The Gymboree Corporation Reports Third Quarter Fiscal 2015 Results

SAN FRANCISCO - Dec. 10, 2015 // PRNewswire // - The Gymboree Corporation (the "Company") today reported consolidated financial results for the third fiscal quarter ended October 31, 2015.

  • Comparable sales (including online sales) decreased 3% during the third quarter of fiscal 2015
  • Net Sales of $305.4 million, a decrease of 3.6% compared to the third quarter of fiscal 2014
  • Adjusted EBITDA was $28.2 million for the third quarter of fiscal 2015 compared to $29.8 million for the third quarter of fiscal 2014, a decrease of 5.2%

"While our business in the third quarter was challenging, we are encouraged by our performance to date in the fourth quarter," said Mark Breitbard, Chief Executive Officer. "Our quarter to date comparable retail sales are up mid-single digits, and while we continue to expect our Adjusted EBITDA to be in the range of $95 million to $105 million, we believe the lower half of the range is the more likely outcome."

Third Quarter Results (13-weeks ended October 31, 2015 versus 13-weeks ended November 1, 2014)

  • Comparable sales (including online sales) decreased 3%;
  • Net sales were $305.4 million, a decrease of 3.6% compared to $316.8 million in the third quarter of fiscal 2014, which was primarily driven by a decrease in Gymboree brand net sales;
  • Gross profit was $122.8 million, or 40.2% of net sales, compared to $125.9 million, or 39.7% of net sales, for the third quarter of fiscal 2014;
  • Adjusted gross profit was $124.5 million, or 40.7% of net sales, compared to $127.7 million, or 40.3% of net sales, for the third quarter of fiscal 2014, an increase of 40 basis points;
  • SG&A expense was $108.6 million, or 35.5% of net sales, compared to $113.7 million, or 35.9% of net sales, in the third quarter of fiscal 2014. The $5.1 million decrease in SG&A expense was primarily driven by a decrease in expenses due to store closures and reduction in asset impairment charges for under-performing stores, partially offset by an increase in marketing expenses;
  • Adjusted SG&A expense was $105.7 million, or 34.6% of net sales, compared to $111.4 million, or 35.2% of net sales, in the third quarter of fiscal 2014;
  • Adjusted EBITDA, defined as net loss attributable to The Gymboree Corporation before interest, income taxes and depreciation and amortization, adjusted for other items as described below, was $28.2 million compared to $29.8 million for the third quarter of fiscal 2014, a decrease of $1.6 million or 5.2%;
  • Net loss attributable to The Gymboree Corporation for the quarter was $10.0 million compared to $522.1 million for the same quarter of fiscal 2014. The third fiscal quarter of 2014 included a $591.4 million non-cash goodwill and intangible asset impairment charge.

Adjusted EBITDA, Adjusted gross profit and Adjusted SG&A expense are not financial measures prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). For a description of Adjusted EBITDA and a reconciliation of these measures to GAAP measures, see "Non-GAAP Financial Measures" below and Exhibit D of this press release.

Net Sales Results for the 13 weeks and 39 weeks ended October 31, 2015

For the 13 weeks and 39 weeks ended October 31, 2015, Gymboree's consolidated net sales were $305.4 million and $855.0 million, respectively, compared to the same prior year period of $316.8 million and $853.1 million, respectively. On a constant currency basis, net sales decreased by $2.5 million and $5.0 million for the 13 weeks and 39 weeks ended October 31, 2015, respectively, compared to the same prior year period of $314.3 million and $848.1 million, respectively. In calculating net sales on a constant currency basis, average current period foreign exchange rates are applied to both current period and prior period net sales. The Company provides net sales on a constant currency basis to help investors assess sales trends, excluding the impact of foreign currency exchange rate fluctuations.

The following table details the Company's net retail sales for the 13 weeks and 39 weeks ended October 31, 2015 in order to help investors further assess sales trends:

For wide spreadsheet please go to: [http://ir.gymboree.com/releasedetail.cfm?ReleaseID=946585].

