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 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to __________________
Commission file number 1-7288
THE BOMBAY COMPANY, INC.
(Exact name of registrant as specified in its charter)
A Delaware Corporation 75-1475223
(State or other jurisdiction of incorporatio (I.R.S. Employer Identification
or organization) Number)
550 Bailey Avenue
Fort Worth, Texas 76107
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code)
(817) 347-8200
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
Registered
Common Stock, Par Value, $1 Per Share
New York Stock Exchange
Securities registered pursuant to Section
12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ___X____ No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ____
The aggregate market value of the voting stock held by nonaffiliates of the
registrant based on the closing price of the stock on 16, 1999 was approximately
$22,277,456
Shares outstanding at April 16,1999: Common Stock, $1 Par Value: 36,609,371
DOCUMENTS INCORPORATED BY REFERENCE:
(a) Portions of the Annual Report to Shareholders for the Fiscal Year Ended
January 30, 1999 (as expressly incorporated by reference in Parts I, II, and
IV).
(b) Portions of the Definitive Proxy Statement for the Annual Meeting to be
held May 20, 1999 (as expressly incorporated by reference in Part III).
FORM 10-K
PART I
ITEM 1. BUSINESS.
(a) General Development of Business
The Bombay Company, Inc. and its wholly-owned subsidiaries (the "Company"
or "Bombay") is a specialty retailer marketing traditional and classic
furniture, prints and accessories for the home through a network of retail
locations throughout the United States and Canada, through mail order and over
the internet at www.bombayco.com. During Fiscal 1998, the Company expanded its
operations through the addition of 15 new stores and relocated or enlarged 16
additional stores while closing 18 locations.
In 1995, the Company changed its year end to the Saturday nearest the end
of January. Prior to that time, the Company's fiscal year ended the Sunday
nearest the end of June. To effect the change, the Company's financial
statements are reported for a 30 week or seven month period ended January 28,
1995.
In January 1995, the Company announced the closing of its Alex & Ivy
division and completed the closing in May 1995. The following discussions
relate only to its on-going Bombay operations.
(b) Financial Information About Segments
The Company operates in one business segment consisting of the retail sale
of decorative home furnishings and related items.
(c) Narrative Description of Business
Merchandise Sales, Purchasing and Distribution
Bombay operates a chain of stores, located primarily in regional shopping
malls, certain secondary malls and selected urban and suburban locations. As of
January 30, 1999, there were 361 Bombay stores in 42 states in the United States
and 51 stores in nine Canadian provinces. Bombay also markets its products
through its mail order operations in the United States and Canada and through e-
commerce over the internet at www.bombayco.com.
The Company offers a diverse selection of products consisting of
approximately 3,500 SKUs of which over 95% of the product has been designed or
styled to Bombay's specifications. Bombay's proprietary product offers unique
design, quality and exceptional value to a wide audience of consumers. While
furniture is the Company's core competency and will remain as such, more focus
has recently and will continue to be given to the smaller "take with" items such
as wood and decorative accessories, crystal, candles and a wide assortment of
gift items.
The Company regularly updates its merchandise assortment through
introducing new products and discontinuing others as they approach the end of
their life cycles. During Fiscal 1998, approximately 2,200 SKUs were introduced
as compared to 1,200 SKUs in Fiscal 1997. Typically, new product introductions
are concentrated during the Company's spring, fall and Christmas marketing
periods. The principal categories of merchandise include the following:
Furniture - This category includes both wood and metal ready-to-assemble
furniture focusing on the bedroom, living room, dining room and home office as
well as occasional pieces. Furniture represented 49% of total sales for each of
the past three fiscal years. Bombay's furniture is manufactured by contract
manufacturers located principally in China, Taiwan, Malaysia, Mexico, Indonesia,
India and the United States. During 1997, the Company introduced a limited
offering of upholstered furniture which represents less than 1% of the total
sales.
Accessories - This is the broadest category and represented 27%, 26% and 27
% of total sales in Fiscal 1998, 1997 and 1996, respectively. This category
includes both functional and decorative accessories including jewelry and
memorabilia boxes, baskets, candles and scents, crystal, ceramics, frames and
desktop, textiles, floral and holiday. The items are imported from 14 countries
in Asia, North America and Europe.
Wall Decor - This category includes prints, mirrors and sconces which
represented 15%, 17% and 16% of total sales in Fiscal 1998, 1997 and 1996,
respectively. This merchandise is sourced primarily from the United States,
Canada, Italy and Korea.
Lamps and Other - This category includes lamps and seasonal offerings which
are sourced primarily from China, Taiwan and the United States. These items
accounted for approximately 9%, 8% and 8% of total sales in Fiscal 1998, 1997
and 1996, respectively.
Merchandise is manufactured to Company specifications through a network of
contract manufacturers located principally in Asia and North America.
Approximately 60% of production needs are provided from overseas sources.
Branch offices located in Taiwan, Malaysia, Indonesia and China and agents in
various countries locate prospective vendors, coordinate production requirements
with manufacturers and provide technical expertise and quality control.
Bombay is not dependent on any particular supplier and has had long
standing relationships with many of its vendors. Approximately 70% of the
Company's merchandise requirements are supplied by 35 contract manufacturers in
eight countries. No long-term production agreements are in place; however,
agreements are in place 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. The Company does
business with its vendors principally in United States currency and has not
historically experienced any material difficulties as a result of any foreign
political, economic or social instabilities.
Usually it takes several months from the time a merchandise order is placed
with a manufacturer until the goods are received at centralized distribution
centers in the United States and Canada. Depending on the category, the source
country and whether an item is new or a reordered product, lead times can vary
from as little as two months to as much as twelve 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,
Bombay maintains a substantial inventory position in its distribution centers to
ensure a sufficient supply of products to its customers.
Store inventories are replenished from regional distribution centers
located in Fort Worth, Texas; Atlanta, Georgia; Gilbertsville, Pennsylvania and
Mississaugua, 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. The Company uses dedicated trucks and
less-than-truckload carriers to transport its product from its distribution
centers to the stores. The Company also leases two vehicles used to transport
product locally in the major metropolitan Toronto area.
Stores and Real Estate
The Company bases its stores primarily in regional shopping malls, certain
secondary malls and selected urban and suburban locations that satisfy its
demographic and financial return criteria. Significant attention is given to
visual merchandising opportunities to maximize the ability to display product in
the most attractive setting.
In selecting store locations, the Company's real estate department conducts
extensive analyses of potential store sites and bases its selection on the
performance of other specialty retail tenants, 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. Although 90% of
the current stores are mall based, the Company has opened stores in alternative
locations including street and upscale, open air strip locations. The Company
will continue to seek out the most potentially profitable locations for the
opening of new stores regardless of the venue.
Prior to 1992, the Company operated stores that were typically 1,500 to
1,800 square feet in size. In 1992, to accommodate the increasing number of
products, the Company introduced a large format store which was approximately
4,000 square feet in total size. Between 1992 and 1995, the Company underwent a
dramatic period of growth expanding the total retail square footage relating to
Bombay stores from 504,000 square feet to 1,206,000 square feet and increasing
its Bombay store count from 309 to 428. Beginning in 1995, the Company adopted
a more conservative approach to expansion, reducing both the number of stores
opened or converted to the large format and the targeted size of the stores from
4,000 square feet to 3,000 to 3,500 square feet. As of January 30, 1999, 251
large format stores were in operation including 155 stores that have been
converted from regular stores since Fiscal 1992.
During Fiscal 1997, the Company undertook a program to update its store
design and introduced the new design in three locations. In Fiscal 1998, the
Company opened 15 new stores and converted 16 others from the regular format to
the large format, all of which were constructed in the new design. In addition,
21 stores underwent major remodeling, including new paint, flooring and
lighting, while an additional 11 stores underwent minor updates in keeping with
the new design. During the year, 18 underperforming stores were also closed.
In Fiscal 1999 and forward, the Company will continue its efforts to update the
appearance of its stores with all new store openings and conversions being
constructed in the new design. The store expansion plan includes approximately
20 stores openings and 15 to 20 conversions in Fiscal 1999.
During Fiscal 1998, the Company's store openings included five outlet
stores which were typically located in traditional outlet malls. The Company
views 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 its strength in designing and sourcing proprietary product.
Bombay's store opening plans for Fiscal 1999 include 5 to 8 outlet locations.
The Company's average cost of leasehold improvements, furniture, fixtures
and machinery for stores (excluding outlets) opened or converted in Fiscal 1998,
net of landlord allowances, was approximately $300,000 per store or $85 per
square foot. In addition, other investments which consist primarily of
inventory in the store location, averaged approximately $86,000 per large format
store. The average cost of leasehold improvements, furniture, fixtures and
machinery for outlet stores opened in Fiscal 1998, net of landlord allowances,
was approximately $65,000 per store while the inventory investment also averaged
approximately $65,000 per store. Bombay stores typically achieve store
operating level profitability during their first year of operations.
As of January 30, 1999, 361 stores were operating in 42 states in the
United States and 51 stores were operating in nine provinces in Canada as
illustrated in the map below.
{The paper version of the Annual Report on Form 10-K contains herein a map
of the United States and Canada with states and provinces outlined, labeled
with the appropriate number of Bombay stores located in each, as follows:
UNITED STATES:
AL - 5 KY - 2 NY - 23
AR - 1 LA - 7 OH - 15
AZ - 5 MA - 9 OK - 4
CA - 49 MD - 12 OR - 3
CO - 4 MI - 9 PA - 18
CT - 6 MN - 5 RI - 2
DC - 1 MO - 5 SC - 4
DE - 3 MS - 2 TN - 12
FL - 32 NC - 10 TX - 24
GA - 14 NE - 1 UT - 3
IA - 1 NH - 3 VA - 13
IL - 15 NJ - 16 WA - 8
IN - 5 NM - 1 WI - 1
KS - 4 NV - 3 WV - 1
CANADA:
AB - 3 NB - 2 ON - 26
BC - 7 NF - 1 PQ - 8
MB - 1 NS - 2 SK - 1}
Competition
The home furnishings and decorative accessories market is highly fragmented.
The Company faces competition from furniture stores, department stores and other
specialty retailers. The Company believes that it competes primarily on the
basis of selection, quality and value of merchandise.
Employees
The Company has approximately 5,000 employees, which include approximately
3,000 part-time employees, and is not a party to any union contract. Employee
relations are considered to be good.
Seasonality
Operating results are subject to seasonal variation. Historically, the
largest proportion of sales and substantially all of the income occurs in the
fiscal quarter the Christmas season. Cash balances increase significantly in
December due to the Christmas business.
Intangibles
The Company owns a number of the trademarks and service marks used in its
business, including federal registrations for the marks "The Bombay Company" and
"Bombay" and the palm tree logo. The Company's 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.
The Company believes that its registered trademarks have significant value
and that these marks enhance the Bombay brand and are instrumental in the
Company's ability to create, sustain demand for and market its product. From
time to time, the Company discovers products in the marketplace that are
counterfeit reproductions of the Company's product or that otherwise infringe
upon trademark or tradedress rights held by the Company. The Company has and
will continue to vigorously defend it rights under the marks as necessary.
Risks and Uncertainties
All statements in this Annual Report on Form 10-K, including those
incorporated herein by reference, that do not reflect historical information are
forward-looking statements made in reliance upon the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
but are not limited to, the following: competition; seasonality; success of
operating initiatives; new product development and introduction schedules;
acceptance of new product offerings; advertising and promotional efforts;
adverse publicity; expansion of the store chain; availability, locations and
terms of sites for store development; changes in business strategy or
development plans; availability and terms of capital; labor and employee benefit
costs; changes in government regulations; risks associated with international
business; regional weather conditions, and the effects of Year 2000 issues.
Executive Officers
The executive officers of the Company, their respective ages, positions held
and tenure as officers are as follows:
<TABLE>
<CAPTION>
Position(s) Held with Officer of the
Name the Company Company Since
Age
<S> <C> <C> <C>
Robert S. Jackson 53 Chief Executive Officer 1997
Carmie Mehrlander 47 President and Chief Operating 1998
Officer
Brian N. Priddy 42 Senior Vice President, Stores 1998
Steven C. Woodward 42 Senior Vice President, 1998
Merchandising
Daniel L. Lawrence 50 Senior Vice President, Sourcing 1996
Elaine D. Crowley 40 Vice President, Finance and 1996
Treasurer
James D. Johnson 52 Vice President, Human Resources 1998
Cathy S. Pringle 47 Vice President, Marketing 1998
Michael J. 42 Vice President, Secretary and 1985
Veitenheimer General Counsel
</TABLE>
Robert S. Jackson was appointed Chief Executive Officer of the Company on
February 2, 1998, after serving as acting President and Chief Executive Officer
of the Company since March 29, 1997. He has been a member of the Board of
Directors since 1991. Prior to joining Bombay as an officer, he was a private
investor and business consultant after having served as President and Chief
Executive Officer of USPCI, Inc., a former waste management subsidiary of Union
Pacific Corporation from May 1991 until December 1994. From December 1981 until
May 1991, Mr. Jackson was employed by Union Pacific Resources, the oil and gas
and hard minerals subsidiary of Union Pacific Corporation, serving as its Vice
President of Finance and Administration from 1984 until 1988 and as its
Executive Vice President and Chief Financial Officer from 1988 until 1991.
Carmie Mehrlander was named President and Chief Operating Officer of the
Company on February 12, 1998, and was elected to fill a vacancy on the Board of
Directors on March 26, 1998. Prior to joining the Company, Ms. Mehrlander
served as Executive Vice President-Merchandising for Home Shopping Network from
June 1996 to June 1997, and as Divisional Vice President of Sears Merchandise
Group from August 1993 to June 1996. Prior to joining Sears, she was Group Vice
President of Macy's South from July 1990 to August 1993 following 13 years of
fashion retailing at Abraham & Strauss and Macy's (Bamberger's).
Brian N. Priddy was named Senior Vice President, Stores on April 21, 1998.
Prior to joining Bombay, Mr. Priddy served as District General Manager and a
member of the Senior Strategic Leadership Team for Sears, Roebuck and Company
from July 1993 to April 1998 and as Regional Merchandise Manager
(Furniture/Hardlines) for Montgomery Wards from September 1992 to July 1993.
From May 1991 until September 1992, Mr. Priddy served as Director of Stores for
the Lillie Rubin chain of specialty stores and from November 1984 to April 1991
as Regional Vice President of Store Operations for Maison Blanche department
stores.
