SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
_______________________
Date of Report
(Date of earliest
event reported): March 13, 1997
Swing-N-Slide Corp.
(Exact name of registrant as specified in its charter)
Delaware 0-20450 36-3808989
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
1212 Barberry Drive, Janesville, Wisconsin 53545
(Address of principal executive offices including zip code)
(608) 755-4777
(Registrant's telephone number)
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired - Game Time, Inc.
Independent Auditors' Report
Financial Statements:
Balance Sheets, December 31, 1996 and 1995
Statement of Operations,
Years Ended December 31, 1996 and 1995
Statement of Changes in Stockholders' Equity,
Years Ended December 31, 1996 and 1995
Statement of Cash Flows,
Years Ended December 31, 1996 and 1995
Notes to Financial Statements
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Gametime, Inc.
We have audited the accompanying balance sheets of GAMETIME, INC. (an S
corporation) as of December 31, 1996 and 1995, and the related statements
of operations, changes in stockholders' equity and cash flows for the
years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 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 financial position of Gametime, Inc. as of
December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the
financial statements taken as a whole. The additional financial data, as
listed in the Table of Contents, is presented for purposes of additional
analysis and is not a required part of the financial statements. Such
information has been subjected to the auditing procedures applied in the
audits of the financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as
a whole.
Chicago, Illinois
March 7, 1997
<PAGE>
Exhibit A
GAMETIME, INC.
(An S Corporation)
Balance Sheets
December 31, 1996 and 1995
Assets (Primarily Pledged--Note 4) 1996 1995
Current Assets:
Cash and cash equivalents (Note 1) $ 47,160 $ 68,091
Restricted cash related to industrial
development bond issue (Note 3) 251,167 252,073
Accounts receivable, trade (net of
allowance for doubtful accounts of
$104,000 and $119,328) 5,488,265 6,219,403
Inventories (Notes 1 and 2) 3,105,623 3,102,293
Other receivables 80,727 261,764
Prepaid expenses 134,556 189,793
Deferred catalog costs--current
(Note 1) 1,158,099 1,654,093
---------- ----------
10,265,597 11,747,510
---------- ----------
Property, Plant and Equipment (less
accumulated depreciation and
amortization):
Owned assets (Notes 1, 2 and 3) 7,917,724 5,797,796
Assets under capitalized leases
(Notes 1, 2 and 3) 2,950,797 3,290,125
---------- ----------
10,868,521 9,087,921
---------- ----------
Other Assets:
Restricted cash related to industrial
development bond issue (Note 3) 484,015 484,905
Marketable equity securities (Note 7) 0 440,131
Deferred catalog costs--noncurrent
(Note 1) 204,799 446,333
Other 243,256 231,949
---------- ----------
932,070 1,603,318
---------- ----------
$22,066,188 $22,438,749
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable, trade $ 2,080,167 $ 2,318,096
Current portion of long-term liabilities
(Note 7) 324,308 252,545
Loans under revolving credit agreement
(Note 4) 6,226,960 0
Accrued expenses and other liabilities
(Note 2) 4,477,316 3,387,103
---------- ----------
13,108,751 5,957,744
---------- ----------
Long-term Liabilities:
Loans under revolving credit agreement
(Note 4) 0 8,305,513
Other long-term liabilities (net of
current portion--Note 3) 4,488,579 4,321,751
---------- ----------
4,488,579 12,627,264
---------- ----------
Stockholders' Equity (Exhibit C) 4,468,858 3,853,741
---------- ----------
$22,066,188 $22,438,749
========== ==========
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit B
GAMETIME, INC.
(An S Corporation)
Statement of Operations
Years Ended December 31, 1996 and 1995
1996 1995
Net Revenue (Note 1) $41,842,729 $36,363,941
Cost of Goods Sold 27,022,837 24,089,146
---------- ----------
Gross Profit 14,819,892 12,274,795
---------- ----------
Operating Expenses:
Selling and marketing 5,141,970 4,528,556
Warehousing and shipping 1,693,223 1,415,174
Engineering 815,681 442,682
General and administrative 3,570,719 3,272,861
---------- ----------
11,221,593 9,659,273
---------- ----------
Income from Operations 3,598,299 2,615,522
---------- ----------
Other Expense (Income):
Interest expense, net 1,309,899 1,455,303
Realized gain on distribution of
securities (Note 7) ( 288,219) 0
Other (income), net ( 74,848) ( 35,586)
---------- ----------
946,832 1,419,717
---------- ----------
Net Income (to Exhibit C) $ 2,651,467 $ 1,195,805
========== ==========
The accompanying notes are an integral part of this statement.
<PAGE>
<TABLE>
Exhibit C
GAMETIME, INC.
(An S Corporation)
Statement of Changes in Stockholders' Equity
Years Ended December 31, 1996 and 1995
<CAPTION>
Common Stock
(1,000 Shares of
$1.00 Par Value
Authorized Additional Unrealized
100 Shares Issued Paid-in Retained Gain on
and Outstanding) Capital Earnings Securities Total
<S> <C> <C> <C> <C> <C>
Balances January 1, 1995 $ 100 $1,635,266 $ 762,445 $ 117,577 $2,515,388
Unrealized Gain on Securities for
1995 (Note 9) 142,548 142,548
Net Income for 1995 1,195,805 1,195,805
---------- ---------- ---------- ---------- ----------
Balances, December 31, 1995 100 1,635,266 1,958,250 260,125 3,853,741
Unrealized Gain on Securities
for 1996 (Note 7) 28,094 28,094
Realized Gain on Securities for 1996
(Note 7) ( 288,219) ( 288,219)
Distributions to Stockholders:
Cash (Note A) ( 1,308,000) ( 1,308,000)
Securities (Note 7) ( 468,225) ( 468,225)
Net Income for 1996 2,651,467 2,651,467
---------- ---------- ---------- ---------- ----------
Balances, December 31, 1996 $ 100 $1,635,266 $2,833,492 $ 0 $4,468,858
========== ========== ========== ========== ==========
Note A--An additional $399,000 was distributed to stockholders in 1997.