As of the end of the third quarter of fiscal 2015, there were $50.0 million in borrowings outstanding under the Company's $225 million asset-backed loan facility and approximately $142.3 million of undrawn availability after being reduced by letters of credit of $32.7 million. As previously announced, on September 24, 2015, the Company amended its asset-backed loan facility to, among other things, extend the maturity date and provide for the incurrence of asset-backed term loans under the facility in an amount not to exceed $75 million, subject to a borrowing base.

Balance Sheet Highlights

Capital expenditures were $5.1 million during the third quarter of fiscal 2015.
Inventory balances at the end of the third quarter of fiscal 2015 were $265.4 million, compared to $259.3 million at the end of the third quarter of fiscal 2014. On a per square foot basis, inventory cost was up 4% over the third quarter of fiscal 2014. Inventory units were up on a low double digit percentage basis.
Fiscal 2015 Business Outlook

The Company's fiscal 2015 outlook is based on current economic environment trends, as well as management expectations for the remainder of the year.

For the full year, the Company expects Adjusted EBITDA will likely be in the lower half of the previously announced range of $95 million to $105 million, which includes the net impact to Adjusted EBITDA of approximately $11 million resulting from the west coast port slowdown in the first half of the year. Based on this guidance, the Company expects to have sufficient liquidity during fiscal 2015 to service its debt and invest in the business to drive long-term growth.

Stores

During fiscal 2015, the Company continues to plan to open approximately 13 stores and expects to close approximately 30 to 40 stores.

Capital Expenditures

During fiscal 2015, the Company now anticipates spending approximately $20 million to $25 million for capital expenditures.

Non-GAAP Financial Measures

The Company defines "Adjusted EBITDA" as net loss attributable to The Gymboree Corporation before interest, income taxes, and depreciation and amortization ("EBITDA") adjusted for other items including, 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 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 loss attributable to The Gymboree Corporation).

The live broadcast of the discussion of third quarter fiscal 2015 financial results and fiscal 2015 business outlook will be available to interested parties at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, December 10, 2015. 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, December 24, 2015, at 855-859-2056, passcode 70524600.

About The Gymboree Corporation

The Gymboree Corporation's specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of October 31, 2015, the Company operated a total of 1,315 retail stores: 598 Gymboree® stores (549 in the United States, 48 in Canada and 1 in Puerto Rico), 175 Gymboree Outlet stores (174 in the United States and 1 in Puerto Rico), 152 Janie and Jack® shops (151 in the United States and 1 in Puerto Rico), and 390 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 720 franchised and Company-operated Gymboree Play & Music® centers in the United States and 42 other countries.

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

Forward-Looking Statements

The foregoing financial information for the third quarter of fiscal 2015 and fourth quarter to date is unaudited and subject to quarter-end and year-end adjustments. The fourth quarter to date comparable retail sales reflect sales through December 8, 2015 and should not be relied upon as an indicator of our results for the fourth quarter of fiscal 2015. This press release includes forward-looking statements, including statements relating to The Gymboree Corporation's anticipated future financial performance, liquidity and capital resources, especially those set forth under the heading "Fiscal 2015 Business Outlook". 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 disruptions in the west coast ports, ongoing volatility in the commodities markets, 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 dependence on the holiday season, particularly the month of December, to sell a significant portion of its existing inventory, which may be affected by weather, spending patterns, promotional activity, terrorist activity or other security threats or perceived threats impacting store traffic and other factors, the Company's ability to anticipate and timely respond to changes in trends, consumer preferences and customer reactions to new merchandise (particularly given the Company's need to build up inventory significantly in advance of potential product sales), 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, 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, the limited data available in the future upon which to base its expectations for stabilizing sales trends, 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 31, 2015, filed with the Securities and Exchange Commission ("SEC") on May 1, 2015. 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, Crazy 8, and Gymboree Play & Music are registered trademarks of The Gymboree Corporation.

