PlayCore, Inc.

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PlayCore, Inc.

1212 Barbary Drive
Janesville, Wisconsin 53545
U.S.A.
(608) 755-4768
Fax: (608) 755-4763
Web site: http://www.playcore.com

Public Company
Incorporated: 1985 as Swing-N-Slide Corporation
Employees: 516
Sales: $89 million (1997)
Stock Exchanges: American
Symbol: PCO
SICs: 3949 Sporting & Athletic Goods, Not Elsewhere Classified

PlayCore, Inc. is one of the fastest growing and most innovative commercial and consumer playground equipment firms in the United States. The company has three core divisions, including: Swing-N-Slide, the consumer products division; GameTime, the commercial products division; and Pentes Play, the soft-contained equipment division. Swing-N-Slide, whose do-it-yourself wooden playground equipment is the leader of the market in the United States, is located in Janesville, Wisconsin, and promotes and sells its products through hardware and home service centers; GameTime, whose manufacturing facilities are situated in Fort Payne, Alabama, designs and markets playground systems to municipalities, amusement parks, school districts, and park districts across America and is recognized as one of the largest makers of modular and custom commercial outdoor playground equipment; and Pentes Play is one of America’s leading designers and manufacturers of indoor soft-contained play equipment. GameTime, Inc., purchased in 1997, and Pentes Play, Inc., acquired in 1998, are the first two steps management has taken at PlayCore to implement its strategy to become the world’s leading supplier of playground and children’s recreation products. By the middle of 1998, both through the acquisition of GameTime and a new global marketing strategy, PlayCore was able to report that international sales accounted for six percent of the company’s total sales volume.

Early History

During the mid-1980s Thomas and Michelle Baer, residents of Janesville, Wisconsin, thought that a do-it-yourself hardware kit using standardized lumber to build swing sets would be a low-cost alternative to the then predominant wooden swing sets everyone bought for their children. Thomas Baer had been looking quite some time for a high-quality swing set for his children, but was unwilling to pay $750 for the pre-cut swing sets that he could find. Baer finally decided to design a wood swing set that included everything such as rings, chain, swing hangers, brackets, and plans, but without the wood. The wood was to be purchased at a local lumberyard. When Baer finished building the swing set design of his own, he realized that he had completed the entire wood swing set for less than $200.

Even though the Baers put their own money into starting a venture to manufacture these hardware kits, however, they found that more capital was required to make the enterprise a sustainable success. They approached the DRS Investment Group, also located in Janesville, and suggested a partnership to underwrite the costs of starting a company. An agreement having been signed among all parties, Swing-N-Slide, Inc. was formed to manufacture and market do-it-yourself wooden home playground equipment. Thomas Baer became the company’s first president and CEO.

Within a few years the company was growing at a torrid rate. Swing sets, which included an assembly plan, swing hangers, chains and seats, brackets, and a complete breakdown of the lumber, number of nails, and tools required to finish the kit, were selling better than anticipated. By the early 1990s the company had introduced a total of six basic designs for swing set kits. Equally successful were the company’s climbing units. Five basic designs were manufactured, each complete with an assembly plan, climbing rope, climbing ladder, tarp, fasteners, assembly hardware and, similar to the swing set kits, a list of the required lumber, number of nails, and tools to complete the kit.

In addition to swing set kits and climbing units, the company manufactured plastic slides for use on all of the kits. Although the firm initially made metal slides, management quickly decided that plastic slides were of a higher quality since they are longer, can be manufactured in a wide variety of colors, are not susceptible to rust, and do not become as hot in the sun as metal slides commonly do. To augment its product line, the company also designed, manufactured, and marketed numerous accessories that complemented its swing set kits and climbing units, such as climbing ropes, metal and wood swing hangers, nets, merry-go-rounds, tarps, ladders, and swing set seats. In 1988 the company’s accessories product line included only eleven items. By the early 1990s, however, more than 30 items were sold as accessories to swing set kits and climbing units.

Growth and Development in the Early 1990s

The early 1990s were boom years for the company. Once only available through lumber yards, by 1992 the company’s products could be purchased through a number of different home center stores—a total of more than 6,000 retail outlets—including 19 of the 20 largest home center chains with operations throughout the United States. Swing-N-Slide’s product mix also was a telling sign of good times: swing sets accounted for 17 percent of sales, climbing units for 23 percent of sales, slides for 34 percent of sales, and accessories for 26 percent of sales. From 1989 to 1992 the company’s total sales volume increased from $7.8 million to $46 million, adding up to an astounding near 500 percent increase. Gross profit and operating income also skyrocketed during the same period. In fact, the company’s gross profit margin hovered around 50 percent, twice the figure of other swing set manufacturers.

Perhaps the best news for those individuals, especially the Baers, who were instrumental in establishing the company, came when Swing-N-Slide became a public company in 1992. With an initial public offering at $11 per share on the Nasdaq stock exchange, the company sold 2.6 million shares. The Baers became millionaires overnight. Although the following summer of 1993, with floods throughout the Midwest and an increase of lumber prices by 15 percent, saw the stock lose 46 percent of its value, within another six months the company’s stock price jumped back and stabilized at $12.50 per share.

