-----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, EQytaTFj/yjS9kBEhfBRW5mDxBRhnfAYTi7IKzhVyMe1uLejQX2rwK9PpkfTVH47 FHaQY72mB3bTHZN3cXIdGg== 0000950152-01-001987.txt : 20010402 0000950152-01-001987.hdr.sgml : 20010402 ACCESSION NUMBER: 0000950152-01-001987 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20010330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANTHONY & SYLVAN POOLS CORP CENTRAL INDEX KEY: 0001067606 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION SPECIAL TRADE CONTRACTORS [1700] IRS NUMBER: 311522456 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-26991 FILM NUMBER: 1587340 BUSINESS ADDRESS: STREET 1: 3739 EASTON RD RTE 611 CITY: DOYLESTOWN STATE: PA ZIP: 18901 BUSINESS PHONE: 2162857946 MAIL ADDRESS: STREET 1: 220 PARK DRIVE CITY: CHARDON STATE: OH ZIP: 44024 10-Q/A 1 l87446ae10-qa.txt ANTHONY & SYLVAN POOLS CORPORATION 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A +--+ |X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE +--+ SECURITIES EXCHANGE ACT Of 1934 For the quarterly period ended SEPTEMBER 30, 2000 ------------------------ +--+ | | 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 000-26991 ------------------------------ ANTHONY & SYLVAN POOLS CORPORATION - --------------------------------------------------------------------- (Exact name of registrant as specified in its charter) OHIO 31-1522456 - ------------------------------------------------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6690 BETA DRIVE, MAYFIELD VILLAGE, OHIO 44143 - ------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (440) 720-3301 -------------- Former name, former address and former fiscal year, if changed since last report. 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, as amended, during the preceding 12 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 90 days. Yes X No N/A Indicate the number of shares outstanding of each of the issuer's classes of common shares, as of the latest practicable date. Class Outstanding at November 12, 2000 ---------------------------- Common Shares, no par value 3,687,470 Shares EXPLANATORY NOTE This amendment on Form 10-Q/A amends the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, as filed by the Registrant on November 14, 2000, and is being filed to reflect the restatement of the Registrant's condensed consolidated financial statements (see Note 8 to the unaudited condensed consolidated financial statements). 1 2 ANTHONY & SYLVAN POOLS CORPORATION AND SUBSIDIARY FORM 10-Q/A FOR QUARTER ENDED SEPTEMBER 30, 2000 INDEX
Sequential Page No. ----------- Part I - Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheets - September 30, 2000 and December 31, 1999.................................... 3 Unaudited Condensed Consolidated Statements of Operations - Three Months and Nine Months Ended September 30, 2000 and 1999............................................. 4 Unaudited Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2000 and 1999............................................. 5 Notes to Unaudited Condensed Consolidated Financial Statements........................................................ 6-8 Independent Accountants' Report................................................. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................... 10-12 Part II - Other Information Item 1. Legal Proceedings........................................................... 13 Item 2. Changes in Securities....................................................... 13 Item 4. Submission of Matters to a Vote of Security Holders..................................................................... 13 Item 6. Exhibits and Reports on Form 8-K............................................ 13
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ANTHONY & SYLVAN POOLS CORPORATION AND SUBSIDIARY UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
September 30, December 31, 2000 1999 ----------- ------------ (As restated per Note 8) ASSETS - ------ Current Assets: Cash and cash equivalents..................................... $ 7,853 $ 533 Contract receivables, net..................................... 7,855 8,101 Inventories, net ............................................. 5,849 5,282 Prepayments and other ........................................ 1,440 1,673 Deferred income taxes......................................... 2,320 2,584 -------- -------- Total current assets..................................... 25,317 18,173 Property, Plant and Equipment, net.................................. 8,375 8,107 Goodwill, net....................................................... 27,157 27,386 Other .............................................................. 1,950 1,841 -------- -------- $ 62,799 $ 55,507 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current Liabilities: Current maturities of long-term debt........................ $ 78 $ 171 Accounts payable............................................ 8,749 5,782 Accrued expenses............................................ 14,733 11,695 Accrued income taxes........................................ 1,828 451 --------- ---------- Total current liabilities 25,388 18,099 Long-term Debt ..................................................... 11 4,593 Other Long-term Liabilities......................................... 1,286 2,243 Commitments and Contingencies....................................... - - Shareholders' Equity: Serial preferred shares no par value, 1,000,000 shares authorized, none issued............................................ - - Common shares no par value, 29,000,000 shares authorized, 3,624,057 and 3,602,263 outstanding, and 2,975,260 and 2,869,264 issued, in 2000 and 1999, respectively.......................... 30,080 27,395 Treasury shares at cost, 648,797 in 2000 and 732,999 in 1999. (4,055) (4,581) Retained earnings........................................... 10,089 7,758 -------- -------- Total shareholders' equity.............................. 36,114 30,572 -------- -------- $ 62,799 $ 55,507 ======== ========
See notes to unaudited condensed consolidated financial statements. 3 4 ANTHONY & SYLVAN POOLS CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (In thousands, except share data) Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 ------ ------- -------- ----- (As restated (As restated per Note 8) per Note 8) Net sales.................... $ 63,188 $ 58,483 $160,778 $147,059 Cost of sales................ 44,985 42,637 115,642 107,786 ------- ------- ------- ------- Gross profit............... 18,203 15,846 45,136 39,273 Operating expenses........... 13,394 12,497 37,937 34,427 ------- ------- ------- ------- Income from operations..... 4,809 3,349 7,199 4,846 Interest and other........... (72) 62 145 1,785 ------- ------- ------- ------- Income before income taxes. 4,881 3,287 7,054 3,061 Provision for income taxes... 1,665 1,315 2,744 1,197 ------ ------- ------- ------ Net income................. $ 3,216 $ 1,972 $ 4,310 $ 1,864 ======== ======== ======== ======= Earnings per share: Basic $1.08 $0.53 $1.46 $0.51 ======= ======= ======= ====== Diluted $0.92 $0.48 $1.25 $0.45 ======= ======= ======= ====== Average shares outstanding: Basic 2,974 3,686 2,944 3,686 ======= ======= ======= ======= Diluted 3,492 4,149 3,461 4,149 ======= ======= ======= ======= See notes to unaudited condensed consolidated financial statements. 4 5 ANTHONY & SYLVAN POOLS CORPORATION AND SUBSIDIARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (Dollars in thousands)
Nine Months Ended September 30, 2000 1999 --------- ------ (As restated per Note 8) Cash Flows from Operating Activities: Net income...................................... $ 4,310 $ 1,864 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............ 2,101 1,856 Non-cash deferred compensation expense... 648 - Deferred income taxes.................... 264 231 Other.................................... 43 214 Changes in operating assets and liabilities net of assets acquired: Contract receivables........................ 284 1,886 Inventories................................. (567) (1,837) Prepayments and other....................... 124 (1,345) Accounts payable............................ 2,941 3,523 Accrued expenses and other.................. 4,230 4,940 -------- ------- Net cash provided by operating activities. 14,378 11,332 -------- ------- Cash Flows from Investing Activities: Additions to property, plant and equipment...... (1,840) (2,760) Other........................................... (176) - -------- ------ Net cash used in investing activities..... (2,016) (2,760) -------- ------ Cash Flows from Financing Activities: Net transactions with Essef Corporation........ - (2,119) Repayment of long term debt and funding of Other long-term liabilities.................... (5,632) (183) Proceeds on exercise of stock options.......... 20 - Proceeds from sale of treasury shares.......... 570 - -------- ------- Net cash used in financing activities..... (5,042) (2,302) -------- ------- Net increase in cash and cash equivalents.......... 7,320 6,270 Cash and Cash Equivalents: Beginning of period.............................. 533 - -------- ------- End of period.................................... $ 7,853 $ 6,270 ======== ======= Supplemental Cash Flow Information: Interest paid $ 180 $ 1,683 ======== ======= Income taxes paid/(refunded) $ 1,396 $ (124) ======== ======= Non-cash financing and investing activities: Former parent's inter-company debt contributed to capital $ - $27,241 ======== =======