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit D
GAMETIME, INC.
(An S Corporation)
Statement of Cash Flows
Years Ended December 31, 1996 and 1995
1996 1995
Cash Flows from Operating Activities:
Net income $2,651,467 $1,195,805
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 1,271,841 1,134,163
Provision for losses on accounts
receivable 23,258 69,000
Loss on sale of assets 2,194 0
Realized gain on distribution of
securities to stockholders ( 288,219) 0
Increase (Decrease) in cash from
changes in:
Accounts receivable 707,880 ( 20,144)
Inventories ( 3,330) ( 433,842)
Prepaid expenses 55,237 56,224
Deferred catalog costs 737,528 765,219
Other assets 169,730 86,589
Accounts payable ( 237,929) 389,408
Accrued expenses and other
liabilities 1,090,213 496,725
---------- ----------
Net cash provided by operating activities 6,179,870 3,739,147
---------- ----------
Cash Flows from Investing Activities:
Capital expenditures for owned assets ( 2,533,348) ( 1,453,858)
Proceeds from sale of property, plant and
equipment 13,713 0
Decrease in due from stockholders 0 167,934
Decrease in restricted cash related to
future repayments of industrial
development bonds 1,796 110,630
---------- ----------
Net cash used in investing activities ( 2,517,839) ( 1,175,294)
---------- ----------
Cash Flows from Financing Activities:
Distributions to stockholders ( 1,308,000) 0
Net repayments under revolving credit
agreement ( 2,078,553) ( 2,381,340)
Principal payments on notes payable ( 296,409) ( 268,505)
---------- ----------
Net cash used in financial activities ( 3,682,962) ( 2,649,845)
---------- ----------
Net Decrease in Cash and Cash Equivalents ( 20,931) ( 85,992)
Cash and Cash Equivalents, Beginning
of Year 68,091 154,083
---------- ----------
Cash and Cash Equivalents, End of Year $ 47,160 $ 68,091
========== ==========
Supplementary Disclosures of Cash Flow
Information:
Cash paid during the year for interest $1,847,983 $1,565,233
========== ==========
Supplementary Disclosures of Noncash
Investing and Financing Activities:
Increase in market value of marketable
equity securities $ 28,094 $ 142,548
========== ==========
Distribution of marketable securities
to stockholders ($ 468,225) $ 0
========== ==========
Equipment acquired under capital lease $ 535,000 $ 0
========== ==========
The accompanying notes are an integral part of this statement.
<PAGE>
GAMETIME, INC.
(An S Corporation)
Notes to the Financial Statements
December 31, 1996 and 1995
Note 1--Nature of Activities and Significant Accounting Policies:
Gametime, Inc. (the "Company") is engaged in the manufacture and
distribution of park, playground and related equipment to end users
such as cities, park districts, and schools. Operations are conducted
from premises in Fort Payne, Alabama with sales being made throughout
the United States and in several foreign countries.
The Company's stockholders have entered into an agreement to sell all
of the Company's stock to Swing-N-Slide Corp., a publicly owned
corporation. Such sale is expected to be closed in March 1997.
A summary of significant accounting policies is as follows:
Inventories--Inventories are stated at the lower of cost,
determined on the first-in, first-out (FIFO) basis, or market.
Revenue--Revenue consists of (a) sales of company products, which
are recorded net of the related commissions paid to outside
manufacturers' representatives and (b) transportation charges to
customers.
Depreciation and Amortization--Provisions for depreciation and
amortization are computed for financial reporting purposes over the
estimated useful lives of the respective assets under the straight-
line method. For income tax reporting purposes, certain assets are
depreciated under accelerated methods. Fully depreciated assets
are generally not written off until disposition or retirement.
Income Taxes--The Company is not liable for federal income taxes
pursuant to its election of S corporation status under the Internal
Revenue Code, whereby income of the corporation is allocated to and
included in the individual returns of the stockholders.
Accordingly, no provision for federal income taxes is reflected in
the financial statements. However, the Company is currently
subject to immaterial amounts of state taxes. The S corporation
status will terminate upon the completion of the sale of the
Company's stock (see above).
Capitalized Leases--Leases capitalized are recorded at the present
value of future rental payments. For both financial and income tax
reporting purposes, amortization of assets under capitalized leases
is computed under the straight-line method.
Use of Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from the
estimates.
Cash and Cash Equivalents--For purposes of the statement of cash
flows, the Company considers all highly liquid debt instruments
acquired with a maturity of three months or less to be cash
equivalents.
Marketable Equity Securities--See Note 7.
Deferred Catalog and Advertising Costs--Catalog costs considered as
direct response advertising are amortized generally over one to two
years from completion of the respective catalogs, which is the
expected period of probable benefits. Other advertising costs are
charged to expense as incurred.
Reclassifications--Certain amounts reflected in the accompanying
financial statements for the year ended December 31, 1995 have been
reclassified from that previously presented in order to conform to
current year classifications, without affecting reported net income
or stockholders' equity for 1995.