During the mid-1990s, however, Swing-N-Slide fell into a design and marketing routine. Sales had peaked in 1993, with profitability leveling off, and gross profit margins stagnating. The year 1994 was the same for the company. In 1995 net sales amounted to a disappointing $45 million. But this was not the end of it. Even more disappointing was the net sales total for 1996—$41 million. Unfortunately, it seemed as if the company had a brief success and was destined to head for bankruptcy courts. In a move that was designed to shake up management and return the company to respectable profitability, the board of directors decided to release Thomas Baer as head of the company and hire a new president and chief executive officer by the name of Frederick L. Contino, a manager with extensive experience in the playground and play systems industry.

Without hesitating, Contino streamlined management and services, expanding the company’s presence in the retail home center and outlet market, and focused on designing new and better playground systems. Most important of all, however, was Contino’s strategy to grow the company through a comprehensive acquisitions plan. The first step in his plan was to purchase GameTime, Inc., located in Fort Payne, Alabama. A leading supplier of commercial outdoor playground equipment for public parks, public schools, municipalities, day care centers, campgrounds, churches, hotels, and amusement parks, GameTime was a perfect complement to Swing-N-Slide’s product line. With a well-known reputation for innovative designs, product longevity, and customer satisfaction, GameTime, Inc. brought with it three primary brands, PrimeTime, PowerScape, and TotTime. The company’s PrimeTime brand is a play system that can be used anywhere, featuring an easy-to-build bolt-through fastening system. GameTime’s PowerScape brand is one of the premier play systems used in the United States, with patented, factory-installed locks, galvanized steel or aluminum support posts, and modular roofs on certain systems. The Tot-Time brand is an innovative play system designed especially for two- to five-year-olds, using PrimeTime construction techniques and featuring lower and higher deck heights. GameTime also manufactures StreetScape, a highly innovative product line including commercial outdoor furniture for use in shopping malls, parks, and a variety of urban environments.

When acquired by Swing-N-Slide, the GameTime product line was sold by 21 independent representatives throughout the United States and by 25 independent international distributors around the world. With an industry certification granted by the International Organization of Standardization, GameTime products were in growing demand from countries outside the United States. The acquisition of GameTime not only doubled the net sales of Swing-N-Slide almost immediately, but provided it with an international distribution network that management was keen to develop.

Company Perspectives:

We make playgrounds that provide children with a stimulating environment in which to grow. The best play systems help develop children’s physical and social skills while encouraging cooperative play. Creative playground design promotes cognitive growth and sparks the imagination. A playground can assist in teaching risk control to children of all ages and abilities. Building a playground not only serves the child users, but it can also enhance the lives of families and even whole communities. Finally, play is a whole lot of fun. At PlayCore we are committed to creating more and more happy faces.

There were other advantages to the acquisition as well. Swing-N-Slide’s consumer sales were seasonal, with most of its business conducted during the first two quarters of the year. GameTime, on the other hand, sold about 65 percent of its product line during the second and third quarters of the year. The two companies also complemented each other with regard to their manufacturing capacities. GameTime previously had outsourced its thermoform production of bubble windows and panels, but was able to take advantage of Swing-N-Slide’s manufacturing plant in Janesville, Wisconsin. Simultaneously, Swing-N-Slide was able to take advantage of GameTime’s efficiency in metal fabrication and commercial production, to hasten and improve Swing-N-Slide’s Tuff Kids product line, a rock-bottom-priced line of commercial playground equipment and systems.

By the end of 1997 Swing-N-Slide’s net sales had jumped to $89 million, an increase of 114 percent over 1996. The number of employees also had increased from 241 to 516 workers. Keeping this many employees was an indication that Contino was strongly committed to expanding the company’s product line and marketing capacity.

By mid-1998 the company reported net sales of $62 million, an increase of 36 percent over the same time in 1997. Operating income and profitability also increased substantially during the first six months of 1998.

With such favorable financial indicators, Contino continued to move the company forward. In 1998 the company changed its name from Swing-N-Slide, Inc. to PlayCore, Inc., to emphasize the company’s focus on playgrounds and play systems. In May of 1998 Contino convinced the board of directors to approve the purchase of Pentes Play, Inc., one of America’s leading designers and marketers of indoor soft-contained play equipment. Based in Charlotte, North Carolina, Pentes Play, Inc. previously had outsourced almost all of its manufacturing needs. The acquisition, however, enabled the company to use the production facilities at PlayCore’s plant in Janesville, Wisconsin.

The Late 1990s and Beyond

The acquisitions made by PlayCore transformed the company from a seasonal consumer playground and play systems manufacturer into a highly integrated company with the ability to produce and market its product line not only in the United States, but in many foreign countries. Adding more than $70 million in revenues, management’s strategy has been enormously successful. In addition, the company’s distribution strength has been enhanced significantly through GameTime’s market leadership in supplying play equipment to schools, churches, and park districts, as well as in other applications. Along with Play Core’s growing retail distribution network through its Swing-N-Slide division, customers such as Home Depot, Lowe’s, Builders Square, 84 Lumber, and Ace Hardware are part of the company’s growing success.

With the number of children in the five- to 12-year age range estimated to increase through the early years of the 21st century, new schools will be opening throughout the United States. The expanding economy has led management at PlayCore to believe that numerous city governments will have the funds to remodel old parks and playgrounds and construct new ones. PlayCore has every intention of taking advantage of this opportunity.