent Auditors.
31(a) - Certification of the Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31(b) - Certification of the Chief Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32 - Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
<PAGE> 43
________________
(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 Annual Report on
Form 10-K for the year ended June 28, 1992. Such Exhibit is incorporated
herein by reference.
(4)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.
(5)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.
(6)Filed with the Commission as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended
January 30, 1999. Such Exhibit is incorporated herein by reference.
(7)Filed with the Commission as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended January 29, 2000. 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 January 2, 2002. Such Exhibit is incorporated
herein by reference.
(9)Filed with the Commission as an Exhibit to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended
August 3, 2002. Such Exhibit is incorporated herein by reference.
(10)Filed with the Commission as an Exhibit to the Company's Definitive Proxy
Statement dated April 10, 2003, 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 1, 2003. Such Exhibit is incorporated
herein by reference.
(11) Filed with the Commission as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended February 1, 2003. Such Exhibit is incorporated
herein by reference.
(12) Filed with the Commission as an Exhibit to the Company's Form 8-K on July
14, 2003. Such Exhibit is incorporated herein by reference.
(13) Filed with the Commission as an Exhibit to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended August 2, 2003. Such Exhibit
is incorporated herein by reference.
(14) Filed with the Commission on April 9, 2004.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10aindemnificationagmt.txt
<DESCRIPTION>EX 10(A) - FORM OF INDEMNIFICATION AGMT
<TEXT>
EXHIBIT 10(a)
INDEMNIFICATION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of the ____ day
of ____________, 2004, by and between The Bombay Company, Inc., a Delaware
corporation (the "Company"), and _________________________ ("Indemnitee").
RECITALS:
WHEREAS, highly competent persons have become more reluctant to serve
publicly-held corporations as directors or officers or in other capacities
unless they are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to, and activities on behalf of, the corporation;
this is because such persons in service to corporations are being increasingly
subjected to expensive and time-consuming litigation relating to, among other
things, claims that traditionally would have been brought only against the
corporation or business enterprise itself; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that, to attract and retain qualified individuals, the Company will
attempt to maintain on an ongoing basis, at its sole expense, liability
insurance to protect persons serving the Company and its subsidiaries from
certain liabilities; and
WHEREAS, the Board has determined that the increased difficulty in
attracting and retaining such persons is detrimental to the best interests of
the Company's stockholders and that the Company should act to assure such
persons that there will be increased certainty of such protection in the
future; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify, and to advance expenses on
behalf of, such persons to the fullest extent permitted by applicable law so
that they will serve or continue to serve the Company free from undue concern
that they will not be so indemnified; and
WHEREAS, this Agreement is separate from and in addition to the Bylaws of
the Company and any resolutions adopted pursuant thereto, and shall not be
deemed a substitute therefor, nor to diminish or abrogate any rights of
Indemnitee thereunder; and
WHEREAS, each of Section 145 of the General Corporation Law of the State
of Delaware ("DGCL") and the Bylaws of the Company is nonexclusive, and
therefore contemplates that contracts may be entered into with respect to
indemnification of directors, officers and employees; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take on
additional service for or on behalf of the Company on the condition that
Indemnitee be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee hereby covenant and agree as
follows:
1. SERVICES BY INDEMNITEE. Indemnitee agrees to continue to serve as
a director or officer of the Company, provided that Indemnitee may
at any time and for any reason resign from such position and the
Company shall have no obligation under this Agreement to continue
Indemnitee in such position (subject, in the case of any
resignation by Indemnitee or termination by the Company, to any
rights and obligations they may have under contracts other than
this Agreement or under applicable law). This Agreement shall not
be deemed an employment contract between the Company (or any of its
subsidiaries) and Indemnitee. This Agreement shall continue in
force after Indemnitee has ceased to serve as a director or officer
of the Company.
2. INDEMNIFICATION-GENERAL. The Company shall indemnify, and advance
Expenses (as hereinafter defined) to, Indemnitee (i) as provided in
this Agreement, and (ii) to the fullest extent permitted by
applicable law in effect on the date hereof and as amended from
time to time (but in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than were permitted prior to the amendment).
The rights of Indemnitee provided under the preceding sentence
shall include, but shall not be limited to, the rights set forth in
the other Sections of this Agreement.
3. PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF THE
COMPANY. Indemnitee shall be indemnified under this Section 3 if,
by reason of Indemnitee's Corporate Status (as hereinafter defined)
or by reason of any act done or not done by Indemnitee by reason of
or on account of Indemnitee's Corporate Status, Indemnitee is, or
is threatened to be made, a party to or a participant in any
threatened, pending, or completed Proceeding (as hereinafter
defined), other than a Proceeding by or in the right of the
Company. Pursuant to this Section 3, Indemnitee shall be
indemnified against all Expenses, judgments, penalties, fines,
liabilities and amounts paid in settlement actually and reasonably
incurred by Indemnitee or on Indemnitee's behalf in connection with
such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in Good Faith.
4. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall be
indemnified under this Section 4 if, by reason of Indemnitee's
Corporate Status or by reason of any act done or not done by
Indemnitee by reason of or on account of Indemnitee's Corporate
Status, Indemnitee is, or is threatened to be made, a party to or a
participant in any threatened, pending or completed Proceeding
brought by or in the right of the Company to procure a judgment in
its favor. Pursuant to this Section 4, Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred
by Indemnitee or on Indemnitee's behalf in connection with such
Proceeding if Indemnitee acted in Good Faith; provided that if
applicable law so provides, no indemnification against such
Expenses shall be made in respect of any claim, issue or matter in
such Proceeding as to which Indemnitee shall have been adjudged to
be liable to the Company unless and to the extent that the Court of
Chancery of the State of Delaware, or the court in which such
Proceeding shall have been brought or is pending, shall determine
that such indemnification may be made.
5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provision of this Agreement,
to the extent that Indemnitee is, by reason of Indemnitee's
Corporate Status or by reason of any act done or not done by
Indemnitee by reason of or on account of Indemnitee's Corporate
Status, a party to (or a participant in) and is successful, on the
merits or otherwise, in any Proceeding (including dismissal without
prejudice), Indemnitee shall be indemnified to the maximum extent
permitted by law against all Expenses actually and reasonably
incurred by Indemnitee or on Indemnitee's behalf in connection
therewith. If Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one
or more but less than all claims, issues or matters in such
Proceeding, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed
to be a successful result as to such claim, issue or matter.
6. INDEMNIFICATION FOR OTHER EXPENSES; PER DIEM WHEN NO LONGER
DIRECTOR, OFFICER OR EMPLOYEE. Notwithstanding any other provision
of this Agreement, Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred or suffered by Indemnitee
or on Indemnitee's behalf if Indemnitee is, by reason of
Indemnitee's Corporate Status, a witness or otherwise involved in
any manner in any threatened, pending or completed Proceeding to
which Indemnitee neither is, nor is threatened to be made, a party;
provided that Indemnitee shall not otherwise be compensated or
reimbursed for the value of Indemnitee's time spent as such unless
(i) Indemnitee no longer serves as an officer, director or employee
of the Company and (ii) Indemnitee has spent more than 10 business
days as a witness or other non-party participant in such Proceeding
by reason of Indemnitee's prior Corporate Status. After such 10th
business day, the Indemnitee shall be entitled to receive a per
diem rate of $1,500 for each additional business day that
Indemnitee is required to spend as a non-party participant in such
Proceeding. If Indemnitee is, or is threatened to be made, a party
to such Proceeding, then the provisions of Section 3, 4 or 5, as
appropriate, shall apply in accordance with the terms thereof.