Steven C. Woodward was named Senior Vice President, Merchandising on August
3, 1998. His responsibilities include buying, concept and product development,
planning, allocation, multinational sourcing and quality assurance. Mr.
Woodward came to Bombay from Service Merchandise where he was the Vice President
of the Home Store Merchandise group from November 1997 to July 1998. Prior
thereto, Mr. Woodward held various positions at Pier 1 Imports from August 1992
to October 1997, including Vice President of Furniture, Textiles and Decorative
Accessories.
Daniel L. Lawrence has served as Senior Vice President, International
Sourcing since 1992 and is principally responsible for product sourcing and
quality assurance. He was elected a corporate officer on February 21, 1996.
From 1990 to 1992 he acted as Vice President, Merchandising for the former
Bombay division of the Company. Mr. Lawrence joined Bombay after serving as
Senior Vice President, Merchandising for Michael's Stores, Inc. and holding
various positions at Pier 1 Imports from 1975 to 1988, including Vice President,
Divisional Merchandise Director from 1986 to 1988.
Elaine D. Crowley was named Vice President, Finance and Treasurer effective
January 25, 1996, after having served as Corporate Controller since January
1995. Prior thereto, Ms. Crowley acted as Executive Vice President, Operations
of The Bombay Company division from January 1994 to January 1995, Vice President
and Controller from January 1991 to December 1994, and Controller from August
1990 to December 1990. Ms. Crowley was with Price Waterhouse from 1981 to 1990.
James D. Johnson joined Bombay on August 17, 1998 as Vice President, Human
Resources. Prior thereto, Mr. Johnson served as Regional Human Resources
Manager for Sears Product Service for the Dallas and Memphis Region, and as
District Human Resources Manager for Sears Retail Organization from December
1994 to August 1998. Prior thereto, Mr. Johnson was employed by Federated
Department Stores in the Abraham & Strauss division from August 1982 to December
1994 as Area Director of Human Resources, Director of Human Resources/Operations
and Merchandising Group Manager. Mr. Johnson began his retail human resources
career at Macy's Department Stores when he was employed from 1974 to 1982.
Cathy S. Pringle joined the Bombay management team on September 9, 1998 from
Paging Network, Inc. in Dallas, Texas where she served as Vice President
Marketing, Paging Products and Services from 1996 to 1998. Prior to Paging
Network, Inc., Ms. Pringle was Director of Marketing for the Printing and
Publishing Division of Jostens during 1995 and 1996. Ms. Pringle began her
marketing career at Rubbermaid Incorporated, where she served as Group Product
Manager during 1994-1995, Senior Product Manager during 1993-1994, Product
Manager from 1989 to 1993 and as Marketing Coordinator from 1986 to 1989.
Michael J. Veitenheimer was named Vice President effective August 4, 1994,
and has served as Secretary of the Company since July l, 1985, and General
Counsel since December 1983. From 1983 to 1985 he was Assistant Secretary of
the Company. Prior thereto, Mr. Veitenheimer was in private practice of law in
Fort Worth, Texas.
(d) Financial Information About Geographic Areas
The Company operates in the United States and Canada. For financial
information by geographic area, see Note 8 to the Company's Consolidated
Financial Statements, located on page 26 of the Annual Report to Shareholders,
filed as Exhibit 13 to this Form 10-K Annual Report. Such Exhibit is
incorporated herein by reference.
<F8>
ITEM 2. PROPERTIES.
The Company owns its United States headquarters office complex of which
it occupies approximately 77,000 square feet. The Company leases 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:
Regular -- 303,000
Large format -- 989,000
Distribution centers:
McDonnaugh, GA -- 250,000
Gilbertsville, PA -- 200,000
Fort Worth, TX -- 272,000
Mississauga, ON, CAN -- 82,000
Offices and storage:
Mississauga, ON, CAN -- 9,000
Regional sites -- 4,000
Fort Worth, TX 121,000 22,000
121,000 2,131,000
</TABLE>
Leases generally have 10 year terms, expiring between 1999 and 2013.
Adequate insurance coverage is maintained on all properties.
For additional lease information, see Note 4 of Notes to Consolidated
Financial Statements, located on page 24 of the 1998 Annual Report to
Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report. Such Exhibit
is incorporated herein by reference.
<F4>
ITEM 3. LEGAL PROCEEDINGS.
The information in response to Item 3 is contained in Note 4 of Notes to
Consolidated Financial Statements, located on page 24 of the 1998 Annual Report
to Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report. Such
Exhibit is incorporated herein by reference.
<F4>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders during the
fourth quarter of the 1998 fiscal year.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
(a) The principal market for the registrant's common stock is the New York
Stock Exchange. The high and low trading prices are contained in the section
entitled "Price Range of Common Stock", located on page 12 of the 1998 Annual
Report to Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report.
Such Exhibit is incorporated herein by reference.
<F2>
(b) The approximate number of record holders of common stock on April 15,
1999 was 2,500.
(c) The Company has bank credit agreements with restrictions related to
payment of dividends. The Company has not paid dividends the past two years and
will continue to utilize available funds primarily for the expansion of its
retail stores and operating purposes.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial and operating data in response to Item 6 is contained
in the section entitled "Selected Financial Data", located on page 12 of the
1998 Annual Report to Shareholders, filed as Exhibit 13 to this Form 10-K
Annual Report. Such Exhibit is incorporated herein by reference.
<F3>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information in response to Item 7 is contained in the section entitled
"Management's Discussion and Analysis", located on pages 14 to 17 of the 1998
Annual Report to Shareholders, filed as Exhibit 13 to this Form 10-K Annual
Report. Such Exhibit is incorporated herein by reference.
<F6>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information in response to Item 8 is contained in the 1998 Annual Report
to Shareholders, filed as Exhibit 13 to this Form 10-K Annual Report. Such
Exhibit is incorporated herein by reference. A cross-reference for location of
the requested information is below.
<TABLE>
<CAPTION>
Page Number(s) in
Annual Report*
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<S> <C>
Consolidated Statements of Operations for the Years Ended
January 30, 1999, January 31, 1998, and February 1, 1997 18
Consolidated Balance Sheets at January 30, 1999 and
January 31, 1998 19
Consolidated Statements of Cash Flows for the Years Ended
January 30, 1999, January 31, 1998, and February 1, 1997 20
Consolidated Statements of Stockholders' Equity for the
Years Ended January 30, 1999, January 31, 1998,
and February 1, 1997 21
Notes to Consolidated Financial Statements 22-26
Report of Independent Accountants 13
Unaudited Quarterly Financial Data 26
<FN>
*The indicated pages of The Bombay Company, Inc. 1998 Annual Report to
Shareholders are filed as Exhibit 13 to this Annual Report on Form 10-K. Such
Exhibit is incorporated herein by reference.
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
There have been no changes in or disagreements with accountants on accounting or
financial disclosures.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this item appears under the captions "Election
of Directors", "Executive Officers of the Company" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Definitive Proxy Statement of
The Bombay Company, Inc. relating to the Company's Annual Meeting of
Shareholders, which information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item appears under the captions "Executive
Compensation" and "Compensation of Directors" in the Definitive Proxy Statement
of The Bombay Company, Inc. relating to the Company's Annual Meeting of
Shareholders, which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item appears under the caption "Security
Ownership" and in the Definitive Proxy Statement of The Bombay Company, Inc.
relating to the Company's Annual Meeting of Shareholders, which information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item appears under the caption "Certain
Transactions" in the Definitive Proxy Statement of The Bombay Company, Inc.
relating to the Company's Annual Meeting of Shareholders, which information is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)The following documents are filed as a part of this Annual Report for The
Bombay Company, Inc. and its subsidiaries:
(1)The financial statements as cross-referenced in Item 8 of this Form
10-K Annual Report, together with the report thereon of
PricewaterhouseCoopers LLP dated March 11, 1999, appearing in the
accompanying 1998 Annual Report to Shareholders are incorporated by
reference in this Form 10-K Annual Report. With the exception of the
aforementioned information and information incorporated in Items 1, 2,
3, 5, 6 and 7, the 1998 Annual Report to Shareholders is not deemed
filed as part of this Report. The following financial statement
schedule should be read in conjunction with the financial statements in
such 1998 Annual Report to Shareholders. Financial statement schedules
not included in this Form 10-K Annual Report have been omitted because
they are not applicable or the required information is shown in the
financial statements or notes thereto.
(2) Financial Statement Schedule:
Report of Independent Accountants on Financial
Statement Schedule 10
Schedule II-Valuation and Qualifying Accounts and Reserves
for the Years Ended January 30, 1999, January 31, 1998
and February 1, 1997 12
(3) Exhibits:
A list of exhibits required to be filed as part of this report is set
forth in the Index to Exhibits, which immediately precedes such exhibits,
and is incorporated herein by reference.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended January 30,
1999.
<AUDIT-REPORT>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of The Bombay Company, Inc.
Our audits of the consolidated financial statements referred to in our
report dated March 11, 1999, appearing on page 13 of the 1998 Annual Report to
Shareholders of The Bombay Company, Inc. (which report and consolidated
financial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the Financial Statement Schedule listed in Item
14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
PRICEWATERHOUSECOOPERS LLP
Fort Worth, Texas
March 11, 1999
</AUDIT-REPORT>
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 12, 1999
/s/ ROBERT S. JACKSON
Robert S. Jackson
Chairman of the Board, 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/ BARBARA BASS Director April 14, 1999
Barbara Bass
Director
George B. Cobbe
Director
Edmund H. Damon
/s/ GLENN E. HEMMERLE Director April 13, 1999
Glenn E. Hemmerle
Director
A. Roy Megarry
/s/ CARMIE MEHRLANDER President, Chief Operating
Carmie Mehrlander Officer and Director April 12, 1999
/s/ ROBERT E. RUNICE Director April 16, 1999
Robert E. Runice
/s/ CARSON R. THOMPSON Director April 20, 1999
Carson R. Thompson
April 22, 1999
/s/ ELAINE D. CROWLEY Vice President, Finance and
Elaine D. Crowley Treasurer
<TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND
QUALIFYING ACCOUNTS AND RESERVES
(Dollars in Thousands)
<CAPTION>
Additions
------------------
Charged Charged
to to
Balance at Costs Other Balance
Beginning and Accounts Deductions End of
Description of Period Expenses Describe Describe Period
<S> <C> <C> <C> <C> <C>
Year Ended February 1,
1997
Store Conversions Reserve-
Asset Writedown $5,323 -- -- 1,683(1) $3,640
Year Ended January 31,
1998
Store Conversions Reserve-
Asset Writedown $3,640 -- -- 1,401(1) $2,239
Year Ended January 30,
1999
Store Conversions Reserve-
Asset Writedown $2,239 -- -- 611(1) $1,628
<FN>
(1) Primarily remaining book value of leasehold improvements and lease obligation
of Bombay stores written off in connection with the asset writedown and store
conversion program.
</TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Filed with the Annual Report on Form 10-K for the fiscal year ended January 30,
1999.
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.
4 - Preferred Stock Purchase Rights Plan. (2)
10(a) - Form of Indemnification Agreement. (3)
10(b) - The Bombay Company, Inc. 1991 Director Stock Option Plan. (4)
10(c) - Form of Agreement used to evidence stock option grants under The
Bombay Company, Inc. 1991 Director Stock Option Plan. (5)
10(d) - The Bombay Company, Inc. Supplemental Stock Program. (5)
10(e) - The Bombay Company, Inc. 1993 Stock Deferral Plan for Non-Employee
Directors. (6)
10(f) - Executive Long Term Disability Plan. (7)
10(g) - The Bombay Company, Inc. 1996 Long-Term Incentive Stock Plan. (8)
10(h) - Form of Award Agreement under the 1996 Long-Term Incentive Stock
Plan.
10(i) - Executive Officers Incentive Compensation Plan. (9)
10(j) - Employment Contract with Executive Officer.
13 - The Bombay Company, Inc. 1998 Annual Report to Shareholders is filed
as exhibit hereto solely to the extent portions thereof are
expressly incorporated herein by reference.
22 - Subsidiaries of the Registrant. (7)
23 - Definitive Proxy Statement of the Company relating to Annual Meeting
of Shareholders (certain portions of such Proxy Statement are
incorporated herein by reference and are identified by reference to
caption in the text of this report). (10)
24 - Consent of Independent Accountants.
[FN]
(1)Filed with the Commission as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended July 4, 1993. Such Exhibit is incorporated
herein by reference.
(2 Filed with the Commission as an Exhibit to the Company's Registration
Statement on Form 8A filed June 12, 1995. Such Exhibit is incorporated
herein by reference.
(3)Filed with the Commission as an Exhibit to the Company's Definitive
Proxy Statement dated October 10, 1986, which Proxy Statement was filed with
the Commission as an Exhibit to the Company's Annual Report on Form 10-K for
the year ended June 30, 1986. Such Exhibit is incorporated herein by
reference.
(4)Filed with the Commission as an Exhibit to the Company's Definitive Proxy
Statement dated October 8, 1991, which Proxy Statement was filed with the
Commission as an Exhibit to the Company's Annual Report on Form 10-K for the
year ended June 30, 1991. Such Exhibit is incorporated herein by reference.
(5)Filed with the Commission as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended June 28, 1992. Such Exhibit is incorporated
herein by reference.
(6)Filed with the Commission as an Exhibit to the Company's Definitive Proxy
Statement dated September 7, 1993, which Proxy Statement was filed with the
Commission as an Exhibit to the Company's Annual Report on Form 10-K for the
year ended July 4, 1993. Such Exhibit is incorporated herein by reference.
(7)Filed with the Commission as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended July 3, 1994. Such Exhibit is incorporated
herein by reference.
(8)Filed with the Commission as an Exhibit to the Company's 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.
(9) Filed with the Commission as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended January 31, 1998. Such Exhibit is incorporated
herein by reference.
(10)Filed with the Commission on April 9, 1999.
