FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
ANNUAL REPORT
PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
| | (X) | | Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934 |
| |
| | | | For the fiscal year ended December 31, 2001 |
| |
| | | | Commission file number 0-21250 |
| |
| | A. | | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
Gymboree 401(k) Plan
| | B. | | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
The Gymboree Corporation
700 Airport Boulevard
Suite 200
Burlingame, CA 94010-1912
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | |
| | The Gymboree Corporation |
|
| Date: June 27, 2002 | By | /s/ Myles McCormick |
| |
|
| | Myles McCormick |
Page 1 of 13
TABLE OF CONTENTS
Gymboree 401(k) Plan
Financial Statements
December 31, 2001 and 2000
Page 2 of 13
GYMBOREE 401(k) PLAN
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000
Table of Contents
| | | | | |
| | | Page |
| Independent Accountants’ Report | | | 1 | |
| |
| Financial Statements: | | | | |
| |
| Statements of Net Assets Available for Benefits | | | 2 | |
| Statements of Changes in Net Assets Available for Benefits | | | 3 | |
| Notes to Financial Statements | | | 4 | |
| |
| Supplemental Schedule as of December 31, 2001 | | | 8 | |
Schedule of Assets Held for Investment Purposes
Page 3 of 13
INDEPENDENT ACCOUNTANTS’ REPORT
To the Participants and
Plan Administrator of the
Gymboree 401(k) Plan
We have audited the financial statements of the Gymboree 401(k) Plan (the Plan) as of December 31, 2001 and 2000, and for the years then ended, as listed in the accompanying table of contents. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Plan’s management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2001 and 2000, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
| | | | |
| By | | /s/ Mohler, Nixon & Williams |
| | |
|
| | | MOHLER, NIXON & WILLIAMS
Accountancy Corporation |
Campbell, California
May 24, 2002
Page 4 of 13
GYMBOREE 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
| | | | | | | | | | |
| | | | December 31, |
| | | | 2001 | | 2000 |
| | | |
| |
|
| Assets: | | | | | | | | |
| | Investments, at fair value | | $ | 6,300,709 | | | $ | 6,400,840 | |
| | Participant loans | | | 130,647 | | | | 172,063 | |
| | | |
| | | |
| |
| Net assets available for benefits | | $ | 6,431,356 | | | $ | 6,572,903 | |
| | | |
| | | |
| |
| See notes to financial statements | | | | | | | | |
Page 5 of 13
GYMBOREE 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
| | | | | | | | | | | | |
| | | | | | Years ended |
| | | | | | December 31, |
| | | | | | 2001 | | 2000 |
| | | | | |
| |
|
| Additions to net assets attributed to: | | | | | | | | |
| | Investment income: | | | | | | | | |
| | | Dividends and interest | | $ | 124,113 | | | $ | 413,799 | |
| | | Net realized and unrealized depreciation in fair value of investments | | | (1,300,628 | ) | | | (1,223,750 | ) |
| | | |
| | | |
| |
| | | | (1,176,515 | ) | | | (809,951 | ) |
| | | |
| | | |
| |
| | Contributions: | | | | | | | | |
| | | Participants’ | | | 1,534,626 | | | | 1,361,461 | |
| | | Employer’s | | | 258,839 | | | | 242,529 | |
| | | |
| | | |
| |
| | | | 1,793,465 | | | | 1,603,990 | |
| | | |
| | | |
| |
| | | | Total additions | | | 616,950 | | | | 794,039 | |
| | | |
| | | |
| |
| Deductions from net assets attributed to: | | | | | | | | |
| | Withdrawals and distributions | | | 758,497 | | | | 1,217,502 | |
| | | |
| | | |
| |
| | | | Total deductions | | | 758,497 | | | | 1,217,502 | |
| | | |
| | | |
| |
| | | | Net decrease in net assets | | | (141,547 | ) | | | (423,463 | ) |
| Net assets available for benefits: | | | | | | | | |
| | Beginning of year | | | 6,572,903 | | | | 6,996,366 | |
| | | |
| | | |
| |
| | End of year | | $ | 6,431,356 | | | $ | 6,572,903 | |
| | | |
| | | |
| |
See notes to financial statements.
