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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
For the fiscal year ended December 31, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION (SLD) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
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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.
THE GYMBOREE CORPORATION
Date: June 26, 2000 By /s/ L.H. Meyer
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L.H. Meyer
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GYMBOREE
401(k) PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
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GYMBOREE
401(k) PLAN
Financial Statements
Years ended December 31, 1999 and 1998
TABLE OF CONTENTS
Independent Accountants' Report................................................4
Financial Statements:
Statements of Net Assets Available for Benefits................................5
Statements of Changes in Net Assets Available for Benefits.....................6
Notes to Financial Statements..................................................7
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To the Participants and
Plan Administrator of the
Gymboree
401(k) Plan
INDEPENDENT ACCOUNTANTS' REPORT
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We have audited the financial statements of the Gymboree 401(k)
Plan (the Plan) as of December 31, 1999 and 1998, 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 benefits
of the Plan as of December 31, 1999 and 1998, and the changes in net assets
available for benefits for the years then ended, in conformity with generally
accepted accounting principles.
By /s/ MOHLER, NIXON & WILLIAMS
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MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 9, 2000
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GYMBOREE
401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
--------------------------
1999 1998
<S> <C> <C>
Investments, at fair value $6,957,355 $4,319,889
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Assets held for investment purposes 6,957,355 4,319,889
Contributions receivable 39,011
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Net assets available for benefits $6,996,366 $4,319,889
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</TABLE>
See independent accountants' report and accompanying
notes to financial statements.
5
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GYMBOREE
401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
For the years ended
December 31,
---------------------------
1999 1998
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<S> <C> <C>
Additions to net assets attributed to:
Investment income:
Dividends and interest $ 293,435 $ 170,509
Net realized and unrealized appreciation in
fair value of investments 1,532,942 287,449
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1,826,377 457,958
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Contributions:
Participants' 1,254,911 1,205,026
Employer's 214,702 170,297
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1,469,613 1,375,323
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Total additions 3,295,990 1,833,281
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Deductions from net assets attributed to:
Benefits paid to participants 619,513 897,096
Administrative expenses 2,104
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Total deductions 619,513 899,200
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Net increase 2,676,477 934,081
Net assets available for benefits:
Beginning of year 4,319,889 3,385,808
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End of year $6,996,366 $4,319,889
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</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, 1999 and 1998
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 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 of 1974 (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 (Van Kampen) as custodian and
third-party administrator. Substantially all expenses incurred for administering
the Plan are paid by the Company.
BASIS OF ACCOUNTING -
The financial statements of the Plan are prepared on the accrual
method of accounting. Participant and Company matching contributions are
recorded in the period during which the Company withholds payroll deductions
from participant's earnings. Benefits are recorded when paid.
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INVESTMENTS -
Plan assets are invested in mutual funds and Gymboree Corporation
common stock, The Gymboree Stock Fund, based solely on instructions received
from participants. From January 1, 1998 to November 30, 1998, Van Kampen was
custodian of Plan assets and investments included seven mutual 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.
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. Participant loans are valued at cost which approximates
fair value.
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 that the trust, which forms a part of the
Plan, is exempt from federal income and state franchise taxes.
RECLASSIFICATIONS -
Certain reclassifications were made in the 1998 financial
statements to conform with the 1999 presentation.
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 benefits and the statements of changes in net assets
available for benefits.
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NEW ACCOUNTING PRONOUNCEMENT -
In September 1999, the Accounting Standards Executive Committee
of the American Institute of Certified Public Accountants issued Statement of
Position (SOP) 99-3, "Accounting for and Reporting of Certain Defined
Contribution Benefit Plan Investments and Other Disclosure Matters." This SOP
eliminates the previous requirement for a defined contribution plan to disclose
participant-directed investment programs by fund. The Plan has adopted SOP 99-3
in its financial statements for the years ended December 31, 1999 and 1998.
NOTE 2 - RELATED PARTY TRANSACTIONS:
Certain Plan investments in mutual funds are managed by Putnam.
These transactions qualify as party-in-interest. Any purchases and sales of
these funds are open market transactions at fair market value. Such
transactions, although considered party-in-interest transactions under ERISA
Regulations, are permitted under the provisions of the Plan and are exempt from
the prohibition of party-in-interest transactions under ERISA and its applicable
exemptions.
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 was as follows at December 31:
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
Number of shares 15,764 11,045
Cost $258,016 $224,931
Fair value $ 88,675 $ 70,421
</TABLE>
NOTE 3 - 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 1999 and 1998, 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. Outstanding loans at December 31,
1999 carry interest rates which range from 9.0% to 9.5%.
VESTING -
Participants are immediately vested in their entire account
balance.
NOTE 4 - 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 5 - INVESTMENTS:
The following table includes the fair values of investments and
investment funds that represent 5% or more of the Plan's net assets at December
31:
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
Putnam:
The George Putnam Fund of Boston $ 142,007 $ 5,565
Investors Fund 2,488,732 1,695,818
Voyager Fund 1,179,192 525,715
Diversified Income Fund 143,899 65,858
New Opportunities Fund 958,282 501,975
International Growth Fund 1,154,576 699,949
Stable Value Fund 615,720 571,253
The Gymboree Stock Fund 88,675 70,421
Participant Loans 186,272 183,335
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Total investments at
fair value $6,957,355 $4,319,889
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</TABLE>
The Plans investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated) in
value as follows:
<TABLE>
<CAPTION>
Years ended December 31,
1999 1998
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<S> <C> <C>
Mutual funds $ 1,548,706 $ 456,285
The Gymboree Stock Fund (15,764) (168,836)
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$ 1,532,942 $ 287,449
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</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
23.1 Consent of Independent Accountants
</TABLE>
