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 June 30, 1999
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
-------
PlayCore, Inc.
--------------
(Exact name of registrant as specified in its charter.)
Delaware 36-3808989
- ------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
15 West Milwaukee Street, Janesville, Wisconsin 53545
-----------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code (608)741-7183.
-------------
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 August 9, 1999 there were
7,911,214 shares of Common Stock, par value $.01 per share, outstanding.
<PAGE>
PLAYCORE, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 1999
INDEX
Part I. Financial Information: Page
----
Unaudited Consolidated Balance Sheets -
December 31, 1998 and June 30, 1999 3
Unaudited Consolidated Interim Statements of Operations
and Retained Earnings -
Three Months Ended June 30, 1998 4
Six Months Ended June 30, 1998
Three Months Ended June 30, 1999 and
Six Months Ended June 30, 1999
Unaudited Consolidated Interim Statements of Cash Flows-
Six Months Ended June 30, 1998 5
Six Months Ended June 30, 1999
Notes to Unaudited Interim Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Quantitative and Qualitative Disclosures about Market Risk 13
Part II. Other Information
Item 4 - Submission of Matters to a Vote of Security Holders 14
Item 6 - Exhibits and Reports on Form 8-K
Signature 15
2
<PAGE>
<TABLE>
PlayCore, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share data)
<CAPTION>
December 31, June 30,
ASSETS 1998 1999
<S> <C> <C>
Current assets:
Cash $ 487 $ 1,837
Accounts receivable, less allowance for doubtful accounts of $801 and $1,157 18,036 29,911
Other receivables 551 1,242
Inventories 11,754 20,804
Prepaid expenses 1,869 3,991
Deferred income taxes 890 2,310
---------- ---------
Total current assets 33,587 60,095
Property, plant and equipment, net 20,871 26,011
Deferred financing and other costs, net of accumulated amortization of $1,557 and $1,990 3,194 3,604
Identifiable intangible assets, net of accumulated amortization of $843 and $1,001 6,593 6,434
Goodwill, net of accumulated amortization of $5,156 and $5,798 39,195 49,020
---------- ---------
$ 103,440 $ 145,164
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving loan $ 9,940 $ 24,775
Accounts payable 5,346 10,683
Accrued income taxes 216 2,962
Accrued expenses 11,106 14,501
Current portion of long-term debt 7,702 6,868
---------- ---------
Total current liabilities 34,310 59,789
Long-term debt, net of current portion 42,288 51,555
Convertible subordinated debentures payable to stockholders 7,021 7,258
Deferred income taxes 3,445 3,475
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,
11,543,349 and 11,545,599 shares issued 115 115
Class B common stock, $.01 par value, 1,750,000 shares authorized,
no shares issued or outstanding - -
Additional paid-in capital 37,524 37,538
Retained earnings 19,248 25,945
Less 3,634,385 common shares held in treasury, at cost (40,511) (40,511)
---------- ---------
Total stockholders' equity 16,376 23,087
---------- ---------
$ 103,440 $ 145,164
========== =========
Note: The consolidated balance sheet at December 31, 1998 has been derived from the
audited consolidated balance sheet at that date.
See notes to interim consolidated financial statements
</TABLE>
3
<PAGE>
<TABLE>
PlayCore, Inc.
Consolidated Interim Statements of Operations and Retained Earnings
(unaudited)
(in thousands, except per share amounts)
<CAPTION>
Three months Six months Three months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
1998 1998 1999 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 36,856 $ 62,113 $ 61,955 $ 93,428
Cost of goods sold 17,880 31,547 33,144 51,427
-------- -------- -------- --------
Gross profit 18,976 30,566 28,811 42,001
Operating expenses:
Selling 6,193 12,138 10,141 16,533
General and administrative 2,197 5,157 5,387 9,053
Amortization of intangible assets 518 1,037 643 1,233
-------- -------- -------- --------
8,908 18,332 16,171 26,819
-------- -------- -------- --------
Operating income 10,068 12,234 12,640 15,182
Other expense:
Interest expense 2,023 3,948 2,208 4,146
Other, net 64 136 37 149
-------- -------- -------- --------
Total other expense 2,087 4,084 2,245 4,295
-------- -------- -------- --------
Income before income taxes 7,981 8,150 10,395 10,887
Income tax expense 3,045 3,105 3,990 4,190
-------- -------- -------- --------
Net income 4,936 5,045 6,405 6,697
Retained earnings at beginning of period 14,681 14,572 19,540 19,248
-------- -------- -------- --------
Retained earnings at end of period $ 19,617 $ 19,617 $ 25,945 $ 25,945
======== ======== ======== ========
Earnings per share:
Basic $ 0.62 $ 0.64 $ 0.81 $ 0.85
Diluted 0.51 0.53 0.64 0.68
See notes to interim consolidated financial statements
</TABLE>
4
<PAGE>
<TABLE>
PlayCore, Inc.
