-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L3Q8QHqIRzzeH5Is43TSjAOibH4agamh0Jt5Gvb4gvPnbRx/22tC59PWfUVtQgdI M/kckQRn1AvbPSb5dXaJKQ== 0000897069-00-000308.txt : 20000516 0000897069-00-000308.hdr.sgml : 20000516 ACCESSION NUMBER: 0000897069-00-000308 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLAYCORE INC CENTRAL INDEX KEY: 0000888916 STANDARD INDUSTRIAL CLASSIFICATION: [3949] IRS NUMBER: 363808989 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20450 FILM NUMBER: 635215 BUSINESS ADDRESS: STREET 1: 1212 BARBERRY DRIVE CITY: JANESVILLE STATE: WI ZIP: 53545 BUSINESS PHONE: 6087554777 FORMER COMPANY: FORMER CONFORMED NAME: SWING N SLIDE CORP DATE OF NAME CHANGE: 19950721 10-Q 1 PLAYCORE, INC. FORM 10-Q 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 March 31, 2000 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 May 5, 2000 there were 7,982,104 shares of Common Stock, par value $.01 per share, outstanding. PLAYCORE, INC. FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2000 INDEX Part I. Financial Information: Page ---- Unaudited Consolidated Balance Sheets - December 31, 1999 and March 31, 2000 3 Unaudited Consolidated Interim Statements of Operations and Retained Earnings - Three Months Ended March 31, 1999 and 2000 4 Unaudited Consolidated Interim Statements of Cash Flows- Three Months Ended March 31, 1999 and 2000 5 Notes to Unaudited Interim Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Quantitative and Qualitative Disclosure about Market Risk 10 Part II. Other Information Item 1 - Legal Proceedings Item 6 - Exhibits and Reports on Form 8-K 12 Signature 13 2 PlayCore, Inc. Consolidated Balance Sheets (unaudited) (in thousands, except share data)
December 31, March 31, ASSETS 1999 2000 ----------- ----------- Current assets: Cash $ 800 $ 811 Accounts receivable, less allowance for doubtful accounts of $666 and $704 28,302 28,457 Other receivables 1,219 1,367 Inventories 19,124 23,910 Refundable income taxes 1,169 723 Prepaid expenses 3,099 4,770 Deferred income taxes 1,855 1,730 ----------- ----------- Total current assets 55,568 61,768 Property, plant and equipment, net 26,688 27,255 Deferred financing and other costs, net of accumulated amortization of $2,537 and $2,796 3,557 3,373 Identifiable intangible assets, net of accumulated amortization of $1,169 and $1,250 6,358 6,277 Goodwill, net of accumulated amortization of $6,621 and $7,000 47,768 47,389 Other long-term assets 372 363 ----------- ----------- $ 140,311 $ 146,425 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Revolving loan $ 25,105 $ 32,881 Accounts payable 9,319 11,566 Accrued expenses 15,410 12,493 Current portion of long-term debt 9,087 9,268 ----------- ----------- Total current liabilities 58,921 66,208 Long-term debt, net of current portion 46,232 45,381 Convertible subordinated debentures payable to stockholders 7,258 7,258 Deferred income taxes 4,269 4,575 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, 11,575,599 and 11,593,989 shares issued 116 116 Class B common stock, $.01 par value, 1,750,000 shares authorized, no shares issued or outstanding - - Additional paid-in capital 37,692 37,780 Retained earnings 26,334 25,618 Less 3,634,385 common shares held in treasury, at cost (40,511) (40,511) ----------- ----------- Total stockholders' equity 23,631 23,003 ----------- ----------- $ 140,311 $ 146,425 =========== =========== Note: The consolidated balance sheet at December 31, 1999 has been derived from the audited consolidated balance sheet at that date. See notes to interim consolidated financial statements
3 PlayCore, Inc. Consolidated Interim Statements of Operations and Retained Earnings (unaudited) (in thousands, except per share amounts) Three months Three months ended ended March 31, March 31, 1999 2000 ------------ ------------ Net sales $ 31,473 $ 38,511 Cost of goods sold 18,283 23,514 ------------ ------------ Gross profit 13,190 14,997 Operating expenses: Selling 6,392 6,970 General and administrative 3,666 5,818 Amortization of intangible assets 590 719 ------------ ------------ 10,648 13,507 ------------ ------------ Operating income 2,542 1,490 Other expense: Interest expense 1,938 2,403 Other, net 112 241 ------------ ------------ Total other expense 2,050 2,644 ------------ ------------ Income(loss) before income taxes 492 (1,154) Income tax expense(benefit) 200 (438) ------------ ------------ Net income(loss) 292 (716) Retained earnings at beginning of period 19,248 26,334 ------------ ------------ Retained earnings at end of period $ 19,540 $ 25,618 ============ ============ Earnings(loss) per share: Basic $ 0.04 $ (0.09) Diluted 0.03 (0.09) See notes to interim consolidated financial statements 4 PlayCore, Inc. Consolidated Interim Statements of Cash Flows (unaudited) (in thousands)