<F3>
<TABLE>
Selected Financial Data
The Bombay Company, Inc. and Subsidiaries
<CAPTION>
Year Ended Seven Months Year
----------------------------------------------- Ended Ended
January 30 January 31 February 1 February 3 January 28 July 3
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Financial Data:
Net sales(1) $356,715 $332,577 $336,303 $345,399 $241,465 $317,452
Net sales increase (decrease) 7% (1)% 2% (4) --% (4) 23% 37%
Same store sales increase (decrease) 6% -- 2% (4) (9)% (4) (1)% 11%
Income (loss) from continuing
operations:(1)
Before accounting change $4,010 $4,450 $(2,840) $12,393 (2) $(14,714) (2) $22,895
Cumulative effect of accounting change -- -- 835 -- -- --
Net income (loss) 4,010 4,450 (2,005) 12,393 (2) (14,714) (2) 22,895
Basic earnings per share:
Income (loss) before accounting change .11 .12 (.07) .33 (2) (.39) (2) .63
Cumulative effect of accounting change -- -- .02 -- -- --
Net income (loss) .11 .12 (.05) .33 (2) (.39) (2) .63
Diluted earnings per share:
Income (loss) before accounting change .11 .12 (.07) .33 (2) (.39) (2) .60
Cumulative effect of accounting change -- -- .02 -- -- --
Net income (loss) .11 .12 (.05) .33 (2) (.39) (2) .60
Total assets(1) 193,519 195,462 195,363 190,696 189,747 180,548
Stockholders' equity(1) 156,143 158,238 153,933 152,468 134,810 147,006
Return on assets 2.1% 2.3% (1.0)% 6.5% N/C (3) 14.4%
Return on equity 2.6% 2.9% (1.3)% 8.6% N/C (3) 17.4%
Operating Data:
Average sales per store open for full $873 $796 $784 $765 (4) $773 (4) $699
fiscal period(1)
Average sales per square foot $278 $263 $262 $263 (4) $304 (4) $323
Number of stores:
Beginning of year 415 427 434 486 447 383
Opened 15 2 9 11 40 71
Closed 18 14 16 63 1 7
End of year 412 415 427 434 486 447
Store composition:
Bombay - Regular 161 187 203 216 230 268
Bombay - Large format 251 228 224 218 198 141
Alex & Ivy -- -- -- -- 58 38
Retail square footage: (1)
Bombay - Regular 303 333 358 371 396 457
Bombay - Large format 989 910 902 885 810 565
Alex & Ivy -- -- -- -- 202 126
Total 1,292 1,243 1,260 1,256 1,408 1,148
<FN>
The Company has paid no cash dividends during the
periods presented.
(1) In thousands.
(2)Includes pre-tax operations realignment costs of $50,000,000, equivalent to $.80 per share in the Seven
Month Period, and credit of $6,000,000, equivalent to $.10 per share in Fiscal 1995.
(3)Not comparable due to Seven Month Period.
(4)Excludes the closed Alex & Ivy division; comparatives are based on twelve month periods.
</TABLE>
<TABLE>
<F2>
PRICE RANGE OF COMMON STOCK
Quoted by quarter for the fiscal periods ended:
<CAPTION>
January 30, 1999 High Low January 31, 1998 High Low
<S> <C> <C> <C> <C> <C>
First $5.94 $4.19 First $5.38 $3.25
Second 5.94 3.75 Second 6.38 3.63
Third 6.75 4.13 Third 9.00 5.56
Fourth 5.88 4.31 Fourth 6.13 4.00
</TABLE>
<AUDIT-REPORT>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
The Bombay Company, Inc.
In our opinion, the accompanying consolidated balance
sheets and the related consolidated statements of
operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial
position of The Bombay Company, Inc. and its
subsidiaries at January 30, 1999 and January 31, 1998,
and the results of their operations and their cash
flows for the three years ended January 30, 1999, in
conformity with generally accepted accounting
principles. 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
generally accepted auditing standards 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 the opinion expressed above.
As discussed in Note 1 to the financial statements, the
Company changed its method of accounting for inventory
during the year ended February 1, 1997.
PRICEWATERHOUSECOOPERS LLP
March 11, 1999
Fort Worth, Texas
</AUDIT-REPORT>
<F6>
MANAGEMENT'S DISCUSSION AND ANALYSIS
General
The Bombay Company, Inc. ("Company") is a
specialty retailer which markets traditional and
classic furniture, prints and accessories through its
412 locations of The Bombay Company ("Bombay") retail
stores in 42 states in the United States and nine
Canadian provinces, through mail order and over the
internet at www.bombayco.com.
The largest percentage of the Company's sales and
operating income is realized in the fiscal quarter that
includes December (Christmas season). Merchandise is
manufactured to Company specification through a network
of contract manufacturers located principally in Asia
and North America. Because the majority of the Company's
products are proprietary, the impact of inflation on operating
results is typically not significant. The Company attempts to
alleviate inflationary pressures by increasing selling prices
(subject to competitive conditions), improving designs and finding
alternative production sources in lower cost countries.
See Note 1 of Notes to Consolidated Financial
Statements for fiscal reporting periods.
<F1>
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 the actual results,
performance or achievements of the Company to be
materially different from any future results,
performance or achievements expressed or implied by
such forward-looking statements. Such factors include,
among others, the following: competition; seasonality;
success of operating initiatives; new product
development and introduction schedules; acceptance of
new product offerings; advertising and promotional
efforts; adverse publicity; expansion of the store
chain; availability, locations and terms of sites for
store development; changes in business strategy or
development plans; availability and terms of capital;
labor and employee benefit costs; changes in government
regulations; risks associated with international
business; regional weather conditions and the effects
of Year 2000 issues.
Net Sales
During Fiscal 1998, the Company recorded net sales
of $356.7 million, an increase of $24.1 million or 7%,
over net sales of $332.6 million in Fiscal 1997. The
increase is due to a 6% increase in same store sales
(stores in existence for one year or more) as well as
opening 15 new stores during the year and converting
another 16 regular stores to the larger format. These
increases were partially offset by the closure of 18
underperforming stores. The same store sales increase
was driven by promotional selling of old and
discontinued merchandise as new management purged
inventory of items that no longer were consistent with
the Company's direction. From a sales mix standpoint,
furniture represented 49% of the sales, accessories
were 27%, wall decor (principally prints, mirrors and
sconces) was 15% and lamps and other categories
represented 9% of the business. In order to broaden the
customer base and increase the sales per square foot in
the stores, new management has focused on developing
the non - furniture portion of the business which
resulted in a shift in the mix toward the latter part
of the year. This emphasis resulted in an 11% increase
in the number of transactions this year and a 3% decline
in the average ticket to $88. All regions of the United
States contributed to the sales gains with relatively
little variation in same store sales performance. Canadian
sales were adversely impacted by the unfavorable
changes in the Canadian exchange rate which resulted in
their reporting flat comparable store sales for the year
measured in U.S. dollars.
In Fiscal 1997, net sales declined by $3.7 million
or 1% to $332.6 million from $336.3 million in Fiscal
1996. The most significant contributor to the sales
decline was the closure of 14 underperforming stores.
Same store sales were flat for the year while new
stores accounted for a 1% increase in sales over Fiscal
1996. The Fiscal 1997 sales mix consisted of: 49%
furniture, 26% accessories, 17% wall decor and 8% lamps
and other categories, essentially the same as Fiscal
1996. The average ticket sale increased by 7%; however,
the number of transactions also declined by 7%. On a
regional basis, Canada and the Northeastern United
States reported the strongest results although the
results across all regions were within a very small
range.
Cost of Sales, Buying and Store Occupancy Costs
Cost of sales, including buying and store
occupancy costs, for Fiscal 1998 was $252.9 million or
70.9% of sales. As a percentage of sales, these costs
increased from 69.1% of sales in Fiscal 1997. Product
margins declined 240 basis points compared to the prior
year as the new management team aggressively cleared
old and discontinued merchandise. The decline in
product margin was partially offset by a 60 basis point
improvement in buying and occupancy costs due to the
relatively fixed nature of costs measured against sales
increases.
In Fiscal 1997, cost of sales, including buying
and store occupancy costs, was $229.9 million or 69.1%
of sales. As a percentage of sales, these costs
improved from 69.6% in Fiscal 1996. Product margins
improved 60 basis points compared to the prior year as
inventory overstock was sold and new products were
introduced. The increase in product margin was somewhat
offset by a 10 basis point increase in buying and
occupancy costs due to the relatively fixed nature of
costs measured against sales declines.
Selling, General and Administrative Expenses
Selling, general and administrative expenses in
Fiscal 1998 were $98.9 million, an increase of $1.2
million or 1%, compared to $97.7 million in Fiscal
1997. Although expense amounts increased, as a
percentage of sales, selling, general and
administrative expenses declined from 29.4% to 27.7%.
Improvements were realized primarily in advertising (63
basis points), payroll and payroll related costs (40
basis points) and insurance (31 basis points) as a
result of higher sales levels and continued cost
control efforts.
In Fiscal 1997, selling, general and
administrative expenses were reduced $9.7 million to
$97.7 million compared to $107.4 million in Fiscal
1996. As a percentage of sales, expenses declined to
29.4% of sales in Fiscal 1997 from 31.9% of sales in
Fiscal 1996. Excluding charges related to management
changes of $.8 million in Fiscal 1997 and $4.2 million
in Fiscal 1996 (see Note 7 of Notes to Consolidated
Financial Statements), selling, general and
administrative expenses were $96.9 million, or 29.1% of
sales, in Fiscal 1997 compared to $103.2 million, or
30.7% of sales, in Fiscal 1996. The decrease was primarily
due to lower payroll and payroll related costs (110 basis
points) and lower supplies costs (20 basis points) as a result
of more stringent cost control initiatives.
Interest
Interest income in Fiscal 1998 was $1.9 million
compared to $2.3 million in Fiscal 1997. There was no
interest expense in either period. The decline in
interest income was due primarily to lower average cash
balances as the Company increased its capital
expenditures to $17.3 million during Fiscal 1998
compared to $4.0 million in Fiscal 1997. Additionally,
$6.2 million of cash was utilized for repurchasing
Company stock during Fiscal 1998. The decline in the
cash balance was somewhat offset by higher interest
rates earned during the year resulting from changes in
the Company's investment mix.
Interest income increased $1.6 million in Fiscal
1997 compared to Fiscal 1996 when interest income was
$.7 million with interest expense less than $.1
million. The increase in interest income relates to
higher average balances in short-term investments as
inventory levels were controlled to significantly lower
levels than in Fiscal 1996.
Income Taxes
The Company provided $2.8 million for income taxes
in Fiscal 1998 and $2.9 million in Fiscal 1997 while
reflecting a benefit of $1.6 million in Fiscal 1996.
The effective rate was 41.0%, 39.3% and (35.6%) in
Fiscal 1998, Fiscal 1997 and Fiscal 1996, respectively.
Fluctuations in the effective rate are primarily
related to state taxes. In Fiscal 1998 the effective
state tax rate was higher, and in Fiscal 1996 the
Company realized an operating loss without reflecting a
corresponding state tax benefit.
Liquidity and Capital Resources
The primary sources of liquidity and capital
resources are cash flows from operations and bank lines
of credit. Bank borrowings are available to fund
seasonal inventory purchases. In addition, the bank
credit lines are used for overseas merchandise
purchases. Unsecured bank lines aggregate $45 million,
of which $30 million are committed under revolving
credit agreements expiring April 13, 1999. These lines
are expected to be renewed with existing banks under
similar terms.
Fiscal 1998
At January 30, 1999, cash and short-term
investments were $52.8 million, a decrease of $3.3
million from January 31, 1998. Net cash provided by
operations of $19.4 million is comprised primarily of
$4.0 million in net income which included non-cash
depreciation and amortization totaling $10.3 million as
well as a decrease in inventories of $8.8 million. The
decline in inventories is primarily related to aggressive
moves to clear old and discontinued merchandise. These
sources of cash were partially offset by an increase in other
noncurrent assets of $3.3 million related to current year
software purchases as well as the acquisition of 1.2 million
shares of Company stock acquired at a cost of $6.2 million
under a stock buy back program approved by the Board of
Directors in June 1998.
Capital expenditures totaled $17.3 million and
included the costs of 15 new stores, 16 store
conversions, purchases of additional store fixtures and
routine purchases of machinery and equipment. The
capital expenditure program for Fiscal 1999 is planned
at approximately $22 million and includes approximately
20 store openings and 15 to 20 conversions. Generally,
a new or converted store is profitable in its first
full year of operations. The planned Fiscal 1999
capital expenditures also include approximately $6
million for the replacement of store point of sale
equipment. The Company believes that its current cash
position, cash flows from operations and borrowings
available under bank credit lines will be sufficient to
fund current operations, stock buy back and capital
expenditure programs.
Fiscal 1997
At January 31, 1998, cash and short-term
investments were $56.1 million, a decrease of $7.0
million from February 1, 1997. Net cash used by
operations was $4.1 million. Cash was used primarily
for the increase in inventories of $16.8 million and
decreases in accounts payable and accrued expenses of
$5.6 million. These were partially offset by net income
of $4.5 million which included non-cash depreciation
and amortization totaling $9.9 million.
Capital expenditures totaled $3.9 million and
included the costs of two new stores, five store
conversions and routine purchases of machinery and
equipment.
Year 2000 Conversion
The Company recognizes the need to ensure that it
will be prepared for Year 2000 issues and is engaged in
an ongoing and comprehensive effort to mitigate such
risks. While the Year 2000 impact on information
technology has been addressed and remediation efforts
have been in process since 1997, during Fiscal 1998 a
"Y2K" team consisting of key employees representing all
functional areas of the Company was developed to
address all other potential areas of Year 2000 impact,
investigate solutions and develop contingency plans.
The overall objective of the Company's efforts to date
has been to identify and remediate Year 2000 related
conditions that could reasonably be expected to cause a
mission critical failure if not addressed. Efforts
related to this objective have focused on a review of
all proprietary and third-party systems and software,
as well as an analysis of the risks inherent in
significant business partner and vendor relationships.
The Company's Year 2000 program and associated
resources are primarily directed toward ensuring that
the Company will be able to effect sales, order and
receive merchandise, and pay its vendors and employees.
The Company's merchandising system was implemented
in 1994 and was designed to be Year 2000 compliant;
however, testing was not performed at that time to
determine its readiness. An eight-tiered project, the
Company's most extensive effort related to Year 2000,
to identify and remediate Year 2000 issues with this
software and other ancillary systems began in Summer
1997 and is scheduled for completion by Fall 1999.
The Company is in the process of replacing the
majority of its store environment software and hardware
including the current proprietary point of sale system,
polling and operating systems. Portions of the
hardware are already Year 2000 compliant and will
remain in use. The new vendor supported store
environment infrastructure is currently undergoing
testing and is scheduled for a complete rollout during
the second and third quarters of Fiscal 1999. Those
portions of the store environment systems that are
affected by Year 2000 are scheduled for completion in
the third quarter of Fiscal 1999.
