<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED].
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission file number 000-21250
A. Full title of the Plan and the address of the Plan, if different from that of
the issuer named below:
THE GYMBOREE CORPORATION
RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the Plan and the address of
its principal executive office:
THE GYMBOREE CORPORATION
700 AIRPORT BLVD., SUITE 200
BURLINGAME, CA 94010-1912
<PAGE> 2
ITEM 1. CHANGES IN THE PLAN
Effective April 7, 1995, the Company appointed Merrill Lynch Trust Company
of California successor trustee of the Plan.
ITEM 2. CHANGES IN INVESTMENT POLICY
No material changes occurred during the 1996 fiscal year with respect to
the nature of securities or other investments in which funds held under the Plan
were invested.
ITEM 3. CONTRIBUTIONS UNDER THE PLAN
The Gymboree Corporation makes matching cash contributions to the Plan. The
Company matches 50% of participant contributions, up to a maximum annual
contribution of $500 in 1996 and 1995.
ITEM 4. PARTICIPATING EMPLOYEES
The Plan had approximately 400 participating employees at December 31,
1996.
ITEM 5. ADMINISTRATION OF THE PLAN
The Plan is administered by a committee comprising employees of The
Gymboree Corporation. No person receives compensation from the Plan in the role
of administrative committee member.
<TABLE>
<CAPTION>
Name of Position held
committee member with issuer Address
- ---------------- ----------- -------
<S> <C> <C>
NANCY J. PEDOT President, Chief 700 Airport Blvd., Suite 200
Executive Officer Burlingame, CA 94010-1912
JAMES P. CURLEY Senior Vice President, 700 Airport Blvd., Suite 200
Chief Financial Officer/ Burlingame, CA 94010-1912
Chief Administrative Officer
JOSEPH T. PRUSKO Vice President, 700 Airport Blvd., Suite 200
Controller Burlingame, CA 94010-1912
JANELLE DAUSCH Benefits Manager 700 Airport Blvd., Suite 200
Burlingame, CA 94010-1912
</TABLE>
2
<PAGE> 3
ITEM 6. CUSTODIAN OF INVESTMENTS
The custodian of Plan assets is Merrill Lynch Trust Company of California
(Merrill Lynch) located at 101 California Street, San Francisco, California
94111. The Plan did not pay Merrill Lynch any compensation as trustee of
investments as all administrative fees are paid by the Company.
ITEM 7. REPORTS TO PARTICIPATING EMPLOYEES
Participants receive quarterly reports from the Plan administrator
summarizing the transactions and market value changes.
ITEM 8. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements - Audited financial statements of The Gymboree
Corporation Retirement Savings Plan as of and for the years ended
December 31, 1996 and 1995.
(b) Exhibit 23.1 - Consent of Mohler, Nixon & Williams, Independent
Accountants
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
administrator has duly caused this annual report to be signed by the undersigned
thereunto duly authorized.
THE GYMBOREE CORPORATION
RETIREMENT SAVINGS PLAN
DATE July 17, 1997 BY /s/ JAMES P. CURLEY
-------------------
JAMES P. CURLEY
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER/
CHIEF ADMINISTRATIVE OFFICER
4
<PAGE> 5
THE GYMBOREE CORPORATION
RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
5
<PAGE> 6
THE GYMBOREE CORPORATION
RETIREMENT SAVINGS PLAN
Financial Statements and
Supplemental Schedules
Years ended December 31, 1996 and 1995
TABLE OF CONTENTS
<TABLE>
<S> <C>
Independent Accountants' Report..............................................7
Consent of Independent Accountants...........................................8
Financial Statements:
Statements of Net Assets Available for Plan Benefits ........................9
Statements of Changes in Net Assets Available for Plan Benefits,
With Fund Information..................................................10
Notes to Financial Statements...............................................11
Supplemental Schedules as of and for the year ended
December 31, 1996 .......................................................15
Assets Held for Investment Purposes .....................................16
Schedule of Reportable Transactions .....................................17
</TABLE>
6
<PAGE> 7
To the Participants and
Plan Administrator of
The Gymboree Corporation
Retirement Savings Plan
INDEPENDENT ACCOUNTANTS' REPORT
We have audited the accompanying statements of net assets available for plan
benefits of The Gymboree Corporation Retirement Savings Plan (the Plan) as of
December 31, 1996 and 1995, and the related statements of changes in net assets
available for plan benefits, with fund information, for the years then ended.
