The Gymboree Corporation Reports Second Quarter of Fiscal 2017 Results

SAN FRANCISCO - March 14, 2017 // PRNewswire // - The Gymboree Corporation (the "Company") today reported consolidated financial results for the second fiscal quarter ended January 28, 2017. The results disclosed below are from continuing operations of the Company and exclude the discontinued operations of the divested Gymboree Play & Music ("Play & Music") business (unless otherwise noted), which was sold on July 15, 2016. As a result of the change in the Company's fiscal year end from the Saturday closest to the end of January to the Saturday closest to the end of July, results for the second quarter of fiscal 2017 ended January 28, 2017 are comparable to results for the fourth quarter of fiscal 2015 ended January 30, 2016.

Second Quarter Fiscal 2017 Overview:

  • Comparable sales (including online sales) decreased 5% during the second quarter of fiscal 2017 compared to the fourth quarter of fiscal 2015;
  • Net loss for the second quarter of fiscal 2017 was $324.9 million, which includes a $368.1 million non-cash goodwill and intangible asset impairment charge and an $11.6 million charge related to excess inventories; and
  • Adjusted EBITDA for the second quarter of fiscal 2017 was $26.2 million compared to $45.5 during for the fourth quarter of fiscal 2015.

Second Quarter Fiscal 2017 compared to Fourth Quarter Fiscal 2015 Results (13 weeks ended January 28, 2017 versus 13 weeks ended January 30, 2016)

  • Net sales were $356.8 million, compared to $381.4 million during the fourth quarter of fiscal 2015.
  • Comparable sales (including online stores) decreased 5% compared to the fourth quarter of fiscal 2015.
  • Comparable sales by brand for the second quarter of fiscal 2017 compared to the fourth quarter of fiscal 2015 and comparable sales by brand for the fourth quarter of fiscal 2015 compared to the fourth quarter of fiscal 2014 were as follows:
     

Comparable Sales

 

13 Weeks Ended

January 28, 2017

    

13 Weeks Ended

January 30, 2016

     

Gymboree

 

-6%

 

6%

     

Janie and Jack

 

1%

 

11%

     

Crazy 8

 

-6%

 

1%

  • Gross profit was $116.4 million, or 32.6% of net sales, compared to $148.8 million, or 39.0% of net sales, during the fourth quarter of fiscal 2015. The decrease in gross profit quarter-over-quarter was driven primarily by a decrease in comparable store sales attributable to the Gymboree and Crazy 8 brands, an $11.6 million charge related to excess inventories, incremental distribution costs totaling $2.4 million related to expedited shipping costs during the holiday period, and an increase in promotional (markdown) activities.
  • Selling, general and administrative ("SG&A") expenses were $106.2 million, or 29.8% of net sales, compared to $122.4 million, or 32.1% of net sales, during the fourth quarter of fiscal 2015. As a percentage of net sales, SG&A during the 13 weeks ended January 28, 2017 decreased by 230 basis points primarily due to lower marketing costs, store expenses and incentive compensation.
  • During the quarter ended January 28, 2017, the Company recorded $368.1 million of non-cash goodwill and intangible asset impairment charges in connection with the Company's recently completed annual goodwill and indefinite-lived intangible asset impairment assessment. The Company started experiencing more difficult traffic and conversion trends beginning in the second quarter of fiscal 2017. The sustained difficult performance was not anticipated in previous projections that assumed an improvement in traffic and conversion trends. As a result, the Company revised its long term assumptions to reflect lower than previously projected revenue and margin growth trends in its Gymboree and Crazy 8 brands. Since these are non-cash impairment charges, they do not have any direct impact on the Company's liquidity or debt covenants.
  • Loss from continuing operations, net of tax, for the quarter was $324.9 million, which includes a $368.1 million non-cash goodwill and intangible asset impairment charge, an $11.6 million charge related to excess inventories as noted above, and incremental distribution costs totaling $2.4 million related to expedited shipping costs during the holiday period, compared to income from continuing operations, net of tax, of $45.9 million during the fourth quarter of fiscal 2015.

