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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K Commission File No. 000-26991
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ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
X EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended December 31, 2000
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from ____ to ____
Anthony & Sylvan Pools Corporation
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(Exact name of registrant as specified in its charter)
Ohio 31-1522456
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(State of Incorporation) (I.R.S. Employer
Identification No.)
6690 Beta Drive, Mayfield Village, Ohio 44143
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (440) 720-3301
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Title of Each Class Name of Each Exchange On Which Registered
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Common Shares, No Par Value The Company's common stock trades on the Nasdaq SmallCap
Stock Market under the symbol: SWIM
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ---.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]
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The aggregate market value of the Registrant's Common Shares held by
non-affiliates of the Registrant on March 23, 2001 was $15,593,984
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 March 23, 2001
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Common Shares, no par value 3,851,263 Shares
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Portions of the following documents are incorporated by reference:
(1) 2000 Annual Report to Shareholders Part II
(2) Definitive Proxy Statement for the Annual Meeting
of Shareholders to be held May 4, 2001 Part III
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ANTHONY AND SYLVAN POOLS CORPORATION
2000 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Begins
PART I On
Page
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Item 1. Business..................................................... 3
Item 2. Properties................................................... 4
Item 3. Legal Proceedings............................................ 5
Item 4. Submission of Matters to a Vote of Security Holders ......... 5
PART II
Item 5. Market for the Registrant's Common Equity and Related
Shareholders' Matters........................................ 6
Item 6. Selected Financial Data...................................... 6
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 6
Item 7A. Quantitative and qualitative disclosures about market risk... 6
Item 8. Financial Statements and Supplementary Data.................. 7
Item 9. Disagreements on Accounting and Financial Disclosure......... 7
PART III
Item 10. Directors and Executive Officers of the Registrant........... 8
Item 11. Executive Compensation....................................... 9
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 9
Item 13. Certain Relationships and Related Transactions............... 9
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K..................................................... 10
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PART I
ITEM 1. BUSINESS.
(a) GENERAL DEVELOPMENT OF BUSINESS.
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Anthony and Sylvan Pools Corporation ("The Company") was formed in 1997
to acquire the assets and business of a predecessor corporation. That
predecessor corporation was the successor to the pool installation businesses of
Pennsylvania-based Sylvan Pools and California-based Anthony Pools. Sylvan Pools
was founded by Herman Silverman in 1946 and grew to become the leading pool
installer in the Northeast, with operations stretching out to the Southeast,
Texas and Nevada. Anthony Pools was founded by Phil Anthony in 1947 and
eventually established itself as one of the largest pool companies in the United
States. In 1996, the parent Company of Sylvan Pools purchased Anthony Pools and
combined the two businesses under the name "Anthony & Sylvan." Anthony & Sylvan
has built over 330,000 pools in its history.
The Company operates in the leisure industry, offering in-ground
residential swimming pools, spas and related products in the United States with
a network of 51 sales offices serving 26 geographic markets in 16 states. The
majority of the Company's swimming pools range in price from $15,000 to $40,000.
Historically, its sales have been seasonally strongest in the second and third
quarters, the peak period for swimming pool installation and use, and weakest in
the first and fourth quarters. The Company built approximately 6,000 pools
(using an "equivalent completed unit" basis) in 2000. In addition to designing
and offering residential swimming pools, spas and related products, the Company:
- Provides pool modernization services in selected markets; and
- Operates 17 retail stores that sell spa and swimming pool related
products, such as chemicals, replacement parts, accessories, equipment
and inflatables; and
- Operates, in limited markets, field service centers that offer
post-installation services such as swimming pool openings and weekly
maintenance, as well as replacement parts, equipment and accessories.
(b) SWIMMING POOL SALES AND INSTALLATION INDUSTRY.
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The Company estimates that the installation of residential in-ground
swimming pools is a $3.5 billion per year industry in the United States.
According to the National Spa & Pool Institute, the number of residential
in-ground pools installed annually in the United States has grown from 121,000
in 1994 to 172,000 in 1998. In each of these years, the percentage of
residential in-ground swimming pools installed using formative structures made
of concrete, vinyl liners and pre-molded fiberglass has remained fairly
consistent and in 1998 represented 68.8%, 28.8% and 2.6%, respectively, of total
residential in-ground swimming pools installed. While other sectors of the
residential in-ground swimming pool business, such as manufacturing,
distribution and retailing of pool products and equipment, have undergone
significant consolidation in recent years, the sales and installation industry
has remained highly fragmented.