Consolidated Interim Statements of Cash Flows
(unaudited)
(in thousands)
<CAPTION>
Six months Six months
ended ended
June 30, June 30,
1998 1999
---------- ----------
<S> <C> <C>
Operating activities
Net income $ 5,045 $ 6,697
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Amortization of debt discount 182 182
Deferred income taxes 800 700
Depreciation 1,222 1,366
Amortization of intangible assets 1,037 1,233
Interest converted to convertible subordinated debentures 292 237
Changes in operating assets and liabilities (8,488) (11,888)
--------- ---------
Net cash provided (used) by operating activities 90 (1,473)
Investing activities
Purchase of property, plant and equipment (1,290) (4,694)
Acquisitions, including transaction costs and net of cash acquired (590) (14,742)
--------- ---------
Net cash used by investing activities (1,880) (19,436)
Financing activities
Increase in revolving loan 7,545 14,835
Issuances of long-term debt - 10,323
Debt issuance costs incurred - (843)
Proceeds from issuance of common stock 6 14
Payments of long-term debt (5,212) (2,070)
--------- ---------
Net cash provided by financing activities 2,339 22,259
--------- ---------
Increase in cash 549 1,350
Cash at beginning of period 677 487
--------- ---------
Cash at end of period $ 1,226 $ 1,837
========= =========
Supplemental disclosure of cash flows information-
cash paid (received) during period for:
Interest $ 2,754 $ 3,783
Income taxes, net of refunds received (520) 34
See notes to interim consolidated financial statements
</TABLE>
5
<PAGE>
PlayCore, Inc.
Notes to Interim Consolidated Financial Statements
Unaudited
(in thousands)
June 30, 1999
1. Basis of presentation of unaudited consolidated financial statements
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission 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 six months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1999. 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, 1998.
2. Earnings per share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three months Six months Three months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
1998 1998 1999 1999
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Numerator:
Numerator for basic and diluted earnings per share -
net income $ 4,936 $ 5,045 $ 6,405 $ 6,697
Effect of diluted securities -
10% convertible subordinated debentures 95 183 111 217
------- ------- ------- -------
Numerator for diluted earnings per share $ 5,031 $ 5,228 $ 6,516 $ 6,914
======= ======= ======= =======
Denominator:
Denominator for basic earnings per share -
weighted average shares 7,909 7,909 7,911 7,911
Effect of diluted securities:
Employee stock options(treasury stock
method) 87 54 187 151
Warrants 624 622 632 630
10% convertible subordinated debentures 1,274 1,248 1,506 1,486
------- ------- ------- -------
Denominator for diluted earnings per share 9,894 9,833 10,236 10,178
======= ======= ======= =======
</TABLE>
3. Inventories
Inventories consisted of the following:
December 31, June 30,
1998 1999
------------ --------
Finished goods and work in process $ 7,153 $ 10,132
Raw materials 4,601 10,672
-------- --------
$ 11,754 $ 20,804
======== ========
6
<PAGE>
PlayCore, Inc.
Notes to Interim Consolidated Financial Statements(continued)
4. Acquisition
On February 16, 1999, the Company acquired all of the capital stock of
Heartland Industries, Inc. (Heartland), a maker of backyard wooden storage
buildings, for approximately $13,605 (including the repayment of certain
indebtedness of Heartland), subject to adjustments as defined in the
Agreement and Plan of Merger. Heartland has a national network of
company-owned sales branches and independent dealers to sell its products,
which include yard barns and custom-build garages.