EXHIBIT A

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)

                               
         

13 Weeks Ended

   

39 Weeks Ended

 
         

October 31, 2015

   

November 1, 2014

   

October 31, 2015

   

November 1, 2014

 
 

Net sales:

                         
 

Retail

   

$            289,653

   

$            304,265

   

$            808,376

   

$            816,765

 
 

Gymboree Play & Music 

   

9,921

   

7,744

   

30,236

   

21,895

 
 

Retail Franchise

   

5,867

   

4,810

   

16,363

   

14,472

 
   

Total net sales

   

305,441

   

316,819

   

854,975

   

853,132

 
 

Cost of goods sold, including buying and occupancy expenses

 

(182,660)

   

(190,898)

   

(526,177)

   

(522,489)

 
   

Gross profit

   

122,781

   

125,921

   

328,798

   

330,643

 
 

Selling, general and administrative expenses

   

(108,566)

   

(113,679)

   

(316,642)

   

(323,109)

 
 

Goodwill and intangible asset impairment

   

-

   

(591,396)

   

-

   

(591,396)

 
   

Operating income (loss)

   

14,215

   

(579,154)

   

12,156

   

(583,862)

 
 

Interest income

   

38

   

42

   

80

   

157

 
 

Interest expense

   

(21,906)

   

(20,768)

   

(64,613)

   

(61,597)

 
 

Other expense, net

   

(170)

   

(19)

   

(138)

   

(521)

 
   

Loss before income taxes

   

(7,823)

   

(599,899)

   

(52,515)

   

(645,823)

 
 

Income tax (expense) benefit

   

(1,829)

   

77,505

   

(5,011)

   

75,573

 
   

Net loss

   

(9,652)

   

(522,394)

   

(57,526)

   

(570,250)

 
   

Net (income) loss attributable to noncontrolling interest

   

(376)

   

319

   

(2,089)

   

3,591

 
   

Net loss attributable to The Gymboree Corporation

 

$             (10,028)

   

$           (522,075)

   

$             (59,615)

   

$           (566,659)

 

 

EXHIBIT B

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

                         
       

October 31,

   

January 31,

   

November 1

   
       

2015

   

2015

   

2014

   

ASSETS

                     

Current assets:

                     
 

Cash and cash equivalents

   

$             24,277

   

$             18,520

   

$             20,828

   
 

Accounts receivable

   

22,487

   

25,248

   

23,377

   
 

Merchandise inventories

   

265,409

   

198,337

   

259,266

   
 

Prepaid income taxes

   

2,577

   

2,599

   

2,715

   
 

Prepaid expenses

   

7,402

   

6,821

   

21,090

   
 

Deferred income taxes

   

7,053

   

6,824

   

9,182

   
 

    Total current assets

   

329,205

   

258,349

   

336,458

   
                         

Property and equipment, net

   

166,660

   

182,431

   

191,175

   

Goodwill

   

373,408

   

373,834

   

375,345

   

Other intangible assets, net

   

341,585

   

343,552

   

344,829

   

Deferred financing costs

   

22,489

   

25,622

   

27,338

   

Restricted cash

     

4,535

   

-

   

-

   

Other assets

   

4,117

   

4,155

   

8,866

   
                         
 

    Total assets

   

$        1,241,999

   

$        1,187,943

   

$        1,284,011

   
                         
                         

LIABILITIES AND STOCKHOLDERS' DEFICIT

                     

Current liabilities:

                     
 

Accounts payable

   

$           132,523

   

$             87,032

   

$           146,066

   
 

Accrued liabilities

   

115,286

   

94,805

   

108,334

   
 

Line of credit borrowings

   

50,000

   

33,000

   

42,000

   
 

Current obligation under capital lease

   

591

   

552

   

539

   
 

    Total current liabilities

   

298,400

   

215,389

   

296,939

   
                         

Long-term liabilities:

                     
 

Long-term debt

   

1,114,288

   

1,114,048

   

1,113,970

   
 

Long-term sale-leaseback financing liability

   

26,462

   

-

   

-

   
 

Long-term obligation under capital lease

   

2,402

   

2,850

   

2,993

   
 