Note 2--Selected Financial Data:
Owned property, plant and equipment at December 31, 1996 and 1995,
stated at cost, consisted of the following:
1996 1995
Land $ 104,868 $ 104,868
Land improvements 417,599 209,549
Buildings 2,158,960 2,158,960
Machinery and equipment 3,878,922 3,560,384
Office furniture and fixtures 1,005,920 755,411
Transportation equipment 272,474 309,591
Patterns and dies 6,853,722 4,992,959
Assets to be placed in service
(see below) 1,363,613 966,899
---------- ----------
16,056,078 13,058,621
Less accumulated depreciation and
amortization 8,138,354 7,260,825
---------- ----------
Net book value $ 7,917,724 $ 5,797,796
========== ==========
Assets to be placed in service at December 31, 1996 consist of a new
rotational molding building containing a new rotational molding
machine (acquired under a capital lease). The facility became
operational in February 1997.
See Notes 3 and 4 for related debt.
Assets under capitalized leases at December 31, 1996 and 1995
consisted of the following:
1996 1995
Land improvements $ 298,910 $ 298,910
Buildings 1,964,006 1,964,006
Machinery and equipment 3,163,544 3,163,544
Furniture and fixtures 42,220 42,220
---------- ----------
5,468,680 5,468,680
Less accumulated amortization 2,517,883 2,178,555
---------- ----------
Net book value $ 2,950,797 $ 3,290,125
========== ==========
See Note 3 for related debt.
Inventories at December 31, 1996 and 1995 consisted of the following:
1996 1995
Raw materials $3,026,742 $2,924,033
Work in process 16,515 12,818
Finished goods 62,366 165,442
---------- ----------
$3,105,623 $3,102,293
========== ==========
Accrued expenses and other liabilities at December 31, 1996 and 1995,
consisted of the following:
1996 1995
Commissions $1,848,793 $1,595,539
Group and product liability
insurance 403,728 247,966
Sales and other taxes 147,592 173,363
Wages, bonuses and vacation pay 1,206,999 702,273
Interest 253,544 249,657
Other 616,660 418,305
---------- ----------
$4,477,316 $3,387,103
========== ==========
Selected expenses for the years ended December 31, 1996 and 1995 were
as follows:
1996 1995
Bad Debt Expense $ 23,258 $ 69,000
========== ==========
Advertising Expense $ 682,867 $ 581,899
========== ==========
Note 3--Long-term Liabilities:
Long-term liabilities at December 31, 1996 and 1995, other than the
loans under the revolving credit agreement (Note 4), consisted of the
following:
1996 1995
Liabilities under capitalized leases
financed by Industrial Revenue Bonds
(see below) $4,119,000 $4,269,000
Liability under capitalized lease, payable
in quarterly installments of $32,685,
including interest at 8% per year; final
payment due June 1, 2001; secured by
certain machinery and equipment 483,939 0
Liability under capitalized lease, payable
in monthly installments of $5,130
including interest at 9.5% per year;
final payment due June 7, 1999; secured
by certain machinery and equipment 194,345 228,667
Liability under capitalized lease, final
payment made February 23, 1996 0 27,200
Note payable; final payment made
September 1, 1996 0 14,414
Note payable in quarterly installments of
$5,410 including interest at 8% per
year; final payment due October 1, 1997;
secured by certain machinery and
equipment 15,603 35,015
--------- ---------
Total long-term liabilities 4,812,887 4,574,296
Less current portion (inclusive of
capitalized leases) 324,308 252,545
--------- ---------
Noncurrent portion $4,488,579 $4,321,751
========= =========
On August 1, 1989, the Company entered into a lease agreement with the
Industrial Development Board of the City of Fort Payne, Alabama
financed by the issuance of new Industrial Development Bonds in the
amount of $4,742,000, the proceeds of which were used primarily for
plant expansion. The bonds bear interest at 10.25% per annum.
At December 31, 1996 and 1995, total restricted cash related to the
bond issue consisted of approximately:
1996 1995
Bond sinking fund $ 484,000 $ 484,000
========= =========
Deposits to trust fund for payment of
interest on debt $ 251,000 $ 252,000
========= =========
Maturities of long-term liabilities are as follows:
Capitalized Leases
Industrial
Revenue
Year Bond Other Other Total
1997 $ 587,198 $ 192,303 $ 15,603 $ 795,104
1998 587,286 192,303 779,589
1999 587,630 231,492 819,122
2000 587,028 130,738 717,766
2001 587,376 56,701 644,077
Thereafter 4,645,346 4,645,346
--------- --------- --------- ---------
Total minimum
payments 7,581,864 803,537 15,603 8,401,004
Less imputed
interest 3,462,864 125,253 3,588,117
--------- --------- --------- ---------
Total obligations $4,119,000 $ 678,284 $ 15,603 $4,812,887
========= ========= ========= =========
Note 4--Loans under Revolving Credit Agreement:
At December 31, 1996 and 1995, the Company was obligated to a bank
for $6,226,960 and $8,305,513, respectively, on secured loans made
under revolving credit agreements. The most recent agreement,
effective May 1, 1996, expires May 1, 1997 and provides for maximum
borrowings of the lesser of $12,000,000 or a borrowing base amount
which is based on accounts receivable and inventory amounts.
Interest is payable quarterly at the LIBOR rate plus 225 basis points
(7.8% at December 31, 1996) on borrowings up to $6,000,000 and
monthly at prime (8.25% at December 31, 1996) for any additional
outstanding balance.