The existing financial accounting and reporting
software has recently been upgraded by its vendor. The
vendor has certified that, with this upgrade, the
system is Year 2000 compliant.
This year the Company has also implemented new
payroll and human resources systems, each of which is
certified by the respective vendor to be Year 2000
compliant and which replaces a non-compliant system.
For those systems which the respective vendor has
certified as Year 2000 compliant, the Company is still
assessing what additional testing is needed to ensure
their readiness.
The Company is also in the process of contacting
its significant business partners and vendors in an
effort to identify those that will not or may not be
Year 2000 compliant. They include landlords,
international and domestic vendors who supply
merchandise to the Company for resale, suppliers of
services such as banks and financial services, data
processing services, advertising services,
telecommunications services and utilities. The strategy
for addressing our vendors is risk based. Each
functional area of the Company is currently engaged in
ranking each of its vendors as "critical", "essential"
or "non-essential". Surveys are being sent primarily to
critical and essential vendors with exceptions made for
selected non-critical vendors that may serve in a
contingency role. As vendors who are unable or
unwilling to provide certification of Year 2000
readiness are identified, alternatives and
contingencies intended to mitigate Year 2000 risks
perceived to be material will be considered.
Primary attention is being given to the Company's
overseas vendors, and purchasing agents are expected to
play a major role in identifying, assessing and
mitigating potential Year 2000 issues that are
foreseeable. Significant emphasis in this area is vital
as many of our primary vendors are concentrated in
regions ofthe world that are commonly perceived to be
potentially less prepared for the Year 2000.
During the year, the Company spent approximately
$1.0 million on the installation of its new payroll and
human resources systems and has incurred approximately
$.7 million in connection with the design and testing
of its new store environment systems. The Company
expects to incur an additional $6.0 million in Fiscal
1999 in connection with the implementation of the new
store environment technology. In addition to the cost
of purchasing and implementing compliant replacement
systems, the Company incurred approximately $.4
million in Fiscal 1998 and expects to incur
approximately $.8 million in Fiscal 1999 for ancillary
testing and remediation of Year 2000 issues, consisting
primarily of normal salaries paid to existing employees
through the redirection of internal programming
resources. These costs and expenditures were included
in the Company's operating budget and have not had a
material effect on the results of operations, liquidity
or financial position. Purchased hardware, software
and the costs of their implementation are capitalized
and amortized over their useful lives while other costs
of remediation associated with the Year 2000 conversion
are being expensed as incurred.
The Company is actively engaged in the process of
developing contingency plans to address situations that
may result if the Company is unable to achieve Year
2000 readiness of its critical operations. Operational
and information technology functions are being
identified and classified according to their degree of
risk. Development of contingency plans is expected to
continue through the third quarter of Fiscal 1999.
There can be no assurance that the Company will be able
to develop a contingency plan that will adequately
address issues that may arise in Year 2000 or that the
failure to develop such a plan will not have a material
impact on the operations of the Company.
Because of the pervasiveness of potential Year
2000 impact, there can be no assurance that all
associated issues have been fully identified and
addressed. In fact, reliance on the technical skills of
employees and independent contractors and on the
representations of third parties are among the factors
that could cause the Company's efforts to be less than
fully effective. While it has realistically examined
its exposure to Year 2000 issues and has taken steps to
address those issues over which it has direct control,
the Company acknowledges that there are considerable
risks that are beyond its reasonable control. These
risks include the potential failure of domestic and
international utility companies to deliver power, of
domestic and international telecommunications companies
to render voice and data services, of financial
institutions to process transactions or transfer funds,
and of vendors to deliver merchandise ordered or to
perform services required by the Company. Additionally,
the Company acknowledges that it is vulnerable to the
impact that Year 2000 may have on domestic and
international economies to the extent that such
economies may negatively impact the Company's vendors,
business partners, customers or agents. Although the
Company believes that it has taken appropriate and
and reasonable actions to identify and mitigate risks
associated with the Year 2000 issues that are within its
ability to control, there can be no assurance that its
efforts will be fully effective. Furthermore, there can
be no assurance that the systems of other companies and
agencies on which the Company relies will be timely
converted or that such failure to convert by another
entity would not have an adverse impact on the Company's
operations.
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
The Bombay Company, Inc. and Subsidiaries
(In thousands, except per share amounts)
<CAPTION>
Year Ended
JANUARY 30 January 31 February 1
1999 1998 1997
<S> <C> <C> <C>
Net sales $ 356,715 $ 332,577 $ 336,303
Costs and expenses:
Cost of sales, buying and store occupancy costs 252,891 229,927 233,903
Selling, general and administrative expenses (Notes 5 and 7) 98,916 97,663 107,420
<F5>
<F7>
Interest income, net
(1,885) (2,349) (607)
349,922 325,241 340,716
Income (loss) before income taxes and accounting change 6,793 7,336 (4,413)
Provision (benefit) for income taxes 2,783 2,886 (1,573)
Income (loss) before accounting change 4,010 4,450 (2,840)
Cumulative effect of accounting change, net of tax (Note 1) -- -- 835
<F1>
Net income (loss) $ 4,010 $ 4,450 $ (2,005)
Basic earnings per share:
Income (loss) before accounting change $.11 $.12 $(.07)
Cumulative effect of accounting change, net of tax (Note 1) -- -- .02
<F1>
Net income (loss) $.11 $.12 $(.05)
Diluted earnings per share:
Income (loss) before accounting change $.11 $.12 $(.07)
Cumulative effect of accounting change, net of tax (Note 1) -- -- .02
<F1>
Net income (loss) $.11 $.12 $(.05)
Average common shares outstanding 37,728 38,066 37,680
Average common shares outstanding and dilutive potential common 37,784 38,095 37,883
shares
<FN>
The accompanying notes are an integral part of these
consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
The Bombay Company, Inc. and Subsidiaries
(In thousands, except shares)
<CAPTION>
January 30 January 31
1999 1998
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents (short-term investments of
$47,705 and $50,538, respectively) $52,809 $56,110
Inventories, at lower of cost or market 76,659 85,861
Other current assets 7,303 7,142
Total current assets 136,771 149,113
Property and equipment, at cost:
Land 993 993
Building 5,198 5,198
Leasehold improvements 71,425 62,122
Furniture and equipment 24,255 20,811
101,871 89,124
Accumulated depreciation (57,459) (52,371)
44,412 36,753
Deferred taxes and other assets 11,824 9,056
Goodwill, less amortization of $522 and $494, 512 540
respectively
$193,519 $195,462
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $23,646 $23,019
Accrued payroll and bonuses 3,214 4,390
Gift certificates redeemable 3,487 3,008
Total current liabilities 30,347 30,417
Accrued rent and other liabilities 7,029 6,807
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 and 38,114,187 shares issued,
respectively 38,150 38,114
Additional paid-in capital 76,044 75,904
Retained earnings 49,433 45,423
Accumulated other comprehensive income (1,501) (1,203)
Common shares in treasury, at cost,1,170,930 and
0 shares, respectively (5,983) --
Total stockholders' equity 156,143 158,238
Commitments and contingencies (Note 4)
<F4>
$193,519 $195,462
<FN>
The accompanying notes are an integral part of these
consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Bombay Company, Inc. and Subsidiaries
(In thousands)
<CAPTION>
Year Ended
January 30 January 31 February 1
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 4,010 $ 4,450 $(2,005)
Adjustments to reconcile net income (loss) to net
cash from operations:
Depreciation and amortization 10,343 9,859 11,203
Management severance costs (Note 7) -- 800 4,200
<F7>
Deferred taxes and other 936 (104) (394)
Noncash contributions to employee benefit plans -- 18 1,667
Change in assets and liabilities:
(Increase) decrease in inventories 8,769 (16,818) 18,714
(Increase) decrease in other current assets (1,777) 4,412 9,268
Increase (decrease) in accounts payable and accrued 1,194 (5,626) (3,919)
expenses
Increase (decrease) in accrued payroll and bonuses (1,163) (567) 1,925
(Increase) decrease in noncurrent assets (3,331) (1,001) 548
Increase (decrease) in noncurrent liabilities 398 496 (56)
Net cash provided (used) by operations 19,379 (4,081) 41,151
Cash flows from investing activities:
Purchases of property, equipment and other (17,307) (3,945) (4,432)
Proceeds from sale of property and equipment 403 234 519
Net cash used by investing activities (16,904) (3,711) (3,913)
Cash flows from financing activities:
Purchases of treasury stock (6,170) -- --
Sale of stock to employee benefit plans 161 273 696
Exercise of stock options 38 266 1,138
Net cash provided (used) by financing activities (5,971) 539 1,834
Effect of exchange rate change on cash 195 233 (21)
Net increase (decrease) in cash and cash equivalents (3,301) (7,020) 39,051
Cash and cash equivalents at beginning of year 56,110 63,130 24,079
Cash and cash equivalents at end of year $52,809 $56,110 $63,130
Supplemental disclosures of cash flow information:
Interest paid $ -- $ - $ 46
Income taxes paid (refunded) $ 2,217 $ 1,791 $(9,536)
<FN>
The accompanying notes are an integral part of these
consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
The Bombay Company, Inc. and Subsidiaries
(In thousands, except shares)
<CAPTION>
Accumulated
Additional Other
Common Stock Treasury Stock Paid-In Retained Comprehensive Comprehensive
Shares Amount Shares Amount Capital Earnings Income Income
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, February 3, 1996 37,362,027 $37,362 --- $ ---- $72,781 $42,978 $ (653)
Shares contributed or sold 275,865 276 ----- ---- 1,531 ---- ----
to employee benefit plans
Exercise of stock options 359,784 360 ----- ---- 1,153 ---- ----
Net loss ---- ---- ---- ---- ---- (2,005) ---- $(2,005)
Foreign currency
translation adjustments ----- ----- ----- ---- ----- ---- 150 150
Comprehensive income ----- ----- ----- ---- ----- ---- ---- $(1,855)
Balance, February 1, 1997 37,997,676 37,998 ----- ---- 75,465 40,973 (503)
Shares contributed or
sold to employee benefit
plans 61,880 62 ----- ---- 223 ---- ----
Exercise of stock options 54,631 54 ----- ---- 216 ---- ----
Net income ----- ----- ----- ---- ---- 4,450 ---- $4,450
Foreign currency
translation adjustments ----- ----- ----- ---- ---- ---- (700) (700)
Comprehensive income ----- ----- ----- ---- ---- ---- ---- $3,750
Balance, January 31, 1998 38,114,187 38,114 ----- ---- 75,904 45,423 (1,203)
Purchases of treasury ----- ----- (1,207,200) (6,170) ---- ---- ----
shares
Shares contributed or
sold to employee benefit
plans 18,321 19 15,039 77 66 ---- ----
Exercise of stock options 15,153 15 ----- ---- 38 ---- ----
Distributions of deferred
director fees 1,985 2 21,231 110 36 ---- ----
Net income ----- ----- ----- ---- ---- 4,010 ---- $4,010
Foreign currency
translation adjustments ----- ----- ----- ---- ---- ---- (298) (298)
Comprehensive income ----- ----- ----- ---- ---- ---- ---- $3,712
Balance, January 30, 1999 38,149,646 $38,150 (1,170,930) $(5,983) $76,044 $49,433 $(1,501)
<FN>
The accompanying notes are an integral part of these
consolidated financial statements.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<F1>
Note 1 - Statement of Accounting Policies
_______________________________________________________
Basis of Presentation
The consolidated financial statements include the
accounts of the Company and its wholly - owned
subsidiaries. All significant intercompany
transactions, balances and profits have been
eliminated. The Company has a retail (52 - 53 week)
fiscal year which ends on the Saturday nearest January
31. The periods ended January 30, 1999 ("Fiscal 1998"),
January 31,1998 ("Fiscal 1997") and February 1, 1997
("Fiscal 1996") represent 52 weeks.
Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates.
Actual results could differ from those estimates.
Foreign Currency Translation
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. The cumulative effect of foreign
currency translation adjustments is reported in
accumulated other comprehensive income within
stockholders' equity.
Cash and Cash Equivalents
Cash in stores, deposits in banks and short-term
investments with original maturities of three months or
less are considered 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 average cost or market, cost
being determined based upon the weighted average
inventory method.
Accounting Change
During the quarter ended May 4, 1996, the Company
changed the timing of allocation of overhead costs to
distribution center inventories. The change more
accurately reflects inventory costs and represents a
preferable method of accounting for distribution center
inventories. The cumulative effect of this change was
$835,000, net of tax, or $.02 per share. This amount is
presented in the Consolidated Statement of Operations
as the cumulative effect of an accounting change. The
impact of this change on Fiscal 1996 results, excluding
the cumulative effect, was not significant. The pro
forma effect of the change on prior years' net income
(loss) and net income (loss) per share is not
significant.
Property and Equipment
Property and equipment 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
Maintenance and repairs are charged to expense as
incurred. Renewals and betterments which materially
prolong the useful lives of the assets are capitalized.
The cost and related accumulated depreciation of
property retired or sold are removed from the accounts,
and gains or losses are recognized in the statement of
operations.
Advertising Costs
Advertising costs are expensed the first time the
advertising takes place. During Fiscal 1998, Fiscal
1997 and Fiscal 1996, advertising expense was
$19,273,000, $20,096,000 and $19,887,000, respectively.
Goodwill
Goodwill recorded in association with acquisitions
accounted for using the purchase method is amortized
using the straight - line method over the estimated
useful life of 40 years. The amortization policy is
reviewed annually and impairments, if any, would be
recognized if the expected future undiscounted
operating cash flows derived from such assets are less
than their carrying value.
Income Taxes
The Company uses 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. The Company assesses realizability
of deferred tax assets and, if necessary, a valuation
allowance is provided.
Comprehensive Income
Effective February 1, 1998, the Company adopted
Statement of Financial Accounting Standards No.130,
Reporting Comprehensive Income. Comprehensive income is
defined as 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
within stockholders' equity and consist of the
cumulative effect of foreign currency translation
adjustments.
Earnings per Share
In March 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 128, Earnings per Share ("FAS 128"),
which superceded Accounting Principles Board Opinion
No. 15. FAS 128 requires presentation of basic and
diluted 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
restricted stock and deferred director compensation.
