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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
(X) Annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934
Commission file number: 0-21250
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Gymboree 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Gymboree Corporation
700 Airport Boulevard
Suite 200
Burlingame, CA 94010-1912
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the administrator has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
GYMBOREE
401(k) PLAN
Date: August 18, 1999 By /s/ L. H. Meyer
---------------------------
L. H. Meyer
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GYMBOREE
401(k) PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
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GYMBOREE
401(k) PLAN
Financial Statements and
Supplemental Schedules
Years ended December 31, 1998 and 1997
TABLE OF CONTENTS
<TABLE>
<S> <C>
Independent Accountants' Report......................................4-5
Consent of Independent Accountants.....................................6
Financial Statements:
Statements of Net Assets Available for Plan Benefits...................7
Statement of Changes in Net Assets Available for Plan Benefits,
With Fund Information for the Year Ended December 31, 1998.............8
Statement of Changes in Net Assets Available for Plan Benefits,
With Fund Information for the Year Ended December 31, 1997.............9
Notes to Financial Statements.........................................10
Consent of Independent Accountants....................................15
</TABLE>
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To the Participants and
Plan Administrator of
Gymboree
401(k) Plan
INDEPENDENT ACCOUNTANTS' REPORT
We have audited the financial statements and supplemental schedules of
Gymboree 401(k) Plan (the Plan) as of December 31, 1998 and 1997, and for the
years then ended, as listed in the accompanying table of contents. These
financial statements and supplemental schedules 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.
The supplemental information included in Schedule G - Financial Schedules
does not disclose 5% reportable transactions. Disclosure of this information is
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
included in Schedule G - Financial Schedules (IRS Form 5500) is presented for
the purpose of additional analysis and is not a required part of the basic
financial statements but is 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 supplemental information in Schedule
G 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
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assets available for plan benefits for each fund. The supplemental information
in Schedule G and fund information have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion except for the omission of the information discussed in the preceding
paragraph, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
August 18, 1999
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CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use of our name on our report, dated August 18, 1999,
with respect to the financial statements of the Gymboree 401(k) Plan for the
years ended December 31, 1998 and 1997, 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
August 18, 1999
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GYMBOREE
401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
December 31,
---------------------------
1998 1997
---------- ----------
<S> <C> <C>
Investments, at fair value $4,319,889 $3,201,278
Investments, at contract value 184,530
---------- ----------
Net assets available for plan benefits $4,319,889 $3,385,808
========== ==========
</TABLE>
See independent accountants' report and
accompanying notes to financial statements.
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GYMBOREE
401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
<TABLE>
<CAPTION>
For the year ended December 31, 1998
------------------------------------
Net assets available Participants' Withdrawals Dividends
for plan benefits at Employer's contributions/ and and
December 31, 1997 contribution rollovers distributions interest
-------------------- ------------ -------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Merrill Lynch Funds $3,095,372
Van Kampen:
Enterprise Fund -- $ 22,244 $ 154,401 ($446,495) $ 12,286
Emerging Growth Fund -- 36,619 242,364 (41,495)
Corporate Bond Fund -- 8,683 60,690 (15,267) 1,623
Stable Value Fund -- 46,545 372,155 (49,602) 15,741
American Value Fund -- 20,472 139,034 (28,552)
International Magnum Fund -- 10,564 64,967 (175,107)
