SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 0-20450
Swing-N-Slide Corp.
(Exact name of registrant as specified in its charter.)
Delaware 36-3808989
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1212 Barberry Drive, Janesville, Wisconsin 53545
(Address of principal executive office)
Registrant's telephone number, including area code (608) 755-4777.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past
ninety days. YES X NO
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date: as of November 7, 1997
there were 7,249,330 shares of Common Stock, par value, $.01 per share,
outstanding.
<PAGE>
SWING-N-SLIDE CORP.
FORM 10-Q
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997
INDEX
Part I. Financial Information: Page
Unaudited Consolidated Balance Sheets -
December 31, 1996 and September 30, 1997 3
Unaudited Consolidated Interim Statements of Operations
and Retained Earnings -
Three Months Ended September 30, 1996 4
Nine Months Ended September 30, 1996
Three Months Ended September 30, 1997 and
Nine Months Ended September 30, 1997
Unaudited Consolidated Interim Statements of Cash Flows-
Nine Months Ended September 30, 1996 and 5
Nine Months Ended September 30, 1997
Notes to Unaudited Interim Consolidated Financial
Statements 6-7
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-12
Part II. Other Information
Item 1 Legal Proceedings
Item 6 Exhibits and Reports on Form 8-K 13
Signature 14
<PAGE>
SWING-N-SLIDE CORP.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share data)
December 31, September 30,
ASSETS 1996 1997
Current assets:
Cash $1 $942
Accounts receivable, less allowance
for doubtful accounts of
$98 and $473 5,637 15,366
Other receivables 550 449
Inventories 7,235 13,498
Prepaid expenses 1,654 1,398
--------- ----------
Total current assets 15,077 31,653
Property, plant and equipment, net 5,524 16,531
Deferred financing and other
costs, net of accumulated
amortization of $914 and $690 2,478 3,800
Patent cost, net of accumulated
amortization of $253 and $340 1,147 1,060
Goodwill, net of accumulated
amortization of $3,048 and $3,922 21,478 49,955
Deferred income taxes 560 -
---------- ----------
$46,264 $102,999
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving loan $5,625 $7,170
Accounts payable 2,711 4,654
Accrued income taxes 1 920
Accrued expenses 1,155 9,571
Deferred income taxes 110 110
Current portion of:
Long-term debt 7,000 9,067
Capital lease obligations - 164
--------- --------
Total current liabilities 16,602 31,656
Long-term debt, net of current
portion 23,550 53,892
Capital lease obligations, net of
current portion - 424
Convertible subordinated debentures
payable to stockholders 5,323 5,588
Deferred income taxes - 130
Commitments and contingent
liability
Stockholders' equity:
Preferred stock, $.01 par value,
5,000,000 shares authorized,
no shares issued or outstanding - -
Common stock, $.01 par value,
25,000,000 shares authorized,
9,604,000 and 10,849,330 shares
issued 96 108
Class B common stock, $.01 par value,
1,750,000 shares authorized, no shares
issued or outstanding - -
Additional paid-in capital 27,646 32,184
Paid-in capital - stock
warrants - 2,723
Excess purchase price over
predecessor basis (5,627) (5,627)
Retained earnings 19,022 22,269
Less 3,600,000 common shares held
in treasury, at cost (40,348) (40,348)
---------- ----------
Total stockholders' equity 789 11,309
---------- ----------
$46,264 $102,999
========== ==========
Note: The consolidated balance sheet at December 31, 1996 has been
derived from the audited consolidated balance sheet at that date.
See notes to interim consolidated financial statements
<PAGE>
<TABLE>
SWING-N-SLIDE CORP.
