UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): December 10, 2015

 

THE GYMBOREE CORPORATION

(Exact Name of Registrant as Specified in its Charter)

  

Delaware 000-21250 94-2615258

(State or Other Jurisdiction of

Incorporation)

(Commission File Number)

(I.R.S. Employer

Identification No.)

 

500 Howard Street, San Francisco, CA

94105

(Address of Principal Executive Offices, Including Zip Code)

 

(415) 278-7000

(Registrant’s Telephone Number, Including Area Code)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

  

 

 

  

Item 2.02 Results of Operations and Financial Condition.

 

On December 10, 2015, The Gymboree Corporation issued an earnings release announcing its financial results for the third fiscal quarter ended October 31, 2015.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.  

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

No.   Description
     
99.1   Earnings release of The Gymboree Corporation dated December 10, 2015.

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  

  THE GYMBOREE CORPORATION
Date: December 10, 2015      
  By: /s/ ANDREW NORTH
    Name:   Andrew North
    Title: Chief Financial Officer

 

 

 

 

EXHIBIT INDEX

 

No.   Description
     
99.1   Earnings release of The Gymboree Corporation dated December 10, 2015.

 

 

 

Exhibit 99.1

 

 

  

  Investor Relations contact:
  Tel: 415-278-7933
  investor_relations@gymboree.com
   
  Media Relations contact:
  Tel: 415-278-7493
  media_relations@gymboree.com

 

The Gymboree Corporation Reports Third Quarter Fiscal 2015 Results

 

San Francisco, Calif., December 10, 2015 – The Gymboree Corporation (the “Company”) today reported consolidated financial results for the third fiscal quarter ended October 31, 2015.

 

·Comparable sales (including online sales) decreased 3% during the third quarter of fiscal 2015
·Net Sales of $305.4 million, a decrease of 3.6% compared to the third quarter of fiscal 2014
·Adjusted EBITDA was $28.2 million for the third quarter of fiscal 2015 compared to $29.8 million for the third quarter of fiscal 2014, a decrease of 5.2%

 

“While our business in the third quarter was challenging, we are encouraged by our performance to date in the fourth quarter,” said Mark Breitbard, Chief Executive Officer. “Our quarter to date comparable retail sales are up mid-single digits, and while we continue to expect our Adjusted EBITDA to be in the range of $95 million to $105 million, we believe the lower half of the range is the more likely outcome.”

 

Third Quarter Results (13-weeks ended October 31, 2015 versus 13-weeks ended November 1, 2014)

 

·Comparable sales (including online sales) decreased 3%;
·Net sales were $305.4 million, a decrease of 3.6% compared to $316.8 million in the third quarter of fiscal 2014, which was primarily driven by a decrease in Gymboree brand net sales;
·Gross profit was $122.8 million, or 40.2% of net sales, compared to $125.9 million, or 39.7% of net sales, for the third quarter of fiscal 2014;
·Adjusted gross profit was $124.5 million, or 40.7% of net sales, compared to $127.7 million, or 40.3% of net sales, for the third quarter of fiscal 2014, an increase of 40 basis points;

  

 

 

 

·SG&A expense was $108.6 million, or 35.5% of net sales, compared to $113.7 million, or 35.9% of net sales, in the third quarter of fiscal 2014. The $5.1 million decrease in SG&A expense was primarily driven by a decrease in expenses due to store closures and reduction in asset impairment charges for under-performing stores, partially offset by an increase in marketing expenses;
·Adjusted SG&A expense was $105.7 million, or 34.6% of net sales, compared to $111.4 million, or 35.2% of net sales, in the third quarter of fiscal 2014;
·Adjusted EBITDA, defined as net loss attributable to The Gymboree Corporation before interest, income taxes and depreciation and amortization, adjusted for other items as described below, was $28.2 million compared to $29.8 million for the third quarter of fiscal 2014, a decrease of $1.6 million or 5.2%;
·Net loss attributable to The Gymboree Corporation for the quarter was $10.0 million compared to $522.1 million for the same quarter of fiscal 2014. The third fiscal quarter of 2014 included a $591.4 million non-cash goodwill and intangible asset impairment charge.