(c) SALES AND MARKETING
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The Company sells its products to a large number of customers,
primarily residential homeowners. A dedicated sales force of approximately 170
employees who have responsibility for developing and maintaining customer
relationships conducts its principal sales activities. Sales visits are
conducted in the customer's home or at an Anthony & Sylvan sales office near the
customer's home. The introduction of the laptop computer as a selling tool in
recent years has significantly enhanced the quality and professionalism of the
Company's sales presentations and reinforced its image as an expert in the
swimming
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pool industry. As a service to its customers, the Company maintains
relationships with lenders that provide financing to its customers.
The Company does most of its advertising in local newspapers and Yellow
Pages. It also advertises, to a lesser extent, through radio, television,
billboards and direct mail and has attracted buyers as a result of referrals
from previous customers and realtors, among others. The Company also operates an
Internet site - http.//www.anthonysylvan.com which is attracting an increasing
number of customers each year.
(d) COMPETITION
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The Company faces competition primarily from regional and local
installers. The Company believes that there are a small number of swimming pool
companies that compete with Anthony & Sylvan on a national basis. Barriers to
entry in the swimming pool sales and installation industry are relatively low.
The Company believes that the principal competitive factors in the
pool design and installation business are the quality and level of customer
service, product pricing, breadth and quality of products offered, ability to
procure labor and materials on a market by market basis from local and regional
sources, financial integrity and stability, and consistency of business
relationships with customers. The Company believes it compares favorably with
respect to each of these factors.
(e) PRINCIPAL SUPPLIERS AND SUBCONTRACTORS
--------------------------------------
The Company regularly evaluates supplier relationships and considers
alternate sourcing as appropriate to assure competitive costs and quality
standards. The Company currently does not have long-term contracts with its
suppliers. It also believes there are currently a number of other suppliers of
that offer comparable terms.
The Company utilizes both company employees as well as subcontractors
to install pools; however, the majority of its installation labor base consists
of independent subcontractors. The Company's personnel act as field supervisors
to oversee all aspects of the installation process and as schedulers to
coordinate the activities of the subcontractors and communicate with the
customer.
(f) BACKLOG
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As of December 31, 2000, the Company had approximately $28,000,000 of
contracts for swimming pool installations that had not been started and
$24,000,000 of remaining revenue to be recognized on contracts currently under
installation. The Company believes, based on past experience, that the December
31, 2000 backlog will be completed in 2001.
(g) EMPLOYEES
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At February 28, 2001, the Company employed approximately 643 persons,
on a full-time basis of which approximately 100 were management personnel.
During the peak swimming pool sales and installation season the Company will
employ additional operations personnel who will primarily be involved in the
installation of swimming pools.
No employees are covered by collective bargaining agreements and the
Company believes it has satisfactory relations with its employees.
ITEM 2. PROPERTIES.
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The Company currently operates 51 sales offices and 20 retail and field
service centers. In addition it has a number of warehouses at which it stores
inventory used in
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pool installations. Its executive offices are located in Mayfield Village, Ohio.
The Company believes that no single property is material to its operations and
that alternate sites are presently available at market rates.
ITEM 3. LEGAL PROCEEDINGS.
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From time to time, the Company is involved in litigation and
proceedings arising in the ordinary course of business. Although the outcome of
litigation and claims is uncertain, the Company does not believe that there are
any pending proceedings which could be expected to have a material adverse
effect on the Company's financial condition, results of operations or cash
flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the year
covered by this report.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDERS'
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MATTERS.
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The Company's Common Shares are listed on the NASDAQ SmallCap Stock Market under
the symbol SWIM. At March 23, 2001 3,851,263 outstanding common shares were held
by 245 shareholders of record. There were no cash dividends declared or paid for
the year ended December 31, 2000, as the Company's policy is to retain earnings
and cash for future expansion of the business. For information on the market
price range see page 22 of Anthony & Sylvan Pools 2000 Annual Report to
Shareholders incorporated herein by reference to Exhibit 13 of this filing [2000
Annual Report to Shareholders].
ITEM 6. SELECTED FINANCIAL DATA.
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Information with respect to selected financial data for each of the last five
fiscal years contained on page 22 of Anthony & Sylvan Pools 2000 Annual Report
to Shareholders is incorporated herein by reference to Exhibit 13 of this filing
[2000 Annual Report to Shareholders].
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS.
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The Management's Discussion and Analysis of Financial Condition and Results of
Operations contained on pages 19 through 21 of Anthony & Sylvan Pools 2000
Annual Report to Shareholders is incorporated herein by reference to Exhibit 13
of this filing [2000 Annual Report to Shareholders].