Adjusted EBITDA from continuing operations, defined as net (loss) income from continuing operations attributable to The Gymboree Corporation before interest, income taxes, and depreciation and amortization, adjusted for other items as described below, was $26.2 million compared to $45.5 million during the fourth quarter of fiscal 2015. The decrease was attributed primarily to a decrease in comparable sales attributable to the Company's Gymboree and Crazy 8 brands, an $11.6 million charge related to excess inventories, incremental distribution costs totaling $2.4 million related to expedited shipping costs during the holiday period, and an increase in promotional (markdown) activities.

Adjusted EBITDA is not a financial measure prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). For a description of Adjusted EBITDA and a reconciliation of this measure to GAAP measures, see "Non-GAAP Financial Measures" below and Exhibit D of this press release.

Six Months Ended January 28, 2017 Results (26 weeks ended January 28, 2017 versus 26 weeks ended January 30, 2016)

  • Net sales were $636.7 million, compared to $676.9 million during the six months ended January 30, 2016.
  • Comparable sales (including online stores) decreased 5% compared to the six months ended January 30, 2016.
  • Comparable sales by brand for the six months ended January 28, 2017 compared to the six months ended January 30, 2016, and comparable sales by brand for the six months ended January 30, 2016 compared to the six months ended January 31, 2015, were as follows:
     

Comparable Sales

 

26 Weeks Ended

January 28, 2017

    

26 Weeks Ended

January 30, 2016

     

Gymboree

 

-6%

 

0%

     

Janie and Jack

 

2%

 

7%

     

Crazy 8

 

-5%

 

1%

  • Gross profit was $223.4 million, or 35.1% of net sales, compared to $263.7 million, or 39.0% of net sales, for the six months ended January 30, 2016. The decrease in gross profit year-over-year was driven primarily by a decrease in comparable store sales attributable to the Gymboree and Crazy 8 brands, a $13.0 million charge related to excess inventories, incremental distribution costs totaling $2.4 million related to expedited shipping costs during the holiday period, and an increase in promotional (markdown) activities.
  • SG&A expenses were $211.4 million, or 33.2% of net sales, compared to $227.4 million, or 33.6% of net sales, during the six months ended January 30, 2016. As a percentage of net sales, SG&A during the 26 weeks ended January 28, 2017 decreased by 40 basis points primarily due to lower marketing costs, store expenses and incentive compensation.
  • As discussed above, during the six months ended January 28, 2017, the Company recorded $368.1 million of non-cash goodwill and intangible asset impairment charges.
  • Loss from continuing operations, net of tax, during the six months ended January 28, 2017 was $335.8 million compared to income from continuing operations, net of tax, of $32.9 million during the six months ended January 30, 2016.
  • Adjusted EBITDA from continuing operations was $44.0 million compared to $72.0 million for the six months ended January 30, 2016. The decrease was attributed primarily to a decrease in comparable sales attributable to the Gymboree and Crazy 8 brands, a $13.0 million charge related to excess inventories, incremental distribution costs totaling $2.4 million related to expedited shipping costs during the holiday period, and an increase in promotional (markdown) activities.

Balance Sheet Highlights

As of January 28, 2017, the Company had $1.0 billion aggregate principal amount of indebtedness that will mature over the next 12 to 22 months, approximately $871.9 million of which is due within 12 months from March 14, 2017, as more fully described below:

Current liabilities

  • $54.0 million in borrowings outstanding under the Company's asset-backed revolving credit facility (the "ABL facility"), due in December 2017. Undrawn line of credit availability under this facility, after being reduced by outstanding line of credit borrowings, letter of credit utilization of $34.6 million and the outstanding balance of the ABL Term Loan, was $90.7 million as of January 28, 2017, subject to a minimum amount of availability pursuant to the terms of the ABL facility. Our undrawn line of credit availability, net of the minimum amount of availability, was $67.9 million as of January 28, 2017.
  • $48.8 million of principal outstanding under the Company's senior secured ABL Term Loan, due in December 2017.
  • $6.5 million of Term loan, due in March, June, September, and December 2017.

