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As filed with the Securities and Exchange Commission on January 10, 2001
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE GYMBOREE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 94-2615258
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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THE GYMBOREE CORPORATION
700 AIRPORT BOULEVARD
BURLINGAME, CALIFORNIA 94010-1912
(650) 579-0600
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
LAWRENCE H. MEYER
CHIEF FINANCIAL OFFICER
THE GYMBOREE CORPORATION
700 AIRPORT BOULEVARD
BURLINGAME, CALIFORNIA 94010-1912
(650) 579-0600
(NAME, ADDRESS, AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
---------------
Copies to:
JEFFREY D. SAPER, ESQ.
SELIM DAY, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
(650) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is to register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
========================================= ========================= ====================== ====================== ==================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO TO BE PRICE OFFERING FILING
BE REGISTERED REGISTERED PER SHARE (1) PRICE FEE
----------------------------------------- ------------------------- ---------------------- ---------------------- ------------------
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Common stock, par value $0.001 per
share................................. 3,198,670 shares $ 13.28125 $42,482,336 $ 10,621
========================================= ========================= ====================== ====================== ==================
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(1) The price of $13.28125 per share, which was the average of the high and low
prices of the Registrant's common stock on the Nasdaq National Market on
January 4, 2001, is set forth solely for the purposes of calculating the
registration fee in accordance with Rule 457(c) of the Securities Act.
---------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until the Registration Statement shall become effective on
such date as the Commission acting pursuant to said Section 8(a) may determine.
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<PAGE> 2
PROSPECTUS
(SUBJECT TO COMPLETION, DATED JANUARY 10, 2001)
3,198,670 SHARES
[GYMBOREE LOGO]
THE GYMBOREE CORPORATION
COMMON STOCK
This prospectus relates to the public offering, which is not being
underwritten, of up to 3,198,670 shares of our common stock that are held by
some of our current stockholders.
The prices at which such stockholders may sell the shares will be
determined by the prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
shares.
Our common stock is listed on the Nasdaq National Market under the symbol
"GYMB." On January 4, 2001, the average of the high and low price for our common
stock was $13.28 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 2.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES
REGULATORS HAVE NOT APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is January __, 2001.
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No person has been authorized to give any information or to make any
representations other than those contained in this prospectus (as it may be
amended or supplemented) in connection with the offering made hereby, and if
given or made, such information or representations must not be relied upon as
having been authorized by The Gymboree Corporation (referred to in this
prospectus as "Gymboree," "we" and the "Company"), any selling stockholder or by
any other person. Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that
information herein is correct as of any time subsequent to the date hereof. This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any security other than the securities covered by this prospectus, nor does
it constitute an offer to or solicitation of any person in any jurisdiction in
which such offer or solicitation may not lawfully be made.
THE GYMBOREE CORPORATION
The Gymboree Corporation is a leading specialty retailer of high-quality
apparel and accessories for children. Gymboree operates an international chain
of stores, primarily in regional shopping malls, and in suburban and urban
locations.
As of December 30, 2000, Gymboree operated 602 stores, including 531
Gymboree stores and 19 Zutopia stores in the United States, 20 Gymboree stores
in Canada and 32 Gymboree stores in Europe, as well as an online store at
www.gymboree.com. Under the GYMBOREE(RM) brand name, we design and contract
manufacture children's active-wear for sale exclusively by Gymboree stores. Our
apparel is characterized by child-appropriate, fashionable colors and prints,
complex embellishment, comfort, functionality and durability. Gymboree stores
offer high-quality apparel and accessories for children ages newborn to seven
years. Zutopia stores offer high-quality apparel and accessories for girls ages
seven to 14 years. The Gymboree Corporation also offers directed parent-child
developmental play programs for children ages newborn to four years old at more
than 430 franchised and corporate-operated centers in the United States and 15
other countries.
On January 4, 2001, Gymboree announced that it had agreed in principle to
sell its Zutopia store chain to The Wet Seal, Inc. The closing of the
transaction, which is expected to close on or about April 7, 2001, is subject to
the execution of a definitive agreement and certain conditions being met. During
its fourth quarter of fiscal year 2000, Gymboree expects to take a before-tax
charge of approximately $6.5 million (approximately $4 million of which is
non-cash), reflecting the loss on the sale of the Zutopia assets and accrual for
Zutopia operating losses which are anticipated prior to the sale date.
Gymboree was organized in October 1979 as a California corporation and
re-incorporated in Delaware in June 1992. Our principal executive offices are
located at 700 Airport Boulevard, Burlingame, California 94010-1912, telephone
number (650) 579-0600.
