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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 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 000-21250
THE GYMBOREE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-2615258
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 AIRPORT BOULEVARD, SUITE 200, BURLINGAME, CALIFORNIA 94010-1912
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650)-579-0600
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class Name of each exchange on which registered
COMMON STOCK, $0.001 PAR VALUE NASDAQ NATIONAL MARKET
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), 12 months 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. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of April 5, 1999, was approximately $248,725,680, based upon the
last price reported for such date on the NASDAQ National Market.
As of April 5, 1999, 24,265,920 shares of the registrant's common stock were
outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the fiscal
year ended January 30, 1999 (hereinafter referred to as the "1998 Annual Report
to Stockholders") are incorporated into Parts II and IV.
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on May 26, 1999 (hereinafter referred to as the "1998
Proxy Statement") are incorporated into Part III.
The exhibit index is located on page 22
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THE GYMBOREE CORPORATION
TABLE OF CONTENTS
PAGE
NUMBER
------
PART I
ITEM 1. BUSINESS................................................................................ 4
ITEM 2. PROPERTIES.............................................................................. 13
ITEM 3. LEGAL PROCEEDINGS....................................................................... 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................... 14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................... 15
ITEM 6. SELECTED FINANCIAL DATA................................................................. 15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...
15
ITEM 7A. QUANTITATIVE AND QUALITATIVE EXPOSURES ON MARKET RISK................................... 15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............................................. 15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES... 15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...................................... 16
ITEM 11. EXECUTIVE COMPENSATION.................................................................. 16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......................... 16
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................................... 16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.................................. 17
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PART 1
ITEM 1. BUSINESS
The Gymboree Corporation is a leading specialty retailer of high quality
apparel and accessories for children ages newborn to preteen. Gymboree operates
an international chain of stores, primarily in regional shopping malls, and in
selected suburban and urban locations. As of January 30, 1999, Gymboree operated
564 stores. Under the GYMBOREE(R) brand name, we design and contract manufacture
children's active-wear for sale exclusively by Gymboree. Our apparel is
characterized by fashionable colors, charming prints, complex embroidery,
comfort, functionality and durability. Gymboree also offers directed
parent-child developmental play programs for children ages newborn to 4 years
old at 398 franchised and Gymboree-operated locations.
Gymboree was organized in October, 1979, as a California corporation, and
re-incorporated in Delaware in June, 1992.
This annual report on Form 10-K contains certain forward-looking statements
reflecting Gymboree's current expectations. Our actual future performance may
not meet such expectations. Factors that could cause future performance to vary
from current expectations include, but are not limited to, the factors discussed
in the "Business" section, and in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section of the 1998 Annual Report
to Stockholders incorporated by reference in this annual report on Form 10-K.
BUSINESS STRATEGY
Gymboree's business strategy consists of the following principal elements:
- HIGH QUALITY APPAREL. We strive to offer our customers high quality
apparel with an excellent price/value relationship. We design the
merchandise to be comfortable, functional, safe and durable by placing
particular emphasis on high quality fabrics and detailed garment
construction.
- BRAND NAME RECOGNITION. Gymboree has developed a clearly recognizable
brand image through its distinctive design, merchandising and retailing.
Customers associate Gymboree with high quality and appealing, colorful
children's clothing sold in an attractive and friendly environment.
- INTEGRATED OPERATIONS: DESIGN, CONTRACT PRODUCTION AND RETAILING. We
believe that the vertical integration of our operations enables us to
identify and respond to market trends, maintain rigorous product quality
standards and closely monitor the distribution of our products.
- EXCLUSIVE DISTRIBUTION CHANNEL. Our products are sold exclusively through
Gymboree retail stores and, to a limited extent, through our play program
sites. During fiscal 1998, we continued to build the Gymboree Gift Center
at www.gymboree.com which began in 1997. This web site allows customers to
purchase selected items.
- MERCHANDISE FOCUS. Gymboree apparel is designed, contract manufactured and
merchandised by line. Merchandise is displayed in each Gymboree store in a
manner designed to enhance visual appeal and maximize customer convenience
by enabling customers to select among an assortment of coordinated apparel
items, accessories and shoes. We offer a broad range of styles, themes and
colors, as opposed to relying primarily on certain key items. To maintain
the freshness of the merchandise, Gymboree introduces between 30 and 40
new lines of boy's, girl's and infant's apparel each year.
- RESPONSIVE CUSTOMER SERVICE. Customer service and satisfaction are
defining features of the Gymboree corporate culture. Assisting customers
in merchandise selection and outfit coordination is the top priority of
Gymboree team members. We believe that this customer service in
combination with our merchandise encourages multiple item purchases per
customer.
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STORE EXPANSION STRATEGY
Gymboree seeks to strategically increase our current store base by opening
new stores in major metropolitan malls, certain secondary regional malls and in
select downtown street locations that satisfy certain demographic and financial
return criteria. In fiscal 1998, Gymboree opened 129 new stores and relocated
and/or expanded 25 existing stores. Over the past year, the average size of new
stores was approximately 1,700 square feet. We plan to open 40 to 50 new stores
during fiscal 1999. As indicated in the table below Gymboree has achieved
increasing geographic diversification within the United States in recent years.
We have continued our international expansion by opening 4 additional retail
stores in Canada and 18 additional stores in Europe during fiscal 1998. During
fiscal 1999, we are planning to open approximately 4 to 5 stores in Europe and 3
to 5 stores in Canada. Our ability to continue to expand successfully in the
future will depend on a number of factors, including the availability of
suitable store locations, the negotiation of acceptable lease terms, our
financial resources and the ability to control the operational aspects of this
growth.
Gymboree expanded from 2 stores in California in 1986 to 525 stores in 50
states and the District of Columbia, 15 stores in Canada and 24 stores in
Europe, as of January 30, 1999. The following table sets forth, by geographic
region, the net number of stores opened and closed during each of the periods
indicated:
Fiscal Year
-------------------------------------------------------------
PRIOR TO
1992 1992 1993 1994 1995 1996 1997 1998 TOTAL
East 35 8 9 14 14 17 23 30 150
Midwest 7 10 9 12 19 25 10 24 116
South 6 9 10 23 26 12 29 39 154
West 32 5 12 8 11 16 7 14 105
Europe 0 0 0 0 0 0 6 18 24
Canada 0 0 0 0 0 5 6 4 15
TOTAL 80 32 40 57 70 75 81 129 564
SITE SELECTION. In selecting new store sites, Gymboree typically looks for
high traffic locations ranging from 1,500 to 3,000 square feet in regional
malls, specialty centers and suburban main street locations. Our real estate
department conducts extensive analysis of potential store sites and bases its
selection on the performance of other specialty retail tenants, size of the
market and demographics of the surrounding area. In evaluating a store location,
placement of the store relative to retail traffic patterns and the number of
children in the trade area are important considerations. Although our current
stores are located primarily in regional malls, we have opened stores in
alternative locations. In addition, we plan to relocate some higher volume
stores within the same malls where we anticipate receiving a competitive
advantage. There can be no assurance that Gymboree will continue to be
successful in either obtaining favorable sites for our new stores or negotiating
favorable lease terms for such sites.