7. ADVANCEMENT OF EXPENSES. Notwithstanding any provision of this
Agreement to the contrary, the Company shall advance all reasonable
Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding referred to in Section 3, 4, 5 or 6 within 10 days
after the receipt by the Company of a statement or statements from
Indemnitee requesting such advance or advances from time to time,
whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses
incurred by Indemnitee. Indemnitee hereby undertakes to repay any
Expenses advanced if it shall ultimately be determined by final
judgment of a court of competent jurisdiction that Indemnitee is
not entitled to be indemnified against such Expenses. Any advances
and undertakings to repay pursuant to this Section 7 shall be
unsecured and interest free. Advances shall include any and all
reasonable Expenses incurred by Indemnitee pursuing an action to
enforce this Agreement, including Indemnitee's right of
advancement, and Expenses incurred in preparing and forwarding
statements to the Company to support the advances claimed;
provided, that the Company shall only be obligated to advance
Expenses incurred by Indemnitee in pursuing an action to enforce
this Agreement to the extent that the Expenses previously paid by
Indemnitee in such action exceed $10,000. In any legal proceedings
commenced by Indemnitee in a court of competent jurisdiction in the
State of Delaware to secure a determination that Indemnitee should
be indemnified under applicable law, or as provided in this
Agreement, any determination made by the Reviewing Party that
Indemnitee would not be permitted to be indemnified under
applicable law or under this Agreement shall not be binding.
8. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(A)To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to
Indemnitee and is reasonably necessary to determine whether and to what
extent Indemnitee is entitled to such indemnification. The Secretary of
the Company shall, promptly upon receipt of such a request for
indemnification, advise the Board in writing that Indemnitee has
requested indemnification.
(B)The person, persons or entity (the "Reviewing Party") who shall
determine whether Indemnitee is entitled to indemnification in the first
instance shall be (i) the Board, acting by a majority vote of
Disinterested Directors (as hereinafter defined), whether or not such
majority constitutes a quorum of the Board, (ii) a committee of
Disinterested Directors designated by a majority vote of the
Disinterested Directors, whether or not such majority constitutes a
quorum, or (iii) if there are no Disinterested Directors, or if
Indemnitee so directs in writing at the time a request for
indemnification is made, an Independent Counsel (as hereinafter defined).
Promptly after making the determination the Reviewing Party shall render
its written opinion to the Company and Indemnitee as to whether and to
what extent Indemnitee should be permitted to be indemnified under this
Agreement. If the Reviewing Party determines that Indemnitee is entitled
to indemnification, payment shall be made by the Company within 10 days
after such determination. Indemnitee shall cooperate with the Reviewing
Party with respect to Indemnitee's entitlement to indemnification,
including providing to the Reviewing Party upon reasonable advance
request any documentation or information that is not privileged or
otherwise protected from disclosure and that is reasonably available to
Indemnitee and reasonably necessary to such determination. All
reasonable costs or expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in so cooperating with the
Reviewing Party shall be paid by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless
therefrom.
(C)If Indemnitee directs that an Independent Counsel be appointed,
the Independent Counsel shall be selected by the Board, and promptly
following such selection the Company shall give written notice to
Indemnitee advising Indemnitee of the identity of the Independent Counsel
so selected. Within 10 days after such written notice of selection has
been given, Indemnitee may deliver to the Company a written objection to
such selection; provided that such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the
requirements of "Independent Counsel" as defined in Section 18, and the
objection shall set forth with particularity the factual basis for such
assertion. Absent a proper and timely objection, the person so selected
shall act as Independent Counsel. If such written objection is so made,
the Independent Counsel so selected may not serve as Independent Counsel
unless and until such objection is withdrawn or a court has determined
that such objection is without merit. If within 45 days after submission
by Indemnitee of a written request for indemnification pursuant to
Section 8(a) that directs the Board to appoint an Independent Counsel,
no Independent Counsel has been selected and not objected to, either the
Company or Indemnitee may petition the Court of Chancery of the State of
Delaware or other court of competent jurisdiction for the appointment of
such person or entity as Independent Counsel as the court shall
designate, and the person with respect to whom all objections are so
resolved or the person so appointed by the court shall then act as
Independent Counsel under this Agreement. Upon the due commencement of
any judicial proceeding or arbitration pursuant to Section 10(a), the
Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
1. PRESUMPTIONS; RELIANCE AND EFFECT OF CERTAIN PROCEEDINGS.
(A)In making a determination with respect to entitlement to
indemnification hereunder, the Reviewing Party shall presume that
Indemnitee is entitled to indemnification under this Agreement if
Indemnitee has submitted a request for indemnification in accordance with
Section 8(a), and the Company shall have the burden of proof to overcome
that presumption by clear and convincing evidence in connection with the
making by any person, persons or firm of any determination contrary to
that presumption. Neither the failure of the Reviewing Party to have
made a determination prior to the commencement of any action pursuant to
this Agreement that indemnification is proper in the circumstances
because Indemnitee has met the applicable standard of conduct, nor any
determination thereby that Indemnitee has not met such applicable
standard of conduct, shall be a defense or admissible as evidence in any
action for any purpose or create a presumption that Indemnitee has not
acted in Good Faith or met any other applicable standard of conduct.
(B)If the Reviewing Party shall not have made a determination
within 60 days after receipt by the Company of the request therefor, the
requisite determination of entitlement to indemnification shall be deemed
to have been made and Indemnitee shall be entitled to such
indemnification, absent (i) a misstatement by Indemnitee of a material
fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided that such 60-day period may be extended for a
reasonable time, not to exceed an additional 30 days, if the Reviewing
Party in good faith requests in writing such additional time for the
obtaining or evaluating of documentation and/or information relating
thereto.
(C)The termination of any Proceeding or of any claim, issue or
matter therein , by judgment, order, settlement (whether with or without
court approval) or conviction, or upon a plea of nolo contendere or its
equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that (i) Indemnitee did not act
in Good Faith or failed to meet any other applicable standard of conduct,
or (ii) a court has determined that indemnification is not permitted
under applicable law.
(D)The knowledge and/or actions, or failure to act, of any
director, officer, agent or employee of the Enterprise shall not be
imputed to Indemnitee for purposes of determining the right to
indemnification under this Agreement.
1. REMEDIES OF INDEMNITEE.
(A)If (i) a determination is made pursuant to Section 8 that
Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 7, (iii)
no determination of entitlement to indemnification shall have been made
pursuant to Section 8(b) within 90 days after receipt by the Company of
the request for indemnification, (iv) payment of indemnification is not
made pursuant to Section 5, Section 6, the last sentence of Section
8(b) or the last sentence of Section 18(j) within 10 days after receipt
by the Company of a written request therefor, or (v) payment of
indemnification pursuant to Section 3 or Section 4 is not made within 10
days after a determination has been made that Indemnitee is entitled to
indemnification, Indemnitee shall be entitled to an adjudication by the
Court of Chancery of the State of Delaware of Indemnitee's entitlement to
such indemnification or advancement of Expenses. Alternatively,
Indemnitee, at Indemnitee's option, may seek an award in arbitration to
be conducted by a single arbitrator pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. Indemnitee
shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first
has the right to commence such proceeding pursuant to this Section 10(a);
provided that the foregoing clause shall not apply in respect of a
proceeding brought by Indemnitee to enforce Indemnitee's rights under
Section 5. The Company shall not oppose Indemnitee's right to seek any
such adjudication or award in arbitration.