 

Adjusted EBITDA, Adjusted gross profit and Adjusted SG&A expense are not financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). For a description of Adjusted EBITDA and a reconciliation of these measures to GAAP measures, see “Non-GAAP Financial Measures” below and Exhibit D of this press release.

 

Net Sales Results for the 13 weeks and 39 weeks ended October 31, 2015

 

For the 13 weeks and 39 weeks ended October 31, 2015, Gymboree’s consolidated net sales were $305.4 million and $855.0 million, respectively, compared to the same prior year period of $316.8 million and $853.1 million, respectively. On a constant currency basis, net sales decreased by $2.5 million and $5.0 million for the 13 weeks and 39 weeks ended October 31, 2015, respectively, compared to the same prior year period of $314.3 million and $848.1 million, respectively.  In calculating net sales on a constant currency basis, average current period foreign exchange rates are applied to both current period and prior period net sales. The Company provides net sales on a constant currency basis to help investors assess sales trends, excluding the impact of foreign currency exchange rate fluctuations.

 

The following table details the Company’s net retail sales for the 13 weeks and 39 weeks ended October 31, 2015 in order to help investors further assess sales trends:

 

   Net Retail Sales 
               Total         
   Gymboree   Janie and Jack   Crazy 8   Before VIE   VIE   Total 
13 Weeks Ended October 31, 2015  $186,423   $33,600   $67,825   $287,848   $1,805   $289,653 
13 Weeks Ended November 1, 2014  $202,558   $32,242   $68,366   $303,166   $1,099   $304,265 
                               
39 Weeks Ended October 31, 2015  $508,390   $101,251   $193,440   $803,081   $5,295   $808,376 
39 Weeks Ended November 1, 2014  $531,152   $93,144   $188,591   $812,887   $3,878   $816,765 

 

Balance Sheet Highlights

 

·As of the end of the third quarter of fiscal 2015, there were $50.0 million in borrowings outstanding under the Company’s $225 million asset-backed loan facility and approximately $142.3 million of undrawn availability after being reduced by letters of credit of $32.7 million. As previously announced, on September 24, 2015, the Company amended its asset-backed loan facility to, among other things, extend the maturity date and provide for the incurrence of asset-backed term loans under the facility in an amount not to exceed $75 million, subject to a borrowing base.

  

 

 

 

·Capital expenditures were $5.1 million during the third quarter of fiscal 2015.
·Inventory balances at the end of the third quarter of fiscal 2015 were $265.4 million, compared to $259.3 million at the end of the third quarter of fiscal 2014. On a per square foot basis, inventory cost was up 4% over the third quarter of fiscal 2014. Inventory units were up on a low double digit percentage basis.

 

Fiscal 2015 Business Outlook

 

The Company’s fiscal 2015 outlook is based on current economic environment trends, as well as management expectations for the remainder of the year.

 

For the full year, the Company expects that Adjusted EBITDA will likely be in the lower half of the previously announced range of $95 million to $105 million, which includes the net impact to Adjusted EBITDA of approximately $11 million resulting from the west coast port slowdown in the first half of the year. Based on this guidance, the Company expects to have sufficient liquidity during fiscal 2015 to service its debt and invest in the business to drive long-term growth.

 

Stores

 

During fiscal 2015, the Company continues to plan to open approximately 13 stores and expects to close approximately 30 to 40 stores.

 

Capital Expenditures

 

During fiscal 2015, the Company now anticipates spending approximately $20 million to $25 million for capital expenditures.

 

Non-GAAP Financial Measures

 

The Company defines "Adjusted EBITDA" as net loss attributable to The Gymboree Corporation before interest, income taxes, and depreciation and amortization ("EBITDA") adjusted for other items including, non-cash share-based compensation, loss on disposal/impairment of assets and sponsor management fees and expenses, as well as the impact of purchase accounting adjustments resulting from the Acquisition and other non-recurring or unusual items. The Company is likely to exclude these items from Adjusted EBITDA in the future and may also exclude other similar items, the effect of which is uncertain but may be significant in amount. The determination of the amounts that are excluded from non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts.