See notes to unaudited condensed consolidated financial statements. 5 6 ANTHONY & SYLVAN POOLS CORPORATION AND SUBSIDIARY NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) BASIS OF PRESENTATION Anthony & Sylvan Pools Corporation and Subsidiary (the "Company") is among the largest residential in-ground concrete pool sales and installation businesses in the United States and operates in one business segment. On August 10, 1999, a third party (the "Acquiring Party") acquired Essef Corporation ("Essef") the Company's former parent, in a merger transaction that included the Company being split-off to Essef's common shareholders through a taxable distribution of 100% of the Company's shares as part of the merger consideration. The split-off was accomplished through the distribution of 0.25 shares of common stock for every share of Essef common stock held at the time of the distribution. Immediately prior to the split-off, the Company amended its articles of incorporation to provide for the issuance of up to 1,000,000 serial preferred shares and 29,000,000 shares of common stock. The Company, Essef and Acquiring Party have entered into various agreements that provide for administrative services, tax sharing and indemnification (the "Agreements".) Among other things, these Agreements provided for the Company to pay a dividend of $17,000,000, subject to certain adjustments, to Essef with the balance of the inter-company payable being contributed to capital retroactive to the split-off date. The potential adjustments to the $17,000,000 primarily related to the net tax benefit, as defined in the Agreements, realized by Essef from the exercise of employee stock options net of the corporate tax payable from the split-off. Pursuant to the Agreements, the calculation of adjustments has been completed and the Company was not required to pay Essef any of the $17,000,000. As such all of the Company's debt to Essef, which totaled $27,241,000 at the date of the split-off, was contributed to the Company's capital increasing shareholders' equity to approximately $34,700,000 at the date of the split-off. Company management believes that for the periods presented herein in which the Company was owned by Essef that the financial statements reflect all material expenses of the Company as if it was organized as a stand-alone legal entity including specifically identifiable costs incurred by Essef on behalf of, and charged to, the Company. (2) INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The accompanying condensed consolidated balance sheet as of September 30, 2000 and statements of operations for the three-month and nine-month periods ended September 30, 2000 and 1999 and cash flows for the nine-month periods ended September 30, 2000 and 1999 are unaudited. In the opinion of management, these interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements for the year ended December 31, 1999 and include all adjustments, consisting of only normal and recurring adjustments, necessary for the fair presentation of the interim period. The disclosures in the notes related to these interim unaudited condensed consolidated financial statements are also unaudited. The unaudited condensed consolidated statements of operations for the three-month and nine-month periods ended September 30, 2000 are not necessarily indicative of the results to be expected for the full year. Financial statements should be read in conjunction with the audited financial statements included in the Annual Report on Form 10-K. (3) EARNINGS PER SHARE Basic earnings per share is computed by dividing net income by the 6 7 weighted average number of common shares outstanding. Diluted earnings per share is based on the combined weighted average number of shares outstanding including the assumed exercise or conversion of options. The treasury stock method is used in computing diluted earnings per share. For the periods prior to the split-off from Essef, earnings per share is calculated based on the number of shares that would have been outstanding assuming the split-off had ccurred at the beginning of the period shown. The calculations are as follows (in thousands except per share data):
THREE-MONTHS ENDED NINE-MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2000 1999 2000 1999 ------ ------- ------- ------ (UNAUDITED) (UNAUDITED) (As restated (As restated per note 8) per note 8) Numerator Net income available to common shareholders $ 3,216 $ 1,972 $ 4,310 $ 1,864 ======= ======= ======== ======== Denominator Weighted average common shares outstanding 2,974 3,686 2,944 3,686 Dilutive effect of stock options 518 463 517 463 ------- ------- -------- -------- Denominator for net Income per diluted share 3,492 4,149 3,461 4,149 ======= ======= ======== ======== Earnings per share: Basic $ 1.08 $ 0.53 $ 1.46 $ 0.51 ======= ======= ======== ======== Diluted $ 0.92 $ 0.48 $ 1.25 $ 0.45 ======= ======= ======== ========
