8-K

 

 

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): June 13, 2016

 

 

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)

 

(IRS Employer

Identification Number)

500 Howard Street, San Francisco, CA

94105

(Address of Principal Executive Office, 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 June 13, 2016, The Gymboree Corporation issued an earnings release announcing its financial results for the first fiscal quarter ended April 30, 2016. A copy of the earnings release is furnished as Exhibit 99.1 to this Current Report and is incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

No.

  

Description

99.1    Earnings release of The Gymboree Corporation dated June 13, 2016.


SIGNATURE

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

 

  THE GYMBOREE CORPORATION
Date: June 13, 2016   By:  

/s/ Andrew North

    Name:   Andrew North
    Title:   Chief Financial Officer


EXHIBIT INDEX

 

No.

  

Description

99.1    Earnings release of The Gymboree Corporation dated June 13, 2016.
EX-99.1

Exhibit 99.1

 

LOGO

 

   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 First Quarter of Fiscal 2016 Results

San Francisco, Calif., June 13, 2016 – The Gymboree Corporation (the “Company”) today reported consolidated financial results for the fiscal quarter ended April 30, 2016.

First Quarter Fiscal 2016 Highlights Include:

 

    Comparable sales (including online sales) increased 4% during the first quarter of fiscal 2016.

 

    Adjusted EBITDA increased $8.9 million from the first quarter of fiscal 2015 to $24.5 million.

 

    Net income attributable to The Gymboree Corporation for the quarter was $32.8 million, including a gain on extinguishment of debt of $48.8 million, compared to a net loss of $23.0 million for the first quarter of fiscal 2015.

 

    The Company reaffirms full year guidance.

First Quarter Results (13 weeks ended April 30, 2016 versus 13 weeks ended May 2, 2015)

 

    Net sales were $285.0 million, compared to $276.1 million in the first quarter of fiscal 2015.

 

    Comparable sales (including online stores) increased 4% compared to the first quarter of fiscal 2015.

 

    Comparable sales increases by brand for the first quarter of fiscal 2016 compared to the first quarter of fiscal 2015 and for the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014 were as follows:

 

Comparable Sales

   Q1 2016     Q1 2015  

Gymboree

     +6     -2

Janie and Jack

     +5     +5

Crazy 8

     -2     +4


    Gross profit was $116.5 million, or 40.9% of net sales, compared to $105.4 million, or 38.2% of net sales, for the first quarter of fiscal 2015.

 

    Adjusted Gross Profit was $118.0 million, or 41.4% of net sales, compared to $107.1 million, or 38.8% of net sales, for the first quarter of fiscal 2015.

 

    SG&A expense was $114.0 million, or 40% of net sales, compared to $104.7 million, or 37.9% of net sales, in the first quarter of fiscal 2015. The $9.3 million increase in SG&A expense was primarily driven by a $5.7 million loss incurred as a result of terminating a contract with a third party fulfillment center for www.gymboree.com.

 

    Adjusted SG&A Expense was $105.4 million, or 37% of net sales, compared to $101.1 million, or 36.6% of net sales, in the first quarter of fiscal 2015.

 

    Adjusted EBITDA, defined as net income (loss) attributable to The Gymboree Corporation before interest, income taxes and depreciation and amortization, adjusted for other items as described below, was $24.5 million compared to $15.6 million for the first quarter of fiscal 2015. The prior year quarter Adjusted EBITDA of $15.6 million was impacted by the port slowdown, which negatively impacted Adjusted EBITDA by approximately $6 million.

 

    Net income attributable to The Gymboree Corporation for the quarter was $32.8 million, including a gain on extinguishment of debt of $48.8 million, compared to a net loss of $23.0 million for the first quarter of fiscal 2015.

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 descriptions of Adjusted EBITDA, Adjusted Gross Profit and Adjusted SG&A Expense and a reconciliation of these measures to the relevant GAAP measures, see “Non-GAAP Financial Measures” below and Exhibit D of this press release.

Balance Sheet and Other Highlights

 

    During the 13 weeks ended April 30, 2016, the Company repurchased $77 million aggregate principal amount of its senior notes for $26.2 million through privately negotiated transactions.

 

    As of the end of the first quarter of fiscal 2016, there were $43 million in borrowings outstanding under the Company’s asset-backed revolving credit facility (after being reduced by $10 million from the proceeds of the ABL Term Loan) and approximately $90.7 million of undrawn availability after being reduced by letters of credit of $30.8 million and $50 million of the ABL Term Loan.