NEW STORE ECONOMICS. Gymboree's average cost for leasehold improvements,
furniture and fixtures for stores opened in fiscal 1998 was approximately
$250,000 per store, before landlord construction allowances. In addition,
working capital requirements on these same stores, consisting almost entirely of
inventory purchases, averaged approximately $60,000 per store. Average
pre-opening costs per store, which are expensed as incurred, were $17,000 during
fiscal 1998. Gymboree stores have typically achieved profitability at the store
operating level within their first six months of operation, although there can
be no assurance that new stores will continue to achieve the same levels of
profitability.
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PRODUCTS AND MERCHANDISING
Gymboree's merchandise has evolved significantly over time. Prior to 1988,
Gymboree offered unisex apparel for children ages 6 months to 5 years and a
selection of non-apparel products, including toys. Since 1989, we have broadened
our apparel merchandise assortment by developing separate boy's and girl's
lines, distinguishing assortments for appropriate ages: CradleGym(R) - newborn
to 12 months; GymBaby(R) - newborn to 3 years and GymKids(R) - for children ages
3 to 7 years. Gymboree currently offers customers an assortment of high quality,
comfortable, fully coordinated lines of GYMBOREE(R) brand apparel and
accessories, consisting primarily of pants, tops, overalls, dresses, socks,
hats, crib shoes, swimwear, sweaters, outerwear, underwear and shoes. Our
merchandising strategy focuses upon the quality and design of the apparel
products and planned introduction of new product lines. Gymboree strives to
create a distinctive look for its merchandise to enhance brand recognition and
stimulate repeat purchases. Gymboree apparel is designed, manufactured,
purchased and merchandised by line on a seasonal basis.
Each of Gymboree's stores features 11 major merchandising lines per year.
Each merchandise line generally consists of approximately 60 clothing items,
encompassing matching tops and bottoms, with similar color palettes, patterns
and designs. Additionally, each line features a wide selection of related
accessories that complement the apparel, such as coordinated socks, hats, crib
shoes and hair accessories. In order to maintain the freshness of its
merchandise, Gymboree regularly updates the assortments by rotating each line on
an 11- to 13-week selling cycle. Although Gymboree generally is unable to
reorder items after a line has been purchased, we carefully monitor the rotation
schedule, and we have the ability to move up the set-up of new lines based on
selling demand. Merchandise in each line generally flows through a structured
markdown process.
Gymboree's customized wall systems display each merchandise line as a
separate coordinated group. This presentation maximizes customer convenience in
selection, creates a visually attractive selling environment and assists team
members in the process of wardrobing, which, we believe, stimulates multiple
purchases of matching items. Boy's and girl's lines are generally displayed on
opposite walls and accessories are located adjacent to the coordinated line. A
typical store offers approximately 200 to 250 styles of apparel and
approximately 100 to 120 accessories and other non-apparel items.
FASHION TRENDS AND CHANGING CONSUMER PREFERENCES
Gymboree's sales and profitability depend upon the continued demand by
customers for our apparel and accessories. We believe that our success depends
in large part upon our ability to anticipate, gauge and respond in a timely
manner to changing consumer demands and fashion trends and upon the appeal of
our products. There can be no assurance that the demand for Gymboree's apparel
or accessories will not decline or that we will be able to anticipate, gauge and
respond to changes in fashion trends. If demand for our apparel and accessories
were to decline or if we were to misjudge fashion trends, Gymboree's business,
financial condition and results of operations could be materially adversely
affected.
DESIGN, SOURCING AND CONTRACT MANUFACTURING
Gymboree apparel is characterized by colorful and distinctive designs,
quality fabrications and construction and an excellent price/value relationship.
Gymboree sources soft, comfortable and durable fabrics. Our merchandising and
design team creates unique color combinations and original patterns for these
fabrics and emphasizes functional features such as grow cuffs, which allow for
extended use of tops, pants and overalls as children grow.
Gymboree manages the production of apparel from the initial product concept,
through color and pattern design, fabric development and testing, sample
approval and testing and garment manufacturing. We believe that the vertical
integration of operations and the coordinated efforts of our merchandising and
design, production, and financial planning teams enable Gymboree to create
distinctive offerings. The merchandising and design team determines the styles
for merchandise based on an evaluation of current style trends as well as a
review of the popularity of the prior year's products. This team works closely
with Gymboree's financial planning team to select garment styles for each
season. In conjunction with foreign buying agents, the production team arranges
fabric sourcing and garment production while the quality team ensures that the
final products satisfy Gymboree's detailed specifications and strict quality and
safety standards. The process from initial product concept/design to receipt of
finished product requires approximately 10 months. Fabric and production
commitments are made approximately 6 months before receipt of the finished
garments at our distribution center.
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Throughout the design process, Gymboree's financial planning team prepares
financial plans for each line of clothing on an item-by-item basis. Certain
proposed items in a line may be revised or replaced as a result of this team's
financial analysis. This team also monitors inventories on a daily basis,
prepares seasonal plans and develops unit production forecasts.
The majority of Gymboree apparel is manufactured to our specifications by
approximately 150 independent manufacturers. Key countries in the Far East
include China, Indonesia, Philippines, Thailand and Sri Lanka. Other
manufacturing regions include Central America, Israel, Mexico and the United
States. Gymboree sources its fabric from approximately 15 vendors. In fiscal
1998, our product assortment was approximately 65% knit and 35% woven. Gymboree
purchases all products in U.S. dollars, and we have not historically experienced
any material difficulties as a result of any foreign political, economic or
social instabilities, although there can be no assurance that we will not
experience such difficulties in the future. We have no long-term contracts with
suppliers and typically transact business on an order-by-order basis.
Gymboree's quality control team arranges with independent testing
laboratories to test fabrics prior to cutting against established performance
standards for quality and safety. During the prototype sampling stage and
following manufacturing, the technical teams subject the merchandise to tests
which ensure that construction, workmanship and fit, as well as the style and
appearance of the garments, satisfy Gymboree's stringent specifications.
Subsequently, the production and quality control teams review the garment test
and bulk production inspection results to verify that the quality is consistent
with Gymboree's high standards. Gymboree generally does not purchase its
finished apparel products until manufacturing has been completed and the
products have been approved by independent testing labs and Gymboree's quality
control and production teams.
