Recently, the Board of directors made the decision to purchase Quarry Company and Landscaping Company - these large and significant acquisitions were financed through an increase in Border Pool's debt. This debt was negotiated with the company's bank by the Board of Directors. The Board meets on a semi-annual basis.Background Border Pools is a medium sized swimming pool and landscaping company located in a midsized city on the Canadar'USA border. Border Pools recently acquired two longtime suppliers: a supplier of stone {Quarry Company), and a supplier of plants and landscaping services {Landscaping Company}. As a result of these acquisitions, Border Pools reorganized into three separate divisions (Pools, Ouarry and Landscaping). Eachdivision is l% owned by Border Pool s. {see Appendix A for the overall corporate structure}. Details about the parent company and each division are as follows {see Appendix B for nancial information): Border Pools {Parent} Border Pools Company was founded by the Wright brothers many years ago. Subsequent generations of family members have managed the organization, but their involvement has significantly decreased over th years. Border Pools is lz' privately owned by various members of the Wright family. Border Pools is the parent company. As a result of the recent acquisitions and reorganization, Border Pools owns lz' of the subsidiaries: Pool Company, Ouarry Company and Landscaping Company. Border Fool's office is located downtown Most employees work for one of the three subsidiaries. Border Pool s only has 1' employees: the company President, Chief Financial Officer {CFO}, two administrative assistants, three divisional controllers. Border Pools is run by the President and CFO. The President of Border Pools is responsible for overall corporate strategy. All the divisional managrs directly report to the President of Border Pools. The Divisional Managers have a lot of autonomy, and the Divisional Managers are responsible for setting performance targets and bonuses for their respective employees. The President is responsible for the approval of compensation of everyone else, including the Divisional Managers. The Chief Financial Officer {CFO} is responsible for overall financial reponing and tax filings {the tax rate is higher in Canada). While members of the Wright family had been active members of the board in prior years, for the last several years the only members of the board are the President and CFO. The President and CFO are paid a salary of S lil and Sl, respectively. As well, they are paid an annual bonus based on their performance. The range of the bonus has increased in the last few years, and is now between 2U% to 60% of their salary. The bonus is approved by the Board of Directors. The divisional controllers are colocated with each division and report to the CFO. They are responsible for assisting the Senior Managers of each division with financial management issues and for segmented financial reporting. They are paid between $6, and $9EI,CICICI per year based on the complexity of each division. Recently, the Divisional Managers have collectively requested that the Divisional Controllers no longer repor1 directly to the CFO, but instead repon to each of them respectively. Landscaping Company The Landscaping Company was recently acquired because at times it was difficult for Border Pools to acquire landscaping services. Landscaping involves a range of services including the building of decorative gardens, utility huts (for pool heaters and supplies), walkways, retaining walls and other landscaping services. The Landscaping Company provides these services to both The Swimming Pool Company as well as an equal amount to other swimming pool companies. While the jobs most often differ in terms of size and complexity, the overall margins tend to be similar. The number of employees fluctuates during the year, as most landscaping occurs during summer months. However, there is a consistent group of Landscape Managers that supervise seasonal workers. Landscape Managers are paid $60,000 per year. They are also paid a bonus up to 10% of their salary based on their ability to complete jobs on time and on budget. Customers often purchase minimal landscaping services at the time of the initial purchase of the pool, but the manager of the Swimming Pool company is often able to up-sell customers to purchase additional landscaping products and services, often after the initial landscaping work has begun. As one Landscaping Manager complained, "We first quoted the job for Customer # 144 as a small 3-day $4,000 job, and it ended up being a month-long $60,000 job - I know we made a huge amount of margin on that job, but it put me way behind on all my other jobs"