<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
- ---------
+--+
|X | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
+--+ SECURITIES EXCHANGE ACT Of 1934
For the quarterly period ended September 30, 1999
----------------------------------------
+--+
| | 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
------------------------------
220 Park Drive, Chardon, Ohio , 44024
- --------------------------------------------------------------------------------
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 14, 1999
- ----------------------------- ---------------------------------
Common Shares, no par value 3,341,840 Shares
1
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ANTHONY & SYLVAN POOLS CORPORATION AND SUBSIDIARY
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 1999
INDEX
Sequential
Page No.
--------
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 30, 1999 and December 31, 1998............. 3
Condensed Consolidated Statements of Operations -
Three Months and Nine Months Ended September 30,
1999 and 1998.................................. 4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1999 and 1998...... 5
Notes to Condensed Consolidated Financial Statements. 6-9
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
<PAGE> 3
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANTHONY & SYLVAN POOLS CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
1999 1998
------- -------
ASSETS (unaudited) (audited)
- ------
<S> <C> <C>
Current Assets:
Cash and cash equivalents .......................................... $ 6,270 $ --
Accounts receivable, net .......................................... 8,421 10,307
Inventories, net ................................................. 6,173 4,336
Prepayments and other ............................................ 2,525 2,052
Deferred income taxes ............................................ 1,717 1,948
------- -------
Total current assets .......................................... 25,106 18,643
Property, plant and equipment, net ....................................... 8,483 7,258
Goodwill, net ............................................................ 27,728 28,052
Other .................................................................... 967 320
------- -------
$62,284 $54,273
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt ............................. $ 202 $ 244
Payable to former parent ......................................... -- 29,361
Accounts payable ................................................. 9,683 6,160
Accrued expenses ................................................. 13,912 10,307
Accrued income taxes ............................................. 1,321 --
------- -------
Total current liabilities ..................................... 25,118 46,072
Long-term Debt ........................................................... 119 260
Other Long-term Liabilities .............................................. 1,200 1,200
Commitments and Contingencies ............................................ -- --
Shareholders' Equity:
Serial preferred shares no par value,
authorized 1,000,000 shares, none issued ...................... -- --
Common shares no par value,
authorized 29,000,000 shares, issued
3,350,640 shares ............................................. 27,242 --
Retained earnings ................................................ 8,605 6,741
------- -------
Total shareholders' equity ................................ 35,847 6,741
------- -------
$62,284 $54,273
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
<TABLE>
<CAPTION>
ANTHONY & SYLVAN POOLS CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
------ ------- -------- ------
<S> <C> <C> <C> <C>
Net sales.................... $ 58,483 $ 53,038 $147,059 $123,493
Cost of sales................ 42,634 38,539 107,786 89,136
------- ------- ------- -------
Gross profit............... 15,849 14,499 39,273 34,357
Operating expenses........... 12,500 10,228 34,427 27,299
------- ------- ------- -------
Income from operations..... 3,349 4,271 4,846 7,058
Interest and other expense... 62 478 1,785 1,504
------- ------- ------- --------
Income before income taxes. 3,287 3,793 3,061 5,554
Provision for income taxes... 1,315 1,545 1,197 2,220
------- ------- ------- -------
Net income................. $ 1,972 $ 2,248 $ 1,864 $ 3,334
======== ======== ======== =======
Earnings per share:
Basic $.59 $.67 $.56 $.99
======= ======= ======= ======
Diluted $.52 $.60 $.49 $.88
======= ======= ======= ======
Average shares outstanding:
Basic 3,351 3,357 3,351 3,357
======= ======= ======= =======
Diluted 3,772 3,772 3,772 3,772
======= ======= ======= =======
</TABLE>
See notes to condensed consolidated financial statements.
