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UNITED STATES
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[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 OR |
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[_] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________. |
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COMMISSION FILE NO.: 0-26640 SCP POOL CORPORATION |
DELAWARE |
36-3943363 |
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(State or other jurisdiction of | (I.R.S. Employer | ||
incorporation or organization) | Identification No.) |
109 Northpark Boulevard, Covington, Louisiana |
70433-5001 |
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(Address of principal executive offices) | (Zip Code) |
504-892-5521 __________________________________________________________________________
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 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 [_] At April 21, 2000, there were 11,296,882 outstanding shares of the Registrants common stock, $.001 par value per share. |
SCP POOL CORPORATIONTABLE OF CONTENTS |
Part I. Financial Information | Page | ||
Item 1. Financial Statements (2000 Unaudited) | |||
Consolidated Balance Sheets | |||
March 31, 2000 and December 31, 1999 | 1 | ||
Consolidated Statements of Income | |||
Three Months Ended March 31, 2000 and March 31, 1999 | 2 | ||
Condensed Consolidated Statements of Cash Flows | |||
Three Months Ended March 31, 2000 and March 31, 1999 | 3 | ||
Notes to Condensed Consolidated Financial Statements | |||
March 31, 2000 | 4 | ||
Item 2. Managements Discussion and Analysis of Financial Condition and | |||
Results of Operations | 5 | ||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 9 | ||
Part II. Other Information | |||
Items 1. - 6. | 10 |
SCP POOL CORPORATIONCONSOLIDATED BALANCE SHEETS |
(Unaudited) March 31, 2000 |
(note) December 31, 1999 | ||||
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Assets | |||||
Current assets: | |||||
Cash and cash equivalents | 2,136 | 3,958 | |||
Receivables, net | 75,001 | 40,932 | |||
Inventory, net | 130,517 | 84,252 | |||
Prepaid expenses | 1,126 | 757 | |||
Deferred income taxes | 2,081 | 2,544 | |||
Total current assets | 210,861 | 132,443 | |||
Property and equipment, net | 7,335 | 6,831 | |||
Goodwill, net | 50,092 | 49,692 | |||
Other assets, net | 3,351 | 5,175 | |||
Total assets | 271,639 | 194,141 | |||
Liabilities and stockholders equity | |||||
Current liabilities: | |||||
Accounts payable | 115,899 | 51,132 | |||
Accrued and other current liabilities | 8,875 | 12,537 | |||
Current portion of long-term debt | 5,000 | 5,000 | |||
Total current liabilities | 129,774 | 68,669 | |||
Deferred income taxes | 3,827 | 5,094 | |||
Long-term debt, less current portion | 42,141 | 22,766 | |||
Stockholders equity: | |||||
Common stock, $.001 par value; 20,000,000 shares authorized; | |||||
11,302,132 and 11,410,600 shares issued and outstanding in | |||||
2000 and 1999, respectively | 11 | 11 | |||
Additional paid-in capital | 56,117 | 55,272 | |||
Retained earnings | 50,336 | 49,091 | |||
Treasury stock | (10,019 | ) | (6,231 | ) | |
Unearned compensation | (554 | ) | (554 | ) | |
Accumulated other comprehensive income | 6 | 23 | |||
Total stockholders equity | 95,897 | 97,612 | |||
Total liabilities and stockholders equity | 271,639 | 194,141 | |||
Note: | The balance sheet at December 31, 1999 has been derived from the audited financial statements at that | ||
date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. | |||
See accompanying notes. 1. |
SCP POOL CORPORATIONCONSOLIDATED STATEMENTS OF INCOME |
Three Months Ended March 31, |
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2000 | 1999 | ||||||||
Net sales | 120,631 | 98,906 | |||||||
Cost of sales | 92,109 | 76,151 | |||||||
Gross profit | 28,522 | 22,755 | |||||||
Selling and administrative expenses | 25,403 | 20,456 | |||||||
Goodwill amortization | 440 | 326 | |||||||
Operating income | 2,679 | 1,973 | |||||||
Other income (expense): | |||||||||
Interest expense | (714 | ) | (852 | ) | |||||
Amortization expense | (222 | ) | (316 | ) | |||||
Miscellaneous income | 238 | 274 | |||||||
(698 | ) | (894 | ) | ||||||
Income before income taxes and change in | |||||||||
accounting principle | 1,981 | 1,079 | |||||||
Income taxes | 739 | 401 | |||||||
Income before change in accounting principle | 1,242 | 678 | |||||||