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(unaudited)
(in thousands, except per share amounts)
<CAPTION>
Three Months Nine Months Three Months Nine Months
ended ended ended ended
September 30 September 30 September 30 September 30
1996 1996 1997 1997
<S> <C> <C> <C> <C>
Net sales $6,728 $35,543 $24,827 $70,599
Cost of goods sold 4,106 17,535 13,887 36,953
--------- --------- --------- ---------
Gross profit 2,622 18,008 10,940 33,646
Operating expenses:
Selling 887 4,186 5,454 13,200
General and administrative 833 3,491 2,502 6,563
Amortization of intangible
assets 298 926 537 1,408
--------- --------- --------- ---------
2,018 8,603 8,493 21,171
--------- -------- -------- ---------
Operating income 604 9,405 2,447 12,475
Other expense:
Interest expense 920 2,995 2,017 5,519
Other, net 9 2,627 262 317
--------- -------- --------- --------
Total other expense 929 5,622 2,279 5,836
--------- -------- --------- --------
Income(loss) before income taxes
and extraordinary item (325) 3,783 168 6,639
Income tax expense(benefit) (127) 1,753 70 2,532
--------- -------- -------- --------
Income(loss) before extraordinary
item (198) 2,030 98 4,107
Extraordinary item, net of income
tax benefit of $540 - - - 860
--------- --------- --------- ---------
Net income(loss) (198) 2,030 98 3,247
Retained earnings at beginning of
period 19,680 17,452 22,171 19,022
--------- --------- --------- ---------
Retained earnings at end of
period $19,482 $19,482 $22,269 $22,269
========= ========= ========= =========
Earnings(loss) per common share
and common equivalent
share - primary:
Income(loss) before extraordinary
item ($0.03) $0.34 $0.01 $0.56
Extraordinary loss - - - (0.12)
--------- --------- --------- ---------
Net income(loss) ($0.03) $0.34 $0.01 $0.44
========= ========= ========= =========
Earnings(loss) per common share
- assuming full dilution:
Income(loss) before extraordinary
item ($0.03) $0.32 $0.01 $0.51
Extraordinary loss - - - (0.10)
--------- --------- --------- ---------
Net income(loss) ($0.03) $0.32 $0.01 $0.41
========= ========= ========= =========
See notes to interim consolidated financial statements
</TABLE>
<PAGE>
SWING-N-SLIDE CORP.
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Nine Months
ended ended
September 30, September 30,
1996 1997
Operating activities
Net income $2,030 $3,247
Adjustments to reconcile net
income to net cash provided by
operating activities:
Write-off of unamortized deferred
financing costs - 1,400
Amortization of debt discount - 197
Deferred income taxes 505 690
Depreciation 898 1,360
Amortization of intangible assets 926 1,408
Interest converted to convertible
subordinated debentures 71 265
Changes in operating assets
and liabilities (668) (1,783)
----------- ----------
Net cash provided by operating
activities 3,762 6,784
Investing activity
Purchase of property, plant and
equipment (152) (1,061)
Purchase of non-compete agreement - (141)
Acquisition of GameTime, Inc.,
net of cash acquired of $461
and including transaction costs
of $2,627 - (42,566)
-------- ---------
Net cash used by investing
activities (152) (43,768)
Financing activities
Increase in revolving loan (680) 1,545
Issuances of long-term debt 5,000 63,777
Debt costs incurred (1,463) (3,027)
Proceeds from issuance of
warrants - 2,723
Proceeds from issuance of common
stock, net of offering costs 15 4,550
Payments of long-term debt (6,488) (31,643)
--------- ----------
Net cash provided(used) by financing
activities (3,616) 37,925
--------- ----------
Increase(decrease) in cash (6) 941
Cash at beginning of period 7 1
Cash at end of period $1 $942
========= ==========
Supplemental disclosure of cash
flows information - cash paid
during period for:
Interest $2,552 $4,164
Income taxes 610 369
See notes to interim consolidated financial statements
<PAGE>
Notes to Interim Consolidated Financial Statements
Unaudited
(in thousands, except per share amounts)
September 30, 1997
1. Basis of presentation of unaudited consolidated financial statements
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for year end financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For further information refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
2. Net income per common and common equivalent share
Net income per share of common and common equivalent share is
based on the weighted average number of shares of common stock and common
stock equivalents, if dilutive, outstanding during each period.
3. Inventories
Inventories consist of the following:
December 31, September 30,
1996 1997
Finished goods and work in process $3,109 $4,176
Raw materials 4,126 9,322
--------- ---------
$7,235 $13,498
========= =========
4. Extraordinary item
In connection with the prepayment in full of the indebtedness
under the Company's previous credit agreement, the Company wrote-off, as
an extraordinary loss, the unamortized deferred financing costs of $860,
net of an income tax benefit of $540, incurred in connection with the
procurement of the previous credit agreement.
