8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 8-K

______________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 15, 2007 (February 13, 2007)

______________

POOL CORPORATION

(Exact name of registrant as specified in its charter)

______________

 Delaware0-26640     36-3943363

 (State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)

       109 Northpark Boulevard, Covington, Louisiana  70433-5001

          (Address of principal executive offices)                 (Zip Code)

          Registrant’s telephone number, including area code(985) 892-5521

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02Results of Operations and Financial Condition.

The following information is being provided under Form 8-K Item 2.02 and should not be deemed incorporated by reference by any general statement incorporating by reference this Current Report on Form 8-K into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates this information by reference, and none of this information should be deemed “filed” under such acts.

On February 15, 2007, Pool Corporation, a Delaware corporation, issued a press release announcing its fourth quarter and fiscal 2006 earnings results.

A copy of the press release is included herein as Exhibit 99.1.

Item 5.02Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

(b)(c)

Effective February 13, 2007, Mark W. Joslin, the Company’s Vice President, Chief Financial Officer and principal financial officer, will serve as the Company’s principal accounting officer. A description of Mr. Joslin’s biographical information, relationships and transactions with the Company and employment arrangements with the Company is contained in the Company's Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 3, 2006 and is incorporated herein by reference. Donald L. Meyer, who previously served as the Company’s principal accounting officer, will continue to serve as the Company’s Corporate Controller and Assistant Treasurer.

Item 7.01 Regulation FD Disclosure.

On February 15, 2007, Pool Corporation issued the press release included herein as Exhibit 99.1.

Item 9.01Financial Statements and Exhibits.

(d)Exhibits

99.1Press release issued by Pool Corporation on February 15, 2007, announcing its fourth quarter and fiscal 2006 earnings results and the declaration of its regular quarterly cash dividend

SIGNATURES

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 hereunto duly authorized.

        POOL CORPORATION

        By:/s/ Mark W. Joslin 

            Mark W. Joslin

       Vice President and Chief Financial Officer

Dated: February 15, 2007

EX-99.1

                        EXHIBIT 99.1

                            FOR

IMMEDIATE RELEASE

POOL CORPORATION

REPORTS THIRTEENTH CONSECUTIVE YEAR OF RECORD RESULTS

20% EARNINGS PER SHARE INCREASE FOR THE YEAR

COVINGTON, La. (February 15, 2007) - Pool Corporation (the “Company” or “POOL”) (Nasdaq/GSM: POOL) today reported record net sales and net income for 2006.

Earnings per share for 2006 increased 20% to $1.74 per diluted share on net income of $95.0 million, compared to $1.45 per diluted share on net income of $80.5 million last year.

Net sales for the year ended December 31, 2006 increased $357.1 million, or 23%, to $1.91 billion, compared to $1.55 billion in 2005. The increase in net sales includes $204.7 million related to acquired sales centers and $152.4 million of base business sales growth. The 10% increase in base business sales is due to the continued growth in the installed base of swimming pools, POOL’s execution of its sales and service programs, inflationary price increasespassed through the supply chain, 26% growth in complementary product sales and sales from new locations.

Gross profit for the year ended December 31, 2006 increased $107.5 million, or 25%, to $539.9 million from $432.4 million in 2005. This increase is primarily due to the increase in net sales. Gross profit as a percentage of net sales (gross margin) increased 40 basis points to 28.3% in 2006 from 27.9% in 2005. The gross margin improvement is primarily attributable to the benefits achieved through our supply chain management initiatives, including our pre-price increase inventory purchases in the fourth quarter of 2005 and second quarter of 2006.

Operating expenses in 2006 increased $75.5 million, or 25%, to $372.6 million from $297.1 million in 2005. Operating expenses as a percentage of net sales increased to 19.5% in 2006 from 19.1% in 2005 due to the higher expense ratios for acquired businesses and start-up costs and higher expense ratios for the 17 new sales centers opened in 2006.

Operating income increased $32.0 million, or 24%, to $167.4 million in 2006 from $135.4 million in 2005. Operating income as a percentage of net sales (operating margin) increased 10 basis points to 8.8% in 2006 from 8.7% in 2005. EBITDA (as defined in the addendum) increased 24% to $183.0 million in 2006 from $147.4 million in 2005.

Cash provided by operations was $69.0 million in 2006, compared to $39.5 million in 2005. The increase in 2006 cash provided by operations is primarily the result of the increase in net income.