The Company adopted FAS 128 in Fiscal 1997 on a
retrospective basis
The computations for basic and diluted earnings
from continuing operations per share follow (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
Year Ended
January 30 January 31 February 1
1999 1998 1997
<S> <C> <C> <C>
Numerator:
Income (loss) before
accounting change $4,010 $4,450 $(2,840)
Denominator for basic
earnings per share:
Average common
shares outstanding 37,728 38,066 37,680
Denominator for diluted
earnings per share:
Average common shares
outstanding 37,728 38,066 37,680
Stock options 32 11 203
Restricted stok 8 13 -
Deferred director
compensation 16 5 -
37,784 38,095 37,883
Basic earnings per share $.11 $.12 $(.07)
Diluted earnings per share $.11 $.12 $(.07)
</TABLE>
Note 2 - Income Taxes
_______________________________________________________
The components of the provision (benefit) for
domestic and foreign income taxes are shown below (in
thousands):
<TABLE>
<CAPTION>
Year Ended
January 30 January 31 February 1
1999 1998 1997
<S> <C> <C> <C>
Income (loss) before
income taxes and
accounting change:
Domestic $7,244 $6,706 $(4,714)
Foreign (451) 630 301
$6,793 $7,336 $(4,413)
Provision (benefit) for income
taxes:
Current:
Federal $1,789 $2,255 $(1,479)
Foreign (75) 306 500
State and local 299 109 -
2,013 2,670 (979)
Deferred (prepaid):
Federal 767 175 (476)
Foreign (50) 59 (118)
State and local 53 (18) -
770 216 (594)
Income tax provision
(benefit) before
accounting change 2,783 2,886 (1,573)
Tax effect of accounting change - - 449
Total provision (benefit) for $2,783 $2,886 $(1,124)
income taxes
</TABLE>
The effective tax rate differs from the federal
statutory tax rate for the following reasons:
<TABLE>
<CAPTION>
Year Ended
January 30 January 31 February 1
1999 1998 1997
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% (35.0)%
Increase in effective tax
rate due to:
Foreign income taxes .5 2.0 (2.5)
State and local taxes,
net of federal income
tax benefit 4.0 1.2 -
Other, net 1.5 1.1 1.9
Effective tax rate 41.0% 39.3% (35.6)%
</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 30 January 31
1999 1998
<S> <C> <C>
Deferred tax liabilities $(1,043) $(1,144)
Deferred tax assets:
Depreciation 1,661 789
Accrued severance 77 740
Store conversion cost 530 764
Inventory valuation 1,702 2,323
Accrued rent 3,004 2,998
Other 1,840 2,247
8,814 9,861
Net deferred tax assets $7,771 $8,717
</TABLE>
Note 3 - Debt
_______________________________________________________
The Company has unsecured revolving credit
agreements with a group of banks aggregating $45
million at January 30, 1999 of which $30 million is
committed. The credit facilities are for working
capital and letter of credit purposes, primarily to
fund seasonal merchandise purchases, and bear interest
at market rates based on prime. The credit agreements
restrict dividend payments, and require the maintenance
of various financial ratios and the payment of
negotiated fees. The revolving credit agreements expire
April 13, 1999 and are expected to be renewed under
similar terms. At January 30, 1999, there were
$13,561,000 in letters of credit outstanding under the
credit facilities, issued principally in conjunction
with overseas merchandise purchases. Interest expense
and negotiated fees for Fiscal 1998, Fiscal 1997 and
Fiscal 1996 totaled $247,000, $182,000 and $138,000,
respectively.
<F4>
Note 4 - Commitments and Contingencies
_______________________________________________________
Store, distribution and field office facilities
are leased under operating leases expiring through
2013. 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 1998, Fiscal 1997 and Fiscal 1996 totaled
$40,244,000, $39,051,000 and $39,502,000, respectively.
The minimum rental commitments for future fiscal
years are as follows (in thousands):
Fiscal
1999 $38,373
2000 35,865
2001 33,781
2002 31,643
2003 25,745
Thereafter 33,194
$198,601
The Company has 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 the financial position or results of
operations of the Company.
<F5>
Note 5 - 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 14% of earnings with the Company matching the first
5% at a rate of 75%. Contributions are paid to a
corporate trustee and invested in various funds.
Company matching contributions made to participants'
accounts become fully vested upon completion of two
years of service. 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 Company common
stock.
The Bombay Company, Inc. Stock Purchase Program is
open to all full-time employees who have at least six
months of service. Each participant may contribute 5%
or 10% of qualifying compensation. Contributions are
used to purchase shares of Company common stock, which
are distributed annually to all participants. The
participants' shares are fully vested upon purchase.
There is currently no Company match on the Stock
Purchase Program.
Total Company contributions to these plans for
Fiscal 1998, Fiscal 1997 and Fiscal 1996 were $544,000,
$681,000 and $1,667,000, respectively.
During Fiscal 1998, the Company modified its
vacation policy in order to be more competitive with
the retail industry. As a result of the change, the
Company recorded a one time pre - tax credit of
$700,000, equivalent to $.01 per share after tax, relating to
expenses that had been accrued under the previous policy
but were no longer required under the revised policy.
Note 6 - Common Stock and Stock Options
_______________________________________________________
On June 17,1998, the Company announced that its
Board of Directors had approved a stock buy back
program with initial authorization to purchase up to
$10 million of the Company's stock. The shares may be
purchased from time to time, through open market
purchases and privately negotiated transactions. As of
January 30, 1999, 1,207,200 shares had been purchased
at a cost aggregating $6,170,000 of which 36,270 had
been sold to the Company's employee stock plans or used
for distributions of deferred director fees.
Non - employee directors are eligible to
participate in the 1993 Stock Deferral Plan for Non -
Employee Directors, which allows such directors the
option to defer receipt of retainer payments and
meeting fees which are credited to an account for such
director in units equivalent to Company common stock.
The Company has a shareholders' rights plan under
which each share of Company 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 the Company 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
the Company, each Right will entitle the holder to
purchase, at the Right's exercise price, a number of
shares of Company common stock having a market value of
twice the Right's exercise price. If the Company is
acquired in a merger or other business combination
transaction after a person or group acquires 15% or
more of the Company's 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.
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 30,
1999, the option shares reserved for the Employee Plans
were 4,523,299. 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 2,315,959,
2,663,618 and 1,096,403 at January 30, 1999, January
31,1998 and February 1, 1997, respectively.
On March 12, 1997, the Board of Directors granted
50,000 shares each of restricted stock under the 1996
Long Term Incentive Stock Plan to two key executives. The
respective shares were issuable at March 12, 2001 contingent
upon the continued employment of each executive. Compensation
expense of $105,000 was recognized during Fiscal 1997 in
connection with the restricted stock. The expense related
to each was reversed during Fiscal 1998 and the grants were
canceled upon the respective departures of the excutives from
the Company.
During Fiscal 1998, restricted stock aggregating
90,000 shares was granted under the 1996 Long Term
Incentive Stock Plan to three key executives. The
respective shares are issuable in designated increments
contingent upon continued employment of the respective
executive after 12 months, 24 months and 36 months. If
each of the executives remains employed by the Company
under the terms of the grant, 13,000, 27,500 and 49,500
shares will be issuable during Fiscal 1999, Fiscal 2000
and Fiscal 2001, respectively. Compensation expense of
$214,000 was recognized during Fiscal 1998 in
connection with the restricted stock.
The Bombay Company, Inc. 1991 Director Stock
Option Plan ("Director Plan") provides for the granting
of options to members of the Board of Directors who are
neither employees nor officers of the Company. At
January 30, 1999, the option shares reserved for the
Director Plan were 275,005. The option price is fixed
at the market price on the date of the grant. The
option grant, initial and annual, is currently the
lesser of 5,000 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 and
includes past Board service toward full vesting of the
initial grant. Each additional annual grant becomes
fully exercisable six months after the grant date.
Shares available for additional grants were 56,946,
6,946 and 18,633 at January 30, 1999, January 31,1998
and February 1, 1997, respectively.
The following table includes option information
for the Employee Plans and Director Plan:
<TABLE>
<CAPTION>
Number Option Price
Stock Option Activity of Shares per Share
<S> <C> <C>
February 3, 1996 2,440,130 $2.72 - 32.58
Options granted 1,243,748 5.25 - 10.75
Options exercised (423,142) 2.72 - 7.98
Options canceled (1,048,065) 6.74 - 32.58
February 1, 1997 2,212,671 3.01 - 25.75
Options granted 644,766 3.63 - 8.38
Options exercised (75,783) 3.16 - 6.75
Options canceled (1,174,147) 3.63 - 17.94
January 31, 1998 1,607,507 3.01 - 25.75
Options granted 1,218,535 3.75 - 8.19
Options exercised (25,569) 3.01 - 4.75
Options canceled (691,329) 3.88 - 15.88
January 30, 1999 2,109,144 3.33 - 25.75
Exercisable at: 1997
February 1, 1997 623,256 3.01 - 25.75
January 31, 1998 579,233 3.01 - 25.75
January 30,1999 640,609 3.33 - 25.75
</TABLE>
The following table summarizes stock options
outstanding at January 30, 1999:
<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>
$3.33 to 4.38 492,205 8.3 $ 4.22 57,293 $ 3.56
4.50 to 4.94 507,667 8.4 4.73 134,826 4.65
5.00 to 5.95 394,982 9.3 5.52 38,280 5.14
6.06 to 6.94 301,858 7.4 6.74 101,778 6.74
7.25 to 9.25 259,506 6.9 8.66 163,886 8.79
10.00 to 25.75 152,926 5.0 15.14 144,546 15.17
2,109,144 8.0 $ 6.28 640,609 $ 8.35
</TABLE>
The Company has adopted the disclosure-only
provisions of Statement of Financial Accounting
Standards No. 123, Accounting for Stock - Based
Compensation ("FAS 123"). Accordingly, no compensation
cost has been recognized for options granted. Had
compensation cost for the Company's stock option plans
been determined based on the fair value at the grant
date for awards in Fiscal 1995 through Fiscal 1998 in
accordance with the provisions of FAS 123, the
Company's net income (loss) and earnings (loss) per
share would have been reduced to the pro forma amounts
indicated below (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
Year Ended
January 30 January 31 February 1
1999 1998 1997
<S> <C> <C> <C>
Net income (loss), as reported $4,010 $4,450 $(2,005)
Net income (loss), pro forma 2,868 4,057 (3,443)
Basic earnings (loss) per share,
as reported .11 .12 (.05)
Diluted earnings (loss) per share,
as reported .11 .12 (.05)
Basic earnings (loss) per share,
pro forma .08 .11 (.09)
Diluted earnings (loss) per share,
pro forma .08 .11 (.09)
</TABLE>
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 30 January 31 February 1
1999 1998 1997
<S> <C> <C> <C>
Expected volatility 55.5% 75.0% 78.6%
Expected life years 6 6 6
Expected dividends - - -
Risk-free interest rate 5.0 - 6.1% 5.8 - 7.1% 5.9 - 6.8%
</TABLE>
The weighted average fair value of options granted
during Fiscal 1998, Fiscal 1997 and Fiscal 1996 was
$2.92, $3.37 and $4.96, respectively.
The exercise of non - qualified stock options in
Fiscal 1998, Fiscal 1997 and Fiscal 1996 resulted in
income tax benefits of $17,000, $47,000 and $558,000,
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.
<F7>
Note 7 - Management Changes
_______________________________________________________
On October 3, 1997, the Company announced the
departure of its Executive Vice President and Chief
Financial Officer. In accordance with a severance and
non competition agreement, a one time pre-tax charge of
$800,000, equivalent to $.01 per share after tax, was
recorded during the quarter ended November 1, 1997. As
of January 30,1999 and January 31,1998, $394,000 and
$84,000, respectively, of the $800,000 had been paid.
On September 5, 1996, the Company announced the
termination of its President and Chief Executive
Officer and its Executive Vice President of
Merchandising and Marketing. In accordance with
severance and non competition agreements, a one time
pre-tax charge of $4.2 million, equivalent to $.07 per
share after tax, was recorded during the quarter ended
November 2, 1996. As of January 30,1999, January 31,
1998 and February 1, 1997, $4,200,000, $3,406,000 and
$1,970,000, respectively, of the $4.2 million had been
paid.
<F8>
Note 8 - Geographic Areas
_______________________________________________________
The Company operates 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.
Operating profit by geographic area is total revenue
less operating expenses. Area operating expenses
exclude interest income, net of interest expense, and
income taxes. Identifiable assets by area are those
assets used in the area's operations, including intangibles.
The following table shows net sales, operating
profit (loss) and other financial information by
geographic area (in thousands):
<TABLE>
<CAPTION>
Year Ended
January 30 January 31 February 1
1999 1998 1997
<S> <C> <C> <C>
Net sales:
United States $318,657 $294,308 $298,137
Canada 38,058 38,269 38,166
Total $356,715 $332,577 $336,303
Operating profit (loss):
United States $3,505 $2,462 $(7,199)
Canada 1,403 2,525 2,179
Interest income, net 1,885 2,349 607
Income (loss) before income taxes
and accounting change
$6,793 $7,336 $(4,413)
Identifiable assets:
United States $180,741 $180,351 $180,209
Canada 12,778 15,111 15,154
Total $193,519 $195,462 $195,363
Depreciation and amortization:
United States $9,592 $9,078 $10,362
Canada 751 781 841
Total $10,343 $9,859 $11,203
Capital expenditures:
United States $16,530 $3,591 $3,820
Canada 777 354 612
Total $17,307 $3,945 $4,432
</TABLE>
<TABLE>
UNAUDITED QUARTERLY FINANCIAL DATA
The Bombay Company, Inc. and Subsidiaries
(In thousands, except per share amounts)
Unaudited quarterly financial data for the quarters
ended:
<CAPTION>
January 30 October 31 August 1 May 2
1999 1998 1998 1998
<S> <C> <C) <C> <C>
Net sales $130,483 $75,878 $82,011 $68,343
Gross profit 46,693 19,737 21,685 15,709
Net income (loss) 11,142 (2,775) (1) (476) (3,881)
Basic earnings (loss) per share .30 (.07) (1) (.01) (.10)
Diluted earnings (loss) per .30 (.07) (1) (.01) (.10)
share
<CAPTION>
January 31 November 1 August 2 May 3
1998 1997 1997 1997
<S> <C> <C> <C> <C>
Net sales $125,274 $71,329 $68,743 $67,231
Gross profit 47,204 20,966 19,648 14,832
Net income (loss) 11,971 (1,901) (2) (995) (4,625)
Basic earnings (loss) per share .31 (.05) (2) (.03) (.12)
Diluted earnings (loss) per .31 (.05) (2) (.03) (.12)
share
<FN>
(1) Includes a one time pre - tax credit of $700,000,
equivalent to $.01 per share after tax, resulting from
a change in vacation policy.