RISK FACTORS
An investment in the shares of our common stock offered by this prospectus
involves a high degree of risk. You should carefully consider the risks
described below and the other information in this prospectus before deciding to
invest in our common stock.
WE HAVE EXPERIENCED NET LOSSES IN RECENT PERIODS AND, IF SUCH LOSSES CONTINUE IN
THE FUTURE, WE MAY NEED TO OBTAIN ADDITIONAL CAPITAL TO CONTINUE OUR OPERATIONS.
We incurred net losses of $10.6 million in our fiscal year 1999 and, to
date, we have continued to incur net losses in each of our quarters in fiscal
year 2000. Our losses for the quarters ended October 28,
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2000, July 29, 2000 and April 29, 2000 were $4.8 million, $17.1 million and
$13.8 million, respectively. There can be no assurance that losses will not
continue in the future. If losses do continue to occur, we will likely need to
obtain additional capital to continue our operations.
WE MUST MAINTAIN A MINIMUM COLLATERAL BASE TO SECURE OUR EXISTING CREDIT
FACILITY, WHICH IS NECESSARY FOR CASH BORROWINGS AND LETTERS OF CREDIT.
The amount of our credit facility for cash borrowings and letters of credit
needed for the purchase of new inventory is limited to our available collateral.
Our existing credit facility fluctuates relative to our collateral base, which
includes our inventory, cash and other assets. This collateral base varies in
value as a result of sales, merchandise purchases and profitability. Lack of
short-term liquidity due to reaching the limit of our collateral base could
force us into seeking alternative financing or court protection from our
creditors.
WE MAY NEED ADDITIONAL CAPITAL TO PURSUE OUR FUTURE BUSINESS PLANS.
Our growth strategies may require additional capital, should our operations
generate insufficient cash flow to expand our business. For example, we may need
additional capital to rebuild our customer base, to broaden existing product
lines and to introduce new products and concepts. To pursue this prospective
business plan, we will need to fund operations, invest in capital projects and
increase inventory levels. There can be no assurance that either internally
generated cash will be available, or that debt or equity will be available to
Gymboree on terms that are satisfactory. In addition, under the terms of our
existing credit facility, we will likely need the consent of our bank lenders
before incurring additional indebtedness, and there can be no guarantee that our
lenders will permit us to incur new debt on terms that we otherwise find
satisfactory. Also, to the extent that we raise additional capital by issuing
equity, a dilutive effect on existing stockholders will likely result.
WE MAY NOT BE ABLE TO OPERATE SUCCESSFULLY IF WE LOSE KEY PERSONNEL, ARE UNABLE
TO HIRE QUALIFIED ADDITIONAL PERSONNEL, OR EXPERIENCE TURNOVER OF OUR MANAGEMENT
TEAM.
The 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 key personnel in the future. Also, because customer service is a
defining feature of the Gymboree corporate culture, we must be able to hire and
train qualified sales associates to succeed. The loss of certain key employees,
Gymboree's inability to attract and retain other qualified key employees or a
labor shortage that reduces the pool of qualified sales associates could have a
material adverse effect on our growth, our operations and our financial
position. Furthermore, we have experienced significant turnover of our
management team in recent years, and several members of our key management team
have only recently joined us or have been promoted to executive positions for
the first time. For example, our current president represents our fourth
president in the last four years, and our current chief executive officer was
appointed in February 2000. In addition to performing their regular duties, our
new managers must spend a significant amount of time devising strategies to
execute our business model. If they are unable to effectively integrate
themselves into our business, to work together as a management team or to master
their new roles in a timely manner, our business will suffer.
OUR BUSINESS IS SENSITIVE TO ECONOMIC CONDITIONS THAT DECREASE CONSUMER
SPENDING.
Gymboree's financial performance is sensitive to changes in overall
economic conditions that impact consumer spending, particularly discretionary
spending. Future economic conditions affecting disposable consumer income such
as employment levels, business conditions, interest rates and tax rates could
reduce
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consumer spending or cause consumers to shift their spending to other products.
A general reduction in the level of discretionary spending or shifts in consumer
discretionary spending to other products could adversely affect our growth, net
sales and profitability.
WE EXPERIENCE SEASONAL QUARTERLY FLUCTUATIONS IN OUR SALES AND RESULTS.