(B)If a determination shall have been made pursuant to Section 8(b)
that Indemnitee is not entitled to indemnification, any judicial
proceeding or arbitration commenced pursuant to this Section 10 shall be
conducted in all respects as a de novo trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination.
(C)If a determination shall have been made pursuant to Section 8(b)
that Indemnitee is entitled to indemnification, the Company shall be
bound by such determination in any judicial proceeding or arbitration
commenced pursuant to this Section 10, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statements not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition
of such indemnification under applicable law.
(D)If Indemnitee, pursuant to this Section 10, seeks a judicial
adjudication of or an award in arbitration to enforce Indemnitee's rights
under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified
by the Company against, any and all expenses (of the types described in
the definition of Expenses in Section 18 of this Agreement) actually and
reasonably incurred by Indemnitee in such judicial adjudication or
arbitration unless it shall be finally determined by the court or
arbitrator before which such claim was brought that it was brought in bad
faith. Even if it shall be determined in such judicial adjudication or
arbitration that Indemnitee is entitled to receive part but not all of
the indemnification or advancement of Expenses sought, the expenses
incurred by Indemnitee in connection with such judicial adjudication or
arbitration shall be paid in full.
(E)The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 10 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and hereby stipulates, and shall so stipulate in any such
court or before any such arbitrator, that the Company is bound by all the
provisions of this Agreement.
1. NOTIFICATION AND DEFENSE OF PROCEEDING.
(A)Indemnitee shall promptly notify the Company in writing upon
being served with any summons, citation, subpoena, complaint, indictment,
information or other document relating to any Proceeding or matter that
may be subject to indemnification or advancement of Expenses pursuant to
this Agreement, but subject to the last sentence of Section 11(c), the
omission so to notify the Company will not relieve it from any liability
that it may have to Indemnitee.
(B)In the event Indemnitee notifies the Company of the commencement
of a Proceeding, the Company will be entitled to participate in the
Proceeding at its own expense, and except as otherwise provided below, if
the Company so wishes, it may assume the defense thereof with counsel
reasonably satisfactory to Indemnitee. After notice from the Company to
Indemnitee of its election to assume the defense of any Proceeding, the
Company will not be liable to Indemnitee under this Agreement or
otherwise for any Expenses subsequently incurred by Indemnitee in
connection with the defense of such Proceeding other than reasonable
costs of investigation or as otherwise provided below. Indemnitee shall
have the right to retain Indemnitee's own counsel in such Proceeding, but
Indemnitee shall be obligated to pay all Expenses related thereto
incurred by Indemnitee after notice from the Company of its assumption of
the defense unless: (i) the retention of counsel by Indemnitee has been
authorized by the Company, (ii) Indemnitee has reasonably determined,
based upon a written opinion of Indemnitee's counsel, that there is a
substantial possibility that a conflict of interest will arise between
Indemnitee and the Company in the defense of the Proceeding, (iii) after
a Change of Control (as hereinafter defined), the retention of counsel by
Indemnitee has been approved by an Independent Counsel, or (iv) the
Company shall not within 60 calendar days have retained counsel
reasonably satisfactory to Indemnitee to assume the defense of such
Proceeding, in each of which cases all Expenses incurred by Indemnitee in
connection with such Proceeding shall be borne by the Company. In the
event separate counsel is retained by Indemnitee pursuant to this Section
11(b), the Company shall cooperate with Indemnitee with respect to the
defense of the Proceeding, including making documents, witnesses and
other reasonable information related to the defense available to
Indemnitee and such separate counsel pursuant to joint-defense agreements
or confidentiality agreements, as appropriate. Notwithstanding any
provision herein to the contrary, the Company shall not be entitled to
assume the defense of any Proceeding brought by or on behalf of the
Company or as to which Indemnitee shall have made the determination
provided for in (ii) above.
(C)The Company shall not be liable to indemnify Indemnitee under
this Agreement or otherwise for any amounts paid in settlement of any
Proceeding effected without the Company's prior written consent; provided
that if a Change of Control has occurred, the Company shall be liable for
indemnification of Indemnitee for amounts paid in settlement if an
Independent Counsel has approved the settlement. The Company shall not
settle any Proceeding in any manner that would impose any penalty,
liability or limitation on Indemnitee without Indemnitee's prior written
consent; provided that the Company shall not be required to obtain the
consent of Indemnitee to the settlement of any Proceeding the Company has
undertaken to defend if the settlement grants Indemnitee a complete and
unqualified release in respect of the potential liability. The Company
shall not be liable for any amount paid by Indemnitee in settlement of
any Proceeding that is not defended by the Company unless the Company has
consented to such settlement. Neither the Company nor Indemnitee will
unreasonably withhold their consent to any proposed settlement. The
Company shall have no obligation to indemnify Indemnitee under this
Agreement with regard to any judicial award issued in a Proceeding, or
any related Expenses of Indemnitee, if the Company was not given a
reasonable and timely opportunity, at its expense, to participate in the
defense of such Proceeding, except to the extent the Company was not
materially prejudiced thereby.
1. NONEXCLUSIVITY; INSURANCE; SUBROGATION.
(A)The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of
any other rights to which Indemnitee may at any time be entitled under
applicable law, the Company's Certificate of Incorporation, the Company's
Bylaws, any other agreement, any vote of stockholders, any resolution of
the Board, or otherwise. No amendment, alteration or repeal of this
Agreement or of any provision hereof shall limit or restrict any right of
Indemnitee under this Agreement in respect of any action taken or omitted
by such Indemnitee in Indemnitee's Corporate Status prior to such
amendment, alteration or repeal. To the extent that a change in the DGCL
or the manner in which the DGCL is judicially construed permits greater
indemnification or advancement of Expenses than would be afforded
currently under the Company's Certificate of Incorporation, Bylaws and
this Agreement, it is the agreement and intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such change. No right or remedy herein conferred is intended to be
exclusive of any other right or remedy, and every other right and remedy
shall be cumulative and in addition to every right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of
any other right or remedy.
(B)The Company shall use reasonable best efforts to provide
directors' and officers' liability insurance coverage for the benefit of
Indemnitee and Indemnitee's estate at all times while Indemnitee
continues to serve as a director or an executive officer of the Company
on the same terms and in the same amount as the Company then provides for
its other directors and executive officers. Upon the termination of
Indemnitee's service as a director or executive officer of the Company
and for a period thereafter equal to the shorter of (i) six years or (ii)
the expiration of the applicable statute of limitations (the "Post-
Termination Coverage Period"), the Company will use reasonable best
efforts to maintain directors' and officers' liability insurance coverage
for its directors and executive officers in a manner that will continue
to provide coverage for Indemnitee's acts and omissions during
Indemnitee's service as a director or executive officer of the Company.
Notwithstanding the foregoing sentences of this Section 12(b), from and
after the occurrence of a Change of Control, the Company shall be
obligated to use best efforts to maintain directors' and officers'
liability insurance coverage while Indemnitee continues to serve as a
director or an executive officer of the Company and during the Post-
Termination Coverage Period on terms and in amounts substantially similar
to those maintained by the Company immediately prior to the Change of
Control.
(C)In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all documents required and take
all actions necessary to secure such rights, including execution of such
documents as are necessary to enable the Company to bring suit to enforce
such rights.
(D)The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable (or for which advancement is
provided hereunder) hereunder if and to the extent that Indemnitee has
already received payment of such amounts under any insurance policy,
contract, agreement or otherwise.