(2) Includes a one time pre - tax charge of $800,000,
equivalent to $.01 per share after tax, relating to a
change in management.
</TABLE>
THE BOMBAY COMPANY, INC.
BYLAWS
(RESTATED - EFFECTIVE MAY 21, 1997)
ARTICLE I
OFFICES.
SECTION 1. REGISTERED OFFICE. The registered office of the
Corporation in the State of Delaware shall be located in the City of Dover,
County of Kent, State of Delaware, and the name of the resident agent in charge
thereof shall be The Prentice-Hall Corporation System, Inc.
SECTION 2. OTHER OFFICES. The principal office of the Corporation and
such other offices as may be deemed appropriate shall be at such place or places
as the Board of Directors may from time to time appoint or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS.
SECTION 1. PLACE OF MEETING. All meetings of the stockholders for the
election of directors shall be held at such place within or without the State of
Delaware as the Board of Directors may designate, provided that at least ten
(10) days' notice must be given to the stockholders entitled to vote thereat of
the place so fixed. Meetings of stockholders for any other purpose may be held
at such place and time as shall be stated in the notice of the meeting.
SECTION 2. ANNUAL MEETING. The Annual Meeting of Shareholders shall be
held annually on such a date and at such time as shall be designated from time
to time by the Board of Directors and stated in the Notice of Meeting in
accordance with the General Corporation Laws of the State of Delaware, at which
meeting the shareholders shall elect directors by plurality vote and shall
transact such other business as may properly be brought before the meeting.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute or the
Certificate of Incorporation, may be called by the directors by resolution
adopted by a vote of the majority.
SECTION 4. NOTICE. Written or printed notice of every meeting of
stockholders, annual or special, stating the time and place thereof, and, if a
special meeting, the purpose or purposes in general terms for which the meeting
is called, shall not be less than ten (10) days before such meeting be served
upon or mailed to each stockholder entitled to vote thereat, at his address as
it appears upon the books of the Corporation, or, if such stockholder shall have
filed with the Secretary of the Corporation a written request that notices
intended for him be mailed to some other address, then to the address designated
in such request.
SECTION 5. QUORUM. Except as otherwise provided by law or by the
Certificate of Incorporation, the presence in person or by proxy at any meeting
of stockholders of the holders of a majority of the shares of the capital stock
of the Corporation issued and outstanding and entitled to vote thereat shall be
requisite and shall constitute a quorum. If, however, such majority shall not
be represented at any meeting of the stockholders regularly called, the holders
of a majority of the shares present in person or by proxy and entitled to vote
thereat shall have power to adjourn the meeting to another time, or to another
time and place, without notice other than announcement of adjournment at the
meeting, and there may be successive adjournments for like cause and in like
manner until the requisite amount of shares entitled to vote at such meeting
shall be represented. At such adjourned meeting at which the requisite amount
of shares entitled to vote thereat shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 6. VOTES. At each meeting of stockholders every stockholder
shall have one vote for each share of Common Stock entitled to vote and the
vote, if any, which was fixed pursuant to the Certificate of Incorporation for
each share of Preferred Stock which is registered in the stockholder's name on
the books of the Corporation on the date on which the transfer books were
closed, if closed, or on the date set by the Board of Directors for the
determination of stockholders entitled to vote at such meeting. At each such
meeting, every stockholder shall be entitled to vote in person, or by proxy
appointed by an instrument in writing subscribed by such stockholder and bearing
a date not more than three (3) years prior to the meeting in question, unless
said instrument provides for a longer period during which it is to remain in
force.
At all meetings of the stockholders, a quorum being present, all matters
shall be decided by a majority vote of the shares of stock entitled to vote held
by stockholders present in person or by proxy, except as otherwise required by
the Certificate of Incorporation or the laws of the State of Delaware. Unless
so directed by the chairman of the meeting, or required by the laws of the State
of Delaware, the vote thereat on any question need not be by ballot.
On a vote by ballot, each ballot shall be signed by the stockholder voting,
or in his name by his proxy, if there be such proxy, and shall state the number
of shares voted by him and the number of votes to which each share is entitled.
On a vote by ballot, the chairman shall appoint two inspectors of election, who
shall first take and subscribe an oath or affirmation faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of their ability and who shall take charge of the polls and after the
balloting shall make a certificate of the result of the vote taken; but no
director or candidate for the office of director shall be appointed as such
inspector.
SECTION 7. STOCK LIST. At least ten (10) days before every election of
directors, a complete list of stockholders entitled to vote at such election,
arranged in alphabetical order, with the residence of each and the number of
voting shares held by each shall be prepared by the Secretary. Such list shall
be open at the place where the election is to be held for said ten (10) days, to
the examination of any stockholder entitled to vote at that election and shall
be produced and kept at the time and place of election during the whole time
thereof, and subject to the inspection of any stockholder who may be present.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER. The business and property of the Corporation shall be
conducted and managed by a Board consisting of such number of directors, but not
less than three (3) nor more than nine (9), as may be fixed from time to time by
resolution adopted by the Board or as set forth in the Articles of
Incorporation. Directors need not be stockholders.
SECTION 2. TERM OF OFFICE. Except as otherwise provided by law or the
Certificate of Incorporation, each director shall hold office until the annual
meeting of stockholders held in the third year following the year of such
director's election, and until such director's successor is duly elected and
qualified or until such director's earlier death or resignation. Directors
shall retire from the Board at the Board meeting held in conjunction with the
annual stockholders meeting following such director's 70th birthday.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors.
SECTION 4. VACANCIES. If any vacancy shall occur among the directors, or
if the number of directors shall at any time be increased, the directors in
office, although less than a quorum, by a majority vote may fill the vacancies
or newly created directorships. When one or more directors shall resign from
the Board of Directors, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each director so chosen shall hold
office as herein provided in the filling of other vacancies.
SECTION 5. MEETING. Meetings of the Board of Directors shall be held at
such place within or without the State of Delaware as may from time to time be
fixed by resolution of the Board of Directors or by the Chairman of the Board,
or by the President or as may be specified in the notice or waiver of notice of
any meeting. Meetings may be held at any time upon the call of the Chairman of
the Board, the President or the Secretary or any two (2) of the directors in
office by oral, telegraphic, or written notice, duly served or sent or mailed to
each director not less than one (1) day before such meeting. Meetings may be
held at any time and place without notice if all the directors are present, or
if those not present shall in writing or by telegram or cable waive notice
thereof. A regular meeting of the Board of Directors may be held without notice
immediately following the annual meeting of stockholders at the place where such
annual meeting is held. Regular meetings of the Board may also be held without
notice at such time and place as shall from time to time be determined by
resolution of the Board of Directors.
SECTION 6. QUORUM. One-third, but not less than two (2), of the
directors shall constitute a quorum for the transaction of business. If at any
meeting of the Board of Directors there shall be less than a quorum present, a
majority of those present may adjourn the meeting from time to time without
notice other than announcement of the adjournment at the meeting, and at such
adjourned meeting at which a quorum is present any business may be transacted
which might have been transacted at the meeting as originally notified.
SECTION 7. COMPENSATION. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors, a fixed sum for
attendance at each meeting of the Board of Directors and/or a stated fee as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of the Executive Committee and/or of other committees may be allowed like
compensation and reimbursement of expenses for attending committee meetings.
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES.
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may, by
resolution passed by a majority of the whole Board, appoint an Executive
Committee of two (2) or more members, to serve during the pleasure of the Board
of Directors, to consist of such directors as the Board of Directors may from
time to time designate. The Chairman of the Executive Committee shall be
designated by the Board of Directors.
SECTION 2. PROCEDURE. The Executive Committee, by a vote of a majority
of its members, shall fix its own times and places of meeting, shall determine
the number of its members constituting a quorum for the transaction of business,
and shall prescribe its own rules of procedure, no change in which shall be made
save by a majority vote of its members.
SECTION 3. POWERS. The Executive Committee shall have the responsibility
to act for the Board of Directors, within the specified limits of its authority.
The Executive Committee shall formulate an Executive Committee Charter, to be
approved by the Board of Directors, setting forth the Committee's duties and
responsibilities and establishing the limits of its authority.
SECTION 4. MINUTES. The Executive Committee shall keep regular minutes
of its proceedings and all action by the Executive Committee shall be reported
to the Board of Directors at its next meeting. Such action shall be subject to
review by the Board of Directors, provided that no rights of third parties shall
be affected by such review.
SECTION 5. OTHER COMMITTEES. From time to time the Board of Directors,
by the affirmative vote of a majority of the whole Board of Directors, may
appoint other committees for any purpose or purposes, and such committees shall
have such powers as shall be conferred by the resolution of appointment, and as
shall be permitted by law.
ARTICLE V
OFFICERS.
SECTION 1. OFFICERS. The Board of Directors shall elect, as officers, a
President, one or more Vice Presidents (the number thereof to be determined by
the Board of Directors), a Treasurer and a Secretary, and in their discretion
one or more Assistant Secretaries, and Assistant Treasurers. Such officers
shall be elected annually by the Board of Directors at its first meeting
following the annual meeting of stockholders, and each shall hold office until
the corresponding meeting of the Board of Directors in the next year and until
his successor shall have been duly elected and qualified, or until he shall have
died or resigned or shall have been removed in the manner provided herein. The
powers and duties of two or more offices may be exercised and performed by the
same person, except the offices of President and Secretary.
SECTION 2. VACANCIES. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors at any regular or
special meeting.
SECTION 3. PRESIDENT. The President shall be either the Chief Executive
Officer or the Chief Operating Officer of the Corporation. Subject to the
direction of the Board of Directors, he shall have and exercise direct charge of
and general supervision over the business and affairs of the Corporation and
shall perform such other duties as may be assigned to him from time to time by
the Board of Directors.
SECTION 4. VICE PRESIDENTS. The Vice Presidents shall, in the order of
their seniority or in such order as may be specified by the Board of Directors,
have and perform all the powers and duties of the President, in his absence or
disability, and shall in addition have and exercise such powers and shall
perform such duties as from time to time may be conferred upon or assigned to
them by the Board of Directors or as may be delegated to them by the Chairman of
the Board or the President.
SECTION 5. TREASURER. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all monies or other valuable effects in such banks, trust companies
or other depositaries as shall, from time to time, be selected by the Board of
Directors; he may endorse for collection on behalf of the Corporation, checks,
notes and other obligations; he may sign receipts and vouchers for payments made
to the Corporation; singly or jointly with another person as the Board of
Directors may authorize, he may sign checks of the Corporation and pay out and
dispose of the proceeds under the direction of the Board of Directors; he shall
cause to be kept correct books of account of all the business and transactions
of the Corporation, shall see that adequate audits thereof are currently and
regularly made, and shall examine and certify the accounts of the Corporation;
he shall render to the Board of Directors, the Executive Committee, the Chairman
of the Board or to the President, whenever requested, an account of the
financial condition of the Corporation; he may sign with the President or a Vice
President, certificates of stock of the Corporation; and, in general, shall
perform all the duties incident to the office of a treasurer of a corporation,
and such other duties as from time to time may be assigned to him by the Board
of Directors.
SECTION 6. ASSISTANT TREASURERS. The Assistant Treasurers in order of
their seniority shall, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties as the President or the Board of Directors shall prescribe.
SECTION 7. SECRETARY. The Secretary shall keep the minutes of all
meetings of the stockholders and of the Board of Directors in books provided for
the purpose; he shall see that all notices are duly given in accordance with the
provisions of law and these Bylaws; he shall be custodian of the records and of
the corporate seal or seals of the Corporation; he shall see that the corporate
seal is affixed to all documents, the execution of which, on behalf of the
Corporation, under its seal, is duly authorized and when the seal is so affixed
he may attest the same; he may sign, with the President or a Vice President,
certificates of stock of the
Corporation; and, in general, he shall perform all duties incident to the office
of a secretary of a corporation, and such other duties as from time to time may
be assigned to him by the Board of Directors.
SECTION 8. ASSISTANT SECRETARIES. The Assistant Secretaries in order of
their seniority shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties as the President or the Board of Directors shall prescribe.
SECTION 9. SUBORDINATE OFFICERS. The Board of Directors may appoint such
subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority and perform such duties as the Board
of Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
SECTION 10. COMPENSATION. The Board of Directors shall have power to fix
the compensation of all officers of the Corporation. It may authorize any
officer, upon whom the power of appointing subordinate officers may have been
conferred, to fix the compensation of such subordinate officers.
SECTION 11. REMOVAL. Any officer of the Corporation may be removed, with
or without cause, by a majority vote of the Board of Directors at a meeting
called for that purpose.
SECTION 12. BONDS. The Board of Directors may require any officer of the
Corporation to give a bond to the Corporation, conditional upon the faithful
performance of his duties, with one or more sureties and in such amount as may
be satisfactory to the Board of Directors.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 1. FORM AND EXECUTION OF CERTIFICATES. The interest of each
stockholder of the Corporation shall be evidenced by a certificate or
certificates for shares of stock in such form as may be prescribed from time to
time by law and by the Board of Directors. The certificates of stock of each
class and series now authorized or which may hereafter be authorized by the
Certificate of Incorporation shall be consecutively numbered and signed by
either the President or a Vice President together either with the Secretary or
an Assistant Secretary or the Treasurer or an Assistant Treasurer of the
Corporation, and may be countersigned and registered in such manner as the Board
of Directors may prescribe, and shall bear the corporate seal or a printed or
engraved facsimile thereof. Where any such certificate is signed by a transfer
agent or transfer clerk and by a registrar, the signatures of any such
President, Vice President, Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary upon such certificate may be facsimiles engraved or printed.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall have been placed upon, such certificate or
certificates shall have ceased to be such, whether because of death, resignation
or otherwise, before such certificate or certificates shall have been issued and
delivered, such certificate or certificates may nevertheless be issued and
delivered with the same effect as if such officer or officers had not ceased to
be such at the date of its issue and delivery.