Gymboree has historically experienced, and expects to continue to
experience, seasonal fluctuations in our retail sales and net income. Our net
sales and net income are generally weakest during the first two fiscal quarters
(particularly the second quarter) and strongest during the third and fourth
quarters. Any failure by us to meet our business plans for, in particular, the
third and fourth quarter of any fiscal year would have a material adverse effect
on our earnings, which in all likelihood would not be offset by satisfactory
results achieved in other quarters of the same fiscal year. Also, any failure by
us to meet our anticipated sales volume could result in our holding excess
inventory, which may prompt us to offer our products at reduced prices and
reduce our profitability.
WE HAVE REINSTATED OUR HISTORICAL MERCHANDISING STRATEGY AND CANNOT GUARANTEE
ITS SUCCESS.
During 1999, in an attempt to expand the customer base by changing our
merchandise focus, we embarked on a re-merchandising strategy. Because the
results of the re-merchandising strategy fell well below our expectations, in
February 2000 we reinstated our historical strategies and integrated any
benefits that flowed from the re-merchandising, including a new trademark,
remodeled store interiors and updated fashions. We cannot assure you that our
revised approach will regain our core customers and re-establish our core
businesses.
BECAUSE WE PURCHASE AND SELL OUR PRODUCTS INTERNATIONALLY, OUR BUSINESS IS
SENSITIVE TO FOREIGN RISKS ASSOCIATED WITH INTERNATIONAL BUSINESS.
Gymboree's products are currently manufactured to specifications by
independent factories located primarily in Asia, as well as the Middle East,
Central America, South America, Mexico and the United States. In addition to
Gymboree's reliance on foreign manufacturers, Gymboree has operations in Europe
and Canada. As a result, our business is subject to the risks generally
associated with doing business abroad, such as foreign governmental regulations,
foreign consumer preferences, currency fluctuations, natural disasters, social
or political unrest, disruptions or delays in shipments or customs clearance,
local business practices and changes in economic conditions in countries in
which our suppliers or stores are located. Gymboree cannot predict the effect of
such factors on our business relationships with foreign suppliers or on our
ability to sell our products in international markets. 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, there could be a material and
adverse effect on Gymboree's results of operations and financial position.
WE WILL NOT BE ABLE TO MAINTAIN SUFFICIENT INVENTORY LEVELS IF OUR INDEPENDENT
MANUFACTURERS FAIL TO PROVIDE THE REQUIRED PRODUCTION CAPACITY.
Gymboree currently relies on unaffiliated manufacturers to produce
substantially all of our products, with whom we have no long-term contracts and
from whom we typically purchase goods on an order-by-order basis. Many of our
unaffiliated manufacturers produce goods for other companies, with which we
compete for production facilities and import quota capacity. If Gymboree
experiences significant increased demand, which cannot be foreseen, or in the
event any of our key manufacturers is unable or unwilling to continue to
manufacture Gymboree's products, Gymboree may not be able to obtain sufficient
capacity from
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our other current manufacturing sources or to identify and qualify new
unaffiliated sources in a timely manner. 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.
SINCE ZUTOPIA REPRESENTS A NEW BUSINESS FOR US, WE CANNOT GUARANTEE THAT WE WILL
BE ABLE TO OPERATE IT PROFITABLY UNTIL ITS SALE TO WET SEAL IS CONSUMMATED OR IF
THE SALE TO WET SEAL IS NOT CONSUMMATED.
Although we have agreed in principle to sell our Zutopia store chain to The
Wet Seal, Inc., the closing of the transaction is subject to the execution of a
definitive agreement and certain conditions being met, including obtaining
landlord agreement to transfer the existing Zutopia store leases to Wet Seal and
reaching an agreement on the valuation of goods on hand. Given those closing
conditions, the sale of the Zutopia stores to Wet Seal may not be consummated.
If that sale is not consummated, and until such time as the sale is consummated,
because Zutopia represents a new business for us, we cannot assure you that we
will be able to operate it profitably.
During 1999, Gymboree opened 19 stores under our new Zutopia product line,
which offers clothing for girls between the ages of seven and 14. We have not
opened any Zutopia stores in 2000, and if we cannot sell our Zutopia stores, we
will likely review the performance of the Zutopia stores in the near future and
decide to expand the number of stores, to close some or all of them, or to seek
another buyer for those stores. Zutopia involves risk and uncertainties,
including no operating history, no history of market acceptance, potentially
higher expenses without corresponding revenue increases, negative impact on
earnings, difficulty in obtaining new store sites and adequate sources of
merchandise, competition from other retailers and uncertainties generally
associated with apparel retailing. In addition, Gymboree needs to support the
production, merchandising and promotion of Zutopia. Our limited experience with
marketing apparel to this demographic segment could materially and adversely
affect our ability to successfully develop this product line. If we are unable
to operate Zutopia profitably, our aggregate losses could significantly increase
which, in turn, could harm our business and financial condition.
