<PAGE> 1
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT
PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997:
A. Full title of Plan:
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
ITEM 1. CHANGES IN THE PLAN
Effective January 1, 1997, the Company appointed Van Kampen American
Capital successor trustee and record keeper of the Plan.
ITEM 2. CHANGES IN INVESTMENT POLICY
No material changes occurred during the 1997 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 1997 and 1996.
ITEM 4. PARTICIPATING EMPLOYEES
The Plan had approximately 450 participating employees at December 31,
1997.
Page 1 of 17
<PAGE> 2
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 committee member Position held with issuer Address
- ------------------------ ------------------------- -------
<S> <C> <C>
Esther Koch Vice President, Finance 700 Airport Blvd, Ste. 200
Corporate Controller Burlingame, CA 94010-1912
Ken Meyers Senior Vice President 700 Airport Blvd, Ste. 200
Human Resources Burlingame, CA 94010-1912
Mindy C. Meads Senior Vice President 700 Airport Blvd, Ste. 200
General Merchandising Burlingame, CA 94010-1912
Manager
</TABLE>
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, 1997 and 1996.
(b) Exhibit 23.1 - Consent of Mohler, Nixon & Williams
Independent Accountants
Page 2 of 17
<PAGE> 3
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 31, 1998 By: /s/ Esther Koch
_____________ __________________________________
Esther Koch
Vice President, Finance
Corporate Controller
Page 3 of 17
<PAGE> 4
THE GYMBOREE CORPORATION
RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
Page 4 of 17
<PAGE> 5
THE GYMBOREE CORPORATION
RETIREMENT SAVINGS PLAN
Financial Statements and
Supplemental Schedules
Years ended December 31, 1997 and 1996
TABLE OF CONTENTS
<TABLE>
<S> <C>
Independent Accountants' Report ...................................................6
Consent of Independent Accountants.................................................7
Financial Statements:
Statements of Net Assets Available for Plan Benefits...............................8
Statements of Changes in Net Assets Available for Plan Benefits,
With Fund Information...........................................................9
Notes to Financial Statements.....................................................10
Supplemental Schedules as of and for the year ended
December 31, 1997..............................................................14
Schedule of Assets Held for Investment Purposes
Schedule of Reportable Transactions
</TABLE>
Page 5 of 17
<PAGE> 6
To the Participants and
Plan Administrator of
The Gymboree Corporation
Retirement Savings Plan
INDEPENDENT ACCOUNTANTS' REPORT
We have audited the financial statements and supplemental schedules of
the Gymboree Corporation Retirement Savings Plan (the Plan) as of December 31,
1997 and 1996, and for the years then ended, as listed in the accompanying table
of contents. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
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, 1997 and 1996, and the changes in net assets
available for plan benefits 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 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. This supplemental
information is the responsibility of the Plan's management. The fund information
in the statement of changes in net assets available for plan benefits is
presented for purposes 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.
/s/ MOHLER, NIXON & WILLIAMS
------------------------------
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 20, 1998
Page 6 of 17
<PAGE> 7
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 20, 1998, 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, 1997.
/s/ MOHLER, NIXON & WILLIAMS
------------------------------
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 20, 1998
Page 7 of 17
<PAGE> 8
THE GYMBOREE CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
December 31,
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Investments, at contract value $ 184,530 $ 166,070
Investments, at fair value 3,201,278 2,453,877
----------- -----------
Assets held for investment purposes 3,385,808 2,619,947
Receivables 38,114
----------- -----------
Total assets 3,385,808 2,658,061
Payables (49,119)
----------- -----------
Net assets available for plan benefits $ 3,385,808 $ 2,608,942
=========== ===========
</TABLE>
See independent accountants' report and accompanying
notes to financial statements.