 

 

 

 

Adjusted EBITDA is a non-GAAP measure but is considered an important supplemental measure of the Company's performance and is believed to be used frequently by securities analysts, investors and other interested parties in the evaluation of similar retail companies. Adjusted EBITDA is not a presentation made in accordance with GAAP and the Company's computation of Adjusted EBITDA may vary from others in the industry. Adjusted EBITDA should not be considered an alternative to operating income or net income, as a measure of operating performance or cash flow, or as a measure of liquidity. Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP (see Exhibit D for a reconciliation of Adjusted EBITDA to net loss attributable to The Gymboree Corporation).

 

The live broadcast of the discussion of third quarter fiscal 2015 financial results and fiscal 2015 business outlook will be available to interested parties at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, December 10, 2015. To listen to the live broadcast over the internet, please log on to www.gymboree.com, click on "Company Information" at the bottom of the page; go to "Investor & Media" and then "Conference Calls & Webcasts." A replay of the call will be available two hours after the broadcast through midnight PT, December 24, 2015, at 855-859-2056, passcode 70524600.

 

About The Gymboree Corporation

 

The Gymboree Corporation’s specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of October 31, 2015, the Company operated a total of 1,315 retail stores: 598 Gymboree® stores (549 in the United States, 48 in Canada and 1 in Puerto Rico), 175 Gymboree Outlet stores (174 in the United States and 1 in Puerto Rico), 152 Janie and Jack® shops (151 in the United States and 1 in Puerto Rico), and 390 Crazy 8® stores in the United States. The Company also operates online stores at www.gymboree.com, www.janieandjack.com and www.crazy8.com, and offers directed parent-child developmental play programs at 720 franchised and Company-operated Gymboree Play & Music® centers in the United States and 42 other countries.

 

Gymboree, Janie and Jack, Crazy 8 and Gymboree Play & Music are registered trademarks of The Gymboree Corporation.

 

 

 

 

Forward-Looking Statements

 

The foregoing financial information for the third quarter of fiscal 2015 and fourth quarter to date is unaudited and subject to quarter-end and year-end adjustments. The fourth quarter to date comparable retail sales reflect sales through December 8, 2015 and should not be relied upon as an indicator of our results for the fourth quarter of fiscal 2015. This press release includes forward-looking statements, including statements relating to The Gymboree Corporation's anticipated future financial performance, liquidity and capital resources, especially those set forth under the heading "Fiscal 2015 Business Outlook". These forward-looking statements generally can be identified by the use of words such as "anticipate," "expect," "plan," "could," "may," "will," "believe," "estimate," "forecast," "goal," "project," and other words of similar meaning. Each forward-looking statement contained in this press release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. The Company presently considers the following risks and uncertainties to be important factors that could cause actual results to differ materially from the Company's expectations: the disruptions in the west coast ports, ongoing volatility in the commodities markets, uncertainties relating to high levels of consumer debt and general economic conditions, volatility in the financial markets, potential data breaches of the Company’s or the Company’s vendors or suppliers computer networks, the Company's dependence on the holiday season, particularly the month of December, to sell a significant portion of its existing inventory, which may be affected by weather, spending patterns, promotional activity, terrorist activity or other security threats or perceived threats impacting store traffic and other factors, the Company's ability to anticipate and timely respond to changes in trends, consumer preferences and customer reactions to new merchandise (particularly given the Company’s need to build up inventory significantly in advance of potential product sales), competitive market conditions, including promotional activities of the Company’s competitors, success in meeting the Company's delivery targets, gross margin achievement, the Company's ability to appropriately manage inventory, effects of future embargos from countries used to source product, the Company's ability to attract and retain key personnel and other qualified team members, the limited data available in the future upon which to base its expectations for stabilizing sales trends, and other factors, including those discussed under "Risk Factors" in "Item 1A. Risk Factors," of the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2015, filed with the Securities and Exchange Commission ("SEC") on May 1, 2015. The Company cautions investors to carefully consider the risks associated with, and not to place considerable reliance on, the forward-looking statements contained in this press release. The forward-looking statements in this press release speak only as of the date of this document, and the Company undertakes no obligation to update or revise any of these statements.

 

Gymboree, Janie and Jack, Crazy 8, and Gymboree Play & Music are registered trademarks of The Gymboree Corporation.