Pursuant to the agreement, the Company has granted the bank a
security interest in all accounts receivable, inventories and certain
equipment. The agreement also contains various restrictive covenants
as well as pledges of certain marketable securities of the
stockholders as additional collateral. The Company was in compliance
with all such covenants at December 31, 1996. The loan is expected
to be repaid in full concurrent with the sale of the Company's stock
(Note 1) and is classified as a current liability at December 31,
1996.
Note 5--Employee Benefit Plan:
The Company provides retirement benefits to its qualified employees
through a "401(k) plan," which permits employee contributions up to
the maximum allowable by federal regulation, with the Company making
matching contributions at the rate of 40% of the amount contributed
by the participants up to 8% of the participants' gross wages.
During 1996 and 1995, respectively, the Company's contributions were
$110,000 and $97,000 and employee contributions totaled $293,000 and
$259,000.
Note 6--Contingencies:
The Company is subject to various product liability claims and
litigation which arise in the ordinary course of its business. In
the opinion of management, the amount of ultimate liability with
respect to these actions is adequately insured against and any
uninsured losses will not materially affect the financial position of
the Company.
Note 7--Marketable Equity Securities:
The Company had adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 115, Investments in Debt and Certain
Equity Securities to account for its investment in marketable equity
securities. The adoption of SFAS No. 115 required that marketable
equity securities held for sale be valued at market. The Company's
investment in such marketable equity securities consisted of the
stock of a single company.
On September 16, 1996, the securities (with an original cost of
$180,006) were distributed to the stockholders. A realized gain of
$288,219 was recorded upon distribution and is separately reflected
on the Statement of Operations. At December 31, 1995, there was an
unrealized gain of $260,125, shown as a separate component of
Stockholders' Equity.
<PAGE>
Independent Auditors' Report
Financial Statements:
Balance Sheets, December 31, 1995 and 1994
Statement of Operations,
Years Ended December 31, 1995 and 1994
Statement of Changes in Stockholders' Equity,
Years Ended December 31, 1995 and 1994
Statement of Cash Flows,
Years Ended December 31, 1995 and 1994
Notes to Financial Statements
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Gametime, Inc.
We have audited the accompanying balance sheets of GAMETIME, INC. (an S
corporation) as of December 31, 1995 and 1994, and the related statements
of operations, changes in stockholders' equity and cash flows for the
years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 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 financial position of Gametime, Inc. as of
December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.
As explained in Note 9 to the financial statements, the Company in 1994
adopted the provisions of Statement of Financial Accounting Standards No.
115, Investments in Debt and Certain Equity Securities.
Our audits were made for the purpose of forming an opinion on the
financial statements taken as a whole. The additional financial data, as
listed in the Table of Contents, is presented for purposes of additional
analysis and is not a required part of the financial statements. Such
information has been subjected to the auditing procedures applied in the
audits of the financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as
a whole.
Chicago, Illinois
March 8, 1996
<PAGE>
Exhibit A
GAMETIME, INC.
(An S Corporation)
Balance Sheets
December 31, 1995 and 1994
Assets (Primarily Pledged--Note 6) 1995 1994
Current Assets:
Cash and cash equivalents (Note 1) $ 68,091 $ 154,083
Accounts receivable, trade (net of
allowance for doubtful accounts of
$119,328 and $71,900) 6,219,403 6,268,259
Inventories (Note 1) 3,102,293 2,668,451
Other receivables 261,764 290,445
Due from stockholders 0 167,934
Prepaid expenses 189,793 246,017
Deferred catalog costs--current
(Note 1) 1,654,093 2,290,645
---------- ----------
11,495,437 12,085,834
---------- ----------
Property, Plant and Equipment (less
accumulated depreciation and
amortization):
Owned assets (Notes 1, 2 and 4) 5,797,796 5,134,143
Assets under capitalized leases
(Notes 1, 3 and 4) 3,290,125 3,634,083
---------- ----------
9,087,921 8,768,226
---------- ----------
Other Assets:
Restricted cash related to industrial
development bond issue (Note 4) 736,978 847,608
Marketable equity securities (Note 9) 440,131 297,583
Deferred catalog costs--non-current
(Note 1) 446,333 575,000
Other 231,949 289,857
---------- ----------
1,855,391 2,010,048
---------- ----------
$22,438,749 $22,864,108
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable, trade $ 2,318,096 $ 1,928,688
Current portion of long-term
liabilities (Note 4) 252,545 268,505
Accrued expenses and other liabilities
(Note 5) 3,387,103 2,890,378
---------- ----------
5,957,744 5,087,571
---------- ----------
Long-term Liabilities:
Loans under revolving credit agreement
(Note 6) 8,305,513 10,686,853
Other long-term liabilities (net of
current portion--Note 4) 4,321,751 4,574,296
---------- ----------
12,627,264 15,261,149
---------- ----------
Stockholders' Equity (Exhibit C) 3,853,741 2,515,388
---------- ----------
$22,438,749 $22,864,108
========== ==========
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit B
GAMETIME, INC.
(An S Corporation)
Statement of Operations
Years Ended December 31, 1995 and 1994
1995 1994
Net Revenue (Note 1) $36,363,941 $32,619,798
Cost of Goods Sold 24,089,146 21,722,347
---------- ----------
Gross Profit 12,274,795 10,897,451
---------- ----------
Operating Expenses:
Selling and marketing 4,528,556 4,334,121
Warehousing and shipping 1,415,174 1,126,928
Engineering 442,682 442,890
General and administrative 3,272,861 2,891,799
---------- ----------
9,659,273 8,795,738
---------- ----------
Income from Operations 2,615,522 2,101,713
---------- ----------
Other Expense:
Interest expense, net 1,455,303 1,422,303
Other expense, net ( 35,586) ( 49,025)
Settlement of claim (Note 8) 0 150,000
---------- ----------
1,419,717 1,523,278
---------- ----------
Net Income (to Exhibit C) $ 1,195,805 $ 578,435
========== ==========
The accompanying notes are an integral part of this statement.