DEPENDENCE ON NEW PRODUCTS
Gymboree's continued growth and success depend in large part on our ability
to successfully develop and introduce new products that are perceived to
represent an improvement in style, functionality or value compared to products
available in the marketplace. Failure to regularly develop and introduce new
products successfully could materially and adversely impact future growth and
profitability. In addition, in 1999 Gymboree will introduce certain new products
and concepts such as Zutopia, targeted for children ages 6 - 12, that represent
a shift in concept, design and target market demographics from our traditional
products. These new products may have shorter life cycles, thereby requiring
more frequent product introductions than Gymboree's traditional product lines.
Furthermore, these products and the introduction of more products could dilute
Gymboree's image as a leading supplier of children's apparel in the newborn - 7
years age range and lead to a reduced demand for its existing products.
RELIANCE ON FOREIGN AND UNAFFILIATED MANUFACTURERS
Gymboree currently relies on unaffiliated manufacturers to produce
substantially all of its products. Gymboree has no long-term contracts with its
manufacturing sources, and we compete with other companies for production
facilities and import quota capacity. Gymboree's products are currently
manufactured to specifications by independent factories located primarily in the
Far East, as well as Central America , Israel, , Mexico and the United States.
In the event any of our key manufacturers were unable or unwilling to continue
to manufacture Gymboree's products, Gymboree would have to rely on other current
manufacturing sources or identify and qualify new unaffiliated manufacturers. In
such event, there can be no assurance that Gymboree would be able to qualify
such manufacturers for existing or new products in a timely manner or that such
manufacturers would allocate sufficient capacity to Gymboree in order to meet
its requirements. Any significant delay in our ability to obtain adequate
supplies of products from our current or alternative sources, would materially
and adversely affect the business and results of operations. Although Gymboree
believes that we have good relationships with our unaffiliated principal mills
and manufacturing sources and we maintain good control with respect to product
specifications and quality, our future success will depend in large measure upon
our ability to maintain such relationships both directly and through our
independent agents, and there can be no assurance that these manufacturers will
continue to produce products that are consistent with Gymboree's standards. In
this regard, Gymboree has occasionally received, and may in the future continue
to receive, shipments of product from unaffiliated manufacturers that fail to
conform to our quality control standards. In such event, unless we are able to
obtain replacement products in a timely manner, Gymboree risks the loss of
revenue resulting from the sale of such products and related increased
administrative and shipping costs. The failure of any key unaffiliated
manufacturer to supply products that conform to Gymboree's standards could
materially and adversely affect our results of operations and our reputation in
the marketplace.
Although Gymboree believes that we have good relationships with our principal
manufacturing sources, our future success is substantially dependent upon our
ability to maintain such relationships. If Gymboree experiences significant
increased demand, which
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cannot be assured, or if an existing unaffiliated manufacturer needs to be
replaced, we will need to significantly expand manufacturing capacity, both from
current and new manufacturing sources. There can be no assurance that such
additional manufacturing capacity will be available when required on terms that
are acceptable to Gymboree. In addition, in fiscal 1998, one vendor accounted
for approximately 70% of our cotton knit fabric purchases. Although we believe
that other sources could be identified to satisfy our requirements for cotton
knit fabrics, the loss of this vendor, or a delay in obtaining fabric from this
vendor, could have a material adverse effect on our business and operating
results.
Gymboree's business is subject to the risks generally associated with doing
business abroad, such as foreign governmental regulations, political unrest,
disruptions or delays in shipments and changes in economic conditions in
countries in which our vendor mills and manufacturing sources are located.
Gymboree cannot predict the effect that such factors will have on our business
arrangements with foreign mills and manufacturing sources. If any such factors
were to render the conduct of business in a particular country undesirable or
impractical, or if our current foreign manufacturing sources or mills were to
cease doing business with us for any reason, Gymboree's business and operating
results could be adversely affected. Our business is also subject to the risks
associated with the imposition of additional United States legislation and
regulations relating to imported apparel products, including quotas, duties,
taxes and other charges or restrictions on imported apparel. We cannot predict
whether additional United States quotas, duties, taxes or other charges or
restrictions will be imposed upon the importation of our products in the future,
or what effect any such actions would have on our business, financial position
and results of operations.
STORE OPERATIONS
The primary objective of store management is to maximize sales by providing
superior customer service. Store management is principally responsible for sales
training and implementing performance evaluation systems. In a continuing effort
to minimize team members' time away from customers, operational procedures are
reviewed and streamlined by the store operations team prior to implementation at
the store level. This team is also responsible for field and store staffing,
daily sales motivation and central office to store communications. Our
merchandising team also interacts with store personnel and is responsible for
developing merchandise presentation plans that can be effectively implemented at
the store level.
Store operations are managed through 46 operating districts, divided into 6
geographic regions. Each District Team Leader is responsible for approximately 8
stores. Stores are typically staffed with a team leader, two assistant team
leaders and several team members, which varies with store volume. During the
holiday selling season, team member levels are substantially increased to
accommodate peak traffic levels.
A number of Gymboree programs offer incentives to both team members and team
leaders. Team members receive compensation primarily in the form of hourly
wages. Incentive structures are designed to maximize team members' average sales
transactions. Scheduling procedures allocate payroll hours to team members based
upon sales performance rather than simple availability. Other programs provide
bonuses or cash awards to high achieving team members during contest periods, or
to all team members of a store based on store sales achievements. District Team
Leaders and Regional Team Directors receive compensation in the form of
salaries, performance-based bonuses and stock options.
CUSTOMER SERVICE
Customer service is a defining feature of the Gymboree corporate culture. We
believe that knowledgeable and enthusiastic team members have a direct impact on
profitability. Gymboree places great emphasis on the selling function through
consistent and on-going training and evaluation systems which are initiated by
the central office and administered by field management at all levels. Our store
Managers, District Team Leaders and Regional Team Directors spend the majority
of their work week on Gymboree selling floors, providing leadership by coaching
the sales staff and assisting customers.
Customer service is a high priority for Gymboree store team members.
Gymboree's customer focus is emphasized in recruiting and, as measured by sales,
is the primary component in the on-going evaluation of team members. Gymboree
minimizes team members' time spent on administrative functions by centrally
determining merchandise display and replenishment, markdowns and basic labor
scheduling. By emphasizing friendliness, product knowledge and personal
attention, we believe that Gymboree has established a reputation for excellent
customer service.
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STORE ENVIRONMENT
Gymboree stores are designed to create an energetic and enjoyable shopping
environment. The brightly lit stores and glass store fronts allow the colorful
in-store environments to attract customers from the outside. Stores are
constructed in an open manner which enables customers to see virtually all
product offerings from the store's entrance.
Customers enter the stores under natural wood arches supported by giant
children's building blocks. The dramatic archways and Gymboree logo attract the
customer's attention, even from a distance. Gymboree believes that the playful
image created by our store fronts is carried into the stores and maintained
through product presentation and enthusiastic store personnel.