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
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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 these risks. Further, the Company
does not enter into derivatives or other financial instruments for trading or
speculative purposes.
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 December 31, 2000 is included in Note 6 of the Consolidated
Financial Statements on page 15 of Anthony & Sylvan Pools 2000 Annual Report to
Shareholders incorporated herein by reference to Exhibit 13 of this filing [2000
Annual Report to Shareholders].
The Company's financial results may be 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 or award plan.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
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The consolidated financial statements and accompanying notes of Anthony & Sylvan
Pools contained on pages 9 through 17, inclusive, of Anthony & Sylvan Pools 2000
Annual Report to Shareholders, together with the report of Independent Public
Accountants relating thereto contained on page 18 thereof, and the unaudited
quarterly financial data under the heading "Quarterly Financial Information" on
page 22 of such Annual Report, are incorporated herein by reference to Exhibit
13 of this filing [2000 Annual Report to Shareholders].
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
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FINANCIAL DISCLOSURE.
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None
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
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(a) Identification of Directors
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The identity of directors including age, business experience,
positions held and other relevant information is contained in
the Company's Proxy Statement dated April 4, 2001; (filed with
the Commission pursuant to Regulation 14A) under the headings
NOMINEES AND DIRECTORS, on pages 2-3 and DIRECTORS'
COMMITTEES, MEETINGS AND FEES on page 3 is incorporated herein
by this reference.
(b) Identification of Executive Officers
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The persons named below are the executive officers of the
Company at the date hereof.
Name Age Position
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Stuart D. Neidus 50 Chairman and Chief Executive Officer,
Director
Howard P. Wertman 56 President
Richard M. Kelso 52 Executive Vice President
and Chief Operating Officer
William J. Evanson 50 Executive Vice President
and Chief Financial Officer
Martin J. Degnan 55 Vice President, Secretary and General
Counsel
Stuart D. Neidus has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company since September 1998. He served as Chief
Financial Officer of the Company from September 1998 through April 1999. Mr.
Neidus also served as Executive Vice President and Chief Financial Officer of
Essef Corporation from September 1996 to August 1999. Prior to that, from 1992
to 1996 Mr. Neidus served with Premier Farnell plc, successor to Premier
Industrial Corporation, most recently as Executive Vice President. Prior to
joining Premier Farnell plc, Mr. Neidus spent 19 years as an independent public
accountant with KPMG LLP, including eight years as a partner.
Howard P. Wertman has served as President of Anthony & Sylvan
Pools since October 1995. He previously served as Divisional Vice President of
Sylvan Pools from 1990 to 1995. Mr. Wertman's career in the swimming pool
industry began in 1973, and since then he has served in various management
positions with both Anthony Pools and Sylvan Pools.
Richard M. Kelso has served as Executive Vice President and
Chief Operating Officer of Anthony & Sylvan Pools since 1996. His experience in
the pool industry includes service as Vice President of Anthony Pools from 1989
to 1996. Prior to that, Mr. Kelso was the General Manager of the Washington,
D.C. division of Anthony Pools. His career includes 25 years of pool service,
all in management positions with Anthony Pools.
William J. Evanson joined Anthony & Sylvan as Executive Vice
President and Chief Financial Officer on March 20, 2000. From 1978 to 2000, Mr.
Evanson served with Premier Farnell plc, successor to Premier Industrial
Corporation, most recently as Vice
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President - North America Finance.
Martin J. Degnan has served as Vice President, Secretary and General
Counsel of Anthony & Sylvan Pools since October, 1999. Prior to joining the
Company Mr. Degnan served with Rubbermaid, Inc. for over 20 years most recently
as Vice President and Associate General Counsel.
ITEM 11. EXECUTIVE COMPENSATION.
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Information relating to compensation of executive officers and directors is
contained in the Company's Proxy Statement dated April 4, 2001 under the
headings DIRECTORS' COMMITTEES, MEETINGS AND FEES on page 3, and EXECUTIVE
COMPENSATION on page 4, incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
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Information relating to security ownership of certain beneficial owners and
management is contained in the Company's Proxy Statement dated April 4, 2001
under the heading BENEFICIAL OWNERSHIP OF SHARES appearing on pages 10 and 11,
incorporated herein by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
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Information with respect to related transactions is included in the Company's
Proxy Statement dated April 4, 2001 under the headings REPORT OF COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION on page 7 and BENEFICIAL OWNERSHIP OF SHARES
on pages 10 and 11, incorporated herein by this reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
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(a) Documents filed as part of this report:
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(1) The following consolidated financial statements of Anthony &
Sylvan Pools Corporation and Subsidiary, together with the
independent auditors' report relating thereto, contained on
pages 9 through 18, inclusive of Anthony & Sylvan's 2000 Annual
Report to its shareholders, and the unaudited quarterly
financial data set forth under the heading "Quarterly Financial
Information" on page 22 of such Annual Report, are incorporated
herein by reference to Exhibit 13 of this filing [2000 Annual
Report to Shareholders].
