The Gymboree Corporation Reports Fourth Quarter and Fiscal Year 2012 Results

SAN FRANCISCO - April 25, 2013 // PRNewswire // - The Gymboree Corporation (the "Company") today reported consolidated financial results for the fourth fiscal quarter and the fiscal year ended February 2, 2013 ("fiscal 2012").

Fourth Quarter Results

Net sales for the 14 weeks ended February 2, 2013 were $397.6 million, an increase of 11.7% compared to $355.8 million in net sales for the 13 weeks ended January 28, 2012. Comparable sales for the fourth quarter of fiscal 2012, decreased 2% compared to the fourth quarter of fiscal 2011. Given the additional week included in the fiscal fourth quarter, the comparable period has been adjusted to reflect a similar 14 week period.

Gross profit for the fourth quarter of fiscal 2012 was $144.8 million, or 36.4% of net sales, compared to $126.2 million, or 35.5% of net sales, for the fourth quarter of fiscal 2011. Excluding purchase accounting adjustments of $2.6 million and $3.1 million for the fourth quarter of fiscal 2012 and the fourth quarter of fiscal 2011, respectively, relating to the November 2010 acquisition of the Company by investment funds sponsored by Bain Capital Partners, LLC (the "Acquisition"), adjusted gross profit was $147.4 million, or 37.1% of net sales, and $129.3 million, or 36.3% of net sales, for the fourth quarter of fiscal 2012 and the fourth quarter of fiscal 2011, respectively (see Exhibit D for relevant reconciliation information).

SG&A expense for the fourth quarter of fiscal 2012 was $125.4 million, or 31.5% of net sales, compared to $107.2 million, or 30.1% of net sales, in the fourth quarter of the prior year. Results for the fourth quarter of fiscal 2012 and fiscal 2011 include $12.9 million and $6.2 million, respectively, of additional costs resulting from the Acquisition, including the effect of purchase accounting adjustments and non-recurring adjustments. Excluding these charges, adjusted SG&A expense for the fourth quarter of fiscal 2012 and fiscal 2011 was $112.5 million, or 28.3% of net sales, and $101.0 million, or 28.4% of net sales, respectively, which represents a decrease of 10 basis points over fiscal 2011 (see Exhibit D for relevant reconciliation information).

Net loss attributable to The Gymboree Corporation before interest (income) expense, income tax benefit and depreciation and amortization, adjusted for other items ("Adjusted EBITDA"), for the fourth quarter of fiscal 2012 increased 1.1% to $47.7 million compared to $47.2 million for the fourth quarter of the prior year. Adjusted EBITDA is not a performance measure under U.S. generally accepted accounting principles ("GAAP"). See "Non-GAAP Financial Measures" below. A reconciliation of net income/(loss) attributable to The Gymboree Corporation to Adjusted EBITDA presented herein is included in Exhibit D of this press release.

Fiscal Year 2012

Net sales for the 53 weeks ended February 2, 2013 were $1.28 billion, an increase of 7.4% compared to $1.19 billion in net sales for the 52 weeks ended January 28, 2012. Comparable sales for fiscal 2012 decreased 2% compared to fiscal 2011.

Gross profit for fiscal year 2012 was $481.4 million, or 37.7% of net sales, compared to $459.9 million, or 38.7% of net sales, for fiscal 2011. Excluding purchase accounting adjustments of $11.7 million and $24.0 million in fiscal 2012 and fiscal 2011, respectively, adjusted gross profit was $493.1 million, or 38.7% of net sales, and $483.9 million, or 40.7% of net sales, for fiscal 2012 and fiscal 2011, respectively (see Exhibit D for relevant reconciliation information).

SG&A expense for fiscal 2012 was $411.7 million, or 32.3% of net sales, compared to $380.1 million, or 32.0% of net sales, in the prior year. Results for fiscal 2012 and fiscal 2011 include $28.6 million and $30.3 million, respectively, of additional costs resulting from the Acquisition, including the effect of purchase accounting adjustments and non-recurring adjustments. Excluding these charges, adjusted SG&A expense for fiscal 2012 and fiscal 2011 was $383.1 million, or 30.0% of net sales, and $349.8 million, or 29.4% of net sales, respectively, which represents an increase of 60 basis points over fiscal 2011 (see Exhibit D for relevant reconciliation information).