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 market 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.
5. Segment Reporting
Commercial Consumer Total
---------- -------- -----
Three months ended June 30, 1998
Revenues from external customers $ 20,224 $ 16,632 $ 36,856
Segment profit 2,265 2,671 4,936
Six months ended June 30, 1998
Revenues from external customers 32,414 29,699 62,113
Segment profit 1,836 3,209 5,045
Three months ended June 30, 1999
Revenues from external customers 22,577 39,378 61,955
Segment profit 2,922 3,483 6,405
Six months ended June 30, 1999
Revenues from external customers 36,588 56,840 93,428
Segment profit 3,286 3,411 6,697
Segment assets 70,710 74,454(a) 145,164
(a) The increase in assets since December 31, 1998 was due to the inclusion of
Heartland's assets.
7
<PAGE>
Management's Discussion and Analysis
of
Financial Condition and Results of Operations
Special Note Regarding Forward-Looking Statements
Certain matters discussed herein are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements can generally be identified as such because the context of the
statement will include words such as the Company "believes," "anticipates,"
"expects" or words of similar import. Similarly, statements that describe the
Company's future plans, objectives or goals are forward-looking statements. Such
forward-looking statements are subject to certain risks and uncertainties which
are described in close proximity to such statements and which could cause actual
results to differ materially from those currently anticipated. Readers are urged
to consider these factors carefully in evaluating the forward-looking statements
and are cautioned not to place undue reliance on such forward-looking
statements. The forward-looking statements made herein are only made as of the
date of this report and the Company undertakes no obligation to publicly update
such forward-looking statements to reflect subsequent events or circumstances.
Results of Operations:
On February 16, 1999, the Company acquired all of the capital stock of Heartland
Industries, Inc. (Heartland), a maker of backyard wooden storage buildings. The
acquisition of Heartland was accounted for using the purchase method. Therefore,
the results of Heartland are included with those of the Company beginning with
the date of acquisition.
Three months ended June 30, 1999, compared to the three months ended June 30,
1998.
Net Sales. Net sales increased $25.1 million, or 68.1 percent, to $62.0 million
for the three months ended June 30, 1999, compared to $36.9 million for the same
period a year ago. Sales of the Company's consumer products increased $22.8
million, or 136.8 percent to $39.4 million for the three months ended June 30,
1999, compared to $16.6 million for the same period a year ago. The increase in
consumer product sales is due to the inclusion of Heartland sales for the three
months ended June 30, 1999. Sales of the Company's commercial products also
increased by $2.4 million, or 11.6 percent, to $22.6 million for the three
months ended June 30, 1999, compared to $20.2 million for the same period a year
ago. The commercial products sales growth was attributable to the growth in the
overall commercial market, which was favorably impacted by new playground
equipment safety standards and strong demographic trends.
Gross Profit. Gross profit increased $9.8 million, or 51.8 percent, to $28.8
million but decreased as a percentage of net sales to 46.5 percent for the three
months ended June 30, 1999, compared to $19.0 million and 51.5 percent of net
sales for the same period a year ago. The main reason for the decrease in the
gross profit margin was the inclusion of Heartland's wooden storage building
sales, which have a lower profit margin than playground equipment.
Selling Expense. Selling expense increased $3.9 million, or 63.7 percent to
$10.1 million but decreased slightly as a percentage of net sales to 16.4
percent for the second quarter of 1999,
8
<PAGE>
compared to $6.2 million and 16.8 percent of net sales for the same period a
year ago. The dollar increase was primarily due to the inclusion of Heartland's
selling expenses for the three months ended June 30, 1999.
General and Administrative Expenses. General and administrative expenses
increased $3.2 million, or 145.2 percent, to $5.4 million and increased as a
percentage of net sales to 8.7 percent for the three months ended June 30, 1999
as compared to $2.2 million and 6.0 percent for the same period a year ago. The
dollar increase was due to the inclusion of Heartland's general and
administrative expenses in the second quarter of 1999. The increase as a
percentage of net sales was primarily the result of higher general and
administrative expenses as a percentage of net sales associated with wooden
storage building sales.