These financial statements are the responsibility of the Plan's management.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Plan's management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1996 and 1995, and the changes in net assets available for plan
benefits, with fund information, for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules as listed in
the accompanying table of contents are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The fund information in the statement of changes in net
assets available for plan benefits is presented for purpose of additional
analysis rather than to present the changes in net assets available for plan
benefits for each fund. The supplemental schedules and fund information have
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the financial statements taken as a whole.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 17, 1997
7
<PAGE> 8
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use of our name on our report, dated June 17, 1997, with
respect to the financial statements and schedules of The Gymboree Corporation
Retirement Savings Plan for the years ended December 31, 1996 and 1995, included
in the Annual Report on Form 11-K which is filed electronically with the
Securities and Exchange Commission.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 17, 1997
8
<PAGE> 9
THE GYMBOREE CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
December 31,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
Investments, at contract value $ 166,070 $ 146,990
Investments, at fair value 2,453,877 1,495,901
----------- -----------
Assets held for investment purposes 2,619,947 1,642,891
Receivables 38,114 47,177
----------- -----------
Total assets 2,658,061 1,690,068
Payables (49,119)
----------- -----------
Net assets available for plan benefits $ 2,608,942 $ 1,690,068
=========== ===========
</TABLE>
See independent accountants' report and
accompanying notes to financial statements.
9
<PAGE> 10
THE GYMBOREE CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
Merrill Lynch
----------------------------------------------------------------------------------------
CMA
Global Retirement Gymboree Money
Capital Growth Allocation Preservation Stock Market
Fund Fund Fund Trust Fund Fund
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net assets available for plan
benefits at December 31, 1994 $ 112,231 $ 316,054 $ 254,687 $ 102,505 $ 78,918 $ 22,998
----------- ----------- ----------- ----------- ----------- -----------
Employer's contribution 14,126 36,908 25,767 11,441 9,940
Participants' contributions/rollovers 80,172 322,762 153,625 78,979 66,642
Withdrawals/distributions (28,512) (73,270) (109,100) (29,508) (20,553)
Dividends and interest 19,960 60,319 28,185
Net appreciation (depreciation)
in fair value of investments 21,331 70,806 30,251 7,293 (37,084)
Net loan activities (955) (16,220) (106) 564 227
Transfers in (out) 509 7,967 17,715 (24,284) 7,748 (22,998)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets 106,631 409,272 146,337 44,485 26,920 (22,998)
----------- ----------- ----------- ----------- ----------- -----------
Net assets available for plan
benefits at December 31, 1995 218,862 725,326 401,024 146,990 105,838 --
----------- ----------- ----------- ----------- ----------- -----------
Employer's contribution 20,124 53,726 28,054 12,296 11,014
Participants' contributions/rollovers 157,923 412,355 194,689 71,215 73,653
Withdrawals/distributions (56,468) (170,985) (114,078) (49,196) (30,625)
Dividends and interest 26,653 72,719 52,770 3,136
Net appreciation (depreciation)
in fair value of investments 4,381 159,091 16,825 6,750 8,817
Net loan activities (16,576) (27,377) (15,461) (5,849) (1,309)
Transfers in (out) (17,041) (29,459) 34,717 (19,272) (17,640) 59,700
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets 118,996 470,070 197,516 19,080 43,910 59,700
----------- ----------- ----------- ----------- ----------- -----------
Net assets available for plan
benefits at December 31, 1996 $ 337,858 $ 1,195,396 $ 598,540 $ 166,070 $ 149,748 $ 59,700
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Participant
Loans Receivables Payables Total
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net assets available for plan
benefits at December 31, 1994 $ 27,659 $ 22,630 ($ 35,973) $ 901,709
----------- ----------- ------------ -----------
Employer's contribution 98,182
Participants' contributions/rollovers 47,177 749,357
Withdrawals/distributions (260,943)
Dividends and interest 702 109,166
Net appreciation (depreciation)
in fair value of investments 92,597
Net loan activities 16,490 --
Transfers in (out) (22,630) 35,973 --
----------- ----------- ------------ -----------
Increase (decrease) in net assets 17,192 24,547 35,973 788,359
----------- ----------- ------------ -----------
Net assets available for plan
benefits at December 31, 1995 44,851 47,177 -- 1,690,068
----------- ----------- ------------ -----------
Employer's contribution 125,214
Participants' contributions/rollovers (47,177) 862,658
Withdrawals/distributions (2,936) (424,288)
Dividends and interest 4,148 159,426
Net appreciation (depreciation)
in fair value of investments 195,864
Net loan activities 66,572 --
Transfers in (out) 38,114 (49,119) --
----------- ----------- ------------ -----------
Increase (decrease) in net assets 67,784 (9,063) (49,119) 918,874
----------- ----------- ------------ -----------
Net assets available for plan
benefits at December 31, 1996 $ 112,635 $ 38,114 $ (49,119) $ 2,608,942
=========== =========== ============ ===========
</TABLE>
See independent accountants' report and
accompanying notes to financial statements.