Adjusted EBITDA for fiscal 2012 decreased 16.0% to $161.8 million, compared to $192.6 million for the prior year (see "Non-GAAP Financial Measures" included in Exhibit D of this press release).

Balance Sheet Highlights

There were no borrowings outstanding under the Company's $225 million asset-backed loan facility at the end of the fourth quarter of fiscal 2012 and approximately $167.2 million of undrawn availability.

Cash at the end of fiscal 2012 decreased to $33.3 million from $77.9 million at the end of fiscal 2011. During fiscal 2012, the Company reduced its outstanding debt by approximately $71.4 million.

Capital expenditures for fiscal 2012 were $47.9 million.

Inventory balances at the end of fiscal 2012 were $197.9 million compared to $210.2 million at the end of fiscal 2011. Inventory cost on a per square foot basis was down 15% and inventory units on a per square foot basis were also down in the mid-single digits.

Fiscal 2013 Business Outlook

In fiscal 2013, the Company is focused on improving its inventory discipline, strengthening its product assortment and continuing to drive its growth opportunities of real estate, ecommerce and international. The Company's fiscal 2013 outlook is based on the current economic environment and trends, as well as its expectations for the balance of the year.

First Quarter

The Company anticipates Adjusted EBITDA for the first quarter to be in the range of $30 million to $35 million. This expectation reflects a comparable sales decline of 7% quarter to date with an improvement in trend in April. The Company expects inventory cost on a per square foot basis at quarter end to be down mid-teens versus the prior year quarter and units per square foot to be down in the mid-single digits.

Full Year

For the full year, the Company expects Adjusted EBITDA to grow modestly over last year and comparable sales to be flat to slightly positive. Based on this guidance, the Company expects to generate sufficient cash flow to service its debt and invest in the business to drive long term growth.

New Stores

During fiscal 2013, the Company plans to open approximately 100 new stores, with the majority being Crazy 8 stores.

Capital Expenditures

During fiscal 2013, the Company anticipates spending approximately $50 million for capital expenditures.

Non-GAAP Financial Measures

The Company defines "Adjusted EBITDA" as net income (loss) attributable to The Gymboree Corporation before interest (income) expense, income tax expense (benefit), and depreciation and amortization ("EBITDA") adjusted for other items including (gain) or loss on extinguishment of debt, 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.

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 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 to net income/(loss).

Management Presentation

The live broadcast of the discussion of fourth quarter and fiscal 2012 financial results and fiscal 2013 business outlook will be available to interested parties at 1:00 p.m. PT (4:00 p.m. ET) on Thursday, April 25, 2013. 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, Thursday, May 9, 2013, at 855-859-2056, passcode 31845978.

About The Gymboree Corporation

The Gymboree Corporation's specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of February 2, 2013, the Company operated a total of 1,262 retail stores: 637 Gymboree® stores (588 in the United States, 42 in Canada, 1 in Puerto Rico and 6 in Australia), 160 Gymboree Outlet stores (158 in the United States and 2 in Puerto Rico), 133 Janie and Jack® shops and 332 Crazy 8® stores in the United States. The Company also operates online stores at www.gymboree.com, www.janieandjack.com and www.crazy8.com, and offers directed parent-child developmental play programs at 718 franchised and Company-operated Gymboree Play & Music® centers in the United States and 42 other countries.

Forward-Looking Statements

The foregoing financial information for the fourth fiscal quarter and the fiscal year ended February 2, 2013 is unaudited and subject to quarter-end and year-end adjustments. The foregoing paragraphs contain forward-looking statements relating to The Gymboree Corporation's anticipated future financial performance,such as those relating to its comparable store sales growth, Adjusted EBITDA, capital expenditures, cash flows and new store openings in fiscal 2013. Actual results could vary materially as a result of a number of factors, including the ongoing volatility in the commodities market for cotton, uncertainties relating to high levels of unemployment and consumer debt, volatility in the financial markets, general economic conditions, the Company's ability to anticipate and timely respond to changes in trends and consumer preferences and customer reactions to new merchandise, service levels and new concepts, competitive market conditions, success in meeting the Company's delivery targets, the Company's promotional activity, gross margin achievement, the Company's ability to appropriately manage 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 Annual Report on Form 10-K for the fiscal year ended January 28, 2012, filed with the Securities and Exchange Commission ("SEC") on April 26, 2012, and its subsequent SEC filings. The forward-looking statements contained in this press release reflect the Company's expectations as of the date hereof,and the inclusion of a projection or forward-looking statement in this press release should not be regarded as a representation by the Company that its plans or objectives will be achieved. The Company undertakes no obligation to update the information provided herein.