 

###

  

 

 

 

EXHIBIT A

 

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)

 

   13 Weeks Ended   39 Weeks Ended 
   October 31, 2015   November 1, 2014   October 31, 2015   November 1, 2014 
Net sales:                    
Retail  $289,653   $304,265   $808,376   $816,765 
Gymboree Play & Music   9,921    7,744    30,236    21,895 
Retail Franchise   5,867    4,810    16,363    14,472 
Total net sales   305,441    316,819    854,975    853,132 
Cost of goods sold, including buying and occupancy expenses   (182,660)   (190,898)   (526,177)   (522,489)
Gross profit   122,781    125,921    328,798    330,643 
Selling, general and administrative expenses   (108,566)   (113,679)   (316,642)   (323,109)
Goodwill and intangible asset impairment   -    (591,396)   -    (591,396)
Operating income (loss)   14,215    (579,154)   12,156    (583,862)
Interest income   38    42    80    157 
Interest expense   (21,906)   (20,768)   (64,613)   (61,597)
Other expense, net   (170)   (19)   (138)   (521)
Loss before income taxes   (7,823)   (599,899)   (52,515)   (645,823)
Income tax (expense) benefit   (1,829)   77,505    (5,011)   75,573 
Net loss   (9,652)   (522,394)   (57,526)   (570,250)
Net (income) loss attributable to noncontrolling interest   (376)   319    (2,089)   3,591 
Net loss attributable to The Gymboree Corporation  $(10,028)  $(522,075)  $(59,615)  $(566,659)

 

 

 

 

EXHIBIT B

 

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

   October 31,   January 31,   November 1, 
   2015   2015   2014 
ASSETS               
Current assets:               
Cash and cash equivalents  $24,277   $18,520   $20,828 
Accounts receivable   22,487    25,248    23,377 
Merchandise inventories   265,409    198,337    259,266 
Prepaid income taxes   2,577    2,599    2,715 
Prepaid expenses   7,402    6,821    21,090 
Deferred income taxes   7,053    6,824    9,182 
    Total current assets   329,205    258,349    336,458 
                
Property and equipment, net   166,660    182,431    191,175 
Goodwill   373,408    373,834    375,345 
Other intangible assets, net   341,585    343,552    344,829 
Deferred financing costs   22,489    25,622    27,338 
Restricted cash   4,535    -    - 
Other assets   4,117    4,155    8,866 
    Total assets  $1,241,999   $1,187,943   $1,284,011 
                
LIABILITIES AND STOCKHOLDERS' DEFICIT               
Current liabilities:               
Accounts payable  $132,523   $87,032   $146,066 
Accrued liabilities   115,286    94,805    108,334 
Line of credit borrowings   50,000    33,000    42,000 
Current obligation under capital lease   591    552    539 
    Total current liabilities   298,400    215,389    296,939 
                
Long-term liabilities:               
Long-term debt   1,114,288    1,114,048    1,113,970 
Long-term sale-leaseback financing liability   26,462    -    - 
Long-term obligation under capital lease   2,402    2,850    2,993 
Lease incentives and other liabilities   50,992    53,677    54,129 
Unrecognized tax benefits   6,114    5,048    6,186 
Deferred income taxes   129,808    129,196    131,137 
    Total liabilities   1,628,466    1,520,208    1,605,354 
                
Stockholders' deficit   (386,467)   (332,265)   (321,343)
Total liabilities and stockholders' deficit  $1,241,999   $1,187,943   $1,284,011 

 

 

 

 

EXHIBIT C

 