Long-term liabilities

  • $762.6 million of principal outstanding under the Company's $820 million senior secured term loan (the "Term Loan"), due in February 2018.
  • $171.0 million of principal outstanding under the Company's Senior Notes, due in December 2018.

*Inventory balances as of January 28, 2017 were $210.9 million, an increase of $8.1 million or 4.0% compared to $202.8 million as of January 30, 2016. On a per square foot basis, inventory cost, net of lower-of-cost-or-market reserves, was up 6% at January 28, 2017 over the same period in fiscal 2015. Inventory units were up 10% at January 28, 2017 over the same period in fiscal 2015.

Cash Flow Highlights

  • Cash flows from operating activities decreased by $94.2 million from net cash provided by operating activities of $71.1 million during the 26 weeks ended January 30, 2016 to net cash used in operating activities of $23.1 million during the 26 weeks ended January 28, 2017. Cash flows from operating activities decreased partially because of a decrease in income before income taxes. Excluding the impact of goodwill and intangible asset impairment, depreciation and amortization and other non-cash charges, income before income taxes decreased by $8.8 million primarily because of a decline in gross profit driven by comparable sales decline and inventory charges. Cash flows from operating activities also decreased because of a $26.0 million decrease in merchandise inventories due to the timing of purchases. In addition, cash flows from operating activities decreased because of a $13.2 million decrease in prepaid expenses and other assets, and a $42.7 million decrease in accounts payable, accrued and other current liabilities due to timing of payments.
  • Capital expenditures were $12.1 million during the six months ended January 28, 2017.
  • Cash paid for interest was $32.7 million during the six months ended January 28, 2017 compared to $37.7 million during the six months ended January 30, 2016.
  • Cash paid for income taxes was $9.6 million during the six months ended January 28, 2017.

Non-GAAP Financial Measures

The Company defines "Adjusted EBITDA" as net (loss) income attributable to The Gymboree Corporation before interest expense, interest income, income taxes, and depreciation and amortization ("EBITDA") adjusted for other items including, goodwill and intangible asset impairment, non-cash share-based compensation, loss on disposal/impairment of assets and sponsor management fees and expenses, as well as the impact of purchase accounting adjustments resulting from the Acquisition and other non-recurring or unusual items. The Company is likely to exclude these items from Adjusted EBITDA in the future and may also exclude other similar items, the effect of which is uncertain but may be significant in amount. The determination of the amounts that are excluded from non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts.

Adjusted EBITDA is a non-GAAP measure but is considered an important supplemental measure of the Company's performance and is believed to be used frequently by securities analysts, investors and other interested parties in the evaluation of similar retail companies. Adjusted EBITDA is calculated in substantially the same manner as "EBITDA" under the indenture governing the Notes and "Consolidated EBITDA" under the agreement governing our Senior Credit Facilities. Adjusted EBITDA is not a presentation made in accordance with GAAP and the Company's computation of Adjusted EBITDA may vary from others in the industry. Adjusted EBITDA should not be considered an alternative to operating income or net income, as a measure of operating performance or cash flow, or as a measure of liquidity. Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP (see Exhibit D for a reconciliation of Adjusted EBITDA from continuing operations to net (loss) income from continuing operations attributable to The Gymboree Corporation).

The live broadcast of second quarter fiscal 2017 financial results and fiscal 2017 business outlook will be available to interested parties at 2:00 p.m. PT (5:00 p.m. ET) on March 14, 2017. To listen to the live broadcast over the internet, please log on to www.gymboree.com, click on "Company Information" at the bottom of the page; go to "Investor & Media" and then "Conference Calls & Webcasts." A replay of the call will be available two hours after the broadcast through midnight PT, Tuesday March 28, 2017, at 855-859-2056, passcode 65304456.