OUR RESULTS MAY BE IMPAIRED BY CHANGES IN FASHION TRENDS AND 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.
WE CANNOT MAINTAIN AND GROW OUR SALES AND PROFITABILITY WITHOUT THE CONTINUED
DEVELOPMENT OF 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 the future Gymboree may introduce certain new
products and concepts that may 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
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leading supplier of quality children's apparel in the newborn-to-seven age range
and lead to a reduced demand for our existing products.
THE HIGHLY COMPETITIVE BUSINESS IN WHICH WE OPERATE MAY IMPAIR OUR ABILITY TO
MAINTAIN AND GROW OUR SALES AND RESULTS.
The children's apparel segment of the specialty retail business is highly
competitive, and we may not be able to compete successfully in the future.
Gymboree competes on a national level with BabyGap and GapKids (divisions of The
Gap, Inc.), The Children's Place and Talbots Kids and certain leading department
stores as well as certain discount retail chains such as Old Navy (a division of
The Gap, Inc.) and 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. Zutopia (which Gymboree has agreed in principle to
sell to Wet Seal) competes with Limited Too and with the girls' lines of
Abercrombie & Fitch and American Eagle Outfitters. We also compete with
children's retailers that sell their products by mail order or over the
Internet. 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.
OUR BUSINESS IS SENSITIVE TO CHANGES IN SEASONAL CONSUMER SPENDING PATTERNS THAT
ARE BEYOND OUR CONTROL.
Historically, a disproportionate amount of our retail sales and a
significant portion of our net income have been realized during the months of
November and December, during the holiday season. We have also experienced
periods of increased sales activity in the early spring, during the period
leading up to the Easter holiday, and in the early fall, in connection with
back-to-school sales. Changes in seasonal consumer spending patterns for reasons
beyond our control could result in lower-than-expected sales during these
periods. Such a circumstance could cause us to have excess inventory,
necessitating mark-downs to minimize this excess, which would reduce our
profitability. Also, because Gymboree typically spends more in labor costs
during the holiday season, when we hire temporary store employees in
anticipation of holiday spending, a shortfall in expected sales during that
period could result in a disproportionate decrease in our net income.
OUR BUSINESS WILL SUFFER IF OUR INDEPENDENT MANUFACTURERS FAIL TO PRODUCE
APPAREL THAT MEETS OUR QUALITY STANDARDS.
Gymboree has occasionally received, and may in the future continue to
receive, shipments of products from unaffiliated manufacturers that fail to
conform to our quality control standards. We cannot assure you that our
independent manufacturers will continue to produce products that comply with
Gymboree's standards. In such an event, unless we are able to obtain replacement
products in a timely manner, Gymboree may lose revenue and experience related
increased administrative and shipping costs. Also, the failure of any key
unaffiliated manufacturer to supply products that conform to Gymboree's
standards could materially and adversely affect our reputation in the
marketplace.
WE MAY SUFFER NEGATIVE PUBLICITY IF ANY OF OUR PRODUCTS ARE FOUND TO BE UNSAFE.
Gymboree currently tests most toys and similar products sold in our stores.
However, we may end this practice in the foreseeable future, as we anticipate
that a larger portion of the toys and similar products we sell will be products
that we buy from market sources for resale to our customers. If these products
have safety problems of which we are not aware or if the Consumer Product Safety
Commission recalls a product sold in our stores, we may experience not only
negative publicity, which could adversely impact our sales and
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reputation, but also product liability lawsuits, which could have a material
adverse effect on our reputation, business and our financial position.
WE MAY BE SUBJECT TO NEGATIVE PUBLICITY OR BE SUED IF OUR MANUFACTURERS VIOLATE
LABOR LAWS OR ENGAGE IN PRACTICES THAT OUR CUSTOMERS BELIEVE ARE UNETHICAL.
We seek to require our independent manufacturers to operate their
businesses in compliance with the laws and regulations that apply to them. Our
sourcing personnel periodically visit and monitor the operations of our
independent manufacturers, but we cannot control their business and labor
practices. If an independent manufacturer violates labor laws or other
applicable regulations, or if such a manufacturer engages in labor or other
practices that diverge from those typically acceptable in the United States,
Canada or Europe, Gymboree could in turn experience negative publicity or be
sued. Negative publicity regarding the production of our products could
materially adversely affect sales of our products and our business, and a
lawsuit could materially adversely effect our financial position.