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


EXHIBIT A

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

                   
     

Quarter Ended

 

Quarter Ended

 

Year Ended

 

Year Ended

     

February 2, 2013

 

January 28, 2012

 

February 2, 2013

 

January 28, 2012

     

(14 weeks)

 

(13 weeks)

 

(53 weeks)

 

(52 weeks)

     

(in thousands)

Net sales:

             
 

Retail

$            387,798

 

$             348,437

 

$         1,234,993

 

$          1,164,171

 

Gymboree Play & Music 

5,960

 

4,416

 

23,941

 

13,885

 

Retail Franchise

3,885

 

2,995

 

16,730

 

10,232

   

Total net sales

397,643

 

355,848

 

1,275,664

 

1,188,288

 

Cost of goods sold, including buying and occupancy expenses

(252,866)

 

(229,643)

 

(794,272)

 

(728,346)

                   
   

Gross profit

144,777

 

126,205

 

481,392

 

459,942

 

Selling, general and administrative expenses

(125,392)

 

(107,246)

 

(411,742)

 

(380,141)

 

Goodwill impairment

-

 

(28,300)

 

-

 

(28,300)

                   
   

Operating income (loss)

19,385

 

(9,341)

 

69,650

 

51,501

 

Interest income

31

 

53

 

177

 

168

 

Interest expense

(21,477)

 

(21,826)

 

(85,640)

 

(89,807)

 

Gain (loss) on extinguishment of debt

1,023

 

-

 

(214)

 

(19,563)

 

Other expense, net

(8)

 

(67)

 

(12)

 

(109)

                   
   

Loss before income taxes

(1,046)

 

(31,181)

 

(16,039)

 

(57,810)

 

Income tax (expense) benefit 

(4,371)

 

416

 

5,636

 

6,626

                   
   

Net loss

(5,417)

 

(30,765)

 

(10,403)

 

(51,184)

 

Net (income) loss attributable to noncontrolling interest

(274)

 

5,839

 

2,561

 

5,839

   

Net loss attributable to The Gymboree Corporation

$               (5,691)

 

$             (24,926)

 

$               (7,842)

 

$             (45,345)

                   

 

EXHIBIT B

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

           
     

February 2,

 

January 28,

     

2013

 

2012

     

(in thousands)

Current assets

       
 

Cash and cash equivalents

 

$      33,328

 

$      77,910

 

Accounts receivable

 

27,542

 

27,277

 

Merchandise inventories

 

197,935

 

210,212

 

Prepaid income taxes

 

2,903

 

3,736

 

Prepaid expenses

 

17,341

 

5,532

 

Deferred income taxes

 

31,383

 

36,115

 

    Total current assets

 

310,432

 

360,782

           

Property and equipment, net

 

205,325

 

202,152

Goodwill

 

898,966

 

899,097

Other intangible assets

 

580,641

 

599,195

Deferred financing costs

 

40,040

 

47,915

Other assets

 

7,809

 

4,646

           
 

    Total assets

 

$ 2,043,213

 

$ 2,113,787

           

Current liabilities

       
 

Accounts payable

 

$      90,133

 

$      79,027

 

Accrued liabilities

 

90,443

 

94,178

 

Current portion of long-term debt

 

-

 

17,698

 

    Total current liabilities

 

180,576

 

190,903

           

Long-term liabilities

       
 

Long-term debt

 

1,138,455

 

1,192,171

 

Lease incentives and other deferred liabilities

 

40,104

 

28,681

 

Unrecognized tax benefits

 

7,848

 

7,898

 

Deferred income taxes

 

234,593

 

245,495

 

    Total liabilities

 

1,601,576

 

1,665,148

           

Stockholders' equity

 

441,637

 

448,639

           
 