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

   39 Weeks Ended 
   October 31, 2015   November 1, 2014 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(57,526)  $(570,250)
Adjustments to reconcile net loss to net cash used in operating activities:          
Goodwill and intangible asset impairment   -    591,396 
Depreciation and amortization   30,868    33,469 
Amortization of deferred financing costs and accretion of original issue discount   5,948    5,345 
Interest rate cap contracts - adjustment to market   2,737    1,441 
Loss on disposal/impairment of assets   438    6,089 
Deferred income taxes   260    (79,214)
Share-based compensation expense   2,665    3,389 
Other   (907)   (106)
Change in assets and liabilities:          
Accounts receivable   4,476    (1,507)
Merchandise inventories   (67,669)   (84,093)
Prepaid income taxes   8    (744)
Prepaid expenses and other assets   (377)   630 
Accounts payable   45,516    44,115 
Accrued liabilities   17,529    8,237 
Lease incentives and other liabilities   (304)   5,304 
Net cash used in operating activities   (16,338)   (36,499)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Capital expenditures   (12,576)   (24,372)
Increase in restricted cash   (10,863)   - 
Decrease in restricted cash   6,328    - 
Increase in related party loan receivable   (1,741)   - 
Proceeds from sale of assets   353    - 
Other   33    (45)
Net cash used in investing activities   (18,466)   (24,417)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from ABL facility   390,000    300,000 
Payments on ABL facility   (373,000)   (258,000)
Proceeds from sale-leaseback financing liability   26,750    - 
Payments on capital lease and sale-leaseback financing liability   (497)   (373)
Payments for deferred financing costs   (2,574)   - 
Dividend payment to parent   (11)   (84)
Capital contribution received by noncontrolling interest   -    992 
Net cash provided by financing activities   40,668    42,535 
Effect of exchange rate fluctuations on cash and cash equivalents   (107)   (220)
Net increase (decrease) in cash and cash equivalents   5,757    (18,601)
CASH AND CASH EQUIVALENTS:          
Beginning of period   18,520    39,429 
End of period  $24,277   $20,828 

 

 

 

 

EXHIBIT D

THE GYMBOREE CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands)

(Unaudited)

 

ADJUSTED EBITDA:

The Company defines "Adjusted EBITDA" as net income (loss) attributable to The Gymboree Corporation before interest expense, interest income, income tax expense/benefit, and depreciation and amortization ("EBITDA") adjusted for other items, including non-cash share-based compensation, loss on disposal/impairment of assets, sponsor management fees and expenses, as well as the impact of purchase accounting adjustments resulting from the acquisition of the Company by investment funds sponsored by Bain Capital Partners, LLC (the "Acquisition"), non-recurring and unusual items.

 

Adjusted EBITDA is not a performance measure under U.S. generally accepted accounting principles ("GAAP"), but is considered an important supplemental measure of the Company's performance and is believed to be used frequently by securities analysts, investors and other interested parties in the evaluation of similar retail companies. Adjusted EBITDA is not a presentation made in accordance with GAAP and the Company's computation of Adjusted EBITDA may vary from others in the industry. Adjusted EBITDA should not be considered an alternative to operating income or net income, as a measure of operating performance or cash flow, or as a measure of liquidity. Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP.

 

The table below provides a reconciliation of net loss attributable to The Gymboree Corporation to Adjusted EBITDA:

 

   13 Weeks Ended   39 Weeks Ended 
   October 31, 2015   November 1, 2014   October 31, 2015   November 1, 2014 
                 
Net loss attributable to The Gymboree Corporation  $(10,028)  $(522,075)  $(59,615)  $(566,659)
Reconciling items (a):                    
Interest expense   21,906    20,768    64,613    61,597 
Interest income   (6)   (14)   (23)   (80)
Income tax expense (benefit)   951    (78,023)   2,869    (76,633)
Depreciation and amortization (b)   9,705    10,477    29,813    32,281 
Non-cash share-based compensation expense   813    1,120    2,665    3,389 
Loss on disposal/impairment on assets   332    2,186    874    6,041 
Loss on modification of ABL facility   201    -    201    - 
Goodwill and intangible asset impairment   -    591,396    -    591,396 
Acquisition-related adjustments (c)   2,563    2,771    8,564    8,678 
Other (d)   1,801    1,181    4,938    1,369 
Adjusted EBITDA  $28,238   $29,787   $54,899   $61,379 

 

(a) Excludes amounts related to noncontrolling interest, which are already excluded from net loss attributable to The Gymboree Corporation.