“We are pleased with another strong year of growth in 2006. This marks our 11^th consecutive year of 20% or greater earnings per share growth, which represents all of our years as a publicly traded company. In our continuing effort to provide exceptional value to both our customers and our suppliers, we made important investments in 2006 to expand our networks and value-added programs. Combined with other investments that strengthen every aspect of our organization, we have positioned the Company to leverage our industry’s unique dynamics in order to realize our long-term earnings objectives and create substantial value for our shareholders,” commented Manuel Perez de la Mesa, President and CEO.

In the fourth quarter of 2006, net sales increased $18.7 million, or 6%, to $318.5 million, compared to $299.8 million in the comparable 2005 period. This increase is due to the Wickham acquisition, growth in the Horizon business and a 1% increase in base business sales. Gross margin decreased 180 basis points to 26.0% in the fourth quarter of 2006 from 27.8% for the same period last year. This decrease is primarily attributable to a fourth quarter adjustment to the estimated amount of vendor incentives earned for the year based on our actual 2006 product purchases. Operating loss for the fourth quarter was $4.1 million compared to operating income of $2.3 million in the same period last year. Loss per share for the fourth quarter of 2006 was $0.10 per basic share on a net loss of $5.0 million, compared to a loss of $0.02 per basic share on a net loss of $0.9 million in the fourth quarter of 2005.

“We project 15% to 20% earnings growth in 2007. Given the tougher first half comps, we expect to realize the growth relative to 2006 as the year unfolds,” continued Perez de la Mesa.

POOL also announced today that it has completed the placement of $100.0 million aggregate principal amount of Floating Rate Senior Notes (the “Notes”) in a private placement offering, on February 12, 2007. The Notes are due on February 12, 2012. Net proceeds from the placement were used to pay down the Company’s revolving credit facility.

Additionally, POOL announced that its Board of Directors has declared its regular quarterly cash dividend of $0.105 per share. The dividend will be payable on March 19, 2007 to holders of record on March 5, 2007.

At December 31, 2006, 210 sales centers were included in the base business calculations, and 64 sales centers, including the Horizon and Wickham sales centers, were excluded because they were acquired or opened in new markets within the last 15 months.

Pool Corporation is the largest wholesale distributor of swimming pool and related backyard products. Currently, POOL operates 275 sales centers in North America and Europe, through which it distributes more than 100,000 national brand and private label products to roughly 70,000 wholesale customers. For more information about POOL, please visit www.poolcorp.com.

This news release includes “forward-looking” statements that involve risk and uncertainties that are generally identifiable through the use of words such as “believe, “ “expect,” “intend,” “plan,” “estimate,” “project” and similar expressions and include projections of earnings growth. The forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date of this release, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. Actual results may differ materially due to a variety of factors, including the sensitivity of our business to weather conditions, our ability to maintain favorable relationships with suppliers, competition from other leisure product alternatives and mass merchants, changes in the economy and other risks detailed in POOL’s Form 10-Q for the quarter ended September 30, 2006 filed with the Securities and Exchange Commission.

CONTACT:

Craig K. Hubbard

Treasurer

985.801.5117

craig.hubbard@poolcorp.com

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POOL CORPORATION

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

	Three Months Ended						Year Ended
	December 31,						December 31,
		2006			2005*		2006			2005*
Net sales	$	318,486		$	299,791		$	1,909,762		$	1,552,659
Cost of sales		235,581			216,580			1,369,814			1,120,211
Gross profit		82,905			83,211			539,948			432,448
Percent		26.0	%		27.8	%		28.3	%		27.9	%
Selling and administrative expenses		86,975			80,923			372,566			297,085
Operating income (loss)		(4,070	)		2,288			167,382			135,363
Percent		(1.3	)%		0.8	%		8.8	%		8.7	%
Interest expense, net		4,213			2,118			15,196			6,434
Income (loss) before income taxes and equity earnings (loss)		(8,283	)		170			152,186			128,929
Provision for income taxes		(3,198	)		141			58,759			49,941
Equity earnings (loss) in unconsolidated investments		84			(905	)		1,597			1,467
Net income (loss)	$	(5,001	)	$	(876	)	$	95,024		$	80,455
Earnings (loss) per share:
Basic	$	(0.10	)	$	(0.02	)	$	1.83		$	1.53
Diluted	$	(0.10	)	$	(0.02	)	$	1.74		$	1.45
Weighted average shares outstanding:
Basic		50,750			52,308			51,866			52,445
Diluted		50,750			52,308			54,662			55,665
Cash dividends declared per common share	$	0.105		$	0.09		$	0.405		$	0.34

      *  As adjusted to reflect the impact of share-based compensation expense related to the adoption of SFAS 123(R) using the modified retrospective transition method.