Page 8 of 17
<PAGE> 9
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, 1997 and 1996
<TABLE>
<CAPTION>
Merrill Lynch
---------------------------------------------------------------------------------
Retirement The CMA
Global Preservation Gymboree Money
Capital Growth Allocation Trust Stock Market
Fund Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
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 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
----------- ----------- ----------- ----------- ----------- -----------
Employer's contribution 20,629 75,793 34,129 9,746 10,451
Participants' contributions/rollovers 122,197 440,149 203,527 92,546 66,146
Withdrawals/distributions (56,955) (302,033) (175,159) (58,383) (61,254)
Dividends and interest 35,527 125,237 88,166 10,256 94
Net appreciation (depreciation)
in fair value of investments 39,410 108,116 (22,705) 26,624
Net loan activities 4,702 (27,082) (367) (17,611) 245
Transfers in (out) (22,890) 5,276 (714) (18,094) 1,022 24,395
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets 142,620 425,456 126,877 18,460 43,328 24,395
----------- ----------- ----------- ----------- ----------- -----------
Net assets available for plan
benefits at December 31, 1997 $ 480,478 $ 1,620,852 $ 725,417 $ 184,530 $ 193,076 $ 84,095
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Participant
Loans Receivables Payables Total
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
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 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
----------- ----------- ----------- -----------
Employer's contribution 150,748
Participants' contributions/rollovers 924,565
Withdrawals/distributions (63,711) (717,495)
Dividends and interest 8,323 267,603
Net appreciation (depreciation)
in fair value of investments 151,445
Net loan activities 40,113 --
Transfers in (out) (38,114) 49,119 --
----------- ----------- ----------- -----------
Increase (decrease) in net assets (15,275) (38,114) 49,119 776,866
----------- ----------- ----------- -----------
Net assets available for plan
benefits at December 31, 1997 $ 97,360 $ -- $ -- $ 3,385,808
=========== =========== =========== ===========
</TABLE>
See independent accountants' report and
accompanying notes to financial statements.
Page 9 of 17
<PAGE> 10
THE GYMBOREE CORPORATION
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
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
manage the operation and administration of the Plan. A third-party administrator
processes and maintains the records of participant data. The Company has
contracted with 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.
Page 10 of 17
<PAGE> 11
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 6.52% and 6.40% for the year ended December 31, 1997 and 1996 and is
valued at contract value (purchase price plus interest) as of the last day of
the Plan year.
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 been amended since receiving its latest favorable
determination letter dated June 5, 1995. However, the Company intends that the
Plan continue to qualify under the applicable requirements of the Internal
Revenue Code and related state statutes, and be 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.
RISKS AND UNCERTAINTIES -
The Plan provides for various investment options in any combination of
four different Merrill Lynch mutual funds as well as The 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.
Page 11 of 17
<PAGE> 12
NOTE 2 - PARTICIPATION AND BENEFITS:
EMPLOYEE CONTRIBUTIONS -
Participants may elect to have the Company contribute a percentage, 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 discretionary matching contributions as
defined in the Plan and as approved by the Board of Directors. In 1997 and 1996,
the Company matched 50% of each eligible participant's contribution up to a
maximum of $500.
PARTICIPANT ACCOUNTS -
Each participant's account is credited with the participant's
contribution, Plan earnings and an allocation of the Company's contribution.
Allocation of Company contributions is 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.
The Plan allows for automatic lump sum distribution of participant account
balances that do not exceed $3,500.
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 Committee establishes the specific
terms and conditions of such loans.
Page 12 of 17
<PAGE> 13
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 presents the contract or fair values of investments
and investment funds that represent 5% or more of the Plan's net assets at
December 31:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Merrill Lynch:
Capital Fund $ 480,478 $ 337,858
Growth Fund 1,620,852 1,195,396
Global Allocation Fund 725,417 598,540
Retirement Preservation Trust Fund 184,530 166,070
The Gymboree Stock Fund 193,076 149,748
CMA Money Market Fund 84,095 59,700
Participant Loans 97,360 112,635
---------- ----------
Total investments at
contract or fair value $3,385,808 $2,619,947
========== ==========
</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, 1997 and 1996 was as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Number of shares 7,053 6,049
Cost $191,372 $179,595
Fair value $193,076 $149,748
</TABLE>
NOTE 6 - SUBSEQUENT EVENT:
The Company changed designated Van Kampen American Capital (Van Kampen)
successor trustee and record keeper of the Plan effective January 1, 1998. In
conjunction with the change, the Plan replaced Merrill Lynch mutual funds with
mutual funds offered by Van Kampen.