Lease incentives and other liabilities

   

50,992

   

53,677

   

54,129

   
 

Unrecognized tax benefits

   

6,114

   

5,048

   

6,186

   
 

Deferred income taxes

   

129,808

   

129,196

   

131,137

   
 

    Total liabilities

   

1,628,466

   

1,520,208

   

1,605,354

   
                         

Stockholders' deficit

   

(386,467)

   

(332,265)

   

(321,343)

   
                         
 

Total liabilities and stockholders' deficit

   

$        1,241,999

   

$        1,187,943

   

$        1,284,011

   
                         

 

EXHIBIT C

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

                 
       

39 Weeks Ended

 
       

October 31, 2015

   

November 1, 2014

 

CASH FLOWS FROM OPERATING ACTIVITIES:

           

Net loss

   

$              (57,526)

 

$

(570,250)

 

Adjustments to reconcile net loss to net cash used in operating activities:

           
 

Goodwill and intangible asset impairment

 

-

   

591,396

 
 

Depreciation and amortization

 

30,868

   

33,469

 
 

Amortization of deferred financing costs and accretion of original issue discount

 

5,948

   

5,345

 
 

Interest rate cap contracts - adjustment to market

 

2,737

   

1,441

 
 

Loss on disposal/impairment of assets

 

438

   

6,089

 
 

Deferred income taxes

 

260

   

(79,214)

 
 

Share-based compensation expense

 

2,665

   

3,389

 
 

Other

   

(907)

   

(106)

 
 

Change in assets and liabilities:

           
 

Accounts receivable

 

4,476

   

(1,507)

 
 

Merchandise inventories

 

(67,669)

   

(84,093)

 
 

Prepaid income taxes

 

8

   

(744)

 
 

Prepaid expenses and other assets

 

(377)

   

630

 
 

Accounts payable

 

45,516

   

44,115

 
 

Accrued liabilities

 

17,529

   

8,237

 
 

Lease incentives and other liabilities

 

(304)

   

5,304

 
 

Net cash used in operating activities

 

(16,338)

   

(36,499)

 
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

           

Capital expenditures

 

(12,576)

   

(24,372)

 

Increase in restricted cash

 

(10,863)

   

-

 

Decrease in restricted cash

 

6,328

   

-

 

Increase in related party loan receivable

 

(1,741)

   

-

 

Proceeds from sale of assets

 

353

   

-

 

Other

   

33

   

(45)

 
 

Net cash used in investing activities

 

(18,466)

   

(24,417)

 
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

           

Proceeds from ABL facility

 

390,000

   

300,000

 

Payments on ABL facility

 

(373,000)

   

(258,000)

 

Proceeds from sale-leaseback financing liability

 

26,750

   

-

 

Payments on capital lease and sale-leaseback financing liability

 

(497)

   

(373)

 

Payments for deferred financing costs

 

(2,574)

   

-

 

Dividend payment to parent

 

(11)

   

(84)

 

Capital contribution received by noncontrolling interest

 

-

   

992

 
 

Net cash provided by financing activities

 

40,668

   

42,535

 

Effect of exchange rate fluctuations on cash and cash equivalents

 

(107)

   

(220)

 

Net increase (decrease) in cash and cash equivalents

 

5,757

   

(18,601)

 

CASH AND CASH EQUIVALENTS:

           

Beginning of period

 

18,520

   

39,429

 

End of period

   

$                24,277

   

$                20,828

 

 

EXHIBIT D

THE GYMBOREE CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands)

(Unaudited)

                   

ADJUSTED EBITDA:

                 

The Company defines "Adjusted EBITDA" as net income (loss) attributable to The Gymboree Corporation before interest expense, interest income, income tax expense/benefit, and depreciation and amortization ("EBITDA") adjusted for other items, including 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 loss attributable to The Gymboree Corporation to Adjusted EBITDA:

 
                   
   

13 Weeks Ended

 

39 Weeks Ended

 
   

October 31, 2015

 

November 1, 2014

 

October 31, 2015

 