Inside the store, merchandise is displayed on store walls by coordinated
apparel lines, which allows easy accessibility and provides ample floor space
for customers to maneuver strollers within the store. While parents shop,
children are encouraged to play with small toys throughout the store and to
enjoy Gymboree videos which run continuously throughout the day.
MARKETING AND PROMOTION
Whereas Gymboree previously relied on word of mouth advertising, in 1998 we
continued development through strategic marketing of the Gymboree brand. An
increased focus on synergy between the stores and Play Programs helped fuel more
successful direct marketing, advertising and promotional efforts.
Cross-promotional activities with other large strategically appropriate brands
like Gruner and Jahr's Parents Magazine were also successfully executed.
ELECTRONIC COMMERCE
Gymboree launched its first web site at www.gymboree.com during fiscal 1997.
This web site, also known as the Gymboree Gift Center, is designed to assist
customers as a one-stop shopping connection for Gymboree gift sets for children
between the ages of newborn and 7 years old. During 1998, products were
selectively added to the Gift Center. We will continue to develop our web
presence for corporate identification and expansion of sales.
MERCHANDISE DISTRIBUTION
Gymboree's merchandise is shipped primarily via ocean carriers from foreign
ports to the Port of Oakland, California, for distribution to U.S. stores, to
Toronto, Ontario, for distribution to Canadian stores, and to Shannon, Ireland
for our European stores. Contract manufacturers or vendors are required to
complete manufacturing and deliver merchandise to our foreign consolidator
within a designated ship window. This ship window ensures timely delivery of the
product to Gymboree's U.S., Canadian and Irish distribution centers using
cost-effective ocean transportation. A multi-country consolidation program was
established in 1997 which enables us to bring full ocean containers into those
countries, thereby minimizing shipping cost per unit.
Our transportation department coordinates the transportation of all purchase
orders and monitors the timeliness of these shipments. Customs clearance takes
place at the Port of Oakland for U.S. goods, Toronto for Canadian goods, and
Shannon, Ireland for European goods. Samples of all items are reviewed by U.S.
or local Customs agents prior to the actual shipment of merchandise. This
process reduces the customs clearance time and speeds the delivery of the
merchandise to Gymboree.
Our U.S. merchandise is received, checked, processed and distributed through
the new U.S. distribution center in Dixon, California. This distribution center
is a Gymboree-owned 300,000 square foot facility which opened on schedule in
January, 1998. New lines are received at the distribution center "just in time."
The merchandise is processed, packed by store and delivered on a targeted
in-store date approximately once per month. Merchandise is then replenished on a
weekly basis based on store sell-through. Merchandise for distribution to Europe
is shipped directly from the factory to a 26,000 square foot leased facility in
Shannon, Ireland, where it is processed for delivery to the stores. Merchandise
destined for Canadian stores is shipped directly to a third-party distribution
center in Toronto, Canada.
Outbound transportation is coordinated by our transportation team. Store
orders are consolidated by region and shipped via truckload carriers into the
downstream terminals of regional less-than-truckload carriers. This allows
Gymboree to build full trailers, thereby reducing the delivery cost per unit.
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MANAGEMENT INFORMATION SYSTEMS
Gymboree's information systems provide integration of store, merchandising,
distribution and financial systems. These systems operate on Unix and NT
platforms. Sales and other inventory management information are updated daily in
the merchandise reporting systems by communicating with each store's
point-of-sale system. Merchandise is automatically replenished in response to
the specific unit inventory requirements of each store. Gymboree evaluates
information obtained through daily reporting to implement merchandising
decisions regarding markdowns and allocation of merchandise.
Gymboree believes that our information systems are essential in achieving our
growth plans and maintaining a competitive industry position. We are committed
to utilizing technology as a competitive advantage.
YEAR 2000
The information required by this item is incorporated herein by reference to
page 15 of the 1998 Annual Report to Stockholders filed as Exhibit 13.1 to this
Annual Report on Form 10-K.
PLAY PROGRAMS
As of January 30, 1999, Gymboree's Play Programs included 18 Company-operated
play centers in California and 380 franchisee-operated play centers, of which
approximately 80% are located in the United States, and the remaining 20% are
located in foreign countries, including Australia, Canada, Colombia, France,
Indonesia, Korea, Mexico, Singapore and Taiwan. In addition to generating
income, we believe that the Play Programs provide attractive cross-marketing
opportunities for Gymboree stores and further strengthen the GYMBOREE(R) brand
name recognition with retail customers. See "Marketing and Promotion."
The Gymboree Play Programs are designed to enhance early childhood
development through fun-filled sensory and motor activities, which engage
children through sight, touch, sound and movement. Motor skill development is
stimulated through physical play and exercise in an exciting, safe environment
which includes proprietary, colorful, developmentally appropriate play
equipment. The Gymboree Play Program involves weekly 45-minute classes offered
throughout the year. Classes are designed to interest and challenge children
through activities that are tailored to enhance mental and physical development
as well as to provide opportunities for socializing. In addition to sliding,
climbing, jumping and running, classes include music, structured play
activities, games and often a finale featuring a colorful parachute, songs,
bubbles and GYMBO(R) the clown. Parents are present at play classes and
participate in the activities with their children.
Gymboree classes are offered to children ages newborn to 4 years old.
GymBabies (for ages newborn to 6 months) introduce sensory play with special
props and equipment. GymCrawlers (6 to 12 months) develop upper-body stability,
strength and coordination. GymWalkers (10 to 18 months) emphasize pre-walking
and early walking skills and enhance strength, socialization, walking, balance
and coordination. GymRunners (14 to 28 months) encourage exploration and build
motor skills. GymExplorers (for 2 year olds) explore movement, stories, puppetry
and songs. GymKids (3 year olds) learn non-competitive skills like catching,
throwing, kicking and tumbling. GymPairs classes are designed for parents with
two mobile children; activities are modified to serve the needs of each
participant.
Gymboree's standard franchise agreement provides for an initial term of 10
years. Upon signing the franchise agreement, each domestic and Canadian
franchisee currently pays an initial fee ranging from $35,000 for the
franchisee's first play center location to $20,000 for the fourth (and each
subsequent) location, and each international (excluding Canadian) franchisee
pays an initial fee ranging from $75,000 to $500,000. The franchises are
renewable for 1 additional 10-year term, and Gymboree receives no fee upon the
renewal of the franchise from domestic franchisees. Gymboree receives a royalty
of 6% of each domestic franchisee's gross receipts from operations, and a fee of
approximately $10,500 upon the transfer of a franchise from one domestic
franchisee to another. Currently, Gymboree supplies the franchisees with program
aids, equipment and consumer products at a cost to the franchisee and conducts
initial and ongoing training programs.