4
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<TABLE>
<CAPTION>
ANTHONY & SYLVAN CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Dollars in thousands)
Nine Months Ended
September 30,
1999 1998
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income ................................................................. $ 1,864 $ 3,334
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization .................................... 1,856 1,590
Deferred income taxes ............................................ 231 1,437
Other ............................................................ 214 --
Changes in operating assets and liabilities
net of assets acquired
Accounts receivables .................................................. 1,886 (2,680)
Inventories ........................................................... (1,837) (714)
Prepayments and other ................................................. (1,345) (227)
Accounts payable ...................................................... 3,523 1,642
Accrued expenses ...................................................... 4,940 461
-------- --------
Net cash provided by operating activities ......................... 11,332 4,843
-------- --------
Cash Flows from Investing Activities:
Additions to property, plant and
equipment ........................................................... (2,760) (1,584)
Business acquisitions ................................................. -- (4,747)
-------- --------
Net cash used in investing activities ............................. (2,760) (6,331)
-------- --------
Cash Flows from Financing Activities:
Net transactions with former parent ........................................ (2,119) (214)
Repayment of long term debt ................................................ (183) (77)
-------- --------
Net cash used in financing activities .............................. (2,302) (291)
-------- --------
Net increase (decrease) in cash and
cash equivalents ...................................................... 6,270 (1,779)
Cash and Cash Equivalents:
Beginning of period ............................................................ -- 703
-------- --------
End of period .................................................................. $ 6,270 $ (1,076)
======== ========
Supplemental Cash Flow Information:
Interest paid ......................................................... $ 1,683 $ 1,507
======== ========
Income taxes (refunded) paid .......................................... $ (124) $ 2,220
======== ========
Non-cash financing and investing activities:
Business acquisition using former parent's
stock charged through inter-company payable ........................... $ -- $ 1,199
======== ========
Former parent's inter-company debt
contributed to capital ................................................ $ 27,242 $ --
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
ANTHONY & SYLVAN POOLS CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
Anthony & Sylvan Pools Corporation and Subsidiary (the
"Company") is among the largest residential in-ground concrete
swimming pool sales and installation businesses in the United States.
Until August 10, 1999, the Company was an indirect wholly-owned
subsidiary of Essef Corporation (the "Parent"). Effective August 10,
1999, the Company was split-off to the Parent's common shareholders
through a taxable distribution of 100% of the Company's shares. For
the periods presented herein in which the Company was owned by the
Parent, management believes that the financial statements reflect all
material expenses of the Company assuming the Company was organized
as a stand-alone legal entity including specifically identifiable
costs incurred by the Parent 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, 1999 and statements of operations and cash flows for
the three-month and nine-month periods ended September 30, 1999 and
1998 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, 1998 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, 1999 are not necessarily
indicative of the results to be expected for the full year.
(3) SPLIT-OFF FROM PARENT
On August 10, 1999, a third party (the "Acquiring Party")
acquired the Parent in a merger transaction that occurred
simultaneous with the Company being split-off to Parent's common
shareholders through a taxable distribution of 100% of the Company's
shares. The split-off was accomplished through the distribution of
0.25 shares of Company common stock for every share of Parent 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 shares of serial
preferred stock and 29,000,000 shares of common stock.
At the time of the split-off 741,558 stock options representing
an 18.1 percent ownership interest held by persons who became
employees or directors of the Company were also split-off so that the
potential ownership these employees and directors had in the Parent
would remain consistent with their potential ownership in the
Company. Of these options 652,320 will expire in October 2000, 83,188
in September 2006 and the remaining 6,050 in July 2007. The exercise
price for these options which range from $0.20 to $3.37 was
determined based on a formula that included the Company's first day's
trading price following the split-off.
6
<PAGE> 7
Additionally, the Company established a long-term incentive plan
under which certain employees and directors were granted options to
purchase common shares of the Company (the "Long-Term Incentive
Plan"). The number of options issued under the Long-Term Incentive
Plan cannot exceed 500,000.
The Company, Parent 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 Parent 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 Parent 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
made and the Company is not required to pay Parent any of the
$17,000,000. As such all of the Company's debt to Parent, which
totaled $27,242,000 at the date of the split-off, was contributed to
the Company's capital increasing shareholders' equity to
approximately $35,800,000.