About The Gymboree Corporation

The Gymboree Corporation's specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of January 28, 2017, the Company operated a total of 1,291 retail stores: 586 Gymboree® stores (536 in the United States, 49 in Canada and 1 in Puerto Rico), 174 Gymboree Outlet stores (173 in the United States and 1 in Puerto Rico), 149 Janie and Jack® shops (148 in the United States and 1 in Puerto Rico), and 382 Crazy 8® stores in the United States. The Company also operates online stores at www.gymboree.com, www.janieandjack.com and www.crazy8.com.

Forward-Looking Statements

This press release includes forward-looking statements, including statements relating to The Gymboree Corporation's anticipated future financial performance and ability to address the challenges imposed by its capital structure, and the Company's expectation that (i) it has the right strategies in place to continue to generate positive Adjusted EBITDA well into the future and (ii) it will be able to address its capital structure in a manner that allows it to continue operations. These forward-looking statements generally can be identified by the use of words such as "anticipate," "expect," "plan," "could," "may," "will," "believe," "estimate," "forecast," "goal," "project," and other words of similar meaning. Each forward-looking statement contained in this press release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. The Company presently considers the following risks and uncertainties to be important factors that could cause actual results to differ materially from the Company's expectations: the ongoing volatility in the commodities markets, mall traffic, our ability to successfully upgrade our omni-channel platforms and technology, as well implement our omni-channel strategy, our ability to realize expected expense management initiatives and drive growth in our wholesale channel, the success of our marketing initiatives, uncertainties relating to high levels of consumer debt and general economic conditions, volatility in the financial markets, potential data breaches of the Company's or the Company's vendors' or suppliers' computer networks, the Company's ability to anticipate and timely respond to changes in trends, consumer preferences and customer reactions to new merchandise (particularly in light of the negative sales trends experienced over the holiday season), competitive market conditions, including promotional activities of the Company's competitors, success in meeting the Company's delivery targets, gross margin achievement, the Company's ability to appropriately manage inventory and the level of promotional activity required to reduce inventory, effects of future embargos from countries used to source product, the Company's ability to attract and retain key personnel and other qualified team members, and other factors, including those discussed under "Risk Factors" in "Item 1A. Risk Factors" of the Company's Transition Report on Form 10-K for the 26 weeks ended July 30, 2016, filed with the Securities and Exchange Commission on October 28, 2016. The Company cautions investors to carefully consider the risks associated with, and not to place considerable reliance on, the forward-looking statements contained in this press release. The forward-looking statements in this press release speak only as of the date of this document, and the Company undertakes no obligation to update or revise any of these statements.

Gymboree, Janie and Jack, and Crazy 8 are registered trademarks of The Gymboree Corporation.

EXHIBIT A

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)

                   
     

13 Weeks Ended

 

26 Weeks Ended

     

January 28,
2017

 

January 30,
2016

 

January 28,
2017

 

January 30,
2016

Net sales:

               

Retail

 

$   352,898

 

$   376,230

 

$   629,208

 

$   665,883

Retail Franchise

 

3,936

 

5,170

 

7,453

 

11,037

 

Total net sales

 

356,834

 

381,400

 

636,661

 

676,920

Cost of goods sold, including buying and occupancy expenses

 

(240,423)

 

(232,576)

 

(413,245)

 

(413,189)

 

Gross profit

 

116,411

 

148,824

 

223,416

 

263,731

Selling, general and administrative expenses

 

(106,210)

 

(122,393)

 

(211,364)

 

(227,420)

Goodwill and intangible asset impairment

 

(368,069)

 

-

 

(368,069)

 

-

 

Operating (loss) income

 