(4) STOCK DIVIDENDS On May 2, 2000, the Board of Directors authorized a 10% stock dividend which was distributed on May 30, 2000 to shareholders of record on May 16, 2000. The consolidated financial statements have been retroactively restated to reflect the number of shares outstanding following the dividend. On October 26, 2000, the Board of Directors authorized a 10% stock dividend to be distributed on or about November 30, 2000 to shareholders of record on November 16, 2000. The consolidated financial statements have not been retroactively restated to reflect the number of shares outstanding following this dividend. (5) RELATED PARTY TRANSACTIONS With the exception of certain capitalized lease obligations, prior to June 30, 1999 the Company did not have external sources of borrowings, and as such relied upon Essef as its primary source of funding. Interest was charged at an average rate of 10.6% for the six-month period ended June 30, 1999. Total interest charges on the inter-company account for the six-months ended June 30, 1999 were $1,683,000. At the date of the split-off the intercompany account was contributed to capital (see note 1). No interest was charged to the Company by Essef between June 30, 1999 and the date of the split-off. 7 8 (6) DEBT On August 10, 1999, the Company entered into a $35 million revolving credit facility ("Credit Facility") with a group of banks. The Credit Facility, secured by the assets of the Company, matures August 10, 2002 and may be extended in one-year increments with the approval of the bank group. The Company's borrowing capacity and interest rates under the Credit Facility are based on its profitability and leverage. Interest rates are charged at increments over either Prime or Libor rates. In addition a 37.5 basis points commitment fee is payable on the total amount of the unused commitment. As of September 30, 2000, there were no outstanding borrowings under the Credit Facility and the available borrowings were $28 million. The Company is in compliance with all of its debt covenants under the Credit Facility. (7) LITIGATION Certain claims, suits and complaints arising in the ordinary course of business have been filed or are pending against the Company. In the opinion of management, the results of all such matters will not have a material adverse effect on the Company's financial position, results of operations or liquidity. (8) RESTATEMENT Subsequent to the issuance of the Company's unaudited condensed consolidated financial statements for the three months ended and nine months ended September 30, 2000, the Company determined its Long-Term Incentive Plan, adopted in the fourth quarter of 1999, should be accounted for as a variable compensation plan. Previously, the Company was accounting for the plan as a fixed compensation plan. As a result, the unaudited condensed consolidated financial statements as of and for the three months and nine months ended September 30, 2000 have been restated from amounts previously reported to appropriately account for the plan. The operating expenses and income taxes were adjusted to account for the non-cash deferred compensation expense related to that plan. A summary of the significant effects of the restatement is as follows: (In thousands, except per share data)
(As restated As Previously PER NOTE 8) REPORTED ------------ -------------- For the three months ended September 30, 2000: Operating expenses..................................... $ 13,394 $ 13,501 Net income............................................. $ 3,216 $ 3,114 Net income basic share................................. $ 1.08 $ 1.05 Net income per diluted share........................... $ 0.92 $ 0.89 For the nine months ended September 30, 2000: Operating expenses..................................... $ 37,937 $ 37,289 Net income............................................. $ 4,310 $ 4,929 Net income per basic share............................. $ 1.46 $ 1.67 Net income per diluted share........................... $ 1.25 $ 1.42 As of September 30, 2000: Deferred income taxes $ 2,320 $ 2,291 Common shares $ 30,080 $ 29,432 Retained earnings $ 10,089 $ 10,708
8 9 INDEPENDENT ACCOUNTANTS' REPORT To the Shareholders and Board of Directors of Anthony & Sylvan Pools Corporation and Subsidiary Mayfield Village, Ohio We have reviewed the accompanying condensed consolidated balance sheet of Anthony & Sylvan Pools Corporation and Subsidiary (the "Company") as of June 30, 2000, and the related condensed consolidated statements of operations and cash flows for the three-month and nine-month periods ended September 30, 2000 and 1999. These consolidated financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of the Company as of December 31, 1999, and the related statements of operations, shareholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated February 18, 2000, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1999 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. As discussed in Note 8, the accompanying September 30, 2000 