(4) EARNINGS PER SHARE
Earnings per share are computed in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share". Basic
earnings per share are computed by dividing net income by the number
of common shares outstanding following the split-off from the Parent.
Diluted earnings per share are based on the combined 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 from the Company's former
Parent earnings per share were calculated based on the number shares
that would have been outstanding assuming the split-off had occurred
at the beginning of the period shown. The calculations were as
follows (In thousands except per share data):
7
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<TABLE>
<CAPTION>
THREE-MONTHS ENDED NINE-MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
------ ------ ------ ------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Numerator
Net income available to
common shareholders $1,972 $2,248 $1,864 $3,334
====== ====== ====== ======
Denominator
Weighted average common
shares outstanding 3,351 3,357 3,351 3,357
Dilutive effect of
stock options 421 415 421 415
------ ------ ------ ------
Denominator for net
income per diluted share 3,772 3,772 3,772 3,772
====== ====== ====== ======
Earnings per share:
Basic $ .59 $ .67 $ .56 $ .99
====== ====== ====== ======
Diluted $ .52 $ .60 $ .49 $ .88
====== ====== ====== ======
</TABLE>
(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 the Parent as its primary source
of funding. Interest was charged at an average rate of 6.75% 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
$1,684,000. There was no interest charged on the inter-company
account between June 30, 1999 and the date of the split-off, August
10, 1999, and the inter-company account as of this date was
contributed to capital as part of the split-off (see note 3).
(6) DEBT
As required under the Agreements, subsequent to June 30, 1999
the Company separated its cash management activities from the Parent.
As such the Company could no longer obtain funds from the Parent
while retaining its after-tax cash flow after such date. From June
30, 1999 through the split-off, the Company arranged a $5 million
bank line of credit that was not utilized.
On August 10, 1999, the Company replaced the line of credit with
a $35 million secured revolving credit facility ("Credit Facility")
with a group of banks. The Company's borrowing capacity under the
Credit Facility is based on its profitability and leverage. Initial
pricing under the Credit Facility was at 137.5 basis points over the
bank's Libor borrowing rate with an unused line commitment fee of
37.5 basis points. The Company has not borrowed any funds under the
Credit Facility.
(7) BUSINESS ACQUISITIONS
In January 1998, the Company acquired the net operating assets
of Tango Pools, an installer of swimming pools in Las Vegas, Nevada,
and in August
8
<PAGE> 9
1998 the Company acquired Pools by Andrews, Inc., an installer of
swimming pools in Florida. Consideration for these transactions of
$5,946,000, including transaction costs, was paid in a combination of
cash and the Parent's common stock. These acquisitions were accounted
for as purchases, and thus, the purchase price has been allocated to
the assets and liabilities based on their estimated fair value. The
results of operations of the acquired entities have been included in
the Company's results since the date of acquisition.
The following unaudited proforma combined results of operations
give effect to the acquisition of Pools by Andrews as if it were
completed at the beginning of 1998. The proforma information has been
presented for comparative purposes only and does not purport to be
indicative of what would have occurred had the acquisition been made
at the beginning of 1998 or the results which may occur in the future
(dollars in thousands except per share data):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
9/30/98 9/30/98
------- -------
<S> <C> <C>
Net sales ................................................ $ 57,484 $141,278
Net income ............................................... $ 2,299 $ 3,537
Diluted earnings per share ............................... $ 0.61 $ 0.94
</TABLE>
(8) 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 or results of operations and liquidity.
9
<PAGE> 10
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH
THREE MONTHS ENDED SEPTEMBER 30, 1998
Net sales of $58.5 million for the third quarter of fiscal 1999 increased 10.3%
over fiscal 1998 net sales of $53.0 million. The increase was predominantly
attributable to the acquisition of Pools by Andrews completed in August 1998.
Gross profit increased to $15.8 million in 1999 from $14.5 million in 1999 as a
result of the increase in net sales. Gross profit as a percentage of sales for
the three months decreased from 27.3% of net sales to 27.1% due to material and
labor cost increases that outpaced the Company's ability to increase prices.