5. Acquisition
On March 13, 1997, the Company's operating subsidiary, Newco,
Inc., acquired all of the issued and outstanding shares of capital stock
of GameTime, Inc.("GameTime") for $27,000 and the assumption of GameTime
indebtedness of approximately $13,400.
The acquisition was accounted for using the purchase method of
accounting and the total purchase cost was 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 in the
financial statements is based on estimates and may differ from
the final allocation.
The following unaudited pro forma results of operations has been
prepared to give effect to the acquisition as if it occurred on January 1,
1996 and January 1, 1997.
Nine Months Ended
September 30,
1996 1997
Net sales $74,452 $77,550
========== ==========
Income before extraordinary
item $2,265 $3,626
========== ==========
Income before extraordinary
item per common and common
equivalent share $0.29 $0.47
========== ==========
Net income $1,405 $2,766
========== ==========
Net Income per common and common
equivalent share $0.18 $0.36
========== ==========
6. Pending accounting change
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings per Share, which is required to be
adopted on December 31, 1997. At that time, the Company will be required
to change the method currently used to compute earnings per share and to
restate prior periods. Under the new requirements for calculating primary
earnings per share, the dilutive effects of stock options and
warrants will be excluded. The impact is expected to result in an
increase in primary earnings per share for the nine months ended September
30, 1997 of $.04 per share. The impact for the three months ended
September 30, 1996 and 1997 and the nine months ended September 30, 1996
is not material. The impact of Statement 128 on the calculation of fully
diluted earnings per share for these periods is not expected to be material.
<PAGE>
Management's Discussion and Analysis
of
Financial Condition and Results of Operations
Results of Operations:
On March 13, 1997, the Company completed the acquisition of GameTime, Inc.
("GameTime"), a leading manufacturer of modular and custom commercial
outdoor playground equipment for schools, parks, and municipalities.
GameTime was merged into Newco, Inc. ("Newco"), the Company's wholly owned
operating subsidiary as an independent business unit. The results of
operations for GameTime are included with those of the Company from the
date of the acquisition.
Three months ended September 30, 1997, compared to the three months ended
September 30, 1996.
Net Sales. Net sales increased by $18.1 million, or 269.0 percent, for
the three months ended September 30, 1997 as compared to the same period a
year ago. The primary reason for the increase in sales for the third
quarter of 1997 is the growth in sales of commercial playground equipment
due to the acquisition of GameTime. Sales for the Company's consumer
products decreased $1.2 million, or 17.4 percent, for the three months
ended September 30, 1997 as compared to the same period a year ago. This
decline is mainly due to retailers maintaining lower inventories during
the off-season.
Gross Profit. Gross profit increased $8.3 million, or 317.2 percent, and
increased as a percentage of net sales to 44.1 percent for the three
months ended September 30, 1997 as compared to 39.0 percent for the same
period a year ago. The reason for the increase in gross profit dollars for
the three months ended September 30, 1997, is the growth in the commercial
playground equipment sales. The primary reason for the increase in gross
profit margin is due to the impact of higher sales volume on fixed
overhead costs.
Selling Expense. Selling and marketing expenses increased $4.6 million, or
514.9 percent and increased as a percentage of net sales to 22.0 percent
for the three months ended September 30, 1997 as compared to 13.2 percent
for the same period a year ago. The dollar increase is mainly attributable
to the inclusion of GameTime's selling and marketing expenses. The
increase as a percentage of net sales is primarily due to the higher
selling costs as a percentage of net sales inherent in the commercial
playground segment.
General and Administrative Expenses. General and administrative expenses
increased $1.7 million, or 200.4 percent, but decreased as a percentage of
net sales to 10.1 percent for the quarter ended September 30, 1997 as
compared to 12.4 percent for the quarter ended September 30, 1996. The
dollar increase is primarily attributable to the inclusion of GameTime's
general and administrative expenses.
Amortization of Intangible Assets. Amortization of financing fees,
goodwill and other intangibles was $0.5 million for the quarter ended
September 30, 1997. Amortization increased $0.2 million for the three
months ended September 30, 1997 as compared to the same period in 1996 due
to amortization of the goodwill and financing fees resulting from the
GameTime acquisition on March 13, 1997.