 

(b) Includes the following:

 

Amortization of intangible assets (impacts SG&A)  $384   $384   $1,151   $1,151 
Amortization of below and above market leases (impacts COGS)   (198)   (237)   (546)   (724)
   $186   $147   $605   $427 

 

(c) Includes the following:

 

Additional rent expense recognized due to the elimination of deferred rent and construction allowances in purchase accounting (impacts COGS)  $1,879   $2,058   $5,646   $6,189 
Sponsor fees, legal and accounting, as well as other costs incurred as a result of the Acquisition or refinancing (impacts SG&A)   684    713    2,918    2,489 
   $2,563   $2,771   $8,564   $8,678 

 

(d) Other is comprised of restructuring charges and non-recurring changes in reserves.

 

OTHER NON-GAAP FINANCIAL MEASURES:

 

   13 Weeks Ended   39 Weeks Ended 
   October 31, 2015   November 1, 2014   October 31, 2015   November 1, 2014 
                 
Gross profit as reported  $122,781   $125,921   $328,798   $330,643 
Acquisition-related adjustments   1,681    1,821    5,100    5,465 
Adjusted gross profit excluding Acquisition-related adjustments (non-GAAP measure)  $124,462   $127,742   $333,898   $336,108 

 

   13 Weeks Ended   39 Weeks Ended 
   October 31, 2015   November 1, 2014   October 31, 2015   November 1, 2014 
                 
SG&A as reported  $(108,566)  $(113,679)  $(316,642)  $(323,109)
Acquisition-related adjustments   1,068    1,097    4,069    3,640 
Other adjustments   1,801    1,181    4,938    1,369 
    2,869    2,278    9,007    5,009 
Adjusted SG&A excluding Acquisition-related and other adjustments (non-GAAP measure)  $(105,697)  $(111,401)  $(307,635)  $(318,100)

 

 

 

 

EXHIBIT E

 

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)

 

   For the 13 Weeks Ended October 31, 2015 
   Balance Before             
   Consolidation             
   of VIEs   VIEs*   Eliminations   As Reported 
Net sales  $297,895   $9,917   $(2,371)  $305,441 
Cost of goods sold, including buying and occupancy expenses   (180,276)   (3,087)   703    (182,660)
Gross profit   117,619    6,830    (1,668)   122,781 
Selling, general and administrative expenses   (104,633)   (5,627)   1,694    (108,566)
Operating income   12,986    1,203    26    14,215 
Other non-operating (expense) income   (22,089)   51    -    (22,038)
(Loss) income before income taxes   (9,103)   1,254    26    (7,823)
Income tax expense   (951)   (878)   -    (1,829)
Net (loss) income   (10,054)   376    26    (9,652)
Net income attributable to noncontrolling interest   -    (376)   -    (376)
Net loss attributable to The Gymboree Corporation  $(10,054)  $-   $26   $(10,028)

 

   For the 13 Weeks Ended November 1, 2014 
   Balance Before             
   Consolidation             
   of VIEs   VIEs*   Eliminations   As Reported 
Net sales  $312,258   $6,055   $(1,494)  $316,819 
Cost of goods sold, including buying and occupancy expenses   (189,729)   (1,561)   392    (190,898)
Gross profit   122,529    4,494    (1,102)   125,921 
Selling, general and administrative expenses   (701,854)   (4,322)   1,101    (705,075)
Operating (loss) income   (579,325)   172    (1)   (579,154)
Other non-operating (expense) income   (20,772)   27    -    (20,745)
(Loss) income before income taxes   (600,097)   199    (1)   (599,899)
Income tax benefit (expense)   78,023    (518)   -    77,505 
Net loss   (522,074)   (319)   (1)   (522,394)
Net loss attributable to noncontrolling interest   -    319    -    319 
Net loss attributable to The Gymboree Corporation  $(522,074)  $-   $(1)  $(522,075)

 

   For the 39 Weeks Ended October 31, 2015 
   Balance Before             
   Consolidation             
   of VIEs   VIEs*   Eliminations   As Reported 
Net sales  $832,928   $29,609   $(7,562)  $854,975 
Cost of goods sold, including buying and occupancy expenses   (520,518)   (8,145)   2,486    (526,177)
Gross profit   312,410    21,464    (5,076)   328,798 
Selling, general and administrative expenses   (304,330)   (17,290)   4,978    (316,642)
Operating income   8,080    4,174    (98)   12,156 
Other non-operating (expense) income   (64,728)   57    -    (64,671)
(Loss) income before income taxes   (56,648)   4,231    (98)   (52,515)
Income tax expense   (2,869)   (2,142)   -    (5,011)
Net (loss) income   (59,517)   2,089    (98)   (57,526)
Net income attributable to noncontrolling interest   -    (2,089)   -    (2,089)
Net loss attributable to The Gymboree Corporation  $(59,517)  $-   $(98)  $(59,615)