Operating expenses consisting of sales and marketing and administrative expenses
increased by $2.3 million to $12.5 million in 1999 from $10.2 million in 1998.
As a percentage of sales operating expenses increased from 19.3% in 1998 to
21.4% in the current period. The dollar increase was primarily attributable to
operating expenses incurred within the operations acquired with Pools by
Andrews.
Interest and other expense decreased $0.4 million from $0.5 million in 1998 to
$0.1 million in the current period reflecting the contribution to capital of the
Company's debt to its former parent on August 10, 1999.
As a result of the above items, net income decreased $0.2 million to $2.0
million for the three months ended September 30, 1999 from $2.2 million for the
same period in the prior year.
NINE MONTHS ENDED JUNE 30, 1999 COMPARED WITH
NINE MONTHS ENDED JUNE 30, 1998
Net sales of $147.1 million for the first nine months of fiscal 1999 increased
19.1% over fiscal 1998 net sales of $123.5 million. As was the case with the
third quarter the increase in sales was predominantly attributable to the
acquisition of Pools by Andrews completed in August 1998.
Gross profit increased to $39.3 million in 1999 from $34.4 million in 1998 as a
result of the increase in net sales. Gross profit as a percentage of sales for
the nine months decreased from 27.8% of net sales to 26.7% of net sales in the
current period. The decrease is primarily attributable to material and labor
cost increases that outpaced the Company's ability to increase prices.
Operating expenses consisting of sales and marketing and administrative expenses
increased by $7.1 million to $34.4 million in 1999 from $27.3 million in 1998.
As a percentage of sales operating expenses increased from 22.1% in 1998 to
23.4% in the current period. The increase was attributable to operating expenses
incurred with Pools by Andrews; legal fees associated with certain
acquisition-related activities; and increased spending for sales, marketing and
lead generating activities to support the higher level of sales.
Interest and other expense increased $0.3 million from $1.5 million in 1998 to
$1.8 million in the current period. The increase is attributable to increased
borrowings from the Company's former parent prior to June 30, 1999, the proceeds
of which were used to finance operations and the acquisition of Pools by Andrews
in August 1998.
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As a result of the above items, net income decreased $1.4 million to $1.9
million for the nine months ended September 30, 1999 from net income of $3.3
million for the same period in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended September 30, 1999 cash flow from operating activities
was $11.3 million compared with $4.8 million for the same period in 1998. The
increase came principally from an $8.7 million improvement over the prior year
period in the management of operating assets and liabilities.
Cash used in investing activities decreased by $3.6 million to $2.8 million due
to the prior year acquisition payments of $4.7 million, which were partially
offset by a $1.2 million increase in capital expenditures.
The increase in cash flow from operating activities and reduction in cash used
in investing activities resulted in repayments of intercompany debt to Essef of
$2.1 million compared with repayments of $0.2 million in the prior year.
On August 10, 1999, a third party (the "Acquiring Party") acquired the Company's
Parent, Essef Corporation, in a merger transaction that occurred simultaneous
with the Company being split-off to Parent's common shareholders. In accordance
with the terms of the merger agreement, subsequent to June 30, 1999 the Company
separated its cash management activities from its former Parent. Therefore, the
Company could no longer be advanced funds from the Parent while retaining its
after-tax cash flow after such date. Additionally, the Company was not required
to pay to its former Parent, any of the $17,000,000 that might have been due
under certain adjustment mechanisms related to the Company's split-off from
Parent. As such, all of the Company's debt to its former Parent, which totaled
$27.2 million at the date of the split-off, was contributed to the Company's
capital during the third quarter, increasing shareholders' equity to $35.8
million.
The Company has established a $35 million secured revolving credit facility
("Credit Facility") with a syndicate of banks effective August 10, 1999. The
Credit Facility matures on August 10, 2002 and may be extended in one-year
increments with the approval of the bank group. Initial pricing under the Credit
Facility was 137.5 basis points over Libor with an unused line commitment fee of
37.5 basis points. The Company has not borrowed any funds 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.
