What changed in this filing

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Item 1. Financial Statements

2020-10-30 compared with 2020-07-31 · 58 added, 24 removed, 364 unchanged (18% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

21 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

2 unchanged sentences

Foreign currency translation gains (losses) 2,976 ( 2,156 ) ( 320 ) ( 734 )

Change in unrealized losses on interest rate swaps, net of change in taxes of $ 855 , $ 413 , $ 3,692 and $ 503

Change in unrealized gains (losses) on interest rate swaps, net of change in taxes of $( 51 ), $ 188 , $ 3,641 and $ 692

154 ( 565 ) ( 10,923 ) ( 2,074 )

Total other comprehensive loss ( 433 ) ( 32 ) ( 14,373 ) ( 87 )

Total other comprehensive income (loss) 3,130 ( 2,721 ) ( 11,243 ) ( 2,808 )

Comprehensive income $ 122,228 $ 76,804 $ 296,322 $ 240,743

3 unchanged sentences

(In thousands, except share data)

June 30, June 30, December 31,

September 30, September 30, December 31,

2020 2019 2019 (1)

30 unchanged sentences

40,153,287 , 40,020,216 and 40,074,160 shares issued and

outstanding at June 30, 2020, June 30, 2019 and

outstanding at September 30, 2020, September 30, 2019 and

December 31, 2019, respectively

9 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities

26 unchanged sentences

Payments on short-term borrowings and current portion of long-term debt ( 13,291 ) ( 24,962 )

Payments of deferred and contingent acquisition consideration ( 281 ) ( 311 )

Payments of deferred financing costs ( 12 ) —

Payments of deferred and contingent acquisition consideration ( 281 ) ( 311 )

Proceeds from stock issued under share-based compensation plans 16,696 17,042

43 unchanged sentences

Balance at June 30, 2020 40,042 40 503,271 8,212 ( 24,732 ) 486,791

— — — 119,098 — 119,098

Foreign currency translation

— — — — 2,976 2,976

Interest rate swaps, net of the change in taxes of $( 51 )

— — — — 154 154

Repurchases of common stock, net of retirements

( 20 ) — — ( 5,990 ) — ( 5,990 )

Share-based compensation

— — 3,874 — — 3,874

Issuance of shares under share-based compensation plans

131 — 5,885 — — 5,885

Declaration of cash dividends

— — — ( 23,287 ) — ( 23,287 )

Balance at September 30, 2020 40,153 $ 40 $ 513,030 $ 98,033 $ ( 21,602 ) $ 589,501

Common Stock Additional

31 unchanged sentences

Balance at June 30, 2019 39,898 40 472,390 ( 118,177 ) ( 11,084 ) 343,169

— — — 79,525 — 79,525

Foreign currency translation

— — — — ( 2,156 ) ( 2,156 )

Interest rate swaps, net of the change in taxes of $ 188

— — — — ( 565 ) ( 565 )

Repurchases of common stock, net of retirements

( 1 ) — — ( 92 ) — ( 92 )

Share-based compensation

— — 3,649 — — 3,649

Issuance of shares under share-based compensation plans

123 — 4,439 — — 4,439

Declaration of cash dividends

— — — ( 21,999 ) — ( 21,999 )

Balance at September 30, 2019 40,020 $ 40 $ 480,478 $ ( 60,743 ) $ ( 13,805 ) $ 405,970

The accompanying Notes are an integral part of the Consolidated Financial Statements.

9 unchanged sentences

You should read the interim Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and accompanying notes in our 2019 Annual Report on Form 10-K.

The results for our three and six month periods ended June 30, 2020 are not necessarily indicative of the expected results for our fiscal year ending December 31, 2020.

The results for our three and nine month periods ended September 30, 2020 are not necessarily indicative of the expected results for our fiscal year ending December 31, 2020.

Newly Adopted Accounting Pronouncements

23 unchanged sentences

We monitor housing market trends through review of the House Price Index as published by the Federal Housing Finance Agency, which measures the movement of single-family house prices.

Our assessment of future losses in the first half of 2020 further considered the uncertainty of the impact of the COVID-19 pandemic on forecasted economic trends.

Our assessment of future losses in the first nine months of 2020 further considered the uncertainty of the impact of the COVID-19 pandemic on forecasted economic trends.

At the end of each quarter, we also perform a reserve analysis of all accounts with balances greater than $ 20,000 that are more than 60 days past due.