For example, Gymboree has been named as a defendant in a lawsuit relating
to sourcing of products from Saipan (Commonwealth of the Northern Mariana
Islands). A complaint was filed on January 13, 1999 in the U.S. District Court,
Central District of California, by various unidentified worker plaintiffs
against Gymboree and approximately 25 other parties. The case was transferred to
the U.S. District Court for the District of Hawaii. That court ordered the case
to be transferred to the U.S. District Court for the District of the Northern
Mariana Islands. The transfer to the District Court in the Northern Mariana
Islands was stayed by the Ninth Circuit Court of Appeals so that it could review
the legal issues involved. The 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 products for us. The
plaintiffs seek injunctive relief as well as actual and punitive damages.
Gymboree has agreed to a settlement with the plaintiffs that would require us to
pay approximately $200,000, but the settlement will not take effect until it is
approved by the court, which cannot take place until the transfer issues are
decided. There can be no assurance that the court that ultimately hears the
motion to approve the settlement will approve it.
THE LOSS OF A KEY VENDOR COULD IMPAIR OUR ABILITY TO OBTAIN A SUFFICIENT
QUANTITY OF FABRIC FOR OUR APPAREL.
In fiscal 1999, one vendor accounted for a majority of our cotton knit
fabric purchases. 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, though we believe that other sources could be identified to satisfy our
requirements for cotton knit fabrics.
OUR BUSINESS MAY BE HARMED BY ADDITIONAL UNITED STATES REGULATION OF FOREIGN
TRADE.
Our business is subject to the risk that the United States may adopt
additional 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. If the U.S. government imposes any such
charges or restrictions, the supply of products could be disrupted and their
cost could substantially increase, either of which could materially adversely
affect our operating results.
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OUR BUSINESS WILL BE IMPAIRED IF WE CANNOT PROTECT OUR TRADEMARKS.
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 to 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 our business. In addition, we could incur
substantial costs in defending 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 products 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 position.
A DISASTER COULD SEVERELY DAMAGE OUR OPERATIONS.
Our operations depend on our ability to maintain and protect our computer
systems, on which we rely to manage our purchase orders, store inventory levels,
accounting functions and other aspects of our business. We have computer systems
located in each of our stores, with the main database server for our systems
located in Burlingame, California, which exists on or near known earthquake
fault zones. A disaster could severely damage our business and results of
operations not only by damaging our stores, but also by damaging our main
server, which could disrupt our business for an indeterminate length of time.
Although the outside facility that hosts our main server is designed to be fault
tolerant, our systems are vulnerable to damage from fire, floods, earthquakes,
power loss, telecommunications failures, and similar events. Although we
maintain insurance against fires, floods, earthquakes and general business
interruptions, there can be no assurance that the amount of coverage will be
adequate in any particular case. We have a disaster recovery plan in effect and
some redundant systems for our service at an alternate site.
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
We have made forward looking statements in this prospectus that are subject
to risks and uncertainties. Forward looking statements include information
concerning possible or assumed future results of operations of Gymboree. Also,
when we use such words as "intends," "believes," "expects," "anticipates,"
"plans" or similar expressions, we are making forward looking statements. You
should note that an investment in our securities involves risks and
uncertainties that could affect future financial results. Our actual results
could differ materially from those anticipated in these forward looking
statements as a result of factors, including those set forth in "Risk Factors"
and elsewhere in this prospectus.
USE OF PROCEEDS
Gymboree will not receive any of the proceeds from the sale of the shares
offered by this prospectus. All proceeds from the sale of the shares offered by
this prospectus will be for the account of the selling stockholders, as
described below.
SELLING STOCKHOLDERS
The following table sets forth as of the date of this prospectus the names
of each of the selling stockholders, their positions (if any) with Gymboree, the
number of shares of common stock that each selling stockholder owns, the number
of shares of common stock owned by each selling stockholder that may be offered
for sale from time to time by this prospectus and the number of shares of common
stock to be held by each selling stockholder assuming the sale of all the common
stock offered hereby.
The selling stockholders are certain stockholders who are entitled to
registration rights. We may amend or supplement this prospectus from time to
time to update the disclosure set forth herein.