YEAR 2000 MATTERS
In 1997, as part of an overall modernization and upgrade of its information
systems, the Company began preparing its computer systems and applications for
the date change in the year 2000. To date, this process has involved modifying
or replacing certain hardware and upgrading certain software and has not
involved material costs. Management believes that substantially all of the
necessary systems and applications changes will be completed during the final
quarter of 1999, that the Company's level of preparedness is appropriate and
that the amount of additional costs, if any, needed to address the year 2000
issue will be immaterial.
The Company has initiated communications with certain of its largest suppliers
and service providers regarding year 2000 preparedness. However, management does
not believe that the Company would have any difficulty securing alternate
sources of supply in the event any of its current suppliers and service
providers
11
<PAGE> 12
experience year 2000 difficulties. In addition, because of the seasonal nature
of the Company's business, which is slowest in the first and fourth quarters of
the calendar year, management believes that any problems arising on January 1,
2000, either with the Company's systems or the systems of its major suppliers
and service providers, can be substantially remedied before the start of the
peak swimming pool installation season.
The costs of the project and the date on which the Company believes it will
complete the year 2000 modifications are based on management's best estimates,
including the continued availability of certain resources, third party
modification plans and other factors. However, the Company cannot guarantee that
these estimates can be achieved and actual results could differ materially from
those anticipated. Specific factors that might cause such material differences
include, but are not limited to, availability and cost of personnel trained in
this area, the ability to locate and correct all relevant computer codes and
similar uncertainties.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No change from the matters reported in the Company's S-4 registration
statement filed with the Securities and Exchange Commission on May
18, 1999.
ITEM 2. CHANGES IN SECURITIES
No change from items previously reported in the Company's S-4
registration statement filed with the Securities and Exchange
Commission on May 18, 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
13 Independent Accountants' Report
15 Independent Accountants' Awareness Letter
(b) Reports on Form 8-K
None
13
<PAGE> 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)
/s/ Stuart D. Neidus
--------------------------------------
STUART D. NEIDUS
Chairman and Chief Executive Officer
(Principal Executive Officer)
/s/ Mark E. Brody
--------------------------------------
MARK E. BRODY
Executive Vice President
and Chief Financial Officer
(Principal Accounting Officer)
Date: November 15, 1999
14
<PAGE> 1
EXHIBIT 13
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders 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
September 30, 1999, and the related condensed consolidated statements of
operations for the three-month and nine-month periods ended September 30,
1999 and 1998, and it's cash flows for the nine-month periods ended September
30, 1999 and 1998. These 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 making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, 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 generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of the Company as of December 31, 1998, 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
19, 1999, 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, 1998 is fairly stated, in all
material respects, in relation to the balance sheet from which it has been
derived.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
November 11, 1999
15
<PAGE> 1
EXHIBIT 15
INDEPENDENT ACCOUNTANTS' AWARENESS LETTER
November 15, 1999
Anthony & Sylvan Pools Corporation and Subsidiary
6690 Beta Drive
Mayfield Village, Ohio, 44143
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of Anthony & Sylvan Pools Corporation and Subsidiary
for the periods ended September 30, 1999 and 1998, as indicated in our report
dated November 11, 1999; because we did not do an audit, we expressed no
opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, is
incorporated by reference in Registration Statement No. 333-78731 on Form
S-4.
We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the
Registration Statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and
11 of that Act.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 6,270
<SECURITIES> 0
<RECEIVABLES> 8,421
<ALLOWANCES> 0
<INVENTORY> 6,173
<CURRENT-ASSETS> 25,106
<PP&E> 11,045
<DEPRECIATION> (2,562)
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0
0
<COMMON> 27,242
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<SALES> 58,483
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<CGS> 42,634
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<INCOME-TAX> 1,315
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<EPS-BASIC> .59
<EPS-DILUTED> .52
</TABLE>