<PAGE>
<TABLE>
Exhibit C
GAMETIME, INC.
(An S Corporation)
Statement of Changes in Stockholders' Equity
Years Ended December 31, 1995 and 1994
<CAPTION>
Common Stock
(1,000 Shares of
$1.00 Par Value
Authorized Additional Unrealized
100 Shares Issued Paid-in Retained Gain on
and outstanding) Capital Earnings Securities Total
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1993 $ 100 $ 1,635,266 $ 184,010 $ 1,819,376
Cumulative Effect of Adopting
SFAS 115 January 1, 1994
(Note 9) $ 128,890 128,890
---------- ---------- ---------- ---------- ---------
Balances January 1, 1994,
restated 100 1,635,266 184,010 128,890 1,948,266
Reduction in Unrealized Gain on
Securities for 1994 (Note 9) ( 11,313) ( 11,313)
Net Income for 1994 578,435 578,435
---------- ---------- ---------- ---------- ---------
Balances, December 31, 1994 100 1,635,266 762,445 117,577 2,515,388
Unrealized Gain on Securities
for 1995 (Note 9) 142,548 142,548
Net Income for 1995 1,195,805 1,195,805
---------- ---------- ---------- ---------- ---------
Balances, December 31, 1995 $ 100 $ 1,635,266 $ 1,958,250 $ 260,125 $ 3,853,741
========== ========== ========== ========== =========
(To
Exhibit A)
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit D
GAMETIME, INC.
(An S Corporation)
Statement of Cash Flows
Years Ended December 31, 1995 and 1994
1995 1994
Cash Flows from Operating Activities:
Net income $1,195,805 $ 578,435
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 1,134,163 1,112,828
Provision for losses on accounts
receivable 69,000 15,000
Gain on sale of assets 0 ( 5,610)
Increase (Decrease) in cash from
changes in:
Accounts receivable ( 20,144) ( 332,363)
Inventories ( 433,842) 712,189
Prepaid expenses 56,224 ( 43,585)
Deferred catalog costs 765,219 766,988
Other assets 86,589 ( 37,207)
Accounts payable 389,408 ( 1,439,024)
Accrued expenses and other
liabilities 496,725 537,224
---------- ----------
Net cash provided by operating
activities 3,739,147 1,864,875
---------- ----------
Cash Flows from Investing Activities:
Capital expenditures for owned assets ( 1,453,858) ( 1,267,720)
Proceeds from sale of property, plant
and equipment 0 67,463
Decrease (Increase) in due from
stockholders 167,934 ( 6,695)
Decrease (Increase) in restricted cash
related to future repayments of
industrial
development bonds 110,630 ( 72,289)
---------- ----------
Net cash used in investing activities ( 1,175,294) ( 1,279,241)
---------- ----------
Cash Flows from Financing Activities:
Net repayments under revolving
credit agreement ( 2,381,340) ( 279,815)
Principal payments on notes payable ( 268,505) ( 260,896)
---------- ----------
Net cash used in financial activities ( 2,649,845) ( 540,711)
---------- ----------
Net (Decrease) Increase in Cash and Cash
Equivalents ( 85,992) 44,923
Cash and Cash Equivalents, Beginning of
Year 154,083 109,160
---------- ----------
Cash and Cash Equivalents, End of Year $ 68,091 $ 154,083
========== ==========
Supplementary Disclosures of Cash Flow
Information:
Cash paid during the year for
interest $1,565,233 $1,376,148
========== ==========
Supplementary Disclosures of Noncash
Investing and Financing Activities:
Increase in market value of
marketable equity securities $ 142,548 $ 117,577
========== ==========
The accompanying notes are an integral part of this statement.
<PAGE>
GAMETIME, INC.
(An S Corporation)
Notes to the Financial Statements
December 31, 1995 and 1994
Note 1--Nature of Activities and Significant Accounting Policies:
Gametime, Inc. (the "Company") is engaged in the manufacture and
distribution of park, playground and related equipment to end users
such as cities, park districts, and schools. Operations are
conducted from premises in Fort Payne, Alabama with sales being made
throughout the United States and in several foreign countries.
A summary of significant accounting policies is as follows:
Inventories--Inventories are stated at the lower of cost,
determined on the first-in, first-out (FIFO) basis, or market.
Revenue--Revenue consists of (a) sales of company products, which
are recorded net of the related commissions paid to outside
manufacturers' representatives and (b) transportation charges to
customers.
Depreciation and Amortization--Provisions for depreciation and
amortization are computed for financial reporting purposes over
the estimated useful lives of the respective assets under the
straight-line method. For income tax reporting purposes, certain
assets are depreciated under accelerated methods. Fully
depreciated assets are generally not written off until
disposition or retirement.
Income Taxes--The Company is not liable for federal income taxes
pursuant to its election of S corporation status under the
Internal Revenue Code, whereby income of the corporation is
allocated to and included in the individual returns of the
stockholders. Accordingly, no provision for federal income taxes
is reflected in the financial statements. However, the Company
is currently subject to immaterial amounts of state taxes.