Three months Three months ended ended March 31, March 31, 1999 2000 ------------ ------------ Operating activities Net income(loss) $ 292 $ (716) Adjustments to reconcile net income(loss) to net cash used by operating activities: Amortization of debt discount 91 91 Deferred income taxes 300 431 Depreciation 666 926 Amortization of intangible assets 590 719 Changes in operating assets and liabilities (8,459) (6,985) ------------ ------------ Net cash used by operating activities (6,520) (5,534) Investing activities Purchase of property, plant and equipment (2,241) (1,483) Acquisitions, including transaction costs and net of cash acquired (14,148) - ------------ ------------ Net cash used by investing activities (16,389) (1,483) Financing activities Increase in revolving loan 14,000 7,776 Issuances of long-term debt 10,323 - Debt issuance costs incurred (843) (75) Proceeds from issuance of common stock 14 88 Payments of long-term debt (445) (761) ------------ ------------ Net cash provided by financing activities 23,049 7,028 ------------ ------------ Increase in cash 140 11 Cash at beginning of period 487 800 ------------ ------------ Cash at end of period $ 627 $ 811 ============ ============ Supplemental disclosure of cash flows information- Cash paid (received) during period for: Interest $ 1,899 $ 1,816 Income taxes refunded - (1,385) See notes to interim consolidated financial statements
5 PlayCore, Inc. Notes to Interim Consolidated Financial Statements Unaudited (in thousands) March 31, 2000 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 three months ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. 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, 1999. 2. Earnings per share The following table sets forth the computation of basic and diluted earnings per share: Three months Three months ended ended March 31, March 31, 1999 2000 ------------ ------------ Numerator: Numerator for basic and diluted earnings per share - Net income (loss) $ 292 $ (716) ============ ============ Denominator: Denominator for basic earnings per share - weighted average shares 7,910 7,956 Effect of diluted securities: Employee stock options(treasury stock method) 114 - Warrants 627 - ------------ ------------ Denominator for diluted earnings per share 8,651 7,956 ============ ============ 3. Inventories Inventories consisted of the following: December 31, March 31, 1999 2000 ------------ ------------ Finished goods and work in process $ 10,699 $ 12,235 Raw materials 8,425 11,675 ------------ ------------ $ 19,124 $ 23,910 ============ ============ 4. Segment Reporting Three months ended March 31, 1999 ------------------------------------- Commercial Consumer Total ---------- -------- -------- Revenues from external customers $ 14,011 $ 17,462 $ 31,473 Segment profit (loss) 331 (39) 292 Three months ended March 31, 2000 ------------------------------------- Commercial Consumer Total ---------- -------- -------- Revenues from external customers $ 14,781 $ 23,730 $ 38,511 Segment profit (loss) 271 (987) (716) 6 PlayCore, Inc. Notes to Interim Consolidated Financial Statements Unaudited (in thousands) March 31, 2000 5. Acquistion by Chartwell Investments II LLC On April 13, 2000, the Company entered into a definitive agreement and plan of merger with a newly-formed affiliate of Chartwell Investments II LLC ("Chartwell") providing for the acquisition of all of the outstanding shares of PlayCore for $10.10 per share in cash. As part of the transaction, GreenGrass Holdings, PlayCore's majority shareholder, has agreed to sell all of its shares of PlayCore common stock to the Chartwell affiliate. GreenGrass Holdings owns approximately 72 percent of the outstanding shares of PlayCore. The board of directors of PlayCore unanimously approved the transaction. PlayCore and the Chartwell affiliate have initiated a joint tender offer. The completion of the tender offer is subject to certain conditions, including the tender of 1,367,947 shares, representing 50.1 percent of the publicly-held shares not owned by GreenGrass Holdings and and current directors and officers of PlayCore; the receipt of funds from the lenders; and expiration of a waiting period under the U.S. Hart-Scott-Rodino Act. Any shares of PlayCore common stock not purchased in the tender offer will be acquired in a subsequent merger transaction at the same $10.10 per share cash price. 