November 1, 2014

 
                   

Net loss attributable to The Gymboree Corporation

 

$                (10,028)

 

$              (522,075)

 

$                (59,615)

 

$              (566,659)

 

Reconciling items (a):

                 

Interest expense 

 

21,906

 

20,768

 

64,613

 

61,597

 

Interest income 

 

(6)

 

(14)

 

(23)

 

(80)

 

Income tax expense (benefit)

 

951

 

(78,023)

 

2,869

 

(76,633)

 

Depreciation and amortization (b)

 

9,705

 

10,477

 

29,813

 

32,281

 

Non-cash share-based compensation expense 

 

813

 

1,120

 

2,665

 

3,389

 

Loss on disposal/impairment on assets

 

332

 

2,186

 

874

 

6,041

 

Loss on modification of ABL facility

 

201

 

-

 

201

 

-

 

Goodwill and intangible asset impairment

 

-

 

591,396

 

-

 

591,396

 

Acquisition-related adjustments (c)

 

2,563

 

2,771

 

8,564

 

8,678

 

Other (d)

 

1,801

 

1,181

 

4,938

 

1,369

 

Adjusted EBITDA

 

$                  28,238

 

$                  29,787

 

$                  54,899

 

$                  61,379

 
                   

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

                 
                   

(b) Includes the following:

                 

Amortization of intangible assets (impacts SG&A)

 

$                       384

 

$                       384

 

$                    1,151

 

$                    1,151

 

Amortization of below and above market leases (impacts COGS)

 

(198)

 

(237)

 

(546)

 

(724)

 
   

$                       186

 

$                       147

 

$                       605

 

$                       427

 
                   

(c) Includes the following:

                 

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

 

$                    1,879

 

$                    2,058

 

$                    5,646

 

$                    6,189

 

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

 

684

 

713

 

2,918

 

2,489

 
   

$                    2,563

 

$                    2,771

 

$                    8,564

 

$                    8,678

 
                   

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

                 
                   

OTHER NON-GAAP FINANCIAL MEASURES:

                 
                   
   

13 Weeks Ended

 

39 Weeks Ended

 
   

October 31, 2015

 

November 1, 2014

 

October 31, 2015

 

November 1, 2014

 
                   

Gross profit as reported

 

$                122,781

 

$                125,921

 

$                328,798

 

$                330,643

 

Acquisition-related adjustments

 

1,681

 

1,821

 

5,100

 

5,465

 

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

 

$                124,462

 

$                127,742

 

$                333,898

 

$                336,108

 
                   
                   
   

13 Weeks Ended

 

39 Weeks Ended

 
   

October 31, 2015

 

November 1, 2014

 

October 31, 2015

 

November 1, 2014

 
                   

SG&A as reported

 

$              (108,566)

 

$              (113,679)

 

$              (316,642)

 

$              (323,109)

 

Acquisition-related adjustments

 

1,068

 

1,097

 

4,069

 

3,640

 

Other adjustments

 

1,801

 

1,181

 

4,938

 

1,369

 
   

2,869

 

2,278

 

9,007

 

5,009

 

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

 

$              (105,697)

 

$              (111,401)

 

$              (307,635)

 

$              (318,100)

 

 

EXHIBIT E

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)

                   
   

For the 13 Weeks Ended October 31, 2015

 
   

Balance Before 

             
   

Consolidation

             
   

 of VIEs

 

VIEs*

 

Eliminations

 

As Reported

 

Net sales

$                 297,895

 

$                     9,917

 

$                    (2,371)

 

$                 305,441

 

Cost of goods sold, including buying and occupancy expenses

(180,276)

 

(3,087)

 

703

 

(182,660)

 
 

Gross profit

117,619

 

6,830

 

(1,668)

 

122,781

 

Selling, general and administrative expenses

(104,633)

 

(5,627)

 

1,694

 

(108,566)

 
 

Operating income

12,986

 

1,203

 

26

 

14,215

 

Other non-operating (expense) income

(22,089)

 

51

 