Gymboree will continue offering franchises for sale in fiscal 1999.
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TRADEMARKS AND SERVICE MARKS
Gymboree is the owner in the United States of the trademark and service mark
"GYMBOREE", and the trademarks "GYMBO" and "GYMBABY", among others. These marks
and certain other of Gymboree's marks are registered in the United States Patent
and Trademark Office, and the mark "GYMBOREE" is also registered, or is the
subject of pending applications, in approximately 45 foreign countries. Each
federal registration is renewable indefinitely if the mark is still in use at
the time of renewal. Gymboree's rights in the "GYMBOREE" mark and other marks
are a significant part of the business. Accordingly, we intend to maintain the
mark and the related registrations. Gymboree is not aware of any material claims
of infringement or other challenges to our right to use the mark in the United
States.
Gymboree uses a number of trademarks, certain of which have been registered
with the United States Patent and Trademark Office and in certain foreign
countries. We believe that our registered and common law trademarks have
significant value and that some of our trademarks are instrumental to our
ability to create and sustain demand for and market our products. We believe
that there are no currently pending material challenges to the use or
registration of any of Gymboree's registered trademarks. There can be no
assurance, however, that our trademarks do not or will not violate the
proprietary rights of others, that they would be upheld if challenged or that
Gymboree would, in such an event, not be prevented from using our trademarks,
any of which could have a material adverse effect on Gymboree and the business.
In addition, we could incur substantial costs to defend legal actions taken
against Gymboree relating to our use of trademarks, which could have a material
adverse effect on our results of operations and financial position.
From time to time, Gymboree discovers products in the marketplace that are
counterfeit reproductions of our products or that otherwise infringe upon
trademark rights held by Gymboree. If Gymboree is unsuccessful in challenging a
third party's products on the basis of trademark infringement, continued sales
of such product by that or any other third party could adversely impact the
Gymboree brand, result in the shift of consumer preferences away from Gymboree
and generally have a material adverse effect on our results of operations and
financial condition.
COMPETITION
The children's apparel segment of the specialty retail business is highly
competitive. Gymboree competes on a national level with GapKids (a division of
The Gap, Inc.) and certain leading department stores as well as certain discount
retail chains such as Kids 'R' Us (a division of Toys 'R' Us, Inc.). Gymboree
also competes with a wide variety of local and regional specialty stores and
with certain other retail chains. Many of these competitors are larger and have
substantially greater financial, marketing and other resources than Gymboree.
Increased competition may reduce sales and gross margins, increase operating
expenses and decrease profit margins. We may not be able to compete successfully
in the future.
ECONOMIC CONDITIONS; DEPENDENCE ON CONSUMER SPENDING
Gymboree's financial performance is also sensitive to changes in overall
economic conditions, which have an impact on consumer spending trends. The
success of our operations depends upon a number of factors relating to consumer
spending, including future economic conditions affecting disposable consumer
income such as employment, business conditions, interest rates and tax rates.
There can be no assurance that consumer spending will not decline in response to
economic conditions, thereby adversely affecting our growth, net sales and
profitability. Gymboree's stores are located primarily in enclosed regional
malls. Consequently, our ability to sustain the level of sales is dependent in
part on a high volume of mall traffic. Mall traffic may be adversely affected
by, among other things, economic downturns, the closing of anchor department
stores or changes in consumer preferences, all of which are beyond our control.
Shifts in consumer discretionary spending to other products or a general
reduction in the level of such spending could also adversely affect Gymboree.
These factors may adversely impact our business, financial position and results
of operations in the future.
DEPENDENCE ON KEY PERSONNEL; NEW MANAGEMENT
In the past year, we have made significant changes in our executive officers
and management team. These new senior personnel, among others, have extensive
national retail and wholesale experience and have effected certain product
development, merchandising, marketing and operational strategy changes. There
can be no assurance that Gymboree will successfully assimilate these new
executives and make strategic modifications to certain of its past operating
policies in a timely and efficient manner. Furthermore, the
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continued success of Gymboree is largely dependent on the personal efforts and
abilities of our senior management and certain other key personnel and on our
ability to retain current management and to attract and retain qualified
personnel in the future. The loss of certain key employees or Gymboree's
inability to retain other qualified employees could have a material adverse
effect on the results of operations and financial position.
NEED FOR ADDITIONAL CAPITAL
Various elements of our business and growth strategies, including plans to
broaden existing product lines and introduce new products and concepts, such as
Zutopia, which may require us to maintain higher inventory levels which could
require additional capital. There can be no assurance that funds will be
available to Gymboree on terms that are satisfactory. To the extent that we
raise additional equity capital, a dilutive effect on existing stockholders
could result.
TEAM MEMBERS
As of January 30, 1999, Gymboree had over 6,500 team members. In addition, a
significant number of seasonal team members are hired during each holiday
selling season. None of our team members is represented by a labor union, and we
believe that our relationship with our team members is good.
EXECUTIVE OFFICERS
The following table sets forth information regarding our executive
officers.
Stuart G. Moldaw 71 Chairman of the Board of Directors
Gary White 46 Chief Executive Officer and Vice-Chair of the Board of Directors
Melanie Bordeaux Cox 39 President
Lawrence H. Meyer 46 Senior Vice President and Chief Financial Officer
Edward Loseman 48 Senior Vice President, Sourcing and Logistics
Kenneth F. Meyers 36 Senior Vice President, Human Resources
Stuart G. Moldaw has been our Chairman of the Board of Directors since
January 1994, and has been a director of Gymboree since May 1982. Mr. Moldaw
previously served as Chairman of the Board of Directors of Gymboree from January
1990 through January 1993. From 1980 to 1990, Mr. Moldaw served as a general
partner of U.S. Venture Partners. From 1987 through 1988, Mr. Moldaw served as
Chief Executive Officer of Ross Stores, Inc., an off-price retailer, and is
currently a director and Chairman Emeritus of Ross Stores, Inc.
Gary White has been our Vice-Chair of the Board of Directors and Chief
Executive Officer since February 1999, and was Chief Executive Officer and
President and a director beginning in February 1997. Mr. White served as a
Senior Vice President and the Chief Operating Officer of Gymboree from January
1996 until February 1997. Prior to joining Gymboree, Mr. White served as
Executive Vice President of Mervyn's, a division of Dayton Hudson Corporation.
Mr. White was employed by Dayton Hudson Corporation since 1976 having served in
various positions as an officer with Dayton Hudson Corporation from 1988 to
1996.
Melanie Bordeaux Cox joined Gymboree as President in March 1999. Prior to
joining, she was General Merchandise Manager of Urban Outfitters, Inc. since
1995. Before that, Ms. Cox was Executive Vice President, General Merchandise
Manager, of Contempo Casuals from 1994 to 1995, General Merchandise Manager of
Clothestime Stores, Inc. from 1990 to 1994, and prior to 1990 was Merchandise
Manager of Product Development of The Wet Seal, Inc.