financial statements have been restated. The financial statements have been restated to account for a portion of the Long-Term Incentive Plan as a variable compensation plan. DELOITTE & TOUCHE LLP Cleveland, Ohio October 24, 2000 (March 29, 2001 as to Note 8) 9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As discussed in Note 8 to the condensed consolidated financial statements, the condensed consolidated financial statements as of and for the three months and nine months ended September 30, 2000 have been restated. As discussed in Note 8, the following discussion and analysis gives effect to the restatement. THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 1999 Net sales of $63.2 million for the three-months ended September 30, 2000 increased 8.0% from $58.5 million for the same period in fiscal 1999. The increase was primarily attributable to increases in average selling prices. Gross profit increased $2.4 million to $18.2 million in 2000 from $15.8 million in 1999 as a result of the increase in net sales. Gross profit as a percentage of sales for the three months increased from 27.1% of net sales to 28.8% as a result of increases in overall average selling prices and net material cost reductions arising from new purchasing programs offset by other material and labor cost increases. Operating expenses, consisting of selling and administrative expenses, increased by $0.9 million to $13.4 million in 2000 from $12.5 million in 1999. As a percentage of sales operating expenses decreased slightly from 21.4% in 1999 to 21.2% in 2000. The effective tax rate for the quarter was 34.1% compared with 40.0% in 1999. The lower effective tax rate was the result of an aggregate reduction in state income taxes in the states where Anthony & Sylvan operates. Primarily as a result of the above items, net income for the three month period increased from $2.0 million in 1999 to $3.2 million in 2000 and net income per diluted share, benefiting from a lower number of shares outstanding, increased $0.44 per share from $0.48 in 1999 to $0.92 in 2000. NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 1999 Net sales of $160.8 million for the nine-months ended September 30, 2000 increased 9.3% from $147.1 million for the same period in fiscal 1999. The increase was primarily attributable to increases in average selling prices. Gross profit increased $5.8 million to $45.1 million in 2000 from $39.3 million in 1999 as a result of the increase in net sales. Gross profit as a percentage of sales for the nine months increased from 26.7% of net sales to 28.1% as a result of increases in overall average selling prices and net material cost reductions arising from new purchasing programs offset by other material and labor cost increases. Operating expenses, consisting of selling and administrative expenses, increased 10.2% or $3.5 million, to $37.9 million in 2000 from $34.4 million in 1999. As a percentage of sales, operating expenses increased slightly from 23.4% in 1999 to 23.6% in the current period. Interest and other expense decreased $1.7 million from $1.8 million in 1999 to $0.1 million in 2000. The reduction in interest expense is attributable to the change in the capital and debt structure as a result of the split off into a stand-alone public company in August 1999. Interest was paid on external borrowings in 2000, while the interest paid in 1999 was paid to the Company's former Parent, Essef Corporation, through an intercompany borrowing arrangement. 10 11 The effective tax rate for the nine-month period was 38.9% in 2000 compared with 39.1% in 1999. As a result of the above net income for the nine-month period increased $2.4 million to $4.3 million in 2000. Net income per diluted share, benefiting from a lower number of shares outstanding, increased $0.80 per share to $1.25 from $0.45 in 1999. LIQUIDITY AND CAPITAL RESOURCES Cash flow from operating activities was $14.4 million for the nine months ended September 30, 2000 compared with $11.3 million in the same period in 1999. The increase was primarily attributable to a $2.4 million increase in net income. Cash used in investing activities decreased from $2.8 million in the prior year to $2.0 million in the current year, primarily as a result of lower capital expenditures in the current year compared with the prior year. The excess of cash from operating activities over cash used in investing activities, combined with the proceeds from the sale of treasury shares, was used to reduce external borrowings by $4.6 million and fund deferred compensation liabilities of $1.0 million and resulted in an increase in cash balances of $7.3 million to $7.8 million at September 30, 2000 from $.5 million at December 31, 1999. On August 10, 1999, a third party acquired the Company's former Parent, Essef Corporation ("Essef"), in a merger transaction that included the Company