Change in accounting principle, net of tax | | (544 | ) | ||||||
Net income | 1,242 | 134 | |||||||
Net income per share of common stock: | |||||||||
Basic: | |||||||||
Income before change in accounting principle | 0.11 | 0.06 | |||||||
Change in accounting principle | | (0.05 | ) | ||||||
Net income | 0.11 | 0.01 | |||||||
Diluted: | |||||||||
Income before change in accounting principle | 0.11 | 0.06 | |||||||
Change in accounting principle | | (0.05 | ) | ||||||
Net income | 0.11 | 0.01 | |||||||
Average shares outstanding: | |||||||||
Basic | 11,368 | 11,613 | |||||||
Diluted | 11,797 | 11,908 | |||||||
See accompanying notes. 2. |
SCP POOL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
Three Months Ended March 31, |
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2000 | 1999 | ||||||||
Operating activities | |||||||||
Income before change in accounting principle | 1,242 | 678 | |||||||
Adjustments to reconcile income before change in accounting principle to net cash used in operating activities |
(18,362 | ) | (3,334 | ) | |||||
Net cash used in operating activities | (17,120 | ) | (2,656 | ) | |||||
Investing activities | |||||||||
Acquisition of businesses, net of cash acquired | (130 | ) | (21,823 | ) | |||||
Purchase of property and equipment | (996 | ) | (981 | ) | |||||
Proceeds from sale of property and equipment | 9 | | |||||||
Net cash used in investing activities | (1,117 | ) | (22,804 | ) | |||||
Financing activities | |||||||||
Net borrowings on revolving loan | 20,625 | 27,075 | |||||||
Payments on long-term debt | (1,250 | ) | (952 | ) | |||||
Issuance of common stock | 845 | 735 | |||||||
Purchase of treasury stock | (3,788 | ) | (2,678 | ) | |||||
Net cash provided by financing activities | 16,432 | 24,180 | |||||||
Effect of exchange rate changes on cash | (17 | ) | (53 | ) | |||||
Change in cash and cash equivalents | (1,822 | ) | (1,333 | ) | |||||
Cash and cash equivalents at beginning of period | 3,958 | 4,911 | |||||||
Cash and cash equivalents at end of period | 2,136 | 3,578 | |||||||
Supplemental cash flow information | |||||||||
Cash paid during the period for: | |||||||||
Interest | 676 | 775 | |||||||
Income taxes, net of refunds | 71 | 280 | |||||||
See accompanying notes. 3. |
SCP POOL CORPORATIONNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)MARCH 31, 2000 |
1. | Unaudited Interim Financial Statements |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments consisting of normal recurring adjustments considered necessary for a fair presentation of the results of the interim period. Operating results for the three month period ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information, refer to the consolidated financial statements for the year ended December 31, 1999 and footnotes thereto included in the annual report on Form 10-K filed by the Company with the Securities and Exchange Commission. |
2. | Description of Business |
As of March 31, 2000, the Company conducted operations through 107 service centers in 34 states, the United Kingdom and France. The Company completed four acquisitions during 1999 (the 1999 Acquisitions). In January 1999, the Company acquired certain assets of Benson Pump Company and the capital stock of Pratts Plastics Limited. The Company also acquired certain assets of Garden Leisure Products and the capital stock of Jean Albouy, S.A. in November and December 1999, respectively. The 1999 Acquisitions were accounted for using the purchase method of accounting and the aggregate purchase price for the 1999 Acquisitions was $25.5 million. Benson Pump Company operated 20 service centers in 16 states. The Company consolidated the operations of 15 of these service centers into existing service center locations and closed one service center location. Pratts Plastic Limited operated one service center in Essex, England, while Garden Leisure Products operated one service center in Horsham, England. The Company now operates three service centers in the United Kingdom. Jean Albouy, S.A. operated one service center in Rodez, France. The Rodez service center is the Companys first service center in France. |
3. | Earnings Per Share |
Basic income per common share equals net income divided by the weighted average number of common shares outstanding during the period. Diluted income per common share equals net income plus the after tax interest incurred on the Companys convertible notes, divided by common shares outstanding after giving effect to shares assumed to be issued on conversion of those notes and dilutive options. |