Page 13 of 17
<PAGE> 14
THE GYMBOREE CORPORATION
EMPLOYEE RETIREMENT SAVINGS PLAN
SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1997
Page 14 of 17
<PAGE> 15
THE GYMBOREE CORPORATION
EMPLOYEE RETIREMENT SAVINGS PLAN
E.I.N.: 94-2615258
Plan #: 001
ITEM 27a, PART I - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
<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 $ 431,978 $ 480,478
Merrill Lynch Growth Fund Mutual Fund 1,407,475 1,620,852
Merrill Lynch Global Allocation Fund Mutual Fund 734,530 725,417
Merrill Lynch Retirement Preservation Trust Money Market Fund 184,530 184,530
* The Gymboree Stock Fund Employer Securities 191,372 193,076
Merrill Lynch CMA Money Market Fund Money Market Fund 84,095 84,095
* Participant Loans (3.81% - 9.5%) 97,360
-----------
Total assets held for investment purposes $ 3,385,808
===========
</TABLE>
* Parties-in-interest
Page 15 of 17
<PAGE> 16
THE GYMBOREE CORPORATION
EMPLOYEE RETIREMENT SAVINGS PLAN
E.I.N.: 95-2550381
Plan #: 001
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended December 31, 1997
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
Description of asset Expense
(including interest rate incurred
and maturity in case Purchase Selling Lease with
Identity of party involved of a loan) price price rental transaction
- ----------------------------------- ------------------------ --------- --------- ------ -----------
<S> <C> <C> <C> <C> <C>
Merrill Lynch Trust Company:
Capital Fund Mutual Fund $ 198,464
Capital Fund Mutual Fund $ 93,552
Growth Fund Mutual Fund 698,526
Growth Fund Mutual Fund 375,128
Global Allocation Fund Mutual Fund 359,340
Global Allocation Fund Mutual Fund 210,376
Retirement Preservation Trust Mutual Fund 121,539
Retirement Preservation Trust Mutual Fund 102,826
CMA Money Market Fund Money Market Fund 2,232,839
CMA Money Market Fund Money Market Fund 2,199,513
</TABLE>
<TABLE>
<CAPTION>
(a) (b) (g) (h) (i)
Description of asset Current value
(including interest rate of asset on
and maturity in case Cost of transaction Net gain
Identity of party involved of a loan) asset date or (loss)
- ----------------------------------- ------------------------ ------- ------------- ---------
<S> <C> <C> <C> <C>
Merrill Lynch Trust Company:
Capital Fund Mutual Fund $ 198,464 $ 198,464 $ -
Capital Fund Mutual Fund 85,157 93,552 8,395
Growth Fund Mutual Fund 698,526 698,526 -
Growth Fund Mutual Fund 300,190 375,128 74,938
Global Allocation Fund Mutual Fund 359,340 359,340 -
Global Allocation Fund Mutual Fund 191,654 210,376 18,722
Retirement Preservation Trust Mutual Fund 121,539 121,539 -
Retirement Preservation Trust Mutual Fund 102,826 102,826 -
CMA Money Market Fund Money Market Fund 2,232,839 2,232,839 -
CMA Money Market Fund Money Market Fund 2,199,513 2,199,513 -
</TABLE>
Page 16 of 17
<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 Retirement Savings Plan of our report dated
June 20, 1998, 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, 1997.
/s/ MOHLER, NIXON & WILLIAMS
----------------------------
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 20, 1998