Consolidated Balance Sheets at December 31, 2000 and 1999
Consolidated Statements of Income for the years ended
December 31, 2000, 1999 and 1998
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 2000, 1999 and 1998
Consolidated Statement of Cash Flows for the years ended
December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Quarterly Financial Information (unaudited)
(2) Financial statement schedules
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
DESCRIPTION BEGINNING EXPENSE WRITE-OFFS ACQUISITIONS ENDING
----------- BALANCE ------- ---------- ------------ BALANCE
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ALLOWANCE FOR
DOUBTFUL ACCOUNTS
For the year ended
December 31, 2000 $1,191 $ 306 $ 777 $ - $ 720
For the year ended
December 31, 1999 $1,085 $1,217 $ 1,200 $ 89 $ 1,191
For the year ended
December 31, 1998 $ 708 $ 447 $ 538 $ 468 $ 1,085
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(3) Exhibits Required to be Filed by Item 601 of Regulation S-K
Current Form 10-K Document/Data
Exhibit Number Required
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3.1 Form of Amended and Restated Articles of Incorporation
of Anthony & Sylvan Pools (Reference is made to Exhibit
3.1 to the report on form 10-Q for the quarter ended
June 30, 1999, herein incorporated by reference)
3.2 Form of Amended and Restated Regulations of Anthony &
Sylvan Pools (Reference is made to Exhibit 3.4 to the
report on Form S-4 filed with the Securities and
Exchange Commission June 23, 1999, herein incorporated
by reference)
4.1 See exhibit 3.1 and 3.2 for provisions of the Articles
of Incorporation and Regulations of Anthony & Sylvan
Pools defining the rights of holders of Anthony & Sylvan
common shares.
10.1 1999 Long-Term Incentive Plan. (Reference is made to
Exhibit 10.1 to the report on Form S-4 filed with the
Securities and Exchange Commission June 23, 1999, herein
incorporated by reference).
10.2 Anthony & Sylvan Pools 1999 Leveraged Stock Purchase
Plan dated December 28, 1999. (Reference is made to
Exhibit 10.2 to the report on form 10-K for the quarter
ended December 31, 1999, herein incorporated by
reference)
10.3 Employment Agreement - Stuart D. Neidus, Chairman and
Chief Executive Officer. (Reference is made to Exhibit
10.2 to the report on Form S-4 filed with the Securities
and Exchange Commission June 23, 1999, herein
incorporated by reference)
10.4 Employment Agreement - Howard P. Wertman, President.
(Reference is made to Exhibit 10.3 to the report on Form
S-4 filed with the Securities and Exchange Commission
June 23, 1999, herein incorporated by reference)
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Current Form 10-K Document/Data
Exhibit Number Required
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10.5 Employment Agreement - Richard M. Kelso, Executive Vice
President and Chief Operating Officer. (Reference is
made to Exhibit 10.4 to the report on Form S-4 filed
with the Securities and Exchange Commission June 23,
1999, herein incorporated by reference)
10.6 Employment Agreement - William J. Evanson, Executive
Vice President and Chief Financial Officer.
10.7 Credit Agreement among Anthony & Sylvan Pools
Corporation and the Lending Institutions - National City
Bank, Huntington National Bank and Firstar Bank, N.A.
dated July 8, 1999 (Reference is made to Exhibit 10.10
to the report on form 10-Q for the quarter ended June
30, 1999, which exhibit is herein incorporated by
reference)
13 2000 Annual Report to Shareholders.
(b) There were no reports filed on Form 8-K during the last quarter of
the fiscal year covered by this report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By STUART D. NEIDUS
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Stuart D. Neidus
Chairman and Chief Executive Officer
March 29, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
Signature Title
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STUART D. NEIDUS Chairman, Chief Executive Officer
- ---------------- and Director
STUART D. NEIDUS (Principal Executive Officer)
WILLIAM J. EVANSON Executive Vice President
- ------------------ and Chief Financial Officer
WILLIAM J. EVANSON (Principal Financial Officer)
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ROGER D. BLACKWELL Director
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Roger Blackwell
MARY ANN JORGENSON Director
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Mary Ann Jorgenson
THOMAS B. WALDIN Director
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Thomas B. Waldin
Date: March 29, 2001
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