(357,868)

 

26,431

 

(356,017)

 

36,311

Interest expense

 

(19,433)

 

(21,377)

 

(39,365)

 

(43,283)

Gain on extinguishment of debt

 

-

 

41,522

 

-

 

41,522

Other income (expense), net

 

81

 

(459)

 

216

 

(608)

 

(Loss) income before income taxes

 

(377,220)

 

46,117

 

(395,166)

 

33,942

Income tax benefit (expense)

 

52,285

 

(184)

 

59,339

 

(1,019)

 

Loss (income) from continuing operations, net of tax

 

(324,935)

 

45,933

 

(335,827)

 

32,923

 

Income from discontinued operations, net of tax

 

-

 

2,829

 

-

 

6,187

Net (loss) income

 

(324,935)

 

48,762

 

(335,827)

 

39,110

Net loss attributable to noncontrolling interest

 

-

 

677

 

-

 

301

Net (loss) income attributable to The Gymboree Corporation

 

$  (324,935)

 

$     49,439

 

$  (335,827)

 

$     39,411

 

EXHIBIT B

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

               
     

January 28,

 

July 30,

 

January 30,

     

2017

 

2016

 

2016

ASSETS

           

Current assets:

           
 

Cash and cash equivalents

 

$       22,119

 

$     12,636

 

$         9,774

 

Restricted cash

 

24,018

 

33,505

 

-

 

Accounts receivable, net

 

14,899

 

12,290

 

21,107

 

Merchandise inventories

 

210,895

 

232,959

 

202,832

 

Prepaid income taxes

 

2,062

 

2,046

 

2,196

 

Prepaid expenses

 

5,510

 

4,917

 

6,336

 

Current assets of discontinued operations

 

-

 

-

 

18,210

 

Total current assets

 

279,503

 

298,353

 

260,455

               

Property and equipment, net

 

134,038

 

143,751

 

155,550

Goodwill

 

123,140

 

357,041

 

356,348

Other intangible assets, net

 

164,874

 

300,073

 

303,608

Restricted cash

 

49,015

 

73,566

 

-

Other assets

 

4,928

 

5,728

 

6,170

Other assets of discontinued operations

 

-

 

-

 

58,345

 

Total assets

 

$     755,498

 

$1,178,512

 

$  1,140,476

               

LIABILITIES AND STOCKHOLDERS' DEFICIT

           

Current liabilities:

           
 

Accounts payable

 

$     117,352

 

$   134,498

 

$     107,866

 

Accrued and other current liabilities

 

80,740

 

111,909

 

90,281

 

Line of credit borrowings

 

54,000

 

42,000

 

19,000

 

Current portion of long-term debt, net

 

53,111

 

5,527

 

-

 

Current obligation under capital lease

 

-

 

-

 

605

 

Current liabilities of discontinued operations

 

-

 

-

 

13,300

 

Total current liabilities

 

305,203

 

293,934

 

231,052

               

Long-term liabilities:

           
 

Long-term debt, net

 

925,928

 

970,902

 

1,040,506

 

Long-term sale-leaseback financing liability, net

 

25,426

 

25,508

 

25,578

 

Long-term obligation under capital lease

 

-

 

-

 

2,245

 

Lease incentives and other liabilities

 

41,252

 

44,167

 

49,355

 

Unrecognized tax benefits

 

6,397

 

6,475

 

5,075

 

Deferred income taxes

 

60,440

 

110,799

 

124,243

 

Long-term liabilities of discontinued operations

 

-

 

-

 

310

 

Total liabilities

 

1,364,646

 

1,451,785

 

1,478,364

               

Stockholders' deficit

 

(609,148)

 

(273,273)

 

(337,888)

 

Total liabilities and stockholders' deficit

 

$     755,498

 

$1,178,512

 

$  1,140,476

 

EXHIBIT C

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

           
     

26 Weeks Ended

     

January 28,
2017

 