7 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. Acquisition by Chartwell Investments II LLC On April 13, 2000, the Company entered into a definitive agreement and plan of merger with a newly-formed affiliate of Chartwell Investments II LLC ("Chartwell") providing for the acquisition of all of the outstanding shares of PlayCore for $10.10 per share in cash. As part of the transaction, GreenGrass Holdings, PlayCore's majority shareholder, has agreed to sell all of its shares of PlayCore common stock to the Chartwell affiliate. GreenGrass Holdings owns approximately 72 percent of the outstanding shares of PlayCore. The board of directors of PlayCore unanimously approved the transaction. PlayCore and the Chartwell affiliate have initiated a joint tender offer. The completion of the tender offer is subject to certain conditions, including the tender of 1,367,947 shares, representing 50.1 percent of the publicly-held shares not owned by GreenGrass Holdings and current directors and officers of PlayCore; the receipt of funds from the lenders; and expiration of a waiting period under the U.S. Hart-Scott-Rodino Act. Any shares of PlayCore common stock not purchased in the tender offer will be acquired in a subsequent merger transaction at the same $10.10 per share cash price. 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 March 31, 2000, compared to the three months ended March 31, 1999. Net Sales. Net sales increased $7.0 million, or 22.4 percent, to $38.5 million for the three months ended March 31, 2000 as compared to $31.5 million for the same period a year ago. Sales of the Company's consumer products increased $6.2 million, or 35.9 percent, to $23.7 million for the 8 three months ended March 31, 2000 as compared to $17.5 million for the same period a year ago. This increase in sales is mainly attributable to the inclusion of Heartland sales for the entire first quarter of 2000 versus the inclusion of Heartland sales for only February 16 through March 31 in 1999. Sales of the Company's commercial products increased $0.8 million, or 5.5 percent, to $14.8 million for the three months ended March 31, 2000 as compared to $14.0 million for the same period in 1999. Gross Profit. Gross profit increased $1.8 million, or 13.7 percent, to $15.0 million but decreased as a percentage of net sales to 38.9 percent for the three months ended March 31, 2000 as compared to $13.2 million and 41.9 percent for the same period a year ago. The main reason for the decline in the gross profit margin is a greater percentage of sales attributable to Heartland's wooden storage buildings, which have a lower profit margin than playground equipment. Selling Expense. Selling expense increased $0.6 million, or 9.0 percent, to $7.0 million but declined as a percentage of net sales to 18.1 percent for the first three months of 2000 as compared to $6.4 million and 20.3 percent for the three months ended March 31, 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 $2.1 million, or 58.7 percent, to $5.8 million and increased as a percentage of net sales to 15.1 percent for the three months ended March 31, 2000 as compared to $3.7 million and 11.6 percent for the same period a year ago. The dollar increase was primarily due to the inclusion of Heartland's general and administrative expenses for the entire first quarter of 2000 versus the inclusion of Heartland's general and administrative expenses for only February 16 through March 31 in 1999. The increase as a percentage of net sales was mainly due to 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 intangible assets was $0.7 million for the three months ended March 31, 2000 as compared to $0.6 million for the same period a year ago. Additional amortization resulted from goodwill and financing fees associated with the Heartland acquisition. Other Expense. Interest expense was $2.4 million for the three months ended March 31, 2000 as compared to $1.9 million for the same period in 1999. This increase in interest expense was due to the additional debt that was incurred in connection with the February 1999 acquisition of Heartland. 