Value Fund -- 14,957 82,694 (116,064) 4,249
Putnam:
The George Putnam Fund of Boston -- 246 5,263
Investors Fund -- 1,007 14,114 (190) 42,136
Voyager Fund -- 718 10,088 34,495
Diversified Income Fund -- 238 3,314 (11) 388
New Opportunities Fund -- 449 8,237 (108) 15,267
International Growth Fund -- 86 5,028 (77) 20,009
Stable Value Fund -- 1,430 11,000 (18) 19
The Gymboree Stock Fund 193,076 6,039 31,677 (11,936) 20,070
Participant loans 97,360 (12,174) 4,226
---------- --------- ---------- --------- --------
Total $3,385,808 $ 170,297 $1,205,026 ($897,096) $170,509
========== ========= ========== ========= ========
<CAPTION>
For the year ended December 31, 1998
------------------------------------
Net appreciation
(depreciation) Increase Net assets available
in fair value of Net loan Administrative Transfers (decrease) in for plan benefits at
investments activities fees in (out) net assets December 31, 1998
--------------- ---------- -------------- -------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Merrill Lynch Funds ($3,095,372) ($3,095,372) $ --
Van Kampen:
Enterprise Fund $ 204,075 ($19,033) ($405) 72,927 --
Emerging Growth Fund 13,390 (2,963) (1,201) (246,714) --
Corporate Bond Fund 612 (3,406) (52,935) --
Stable Value Fund 2,758 (61,787) (325,810) --
American Value Fund 178 1,047 (384) (131,795) --
International Magnum Fund 47,744 (7,346) (99) 59,277 --
Value Fund (1,329) (1,743) (15) 17,251 --
Putnam:
The George Putnam Fund of Boston 56 5,565 5,565
Investors Fund 107,724 1,531,027 1,695,818 1,695,818
Voyager Fund 15,393 465,021 525,715 525,715
Diversified Income Fund (694) 62,623 65,858 65,858
New Opportunities Fund 39,751 438,379 501,975 501,975
International Growth Fund 23,829 651,074 699,949 699,949
Stable Value Fund 2,798 556,024 571,253 571,253
The Gymboree Stock Fund (168,836) 1,308 (977) (122,655) 70,421
Participant loans 93,923 85,975 183,335
--------- -------- -------- ----------- ----------- ----------
Total $ 287,449 $ -- ($2,104) $ - $ 934,081 $4,319,889
========= ======== ======== =========== =========== ==========
</TABLE>
See independent accountants' report and
accompanying notes to financial statements
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GYMBOREE
401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
<TABLE>
<CAPTION>
For the year ended December 31, 1997
---------------------------------------------
Net assets available Participants' Withdrawals Dividends
for plan benefits at Employer's contributions/ and and
December 31, 1996 contribution rollovers distributions interest
-------------------- ------------ -------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Merrill Lynch:
Capital Fund $337,858 $20,629 $122,197 ($56,955) $35,527
Growth Fund 1,195,396 75,793 440,149 (302,033) 125,237
Global Allocation Fund 598,540 34,129 203,527 (175,159) 88,166
Retirement Preservation
Trust Fund 166,070 9,746 92,546 (58,383) 10,256
CMA Money Fund 59,700
The Gymboree Stock Fund 149,748 10,451 66,146 (61,254) 94
Participant loans 112,635 (63,711) 8,323
Receivables 38,114
Payables (49,119)
---------- -------- -------- --------- --------
Total $2,608,942 $150,748 $924,565 ($717,495) $267,603
========== ======== ======== ========= ========
<CAPTION>
For the year ended December 31, 1997
------------------------------------
Net appreciation
(depreciation) Increase Net assets available
in fair value of Net loan Transfers (decrease) in for plan benefits at
investments activities in (out) net assets December 31, 1997
--------------- ---------- -------------- ------------- ---------------------
<S> <C> <C> <C> <C> <C>
Merrill Lynch:
Capital Fund $39,410 $ 4,702 ($22,890) $142,620 $ 480,478
Growth Fund 108,116 (27,082) 5,276 425,456 1,620,852
Global Allocation Fund (22,705) (367) (714) 126,877 725,417
Retirement Preservation
Trust Fund (17,611) (18,094) 18,460 184,530
CMA Money Fund 24,395 24,395 84,095
The Gymboree Stock Fund 26,624 245 1,022 43,328 193,076
Participant loans 40,113 (15,275) 97,360
Receivables (38,114) (38,114) --
Payables 49,119 49,119 --
-------- -------- -------- -------- ----------
Total $151,445 $ -- $ -- $776,866 $3,385,808
======== ======== ======== ======== ==========
</TABLE>
See independent accountants' report and
accompanying notes to financial statements.
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GYMBOREE
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 1 - THE PLAN AND ITS SIGNIFICANT ACCOUNTING POLICIES:
The following description of the Gymboree 401(k) Plan (the Plan) provides
only general information. Participants should refer to the Plan document for a
more complete description of the Plan's provisions.