Lawrence H. Meyer joined Gymboree as Senior Vice President and Chief
Financial Officer in September 1998. Previously, Mr. Meyer was Chief Financial
Officer and later was Vice President, Business Development, of Toys "R" Us
International, from 1991 to 1998. Before that, Mr. Meyer was Vice President and
Chief Financial Officer of Nielsen Marketing Research from 1989 to 1991, and
held several financial positions with PepsiCo, Inc. from 1978 to 1989.
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Mr. Edward A. Loseman joined Gymboree as Senior Vice President of Sourcing
and Logistics in January 1998. Prior to joining Gymboree, Mr. Loseman was Vice
President of Sourcing for GUESS? Inc. from 1996, and Vice President of
Manufacturing Services for Polo/Ralph Lauren from 1992 to 1996.
Mr. Kenneth F. Meyers joined Gymboree as Senior Vice President, Human
Resources in March, 1997. Previously, Mr. Meyers was Vice President, Human
Resources at Walt Disney Imagineering from 1995 to 1997. Prior to Disney, Mr.
Meyers held executive positions in human resources at United Technologies
Corporation.
ITEM 2. PROPERTIES
As of January 1999, Gymboree's corporate campus is located in 3 office
buildings in Burlingame, California, which we occupy under leases expiring
between 1999 and 2003.
During 1997, we completed construction of a new 300,000 square foot
distribution center on 15 acres located in Dixon, California. Gymboree has an
option agreement on contiguous land for an additional 6 acres. Beginning in
January, 1998, we started distributing all products to our stores located in the
United States from this facility. Gymboree leases a distribution center in
Shannon, Ireland for European operations, and utilizes a third-party owned and
operated distribution center in Toronto, Ontario, Canada for Canadian
operations.
At January 30, 1999, Gymboree's 564 stores included an aggregate of
approximately 939,000 square feet of space. Our stores are all leased, typically
for a 10-year term. In most cases, Gymboree pays a minimum rent plus a
percentage rent based on the store's net sales in excess of a certain threshold.
Substantially all of the leases require us to pay insurance, utilities, real
estate taxes and repair and maintenance expenses. See Note 2 of Notes to
Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
Gymboree has been named as a defendant in two lawsuits relating to sourcing
of products from Saipan (Commonwealth of Northern Mariana Islands). A complaint
was filed on January 13, 1999 in California Superior Court in San Francisco by
the Union of Needletrades Industrial and Textile Employees, AFL-CIO; Global
Exchange; Sweatshop Watch; and Asian Law Caucus against Gymboree and 17 other
parties. The plaintiffs allege violations of California's unlawful, fraudulent
and unfair business practices and untrue and misleading advertising statutes in
connection with labeling of product and labor practices regarding workers of
factories that make product for Gymboree in Saipan. The plaintiffs seek
injunctive relief, restitution, disgorgement of profits and other damages. On
March 29, 1999, Gymboree, along with other defendants, filed a demurrer in
California Superior Court in San Francisco, seeking dismissal of the complaint.
A second complaint was filed on January 13, 1999 in Federal District Court,
Central District of California, by various unidentified worker plaintiffs
against Gymboree and 25 other parties. Those unidentified worker plaintiffs
seek class-action status and allege, among other things, that Gymboree (and
other defendants) violated the Racketeer Influenced and Corrupt Organizations
Act in connection with the labor practices and treatment of workers of
factories in Saipan that make product for us. The plaintiffs seek injunctive
relief as well as actual and punitive damages. On March 29, 1999, Gymboree,
along with several other defendants, filed a motion in Federal District Court,
Central District of California, to transfer the venue of the case to the
Commonwealth of the Northern Mariana Islands. Additionally, on April 12, 1999,
Gymboree, along with several other defendants, filed a motion to dismiss the
federal complaint.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 8, 1999 a Special Meeting of stockholders was held to vote upon a
proposal to approve Gymboree's Amended and Restated 1993 Stock Option Plan (the
"Plan"). Specifically, the Plan was amended to:
(a) increase the aggregate number of shares of Common Stock authorized
for issuance under the Plan by 2,000,000 shares raising the number
of shares reserved under the plan since its inception to 6,025,000;
(b) impose annual limits on the number of shares subject to stock option
grants, so as to qualify the compensation associated with such
grants as "performance-based" compensation within the meaning of
Section 162(m) of the Internal Revenue Code;
(c) impose an annual maximum limit of 200,000 shares that may be issued
pursuant to Stock Purchase Rights;
(d) impose a minimum 3 year vesting schedule for all Stock Purchase
Rights;
(e) remove language from the 1993 Plan that contemplated option
re-pricings and exchanges.
The number of votes cast for the proposal was 11,885,691, the number of votes
cast against the proposal was 6, 289,356, and the number of abstentions and
broker non-votes was 117,519. The proposal was approved and the Plan was
adopted.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Gymboree's Common Stock is traded on the NASDAQ National Market System under
the symbol "GYMB". The following table sets forth the quarterly high and low
sale prices per share, as reported on the NASDAQ National Market System.
FISCAL 1998 FISCAL 1997 FISCAL 1996
----------- ----------- -----------
HIGH LOW HIGH LOW HIGH LOW
---- --- ---- --- ---- ---
First Quarter 23.375 18.250 27.250 21.750 29.000 17.750
Second Quarter 19.031 12.000 27.625 22.625 35.750 20.125
Third Quarter 10.500 4.063 27.750 23.875 33.675 23.375
Fourth Quarter 8.500 4.875 28.875 23.875 34.750 21.250
As of April 5, 1999, the number of holders of record of Gymboree's Common
Stock was approximately 764. Gymboree has never declared or paid cash dividends
on its Common Stock and anticipates that all future earnings will be retained
for development of its business. The payment of any future dividends will be at
the discretion of Gymboree's Board of Directors and will depend upon, among
other things, future earnings, capital requirements, our financial position and
general business conditions.