-

 

(22,038)

 
 

(Loss) income before income taxes

(9,103)

 

1,254

 

26

 

(7,823)

 

Income tax expense

(951)

 

(878)

 

-

 

(1,829)

 
 

Net (loss) income

(10,054)

 

376

 

26

 

(9,652)

 
 

Net income attributable to noncontrolling interest

-

 

(376)

 

-

 

(376)

 
 

Net loss attributable to The Gymboree Corporation

$                  (10,054)

 

$                           -

 

$                          26

 

$                  (10,028)

 
                   
                   
   

For the 13 Weeks Ended November 1, 2014

 
   

Balance Before 

             
   

Consolidation

             
   

 of VIEs

 

VIEs*

 

Eliminations

 

As Reported

 

Net sales

$                 312,258

 

$                     6,055

 

$                    (1,494)

 

$                 316,819

 

Cost of goods sold, including buying and occupancy expenses

(189,729)

 

(1,561)

 

392

 

(190,898)

 
 

Gross profit

122,529

 

4,494

 

(1,102)

 

125,921

 

Selling, general and administrative expenses

(701,854)

 

(4,322)

 

1,101

 

(705,075)

 
 

Operating (loss) income

(579,325)

 

172

 

(1)

 

(579,154)

 

Other non-operating (expense) income

(20,772)

 

27

 

-

 

(20,745)

 
 

(Loss) income before income taxes

(600,097)

 

199

 

(1)

 

(599,899)

 

Income tax benefit (expense)

78,023

 

(518)

 

-

 

77,505

 
 

Net loss

(522,074)

 

(319)

 

(1)

 

(522,394)

 
 

Net loss attributable to noncontrolling interest

-

 

319

 

-

 

319

 
 

Net loss attributable to The Gymboree Corporation

$                (522,074)

 

$                           -

 

$                           (1)

 

$                (522,075)

 
                   
                   
   

For the 39 Weeks Ended October 31, 2015

 
   

Balance Before 

             
   

Consolidation

             
   

 of VIEs

 

VIEs*

 

Eliminations

 

As Reported

 

Net sales

$                 832,928

 

$                   29,609

 

$                    (7,562)

 

$                 854,975

 

Cost of goods sold, including buying and occupancy expenses

(520,518)

 

(8,145)

 

2,486

 

(526,177)

 
 

Gross profit

312,410

 

21,464

 

(5,076)

 

328,798

 

Selling, general and administrative expenses

(304,330)

 

(17,290)

 

4,978

 

(316,642)

 
 

Operating income

8,080

 

4,174

 

(98)

 

12,156

 

Other non-operating (expense) income

(64,728)

 

57

 

-

 

(64,671)

 
 

(Loss) income before income taxes

(56,648)

 

4,231

 

(98)

 

(52,515)

 

Income tax expense

(2,869)

 

(2,142)

 

-

 

(5,011)

 
 

Net (loss) income

(59,517)

 

2,089

 

(98)

 

(57,526)

 
 

Net income attributable to noncontrolling interest

-

 

(2,089)

 

-

 

(2,089)

 
 

Net loss attributable to The Gymboree Corporation

$                  (59,517)

 

$                           -

 

$                         (98)

 

$                  (59,615)

 
                   
                   
   

For the 39 Weeks Ended November 1, 2014

 
   

Balance Before 

             
   

Consolidation

             
   

 of VIEs

 

VIEs*

 

Eliminations

 

As Reported

 

Net sales

$                 840,794

 

$                   17,705

 

$                    (5,367)

 

$                 853,132

 

Cost of goods sold, including buying and occupancy expenses

(518,426)

 

(4,874)

 

811

 

(522,489)

 
 

Gross profit

322,368

 

12,831

 

(4,556)

 

330,643

 

Selling, general and administrative expenses

(903,695)

 

(15,356)

 

4,546

 

(914,505)

 
 

Operating loss

(581,327)

 

(2,525)

 

(10)

 

(583,862)

 

Other non-operating expense

(61,955)

 

(6)