Other Expense. Interest expense increased $1.1 million to $2.0 million
for the three months ended September 30, 1997. The increase in interest
expense is mainly due to the additional debt that was incurred in
connection with the GameTime acquisition.
Other expenses increased to $0.3 million for the three months ended
September 30, 1997 from $9,000 for the same period a year ago. The
primary reason for the increase is the cost related to the settlement of a
stockholder lawsuit.
Nine months ended September 30, 1997 compared to nine months ended
September 30, 1996.
Net Sales. Net sales for the nine months ended September 30, 1997
increased $35.1 million, or 98.6 percent, as compared to the same period
in 1996. The reason for the increase in sales for 1997 is the growth in
sales of commercial playground equipment driven by the GameTime
acquisition on March 13, 1997. Sales of the Company's consumer products
decreased $2.7 million, or 7.6 percent, for the nine months ended
September 30, 1997 as compared to the same period in 1996. This sales
decline is mainly due to poor weather in some of the strongest sales areas
during the critical spring selling season and the retailers increased
focus on inventory levels.
Gross Profit. Gross profit increased $15.6 million, or 86.8 percent, but
decreased as a percentage of net sales to 47.7 percent for the nine months
ended September 30, 1997 as compared to 50.7 percent for the same period a
year ago. The main reasons for the decrease in gross profit margin were a
greater percentage of sales of the Company's lower margin product
categories and the impact of lower sales volume on fixed overhead costs at
the consumer segment.
Selling Expense. Selling and marketing expenses increased $9.0 million,
or 215.3 percent, and increased as a percentage of net sales to 18.7
percent for the nine months ended September 30, 1997 as compared to 11.8
percent for the nine months ended September 30, 1996. The dollar increase
is mainly due to the inclusion of GameTime's selling and marketing
expenses. The increase as a percentage of net sales is mainly due to the
higher selling costs as a percentage of net sales inherent in the
commercial playground segment.
General and Administrative. General and administrative expenses increased
$3.1 million, or 88.0 percent, but decreased as a percentage of net sales
to 9.3 percent for the nine months ended September 30, 1997, as compared
to 9.8 percent for the same period a year ago. The dollar increase is
primarily due to the inclusion of GameTime's general and administrative
expenses since March 13, 1997.
Amortization of Intangible Assets. Amortization of financing fees,
goodwill and other intangibles was $1.4 million for the nine months ended
September 30, 1997 as compared to $0.9 million for the same period a year
ago. Additional amortization resulted from the goodwill and financing fees
associated with the GameTime acquisition.
Other Expense. Interest expense increased $2.5 million to $5.5 million
for the nine months ended September 30, 1997. The increase in interest
expense is due to the additional debt that was incurred in connection with
the GameTime acquisition.
Other expense decreased to $0.3 million for the nine months ended
September 30, 1997, from $2.6 million for the same period a year ago.
Included in other expenses in 1996 were the fees and expenses paid by the
Company related to the tender offer by GreenGrass Holdings on February 15,
1996.
Extraordinary Item. For the nine months ended September 30, 1997, the
Company recorded an extraordinary loss of approximately $0.9 million (net
of a tax benefit of approximately $0.5 million) for the write-off of
unamortized deferred financing costs. These costs were written-off in
connection with the repayment in full of the indebtedness under the
Company's previous credit agreement.
Seasonality
Sales of the Company's core product lines are concentrated in the period
from April 1 through September 30 (approximately 65 percent). The timing
of initial stocking orders and fluctuations in customer demand through the
spring and summer months contribute to this pattern.
Liquidity and Capital Resources
On March 13, 1997, the Company's operating subsidiary, Newco acquired all
of the issued and outstanding shares of capital stock of GameTime, Inc.
for $27.0 million and the assumption of GameTime indebtedness of
approximately $13.4 million. Immediately following the acquisition,
GameTime was merged with and into Newco. To provide financing for this
acquisition, to refinance certain indebtedness of the Company, Newco and
GameTime, and to provide funds for working capital purposes, the Company
and Newco entered into certain definitive agreements referenced below.