Total liabilities and stockholders' equity

 

$ 2,043,213

 

$ 2,113,787

           

 

EXHIBIT C

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

         
   

Year Ended

 

Year Ended

   

February 2, 2013

 

January 28, 2012

   

(53 weeks)

 

(52 weeks)

   

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

     

Net loss

$             (10,403)

 

$             (51,184)

Adjustments to reconcile net loss to net cash

     

  provided by operating activities:

     
 

Loss on extinguishment of debt

214

 

15,860

 

Depreciation and amortization

58,847

 

57,930

 

Goodwill impairment

-

 

28,300

 

Amortization of deferred financing costs and accretion of original issue discount

6,902

 

6,830

 

Interest rate cap contracts - adjustment to market

300

 

51

 

Loss on disposal/impairment of assets

3,152

 

4,339

 

Benefit for deferred income taxes

(7,009)

 

(8,946)

 

Share-based compensation expense

4,260

 

5,907

 

Other non-cash expense

1,732

 

4,608

 

Change in assets and liabilities:

     

            Accounts receivable

(2,630)

 

(11,209)

            Merchandise inventories

12,060

 

(25,646)

            Prepaid expenses and other assets

(13,820)

 

(743)

            Prepaid income taxes

(47)

 

12,385

            Accounts payable

11,094

 

24,533

            Accrued liabilities

(5,481)

 

14,515

            Lease incentives and other deferred liabilities

14,623

 

14,015

 

Net cash provided by operating activities

73,794

 

91,545

         

CASH FLOWS FROM INVESTING ACTIVITIES:

     

Capital expenditures

(47,851)

 

(36,565)

Acquisition of business, net of cash acquired

-

 

(1,352)

Other

(842)

 

(295)

 

Net cash used in investing activities

(48,693)

 

(38,212)

         

CASH FLOWS FROM FINANCING ACTIVITIES:

     

Proceeds from Term Loan

-

 

820,000

Payments on Term Loan

(42,698)

 

(828,200)

Proceeds from ABL facility

14,000

 

60,656

Payments on ABL facility

(14,000)

 

(60,656)

Repurchase of Notes

(26,613)

 

-

Deferred financing costs

(1,344)

 

(6,665)

Investment by Parent

-

 

14,865

Investment by affiliate of Parent

2,400

 

-

Dividend payment to Parent

(3,273)

 

(12,200)

Capital contribution to noncontrolling interest

1,602

 

4,477

 

Net cash used in financing activities

(69,926)

 

(7,723)

Effect of exchange rate fluctuations on cash

243

 

176

Net (decrease) increase in cash and cash equivalents

(44,582)

 

45,786

CASH AND CASH EQUIVALENTS:

     

Beginning of period

77,910

 

32,124

End of period

$              33,328

 

$               77,910

         

 

EXHIBIT D

THE GYMBOREE CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited)

                   

ADJUSTED EBITDA:

The Company defines "Adjusted EBITDA" as net income (loss) attributable to The Gymboree Corporation before interest (income) expense, income tax expense (benefit), and depreciation and amortization ("EBITDA") adjusted for other items, including gain or loss on extinguishment of debt, non-cash share-based compensation, loss on disposal/impairment of assets, 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 Partners, LLC (the "Acquisition"), non-recurring and unusual items.

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 income (loss) attributable to The Gymboree Corporation to Adjusted EBITDA (in thousands):

                   
   

Quarter Ended

 

Quarter Ended

 

Year Ended

 

Year Ended

 
   

February 2, 2013

 

January 28, 2012

 

February 2, 2013

 

January 28, 2012

 
   

(14 weeks)

 

(13 weeks)

 

(53 weeks)

 

(52 weeks)

 
   

(in thousands)

 

Net (loss) income attributable to The Gymboree Corporation

 

$               (5,691)

 

$             (24,926)

 

$               (7,842)

 

$             (45,345)

 

Reconciling items (a):

                 

  Interest expense 

 

21,477

 

21,826

 

85,640

 

89,807

 

  Interest income 

 

(18)

 

(53)

 

(134)

 

(168)

 

  Income tax expense (benefit)

 

4,549

 

(416)

 

(6,502)

 

(6,626)

 

  Depreciation and amortization (c)