 

    On May 24, 2016, the Company announced the results of its tender offer in which it repurchased $39.6 million aggregate principal amount of its senior notes for $20.6 million. The Company funded these repurchases, as well as the $10 million pay down of the Company’s asset-backed revolving credit facility noted above, with the proceeds from borrowings under the ABL Term Loan. Following the tender offer, there was $171 million principal amount of senior notes outstanding.

 

    Capital expenditures were $3.6 million during the first quarter of fiscal 2016.

 

    Inventory balances at the end of the first quarter of fiscal 2016 were $198.6 million, compared to $208.9 million at the end of the first quarter of fiscal 2015. On a per square foot basis, inventory cost was down 4% over the first quarter of fiscal 2015. Inventory units were down mid-single digits.


The Company is continuing to actively pursue various other financing alternatives, including refinancing and/or repurchasing its existing debt, divestitures of certain of its assets and/or lines of business, as well as other opportunities to improve its capital structure. If opportunities are favorable, the Company may consummate one or more of these initiatives and the amounts involved and related financial statement impact may be material.

Fiscal 2016 Business Outlook

The Company’s fiscal 2016 outlook is based on current economic environment trends, as well as management expectations for the remainder of the year.

Second Quarter

The Company anticipates Adjusted EBITDA for the second quarter of fiscal 2016 to be in the range of $13 million to $17 million. The prior year quarter Adjusted EBITDA of $11.1 million was impacted by the port slowdown, which negatively impacted Adjusted EBITDA by approximately $5 million.

Full Year

For the full year, the Company expects Adjusted EBITDA to be in the range of $120 million to $135 million. Based on this guidance, the Company expects to have sufficient liquidity during fiscal 2016 to service its debt and invest in the business to drive long-term growth.

Stores

During fiscal 2016, the Company plans to open approximately 6 new stores and expects to close approximately 20 to 30 stores, primarily in its Crazy 8 and Gymboree brands.

Capital Expenditures

During fiscal 2016, the Company anticipates spending approximately $30 million to $35 million for capital expenditures. The Company expects to finance its capital expenditures for fiscal 2016 through a combination of cash generated by operations, the remaining funds available under its asset-backed loan facility, senior secured term loan and ABL Term Loan and cash on hand.

Non-GAAP Financial Measures

The Company defines “Adjusted EBITDA” as net income (loss) attributable to The Gymboree Corporation before interest, income taxes, and depreciation and amortization, adjusted for other items, including gain on extinguishment of debt, 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 certain other items that management does not believe are reflective of the Company’s ongoing operations. 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 Company defines “Adjusted Gross Profit” as gross profit adjusted for the impact of purchase accounting adjustments resulting from the Acquisition. The Company defines “Adjusted SG&A Expense” as SG&A expense adjusted for the impact of purchase accounting adjustments resulting from the Acquisition and certain other non-recurring items. 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 by management to be 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. Adjusted Gross Profit and Adjusted SG&A Expense are also non-GAAP measures that are considered by management to be important supplemental measures of the Company’s performance as management believes the items excluded are not reflective of the Company’s ongoing operations. See Exhibit D for reconciliations of Adjusted EBITDA to net income (loss) attributable to The Gymboree Corporation, Adjusted Gross Profit to gross profit and Adjusted SG&A Expense to SG&A expense.

The live broadcast of the discussion of first quarter fiscal 2016 financial results and fiscal 2016 business outlook will be available to interested parties at 2:00 p.m. PT (5:00 p.m. ET) on Monday, June 13, 2016. 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, Monday, June 27, 2016, at 855-859-2056, passcode 61959098.

About The Gymboree Corporation

The Gymboree Corporation’s specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of April 30, 2016, the Company operated a total of 1,303 retail stores: 592 Gymboree® stores (543 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), 149 Janie and Jack® shops (148 in the United States and 1 in Puerto Rico), and 387 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 732 franchised and Company-operated Gymboree Play & Music® centers in the United States and 43 other countries.