Amortization of Intangible Assets. Amortization of financing fees, goodwill and
other identifiable intangible assets was $0.6 million for the three months ended
June 30, 1999 as compared to $0.5 million for the same period a year ago.
Additional amortization resulted from the goodwill and financing fees associated
with the Heartland acquisition.
Other Expense. Interest expense for the three months ended June 30, 1999
increased $0.2 million to $2.2 million. The increase in interest expense was due
to the additional debt that was incurred in connection with the Heartland
acquisition on February 16, 1999.
Six months ended June 30, 1999, compared to the six months ended June 30, 1998.
- ------------------------------------------------------------------------------
Net Sales. Net sales increased $31.3 million, or 50.4 percent, to $93.4 million
for the six months ended June 30, 1999 as compared to $62.1 million for the same
period a year ago. Sales of the Company's consumer products increased $27.1
million, or 91.4 percent, to $56.8 million for the six months ended June 30,
1999 as compared to $29.7 million for the same period a year ago. The increase
in sales was attributable to the inclusion of Heartland sales for the period
February 16, 1999 through June 30, 1999. Sales of the Company's commercial
products increased by $4.2 million, or 12.9 percent, to $36.6 million for the
six months ended June 30, 1999 as compared to $32.4 for the same period a year
ago. Commercial product sales have benefited from growth in the commercial
market driven by the impact of new playground equipment safety standards and
strong demographic trends.
Gross Profit. Gross profit increased $11.4 million, or 37.4 percent, to $42.0
million but declined as a percentage of net sales to 45.0 percent for the six
months ended June 30, 1999 as compared to $30.6 million and 49.2 percent of net
sales in the same period a year ago. The primary reason for the decrease in
gross profit margin was the impact of Heartland's wooden storage building sales,
which have a lower profit margin than consumer or commercial playground
equipment.
Selling Expense. Selling expense increased $4.4 million, or 36.2 percent, to
$16.5 million but decreased as a percentage of net sales to 17.7 percent for the
six months ended June 30, 1999 as compared to $12.1 million and 19.5 percent of
net sales for the same period a year ago. The dollar increase is mainly due to
the inclusion of Heartland's selling expenses for the period
9
<PAGE>
February 16, 1999 through June 30, 1999. The decrease as a percentage of net
sales was due to the impact of higher sales volume on fixed selling expenses and
the lower selling costs as a percentage of net sales associated with wooden
storage building sales.
General and Administrative Expenses. General and administrative expenses
increased $3.9 million, or 75.5 percent, to $9.1 million and increased as a
percentage of net sales to 9.7 percent for the six months ended June 30, 1999 as
compared to $5.2 million and 8.3 percent of net sales for the same period a year
ago. The increase as a percentage of net sales was mainly due to the impact of
higher general and administrative expenses as a percentage of net sales
associated with wooden storage building sales.
Amortization of Intangible Assets. Amortization of financing fees, goodwill and
other identifiable intangible assets was $1.2 million for the six months ended
June 30, 1999 as compared to $1.0 million for the same period a year ago. The
increase in amortization was a result of the goodwill and financing fees related
to the Heartland acquisition.
Other Expenses. Interest expense increased $0.2 million to $4.1 million for the
six months ended June 30, 1999 as compared to $3.9 million in the same period a
year ago. The increase in interest expense was due to the additional debt that
was incurred in connection with the Heartland acquisition.
Seasonality
The Company's sales pattern is seasonal and is concentrated in the period from
April 1 through September 30 (approximately 60 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 February 16, 1999, the Company acquired all of the capital stock of Heartland
Industries, Inc. for approximately $13.6 million (including the repayment of
certain indebtedness of Heartland), subject to certain post-closing adjustments
as provided in the Agreement and Plan of Merger. The acquisition was financed by
amending and restating the Company's existing senior credit facility.