As of January 30, 1999, 1,111,909 shares of Common Stock had been issued upon
exercise of options and pursuant to restricted stock purchase agreements, and
2,842,996 shares of Common stock were issuable upon exercise of outstanding
options under Gymboree's Amended and Restated 1993 Stock Option Plan.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by reference to
page 11 of the 1998 Annual Report to Stockholders filed as Exhibit 13.1 to this
Annual Report on Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is incorporated herein by reference to
pages 12 through 15 of the 1998 Annual Report to Stockholders filed as Exhibit
13.1 to this Annual Report on Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated herein by reference to
page 14 of the 1998 Annual Report to Stockholders filed as Exhibit 13.1 to this
Annual Report on Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference to
pages 16 through 27 of the 1998 Annual Report to Stockholders filed as Exhibit
13.1 to this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated herein by reference to
the sections entitled "Election of Directors - Nominees" and "Additional
Information-Compliance with Section 16(a) of the Securities Exchange Act" in the
1998 Proxy Statement. See also Item 1.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to
the sections entitled "Election of Directors - Compensation of Directors" and
"Additional Information - Executive Compensation" in the 1998 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference to the
section entitled "Additional Information - Security Ownership" in the 1998 Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by reference to
the sections entitled "Additional Information - Employment Contracts and
Termination of Employment and Change-in-Control Arrangements" and " Additional
Information - Compensation Committee Interlocks and Insider Participation" in
the 1998 Proxy Statement.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K
(A)(1) FINANCIAL STATEMENTS
The following documents are incorporated by reference to pages 16 through 27
of the 1998 Annual Report to Stockholders filed as Exhibit 13.1 to this Annual
Report on Form 10-K.
Consolidated Balance Sheets as of January 30, 1999 and January
31, 1998
Consolidated Statements of Income for each of the three fiscal
years ended January 30, 1999
Consolidated Statements of Cash Flows for the three fiscal years
ended January 30, 1999
Consolidated Statements of Stockholders' Equity for the three
fiscal years ended January 30, 1999
Notes to Consolidated Financial Statements
Independent Auditors' Report
(A)(2) FINANCIAL STATEMENT SCHEDULES
Financial statement schedules have been omitted because they are not required
or are not applicable.
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(A)(3) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Restated Certificate of Incorporation of Registrant.(1)
3.2 Bylaws of Registrant.(1)
4.1 Article III of Restated Certificate of Incorporation of
Registrant (See Exhibits 3.1). (1)
4.2 Form of certificate for Common Stock. (1)
10.1 1983 Incentive Stock Option Plan, with form of stock Option
Agreement. (1)
10.2 1993 Stock Option Plan, with form of Stock Option
Agreement.(4)
10.3 1993 Employee Stock Purchase Plan. (1)
10.4 Amended Line of Credit Agreement with Bank of America dated
October 27, 1995. (3)
10.5 Line of Credit Agreement with CoreStates Bank dated August
2, 1994.(2)
10.6 Amended Lease Agreement for 700 Airport Blvd., Suite 200,
Burlingame, California. (2)
10.7 Amended Lease Agreement for distribution center. (3)
10.8 California Uniform Franchise Offering Circular, including
form of Franchise Agreement.(1)
10.11 Restricted Stock Purchase Agreement with Nancy J. Pedot. (2)
10.12 Lease Agreement for 770 Airport Blvd., Burlingame, CA. (5)
10.13 Deferred Compensation Agreement. (5)
10.14 Lease Agreement for Bays 140-141, Shannon Free Zone,
Shannon, Ireland, dated May 6, 1997. (6)
10.15 Lease Agreement for 111 Anza Blvd., Burlingame, CA dated
January 8, 1998. (6)
10.16 Amendment No. 1 to the Amended and Restated Line of Credit
Agreement with Bank of America, dated July 17, 1997. (6)
10.17 Amendment No. 2 to the Amended and Restated Line of Credit
Agreement with Bank of America, dated August 11, 1997. (6)
10.18 Amendment No. 3 to the Amended and Restated Line of Credit
Agreement and Waiver with Bank of America, dated January 9,
1998. (6)
10.19 Amendment No. 4 to the Amended and Restated Line of Credit
Agreement with Bank of America, dated January 30, 1998. (6)
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10.20 Amendment No. 5 to the Amended and Restated Line of Credit
Agreement with Bank of America, dated March 9, 1998. (6)
10.21 Amendment No. 6 to Amended and Restated Line of Credit
Agreement with Bank of America, dated March 9, 1998. (6)
10.22 Acquisition and Development Agreement for Dixon, California
Distribution Facility with Carl D. Panattoni and Wickland
Properties, dated November, 1996. (6)
10.23 Standard Form of Contractor Agreement with DPR Construction,
Inc. for construction of Dixon, California Distribution
Facility dated May 5, 1997. (6)
10.24 Amendment No. 7 to the Amended and Restated Line of Credit
Agreement with Bank of America, dated June 26, 1998. (7)
10.25 Amendment No. 8 to the Amended and Restated Line of Credit
Agreement with Bank of America, dated August 14, 1998. (7)
10.26 Management Change of Control Plan. (8)
10.27 Management Severance Plan. (8)
10.28 Term Loan and Security Agreement with Transamerica Equipment
Financial Services, Inc., dated December 28, 1998.
10.29 Commitment Letter for the Amended and Restated Line of
Credit Agreement with Bank of America, dated March 11, 1999.
10.30 Amended 1993 Stock Option Plan, with form of Stock Option
Agreement, dated March 8, 1999. (9)
11.1 Statement re Computation of Income Per Share.
13.1 1998 Annual Report to Stockholders.
21.1 Subsidiaries of the Registrant.
23.1 Independent Auditors' Consent.
24.1 Power of Attorney (included in Part IV of this Form 10-K
under the caption "Signatures").
27.1 Financial Data Schedule.
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(B) REPORTS ON FORM 8-K
None.
- ------------
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 filed with the Commission on February 18, 1993 (File No.
33-58322), as amended.
(2) Incorporated by reference to the Registrant's 1994 Annual Report on Form
10-K filed with the Commission on April 24, 1995.
(3) Incorporated by reference to the Registrant's 1995 Annual Report on Form
10-K filed with the Commission on May 2, 1996.
(4) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 filed with the Commission on February 18, 1993 (File No.
33-58322), as amended by numbers 33-60310, 33-90452, 33-94594 and
333-10811.
(5) Incorporated by reference to the Registrant's 1996 Annual Report on Form
10-K filed with the Commission on May 5, 1997.
(6) Incorporated by reference to the Registrant's 1997 Annual Report on Form
10-K filed with the Commission on April 20, 1998.
(7) Incorporated by reference to the Registrant's August 1, 1998 Quarterly
Report on Form 10-Q ("1998 Q2 10-Q") filed with the Commission on
September 11, 1998.
(8) Incorporated by reference to the Registrant's October 31, 1998 Quarterly
Report on Form 10-Q ("1998 Q3 10-Q") filed with the Commission on
December 21, 1998.
(9) Incorporated by reference to the Registrant's Registration Statement on
Form S-8 filed with the Commission on March 11, 1999 (File No.
333-74269).