(E)The Company's obligation to indemnify or advance Expenses
hereunder to Indemnitee due to the fact that Indemnitee is or was serving
at the request of the Company as a director, officer, employee or agent
of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise shall be reduced by any amount
Indemnitee has already received as indemnification or advancement of
expenses from such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
1. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of: (i) the expiration of the applicable
limitations periods as to all possible claims in respect of which
Indemnitee is granted rights of indemnification or advancement of
Expenses hereunder upon commencement of a related Proceeding, or
(ii) the final termination of any Proceeding then pending in
respect of which Indemnitee is granted rights of indemnification or
advancement of Expenses hereunder and of any proceeding commenced
by Indemnitee pursuant to Section 10 relating thereto. This
Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of Indemnitee and
Indemnitee's heirs, executors and administrators.
2. SEVERABILITY. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any
reason whatsoever: (i) the validity, legality and enforceability of
the remaining provisions of this Agreement (including without
limitation each portion of any Section of this Agreement containing
any such provision held to be invalid, illegal or unenforceable,
that is not itself invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby and shall remain
enforceable to the fullest extent permitted by law, (ii) such
provision or provisions shall be deemed reformed to the extent
necessary to conform to applicable law and to give the maximum
effect to the intent of the parties hereto, and (iii) to the
fullest extent possible, the provisions of this Agreement
(including without limitation each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the
intent manifested thereby.
3. EXCEPTION TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF EXPENSES.
Notwithstanding any other provision of this Agreement, but subject
to Section 10, Indemnitee shall not be entitled to indemnification
or advancement of Expenses under this Agreement with respect to any
Proceeding brought by Indemnitee, or any claim therein, unless the
bringing of such Proceeding or making of such claim shall have been
approved by the Board.
4. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed
to be an original but all of which together shall constitute one
and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to
evidence the existence of this Agreement.
5. HEADINGS. The headings of the Sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute
part of this Agreement or to affect the construction thereof.
6. DEFINITIONS. For purposes of this Agreement:
(A)"Affiliate" means with respect to any person or entity, any
other person or entity that, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control
with, such person or entity.
(B)"Board" shall have the meaning given such term in the recitals
at the beginning of this Agreement.
(C)"Change of Control" shall mean the occurrence of any of the
following events:
(i) the acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange
Act")) of beneficial ownership of 20% or more of either the then
outstanding shares of common stock of the Company or the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors;
provided that any acquisition by the Company or any of its
subsidiaries, or any corporation with respect to which following
such acquisition, more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the common stock and voting
securities of the Company immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the then outstanding shares of common
stock of the Company or the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors, as the case may be, shall
not constitute a Change of Control;
(ii) individuals, who, as of August 8, 2003, constituted the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided that any individual
becoming a director subsequent to such date whose election, or
nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office is
in connection with an actual or threatened election contest
relating to the election of the directors of the Company (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act); or
(iii) approval by the shareholders of the Company of a
reorganization, merger or consolidation of the Company and the
satisfaction of all conditions precedent to the transaction, in
each case, with respect to which the individuals and entities who
were the respective beneficial owners of the common stock and
voting securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly
or indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such reorganization, merger or consolidation, or a
complete liquidation or dissolution of the Company or of the sale
or other disposition of all or substantially all of the assets of
the Company.
(D)"Corporate Status" describes the status of a person who is or
was a director, officer, employee, agent or fiduciary of an Enterprise.
(E)"DGCL" shall have the meaning given such term in the recitals at
the beginning of this Agreement.
(F)"Disinterested Director" means a member of the Board who is not
and was not a party to the Proceeding in respect of which indemnification
is sought by Indemnitee.
(G)"Enterprise" shall mean the Company and any other corporation,
partnership, limited liability company, joint venture, trust, employee
benefit plan or other entity, enterprise or association of which
Indemnitee is or was serving at the request of the Company as a director,
manager, officer, employee, agent or fiduciary.
(H)"Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, fees of
witnesses other than Indemnitee, travel and lodging expenses, duplicating
costs, printing and binding costs, telephone charges, postage, delivery
service fees, and all other reasonable disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, being or preparing to be
a witness in, or otherwise participating in, a Proceeding, including,
subject to the advancement provisions of Section 7 hereof, a Proceeding
brought by Indemnitee to enforce this Agreement. Expenses also shall
include expenses reasonably incurred in connection with any appeal
resulting from any Proceeding, including without limitation, any premium,
security for, and other costs relating to any cost bond, supersedeas
bond, or other appeal bond or its equivalent.
(I)"Good Faith" shall mean Indemnitee having acted in good faith
and in a manner Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal
Proceeding, having had no reasonable cause to believe Indemnitee's
conduct was unlawful. For purposes of any determination of Good Faith,
Indemnitee shall be deemed to have acted in Good Faith if Indemnitee's
action is based on the records or books of account of the Enterprise,
including financial statements, or on information supplied to Indemnitee
by a committee of the Board upon which Indemnitee does not serve as to
matters within its designated authority, or the officers, agents or
employees of the Enterprise in the course of their duties, or on the
advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified
public accountant or by an appraiser, financial advisor or other expert
or professional selected with reasonable care by the Enterprise. The
provisions of this Section 18(i) shall not be deemed to be exclusive or
to limit in any way the other circumstances in which Indemnitee may be
deemed to have met the applicable standard of conduct set forth in this
Agreement.
(J)"Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent:
(i) the Company or any Affiliate thereof or Indemnitee (other than with
respect to matters concerning Indemnitee's rights under this Agreement,
or the rights of other indemnitees under similar indemnification
agreements), or (ii) any other party to the Proceeding giving rise to a
claim for indemnification hereunder. Notwithstanding the foregoing, the
term "Independent Counsel" shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have
a conflict of interest in representing the Company or Indemnitee in an
action to determine Indemnitee's rights under this Agreement. The
Company shall promptly pay the reasonable fees and expenses of the
Independent Counsel referred to above and shall fully indemnify such
counsel against any and all Expenses, claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant
hereto.
(K)"Post-Termination Coverage Period" shall have the meaning given
in Section 12(b) hereof.
(L)"Proceeding" includes any claim seeking money or other relief,
however made or presented, as well as any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution
mechanism, investigation, inquiry, administrative hearing or any other
actual, threatened or completed proceeding, whether brought by or in the
right of the Company or otherwise and whether civil, criminal,
administrative or investigative, in which Indemnitee was, is or will be
involved as a party or otherwise, by reason of the fact that Indemnitee
is or was a director or officer of the Company, by reason of any action
taken by Indemnitee or of any inaction on Indemnitee's part while acting
in a Corporate Status, or by reason of the fact that Indemnitee is or was
serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, limited liability company,
joint venture, trust or other enterprise, in each case whether or not
Indemnitee is acting or serving in any such capacity at the time any
liability or expense is incurred for which indemnification or advancement
of expenses can be provided under this Agreement.
(M)"Reviewing Party" shall have the meaning given such term in
Section 8(b).
(N)References to "other enterprise" shall include employee benefit
plans; references to "fines" shall include any excise tax assessed with
respect to any employee benefit plan; references to "serving at the
request of the Company" shall include any service as a director, officer,
employee or agent of an Enterprise that imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an
employee benefit plan, as participants or beneficiaries; and an
Indemnitee who acted in good faith and in a manner Indemnitee reasonably
believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in Good Faith.