Capitalized Leases--Leases capitalized are recorded at the
present value of future rental payments (Note 3). For both
financial and income tax reporting purposes, amortization of
assets under capitalized leases is computed under the straight-
line method.
Use of Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could
differ from the estimates.
Cash and Cash Equivalents--For purposes of the statement of cash
flows, the Company considers all highly liquid debt instruments
acquired with a maturity of three months or less to be cash
equivalents.
Marketable Equity Securities--See Note 9.
Deferred Catalog Costs--Catalog costs considered as direct
response advertising are amortized generally over two years from
completion of the respective catalogs, which is the expected
period of probable benefits.
Reclassifications--Certain amounts reflected in the accompanying
financial statements for the year ended December 31, 1994 have
been reclassified from that previously presented in order to
conform to current year classifications, without affecting
reported net income or shareholders' equity for 1994.
Note 2--Property, Plant and Equipment:
Owned property, plant and equipment at December 31, 1995 and 1994,
stated at cost, consisted of the following:
1995 1994
Land $ 104,868 $ 104,868
Land improvements 209,549 209,549
Buildings 2,158,960 2,113,155
Machinery and equipment 3,560,384 3,049,657
Office furniture and fixtures 755,411 899,282
Transportation equipment 309,591 309,591
Patterns and dies 4,992,959 4,506,842
Assets to be placed in service 966,899 962,895
---------- ----------
13,058,621 12,155,839
Less accumulated depreciation and
amortization 7,260,825 7,021,696
---------- ----------
Net book value $ 5,797,796 $ 5,134,143
========== ==========
See Notes 4 and 6 for related debt.
Note 3--Assets under Capitalized Leases:
Assets under capitalized leases at December 31, 1995 and 1994
consisted of the following:
1995 1994
Land improvements $ 298,910 $ 298,910
Buildings 1,964,006 1,964,006
Machinery and equipment 3,163,544 3,163,544
Furniture and fixtures 42,220 42,220
--------- ---------
5,468,680 5,468,680
Less accumulated amortization 2,178,555 1,834,597
--------- ---------
Net book value $ 3,290,125 $ 3,634,083
========= =========
See Note 4 for related debt.
Note 4--Long-term Liabilities:
Long-term liabilities at December 31, 1995 and 1994, other than the
loans under the revolving credit agreement (Note 6), consisted of the
following:
1995 1994
Liabilities under capitalized leases
financed by Industrial Revenue Bonds
(see below) $4,269,000 $4,405,000
Liability under capitalized lease, payable
in monthly installments of $5,130
including interest at 9.5% per year;
final payment due June 7, 1999; secured
by certain machinery and equipment 228,667 266,419
Liability under capitalized lease,
payable in monthly installments of
$13,630 plus interest at prime rate;
final payment due February 23, 1996;
secured by certain machinery and
equipment 27,200 81,720
Note payable in monthly installments of
$1,860 including interest at 8.5% per
year; final payment due September 1,
1996; secured by certain machinery and
equipment 14,414 34,566
Note payable in quarterly installments of
$5,410 including interest at 8% per
year; final payment due October 1, 1997;
secured by certain machinery and
equipment 35,015 52,949
Note payable in monthly installments of
$281, including interest at 12.90% per
year; final payment due September 13,
1995; secured by equipment 0 2,147
--------- ---------
Total long-term liabilities 4,574,296 4,842,801
Less current portion (inclusive of
capitalized leases) 252,545 268,505
--------- ---------
Noncurrent portion $4,321,751 $4,574,296
========= =========
On August 1, 1989, the Company entered into a lease agreement with the
Industrial Development Board of the City of Fort Payne, Alabama
financed by the issuance of new Industrial Development Bonds in the
amount of $4,742,000, the proceeds of which were used primarily for
plant expansion.
At December 31, 1995 and 1994, total restricted cash related to the
bond issue consisted of approximately:
1995 1994
Bond sinking fund $ 484,000 $ 482,000
Deposits to trust fund for payment of
interest on debt 252,000 365,000
--------- ---------
$ 736,000 $ 847,000
========= =========
Maturities of long-term liabilities are as follows:
Capitalized Leases
Industrial
Revenue
Year Bond Other Other Total
1996 $ 587,572 $ 89,377 $ 33,827 $ 710,776
1997 587,198 61,565 15,602 664,365
1998 587,286 61,565 648,851
1999 587,630 90,520 678,150
2000 587,028 587,028
Thereafter 5,232,722 5,232,722
--------- --------- --------- ---------
Total minimum
payments 8,169,436 303,027 49,429 8,521,892
Less imputed
interest 3,900,436 47,160 3,947,596
--------- --------- --------- ---------
Total obligations $4,269,000 $ 255,867 $ 49,429 $4,574,296
========= ========= ========= =========
Management believes that the fair value of its long-term
indebtedness is not materially different from its carrying value.
Management has estimated the fair value by discounting expected
cash flows using interest rates that management believes are
approximately equal to the interest rates currently available for
similar debt issues.
Note 5--Accrued Expenses and Other Liabilities:
Accrued expenses and other liabilities at December 31, 1995 and
1994, consisted of the following:
1995 1994
Commissions $1,595,539 $1,526,025
Group and product liability insurance 247,966 179,882
Sales and other taxes 173,363 138,508
Wages, bonuses and vacation pay 702,273 405,258
Interest 249,657 272,666
Settlement of claim (Note 8) 75,000 150,000
Other 343,305 218,039
--------- ---------
$3,387,103 $2,890,378
========= =========
Note 6--Loans under Revolving Credit Agreement:
At December 31, 1995 and 1994, the Company was obligated to a bank
for $8,305,513 and $10,686,853, respectively, on secured loans made
under a revolving credit agreement. Effective June 1, 1995, a new
revolving agreement was executed, expiring on May 1, 1996 providing
for maximum borrowings of $12,000,000 with interest payable monthly
at prime. In March, 1996, the lender agreed to renew the agreement
to become due in May, 1997. Thus, the indebtedness has been
classified as a long-term liability at December 31, 1995.