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THE GYMBOREE CORPORATION
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 GYMBOREE CORPORATION
April 26, 1999 By: /s/ Gary White
- ------------------ ---------------------------------
(Date) Gary White
Vice-Chair,
Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT:
That the undersigned officers and directors of Gymboree Corporation, a
Delaware corporation, do hereby constitute and appoint Gary White the lawful
attorney and agent, with power and authority to do any and all acts and things
and to execute any and all instruments which said attorney and agent determine
may be necessary or advisable or required to enable said corporation to comply
with the Securities Act, and any rules or regulations or requirements of the
Securities and Exchange Commission in connection with this Form 10-K. Without
limiting the generality of the foregoing power and authority, the powers granted
include the power and authority to sign the names of the undersigned officers
and directors in the capacities indicated below to this Form 10-K, to any and
all amendments, and supplements to this Form 10-K, to any and all instruments or
documents filed as part of or in conjunction with this Form 10-K or amendments
or supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorney and agent shall do or cause to be done by virtue hereof.
This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
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Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
NAME TITLE DATE
---- ----- ----
/s/ Stuart G. Moldaw Chairman of the Board of Directors April 26, 1999
- --------------------------------------------
Stuart G. Moldaw
/s/ Gary White Vice Chair, Chief Executive Officer and April 26, 1999
- --------------------------------------------
Gary White Director
/s/ Melanie B. Cox President April 26, 1999
- --------------------------------------------
Melanie B. Cox
/s/ Lawrence H. Meyer Senior Vice President and Chief Financial April 26, 1999
- -------------------------------------------- Officer (Principal financial and
Lawrence H. Meyer accounting officer of the registrant)
/s/ Walter F. Loeb Director April 26, 1999
- --------------------------------------------
Walter F. Loeb
/s/ Barbara L. Rambo Director April 26, 1999
- --------------------------------------------
Barbara L. Rambo
/s/ Deborah A. Sorondo Director April 26, 1999
- --------------------------------------------
Deborah A. Sorondo
/s/ William U. Westerfield Director April 26, 1999
- --------------------------------------------
William U. Westerfield
/s/ Carole J. Whitacre Director April 26, 1999
- --------------------------------------------
Carole J. Whitacre
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THE GYMBOREE CORPORATION
EXHIBIT INDEX
3.1 Restated Certificate of Incorporation of Registrant.(1)
3.2 Bylaws of Registrant.(1)
4.1 Article III of Restated Certificate of Incorporation of Registrant (See
Exhibits 3.1).(1)
4.2 Form of certificate for Common Stock.(1)
10.1 1983 Incentive Stock Option Plan, with form of stock Option Agreement.(1)
10.2 1993 Stock Option Plan, with form of Stock Option Agreement.(4)
10.3 1993 Employee Stock Purchase Plan.(1)
10.4 Amended Line of Credit Agreement with Bank of America dated October 27,
1995.(3)
10.5 Line of Credit Agreement with CoreStates Bank dated August 2, 1994.(2)
10.6 Amended Lease Agreement for 700 Airport Blvd., Suite 200, Burlingame,
California.(2)
10.7 Amended Lease Agreement for distribution center.(3)
10.8 California Uniform Franchise Offering Circular, including form of
Franchise Agreement.(1)
10.11 Restricted Stock Purchase Agreement with Nancy J. Pedot.(2)
10.12 Lease Agreement for 770 Airport Blvd., Burlingame, CA. (5)
10.13 Deferred Compensation Agreement.(5)
10.14 Lease Agreement for Bays 140-141, Shannon Free Zone, Shannon, Ireland,
dated May 6, 1997.(6)
10.15 Lease Agreement for 111 Anza Blvd., Burlingame, CA dated January 8,
1998.(6)
10.16 Amendment No. 1 to the Amended and Restated Line of Credit Agreement with
Bank of America, dated July 17, 1997.(6)
10.17 Amendment No. 2 to the Amended and Restated Line of Credit Agreement with
Bank of America, dated August 11, 1997.(6)
10.18 Amendment No. 3 to the Amended and Restated Line of Credit Agreement and
Waiver with Bank of America, dated January 9, 1998.(6)
10.19 Amendment No. 4 to the Amended and Restated Line of Credit Agreement with
Bank of America, dated January 30, 1998.(6)
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10.20 Amendment No. 5 to the Amended and Restated Line of Credit Agreement with
Bank of America, dated March 9, 1998.(6)
10.21 Amendment No. 6 to Amended and Restated Line of Credit Agreement with
Bank of America, dated March 9, 1998.(6)
10.22 Acquisition and Development Agreement for Dixon, California Distribution
Facility with Carl D. Panattoni and Wickland Properties, dated November,
1996.(6)
10.23 Standard Form of Contractor Agreement with DPR Construction, Inc. for
construction of Dixon, California Distribution Facility dated May 5,
1997.(6)
10.24 Amendment No. 7 to the Amended and Restated Line of Credit Agreement with
Bank of America, dated June 26, 1998.(7)
10.25 Amendment No. 8 to the Amended and Restated Line of Credit Agreement with
Bank of America, dated August 14, 1998.(7)
10.26 Management Change of Control Plan.(8)
10.27 Management Severance Plan.(8)
10.28 Term Loan and Security Agreement with Transamerica Equipment Financial
Services, Inc., dated December 28, 1998.
10.29 Commitment Letter for the Amended and Restated Line of Credit Agreement
with Bank of America, dated March 11, 1999.
10.30 Amended 1993 Stock Option Plan, with form of Stock Option Agreement,
dated March 8, 1999.(9)
11.1 Statement re Computation of Income Per Share.
13.1 1998 Annual Report to Stockholders.
21.1 Subsidiaries of the Registrant.
23.1 Independent Auditors' Consent.
24.1 Power of Attorney (included in Part IV of this Form 10-K under the
caption "Signatures").
27.1 Financial Data Schedule.
- ---------------
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 filed with the Commission on February 18,1993 (File No.
33-58322), as amended.
(2) Incorporated by reference to the Registrant's 1994 Annual Report on Form
10-K filed with the Commission on April 24, 1995.
(3) Incorporated by reference to the Registrant's 1995 Annual Report on Form
10-K filed with the Commission on May 2, 1996.
(4) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 filed with the Commission on February 18, 1993 (File No.
33-58322), as amended by numbers 33-60310, 33-90452, 33-94594 and
333-10811.
(5) Incorporated by reference to the Registrant's 1996 Annual Report on Form
10-K filed with the Commission on May 5, 1997.
(6) Incorporated by reference to the Registrant's 1997 Annual Report on Form
10-K filed with the Commission on April 20, 1998.
(7) Incorporated by reference to the Registrant's August 1, 1998 Quarterly
Report on Form 10-Q ("1998 Q2 10-Q") filed with the Commission on
September 11, 1998.
(8) Incorporated by reference to the Registrant's October 31, 1998 Quarterly
Report on Form 10-Q ("1998 Q3 10-Q") filed with the Commission on
December 21, 1998.
(9) Incorporated by reference to the Registrant's Registration Statement on
Form S-8 filed with the Commission on March 11, 1999 (File No.
333-74269).
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