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SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING OFFERING
------------------------- ------------------------
NUMBER OF
SHARES BEING
NAME OF SELLING STOCKHOLDER NUMBER PERCENT(1) OFFERED NUMBER PERCENT(1)
------------------------------------------ --------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Asdale Limited(2)......................... 595,808 2.1 505,050 90,758 *
BCIP Associates II(3)..................... 179,276 * 155,892 23,384 *
BCIP Associates II-B(4)................... 94,691 * 82,340 12,351 *
City National Bank as Trustee for HEWM fbo
Julian N. Stern IDA #17003073s159(5)... 58,081 * 50,505 7,576 *
Golden Step Limited(6).................... 287,500 1.0 250,000 37,500 *
Roland Lampert(7)......................... 38,721 * 33,670 5,051 *
Walter F. Loeb(8)......................... 39,921 * 33,670 6,251 *
The Moldaw Variable Fund(9)............... 2,041,027 7.3 1,683,502 357,525 1.3
RCR Associates(10)........................ 154,882 * 134,680 20,202 *
Robert H. Lessin Venture Capital LLC(11).. 193,604 * 168,351 25,253 *
Taube Philanthropic Foundation............ 101,010 * 101,010 0 *
--------------------
</TABLE>
* Less than 1%
9
<PAGE> 11
(1) Based on 27,812,000 shares outstanding as of January 8, 2001. Percentages
have been calculated as required by Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934.
(2) Includes 75,758 shares issuable upon exercise of warrants that will become
exercisable within 60 days of the date of this prospectus.
(3) Includes 23,384 shares issuable upon exercise of warrants that will become
exercisable within 60 days of the date of this prospectus.
(4) Includes 12,351 shares issuable upon exercise of warrants that will become
exercisable within 60 days of the date of this prospectus.
(5) Includes 7,576 shares issuable upon exercise of warrants that will become
exercisable within 60 days of the date of this prospectus.
(6) Includes 37,500 shares issuable upon exercise of warrants that will become
exercisable within 60 days of the date of this prospectus.
(7) Includes 5,051 shares issuable upon exercise of warrants that will become
exercisable within 60 days of the date of this prospectus.
(8) Mr. Loeb is a member of our Board of Directors. Includes 5,051 shares
issuable upon exercise of warrants that will become exercisable within 60
days of the date of this prospectus.
(9) Stuart G. Moldaw, our Chairman and Chief Executive Officer and a member of
our Board of Directors, may be deemed to be a beneficial owner of The
Moldaw Variable Fund. Includes 252,525 shares issuable upon exercise of
warrants that will become exercisable within 60 days of the date of this
prospectus. Does not include 38,417 shares owned by SGM/PIM Trust, of which
Mr. Moldaw may be deemed to be a beneficial owner.
(10) Includes 20,202 shares issuable upon exercise of warrants that will become
exercisable within 60 days of the date of this prospectus.
(11) Includes 25,253 shares issuable upon exercise of warrants that will become
exercisable within 60 days of the date of this prospectus.
10
<PAGE> 12
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from time to
time by the selling stockholders. The selling stockholders will act
independently of Gymboree in making decisions with respect to the timing, manner
and size of each sale. The selling stockholders may sell the shares being
offered by this prospectus on the Nasdaq National Market, or otherwise, at
prices and under terms then prevailing or at prices related to the then-current
market price, at varying prices or at negotiated prices. The shares offered by
this prospectus may be sold, without limitation, by one or more of the following
means of distribution: (a) a block trade in which the broker-dealer so engaged
will attempt to sell such shares as agent, but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker-dealer as principal and resale by such broker-dealer for its own account
pursuant to this prospectus; (c) an over-the-counter distribution in accordance
with the rules of the Nasdaq National Market; (d) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (e)
in privately negotiated transactions. To the extent required, this prospectus
may be amended and supplemented from time to time to describe a specific plan of
distribution.
In connection with distributions of the shares offered hereby or otherwise,
the selling stockholders may enter into hedging transactions with broker-dealers
or other financial institutions. In connection with such transactions,
broker-dealers or other financial institutions may engage in short sales of
Gymboree's common stock in the course of hedging the positions they assume with
selling stockholders. The selling stockholders may also sell Gymboree's common
stock short and deliver the shares offered hereby to close out such short
positions. The selling stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions that require
the delivery to such broker-dealer or other financial institution of shares
offered hereby, which shares such broker-dealer or other financial institution
may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction). The selling stockholders may also pledge the shares offered
hereby to a broker-dealer or other financial institution, and, upon a default,
such broker-dealer or other financial institution may effect sales of the
pledged shares pursuant to this prospectus (as supplemented or amended to
reflect such transaction). In addition, any shares offered hereby that qualify
for sale pursuant to Rule 144 may, at the option of the holder thereof, be sold
under Rule 144 rather than pursuant to this prospectus.