Pursuant to both agreements, the Company has granted the bank a
security interest in all marketable equity securities, accounts
receivable, inventories and certain equipment. Both agreements also
contain various restrictive covenants as well as pledges of certain
marketable securities of the stockholders as additional collateral.
The Company was in compliance with all such covenants at December 31,
1995.
Because the revolving loan interest rate adjusts with changes in the
market rate of interest, management believes the fair value of the
revolving loan is equal to its carrying value.
Note 7--Employee Benefit Plan:
The Company provides retirement benefits to its qualified employees
through a "401(k) plan," which permits employee contributions up to
the maximum allowable by federal regulation, with the Company making
matching contributions at the rate of 40% of the amount contributed
by the participants up to 8% of the participants' gross wages.
During 1995 and 1994, respectively, the Company's contributions were
$97,000 and $87,000 and employee contributions totaled $259,000 and
$232,000.
Note 8--Contingencies:
The Company is subject to various product liability claims and
litigation which arise in the ordinary course of its business. In
the opinion of management, the amount of ultimate liability with
respect to these actions is adequately insured against and any
uninsured losses will not materially affect the financial position of
the Company.
During 1994, a settlement of $150,000 was concluded concerning a
claim made by the U.S. Government regarding a prior year contract.
Such amount was payable $75,000 in 1995 and $75,000 in 1996.
Note 9--Marketable Equity Securities:
As of January 1, 1994, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 115,
Investments in Debt and Certain Equity Securities to account for its
investment in marketable equity securities. The adoption of SFAS No.
115 requires that marketable equity securities held for sale be
valued at market as follows:
December 31,
1995 1994
Cost of securities $ 180,006 $ 180,006
Market value 440,131 297,583
--------- ---------
Unrealized gain $ 260,125 $ 117,577
========= =========
The unrealized gain of $128,890 as of December 31, 1993 was reflected
as a cumulative effect adjustment by increasing stockholders' equity
at January 1, 1994.
(b) Pro Forma Financial Information.
Swing-N-Slide Corp.
Unaudited Pro Forma Condensed
Consolidated Financial Information
The following unaudited pro forma financial information relates to
the March 13, 1997 acquisition (such acquisition including certain related
transactions are collectively referred to herein as the "Acquisition") by
Newco, Inc. ("Newco"), a wholly owned subsidiary of Swing-N-Slide Corp.
(the "Company"), of all of the issued and outstanding shares of capital
stock of GameTime, Inc. ("GameTime"), and the merger of GameTime with and
into Newco. The transaction will be accounted for as a purchase business
combination. The pro forma amounts have been prepared based on certain
purchase accounting and other pro forma adjustments (as described in the
accompanying notes) to the December 31, 1996 historical financial
statements of the Company and GameTime.
The unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1996 reflects the historical
results of operations of both companies with pro forma acquisition
adjustments as if the Acquisition had occurred on January 1, 1996. The
unaudited pro forma condensed consolidated balance sheet at December 31,
1996 reflects the historical financial position of both companies at
December 31, 1996, with pro forma adjustments as if the Acquisition had
occurred on December 31, 1996. The pro forma adjustments are described in
the accompanying notes and give effect to events that are (a) directly
attributable to the Acquisition, (b) factually supportable, and (c) in the
case of certain income statement adjustments, expected to have a
continuing impact.
The unaudited pro forma condensed consolidated financial
statements should be read in connection with the Company's and GameTime's
historical financial statements and related footnotes.
The unaudited pro forma financial information presented is for
information purposes only and does not purport to represent what the
Company's and GameTime's financial position or results of operations as of
the dates presented would have been had the Acquisition in fact occurred
on such date or at the beginning of the period indicated or to project the
Company's and GameTime's financial position or results of operations for
any future date or period.
<TABLE>
Pro Forma Unaudited Condensed Consolidated Statement of Operations
<CAPTION>
Year ended December 31, 1996
(in thousands, except per share data)
Company GameTime Pro forma Pro forma
Historical Historical Adjustments (1) Consolidated
<S> <C> <C> <C> <C>
Net sales $41,872 $41,843 $8,423 (2) $92,138
Cost of sales 21,328 27,023 1,673 (2)(3) 50,024
-------- -------- -------- --------
Gross margin 20,544 14,820 6,750 42,114
Operating expenses:
Selling 4,991 5,142 6,781 (2)(4)(5) 16,914
General and administrative 4,710 6,080 (2,113) (2)(5) 8,677
Amortization of
intangibles assets 1,225 917 (6) 2,142
-------- -------- -------- --------
10,926 11,222 5,585 27,733
-------- -------- -------- --------
Operating income 9,618 3,598 1,165 14,381
Other expense:
Interest expense 3,931 1,310 2,462 (7) 7,703
Other expense (income) 2,637 (363) 2,274
-------- --------- -------- --------
6,568 947 2,462 9,977
-------- --------- -------- --------
Income before income taxes 3,050 2,651 (1,297) 4,404
Income tax expense 1,480 521 (8) 2,001
-------- --------- -------- --------
Income before extraordinary
item $1,570 $2,651 ($1,818) $2,403
========= ========== ======== =========
Income before extraordinary
item per common share $0.26 $0.30
====== =======
Average number of common
shares outstanding 6,004 8,002
====== =======
</TABLE>
See accompanying Notes to Pro Forma Unaudited Condensed Consolidated
Statement of Operations.