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. 9 Liquidity and Capital Resources During the three months ended March 31, 2000, total indebtedness increased $7.1 million to $94.8 million primarily as a result of increased levels of working capital to meet the seasonal increase in production levels. The Company's primary sources of working capital are cash flows from operations and borrowings under PlayCore Wisconsin's senior credit facility, which was entered into in March 1997, amended in February 1999, March 2000 and April 2000, and runs through June 2003. PlayCore Wisconsin, Inc. is a wholly owned subsidiary of the Company. The PlayCore Wisconsin facility consists of (a) a $33.0 million revolving credit facility; (b) a $38.0 million Term A facility and (c) a $9.0 million Term B facility. The revolving loan facility will reduce to $28.0 million after July 31, 2000. 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 Company's 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, which include, among other things, a general restriction on the payment of dividends and a limitation on additional indebtedness. Borrowing availability under the PlayCore Wisconsin revolving credit facility is limited to specified percentages of qualified inventories and accounts receivable, not to exceed $33.0 million. At March 31, 2000, the outstanding amount of the revolving loan facility was $32.9 million. In April 2000, the revolving credit facility was amended to, among other things, increase the percentage of qualified inventories and accounts receivables used to determine the borrowing availability. The Company made capital expenditures totaling approximately $1.5 million in the three months ended March 31, 2000. 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. 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. If market interest rates for the borrowings under the senior credit facility average 1% more during the year ended December 31, 2000 than they did during 1999, the Company's interest expense would increase, and income before taxes would decrease by approximately $0.7 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. 10 In February 2000, the Company entered into an interest rate cap agreement covering $20.0 million of outstanding debt obligations and that expires in February 2002. The cap agreement places a LIBOR rate ceiling of 8% on the obligations covered. 11 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS A complaint was filed in Rock County, Wisconsin state court against the Company and its board of directors. The Company was informed on May 4, 2000 that the complaint was filed on April 17, 2000, three days after the public announcement that the Company had entered into the definitive agreement and plan of merger with the newly-formed affiliate of Chartwell Investments II, LLC. The complaint was filed as a purported class action on behalf of holders of Company common stock. The complaint alleges that the Company's board of directors, by entering into the agreement and plan of merger with the Chartwell entity, violated its fiduciary duties to Company stockholders. Neither the Company nor, to the Company's knowledge, any of its directors have been served with the complaint. The Company believes that the plaintiff's claims are without merit, and intends to defend the action vigorously. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 10 - Amendment No. 2, dated as of April 13, 2000, to Amended and Restated Credit Agreement, dated as of February 16, 1999, among PlayCore, Inc., PlayCore Wisconsin, Inc., the Lenders party to thereof and Fleet National Bank, as lender and agent. Exhibit 27 - Financial Data Schedule (EDGAR version only) (b) Reports on Form 8-K None 12 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: May 15, 2000 /s/ Richard E. Ruegger -------------------------------------- Richard E. Ruegger, Vice President-Finance and Chief Financial Officer (Duly authorized officer and Principal Financial and Accounting Officer) 13 EXHIBIT INDEX Exhibit Description - ------- ----------- 10 Amendment No. 2, dated as of April 13, 2000, to Amended and Restated Credit Agreement, dated as of February 16, 1999, among PlayCore, Inc., PlayCore Wisconsin, Inc., the Lenders party to thereof and Fleet National Bank, as lender and agent. 