Any broker-dealer participating in such transactions as agent may receive
commissions from the selling stockholder of the shares offered by this
prospectus (and, if it acts as agent for the purchaser of such shares, from such
purchaser). Usual and customary brokerage fees will be paid by the selling
stockholder. Broker-dealers may agree with the selling stockholder to sell a
specified number of shares at a stipulated price per share, and, to the extent
such a broker-dealer is unable to do so acting as agent for the selling
stockholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to the selling stockholder. Broker-dealers
who acquire shares as principal may thereafter resell such shares from time to
time in transactions (which may involve cross and block transactions and which
may involve sales to and through other broker-dealers, including transactions of
the nature described above) in the over-the-counter market in negotiated
transactions or otherwise at market prices prevailing at the time of sale or at
negotiated prices, and in connection with such resales, may pay to or receive
from the purchasers of such shares commissions computed as described above.
To comply with the securities laws of certain states, if applicable, the
shares offered hereby will be sold in such jurisdictions only through registered
or licensed brokers or dealers. In addition, in certain states the shares
offered hereby may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is met.
11
<PAGE> 13
We have advised the selling stockholders that the anti-manipulation rules
of Regulation M under the Securities Exchange Act of 1934 may apply to sales of
the shares offered hereby in the market and to the activities of the selling
stockholders and their affiliates. In addition, we will make copies of this
prospectus available to the selling stockholders and have informed them of the
need for delivery of copies of this prospectus to purchasers at or prior to the
time of any sale of the shares offered hereby. The selling stockholders may
indemnify any broker-dealer that participates in transactions involving the sale
of the shares against certain liabilities, including liabilities arising under
the Securities Act.
At the time a particular offer of shares is made, if required, a prospectus
supplement will be distributed that will set forth the number of shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon
for Gymboree by Wilson Sonsini Goodrich & Rosati, Professional Corporation, San
Francisco, California.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from our Annual Report on Form 10-K have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is also
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
As required by Section 13(a) of the Securities Exchange Act of 1934, we
file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms located at 450 Fifth Street, N.W., Washington,
D.C., 20549, and in New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our
SEC filings are also available to the public from the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act until this offering is completed:
12
<PAGE> 14
(1) Our Quarterly Report on Form 10-Q for the quarter ended October 28, 2000;
(2) Our Quarterly Report on Form 10-Q for the quarter ended July 29, 2000;
(3) Our Quarterly Report on Form 10-Q for the quarter ended April 29, 2000;
(4) Our Current Report on Form 8-K, filed with the SEC on June 7, 2000;
(5) Our Annual Report on Form 10-K for the year ended January 29, 2000; and
(6) The description of our common stock contained in our Registration Statement
on Form 8-A dated February 17, 1993 (File No. 0-21250), filed pursuant to
Section 12 of the Exchange Act, including any amendments or reports filed
for the purpose of updating such description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Lawrence H. Meyer
Chief Financial Officer
The Gymboree Corporation
700 Airport Boulevard
Burlingame, California 94010-1912
(650) 579-0600
You should rely only on the information incorporated by reference or
provided in this prospectus as it may be amended or supplemented. We have
authorized no one to provide you with different information.
13
<PAGE> 15
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus as it may
be amended or supplemented. You must not rely on any unauthorized information or
representations. This prospectus is an offer to sell only the shares offered
hereby, but only under circumstances and in jurisdictions where it is lawful to
do so. The information contained in this prospectus is current only as of its
date.
3,198,670 SHARES
[GYMBOREE LOGO]
THE GYMBOREE CORPORATION
COMMON STOCK
14
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the securities being registered. All amounts shown are estimates except for
the SEC registration fee.
SEC registration fee.............................. $ 10,621
Accountant's fees and expenses.................... 23,000
Legal fees and expenses........................... 100,000
Miscellaneous..................................... 16,379
Total....................................$150,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102 of the Delaware General Corporation Law provides that directors
will not be personally liable to the Registrant or its stockholders for monetary
damages for breach of their fiduciary duties as directors, except for liability
(i) for any breach of their duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) for unlawful
payments of dividends or unlawful stock purchases or redemptions as provided in
Section 174 of the Delaware General Corporation Law; or (iv) for any transaction
from which the director derives an improper personal benefit. This provision
eliminates the personal liability of directors for monetary damages for actions
involving a breach of their fiduciary duty of care, including any such actions
involving gross negligence. The Registrant's Restated Certificate of
Incorporation provides that, to the fullest extent permitted by the Delaware
General Corporation Law, the Registrant's directors will not be personally
liable to the Registrant or its stockholders for monetary damages for breach of
their fiduciary duties as directors.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. The
Registrant's Restated Certificate of Incorporation permits the Registrant to
indemnify its directors, officers and employees to the maximum extent permitted
by the Delaware General Corporation Law. The Registrant's Bylaws require the
Company to indemnify its directors and officers, and permit the Registrant to
indemnify its employees and other agents, to the maximum extent permitted by the
Delaware General Corporation Law.