<PAGE>
Notes to Pro Forma Unaudited Condensed Consolidated Statement of
Operations
(1) Pro forma adjustments for the year ended December 31, 1996 do not
include the expensing of the unamortized deferred financing costs
that would have been incurred for the early extinguishment of the
Company's long-term debt. This nonrecurring charge has not been
considered because it does not affect future operations. Upon the
repayment of debt with the proceeds from the refinancing, the
unamortized deferred financing costs of approximately $1.5 million
as of March 13, 1997 will be charged against operations as an
extraordinary loss.
(2) Reflects reclassification of GameTime's expenses to conform to the
Company's classifications.
(3) Reflects an estimated adjustment to the historical depreciation
expense for GameTime's property, plant and equipment resulting
from the adjustment to value such property, plant and equipment at
fair value and the adjustment to the depreciable lives of the
property, plant and equipment.
(4) Reflects the reduction of catalog expense as a result of the
revaluation of GameTime prepaid catalog costs to estimated fair
value had the Acquisition occurred on January 1, 1996.
(5) Reflects elimination of payments made to GameTime shareholders
that will not be made after the Acquisition.
(6) Reflects amortization of goodwill of $32.3 million over 40 years
and deferred financing and other costs of $2.8 million over 6 to 8
years, net of amortization of deferred financing costs previously
recorded by the Company and GameTime.
(7) Reflects the pro forma incremental interest expense which would
have been incurred on the pro forma borrowings of the Company had
the acquisition occurred on January 1, 1996.
(8) Prior to the Acquisition, GameTime had elected to be treated as an
S Corporation for income tax purposes and accordingly did not pay
federal or state income taxes. The increase in income tax expense
represents the net pro forma adjustment attributable to the
Company's marginal income tax rate applied to the historical
earnings of GameTime net of the effects of the pro forma
adjustments to income before income taxes.
<PAGE>
<TABLE>
Pro Forma Unaudited Condensed Consolidated Balance Sheet
<CAPTION>
December 31, 1996
(in thousands)
Company GameTime Pro forma Pro forma
Historical Historical Adjustments (1) Consolidated
<S> <C> <C> <C> <C>
Assets
Cash $1 $298 ($251) (1) $48
Accounts receivable, net 5,637 5,488 11,125
Inventory 7,235 3,105 25 (2) 10,365
Other current assets 2,204 1,374 (679) (2) 2,899
------- -------- -------- --------
Total current assets 15,077 10,265 (905) 24,437
Property, plant and equipment 10,338 21,525 (10,656) (2) 21,207
Accumulated depreciation 4,814 10,656 (10,656) (2) 4,814
------- --------- -------- --------
Net property, plant and
equipment 5,524 10,869 0 16,393
Deferred financing fees, net 2,478 159 1,277 (3) 3,914
Patent cost, net 1,147 1,147
Deferred income taxes 560 560
Goodwill, net 21,478 32,263 (2) 53,741
Other long-term assets 0 773 (689) (1)(2) 84
-------- -------- -------- --------
Total assets $46,264 $22,066 $31,946 $100,276
======== ======== ======== ========
Liabilities and stockholders' equity
Revolving loan $5,625 $6,227 $848 (4) $12,700
Accounts payable 2,711 2,080 4,791
Other current liabilities 1,266 4,477 5,743
Current portion of long-term
debt 7,000 324 (1,599) (4) 5,725
-------- -------- -------- ---------
Total current liabilities 16,602 13,108 (751) 28,959
Long-term debt, net of current
portion 23,550 4,489 30,707 (4) 58,746
Convertible subordinated
debentures payable to
stockholder 5,323 5,323
Total stockholders' equity 789 4,469 1,990 (5) 7,248
-------- -------- -------- --------
Total liabilities and
stockholders' equity $46,264 $22,066 $31,946 $100,276
======== ======== ======== ========
</TABLE>
See accompanying Notes to Pro Forma Unaudited Condensed Consolidated
Balance Sheet.
<PAGE>
Notes to Pro Forma Unaudited Condensed Consolidated Balance Sheet
(1) Reflects the elimination of restricted cash balances related to a
bond issue of GameTime that was retired in connection with the
Acquisition.
(2) The Acquisition will be accounted for using the purchase method of
accounting and the total purchase cost will be allocated first to
assets and liabilities based upon their respective fair values,
with the remainder allocated to goodwill. The allocation of the
purchase price reflected above is based on estimates and may
differ from the final allocation.
(3) Reflects additional financing fees related to the credit
agreements entered into in connection with the Acquisition, net of
the write-off of unamortized financing fees on their retirement of
borrowings under certain credit facilities.
(4) Reflects additional debt related to the credit agreements entered
into to finance the Acquisition and to refinance certain
indebtedness of the Company, net of the retirement of borrowings
under certain credit agreements.
(5) Reflects the net proceeds received from the sale of common stock
and warrants in connection with the Acquisition, less the
elimination of the historical GameTime equity balances and the
after-tax effect of the write-off of unamortized financing fees.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SWING-N-SLIDE CORP.
Date: April 30, 1997 /s/ Richard E. Ruegger
Richard E. Ruegger,
Vice President-Finance
and Chief Financial Officer
(Duly authorized officer and Principal
Financial and Accounting Officer)