On March 13, 1997, a group of banks led by Fleet National Bank provided
Newco with a $69.5 million senior credit facility. The facility consists
of (a) a $20.0 million revolving credit facility; (b) a $45.0 million Term
Loan A facility; and (c) a $4.5 million Term Loan B facility. The entire
facility is guaranteed by Swing-N-Slide Corp., and secured by first
priority mortgage or security interest in all of Newco's tangible and
intangible assets, as well as a pledge of 100 percent of the outstanding
shares of Newco Common Stock. In addition, Newco is subject to certain
restrictive covenants which include, among other things, restrictions on
the payment of dividends or issuance of capital stock and a limitation on
additional indebtedness.
Borrowings under the revolving loan facility are limited to specified
percentages of inventories and accounts receivable, not to exceed $20.0
million. The interest rate on the revolving credit facility is either (i)
.75 to 1.50 percent over the prime rate, or (ii) 2.00 to 2.75 percent over
LIBOR, with the precise rate depending upon Newco's debt-to-cash flow
ratio. The revolving credit facility matures on March 13, 2003. Up to $1.0
million of the revolving credit facility is available for the issuance of
letters of credit. At September 30, 1997, the outstanding amount of the
revolving loan facility was approximately $7.2 million.
The Term Loan A facility bears interest at the same rates as the revolving
credit facility. The principal portion of the Term Loan A facility must be
repaid quarterly beginning June 30, 1997, in amounts of between $0.5
million and $2.9 million, with the final quarterly installment due
December 31, 2002. Newco is also required to make annual prepayments on
the Term Loan A facility of between 50 percent and 75 percent of its
excess cash flow.
The Term Loan B facility bears interest at either 2 percent over the prime
rate or 3.25 over LIBOR. The Term Loan B facility matures June 30, 2003,
but must be prepaid quarterly beginning June 30, 1997, in amounts of
between $16,667 and $33,334.
On March 13, 1997, Swing-N-Slide and Newco entered into Securities
Purchase Agreements with Massachusetts Mutual Life Insurance Company and
certain of its affiliates, pursuant to which the Company sold warrants
(the "MassMutual Warrants") to purchase an aggregate of 607,297 shares of
its Class A Common Stock, and Newco sold its 12 percent Senior
Subordinated Notes due March 13, 2005 (the "MassMutual Notes"), in the
aggregate principal amount of $12.5 million. The MassMutual Warrants are
exercisable at any time during the period commencing March 13, 1997, and
terminating on the later of March 13, 2003, or the date upon which all of
the MassMutual Notes have been paid in full, at an exercise price of $.001
per share (subject to adjustment).
On March 13, 1997, the Company entered into an Investment Agreement with
GreenGrass Holdings pursuant to which the Company sold to GreenGrass
Holdings 1,245,330 shares of its Common Stock for an aggregate purchase
price of $5.0 million or a per share purchase price of $4.015, and sold
its Junior Subordinated Bridge Note in the principal amount of $2.5
million due no later than December 31, 1997 (subject to prepayment),
bearing interest at a rate of 13.5 percent per annum, to be paid by the
issuance of shares of the Company's Common Stock and accompanied by ten-
year warrants to purchase 50,000 shares of such stock at a per share
purchase price of $4.015.