 

14,902

 

15,227

 

58,369

 

57,930

 

  Non-cash share-based compensation expense 

 

1,040

 

1,577

 

4,260

 

5,907

 

  Executive-related hiring expenses (b)

 

1,884

 

-

 

1,884

 

-

 

  Loss on disposal/impairment on assets

 

891

 

838

 

2,981

 

4,339

 

  Loss (gain) on extinguishment of debt

 

(1,023)

 

-

 

214

 

19,563

 

  Gymboree Play & Music franchise transition

 

-

 

-

 

-

 

7,200

 

  Other (e)

 

5,336

 

-

 

5,336

 

-

 

  Goodwill impairment

 

-

 

28,300

 

-

 

28,300

 

  Acquisition-related adjustments (d)

 

4,351

 

4,813

 

17,639

 

31,678

 

Adjusted EBITDA

 

$              47,698

 

$               47,186

 

$            161,845

 

$             192,585

 
                   

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

 
   

(b) Include amounts related to the hiring of our CEO and CFO, including search-firm costs and sign-on bonuses.

 
                   

(c) Includes the following (in thousands):

                 

    Amortization of intangible assets (impacts SG&A)

 

$                4,340

 

$                 5,067

 

$              17,360

 

$               17,500

 

    Amortization of below and above market leases (impacts COGS)

 

(426)

 

(562)

 

(1,868)

 

(2,090)

 
   

$                3,914

 

$                 4,505

 

$              15,492

 

$               15,410

 
                   

(d) Include the following (in thousands):

                 

    Adjustment to cost of goods sold from an increase in the net book value of inventory as a result of purchase accounting (impacts COGS)

 

$                      -

 

$                      -

 

$                      -

 

$               10,731

 

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

 

2,286

 

2,425

 

9,211

 

9,699

 

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

 

1,302

 

1,171

 

4,069

 

5,607

 

    Decrease in net sales due to the elimination of deferred revenue related to the Company's co-branded credit card program in purchase accounting (impacts net sales)

 

763

 

1,217

 

4,359

 

5,641

 
   

$                4,351

 

$                 4,813

 

$              17,639

 

$               31,678

 
                   

(e) Other is comprised of a non-recurring charge in reserves and a non-recurring charge resulting from a termination of our Shade retail concept.

 
                   
                   

OTHER NON-GAAP FINANCIAL MEASURES:

                   
   

Quarter Ended

 

Quarter Ended

 

Year Ended

 

Year Ended

 
   

February 2, 2013

 

January 28, 2012

 

February 2, 2013

 

January 28, 2012

 
   

(14 weeks)

 

(13 weeks)

 

(53 weeks)

 

(52 weeks)

 
   

(in thousands)

 

Gross profit as reported

 

$            144,777

 

$             126,205

 

$            481,392

 

$             459,942

 

Acquisition-related adjustments

 

2,623

 

3,080

 

11,702

 

23,981

 

Adjusted gross profit excluding Acquisition related adjustments (non-GAAP measure)

 

$            147,400

 

$             129,285

 

$            493,094

 

$             483,923

 
                   
                   
   

Quarter Ended

 

Quarter Ended

 

Year Ended

 

Year Ended

 
   

February 2, 2013

 

January 28, 2012

 

February 2, 2013

 

January 28, 2012

 
   

(14 weeks)

 

(13 weeks)

 

(53 weeks)

 

(52 weeks)

 
   

(in thousands)

 

SG&A as reported

 

$           (125,392)

 

$           (107,246)

 

$           (411,742)

 

$           (380,141)

 

Acquisition-related adjustments

 

5,642

 

6,238

 

21,429

 

23,107

 

Executive-related hiring expenses

 

1,884

 

-

 

1,884

 

-

 

Gymboree Play & Music franchise transition

 

-

 

-

 

-

 

7,200

 

Other adjustments

 

5,336

 

-

 

5,336

 

-

 

Adjusted SG&A excluding Acquisition related adjustments
(non-GAAP measure)

 

$           (112,530)

 

$           (101,008)

 

$           (383,093)

 

$           (349,834)

 
                   
                   

 

EXHIBIT E

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Unaudited)

                   
     

For the quarter ended February 2, 2013

     

Balance Before 

           
     