Page 6 of 13
GYMBOREE 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 1 — THE PLAN AND ITS SIGNIFICANT ACCOUNTING POLICIES
General — The following description of the Gymboree 401(k) Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
The Plan is a defined contribution plan that was established in 1992 by The Gymboree Corporation (the Company) to provide benefits to eligible employees, as defined in the Plan document. The Plan administrator believes that the Plan is currently designed and operated in compliance with the applicable requirements of the Internal Revenue Code and the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
Administration — The Company has appointed an Administrative Committee (the Committee) to manage the operation and administration of the Plan. The Company has contracted with a third-party administrator who processes and maintains the records of participant data and Putnam Fiduciary Trust Company (Putnam) to act as the custodian and trustee. Substantially all expenses incurred for administering the Plan are paid by the Company.
Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Basis of accounting — The financial statements of the Plan are prepared on the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America.
Investments — Investments of the Plan are held by Putnam and invested based solely upon instructions received from participants.
The Plan’s investments in mutual funds, a common collective trust and company stock are valued at fair value as of the last day of the Plan year, as measured by quoted market prices. Participant loans are valued at cost, which approximates fair value.
Income taxes — The Plan has been amended since receiving its latest favorable determination letter dated April 1997. The Company believes that the Plan is operated in accordance with, and continues to qualify under, the applicable requirements of the Internal Revenue Code and related state statutes, and that the trust, which forms a part of the Plan, is exempt from federal income and state franchise taxes.
Page 7 of 13
Risks and uncertainties — The Plan provides for various investment options in any combination of mutual funds, a common collective trust and Company stock offered by the Plan. Investment securities are exposed to various risks, such as interest rate, market fluctuations and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits and the statements of changes in net assets available for benefits.
NOTE 2 — RELATED PARTY TRANSACTIONS
Certain Plan investments in mutual funds and a common collective trust are managed by Putnam, the trustee of the Plan. Any purchases and sales of these funds are performed in the open market at fair value. Such transactions, while considered party-in-interest transactions under ERISA regulations, are permitted under the provisions of the Plan and are specifically exempt from the prohibition of party-in-interest transactions under ERISA.
NOTE 3 — PARTICIPATION AND BENEFITS
Participant contributions — Participants may elect to have the Company contribute up to 20% of their eligible pre-tax compensation not to exceed the amount allowable under current income tax regulations. Participants who elect to have the Company contribute a portion of their compensation to the Plan agree to accept an equivalent reduction in taxable compensation. Contributions withheld are invested in accordance with the participant’s direction.
Participants are also allowed to make rollover contributions of amounts received from other tax-qualified employer-sponsored retirement plans. Such contributions are deposited in the appropriate investment funds in accordance with the participant’s direction and the Plan’s provisions.
Employer contributions — The Company is allowed to make discretionary matching contributions as defined in the Plan and as approved by the Board of Directors. In 2001 and 2000, the Company matched 50% of each eligible participant’s contribution, not to exceed $500 per year.
Vesting — Participants are immediately vested in all contributions and related earnings.
Participant accounts — Each participant’s account is credited with the participant’s contribution, Plan earnings or losses and an allocation of the Company’s contribution. Allocation of the Company’s contribution is based on participant contributions, as defined in the Plan.
Page 8 of 13
Payment of benefits — Upon termination, the participant or beneficiary may elect to leave their account balance in the Plan, receive their total benefits in a lump sum amount equal to the value of the participant’s interest in their account, or installments over a period not to exceed the participants lifetime, the lifetime of their designated beneficiary or their life expectancy. The Plan allows for automatic lump sum distribution of participant account balances that do not exceed $5,000.
Loans to participants — The Plan allows participants to borrow not less than $1,000 and up to the lesser of $50,000 or 50% of their account balance. The loans are secured by the participant’s balance. Such loans bear interest at the available market financing rates and must be repaid to the Plan within a five-year period, unless the loan is used for the purchase of a principal residence in which case the maximum repayment period may be extended. The specific terms and conditions of such loans are established by the Committee. Outstanding loans at December 31, 2001 carry interest rates which range from 6.50% to 10.50%.