The Company made capital expenditures totaling approximately $1.1 million
in the nine months ended September 30, 1997. The Company continues to
evaluate opportunities for both internal and external growth and believes
that funds generated from operations and its current and future capacity
for borrowing will be sufficient to fund current business operations as
well as future capital expenditures and growth opportunities.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Swing-N-Slide has been named as a defendant in a class action
pending in the Court of Chancery of the State of Delaware, New Castle
County entitled Robert Barbieri v. Swing-N-Slide Corp., Thomas R. Baer,
Richard G. Mueller, Andrew W. Code, James M. Dodson, Peter M. Gotsch,
Terence S. Malone, Henry B. Pearsall and Brian P. Simmons, GreenGrass
Holdings and GreenGrass Management, LLC, Case No. 14239, filed April 14,
1995. The complaint alleges that Swing-N-Slide's purchase of 3.6 million
of outstanding shares of common stock, which was completed in January
1995, was the result of a deceptive and manipulative plan on the part of
the individual defendants to enrich themselves, and further challenges on
similar grounds the February, 1996, purchase by Swing-N-Slide's majority
shareholder, GreenGrass Holdings, of approximately 3.6 million shares of
Swing-N-Slide's common stock and other securities pursuant to a tender
offer. The plaintiffs were granted certification of the two classes of
stockholders consisting of all stockholders other than the defendants at
November 14, 1994, or at March 15, 1995. The relief sought includes the
imposition of a constructive trust on all proceeds of the repurchase
received by the defendants as well as various non-monetary forms of
relief. The parties have conducted discovery. The Company believes it has
substantial defenses to all the claims and that resolution of the claims
should not have any material adverse effect on the financial condition or
results of operations of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibits 11 Statement Re: Computation of Earnings Per Share
Exhibits 27 Financial Data Schedule
Reports on Form 8-K
Form 8-K dated September 2, 1997 was filed on September 5, 1997.
Items Reported:
On September 2, 1997, Richard G. Mueller resigned as Chairman,
President and Chief Executive Officer and as a director of
Swing-N-Slide Corp.("the Company"). Mr. Mueller will remain an
employee during the pendency of discussions regarding the terms
of a severance agreement, which will reflect (and supersede) the
terms of Mr. Mueller's Severance, Change of Control and
Noncompetition Agreement, dated as of May 21, 1997, with the
Company.
The Board of Directors elected Terence S. Malone to replace Mr.
Mueller as Chief Executive Officer pending the outcome of a
search for a new Chief Executive Officer. Mr. Malone has served
as a director of the Company since September 1992 and prior
thereto, was the Chairman or President as well as the Chief
Executive Officer of Johnson Worldwide Associates, Inc. from
1984 until his retirement in 1994.
<PAGE>
SIGNATURE
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: November 12, 1997 /s/ Richard E. Ruegger
Richard E. Ruegger,
Vice President-Finance
and Chief Financial Officer
(Duly authorized officer and
Principal Financial and Accounting
Officer)
<TABLE>
Exhibit 11 - Statement Re: Computation of Earnings Per Share
<CAPTION>
Three Months Nine Months Three Months Nine Months
ended ended ended ended
September 30 September 30 September 30 September 30
1996 1996 1997 1997
(000's omitted, except per share data)
<S> <C> <C> <C> <C>
Primary:
Weighted average shares outstanding 6,004 6,003 7,774 7,308
========= ========= ========= ==========
Income(loss) before extraordinary item ($198) $2,030 $98 $4,107
Extraordinary loss, net of tax
benefit of $540 - - - 860
-------- -------- -------- ---------
Net income(loss) ($198) $2,030 $98 $3,247
======== ======== ======== =========
Per share amounts:
Income(loss) before extraordinary
loss (0.03) 0.34 0.01 0.56
Extraordinary loss - - - (0.12)
-------- ------- -------- ---------
Net income(loss) ($0.03) $0.34 $0.01 $0.44
======== ======== ======== =========
Fully diluted:
Weighted average shares outstanding 6,004 6,003 7,774 7,308
Shares applicable to stock options
based on quarter-end price of $4.50 - - 21 21
Assumed conversion of 10% convertible
subordinated debentures - 837 - 1,164
-------- -------- -------- --------
Total fully diluted shares 6,004 6,840 7,795 8,493
======== ======== ======== ========
Income(loss) before extraordinary loss ($198) $2,030 $98 $4,107
Add 10% convertible subordinated
debenture interest, net of tax
effect - 187 - 252
-------- -------- -------- --------
Income(loss) before extraordinary loss
assuming conversion (198) 2,217 98 4,359
Extraordinary loss, net of tax
benefit of $540 - - - 860
-------- -------- -------- --------
Net income assuming conversion
of debentures ($198) $2,217 $98 $3,499
======== ======== ======== ========
Per share amounts:
Income(loss) before extraordinary
loss (0.03) 0.32 0.01 0.51
Extraordinary loss - - - (0.10)
-------- -------- -------- --------
Net income(loss) ($0.03) $0.32 $0.01 $0.41
======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF SWING-N-SLIDE CORP.
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
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