10
<PAGE> 11
THE GYMBOREE CORPORATION
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
NOTE 1 - THE PLAN AND ITS SIGNIFICANT ACCOUNTING POLICIES:
The following description of The Gymboree Corporation (the Company)
Retirement Savings Plan (the Plan) provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
The Plan is a defined contribution plan that was established in 1992 by the
Company to provide benefits to eligible employees. The Plan covers all full-time
employees of the Company who have completed one year of service and are age 21
or older.
The Plan administrator believes that the Plan is currently designed and being
operated in compliance with the applicable requirements of the Internal Revenue
Code and the provisions of ERISA.
ADMINISTRATION -
The Company has appointed an Administrative Committee (the Committee) to
control the operation and administration of the Plan. A third-party
administrator, appointed by the Committee, processes and maintains the records
of participant data. Under the terms of the Plan, a group of designated officers
of the Company acted as the trustee of the Plan from inception through April 6,
1995. Effective April 7, 1995, the Company appointed Merrill Lynch Trust Company
of California (Merrill Lynch) as trustee of the Plan. Substantially all expenses
incurred for administering the Plan are paid by the Company.
INVESTMENTS -
Investments of the Plan are held by Merrill Lynch and invested in mutual
funds, Company stock or a collective trust fund based solely upon instructions
received from participants.
The Plan's investment in Merrill Lynch mutual funds as well as Gymboree
Corporation common stock are valued at fair value as of the last day of the Plan
year, as measured by quoted market prices.
The Merrill Lynch Retirement Preservation Trust (RPT) is a collective trust
fund invested primarily in a diversified portfolio of GICs, money market
securities, and U.S. government securities. RPT earned a gross annual effective
yield of 6.40% for the year ended December 31, 1996 and is valued at contract
value (purchase price plus interest) as of the last day of the Plan year.
11
<PAGE> 12
STATEMENT OF POSITION 94-4 -
The Company adopted Statement of Position 94-4, "Reporting of Investment
Contracts Held by Health and Welfare Benefit Plans and Defined Contribution
Pension Plans" (SOP 94-4), for the Plan year beginning January 1, 1996. Under
the new reporting requirements, investment contracts with fully
benefit-responsive features must be reported at contract value. The adoption of
SOP 94-4 did not have a material financial impact on the Plan.
CASH AND CASH EQUIVALENTS -
All highly liquid investments purchased with an original maturity of three
months or less (generally money market funds) are considered to be cash
equivalents.
VESTING -
Participants are immediately vested in their entire account balance.
INCOME TAXES -
The Plan has applied for and received a favorable determination letter
dated June 5, 1995. The Committee believes the Plan qualifies under the
applicable requirements of the Internal Revenue Code and related state statutes,
and is exempt from federal income and state franchise taxes.
ESTIMATES -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
RECLASSIFICATIONS -
Certain reclassifications were made in the 1995 financial statements to
conform with the 1996 presentation.
RISKS AND UNCERTAINTIES -
The Plan provides for various investment options in any combination of four
different Merrill Lynch mutual funds as well as Gymboree Corporation common
stock. Investment securities are exposed to various risks, such as interest
rate, market and credit. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes in risks
in the near term would materially affect participants' account balances and the
amounts reported in the statement of net assets available for plan benefits and
the statement of changes in net assets available for plan benefits.
12
<PAGE> 13
NOTE 2 - PARTICIPATION AND BENEFITS:
EMPLOYEE CONTRIBUTIONS -
Participants may elect to have the Company contribute, from 1% to 20%, of
their pre-tax compensation up to the amount allowable under current income tax
regulations. Participants who elect to have the Company contribute a portion of
their compensation to the Plan agree to accept an equivalent reduction in
taxable compensation. Contributions withheld are invested in accordance with the
participant's direction and are allocated to funds in 1% increments.
Participants are also allowed to make rollover contributions of amounts received
from other qualified employer-sponsored retirement plans. Such contributions are
deposited in the appropriate investment funds in accordance with the
participant's direction and the Plan's provisions.
EMPLOYER CONTRIBUTIONS -
The Company is allowed to make matching contributions as defined in the
Plan and as approved by the Board of Directors. The Company matches 50% of each
participant's contribution up to a maximum of $500 for 1996 and 1995.
PARTICIPANT ACCOUNTS -
Each participant's account is credited with the participant's contribution,
Plan earnings and an allocation of the Company's contribution. Allocations of
Company contributions are based on participant contributions.