 

-

 

(61,961)

 
 

Loss before income taxes

(643,282)

 

(2,531)

 

(10)

 

(645,823)

 

Income tax benefit (expense)

76,633

 

(1,060)

 

-

 

75,573

 
 

Net loss

(566,649)

 

(3,591)

 

(10)

 

(570,250)

 
 

Net loss attributable to noncontrolling interest

-

 

3,591

 

-

 

3,591

 
 

Net loss attributable to The Gymboree Corporation

$                (566,649)

 

$                           -

 

$                         (10)

 

$                (566,659)

 

 

EXHIBIT E (continued)

THE GYMBOREE CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEETS

(In thousands)

(Unaudited)

                     
     

October 31, 2015

 
     

Balance Before 

             
     

Consolidation of VIEs

 

VIEs*

 

Eliminations

 

As Reported

 

Current assets

$                     309,963

 

$                        21,203

 

$                    (1,961)

 

$               329,205

 

Non-current assets

908,163

 

4,631

 

-

 

912,794

 
 

Total assets

$                  1,218,126

 

$                        25,834

 

$                    (1,961)

 

$            1,241,999

 
                     

Current liabilities

$                     286,632

 

$                        13,451

 

$                    (1,683)

 

$               298,400

 

Non-current liabilities

1,329,555

 

511

 

-

 

1,330,066

 
 

Total liabilities

1,616,187

 

13,962

 

(1,683)

 

1,628,466

 
                     

Total stockholders' deficit

(398,061)

 

-

 

(278)

 

(398,339)

 

Noncontrolling interest

-

 

11,872

 

-

 

11,872

 
 

Total liabilities and stockholders' deficit

$                  1,218,126

 

$                        25,834

 

$                    (1,961)

 

$            1,241,999

 
                     
     

January 31, 2015

 
     

Balance Before 

             
     

Consolidation of VIEs

 

VIEs*

 

Eliminations

 

As Reported

 

Current assets

$                     243,682

 

$                        16,222

 

$                    (1,555)

 

$               258,349

 

Non-current assets

924,367

 

5,227

 

-

 

929,594

 
 

Total assets

$                  1,168,049

 

$                        21,449

 

$                    (1,555)

 

$            1,187,943

 
                     

Current liabilities

$                     205,674

 

$                        11,088

 

$                    (1,373)

 

$               215,389

 

Non-current liabilities

1,304,384

 

435

 

-

 

1,304,819

 
 

Total liabilities

1,510,058

 

11,523

 

(1,373)

 

1,520,208

 
                     

Total stockholders' deficit

(342,009)

 

-

 

(182)

 

(342,191)

 

Noncontrolling interest

-

 

9,926

 

-

 

9,926

 
 

Total liabilities and stockholders' deficit

$                  1,168,049

 

$                        21,449

 

$                    (1,555)

 

$            1,187,943

 
                     
     

November 1, 2014

 
     

Balance Before 

             
     

Consolidation of VIEs

 

VIEs*

 

Eliminations

 

As Reported

 

Current assets

$                     321,144

 

$                        16,636

 

$                    (1,322)

 

$               336,458

 

Non-current assets

942,208

 

5,345

 

-

 

947,553

 
 

Total assets

$                  1,263,352

 

$                        21,981

 

$                    (1,322)

 

$            1,284,011

 
                     

Current liabilities

$                     289,155

 

$                          8,959

 

$                    (1,175)

 

$               296,939

 

Non-current liabilities

1,307,985

 

430

 

-

 

1,308,415

 
 

Total liabilities

1,597,140

 

9,389

 

(1,175)

 

1,605,354

 
                     

Total stockholders' deficit

(333,788)

 

-

 

(147)

 

(333,935)

 

Noncontrolling interest

-

 

12,592

 

-

 

12,592

 
 

Total liabilities and stockholders' deficit

$                  1,263,352

 

$                        21,981

 

$                    (1,322)

 

$            1,284,011

 
                     

 

*  The Variable Interest Entities ("VIEs") include 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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