SECTION 2. TRANSFER OF SHARES. The shares of the stock of the
Corporation shall be transferred on the books of the Corporation by the holder
thereof in person or by his attorney lawfully constituted, upon surrender for
cancellation of certificates for the same number of shares, with an assignment
and power of transfer endorsed thereon or attached thereto, duly executed, with
such proof or guaranty of the authenticity of the signature as the Corporation
or its agents may reasonably require. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
SECTION 3. CLOSING OF TRANSFER BOOKS AND RECORD DATES. The Board of
Directors may in its discretion prescribe, in advance, a record date not
exceeding sixty (60) nor less than ten (10) days prior to the date of any
meeting of the stockholders or prior to the last day on which the consent or
dissent of stockholders may be effectively expressed for any purpose without a
meeting, during which no transfer of stock on the books of the Corporation may
be made; or in lieu of prohibiting the transfer of stock, may fix, in advance, a
record date not more than sixty (60) nor less than ten (10) days prior to the
date of any meeting of stockholders or prior to the last day on which the
consent or dissent of stockholders may be effectively expressed for any purpose
without a meeting, as the time as of which stockholders entitled to notice of
and to vote at such a meeting or whose consent or dissent is required or may be
expressed for any purpose, as the case may be, shall be determined; and all
persons who were holders of record of voting stock at such time and no others
shall be entitled to notice of and to vote at such meeting or to express their
consent or dissent, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any record date fixed as aforesaid.
The Board of Directors may also, in its discretion, fix in advance a date not
exceeding sixty (60) days preceding the date fixed for the payment of any
dividend or the making of any distribution, or for the delivery of evidence of
rights, or evidences of interests arising out of any issuance, change,
conversion or exchange of capital stock, as a record date for the determination
of the stockholders entitled to receive or participate in any such dividend,
distribution, rights or interests, notwithstanding any transfer of any stock on
the books of the Corporation after any record date fixed as aforesaid, or, at
its option, in lieu of so fixing a record date, may prescribe in advance a
period not exceeding sixty (60) days prior to the date for such payment,
distribution or delivery during which no transfer of stock on the books of the
Corporation may be made.
SECTION 4. LOST OR DESTROYED CERTIFICATES. In case of the loss or
destruction of any outstanding certificate of stock, a new certificate may be
issued upon the following conditions:
The owner of said certificate shall file with the Secretary of the
Corporation an affidavit giving the facts in relation to the ownership, and in
relation to the loss or destruction of said certificate, stating its number and
the number of shares represented thereby; such affidavit to be in such form and
contain such statements as shall satisfy the President and Secretary that said
certificate has been accidentally destroyed or lost, and that a new certificate
ought to be issued in lieu thereof. Upon being so notified, the President and
Secretary shall require such owner to file with the Secretary a bond in such
penal sum and in such form as they may deem advisable, and with a surety or
sureties approved by them, to indemnify and save harmless the Corporation from
any claim, loss, damage or liability which may be occasioned by the issuance of
a new certificate in lieu thereof. Upon such bond being so filed, a new
certificate for the same number of shares shall be issued to the owner of the
certificate so lost or destroyed; and the transfer agent and registrar of stock,
if any, shall countersign and register such new certificate upon receipt of a
written order signed by the said President and Secretary, and thereupon the
Corporation will save harmless said transfer agent and registrar in the
premises. Any Vice President may act hereunder in the stead of the President,
and an Assistant Secretary in the stead of the Secretary. In case of the
surrender of the original certificate, in lieu of which a new certificate has
been issued, or the surrender of such new certificate, for cancellation, the
bond of indemnity given as a condition of the issue of such new certificate may
be surrendered. A new certificate may be issued without requiring any bond when
in the judgment of the Board of Directors it is proper to do so.
ARTICLE VII
CHECKS, NOTES, ETC.
SECTION 1. EXECUTION OF CHECKS, NOTES, ETC. All checks and drafts on the
Corporation's bank accounts and all bills of exchange and promissory notes, and
all acceptances, obligations and other instruments for the payment of money,
shall be signed by such officer or officers, agent or agents, as shall be
thereunto authorized from time to time by the Board of Directors.
SECTION 2. EXECUTION OF CONTRACTS, ASSIGNMENTS, ETC. All contracts,
agreements, endorsements, assignments, transfers, stock powers, or other
instruments (except as provided in Sections 1 and 3 of this Article VII) shall
be signed by the President or any Vice President and by the Secretary or any
Assistant Secretary or the Treasurer or any Assistant Treasurer, or by such
other officer or officers, agent or agents, as shall be thereunto authorized
from time to time.
SECTION 3. EXECUTION OF PROXIES. The President or a Vice President of
the Corporation may authorize from time to time the signature and issuance of
proxies to vote upon shares of stock of other companies standing in the name of
the Corporation. All such proxies shall be signed in the name of the
Corporation by the President or a Vice President and by the Secretary or an
Assistant Secretary.
ARTICLE VIII
WAIVERS AND CONSENTS
SECTION 1. WAIVERS. Whenever under the provisions of any law or under
the provisions of the Certificate of Incorporation of the Corporation or these
Bylaws, the Corporation, or the Board of Directors or any committee thereof, is
authorized to take any action after notice to stockholders or the directors or
the members of such committee, or after the lapse of a prescribed period of
time, such action may be taken without notice and without the lapse of any
period of time if, at any time before or after such action be completed, such
requirements be waived in writing by the person or persons entitled to said
notice or entitled to participate in this action to be taken, or, in the case of
a stockholder, by his attorney thereunto authorized.
SECTION 2. CONSENTS. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee of the Board of Directors
may be taken without a meeting, if prior to such action a written consent
thereto is signed by all members of the Board of Directors or of such committee
as the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or of such committee.
ARTICLE IX
DIVIDENDS AND RESERVE FUNDS.
SECTION 1. DIVIDENDS. Except as otherwise provided by law or by the
Certificate of Incorporation, the Board of Directors may declare dividends out
of the surplus of the Corporation at such times and in such amounts as it may
from time to time designate.
SECTION 2. RESERVE FUNDS. Before crediting net profits to the surplus in
any year, there may be set aside out of the net profits of the Corporation for
that year such sum or sums as the Board of Directors from time to time in its
absolute discretion may deem proper as a reserve fund or funds to meet
contingencies or for equalizing dividends or for repairing or maintaining any
property of the Corporation or for such other purpose as the Board of Directors
shall deem conducive to the interests of the Corporation.
ARTICLE X
INSPECTION OF BOOKS.
The Board of Directors shall determine from time to time whether, and if
allowed when and under what conditions and regulations, the accounts and books
of the Corporation (except such as may by statute be specifically open to
inspection) or any of them shall be open to the inspection of the stockholders;
and the stockholders' rights in this respect are and shall be restricted and
limited accordingly.
ARTICLE XI
FISCAL YEAR.
The fiscal year of the Corporation shall end on the Saturday closest to the
end of January of each year unless another date shall be fixed by resolution of
the Board of Directors. After such date is fixed, it may be changed for future
fiscal years at any time or from time to time by further resolution of the Board
of Directors.
ARTICLE XII
SEAL.
The corporate seal shall be circular in form and shall contain the name of
the Corporation, the State of incorporation, and the words "Corporate Seal".
ARTICLE XIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Corporation agrees to hold harmless and indemnify each director and
officer, whether or not then in office (and his heirs and administrators), to
the full extent permitted by Section 145 of the General Corporation Law of the
State of Delaware or by any amendment thereof or other statutory provision
authorizing or permitting such indemnification adopted hereafter, for all
liability, including reasonable expenses, incurred by, imposed upon him in
connection with, or resulting from any action, suit or proceeding to which he
may be made a party by reason of his being or having been a director or officer
of the Corporation or any of its subsidiaries, or of any other corporation at
the request of the Corporation. The foregoing right of reimbursement shall not
be exclusive of other rights to which such director or officer may be entitled
as a matter of law or contract.
ARTICLE XIV
AMENDMENTS.
SECTION 1. BY STOCKHOLDERS. Except as otherwise provided in the
Certificate of Incorporation, these Bylaws may be amended by the affirmative
vote of the holders of 66 2/3% or more of the combined voting power of the
outstanding voting stock, voting together as a single class and cast at any
annual or special meeting of the stockholders if notice of the proposed
amendment shall have been contained in the notice of the meeting.
SECTION 2. BY DIRECTORS. Except as otherwise specifically provided
herein, these Bylaws may be amended by the affirmative vote of a majority of the
Board of Directors, at any regular or special meeting thereof, if notice of the
proposed amendment shall have been contained in the notice of such meeting. If
any Bylaw regulating an impending election of directors is adopted or amended or
repealed by the Board of Directors, there shall be set forth in the notice of
the next meeting of the stockholders for the election of directors, the Bylaw so
adopted or amended or repealed together with a concise statement of the changes
made.
EMPLOYEE AWARD AGREEMENT
NON QUALIFIED OPTIONS
PURSUANT TO
THE BOMBAY COMPANY, INC. 1996 LONG-TERM INCENTIVE STOCK PLAN
This Award Agreement (the "Agreement") is made this ___ day of ________,
199_, between THE BOMBAY COMPANY, INC., a Delaware Corporation (the "Company"),
and _____________, an employee of the Company or one of its subsidiaries (the
"Employee").
WHEREAS, the Company desires to carry out the purposes of The Bombay
Company, Inc. 1996 Long Term Incentive Stock Plan (the "Plan") by affording
Employee the opportunity to purchase shares of the Company's $1.00 par value
common stock (the "Shares").
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Award. The Company hereby grants to Employee the right and
option (the "Option") to purchase an aggregate of _______ shares of the
Company's Shares, such Shares being subject to adjustment as provided in
paragraph 8 hereof, and on the terms and conditions herein set forth. The
Shares granted pursuant to this Option (the "Option Shares") are granted as a
non-qualified option.
2. Purchase Price. The purchase price of the Option Shares shall be
$________ per Share, such purchase price being 100% of the fair market value of
such Shares on the date first appearing above (the "Date of the Grant").
3. Exercise of Award. Unless expired as provided in paragraph 5 below,
and subject to the special provisions of paragraph 6 below, the Award for Option
Shares may be exercised from time to time in whole or in part for not more than
33% of the entire number of Option Shares at any time after the first
anniversary of the Date of Grant, and an additional 33% of the total Option
Shares on, or after each of the two (2) succeeding anniversaries of the Date of
Grant.
4. Manner of Exercise; Payment of Purchase Price.
A. Subject to the terms and conditions of this Agreement, the Award
shall be exercised by written notice to the Company at its principal office.
Such notice shall state the election to exercise the Award and shall specify the
number of Option Shares sought to be exercised pursuant to the notice. Such
notice of exercise shall be signed by Employee and shall be irrevocable when
given.
B. The notice of exercise shall be accompanied by the full payment
of the purchase price for the Option Shares in cash by certified check or bank
cashiers check or through satisfactory arrangements for payment by a broker
representing the Employee in the sale of some or all of the Option Shares.
Subject to approval of an authorized Committee of the Board of Directors (the
"Committee"), payment of the purchase price may be accomplished by the surrender
of stock certificates representing Shares having an aggregate fair market value
on the date of exercise equal to the purchase price of the Option Shares, or by
a combination of cash and Shares.
C. Upon receipt of the purchase price, and subject to the terms of
paragraph 11, a certificate representing the Option Shares exercised shall be
registered in the name of the person or persons so exercising the Award. In the
event the Award shall be exercised pursuant to paragraph 7, by any person or
persons other than the Employee, such notice shall be accompanied by appropriate
proof satisfactory to the Company of the right of such person or persons to
exercise the Award. All Shares issued as a result of an exercise of an Award as
provided herein shall be fully paid and non-assessable.
D. The payment of witholding tax liability by Employee shall be a
condition precedent to the Company's obligation to issue any certificates for
Shares resulting from an exercise of an Award.
5. Exercise and Expiration of Award. This Award, if not exercised, shall
expire and become null and void upon the expiration of three (3) months after
Employee ceases to be employed by the Company or any of its subsidiaries unless
such termination shall have been for cause, as determined by the Committee, in
which event the Award shall be null and void as of the date of such termination.
Notwithstanding the above, if Employee retires from the Company or any of its
subsidiaries (as determined by the Committee in its sole discretion), the Award
may, at the Committee's discretion remain exercisable for a period not to exceed
36 months following such retirement. In the event of Employee's death or
permanent disability, the Award shall be exercisable for a period of 12 months
following such death or disability. Notwithstanding the above, the Award shall,
without exception, become null and void once a period of 10 years shall have
lapsed since the Date of Grant. Except as provided in paragraph 6 below, only
those portions of this Award vested as of the date of termination of Employee's
employment may be exercised.
6. Acceleration of Exercise Dates. Notwithstanding the provisions of
paragraph 3 above relating to the vesting of this Award in installments, the
Committee may, in its discretion, permit this Award to be immediately
exercisable, until the expiration date provided in paragraph 5 above, for the
entire number of Option Shares covered hereby upon the retirement of Employee or
any Change in Control of the Company (as defined in the Plan).
7. Award Nontransferable. Unless permitted by law regulation and
approved by the Committee, the Award and any right related there to shall not be
transferable by Employee otherwise than by will or by the laws of descent and
distribution and may be exercised during Employee's lifetime, only by Employee.
Upon the death of employee, the award may be exercised by Employee's executor,
administrator, legatee or distributee, as the case may be.
8. Adjustments of Shares Subject to Award. If any Shares shall at any
time be changed or exchanged by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split, combination of shares or a
dividend payable in stock, then the aggregate number of Option Shares subject to
this Agreement and the purchase price of such Option Shares shall be
automatically adjusted such that Employee's proportionate interest shall be
maintained as before the occurrence of such event. The determination of any
such adjustment by the Committee shall be final, binding and conclusive.
9. No Contract. This Agreement does not constitute a contract for
employment and shall not affect the right of the Company to terminate
Employee's employment for any reason whatsoever.
10. Rights as Shareholder. This Award shall not entitle Employee or
any permitted transferee to any rights of a shareholder of the Company or to
any notice of proceedings of the Company with respect to any Option Shares
issuable upon exercise of this Award unless and until the Award has been
exercised for such Shares.
11. Restriction on Issuance of Shares. The Company shall not be
required to issue or deliver any certificates for Shares purchased upon the
exercise of an Award prior to the obtaining of any approval from any
governmental agency which the Company shall, in its sole discretion, determine
to be necessary or advisable, and the completion of any registration or other
qualification of such Shares under any state or federal law or ruling or
regulations of any governmental body which the Company shall, in its sole
discretion, determine to be necessary or advisable. In addition, if shares
reserved for issuance upon exercise of Awards shall not then be registered under
the Securities Act of 1933 the Company may, upon Employee's exercise of an
Award, require Employee or his permitted transferee to represent in writing that
the Shares being acquired are for investment and not with a view to
distribution, and may mark the certificate for the Shares with a legend
restricting transfer and may issue stop transfer orders relating to such
certificate to the transfer agent.