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POOL CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

			December 31,		December 31,		Change
			2006		2005*		$		%
Assets
Current assets:
	Cash and cash equivalents	$	16,734	$	26,866	$	(10,132	)	(38	)%
	Receivables, net		51,116		42,809		8,307		19
	Receivables pledged under receivables facility		103,821		98,976		4,845		5
	Product inventories, net		332,069		330,575		1,494		—
	Prepaid expenses		8,005		5,190		2,815		54
	Deferred income taxes		7,676		3,727		3,949		106
Total current assets			519,421		508,143		11,278		2
Property and equipment, net			33,633		25,598		8,035		31
Goodwill			154,244		139,546		14,698		11
Other intangible assets, net			18,726		22,838		(4,112	)	(18	)
Equity interest investments			32,509		29,907		2,602		9
Other assets, net			16,029		14,818		1,211		8
Total assets		$	774,562	$	740,850	$	33,712		5	%
Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable	$	177,544	$	174,170	$	3,374		2	%
	Accrued and other current liabilities		35,610		73,441		(37,831	)	(52	)
	Short-term financing		74,286		65,657		8,629		13
	Current portion of  long-term debt and other long-term  liabilities		4,350		1,350		3,000		222
Total current liabilities			291,790		314,618		(22,828	)	(7	)
Deferred income taxes			15,023		13,274		1,749		13
Long-term debt			188,157		129,100		59,057		46
Other long-term liabilities			1,908		2,134		(226	)	(11	)
Total liabilities		$	496,878	$	459,126	$	37,752		8	%
Total stockholders’ equity			277,684		281,724		(4,040	)	(1	)
Total liabilities and stockholders’ equity		$	774,562	$	740,850	$	33,712		5	%

*As adjusted to reflect the impact of share-based compensation expense related to the adoption of SFAS 123(R) using the modified retrospective transition method and to correct the classification of the Company’s deferred income tax balances.

 1. The allowance for doubtful accounts was $4.9 million at December 31, 2006 and $4.2 million at December 31, 2005.

 2. The inventory reserve was $4.8 million at December 31, 2006 and $3.9 million at December 31, 2005.

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POOL CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

			Year Ended December 31,
			2006			2005*			Change
Operating activities
Net income		$	95,024		$	80,455		$	14,569
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation		8,162			5,410			2,752
	Amortization		4,742			3,998			744
	Share-based compensation		7,204			5,966			1,238
	Excess tax benefits from share-based compensation		(14,627	)		(13,473	)		(1,154	)
	Equity earnings in unconsolidated investments		(2,602	)		(2,386	)		(216	)
	Other		(2,329	)		(7,376	)		5,047
Changes in operating assets and liabilities, net of effects of acquisitions:
	Receivables		(5,301	)		(13,394	)		8,093
	Product inventories		5,882			(103,579	)		109,461
	Accounts payable		(5,269	)		41,932			(47,201	)
	Other current assets and liabilities		(21,876	)		41,900			(63,776	)
Net cash provided by operating activities			69,010			39,453			29,557
Investing activities
Acquisition of businesses, net of cash acquired			(26,662	)		(89,963	)		63,301
Equity interest investments			—			(3,539	)		3,539
Purchase of property and equipment, net of sale proceeds			(14,777	)		(8,361	)		(6,416	)
Net cash used in investing activities			(41,439	)		(101,863	)		60,424
Financing activities
Proceeds from revolving line of credit			442,495			364,383			78,112
Payments on revolving line of credit			(380,438	)		(345,703	)		(34,735	)
Proceeds from asset-backed financing			93,347			67,133			26,214
Payments on asset-backed financing			(84,718	)		(44,071	)		(40,647	)
Proceeds from long-term debt			—			60,000			(60,000	)
Payments on long-term debt and other long-term liabilities			(1,508	)		(1,350	)		(158	)
Payments of capital lease obligations			(257	)		—			(257	)
Payments of deferred financing costs			(156	)		(243	)		87
Excess tax benefits from share-based compensation			14,627			13,473			1,154
Issuance of common stock under stock option plans			7,220			4,481			2,739
Payment of cash dividends			(21,080	)		(17,862	)		(3,218	)
Purchase of treasury stock			(111,118	)		(32,091	)		(79,027	)
Net cash provided by (used in) financing activities			(41,586	)		68,150			(109,736	)
Effect of exchange rate changes on cash			3,883			(636	)		4,519
Change in cash and cash equivalents			(10,132	)		5,104			(15,236	)
Cash and cash equivalents at beginning of period			26,866			21,762			5,104
Cash and cash equivalents at end of period		$	16,734		$	26,866		$	(10,132	)