Forward-Looking Statements

The foregoing financial information for the first quarter of fiscal 2016 is unaudited and subject to quarter-end and year-end adjustments. This press release includes forward-looking


statements, including statements relating to The Gymboree Corporation’s anticipated future financial performance, especially those set forth under the heading “Fiscal 2016 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 ongoing volatility in the commodities markets, potential data breaches of the Company’s or the Company’s vendors’ or suppliers’ computer networks, 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 upon which to base its expectations for 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 30, 2016, filed with the Securities and Exchange Commission on April 28, 2016. 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  
     April 30, 2016     May 2, 2015  

Net sales:

    

Retail

   $ 271,276      $ 261,732   

Gymboree Play & Music

     10,094        8,648   

Retail Franchise

     3,671        5,689   
  

 

 

   

 

 

 

Total net sales

     285,041        276,069   

Cost of goods sold, including buying and occupancy expenses

     (168,585     (170,712
  

 

 

   

 

 

 

Gross profit

     116,456        105,357   

Selling, general and administrative expenses

     (114,032     (104,710
  

 

 

   

 

 

 

Operating income

     2,424        647   

Interest income

     105        19   

Interest expense

     (19,807     (21,076

Gain on extinguishment of debt

     48,804        —     

Other income (expense), net

     112        (110
  

 

 

   

 

 

 

Income (loss) before income taxes

     31,638        (20,520

Income tax expense

     (697     (1,960
  

 

 

   

 

 

 

Net income (loss)

     30,941        (22,480

Net loss (income) attributable to noncontrolling interest

     1,905        (545
  

 

 

   

 

 

 

Net income (loss) attributable to The Gymboree Corporation

   $ 32,846      $ (23,025
  

 

 

   

 

 

 


EXHIBIT B

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

     April 30,     January 30,     May 2,  
     2016     2016     2015  

ASSETS

      

Current assets:

      

Cash and cash equivalents

   $ 62,168      $ 18,164      $ 22,363   

Accounts receivable

     20,833        26,696        25,515   

Merchandise inventories

     198,618        206,642        208,908   

Prepaid income taxes

     2,493        2,196        2,759   

Prepaid expenses

     5,862        6,757        18,561   

Deferred income taxes

     —          —          7,263   
  

 

 

   

 

 

   

 

 

 

Total current assets

     289,974        260,455        285,369   

Property and equipment, net

     150,940        158,478        176,400   

Goodwill

     373,845        372,737        374,308   

Other intangible assets, net

     340,510        341,011        342,816   

Other assets

     7,331        7,795        6,089   
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 1,162,600      $ 1,140,476      $ 1,184,982   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

      

Current liabilities:

      

Accounts payable

   $ 94,162      $ 109,193      $ 105,426   

Accrued and other current liabilities

     121,598        102,254        106,669   

Line of credit borrowings

     43,000        19,000        42,000   

Current portion of ABL term loan

     2,500        —          —     

Current obligation under capital lease

     —          605        565   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     261,260        231,052        254,660   
  

 

 

   

 

 

   

 

 

 

Long-term liabilities:

      

Long-term debt, net

     1,010,709        1,040,506        1,092,549   

Long-term sale-leaseback financing liability, net

     25,545        25,578        —     

Long-term obligation under capital lease

     —          2,245        2,704   

Lease incentives and other liabilities

     45,593        49,664        52,858   

Unrecognized tax benefits

     5,111        5,075        5,151   

Deferred income taxes

     123,567        124,244        129,865   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     1,471,785        1,478,364        1,537,787   

Stockholders’ deficit

     (309,185     (337,888     (352,805
  

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 1,162,600      $ 1,140,476      $ 1,184,982   
  

 

 

   

 

 

   

 

 

 


EXHIBIT C

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     13 Weeks Ended  
     April 30, 2016     May 2, 2015  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income (loss)

   $ 30,941      $ (22,480

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

    

Gain on extinguishment of debt

     (48,804     —     

Depreciation and amortization

     10,151        10,700   

Amortization of deferred financing costs and accretion of original issue discount

     1,890        1,886   

Interest rate cap contracts - adjustment to market

     1,183        778   

Loss (gain) on disposal/impairment of assets

     648        (539

Gain on write-off of assets and liabilities due to contract termination (a)

     (2,561     —     

Deferred income taxes

     (613     264   

Share-based compensation expense

     622        720   

Other

     345        (198

Change in assets and liabilities:

    

Accounts receivable

     4,242        (168

Merchandise inventories

     7,805        (10,958

Prepaid income taxes

     (296     (154

Prepaid expenses and other assets

     628        (11,739

Accounts payable

     (15,067     18,375   

Accrued and other current liabilities

     12,096        11,350   

Lease incentives and other liabilities

     (958     (476
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     2,252        (2,639
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Capital expenditures

     (3,591     (3,140

Proceeds from sale of assets

     —          353   

Receipt of related party loan receivable

     1,741        —     

Other

     1        8   
  

 

 

   

 

 

 

Net cash used in investing activities

     (1,849     (2,779
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Proceeds from ABL facility