Consolidation of VIEs

 

VIEs*

 

Eliminations

 

As Reported

     

(in thousands)

 

Net sales

$                      394,436

 

$   5,920

 

$       (2,713)

 

$     397,643

 

Cost of goods sold, including buying and occupancy expenses

(251,870)

 

(1,323)

 

327

 

(252,866)

   

Gross profit

142,566

 

4,597

 

(2,386)

 

144,777

 

Selling, general and administrative expenses

(123,197)

 

(4,523)

 

2,328

 

(125,392)

   

Operating income (loss)

19,369

 

74

 

(58)

 

19,385

 

Interest income

18

 

13

 

-

 

31

 

Interest expense

(21,477)

 

-

 

-

 

(21,477)

 

Loss on extinguishment of debt

1,023

 

-

 

-

 

1,023

 

Other income (expense), net

(18)

 

10

 

-

 

(8)

   

Loss before income taxes

(1,085)

 

97

 

(58)

 

(1,046)

 

Income tax benefit (expense)

(4,548)

 

177

 

-

 

(4,371)

   

Net loss

(5,633)

 

274

 

(58)

 

(5,417)

 

Net loss attributable to noncontrolling interest

-

 

(274)

 

-

 

(274)

   

Net loss attributable to The Gymboree Corporation

$                        (5,633)

 

$         -

 

$            (58)

 

$        (5,691)

                   
                   
     

For the quarter ended January 28, 2012

     

Balance Before 

           
     

Consolidation of VIEs

 

VIEs*

 

Eliminations

 

As Reported

     

(in thousands)

 

Net sales

$                      355,836

 

$   1,195

 

$       (1,183)

 

$     355,848

 

Cost of goods sold, including buying and occupancy expenses

(229,466)

 

(177)

 

-

 

(229,643)

   

Gross profit

126,370

 

1,018

 

(1,183)

 

126,205

 

Selling, general and administrative expenses

(101,599)

 

(6,830)

 

1,183

 

(107,246)

 

Goodwill impairment

(28,300)

 

-

 

-

 

(28,300)

   

Operating income (loss)

(3,529)

 

(5,812)

 

-

 

(9,341)

 

Interest income

53

 

-

 

-

 

53

 

Interest expense

(21,826)

 

-

 

-

 

(21,826)

 

Other (expense) income, net

(59)

 

(8)

 

-

 

(67)

   

Loss before income taxes

(25,361)

 

(5,820)

 

-

 

(31,181)

 

Income tax benefit (expense)

435

 

(19)

 

-

 

416

   

Net loss

(24,926)

 

(5,839)

 

-

 

(30,765)

 

Net loss attributable to noncontrolling interest

-

 

5,839

 

-

 

5,839

   

Net loss attributable to The Gymboree Corporation

$                      (24,926)

 

$         -

 

$               -

 

$      (24,926)

                   
                   
     

For the year ended February 2, 2013

     

Balance Before 

           
     

Consolidation of VIEs

 

VIEs*

 

Eliminations

 

As Reported

     

(in thousands)

 

Net sales

$                   1,270,866

 

$ 14,242

 

$       (9,444)

 

$  1,275,664

 

Cost of goods sold, including buying and occupancy expenses

(791,961)

 

(3,585)

 

1,274

 

(794,272)

                   
   

Gross profit

478,905

 

10,657

 

(8,170)

 

481,392

 

Selling, general and administrative expenses

(407,184)

 

(12,472)

 

7,914

 

(411,742)

                   
   

Operating income (loss)

71,721

 

(1,815)

 

(256)

 

69,650

 

Interest income

134

 

43

 

-

 

177

 

Interest expense

(85,640)

 

-

 

-

 

(85,640)

 

Loss on extinguishment of debt

(214)

 

-

 

-

 

(214)

 

Other income (expense), net

(90)

 

78

 

-

 

(12)

                   
   

Loss before income taxes

(14,089)

 

(1,694)

 

(256)

 

(16,039)

 

Income tax benefit (expense)

6,503

 

(867)

 

-

 

5,636

                   
   

Net loss

(7,586)

 

(2,561)

 

(256)

 

(10,403)

 

Net loss attributable to noncontrolling interest

-

 

2,561

 