The Plan is a defined contribution plan that was established in 1992 by the
The Gymboree Corporation (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. Effective December 1,
1998, the Company amended and restated the Plan and Trust Agreement designating
Putnam Fiduciary Trust Company (Putnam) successor trustee of the Plan.
The Plan administrator believes that the Plan is currently designed and
operated in compliance with the applicable requirements of the Internal Revenue
Code and the provisions of the Employee Retirement Income Security Act (ERISA).
ADMINISTRATION -
The Company has appointed an Administrative Committee (the Committee) to
manage the operation and administration of the Plan. Concurrent with the
appointment of Putnam as successor trustee, the Committee designated Putnam to
replace Van Kampen American Capital as custodian and third-party administrator.
Substantially all expenses incurred for administering the Plan are paid by the
Company.
INVESTMENTS -
Plan assets are invested in mutual funds and Gymboree Corporation common
stock, The Gymboree Stock Fund, based solely on instructions received from
participants. For the year ended December 31, 1997, Merrill Lynch Pierce Fenner
and Smith (Merrill Lynch) was custodian of Plan assets and Plan investments
included five mutual funds sponsored by Merrill Lynch. Effective January 1,
1998, Plan assets were transferred to the custody of Van Kampen American Capital
(Van Kampen) and Merrill Lynch investment funds were replaced with seven new
funds sponsored by Van Kampen. In conjunction with the appointment of Putnam as
successor trustee of the Plan on December 1, 1998, Van Kampen funds were
replaced with seven new funds sponsored by Putnam.
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Plan investments in mutual funds as well as The Gymboree Stock Fund are
valued at fair value as of the last day of the Plan year, as measured by quoted
market prices.
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 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 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, and
changes therein, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
RISKS AND UNCERTAINTIES -
The Plan provides for various investment options in any combination from
among seven different Putnam mutual funds as well as The Gymboree Stock Fund.
Investment securities are exposed to various risks, such as interest rate,
market fluctuations and credit risks. 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 statements of net assets available for plan
benefits and the statements of changes in net assets available for plan
benefits.
NOTE 2 - PARTICIPATION AND BENEFITS:
PARTICIPANT CONTRIBUTIONS -
Participants may elect to have the Company contribute a percentage, from 1%
to 20%, of their eligible 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.
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Participants are also allowed to make rollover contributions of amounts
received from other tax-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 1998 and 1997,
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 or losses and an allocation of the Company's contribution.
Allocation of the Company's contribution 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 $5,000.
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.
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.
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NOTE 4 - INVESTMENTS:
The following table includes 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>
1998 1997
---------- ----------
<S> <C> <C>
Putnam:
The George Putnam Fund of Boston $ 5,565
Investors Fund 1,695,818
Voyager Fund 525,715
Diversified Income Fund 65,858
New Opportunities Fund 501,975
International Growth Fund 699,949
Stable Value Fund 571,253
Merrill Lynch:
Capital Fund $ 480,478
Growth Fund 1,620,852
Global Allocation Fund 725,417
Retirement Preservation Trust Fund 184,530
CMA Money Market Fund 84,095
The Gymboree Stock Fund 70,421 193,076
Participant loans 183,335 97,360
---------- ----------
Total investments at
contract or fair value $4,319,889 $3,385,808
========== ==========
</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, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Number of shares 11,045 7,053
Cost $224,931 $191,372
Fair value $ 70,421 $193,076
</TABLE>
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NOTE 6 - YEAR 2000 COMPLIANCE (UNAUDITED):
The Plan, as with most users of computer software, was required to modify
significant portions of its internally used software to enable it to function
properly in the year 2000. In addition, the Plan must also insure that its
service providers are in compliance with the year 2000 issue. Since the Plan
uses mainly third-party software and service providers, it does not anticipate a
problem in resolving the year 2000 issue in a timely manner.
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EXHIBIT 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Gymboree 401(k) Plan of our report dated August 18,
1999, with respect to the financial statements and schedules of the Gymboree
401(k) Plan included in this Annual Report (Form 11-K) for the year ended
December 31, 1998.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
August 18, 1999
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