     152,000        130,000   

Payments on ABL facility

     (128,000     (121,000

Proceeds from ABL term loan

     50,000        —     

Payments for deferred financing costs

     (3,804     —     

Repurchase of notes

     (26,198     —     

Payments on capital lease and sale-leaseback financing liability

     (47     (133

Dividend payment by VIE to its parent

     (512     —     
  

 

 

   

 

 

 

Net cash provided by financing activities

     43,439        8,867   
  

 

 

   

 

 

 

Effect of exchange rate fluctuations on cash and cash equivalents

     162        394   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     44,004        3,843   

CASH AND CASH EQUIVALENTS:

    

Beginning of period

     18,164        18,520   
  

 

 

   

 

 

 

End of period

   $ 62,168      $ 22,363   
  

 

 

   

 

 

 

 

(a) Incurred as a result of termination of a contract with a third party fulfilment center for www.gymboree.com.


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 gain on extinguishment of debt, 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 of the Company by investment funds sponsored by Bain Capital Private Equity, LP (formerly Bain Capital Partners, LLC) (the “Acquisition”).

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 income (loss) attributable to The Gymboree Corporation to Adjusted EBITDA:

 

     13 Weeks Ended  
     April 30, 2016      May 2, 2015  

Net income (loss) attributable to The Gymboree Corporation

   $ 32,846       $ (23,025

Reconciling items (a):

     

Interest expense

     19,807         21,076   

Interest income

     (3      (7

Income tax (benefit) expense

     (320      1,305   

Depreciation and amortization (b)

     9,983         10,295   

Non-cash share-based compensation expense

     622         720   

Loss on disposal/impairment on assets

     370         133   

Loss on contract termination (c)

     5,689         —     

Gain on extinguishment of debt

     (48,804      —     

Acquisition-related adjustments (d)

     3,542         3,234   

Other (e)

     762         1,866   
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 24,494       $ 15,597   
  

 

 

    

 

 

 

(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   

Amortization of below and above market leases (impacts COGS)

     (239      (133
  

 

 

    

 

 

 
   $ 145       $ 251   
  

 

 

    

 

 

 

(c) Incurred as a result of termination of a contract with a third party fulfilment center for www.gymboree.com.

     

(d) Includes the following:

     

Additional rent expense recognized due to the elimination of deferred rent and construction allowances in purchase accounting (impacts COGS)

   $ 1,784       $ 1,886   

Sponsor fees, legal and accounting, as well as other costs incurred as a result of the Acquisition or refinancing (impacts SG&A)

     1,758         1,348   
  

 

 

    

 

 

 
   $ 3,542       $ 3,234   
  

 

 

    

 

 

 

(e) Other is comprised of restructuring and non-recurring charges.

     

OTHER NON-GAAP FINANCIAL MEASURES:

 

     13 Weeks Ended  
     April 30, 2016      May 2, 2015  

Gross profit as reported

   $ 116,456       $ 105,357   

Acquisition-related adjustments

     1,546         1,753   
  

 

 

    

 

 

 

Adjusted gross profit excluding Acquisition-related adjustments (non-GAAP measure)

   $ 118,002       $ 107,110   
  

 

 

    

 

 

 


     13 Weeks Ended  
     April 30, 2016      May 2, 2015  

SG&A as reported

   $ (114,032    $ (104,710

Acquisition-related adjustments

     2,142         1,732   

Loss on termination of a contract with a third party fulfilment center for www.gymboree.com

     5,689         —     

Other adjustments

     762         1,866   
  

 

 

    

 

 

 
     8,593         3,598   
  

 

 

    

 

 

 

Adjusted SG&A excluding Acquisition-related and other adjustments (non-GAAP measure)

   $ (105,439    $ (101,112
  

 

 

    

 

 

 


EXHIBIT E

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)

 

     For the 13 Weeks Ended April 30, 2016  
     Balance Before                    
     Consolidation                    
     of VIEs     VIEs*     Eliminations     As Reported  

Net sales

   $ 277,431      $ 10,347      $ (2,737   $ 285,041   

Cost of goods sold, including buying and occupancy expenses

     (164,574     (5,023     1,012        (168,585
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     112,857        5,324        (1,725     116,456   

Selling, general and administrative expenses

     (109,145     (6,546     1,659        (114,032
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     3,712        (1,222     (66     2,424   

Other non-operating income

     28,880        334        —          29,214   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     32,592        (888     (66     31,638   

Income tax benefit (expense)

     320        (1,017     —          (697
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     32,912        (1,905     (66     30,941   