27 Financial Data Schedule 14 EX-10 2 AMENDMENT NO. 2 PLAYCORE, INC. PLAYCORE WISCONSIN, INC. RESTATED CREDIT AGREEMENT Amendment No. 2 --------------- This Agreement, dated as of April 13, 2000 (this "Agreement"), is among PlayCore Wisconsin, Inc., a Wisconsin corporation, the Subsidiaries of PlayCore Wisconsin, Inc. party hereto, PlayCore Wisconsin, Inc.'s corporate parent PlayCore, Inc., a Delaware corporation, the Lenders party hereto and Fleet National Bank, both in its capacity as a Lender and in its capacity as agent for itself and the other Lenders. The parties agree as follows: 1. Credit Agreement; Definitions. This Agreement amends the Credit Agreement dated as of March 13, 1997, as amended and restated as of February 16, 1999, among the parties hereto (as in effect prior to giving effect to this Agreement, the "Credit Agreement"). Terms defined in the Credit Agreement as amended hereby (the "Amended Credit Agreement") and not otherwise defined herein are used with the meaning so defined. 2. Amendment of Credit Agreement. Effective upon the date hereof, the definition of the term "Borrowing Base" in Section 1.18 of the Credit Agreement is amended by adding the following clause (c) immediately following clause (b) thereof and prior to the proviso thereto: "plus (c) (i) prior to May 11, 2000, $5,000,000 and (ii) from May 11, 2000 through May 26, 2000, $2,000,000;" 3. Representations and Warranties. Each of the Borrower and the Guarantors jointly and severally represents and warrants as follows: 3.1. Legal Existence, Organization. Each of the Borrower and the Guarantors is duly organized and validly existing and in good standing under the laws of the jurisdiction of its organization, with all power and authority, corporate or otherwise, necessary (a) to enter into and perform this Agreement and the Amended Credit Agreement and (b) to own its properties and carry on the business now conducted or proposed to be conducted by it. Each of the Borrower and the Guarantors has taken all corporate or other action required to make the provisions of this Agreement and the Amended Credit Agreement the valid and enforceable obligations they purport to be. 3.2. Enforceability. Each of the Borrower and the Guarantors has duly authorized, executed and delivered this Agreement. Each of this Agreement and the Amended Credit Agreement is the legal, valid and binding obligation of each of the Borrower and the Guarantors and is enforceable against the Borrower and the Guarantors in accordance with its terms. 3.3. No Legal Obstacle to Agreements. Neither the execution, delivery or performance of this Agreement, nor the performance of the Amended Credit Agreement, nor the consummation of any other transaction referred to or contemplated by this Agreement, nor the fulfillment of the terms hereof or thereof, has constituted or resulted in or will constitute or result in: (a) any breach or termination of any agreement, instrument, deed or lease to which the Holding Company or any of its Subsidiaries is a party or by which it is bound, or of the Charter or By-laws of the Holding Company or any of its Subsidiaries; (b) the violation of any law, judgment, decree or governmental order, rule or regulation applicable to the Holding Company or any of its Subsidiaries; (c) the creation under any agreement, instrument, deed or lease of any Lien (other than Liens on the Credit Security which secure the Credit Obligations) upon any of the assets of the Holding Company or any of its Subsidiaries; or (d) any redemption, retirement or other repurchase obligation of the Holding Company or any of its Subsidiaries under any Charter, By-law, agreement, instrument, deed or lease. No approval, authorization or other action by, or declaration to or filing with, any governmental or administrative authority or any other Person is required to be obtained or made by the Holding Company or any of its Subsidiaries in connection with the execution, delivery and performance of this Agreement or the performance of the Amended Credit Agreement, or the consummation of the transactions contemplated hereby or thereby. 