1. ENFORCEMENT.
(A)The Company expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on it hereby in
order to induce Indemnitee to serve or continue to serve in a Corporate
Status as requested by the Company, and the Company acknowledges that
Indemnitee is relying upon this Agreement in serving in a Corporate
Status.
(B)This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and understandings, oral, written and implied,
between the parties hereto with respect to the subject matter hereof.
(C)The right to be indemnified or to receive advancement of
Expenses under this Agreement (i) is a contract right based upon good and
valuable consideration, pursuant to which Indemnitee may sue, (ii) is and
is intended to be retroactive to the date Indemnitee assumed a Corporate
Status and shall be available as to events occurring prior to the date of
this Agreement, and (iii) shall continue after any rescission or
restrictive modification of this Agreement as to events occurring prior
thereto.
1. MODIFICATION AND WAIVER. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by
both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any
other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver.
2. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if (i) delivered by hand and receipted for by the party to
whom the notice or other communication shall have been directed, or
(ii) mailed by certified or registered mail with postage prepaid,
on the third business day after the date on which it is so mailed:
(A)If to Indemnitee, to:
with a copy to:
(B)If to the Company, to:
The Bombay Company, Inc.
550 Bailey Avenue, Suite 700
Fort Worth, Texas 76107
Attention: Corporate Secretary
with a copy to:
or to such other address as may have been furnished to the Company by
Indemnitee or to Indemnitee by the Company, as the case may be.
1. CONTRIBUTION. To the fullest extent permissible under applicable
law, if the indemnification provided for in this Agreement is
unavailable to Indemnitee for any reason whatsoever, the Company,
in lieu of indemnifying Indemnitee, shall contribute to the amount
incurred by Indemnitee, whether for judgments, fines, penalties,
excise taxes, amounts paid or to be paid in settlement and/or for
Expenses, in connection with any claim relating to an indemnifiable
event under this Agreement, in such proportion as is deemed fair
and reasonable in light of all of the circumstances of such
Proceeding in order to reflect (i) the relative benefits received
by the Company and Indemnitee as a result of the event(s) and/or
transaction(s) giving rise to such Proceeding, and/or (ii) the
relative fault of the Company (and its directors, officers,
employees and agents) and Indemnitee in connection with such
event(s) and/or transaction(s).
2. GOVERNING LAW; SUBMISSION TO JURISDICTION; APPOINTMENT OF AGENT FOR
SERVICE OF PROCESS. This Agreement and the legal relations between
the parties shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without regard
to its conflict of laws rules. Except with respect to any
arbitration commenced by Indemnitee pursuant to Section 10(a), the
Company and Indemnitee hereby irrevocably and unconditionally (i)
agree that any action or proceeding arising out of or in connection
with this Agreement shall be brought only in the Chancery Court of
the State of Delaware (the "Delaware Court"), and not in any other
state or federal court in the United States of America or any court
in any other country, (ii) consent to and submit to the exclusive
jurisdiction of the Delaware Court for purposes of any action or
proceeding arising out of or in connection with this Agreement,
(iii) agree that service to of their respective addresses
referenced herein, as amended from time to time, is good service of
process, (iv) waive any objection to the laying of venue of any
such action or proceeding in the Delaware Court, and (v) waive, and
agree not to plead or to make, any claim that any such action or
proceeding brought in the Delaware Court has been brought in an
improper or otherwise inconvenient forum.
3. MISCELLANEOUS. All references in this Agreement to Sections shall
be deemed to be references to Sections of this Agreement unless the
context indicates otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
The Bombay Company, Inc.
By:
Name: Michael J. Veitenheimer
Title: Vice President, Secretary and
General Counsel
Indemnitee:
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex10odobladoagmt.txt
<DESCRIPTION>EX 10(O) - DOBLADO EMPLOYMENT LETTER
<TEXT>
EXHIBIT 10(o)
October 1, 2003
PERSONAL AND CONFIDENTIAL
Ms. Lucretia Doblado
4709 Green Oaks Drive
Colleyville, TX 76034
Dear Lucretia:
It is a pleasure to confirm our discussion offering you the position of
Senior Vice President and Chief Information Officer for The Bombay Company,
Inc. ("Company" or "Bombay"), effective October 3, 2003. In this capacity you
will report directly to me.
Your annualized base salary will be $210,000 per year. Your compensation
will be evaluated in February 2004.
As a member of our Executive Committee, you will also participate in the
Company Executive Bonus Program. Your targeted fiscal year bonus is $84,000
(40% of base salary). Seventy-five percent (75%) of your bonus will be based
upon the Company achieving its profit goals and twenty-five percent (25%) will
be based upon accomplishment of your Personal Performance Objectives as
established by you and me. For the balance of fiscal 2003, you will be
eligible for the Company results portion of your targeted bonus (75% of target)
on a pro-rated basis. Bonuses are paid in a lump sum following the end of each
fiscal year.
You will receive an initial grant of options covering 30,000 shares of
Bombay stock, which will be priced at the closing price of Bombay stock on your
Hire Date. These options shall vest and may be exercised in whole or in part at
the rate of 33.33% per year, commencing with the first anniversary of your Hire
Date. The options have a term of ten years from the date of grant. The Board
will consider additional grants at the beginning of fiscal 2004. The first
$100,000 in face value will be granted in the form of incentive stock options
(no taxes exercised; taxed when shares are sold and, if holding period is met,
results in capital gains tax treatment) and the balance as non-qualified
options.
You will receive three (3) weeks vacation per year, which are earned per
our vacation policy.
Ms. Doblado
October 1, 2003
Page 2
Your employment is at-will and may be terminated by the Board of
Directors of the Company at any time, with or without cause. Nevertheless, if
you are terminated, not for cause, you shall be paid six (6) months
continuation of base salary. You agree that for a period of six months
following separation, you will not solicit, induce or attempt to induce
directly or indirectly, any employee of the Company to leave the employ of the
Company.
In the event of a Change of Control, as defined in Exhibit "A", attached
hereto, the stock options granted to you shall immediately vest and be
exercisable by you commencing on such date the Change of Control event.
You are eligible to participate in The Bombay Company 401(K) Savings and
Stock Ownership Plan after one year of employment. Under the plan, Bombay
currently contributes 100% of up to 3% of your compensation and 50% for the
next 2% of compensation (Federal Government salary limit is $200,000.) Under
our plan, you are allowed to contribute a maximum of $13,000 ($16,000 if fifty
years of age or over), which may be invested in the various options available
in the plan.
You are eligible to participate in the Employee Stock Purchase Program at
the next available investment period, July 1, 2004, whereby you may purchase
Bombay stock at a 15% discount from the lower fair market value on the first or
last day of the period.
You will be eligible to join our Medical, Dental and Vision plan
effective on your Date of Hire. The Company and the employee share the cost of
the plans. The premiums are currently tax exempt under a section of the IRS tax
code. There is a one-year waiting period for any pre-existing conditions.
After 90 days of employment you will receive Company paid life insurance
equal to 1 1/2 times your compensation at plan (salary plus target bonus).
Also, after 60 days of employment you will be covered under the Executive Short
Term Disability Income Protection plan, which pays 100% of your salary for a
maximum of 13 weeks and the Executive Long Term Income Protection Plan which
pays 60% of your salary up to $15,000 per month for as long as you remain
totally disabled up to age 65. If disability begins after age 62, payments
would commence on a sliding scale based on your age at time of disability. Your
net cost will be limited to the amount of personal income taxes you pay on the
Company reimbursement of the premium. The Company also offers supplemental life
to you at group rates.