PAYMENT OF BENEFITS -
Upon termination, the participant or beneficiary will receive the benefits
in a lump-sum amount equal to the value of the participant's account.
LOANS TO PARTICIPANTS -
The Plan allows participants to borrow not less than $1,000 and up to the
lesser of $50,000 or 50% of their account balance. The loans are secured by the
participant's account balance. Such loans bear interest at rates established by
the Committee and must be repaid to the Plan within a five year period, unless
the loan is used for the purchase of a residence in which case the maximum
repayment period may be extended. The specific terms and conditions of such
loans are established by the Plan administrator.
13
<PAGE> 14
NOTE 3 - PLAN TERMINATION AND/OR MODIFICATION:
The Company intends to continue the Plan indefinitely for the benefit of
its employees; however, it reserves the right to terminate and/or modify the
Plan at any time by resolution of its Board of Directors and subject to the
provisions of ERISA.
NOTE 4 - INVESTMENTS:
The following table includes the contract or fair values of net assets and
investment funds that represent 5% or more of the Plan's net assets at December
31:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Merrill Lynch:
Capital Fund $ 337,858 $ 218,862
Growth Fund 1,195,396 725,326
Global Allocation Fund 598,540 401,024
Retirement Preservation Trust 166,070 146,990
Gymboree Stock Fund 149,748 105,838
CMA Money Market Fund 59,700
Participant Loans 112,635 44,851
---------- ----------
Total net assets at contract or fair value $2,619,947 $1,642,891
========== ==========
</TABLE>
NOTE 5 - PARTY IN INTEREST TRANSACTIONS:
As allowed by the Plan, participants may elect to invest a portion of their
accounts in the common stock of the Company. The aggregate investment in Company
common stock at December 31, 1996 and 1995 was as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Number of shares 6,049 5,041
Cost $179,595 $141,731
Fair value $149,748 $105,838
</TABLE>
14
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THE GYMBOREE CORPORATION
EMPLOYEE RETIREMENT SAVINGS PLAN
SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1996
15
<PAGE> 16
THE GYMBOREE CORPORATION
EMPLOYEE RETIREMENT SAVINGS PLAN
E.I.N.: 94-261525
Plan #: 001
ITEM 27a, PART I - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1996
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Description of investment including
Identity of issue, borrower, lessor, maturity date, rate of interest, Current
or similar party collateral, par or maturity value Cost Value
- --- --------------------------------------------- ------------------------------------- --------- ----------
<S> <C> <C> <C> <C>
Merrill Lynch Capital Fund Mutual Fund $320,374 $337,858
Merrill Lynch Growth Fund Mutual Fund 1,015,198 1,195,396
Merrill Lynch Global Allocation Fund Mutual Fund 566,227 598,540
Merrill Lynch Retirement Preservation Trust Money Market Fund 166,070 166,070
* Gymboree Stock Fund Employer Securities 182,736 149,748
Merrill Lynch CMA Money Market Fund Money Market Fund 59,700 59,700
* Participant Loans (3.81% - 9.5%) 112,635
----------
Total assets held for investment
purposes $2,619,947
==========
* Parties-in-interest
</TABLE>
16
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THE GYMBOREE CORPORATION
EMPLOYEE RETIREMENT SAVINGS PLAN
E.I.N.: 94-2615258
Plan #: 001
ITEM 27d, PART V - SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended December 31, 1996
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Description of asset
(including interest rate
and maturity in case Purchase Selling Lease
Identity of party involved of a loan) price price rental
- ------------------------------------ ------------------------ --------- --------- ---------
<S> <C> <C> <C> <C>
Merrill Lynch Growth Fund Mutual Fund $57,955 $28,844
Merrill Lynch CMA Money Market Fund Money Market Fund 1,287,224 1,266,911
</TABLE>
<TABLE>
<CAPTION>
(a) (f) (g) (h) (i)
Expense Current value
incurred of asset on
with Cost of transaction Net gain
Identity of party involved transaction asset date or (loss)
- ------------------------------------ ----------- --------- -------------- ---------
<S> <C> <C> <C> <C>
Merrill Lynch Growth Fund $83,609 $86,799 $3,190
Merrill Lynch CMA Money Market Fund 2,554,135 2,554,135 --
</TABLE>
17
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- -------- -----------
<S> <C>
23.1 Consent of Independent Accountants
</TABLE>
18
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to The Gymboree Corporation Retirement Savings Plan of our
report dated June 17, 1997, with respect to the financial statements and
schedules of The Gymboree Corporation Retirement Savings Plan included in this
Annual Report (Form 11-K) for the year ended December 31, 1996.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 17, 1997