3.4. Defaults. Immediately after giving effect to the amendments set forth in Section 2 hereof and the waivers set forth in Section 4 hereof, no Default will exist. 3.5. Incorporation of Representations and Warranties. The representations and warranties set forth in Section 7 of the Amended Credit Agreement are true and correct on the date hereof as if originally made on and as of the date hereof. 4. Waivers With Respect to Certain Events of Default. The Lenders waive the Events of Default caused by (a) the Borrower paying on or prior to the date hereof the interest payment due under the Credit Agreement on March 31, 2000 and (b) the sum of the Revolving Loan plus Letter of Credit Exposure exceeding the Borrowing Base (as defined in the Credit Agreement prior to giving effect to this Agreement) by no more than $6,600,000 for the period from January 1, 2000 through the date hereof. -2- 5. Amendment Fee. On May 26, 2000, the Borrower shall pay to the Agent for the accounts of the respective Lenders in accordance with their respective Commitments in the Revolving Loan an amendment fee (the "Amendment Fee") equal to $400,000; provided, however, that (a) in the event the Borrowing Base exceeds the sum of the Revolving Loan plus the Letter of Credit Exposure by at least $2,000,000 at all times after May 10, 2000, the Amendment Fee shall be reduced to $200,000 and (b) in the event clause (a) does not apply, but the Borrowing Base exceeds the sum of the Revolving Loan plus the Letter of Credit Exposure by at least $2,000,000 on and after May 25, 2000, the Amendment Fee shall be reduced to $300,000. In addition, the Borrower shall pay to the Agent the reasonable fees and expenses of its special counsel in connection with this Agreement. 6. General. The Amended Credit Agreement and all of the Credit Documents are each confirmed as being in full force and effect. This Agreement, the Amended Credit Agreement and the other Credit Documents referred to herein or therein constitute the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior and current understandings and agreements, whether written or oral. Each of this Agreement and the Amended Credit Agreement is a Credit Document and may be executed in any number of counterparts, which together shall constitute one instrument, and shall bind and inure to the benefit of the parties and their respective successors and assigns, including as such successors and assigns all holders of any Credit Obligation. This Agreement shall be governed by and construed in accordance with the laws (other than the conflict of law rules) of The Commonwealth of Massachusetts. [the remainder of this page is intentionally blank] -3- Each of the undersigned has caused this Agreement to be executed and delivered by its duly authorized officer as an agreement under seal as of the date first above written. PLAYCORE, INC. By /s/ ------------------------------------ Title: PLAYCORE WISCONSIN, INC. By /s/ ------------------------------------ Title: HEARTLAND INDUSTRIES, INC. (DE) By /s/ ------------------------------------ Title: FLEET NATIONAL BANK By /s/ ------------------------------------ Title: LASALLE BANK NATIONAL ASSOCIATION By /s/ ------------------------------------ Title: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By /s/ ------------------------------------ Title: -4- MASSMUTUAL HIGH YIELD PARTNERS II, LLC By HYP MANAGEMENT, INC., as Managing Member By /s/ ------------------------------------ Title: FIRSTAR BANK MILWAUKEE, N.A. By /s/ ------------------------------------ Title: M & I MARSHALL & ILSLEY BANK By /s/ ------------------------------------ Title: By /s/ ------------------------------------ Title: KEY CORPORATE CAPITAL INC. By /s/ ------------------------------------ Title: -5- EX-27 3 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF PLAYCORE, INC. AS OF AND FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 811 0 29,161 704 23,910 61,768 40,045 12,790 146,425 66,208 45,381 0 0 116 22,887 146,425 38,511 38,511 23,514 23,514 0 0 2,403 (1,154) (438) (716) 0 0 0 (716) (.09) (.09)
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