The Company's primary sources of working capital are cash flows from operations
and borrowings under PlayCore Wisconsin Inc.'s senior credit facility, which was
entered into in March 1997, amended in February 1999, and runs through June
2003. PlayCore Wisconsin, Inc. is a wholly-owned subsidiary of the Company. The
PlayCore Wisconsin facility consists of (a) a $28.0 million revolving credit
facility; (b) a $38.0 million Term A facility and (c) a $9.0 million Term B
facility. The entire facility is guaranteed by PlayCore, Inc. and secured by a
first priority mortgage or security interest in all of PlayCore Wisconsin's
tangible and intangible assets, as well as the pledge of all of the outstanding
shares of PlayCore Wisconsin common stock. In addition, the Company and PlayCore
Wisconsin are subject to certain restrictive covenants,
10
<PAGE>
which include, among other things, a general restriction on the payment of
dividends and a limitation on additional indebtedness.
Borrowing availability under the revolving credit facility is limited to
specified percentages of qualified inventories and accounts receivable, not to
exceed $28.0 million. At June 30, 1999, the outstanding amount of the revolving
loan facility was $24.8 million.
The Company made capital expenditures totaling approximately $4.7 million in the
six months ended June 30, 1999. Approximately $3.1 million of this total was
spent on the expansion of the GameTime facility in Fort Payne, Alabama. This
expansion will provide needed additional capacity to meet projected sales growth
and also allow for better workflow through the facility. The Company continues
to evaluate opportunities for both internal and external growth and believes
that funds generated from operations and its current and anticipated future
capacity for borrowing will be sufficient to fund current business operations as
well as anticipated future capital expenditures and growth opportunities.
Impact of Year 2000
Certain of the Company's older computer programs were written using two digits
rather than four to define the applicable year. As a result, such older computer
programs could misinterpret a date using "00" as the year 1900 rather than the
year 2000. If not corrected, many computer applications with this defect could
fail or create erroneous results.
The Company's Year 2000 compliance is directed by senior management and includes
four main projects.
1. Information technology;
2. Operating equipment with embedded chips or software;
3. Products; and
4. Third party suppliers and customers.
These projects generally include four phases:
1. Assessment - assessing equipment and systems for potential Year
2000 non-compliance;
2. Remediation - developing solutions to correct Year 2000
non-compliance;
3. Testing - testing the developed solutions for effectiveness; and
4. Implementation - implementing the fully tested solutions.
11
<PAGE>
The following chart is a summary of our Year 2000 compliance schedule target
dates:
Resolution Phases
- --------------------------------------------------------------------------------
Assessment Remediation Testing Implementation
- --------------------------------------------------------------------------------
E Information 100% Complete 100% Complete 90% Complete 90% Complete
X Technology
P Expected Expected
O completion completion
S date is date is
U October 1999 October 1999
R ---------------------------------------------------------------------------
E Operating 100% Complete 100% Complete 95% Complete 90% Complete
Equipment
with Expected Expected
T Embedded completion completion
Y Chips or date is date is
P software October 1999 October 1999
E
- --------------------------------------------------------------------------------
Products 100% Complete 100% Complete 100% Complete 100% Complete
- --------------------------------------------------------------------------------
3rd Party 95% Complete 60% Complete 50% Complete 50% Completion
Suppliers for system for system for system for system
and interface interface interface interface
customers
Expected Develop Expected Implement
completion for contingency completion contingency
surveying plans as date for plans or
vendors is appropriate, system alteratives as
September 1999 October 1999 interface necessary,
work is October 1999
October 1999
- --------------------------------------------------------------------------------
We believe our Year 2000 compliance will be completed on schedule, but the
schedule is based on a number of factors and assumptions. These assumptions
include the accuracy and completeness of responses by third parties to our
inquires and the availability of skilled personnel to complete the compliance
work. The compliance schedule could be adversely impacted if any of the factors
and assumptions are incorrect. We cannot give assurance that our Year 2000
compliance projects will be completed on schedule or that we will not uncover
Year 2000 issues that could create a material impact on the operation of the
Company. In addition, disruptions in the economy generally resulting from Year
2000 issues could also materially adversely affect the Company. The Company
could be subject to litigation for computer system failures, equipment
12
<PAGE>
shutdowns or improperly dated business records. The amount of such potential
liability and lost revenue cannot be reasonably estimated at this time.