NOTE 4 — INVESTMENTS
The following table includes the fair values of investments and investment funds that represent 5% or more of the Plan’s net assets at December 31:
| | | | | | | | | | | |
| | | | | 2001 | | 2000 |
| | | | |
| |
|
| Putnam: | | | | | | | | |
| | The George Putnam Fund of Boston | | $ | 404,842 | | | $ | 274,769 | |
| | Investors Fund | | | 1,635,580 | | | | 2,019,468 | |
| | Voyager Fund | | | 1,030,982 | | | | 1,100,508 | |
| | Diversified Income Trust | | | 228,683 | | | | 194,093 | |
| | New Opportunities Fund | | | 771,020 | | | | 801,205 | |
| | International Growth Fund | | | 948,336 | | | | 1,066,545 | |
| | Stable Value Fund | | | 923,221 | | | | 628,406 | |
| Gymboree common stock | | | 357,522 | | | | 315,846 | |
| Cash | | | 523 | | | | | |
| Participant loans | | | 130,647 | | | | 172,063 | |
| | | |
| | | |
| |
| | | Assets held for investment purposes | | $ | 6,431,356 | | | $ | 6,572,903 | |
| | | |
| | | |
| |
The Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows for the years ended December 31:
| | | | | | | | | |
| | | 2001 | | 2000 |
| | |
| |
|
| Mutual funds and common collective trust | | | ($1,312,131 | ) | | | ($1,420,097 | ) |
| Gymboree common stock | | | 11,503 | | | | 196,347 | |
| | | |
| | | |
| |
| | | | ($1,300,628 | ) | | | ($1,223,750 | ) |
| | | |
| | | |
| |
Page 9 of 13
NOTE 5 — PARTY-IN-INTEREST TRANSACTIONS
As allowed by the Plan, participants may elect to invest a portion of their accounts in the common stock of the Company. Aggregate investment in Company common stock at December 31, 2001 and 2000 was as follows:
| | | | | | | | | | | | | |
| Date | | Number of shares | | Fair value | | Cost |
| |
| |
| |
|
| 2001 | | | 29,968 | | | $ | 357,522 | | | $ | 303,920 | |
| 2000 | | | 22,764 | | | | 315,846 | | | | 288,840 | |
NOTE 6 — PLAN TERMINATION
The Company intends to continue the Plan indefinitely for the benefit of its participants; however, it reserves the right to terminate or modify the Plan at any time by resolution of its Board of Directors and subject to the provisions of ERISA.
Page 10 of 13
SUPPLEMENTAL SCHEDULE
Page 11 of 13
| GYMBOREE 401(k) PLAN | EIN: 94-2615258 |
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001
| | | | | | | | | | |
| Identity of issue, borrower, | | Description of investment including maturity date, | | Current |
| lessor or similar party | | rate of interest, collateral, par or maturity value | | value |
| |
| |
|
| | Putnam: | | | | | | | | |
| * The George Putnam Fund of Boston | | Mutual Fund | | $ | 404,842 | |
| * Putnam Investors Fund | | Mutual Fund | | | 1,635,580 | |
| * Putnam Voyager Fund | | Mutual Fund | | | 1,030,982 | |
| * Putnam Diversified Income Trust | | Mutual Fund | | | 228,683 | |
| * Putnam New Opportunities Fund | | Mutual Fund | | | 771,020 | |
| * Putnam International Growth Fund | | Mutual Fund | | | 948,336 | |
| * Putnam Stable Value Fund | | Common Collective Trust | | | 923,221 | |
| * Gymboree common stock | | Common Stock | | | 357,522 | |
| | Cash | | Pending Account | | | 523 | |
| * Participant loans | | Interest rates ranging from 6.50% to 10.50% | | | 130,647 | |
| | | | | | | |
| |
| | | Total | | $ | 6,431,356 | |
| | | | | | | |
| |
| * Party-in-interest | | | | | | | | |
Page 12 of 13
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-74269) of The Gymboree Corporation of our report dated May 24, 2002, with respect to the financial statements and schedule of the Gymboree 401(k) Plan included in this Annual Report on Form 11-K.
| | | | |
| By | | /s/ Mohler, Nixon & Williams |
| | |
|
| | | MOHLER, NIXON & WILLIAMS
Accountancy Corporation |
Campbell, California
June 26, 2002
Page 13 of 13