You agree and represent that your acceptance of employment with Bombay as
set forth in this letter does not conflict with any prior contract or agreement
of employment to which you are a party.
Ms. Doblado
October 1, 2003
Page 3
I look forward to your joining The Bombay Company. We are very pleased
that you are a part of our team. Please call me if you have any questions.
For our records, and if you accept this offer, I would appreciate your
signing and returning one copy of this letter. As I will be in China next
week, please return this acceptance to Jim Johnson.
Sincerely,
/s/ JAMES D. CARREKER
James D. Carreker
Chairman and Chief Executive Officer
/s/ LUCRETIA D. DOBLADO October 3, 2003
__________________________ _________________________
Lucretia D. Doblado Date
Attachment
EXHIBIT "A"
A "Change of Control" of the Company, unless otherwise determined by the
Board shall be deemed to have occurred upon the happening of any of the
following events:
(i) the acquisition, other than from the Company, by any individual
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) of beneficial ownership of 20% or more of
either the then outstanding shares of Common Stock of the Company
or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors; provided, however, that any acquisition by
the Company or any of its subsidiaries, or any employee benefit
plan (or related trust) of the Company or its subsidiaries, or any
corporation with respect to which following such acquisition, more
than 50% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all of substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Common Stock and voting securities of the
Company immediately prior to such acquisition, of the then
outstanding shares of Common Stock of the Company or the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors, as
the case may be, shall not constitute a Change of Control;
(ii) individuals who, as of January 1, 1996, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to such date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election
of the directors of the Company (as such terms are used in rule
14a-11 of Regulation 14A promulgated under the Exchange Act); or
(iii) approval by the shareholders of the Company of a reorganization,
merger or consolidation of the Company, in each case, with respect
to which the individuals and entities who were the respective
beneficial owners of the Common Stock and voting securities of the
Company immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of Common Stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such
reorganization, merger or consolidation, or a complete liquidation
or dissolution of the Company or of the sale or other disposition
of all or substantially all of the assets of the Company.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14
<SEQUENCE>5
<FILENAME>ex14codeofconduct.txt
<DESCRIPTION>EX 14 - CODE OF BUSINESS CONDUCT & ETHICS
<TEXT>
EXHIBIT 14
THE BOMBAY COMPANY, INC.
CODE OF BUSINESS CONDUCT AND ETHICS
INTRODUCTION
This Code of Business Conduct and Ethics (the "Code") describes Bombay
policies for conducting its business in a legal, ethical and honest manner.
This Code is intended to meet the requirements of the Sarbanes-Oxley Act of
2002 and the related rules of the Securities and Exchange Commission ("SEC")
and the New York Stock Exchange ("NYSE").
The purpose of this Code is to establish standards the Company believes
are reasonably necessary to:
Prevent the occurrence of illegal, unethical or dishonest
behavior;
Detect and stop any behavior of this type that may occur as soon
as
reasonably possible after the behavior is discovered; and
Take appropriate actions to discipline those who engage in
illegal, unethical or dishonest behavior or who otherwise violate
this Code.
All Bombay directors, officers, employees or agents, are responsible for
reading and understanding this Code. Your failure to read or understand this
Code will not excuse violations. You should contact your supervisor or the
other persons indicated in this Code if you have any questions regarding your
obligations under this Code.
The Company has personnel policies, rules and standards for employee
performance that continue in force. This Code is intended to supplement and
amplify those established personnel policies, rules and standards.
The Governance and Nomination Committee of the Board of Directors (the
"Committee") is responsible for overseeing the policies, procedures, and
compliance of this Code. The Committee must approve any amendment to the Code.
Any waiver of the Code provisions must also be approved by the Committee and
will be promptly disclosed on the Company's Internet website or in an SEC
filing. The Company's Internet address and its commitment to disclose any
waiver will be documented in the Company's annual report on Form 10-K.
The Committee will periodically review the Code and make appropriate
additions or changes. You will be fully informed of all changes to the Code.
USE OF TERMS AND INTERPRETATION
Some of the terms used in this Code are intended to have specific
meanings. These meanings are described in this section.
The terms "Bombay" and "Company" are used in this Code to mean The Bombay
Company, Inc., its divisions, subsidiaries, and branch offices.
The term "associates" is used in this Code to refer to the Company's
directors, officers, employees and agents.
The term "laws" as used in this Code includes the laws, rules,
regulations and other legal requirements of each jurisdiction that are
applicable to the activities of the Company. These may include the laws of
jurisdictions other than the United States.
The term "Senior Officer" is used in this Code to cover the principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, with respect to actions
and decisions in their capacities as officers and employees of the Company.
This Code is not a contract and is not intended to create any contractual
obligations on the part of the Company. This Code also does not alter the
existing at-will or other applicable employment relationship between you and
the Company or the legal relationship between the Company and its agents.
STANDARDS OF CONDUCT
You are expected to adhere to the following standards in connection with
the performance of your duties as an associate of the Company in order to deter
wrongdoing and to promote:
Honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal and
professional relationships;
Avoidance of conflicts of interest, including disclosure to the
persons identified in this Code of any material transaction or
relationship that reasonably could be expected to give rise to such
a conflict;
Full, fair, accurate, timely and understandable disclosure in
reports and documents that the Company files with, or submits to,
the SEC and in other public communications made by the Company;
Compliance with applicable governmental laws, rules and
regulations;
Compliance with procedures established by the Company;
Prompt internal reporting to the persons identified in this Code
of violations of this Code; and
Accountability for adherence to this Code.
I. HONEST AND ETHICAL CONDUCT
The Company expects you to act honestly and ethically at all times and to
comply fully with the policies comprising this Code.
A. COMPETITIVE PRACTICES
The Company is strongly committed to strengthening the free
enterprise system. The Company believes that fair competition is
fundamental to the continuation of the free enterprise system.
The Company will not enter into arrangements that restrict its
ability to compete with other businesses, or the ability of any other
business organization to compete fairly with the Company.
You may not enter into, or even discuss any arrangement or
understanding with any third party which restricts the Company's pricing
policies, terms upon which its products and services may be sold to
others, the number and type of products manufactured or sold, or which
might in any way be construed as dividing customers or sales territories
with a competitor.
B. DEALINGS WITH SUPPLIERS
The Company is a valuable customer for many suppliers. People who
want to do business or to continue to do business with the Company must
understand that all purchases by the Company will be made exclusively on
the basis of price, quality, service and suitability to the Company's
needs.
C. RECIPROCITY
Reciprocity is a harmful practice and a hindrance to assuring
purchase of the best available materials or services at the lowest
possible prices. A supplier of goods or services to the Company will not
be asked to buy goods and services from the Company in order to become or
to continue as a supplier.
You should not try to influence the Company's suppliers to purchase
goods or services from the Company or from any customer of the Company in
order to get its business. In arriving at purchasing decisions you
should not favor firms who are customers of the Company.
D. PROTECTION AND PROPER USE OF COMPANY ASSETS
You should protect the Company's assets and ensure their proper
use. Theft, carelessness and waste have direct impact on the Company's
profitability. All Company assets should therefore be used only for
legitimate business purposes.
E. INTEGRITY OF RECORDS AND FINANCIAL REPORTS
The integrity of the Company's record keeping and reporting systems
will be respected at all times. No one in the Company is allowed to use,
authorize, or condone the use of "off-the-books" bookkeeping, secret
accounts, unrecorded bank accounts, slush funds, falsified books, or any
other devices that could be utilized to distort records or reports of the
Company's true operating results and financial conditions.