 

*As adjusted to reflect the impact of share-based compensation expense related to the adoption of SFAS 123(R) using the modified retrospective transition method.

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Addendum

(Unaudited)		Base Business				Acquired					Total
(In thousands)		Three Months				Three Months					Three Months
		Ended				Ended					Ended
		December 31,				December 31,					December 31,
		2006		2005		2006		2005			2006		2005
Net sales	$	252,983	$	250,597	$	65,503	$	49,194		$	318,486	$	299,791
Gross profit		64,247		68,479		18,658		14,732			82,905		83,211
Gross margin		25.4	%	27.3	%	28.5	%	29.9	%		26.0	%	27.8	%
Selling and administrative expenses		71,367		68,847		15,608		12,076			86,975		80,923
Expenses as a % of net sales		28.2	%	27.5	%	23.8	%	24.5	%		27.3	%	27.0	%
Operating income (loss)		(7,120	)	(368	)	3,050		2,656			(4,070	)	2,288
Operating income (loss) margin		(2.8	)%	(0.1	)%	4.7	%	5.4	%		(1.3	)%	0.8	%

(Unaudited)		Base Business				Acquired					Total
(In thousands)		Year				Year					Year
		Ended				Ended					Ended
		December 31,				December 31,					December 31,
		2006		2005		2006		2005			2006		2005
Net sales	$	1,653,475	$	1,501,096	$	256,287	$	51,563		$	1,909,762	$	1,552,659
Gross profit		465,942		417,195		74,006		15,253			539,948		432,448
Gross margin		28.2	%	27.8	%	28.9	%	29.6	%		28.3	%	27.9	%
Selling and administrative expenses		316,617		284,443		55,949		12,642			372,566		297,085
Expenses as a % of net sales		19.1	%	18.9	%	21.8	%	24.5	%		19.5	%	19.1	%
Operating income		149,325		132,752		18,057		2,611			167,382		135,363
Operating income margin		9.0	%	8.8	%	7.0	%	5.1	%		8.8	%	8.7	%

We exclude the following sales centers from base business for 15 months:

  · acquired sales centers;

  · sales centers divested or consolidated with acquired sales centers; and

  · new sales centers opened in new markets.

Additionally, we generally allocate overhead expenses to acquired sales centers on the basis of acquired sales center net sales as a percentage of total net sales.

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The effect of sales center acquisitions in the tables above includes the operations of the following:

Acquired	Acquisition Date	Period Excluded
Pool Tech Distributors, Inc.	December 2004	January - February 2006 and 2005
B&B s.r.l. (Busatta)	October 2005	January - December 2006 and October - December 2005
Direct Replacements, Inc.	October 2005	January - December 2006 and October - December 2005
Horizon Distributors, Inc.	October 2005	January - December 2006 and October - December 2005
Wickham Supply, Inc. and Water Zone, LP	August 2006	August - December 2006

EBITDA, as discussed above, is defined as net income plus interest expense, income taxes, depreciation and amortization. We consider EBITDA an important indicator of the operational strength and performance of our business, including the ability to provide cash flows to fund growth, service debt and pay dividends. EBITDA eliminates the non-cash depreciation of tangible assets and non-cash amortization of intangible assets. We believe EBITDA should be considered in addition to, not as a substitute for, operating income, net income and other measures of financial performance reported in accordance with accounting principles generally accepted in the United States (GAAP).

The table below presents a reconciliation of net income to EBITDA.

(Unaudited)			Year Ended
(In thousands)			December 31,
			2006		2005
Net income		$	95,024	$	80,455
	Add:
	Interest expense, net		15,196		6,434
	Provision for income taxes		58,759		49,941
	Income taxes on equity earnings		1,005		919
	Depreciation		8,162		5,410
	Amortization (1)		4,871		4,290
EBITDA		$	183,017	$	147,449

         ⁽¹⁾ Excludes amortization included in interest expense, net

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