Net loss attributable to noncontrolling interest

     —          1,905        —          1,905   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to The Gymboree Corporation

   $ 32,912      $ —        $ (66   $ 32,846   
  

 

 

   

 

 

   

 

 

   

 

 

 
     For the 13 Weeks Ended May 2, 2015  
     Balance Before                    
     Consolidation                    
     of VIEs     VIEs*     Eliminations     As Reported  

Net sales

   $ 270,138      $ 8,611      $ (2,680   $ 276,069   

Cost of goods sold, including buying and occupancy expenses

     (169,562     (2,227     1,077        (170,712
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     100,576        6,384        (1,603     105,357   

Selling, general and administrative expenses

     (100,988     (5,173     1,451        (104,710
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

     (412     1,211        (152     647   

Other non operating expense

     (21,157     (10     —          (21,167
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income taxes

     (21,569     1,201        (152     (20,520

Income tax expense

     (1,304     (656     —          (1,960
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

     (22,873     545        (152     (22,480

Net income attributable to noncontrolling interest

     —          (545     —          (545
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to The Gymboree Corporation

   $ (22,873   $ —        $ (152   $ (23,025
  

 

 

   

 

 

   

 

 

   

 

 

 


EXHIBIT E (continued)

 

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEETS

(In thousands)

(Unaudited)

 

     April 30, 2016  
     Balance Before                     
     Consolidation of VIEs     VIEs*      Eliminations     As Reported  

Current assets

   $ 270,190      $ 22,339       $ (2,555   $ 289,974   

Non-current assets

     868,671        3,955         —          872,626   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total assets

   $ 1,138,861      $ 26,294       $ (2,555   $ 1,162,600   
  

 

 

   

 

 

    

 

 

   

 

 

 

Current liabilities

   $ 241,347      $ 22,135       $ (2,222   $ 261,260   

Non-current liabilities

     1,210,214        311         —          1,210,525   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities

     1,451,561        22,446         (2,222     1,471,785   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total stockholders’ deficit

     (312,700     —           (333     (313,033

Noncontrolling interest

     —          3,848         —          3,848   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 1,138,861      $ 26,294       $ (2,555   $ 1,162,600   
  

 

 

   

 

 

    

 

 

   

 

 

 
     January 30, 2016  
     Balance Before                     
     Consolidation of VIEs     VIEs*      Eliminations     As Reported  

Current assets

   $ 241,043      $ 20,845       $ (1,433   $ 260,455   

Non-current assets

     875,071        4,950         —          880,021   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total assets

   $ 1,116,114      $ 25,795       $ (1,433   $ 1,140,476   
  

 

 

   

 

 

    

 

 

   

 

 

 

Current liabilities

   $ 217,596      $ 14,618       $ (1,162   $ 231,052   

Non-current liabilities

     1,246,849        463         —          1,247,312   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities

     1,464,445        15,081         (1,162     1,478,364   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total stockholders’ deficit

     (348,331     —           (271     (348,602

Noncontrolling interest

     —          10,714         —          10,714   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 1,116,114      $ 25,795       $ (1,433   $ 1,140,476   
  

 

 

   

 

 

    

 

 

   

 

 

 
     May 2, 2015  
     Balance Before                     
     Consolidation of VIEs     VIEs*      Eliminations     As Reported  

Current assets

   $ 269,733      $ 17,770       $ (2,134   $ 285,369   

Non-current assets

     894,518        5,095         —          899,613   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total assets

   $ 1,164,251      $ 22,865       $ (2,134   $ 1,184,982   
  

 

 

   

 

 

    

 

 

   

 

 

 

Current liabilities

   $ 244,625      $ 11,840       $ (1,805   $ 254,660   

Non-current liabilities

     1,282,642        485         —          1,283,127   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities

     1,527,267        12,325         (1,805     1,537,787   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total stockholders’ deficit

     (363,016     —           (329     (363,345

Noncontrolling interest

     —          10,540         —          10,540   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 1,164,251      $ 22,865       $ (2,134   $ 1,184,982   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

* 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.


EXHIBIT F

THE GYMBOREE CORPORATION

RETAIL SALES BY BRAND

(In thousands)

(Unaudited)

 

                          Total                
     Gymboree      Janie and Jack      Crazy 8      Before VIE      VIE      Total  

13 weeks ended April 30, 2016

   $ 170,070       $ 34,985       $ 64,014       $ 269,069       $ 2,207       $ 271,276   

13 weeks ended May 2, 2015

   $ 160,121       $ 33,573       $ 66,230       $ 259,924       $ 1,808       $ 261,732