II. AVOIDANCE OF CONFLICTS OF INTEREST
You must avoid situations where your personal interests may conflict with
the interests of the Company. Conflicts of interest arise where an
individual's position or responsibilities with the Company present an
opportunity for personal gain apart from the normal rewards of employment.
They also arise where an associate's personal interests are inconsistent with
those of the Company and create conflicting loyalties. Such conflicting
loyalties may cause Company personnel to compromise their principles and
responsibilities to the Company for personal gain.
It is not possible to detail every situation where conflicts of interests
may arise. However, the following policies cover some of the areas that have a
significant potential for conflict:
A. SPECULATION IN BOMBAY SECURITIES AND MISUSE OF INSIDE INFORMATION
If you know of any material fact about the Company which has not
been disclosed to the public (commonly known as "insider information"),
you are prohibited by law from taking advantage of any purchaser or
seller of the Company's securities who is not privy to such information.
You may not engage in any transaction in the Company's securities based
upon inside information until such information is disclosed to the
public. In addition, you must not provide insider information to others.
Misuse of insider information may result in civil and criminal penalties
as well as disciplinary action.
Generally, a material fact is one that a prudent investor would
consider in reaching a decision to buy or sell the security involved.
Examples of materials facts are: knowledge of significant new products
or discoveries, unexpected changes in sales or earnings figures, major
contracts and plans for stock splits, acquisitions or mergers.
These restrictions also apply to insider information relating to
the Company's customers and suppliers.
If you have questions regarding the sale or purchase of Company
stock under circumstances where these laws and regulations might apply,
you should review the Company's insider trading policy or consult with
the Company's General Counsel.
It is very important that you not disclose data or information of a
confidential nature concerning the Company or its products to anyone not
employed by the Company except where such information is disclosed in the
course of normal business activities and the Company has obtained from
the recipient a written undertaking to protect the confidential
information from misuse or unauthorized disclosure. Disclosure of
confidential information can be harmful to the Company and could be the
basis for legal action against both the Company and the person disclosing
the information.
You should not acquire any interest in real estate or in any
business which you know the Company is interested in acquiring.
B. PERSONAL FINANCIAL INTEREST
You should avoid any outside financial interests which might
influence your decisions or actions as a Company associate or
representative. Such outside interests could include among other things:
A personal or family interest in an enterprise that has
business relations with the Company, either as a customer or a
supplier, if such financial interest represents a material part
of the person's net worth or income.
An investment in another business that competes with the
Company if the investment represents a material part of the
income or net worth of the person.
C. CORPORATE OPPORTUNITIES
You are not allowed to take for yourself personally opportunities
that are discovered through the use of Company property, information or
position, or use Company property, information or position for your
personal gain, or compete with the Company. Company associates owe a
duty to the Company to advance its legitimate interests when the
opportunity to do so arises.
D. OUTSIDE ACTIVITIES
You should avoid outside employment or activities that would
interfere with the effective performance of your responsibilities to the
Company either because of excessive demands on your time or because of
the nature of the employment or activity. If you desire to practice your
trade or profession for which you have been hired by the Company outside
the scope of your Company employment, you must obtain prior written
approval from your Company supervisor.
E. KICKBACKS AND REBATES
Corporate purchases of goods or services must not lead to personal
kickbacks or rebates. You and/or your family must not accept any form of
undisclosed payment or favor.
F. GIFTS AND ENTERTAINMENT
Even when gifts and entertainment are exchanged out of the purest
motives of personal friendship, they may be misunderstood. They may
appear as attempts to bribe an associate to direct the Company business
to a particular supplier. To avoid both the reality and the appearance
of improper relations with suppliers or potential suppliers, the
following standards apply to the receipt of gifts or entertainment:
You may not solicit gifts, gratuities, or any other personal
benefit or favor of any kind from any supplier or potential supplier.
Gifts include not only merchandise and products but also personal
services, theater tickets, and tickets to sporting events. Gifts of
money may not be accepted.
Associates may accept unsolicited non-money gifts provided they are
items of nominal intrinsic value, such as advertising or
promotional materials, clearly marked with company and brand names.
Any other gifts shall be considered property of the Company and
should be delivered to your department Vice President for
appropriate handling.
The Company's General Counsel should be consulted where gifts of
more than nominal value are offered to you by a company with which the
Company does business.
You should not encourage or solicit entertainment from any
individual or company with which the Company does business.
Entertainment includes, but is not limited to, activities such as dinner
parties, theater parties or sporting events.
From time to time you may accept unsolicited entertainment, but
only under the following conditions:
The acceptance will foster goodwill and successful business
relations;
The entertainment occurs infrequently;
It involves reasonable, not lavish, expenditures; and
The entertainment takes place in settings that are
appropriate and fitting to associates and their hosts.
If you are uncertain about the appropriateness of the business
entertainment, you should review the matter with your department Vice
President.
G. USE OF AGENTS AND NON-EMPLOYEES
You may not use agents or others to circumvent the law or to engage
in practices that run contrary to this Code.
III. ACCURACY OF PUBLIC COMMUNICATIONS
All Company associates are encouraged and instructed to provide reliable
and accurate data to, and otherwise assist the Company's Senior Officers as
they discharge their responsibilities of establishing and maintaining adequate
and effective disclosure controls and procedures. These controls are designed
to provide assurances to the Company and its shareholders that disclosures of
material information related to the Company and its consolidated subsidiaries
in its periodic reports filed with, or submitted to, the SEC and other public
communications are full, fair, accurate, timely, and understandable.
IV. COMPLIANCE WITH LAWS, RULES, AND REGULATIONS
It is the Company's policy to proactively promote compliance with all
applicable laws, rules and regulations in connection with the Company's
business. You and all other associates are expected to comply fully with the
laws of each country or other jurisdiction that are applicable to the Company's
business. You should familiarize yourself with the legal standards and
restrictions applicable to your assigned duties and responsibilities. The
Company requires and encourages compliance with the spirit, as well as the
letter, of the law. Even the appearance of illegal, dishonest or inappropriate
behavior could have a negative impact on the Company and its associates.
If there is a conflict between the requirements of the laws applicable in
the United States and those of any other country or jurisdiction, the Company's
policy is that you should consult with the General Counsel before taking any
actions that might violate United States law.
A. DEALINGS WITH PUBLIC OFFICIALS
Laws and regulations sometimes require associates to be in contact
with public officials on a variety of matters. Associates who make these
contacts have a special responsibility to uphold the Company's
reputation.
If you have a business reason to contact public officials, you need
to understand lobbying laws and public disclosure requirements. This
information may be obtained from the Company's General Counsel.
No form of payment, direct or indirect, shall be made to any public
official as inducement to having a law or regulation enacted or defeated.
From time to time associates may entertain public officials, but
only under the following circumstances:
The entertainment is not solicited by the public official.
The entertainment occurs infrequently.
It does not involve lavish expenditures.
The setting and type of entertainment is
appropriate and fitting to our associates and the public
official.