-

 

2,561

   

Net loss attributable to The Gymboree Corporation

$                        (7,586)

 

$         -

 

$          (256)

 

$        (7,842)

                   
                   
     

For the year ended January 28, 2012

     

Balance Before 

           
     

Consolidation of VIEs

 

VIEs*

 

Eliminations

 

As Reported

     

(in thousands)

 

Net sales

$                   1,188,276

 

$   1,195

 

$       (1,183)

 

$  1,188,288

 

Cost of goods sold, including buying and occupancy expenses

(728,169)

 

(177)

 

-

 

(728,346)

                   
   

Gross profit

460,107

 

1,018

 

(1,183)

 

459,942

 

Selling, general and administrative expenses

(374,494)

 

(6,830)

 

1,183

 

(380,141)

 

Goodwill impairment

(28,300)

 

-

 

-

 

(28,300)

                   
   

Operating income (loss)

57,313

 

(5,812)

 

-

 

51,501

 

Interest income

168

 

-

 

-

 

168

 

Interest expense

(89,807)

 

-

 

-

 

(89,807)

 

Loss on extinguishment of debt

(19,563)

 

-

 

-

 

(19,563)

 

Other (expense) income, net

(101)

 

(8)

 

-

 

(109)

                   
   

Loss before income taxes

(51,990)

 

(5,820)

 

-

 

(57,810)

 

Income tax benefit (expense)

6,645

 

(19)

 

-

 

6,626

                   
   

Net loss

(45,345)

 

(5,839)

 

-

 

(51,184)

 

Net loss attributable to noncontrolling interest

-

 

5,839

 

-

 

5,839

   

Net loss attributable to The Gymboree Corporation

$                      (45,345)

 

$         -

 

$               -

 

$      (45,345)

                   

 

EXHIBIT E (continued)

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEETS

(Unaudited)

     

February 2, 2013

     

Balance Before 

           
     

Consolidation of VIEs

 

VIEs*

 

Eliminations

 

As Reported

     

(in thousands)

Current assets

$                      303,344

 

$ 11,553

 

$       (4,465)

 

$     310,432

Non-current assets

1,730,865

 

1,916

 

-

 

1,732,781

Total assets

$                   2,034,209

 

$ 13,469

 

$       (4,465)

 

$  2,043,213

                   

Current liabilities

$                      175,555

 

$   9,244

 

$       (4,223)

 

$     180,576

Non-current liabilities

1,420,870

 

130

 

-

 

1,421,000

Total liabilities

$                   1,596,425

 

$   9,374

 

$       (4,223)

 

$  1,601,576

                   

Total stockholders' equity

437,784

 

-

 

(242)

 

437,542

Noncontrolling interest

-

 

4,095

 

-

 

4,095

Total liabilities and stockholders' equity

$                   2,034,209

 

$ 13,469

 

$       (4,465)

 

$  2,043,213

                   
     

January 28, 2012

     

Balance Before 

           
     

Consolidation of VIEs

 

VIEs*

 

Eliminations

 

As Reported

     

(in thousands)

Current assets

$                      355,073

 

$   6,692

 

$          (983)

 

$     360,782

Non-current assets

1,752,303

 

702

 

-

 

1,753,005

Total assets

$                   2,107,376

 

$   7,394

 

$          (983)

 

$  2,113,787

                   

Current liabilities

$                      187,812

 

$   4,074

 

$          (983)

 

$     190,903

Non-current liabilities

1,474,189

 

56

 

-

 

1,474,245

Total liabilities

$                   1,662,001

 

$   4,130

 

$          (983)

 

$  1,665,148

                   

Total stockholders' equity

445,375

 

-

 

-

 

445,375

Noncontrolling interest

-

 

3,264

 

-

 

3,264

Total liabilities and stockholders' equity

$                   2,107,376

 

$   7,394

 

$          (983)

 

$  2,113,787

                   

*  The Variable Interest Entities ("VIEs") includes the results of Gymboree (China) Commercial and Trading Co. Ltd. and Gymboree (Tianjin) Educational Information Consultation Co. Ltd.  While the Company does not control these two entities, they have been determined to be variable interest entities and their results have been consolidated by the Company.

 

 

SOURCE The Gymboree Corporation

###

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