January 30,
2016

CASH FLOWS FROM OPERATING ACTIVITIES:

       

Net (loss) income

 

$  (335,827)

 

$     39,110

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

       
 

Goodwill and intangible impairment

 

368,069

 

-

 

Depreciation and amortization

 

18,698

 

20,459

 

Gain on extinguishment of debt

 

-

 

(41,522)

 

Inventory write-down

 

12,999

 

448

 

Amortization of deferred financing costs and accretion of original issue discount

 

4,623

 

4,164

 

Noncash interest charges

 

2,210

 

2,168

 

Loss on disposal/impairment of assets

 

2,931

 

3,720

 

Deferred income taxes

 

(53,673)

 

(1,204)

 

Share-based compensation expense

 

869

 

1,515

 

Other

 

(266)

 

549

 

Change in assets and liabilities:

       
 

Accounts receivable

 

(2,614)

 

(604)

 

Merchandise inventories

 

9,314

 

35,314

 

Prepaid income taxes

 

(16)

 

425

 

Prepaid expenses and other assets

 

(230)

 

12,935

 

Accounts payable

 

(17,145)

 

(14,764)

 

Accrued and other current liabilities

 

(30,785)

 

9,509

 

Lease incentives and other liabilities

 

(2,291)

 

(1,116)

 

Net cash (used in) provided by operating activities

 

(23,134)

 

71,106

           

CASH FLOWS FROM INVESTING ACTIVITIES:

       

Capital expenditures

 

(12,139)

 

(13,907)

Decrease in restricted cash

 

34,038

 

8,157

Increase in related party loan receivable

 

-

 

(1,741)

Other

 

-

 

161

 

Net cash provided by (used in) investing activities

 

21,899

 

(7,330)

           

CASH FLOWS FROM FINANCING ACTIVITIES:

       

Proceeds from ABL facility

 

319,000

 

187,000

Payments on ABL facility

 

(307,000)

 

(238,000)

Payments on ABL term loan

 

(1,250)

 

-

Repurchase of notes

 

-

 

(15,325)

Payments for deferred financing costs

 

-

 

(1,452)

Payments on capital lease and sale-leaseback financing liability

 

(109)

 

(374)

 

Net cash provided by (used in) financing activities

 

10,641

 

(68,151)

           

Effect of exchange rate fluctuations on cash and cash equivalents

 

77

 

(958)

           
 

Net increase (decrease) in cash and cash equivalents

 

9,483

 

(5,333)

           

CASH AND CASH EQUIVALENTS:

       

Beginning of period

 

12,636

 

23,497

End of period

 

22,119

 

18,164

Less - cash and cash equivalents of discontinued operations, end of period

 

-

 

(8,390)

Cash and cash equivalents of continuing operations, end of period

 

$     22,119

 

$       9,774

 

EXHIBIT D

THE GYMBOREE CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands)

(Unaudited)

                 

ADJUSTED EBITDA:

               

The Company defines "Adjusted EBITDA" as net (loss) income attributable to The Gymboree Corporation before interest expense, interest income, income tax expense/benefit, and depreciation and amortization ("EBITDA") adjusted for other items, including goodwill and intangible asset impairment, non-cash share-based compensation, loss on disposal/impairment of assets, and sponsor management fees and expenses, as well as the impact of purchase accounting adjustments resulting from the acquisition of the Company by investment funds sponsored by Bain Capital Private Equity, LP (formerly Bain Capital Partners, LLC) (the "Acquisition").

 

Adjusted EBITDA is not a performance measure under U.S. generally accepted accounting principles ("GAAP"), but is considered an important supplemental measure of the Company's performance and is believed to be used frequently by securities analysts, investors and other interested parties in the evaluation of similar retail companies. Adjusted EBITDA is not a presentation made in accordance with GAAP and the Company's computation of Adjusted EBITDA may vary from others in the industry. Adjusted EBITDA should not be considered an alternative to operating income or net income, as a measure of operating performance or cash flow, or as a measure of liquidity. Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP.