being split-off to Essef's common shareholders as part of the merger consideration. In accordance with the terms of the merger agreement, subsequent to June 30, 1999 the Company separated its cash management activities from Essef. Therefore, the Company could no longer be advanced funds from Essef while retaining its after-tax cash flow after such date. Additionally, the Company was not required to pay Essef any of the $17.0 million that might have been due under certain adjustment mechanisms related to the Company's split-off from Essef. As such, all of the Company's debt to Essef, which totaled $27.2 million at the date of the split-off, was contributed to the Company's capital at the date of the split-off. On August 10, 1999, the Company entered into a $35 million revolving credit facility ("Credit Facility") with a group of banks. The Credit Facility, secured by the assets of the Company, matures August 10, 2002 and may be extended in one-year increments with the approval of the bank group. The Company's borrowing capacity and interest rates under the Credit Facility are based on its profitability and leverage. Interest rates are charged at increments over either Prime or Libor rates. In addition, a 37.5 basis points commitment fee is payable on the total amount of the unused commitment. As of September 30, 2000, there were no outstanding borrowings under the Credit Facility and the available borrowings were $28.0 million. The Company is in compliance with all of its debt covenants under the Credit Facility. The Company believes that existing cash and cash equivalents, internally generated funds and funds available under its line of credit will be sufficient to meet its needs. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company is exposed to various market risks, including changes in pricing of equipment, materials and contract labor, and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices, such as commodity prices and interest rates. The Company does not enter into financial instruments to manage and reduce the impact of some of these risks. Further, the Company does not enter into derivatives or other financial instruments for trading or speculative purposes. 11 12 The Company is exposed to cash flow and fair value risk arising out of changes in interest rates with respect to its long-term debt. Information with respect to the Company's principal cash flows and it's weighted average interest rates on long-term debt at September 30, 2000 is included in the Condensed Consolidated Financial Statements. The Company's financial results may be materially impacted by fluctuations in its stock price, as a portion of the Company's Long-Term Incentive Plan is currently, being treated as a variable versus a fixed stock option award plan. CYCLICALITY AND SEASONALITY The Company believes that the in-ground swimming pool leisure industry is strongly influenced by general economic conditions and tends to experience periods of decline during economic downturns. Since the majority of the Company's swimming pool installation purchases are financed, pool sales are particularly sensitive to interest rate fluctuations and the availability of credit. A sustained period of high interest rates could result in declining sales, which could have a material adverse effect on The Company's financial condition and results of operations. Historically, approximately 70% of the Company's revenues have been generated in the second and third quarters of the year, the peak season for swimming pool installation and use. Conversely, the Company has typically incurred net losses during the first and fourth quarters of the year. Unseasonably cold weather or extraordinary amounts of rainfall during the peak sales season can significantly reduce pool purchases. In addition, unseasonably early or late warming trends can increase or decrease the length of the swimming pool season, significantly affecting sales and operating profit. 12 13 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS No change ITEM 2. CHANGES IN SECURITIES No change ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 13 14 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. Anthony & Sylvan Pools Corporation (Registrant) Stuart D. Neidus ---------------------------------------------- STUART D. NEIDUS Chairman and Chief Executive Officer (Principal Executive Officer) William J. Evanson ---------------------------------------------- WILLIAM J. EVANSON Executive Vice President and Chief Financial Officer (Principal Accounting Officer) Date: March 29, 2001 14 EX-27 2 l87446aex27.txt EXHIBIT 27
5 1 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1 7,853 0 7,855 0 5,849 25,317 12,841 4,366 62,799 25,388 0 0 0 30,080 6,034 62,799 160,778 160,778 115,642 153,579 0 0 145 7,054 2,744 4,310 0 0 0 4,310 $1.46 $1.25
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