The Company is in the process of working with third party vendors and customers
to ensure that the Company's systems that interface directly with third parties
are Year 2000 compliant by October 1999. Although management believes a
significant interruption in our suppliers and customers activities (due to Year
2000 issues) is unlikely, such an interruption could have a material impact on
our financial results.
We do not believe that the cost of our Year 2000 compliance will be material to
our financial condition or results of operations. The cost of Year 2000
compliance is not expected to exceed $0.5 million and is being funded through
operating cash flows. To date, we have spent approximately $0.4 million on Year
2000 compliance.
The Company currently has no contingency plans in place in the event it does not
complete all phases of the Year 2000 program. The Company plans to evaluate the
status of completion in October 1999 and determine whether such a plan is
necessary.
Quantitative and Qualitative Disclosures about Market Risk
----------------------------------------------------------
The Company is exposed to market risk related to changes in interest rates. The
Company's earnings are affected by changes in the interest rate as a result of
its borrowings under the senior credit facility. However, at December 31, 1998,
the Company had a swap agreement that effectively converted $20.0 million of the
Company's debt to a fixed rate. If market interest rates for the remaining
borrowings under the senior credit facility average 1 percent or more during the
year ended December 31, 1999 than they did during 1998, the Company's interest
expense would increase, and income before taxes would decrease by approximately
$0.5 million. This analysis does not consider the effects of the reduced level
of overall economic activity that could exist in such an environment. Further,
in the event of a change of such magnitude, management could take actions to
further mitigate its exposure to the change. However, due to the uncertainty of
the specific actions that would be taken and their possible effects, the
sensitivity analysis assumes no changes in the Company's financial structure.
The Company's swap agreement in place at December 31, 1998 had a notional amount
of $20.0 million and ran through June 11, 2000. The agreement required the
Company to pay interest at a defined fixed rate of 6.11 percent while receiving
interest at a defined variable rate of three-month LIBOR (5.24 percent at
December 31, 1998). This swap effectively converted $20.0 million of the
Company's Term Loan A to a fixed rate. The additional net interest expense
recorded in 1998 as a result of the swap agreement was not material. At December
31, 1998, the swap agreement had a negative fair market value of approximately
$0.3 million as determined by the lender. In connection with the amendment of
the Company's senior credit facility in February 1999, the swap agreement was
terminated. The Company expects to enter into a new swap agreement with a $20.0
million notional amount before the end of the third quarter of 1999.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. SUBMISSION OF MATTERS TO VOTE
At the Company's annual meeting of stockholders held on May 26, 1999
Terence S. Malone, Frederic L. Contino, David S. Evans, George N.
Herrera, Timothy R. Kelleher, Gary A. Massel and Ronald D. Wray were
elected as directors of the Company for terms expiring in 2000. All
directors were elected by 7,710,216 shares, with 6,811 shares
withholding authority.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
14
<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.
PlayCore, Inc.
Date: August 11, 1999 /s/ Richard E. Ruegger
-------------------------------------
Richard E. Ruegger,
Vice President-Finance
and Chief Financial Officer
(Duly authorized officer and Principal
Financial and Accounting Officer)
15
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
27 Financial Data Schedule
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF PLAYCORE, INC. AS OF AND FOR
THE SIX-MONTH PERIOD ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,837
<SECURITIES> 0
<RECEIVABLES> 31,068
<ALLOWANCES> 1,157
<INVENTORY> 20,804
<CURRENT-ASSETS> 60,095
<PP&E> 36,344
<DEPRECIATION> 10,333
<TOTAL-ASSETS> 145,164
<CURRENT-LIABILITIES> 59,789
<BONDS> 51,555
0
0
<COMMON> 115
<OTHER-SE> 22,972
<TOTAL-LIABILITY-AND-EQUITY> 145,164
<SALES> 93,428
<TOTAL-REVENUES> 93,428
<CGS> 51,427
<TOTAL-COSTS> 51,427
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,146
<INCOME-PRETAX> 10,887
<INCOME-TAX> 4,190
<INCOME-CONTINUING> 6,697
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,697
<EPS-BASIC> .85
<EPS-DILUTED> .68
</TABLE>