The Registrant has entered into indemnification agreements with its
directors and certain of its officers, which provide those persons with further
indemnification to the maximum extent permitted by the Delaware General
Corporation Law. In addition, the Registrant and the selling stockholders have
entered into Investor Rights Agreements which provide for cross-indemnification
of each selling stockholder, on the one hand, and of the Registrant, its
officers, directors and controlling persons, and each other selling stockholder,
on the other hand, for certain liabilities arising under the Securities Act, the
Exchange Act or otherwise. Also, the Registrant and certain stockholders (none
of which are selling stockholders) have entered into a Registration Rights and
Modification Agreement which provides for cross-indemnification of each such
II-1
<PAGE> 17
stockholder, on the one hand, and the Registrant, its officers, directors and
controlling persons, and each other such stockholder, on the other hand, for
certain liabilities arising under the Securities Act or otherwise.
The Company has also obtained directors and officers insurance to insure
its directors and officers against certain liabilities, including certain
liabilities under United States securities laws.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
4.1 Article III of Restated Certificate of Incorporation of Gymboree*
4.2 Form of certificate for common stock*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in
Exhibit 5.1)
23.2 Consent of Deloitte & Touche LLP, Independent Auditors
24.1 Powers of Attorney (included on signature page of this Form S-3)
</TABLE>
--------------------
*Incorporated by reference to the Company's Registration Statement on Form S-1
filed with the SEC on February 18, 1993 (File No. 33-58322), as amended.
ITEM 17. UNDERTAKINGS.
A. Undertaking Regarding Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act, (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement, and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; provided, however, that clauses (i)
and (ii) will not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports filed
by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement;
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
this offering.
II-2
<PAGE> 18
B. Undertaking Regarding Filings Incorporating Subsequent Exchange Act
Documents by Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Undertaking Regarding Indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Burlingame, California, on January 10, 2001.
THE GYMBOREE CORPORATION
By: /s/ Stuart G. Moldaw
------------------------------------
Stuart G. Moldaw
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Stuart G. Moldaw his attorney-in-fact,
with the power of substitution, for him in any and all capacities, to sign any
amendment or post-effective amendment to this Registration Statement on Form S-3
or abbreviated registration statement (including, without limitation, any
additional registration filed pursuant to Rule 462 under the Securities Act of
1933) with respect hereto and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
DATE SIGNATURE TITLE
---- --------- -----
<S> <C> <C>
January 10, 2001 /s/ Stuart G. Moldaw Chief Executive Officer and Director
---------------------------------------- (Principal Executive Officer)
Stuart G. Moldaw
January 10, 2001 /s/ Lawrence H. Meyer Chief Financial Officer
---------------------------------------- (Principal Financial and Accounting Officer)
Lawrence H. Meyer
January 10, 2001 /s/ Lisa M. Harper Director
----------------------------------------
Lisa M. Harper
January 10, 2001 /s/ Walter F. Loeb Director
----------------------------------------
Walter F. Loeb
January 10, 2001 /s/ John Pound Director
----------------------------------------
John Pound
</TABLE>
II-4
<PAGE> 20
<TABLE>
<CAPTION>
DATE SIGNATURE TITLE
---- --------- -----
<S> <C> <C>
January 10, 2001 /s/ Barbara L. Rambo Director
----------------------------------------
Barbara L. Rambo
January 10, 2001 Director
----------------------------------------
Michael Steinberg
January 10, 2001 /s/ William U. Westerfield Director
----------------------------------------
William U. Westerfield
</TABLE>
II-5
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
4.1 Article III of Restated Certificate of Incorporation of Gymboree*
4.2 Form of certificate for common stock*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in
Exhibit 5.1)
23.2 Consent of Deloitte & Touche LLP, Independent Auditors
24.1 Powers of Attorney (included on signature page of this Form S-3)
</TABLE>
--------------------
*Incorporated by reference to the Company's Registration Statement on Form S-1
filed with the SEC on February 18, 1993 (File No. 33-58322), as amended.