B. APPLICATION OF THE FOREIGN CORRUPT PRACTICES ACT
The Foreign Corrupt Practices Act was enacted in 1977 and amended
in 1998 to penalize United States companies and their employees, agents
and consultants for bribing or attempting to bribe foreign officials,
governments and political parties in order to secure business or any
improper advantage. Among other things, it made foreign bribery a crime
and mandated accounting control requirements to prevent off-the-book
slush fund payments, kickbacks and other forms of unlawful or improper
renumeration. While certain facilitating payments, where necessary to
expedite or secure performance of routine governmental actions outside
the United States, are not illegal, prior approval by senior management
must be obtained before a facilitating payment may be offered.
Violations of the Foreign Corrupt Practices Act carry criminal and
civil penalties. Criminal penalties include fines up to $2,000,000 per
company and $250,000 per individual, plus a maximum imprisonment of five
years. The Company expects strict compliance with this law as well as
the other laws of the United States and of any foreign country in which
the Company operates or conducts business. Any uncertainties regarding
the application of a law, whether domestic or foreign, should be
clarified with the Company's General Counsel.
C. POLITICAL ACTIVITIES AND CONTRIBUTIONS
Federal law and the statutes of most states prohibit a corporation
from contributing to a political campaign or to a political party.
Improper corporate contributions could take the form of use of corporate
facilities (for example, use of a photocopy machine to reproduce campaign
literature) as well as cash. Associates who participate in partisan
political activities, you must never imply that you speak or act for the
Company.
No corporate action, direct or indirect, will be allowed that
infringes on the right of each associate individually to decide whether,
to whom, and in what amount, he or she will make personal political
contributions of money or personal service.
V. COMPLIANCE PROCEDURES
Upon approval by the Board of Directors, a copy of this Code will be
distributed to all current associates. Future associates will receive their
copies at the time of hire.
You may be required to prepare a written disclosure if you have knowledge
of or are currently not in compliance with the Code. Subsequently, upon
request of your supervisor, you may be required to correct the variance to be
in full compliance with the Code. A verification of compliance will then be
signed and turned in to your supervisor who will make it a part of your
permanent corporate records.
To maintain compliance, you must read and develop an understanding of the
Code and agree to comply with it. Supervisors will develop an awareness on the
part of their associates of the importance of adhering to the Code. Associates
should resolve any doubts or questions pertaining to the Code with his or her
supervisor or, when appropriate, the General Counsel. Associates should inform
his or her supervisor of any existing holdings or activities that might be or
may appear to be at variance with the Code. Senior Officers and other
designated employees will annually acknowledge in writing their understanding
of the Code and their compliance with it.
Senior Officers shall inform the Committee of any actual or potential
conflicts of interest, and the Committee will resolve any questions regarding
conflicts of interest involving any of the Senior Officers.
Regular audits of the Company may include procedures to test compliance
with this Code.
VI. REPORTING OF VIOLATIONS
You should immediately report any suspected violation of the Code to your
supervisor or the Company's General Counsel at 817-347-8244. You may also
report a violation through the Bombay Careline (1-877-BOMBAY-7) on an anonymous
basis if you so choose. Supervisors receiving such reports should promptly and
thoroughly investigate such reports and consult with the Company's General
Counsel. Any report of a disputed violation by a Senior Officer shall be
immediately reported to the Committee. If a violation is discovered,
appropriate corrective action will be taken promptly.
The Company prohibits any kind of retaliation for good faith reporting of
actual or possible violations of this Code. Retaliation in any form against
any Company associate who reports a possible violation of this Code, or who
assists in the investigation of a possible violation of this Code, is itself a
violation of this Code and will be disciplined appropriately.
VII. ACCOUNTABILITY FOR ADHERENCE TO THIS CODE
You and all other associates are individually responsible for adhering to
the standards set forth in this Code. The following types of conduct will
result in appropriate disciplinary actions:
Violating this Code or asking others to violate this Code;
Failing to report a known or suspected violation of this Code;
Failing to cooperate in a Company investigation of possible
violations of this Code;
Failing to appropriately supervise subordinates in order to detect
and report possible violations of this Code; and
Retaliating against other Company personnel for reporting a possible
violation of this Code.
Upon receiving a report of a violation of this Code, the supervisor, the
Company's General Counsel, or the Committee, including its legal and other
advisors, will have the full power and authority to investigate the report and
to determine what steps, if any, should be taken to resolve the problem and
avoid the likelihood of its recurrence. These steps may, where appropriate,
include the termination of an individual's employment by the Company and the
commencement of appropriate legal proceedings.
CODE OF BUSINESS CONDUCT AND ETHICS
2004
ACKNOWLEDGMENT OF RECEIPT AND UNDERSTANDING
I HAVE RECEIVED A COPY OF THE CODE OF BUSINESS CONDUCT AND ETHICS FOR THE
BOMBAY COMPANY, INC. I AGREE TO BE BOUND BY THE CODE AND REPORT ANY SUSPECTED
VIOLATION AS PROVIDED FOR IN THE CODE.
SIGNATURE
NAME (PLEASE PRINT)
DATE
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>6
<FILENAME>ex23consent.txt
<DESCRIPTION>EX 23 - CONSENT OF INDEPENDENT AUDITORS
<TEXT>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-02028, 33-32610, 33-40736, 33-40743, 33-51076,
33-55306, 333-39057, 333-82758, 333-96357 and 333-99561) of The Bombay
Company, Inc. of our report dated April 9, 2004 relating to the financial
statements, which appears in this Form 10-K.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Fort Worth, Texas
April 9, 2004
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>7
<FILENAME>ex31aceo302cert.txt
<DESCRIPTION>EX 31(A) - CEO SECTION 302 CERTIFICATION
<TEXT>
EXHIBIT 31(A)
CERTIFICATION
I, James D. Carreker, certify that:
1. I have reviewed this annual report on Form 10-K of The Bombay Company, Inc.;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operation and cash flows of the
registrant as of, and for, the periods presented in this annual 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-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, 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 annual report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this annual report based on such evaluation; and
c) Disclosed in this annual report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: April 9, 2004
/s/ JAMES D. CARREKER
James D. Carreker
Chairman of the Board and
Chief Executive Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>8
<FILENAME>ex31bcfo302cert.txt
<DESCRIPTION>EX 31(B) - CFO SECTION 302 CERTIFICATION
<TEXT>
EXHIBIT 31(B)
CERTIFICATION
I, Elaine D. Crowley, certify that:
1. I have reviewed this annual report on Form 10-K of The Bombay Company, Inc.;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operation and cash flows of the
registrant as of, and for, the periods presented in this annual 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-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, 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 annual report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this annual report based on such evaluation; and
c) Disclosed in this annual report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: April 8, 2004
/s/ ELAINE D. CROWLEY
Elaine D. Crowley
Senior Vice President, Chief
Financial Officer and Treasurer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>9
<FILENAME>ex32906certs.txt
<DESCRIPTION>EX 32 - SECTION 906 CERTIFICATIONS
<TEXT>
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of The Bombay Company, Inc. (the
"Company") on Form 10-K for the year ended January 31, 2004 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), each of
the undersigned, certify, pursuant to 18 U.S.C. section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of
their knowledge:
(1) The Report fully complies with the requirements of section 13(a)or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ JAMES D. CARREKER /s/ ELAINE D. CROWLEY
- ----------------------------- ------------------------------
James D. Carreker Elaine D. Crowley
Chairman of the Board and Senior Vice
President, Chief Financial
Chief Executive Office Officer and Treasurer
Date: April 9, 2004 Date: April 8, 2004
A signed original of this written statement required by Section 906 has been
provided to The Bombay Company, Inc. and will be retained by The Bombay
Company, Inc. and furnished to the Securities and Exchange Commission or its
staff upon request.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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