12. Lapse of Award. The Agreement shall be null and void in the event
Employee shall fail to sign and return a counterpart hereof to the Company
within thirty (30) days of its delivery to Employee.
13. Binding Effect. This Agreement shall be binding upon this heirs,
executors, administrators, and successors of the parties hereto.
14. Governing Instrument and Law. This Award and any Shares issued
hereunder shall in all respects be governed by the terms and provisions of the
Plan, and by the laws of the State of Texas, and in the event of a conflict
between the terms of this Agreement and the terms of the Plan, the terms of the
Plan shall control.
THE BOMBAY COMPANY, INC.
By: _____________________________
Robert S. Jackson
Chairman of the Board & CEO
Accepted and Agreed:
____________________________ Date: ___________________________
Name
EMPLOYMENT AGREEMENT
THIS Employment Agreement ("Agreement") is entered into this 12th day of
February, 1998 ("Effective Date") by and between Carmie Mehrlander ("Mehrlander"
or "Employee") and The Bombay Company, Inc. ("Bombay" or "Company"), (together
referred to as the "Parties").
WHEREAS, Bombay desires to employ Mehrlander; and
WHEREAS, Mehrlander desires to be employed by Bombay;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties contained herein, the Parties agree as
follows:
1. POSITION AND TERM OF EMPLOYMENT.
1.01 Employment. Subject to the terms and conditions of this Agreement,
Bombay shall employ Mehrlander to perform the duties of President and Chief
Operating Officer, and in addition, Mehrlander shall serve on the Board of
Directors of the Company.
1.02 Term. Mehrlander's employment is "at-will" and may be terminated by
the Board of Directors of the Company at any time, with or without cause, along
with the requisite severance provisions of Paragraphs 7.01 and 7.02 hereinbelow.
2. COMPENSATION.
2.01 Base Annual Salary. Bombay shall pay Mehrlander a base annual salary
of three hundred thousand dollars ($300,000.00), paid in regular periodic
installments, as salary payments are generally made by the Company to its
employees.
2.02 Executive Bonus Program. Mehrlander shall participate in the
Company's Executive Bonus Program under which, if Bombay (USA and Canada)
achieves its annual business plan for the fiscal year, Mehrlander shall receive
a bonus of up to sixty-seven percent (67%) of her base annual salary. For
Company performance that exceeds its annual business plan for the fiscal year,
Mehrlander shall receive a bonus of up to one hundred thirty-five percent (135%)
of her base annual salary. The actual bonus amount that Mehrlander receives
shall be determined based upon Company results and Mehrlander's personal
performance, as judged by the CEO and the Board of Directors of the Company.
Bonuses shall be paid in a lump sum following the end of each fiscal year. For
fiscal year 1998 only, Mehrlander's bonus shall be guaranteed, regardless of
Company and personal performance, to be not less than one hundred fifty thousand
dollars ($150,000.00).
3. COMPANY STOCK PLANS.
3.01 Long-Term Incentive Stock Plan. Mehrlander shall receive an initial
grant of sixty thousand (60,000) shares of restricted stock under the Company's
1996 Long-Term Incentive Stock Plan, which shall vest and be delivered to
Mehrlander according to the following schedule: ten thousand (10,000) shares
upon the first anniversary of the Effective Date of this Agreement; twenty
thousand (20,000) shares upon the second anniversary of the Effective Date of
this Agreement; and thirty thousand (30,000) shares upon the third anniversary
of the Effective Date of this Agreement. Mehrlander must be actively employed
at the end of each respective anniversary period in order to become vested in
these shares for such periods.
3.02 Stock Options. Mehrlander shall receive an initial grant of stock
options covering two hundred eighty thousand (280,000) shares of Bombay stock
according to the following schedule: one hundred forty thousand (140,000) share
options priced at the closing price of Bombay stock on the Effective Date;
seventy thousand (70,000) share options priced at the closing price on the
Effective Date plus one dollar and twenty-five cents ($1.25) per share; and
seventy thousand (70,000) share options priced at the closing price on the
Effective Date plus two dollars and fifty cents ($2.50) per share. These
options shall vest at the rate of twenty percent (20%) per year (i.e. fifty-six
thousand shares per year,) commencing with the first anniversary of the
Effective Date of this Agreement and, to the extent vested, may be exercised in
whole or in part each year. These options have a term of ten (10) years from
the date of this grant. Additional grants for Mehrlander shall be considered by
the Board of Directors of the Company in February 2000.
4. COMPANY BENEFIT PLANS.
4.01 Company 401(k) Savings and Stock Ownership Plan. Mehrlander shall be
eligible to participate in the Company 401(k) Savings and Stock Ownership Plan
upon the first anniversary of the Effective Date of this Agreement.
4.02 Life, Accident, and Disability Insurance. On the Effective Date of
this Agreement, Mehrlander shall receive Company paid life insurance and
accident insurance, each equal to one and one-half (11/2) times Mehrlander's
compensation at plan up to a maximum of five hundred thousand dollars
($500,000.00) each. Also, Mehrlander shall be covered under the Executive Short
Term Disability Income Protection Plan, which pay one hundred percent (100%) of
Mehrlander's salary for a maximum of thirteen (13) weeks, and the Executive Long
Term Income Protection Plan which pays sixty percent (60%) of Mehrlander's
salary up to eight thousand five hundred dollars ($8,500.00) per month for as
long as she remains totally disabled up to age sixty-five (65). If disability
begins after age sixty-two (62), payments would commence on a sliding scale
based upon Mehrlander's age at time of disability. Mehrlander's net cost will
be limited to the amount of personal income taxes she pays on the Company
reimbursement of the premium. The Company shall also offer supplemental life
and personal accident insurance programs to Mehrlander at low group rates.
4.03 Medical and Dental Insurance. Mehrlander shall be eligible to join
the Company Medical and Dental Plan after ninety (90) days from the Effective
Date of this Agreement. The cost of the Plan is shared by the Company and the
Employee. The premiums are currently tax exempt under a section of the IRS tax
code. There is a one (1) year waiting period for any pre-existing conditions.
The Company shall reimburse Mehrlander for COBRA expenses actually incurred by
her for coverage during the first ninety (90) days after the Effective Date of
this Agreement.
4.04 Liability Insurance. Upon the Effective Date of this Agreement, the
Company shall provide and pay for liability insurance, which shall insure,
indemnify and defend Mehrlander in her capacity as an officer and director of
Bombay, against claims alleging officer's and/or director's liability.
5. CAR ALLOWANCE. Mehrlander shall receive a car allowance from the
Company in the amount of nine thousand six hundred dollars ($9,600.00) per year,
paid at the rate of eight hundred dollars ($800.00) per month, beginning upon
the Effective Date of this Agreement.
6. RELOCATION.
6.01 Moving and Selling Expenses. For a period of one year from the
Effective Date of this Agreement, Bombay shall pay all reasonable costs of
packing and moving Mehrlander's furniture and household effects from Atlanta to
the Fort Worth area. If possible, the Company requests that Mehrlander use one
of the moving companies with whom Bombay has a corporate contract. In addition,
provided that Mehrlander commences efforts to sell her house in Atlanta within a
period of one year from the Effective Date of this Agreement, Bombay will pay
selling costs to Mehrlander related to her Atlanta house, up to a maximum of
seven percent (7%) of said house's selling price.
6.02 Temporary Executive Housing. The Company shall provide temporary
executive housing to Mehrlander, in Fort Worth, for three (3) months, subject to
an extension for an additional three (3) months at the discretion of the
Company.
6.03 Relocation Bonus. Bombay shall pay Mehrlander, on the Effective Date
of this Agreement, a relocation bonus of fifty thousand dollars ($50,000.00),
grossed up for federal income taxes at the rate of thirty-nine percent (39%).
7. SEVERANCE PAYMENTS.
7.01 Termination of Employment Without Cause During the First Year.
A) During the first year of employment, if Mehrlander's employment
with Bombay is terminated without "cause", as defined in Paragraph 7.02
hereinbelow, Bombay shall pay Mehrlander twenty-four (24) months of continuation
of base salary. The severance payments for months thirteen (13) through twenty-
four (24) shall be subject to an offset equal to actual payments from subsequent
new employment during that period of time as follows: i.) if such subsequent new
employment provides actual payments during that period of time that are less
than those severance payments provided herein by Bombay, then Mehrlander shall
still be paid the difference in such amounts by Bombay; and ii.) if such
subsequent new employment provides actual payments during that period of time
that are equal to or more than those severance payments provided herein by
Bombay, then Mehrlander shall be paid no additional severance by Bombay.
B) During the second year of employment, if Mehrlander's employment
with Bombay is terminated without cause, as defined in Paragraph 7.02
hereinbelow, Bombay shall pay Mehrlander twelve (12) months of continuation of
base salary.
C) It is expressly understood and agreed that Mehrlander shall have
no obligation to accept any other employment during any period in which she is
to receive severance payments from Bombay.
7.02 Termination for Cause. For purposes of this Agreement, termination of
employment for cause shall be governed by the following provisions.
Mehrlander's employment under this Agreement may be terminated by the Company
for cause, as defined hereinbelow, upon at least thirty (30) days prior written
notice. The term "cause" shall mean only one or more of the following: i.)
Employee's conviction by a court of competent jurisdiction (which such
conviction, through lapse of time or otherwise is not subject to appeal,) of any
State or Federal felony; ii.) Employee's possession or use of illegal drugs or
Employee's continued and excessive drinking of alcoholic beverages that
substantially impairs her ability to perform her duties under this Agreement;
iii.) Employee's commission of a tort or act of fraud upon the Company; or iv.)
Employee's continuous refusal to perform her duties under this Agreement and her
failure to remedy such refusals after sixty (60) days written notice and
opportunity to cure.
8. CHANGE OF CONTROL.
8.01 Benefits and Rights of Mehrlander Upon Change of Control of Company.
In the event of a Change of Control of the Company, as defined in Paragraph 8.02
hereinbelow, all stock options granted to Mehrlander shall immediately vest
commencing on such date of Change of Control and be exercisable by Mehrlander at
any time during the ninety (90) days following the event of Change of Control,
subject to an enlargement of such exercise period by the Company. Additionally,
in the event of a Change of Control of the Company, as defined in Paragraph 8.02
hereinbelow, the severance provisions provided in Paragraph 7.01 hereinabove
shall be operational, at the election of Mehrlander, at any time after such
Change of Control, allowing her to terminate her employment with the Company and
allowing her to receive full severance payments (as if terminated without
cause.)
8.02 Definition of Change of Control of Company. A Change of Control of
the Company shall be deemed to have occurred upon the happening of any one of
the following events:
A) 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 twenty percent (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 fifty percent (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;
B) 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
D) 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
fifty percent (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.
9. CONFLICT WITH OTHER EMPLOYMENT. Mehrlander agrees and represents that
her acceptance of this employment with Bombay as set forth herein does not
conflict with any prior contract or agreement of employment to which she is a
party.
10. SUCCESSORSHIP. This Agreement and the rights and obligations of the
parties hereto shall be binding upon and shall inure to the benefit of each of
the parties hereto, and any individual, company, corporation, entity or other
business enterprise that shall succeed to the interest of the Company, through
merger, consolidation, divestiture or otherwise, shall be bound by the terms of
this Agreement.
11. MISCELLANEOUS.
11.01 Entire Agreement. This Agreement embodies the entire agreement
and understanding between the Company and Mehrlander relating to the subject
matter hereof. This Agreement supersedes and cancels all prior agreements
between the Company and Mehrlander, whether written or oral, relating to the
employment of Mehrlander.
11.02 Amendment and Waiver. This Agreement may not be amended,
supplemented or waived, except in writing, signed by both parties to this
Agreement. The waiver by either party of a breach of this Agreement shall not
operate to, or be construed as a waiver of, any other breach of that provision,
nor as a waiver of any other provision.
11.03 Governing Law. This Agreement shall be construed in accordance
with, and governed for all purposes by the laws of the State of Texas.
11.04 Severability. If any paragraph, subparagraph, or provision
hereof is found for any reason whatsoever to be invalid, illegal, unenforceable,
void, voidable, or inoperative, that paragraph, subparagraph, or provision shall
be deemed severable and shall not affect the force and validity of any other
provision of this Agreement.
11.05 Notices. Any notice, request, or instruction to be given herein,
pursuant to the terms of this Agreement, shall be in writing and shall be deemed
given when personally delivered, or upon signature of the addressee on a
returned receipt when sent via certified mail, return receipt requested.
11.06 Survival of Rights. All rights and obligations of the parties,
arising during the term of this Agreement, shall continue to have full force and
effect after the date that this Agreement terminates or expires.
11.07 Interpretation and Construction. Should any provision of this
Agreement require interpretation or construction, it is agreed by the parties
that the entity interpreting or construing this Agreement shall not apply a
presumption that the provisions herein shall be more strictly construed against
one party by reason of the legal rule of construction that a document is to be
more strictly construed against the party who prepared it, as it is expressly
understood and agreed by Bombay and Mehrlander that both parties have
participated in the negotiation, drafting, and preparation of all provisions of
this Agreement.
11.08 Duplicate Originals. This Agreement shall be executed in
duplicate originals.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
Effective Date indicated at the beginning of this Agreement.
THE BOMBAY COMPANY, INC.
By: Date:
Robert S. Jackson
Chief Executive Officer
EMPLOYEE
Date:
Carmie Mehrlander
<AUDIT-REPORT>
CONSENT OF INDEPENDENT ACCOUNTANTS
EXHIBIT 24
We hereby consent to the incorporation by reference in these Registration
Statements on Form S-8 (No. 33-02028, 33-32610, 33-40736, 33-40743, 33-51076,
33-55306, 333-39057 and 333-39059) of The Bombay Company, Inc. of our report
dated March 11, 1999 relating to the financial statements, which appears in the
Annual Report to Shareholders, which is incorporated by reference in this Annual
Report on Form 10-K. We also consent to the incorporation by reference of our
report dated March 11, 1999 relating to the financial statement schedule, which
appears in this Form 10-K.
PRICEWATERHOUSECOOPERS LLP
Fort Worth, Texas
April 22, 1999
</AUDIT-REPORT>
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<NAME> THE BOMBAY COMPANY, INC.
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<PERIOD-START> FEB-01-1998
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