 

   For the 39 Weeks Ended November 1, 2014 
   Balance Before             
   Consolidation             
   of VIEs   VIEs*   Eliminations   As Reported 
Net sales  $840,794   $17,705   $(5,367)  $853,132 
Cost of goods sold, including buying and occupancy expenses   (518,426)   (4,874)   811    (522,489)
Gross profit   322,368    12,831    (4,556)   330,643 
Selling, general and administrative expenses   (903,695)   (15,356)   4,546    (914,505)
Operating loss   (581,327)   (2,525)   (10)   (583,862)
Other non-operating expense   (61,955)   (6)   -    (61,961)
Loss before income taxes   (643,282)   (2,531)   (10)   (645,823)
Income tax benefit (expense)   76,633    (1,060)   -    75,573 
Net loss   (566,649)   (3,591)   (10)   (570,250)
Net loss attributable to noncontrolling interest   -    3,591    -    3,591 
Net loss attributable to The Gymboree Corporation  $(566,649)  $-   $(10)  $(566,659)

 

 

 

 

EXHIBIT E (continued)

 

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEETS

(In thousands)

(Unaudited)

 

   October 31, 2015 
   Balance Before             
   Consolidation of VIEs   VIEs*   Eliminations   As Reported 
Current assets  $309,963   $21,203   $(1,961)  $329,205 
Non-current assets   908,163    4,631    -    912,794 
Total assets  $1,218,126   $25,834   $(1,961)  $1,241,999 
                     
Current liabilities  $286,632   $13,451   $(1,683)  $298,400 
Non-current liabilities   1,329,555    511    -    1,330,066 
Total liabilities   1,616,187    13,962    (1,683)   1,628,466 
                     
Total stockholders' deficit   (398,061)   -    (278)   (398,339)
Noncontrolling interest   -    11,872    -    11,872 
Total liabilities and stockholders' deficit  $1,218,126   $25,834   $(1,961)  $1,241,999 

 

   January 31, 2015 
   Balance Before             
   Consolidation of VIEs   VIEs*   Eliminations   As Reported 
Current assets  $243,682   $16,222   $(1,555)  $258,349 
Non-current assets   924,367    5,227    -    929,594 
Total assets  $1,168,049   $21,449   $(1,555)  $1,187,943 
                     
Current liabilities  $205,674   $11,088   $(1,373)  $215,389 
Non-current liabilities   1,304,384    435    -    1,304,819 
Total liabilities   1,510,058    11,523    (1,373)   1,520,208 
                     
Total stockholders' deficit   (342,009)   -    (182)   (342,191)
Noncontrolling interest   -    9,926    -    9,926 
Total liabilities and stockholders' deficit  $1,168,049   $21,449   $(1,555)  $1,187,943 

 

   November 1, 2014 
   Balance Before             
   Consolidation of VIEs   VIEs*   Eliminations   As Reported 
Current assets  $321,144   $16,636   $(1,322)  $336,458 
Non-current assets   942,208    5,345    -    947,553 
Total assets  $1,263,352   $21,981   $(1,322)  $1,284,011 
                     
Current liabilities  $289,155   $8,959   $(1,175)  $296,939 
Non-current liabilities   1,307,985    430    -    1,308,415 
Total liabilities   1,597,140    9,389    (1,175)   1,605,354 
                     
Total stockholders' deficit   (333,788)   -    (147)   (333,935)
Noncontrolling interest   -    12,592    -    12,592 
Total liabilities and stockholders' deficit  $1,263,352   $21,981   $(1,322)  $1,284,011 

 

*  The Variable Interest Entities ("VIEs") include the results of Gymboree (China) Commercial and Trading Co. Ltd. and Gymboree (Tianjin) Educational Information Consultation Co. Ltd.  While the Company does not control these two entities, they have been determined to be variable interest entities and their results have been consolidated by the Company.