 

The table below provides a reconciliation of net (loss) income from continuing operations attributable to The Gymboree Corporation to Adjusted EBITDA from continuing operations:

                 
   

13 Weeks Ended

 

26 Weeks Ended

   

January 28,
2017

 

January 30,
2016

 

January 28,
2017

 

January 30,
2016

                 

Net (loss) income from continuing operations

 

$  (324,935)

 

$     45,933

 

$  (335,827)

 

$     32,923

Net loss from continuing operations attributable to noncontrolling interest

 

-

 

1,600

 

-

 

3,030.00

Net (loss) income from continuing operations attributable to The Gymboree Corporation

 

(324,935)

 

47,533

 

(335,827)

 

35,953

Reconciling items (a):

               

Interest expense 

 

19,433

 

21,377

 

39,365

 

43,283

Interest income 

 

(122)

 

(10)

 

(194)

 

(16)

Income tax (benefit) expense

 

(52,285)

 

118

 

(59,339)

 

953

Depreciation and amortization(b)

 

9,304

 

10,151

 

18,698

 

19,943

Non-cash share-based compensation expense 

 

493

 

701

 

869

 

1,515

Loss on disposal/impairment on assets

 

2,288

 

2,834

 

2,931

 

3,164

Gain on extinguishment of debt

 

-

 

(41,522)

 

-

 

(41,522)

Goodwill and intangible asset impairment

 

368,069

 

-

 

368,069

 

-

Acquisition-related adjustments(c)

 

2,913

 

3,417

 

6,337

 

5,980

Other (d)

 

1,051

 

922

 

3,122

 

2,747

Adjusted EBITDA from continuing operations

 

$     26,209

 

$     45,521

 

$     44,031

 

$     72,000

                 

(a) Excludes amounts related to noncontrolling interest, which are already excluded from net (loss) income from continuing operations attributable to The Gymboree Corporation.

               
                 

(b) Includes the following:

               

Amortization of intangible assets (impacts SG&A)

 

$          208

 

$          384

 

$          558

 

$          768

Amortization of below and above market leases (impacts COGS)

 

(124)

 

(199)

 

(350)

 

(397)

   

$           84

 

$          185

 

$          208

 

$          371

                 

(c) Includes the following:

               

Additional rent expense recognized due to the elimination of deferred rent and construction allowances in purchase accounting (impacts COGS)

 

$       1,737

 

$       1,871

 

$       3,484

 

$       3,750

Sponsor fees, legal and accounting, as well as other costs incurred as a result of the Acquisition or refinancing (impacts SG&A)

 

1,176

 

1,546

 

2,853

 

2,230

   

$       2,913

 

$       3,417

 

$       6,337

 

$       5,980

                 

(d) Other is comprised of restructuring and non-recurring charges.

               

 

EXHIBIT E

THE GYMBOREE CORPORATION

RETAIL SALES BY BRAND

(In thousands)

(Unaudited)

                         
               

 Total 

       
   

 Gymboree 

 

 Janie and Jack 

 

 Crazy 8 

 

 Before VIE 

 

 VIE 

 

 Total 

13 weeks ended January 28, 2017

$   227,635

 

$       44,934

 

$   80,329

 

$    352,898

 

$      -

 

$  352,898

13 weeks ended January 30, 2016

$   244,237

 

$       44,444

 

$   85,431

 

$    374,112

 

$ 2,118

 

$  376,230

                         

26 weeks ended January 28, 2017

$   404,106

 

$       79,952

 

$  145,150

 

$    629,208

 

$      -

 

$  629,208

26 weeks ended January 30, 2016

$   430,660

 

$       78,044

 

$  153,256

 

$    661,960

 

$ 3,923

 

$  665,883

SOURCE The Gymboree Corporation

###

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