4. | Change in Accounting Principle |
In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5, Reporting on the Costs of Start-Up Activities which required capitalized start-up costs to be written-off at the date of adoption and any future start up costs to be expensed as incurred. The Company adopted the statement on January 1, 1999 and wrote-off $863,000, net of a $319,000 tax benefit. 4. |
SCP POOL CORPORATIONMANAGEMENTS DISCUSSION AND ANALYSIS OF
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Three Months Ended March 31, |
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2000 | 1999 | ||||||||
Net sales | 100.0 | % | 100.0 | % | |||||
Cost of sales | 76.4 | 77.0 | |||||||
Gross profit | 23.6 | 23.0 | |||||||
Selling and administrative expenses | 21.0 | 20.7 | |||||||
Goodwill amortization | 0.4 | 0.3 | |||||||
Operating income | 2.2 | 2.0 | |||||||
Other income (expense): | |||||||||
Interest expense | (0.6 | ) | (0.9 | ) | |||||
Amortization expense | (0.2 | ) | (0.3 | ) | |||||
Miscellaneous income | 0.2 | 0.3 | |||||||
Income before income taxes and change in accounting principle | 1.6 | 1.1 | |||||||
Income taxes | 0.6 | 0.4 | |||||||
Income before change in accounting principle | 1.0 | 0.7 | |||||||
Change in accounting principle, net of tax | | (0.6 | ) | ||||||
Net Income | 1.0 | 0.1 | |||||||
5. |
SCP POOL CORPORATIONMANAGEMENTS DISCUSSION AND ANALYSIS OF
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SCP POOL CORPORATIONMANAGEMENTS DISCUSSION AND ANALYSIS OF
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QUARTER | |||||||||||
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(Unaudited) | 2000 | 1999 | |||||||||
(dollars, in thousands) | First | First | Second | Third | Fourth | ||||||
Net sales | 120,631 | 98,906 | 225,125 | 163,325 | 82,469 | ||||||
Gross profit | 28,522 | 22,755 | 54,646 | 38,591 | 17,303 | ||||||
Operating income (loss) | 2,679 | 1,973 | 27,926 | 13,592 | (4,148 | ) | |||||
Net sales as a percentage of annual net sales | N/A | 17 | % | 39 | % | 29 | % | 15 | % | ||
Gross profit as a percentage of annual gross profit | N/A | 17 | % | 41 | % | 29 | % | 13 | % | ||
Operating income as a percentage of annual operating income | N/A | 5 | % | 71 | % | 35 | % | (11 | )% | ||
Liquidity and Capital Resources Currently, the Companys primary sources of working capital are cash flows from operations and borrowings under its Senior Loan Facility consisting of a term loan and a revolving line of credit. The revolving line of credit has a total borrowing capacity of $65.0 million. The Companys borrowings under its credit facilities, together with cash flows from operations and seller financing have historically been sufficient to support the Companys growth and to finance acquisitions. Considering the Companys borrowing base as of March 31, 2000, the Company had $27.7 million available for borrowing under its Senior Loan Facility, the only additional credit source currently available to the Company. During the three months ended March 31, 2000, the Company had net borrowings on its revolver loan of $20.6 million to meet seasonal working capital requirements and made scheduled principal payments of $1.3 million required under its Senior Loan Facility. 7. |
SCP POOL CORPORATIONMANAGEMENTS DISCUSSION AND ANALYSIS OF
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SCP POOL CORPORATIONQUANTITATIVE AND QUALITATIVE DISCLOSURES
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SCP POOL CORPORATIONPart II. Other Information |
Item 1. | Legal Proceedings | ||||
The Company currently is not involved in any material legal proceedings. | |||||
Item 2. | Changes in Securities | ||||
None. | |||||
Item 3. | Defaults Upon Senior Securities | ||||
None. | |||||
Item 4. | Submission of Matters to a Vote of Security Holders | ||||
None. | |||||
Item 5. | Other Information | ||||
None. | |||||
Item 6. | Exhibits and Reports on Form 8-K | ||||
(a) Exhibits | |||||
27.1 Financial Data Schedule | |||||
(b) Reports on Form 8-K. | |||||
None. |
10. |
SCP POOL CORPORATIONSIGNATUREPursuant 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. |
SCP POOL CORPORATION |
DATE: | April 26, 2000 | BY: | /s/ Craig K. Hubbard
Craig K. Hubbard, Chief Financial Officer, Treasurer and Secretary and duly authorized signatory on behalf of the Registrant |
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