2 unchanged sentences

The following table summarizes the changes in our allowance for doubtful accounts (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Balance at beginning of period $ 5,472 $ 6,182

10 unchanged sentences

Although we do not currently anticipate any long-term impacts for the overall business, we continue to monitor reporting units that we consider more at risk;

this includes one reporting unit in Italy with a goodwill balance of $ 3.5 million at June 30, 2020, and three reporting units in Quebec, Canada, with an aggregate goodwill balance of $ 2.5 million at June 30, 2020.

this includes one reporting unit in Italy with a goodwill balance of $ 3.7 million at September 30, 2020, and three reporting units in Quebec, Canada, with an aggregate goodwill balance of $ 2.6 million at September 30, 2020.

The determination of our reporting units’ goodwill and intangibles fair values includes numerous assumptions that are subject to various risks and uncertainties.

3 unchanged sentences

We record all excess tax benefits as a component of income tax benefit or expense on the Consolidated Statements of Income in the period in which stock options are exercised or restrictions on awards lapse.

We recorded excess tax benefits of $ 6.2 million in the second quarter of 2020 compared to $ 7.8 million in the second quarter of 2019 and $ 14.2 million in the six months ended June 30, 2020 compared to $ 16.6 million in the six months ended June 30, 2019.

We recorded excess tax benefits of $ 8.5 million in the third quarter of 2020 compared to $ 4.5 million in the third quarter of 2019 and $ 22.6 million in the nine months ended September 30, 2020 compared to $ 21.1 million in the nine months ended September 30, 2019.

Retained Earnings

We account for the retirement of treasury shares as a reduction of Retained earnings (deficit).

As of June 30, 2020, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $ 1.5 billion and cumulative dividends of $ 624.2 million.

As of September 30, 2020, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $ 1.5 billion and cumulative dividends of $ 647.5 million.

Accumulated Other Comprehensive Loss

The table below presents the components of our Accumulated other comprehensive loss balance (in thousands):

June 30, December 31,

September 30, December 31,

2020 2019 2019

10 unchanged sentences

Annual periods beginning after December 15, 2020 We are currently evaluating the effect this standard will have on our financial position, results of operations and related disclosures.

We do not expect that there will be a material impact to the financial statements as a result of adopting this ASU.

ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting

12 unchanged sentences

The table below presents the computation of EPS, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except EPS):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

10 unchanged sentences

Note 3 – Acquisitions

In September 2020, we acquired the distribution assets of Northeastern Swimming Pool Distributors, Inc., a wholesale distributor of swimming pool equipment, chemicals and supplies, adding two locations in Ontario, Canada and one location in Quebec, Canada.

In February 2020, we acquired the distribution assets of Master Tile Network LLC, a wholesale distributor of swimming pool tile and hardscape products, adding two locations in Texas, one location in Nevada and one location in Oklahoma.

We have completed our acquisition accounting for this acquisition, subject to adjustments for standard holdback provisions per the terms of the purchase agreement, which are not material.

We have completed our acquisition accounting for these acquisitions, subject to adjustments for standard holdback provisions per the terms of the purchase agreements, which are not material.

In January 2019, we acquired the distribution assets of W.W.

1 unchanged sentence

We have completed our acquisition accounting for this acquisition.

Subsequent to September 30, 2020, in October 2020, we acquired Jet Line Products, Inc., a wholesale distributor of swimming pool equipment, chemicals and supplies, adding three locations in New Jersey, three locations in New York, two locations in Texas and one location in Florida.

These acquisitions did not have a material impact on our financial position or results of operations, either individually or in the aggregate.

11 unchanged sentences

The table below presents the estimated fair values of our interest rate swap contract, our forward-starting interest rate swap contracts and our contingent consideration liabilities (in thousands):

Fair Value at June 30,

Fair Value at September 30,

Unrealized gains on interest rate swaps $ — $ 631

8 unchanged sentences

If determined to be effective cash flow hedges, we record the changes in the estimated fair value of the swaps to Accumulated other comprehensive loss on our Consolidated Balance Sheets.

To the extent our interest rate swaps are determined to be ineffective, we recognize the changes in the estimated fair value of our swaps in Interest and other non-operating expenses, net on our Consolidated Statements of Income.

If any of our interest rate swaps were determined to be ineffective, we would recognize the changes in the estimated fair value of our swaps in Interest and other non-operating expenses, net on our Consolidated Statements of Income.

We currently have one interest rate swap contract in place, which became effective on November 20, 2019 , and terminates on November 20, 2020 .

5 unchanged sentences

Interest rate swap 1 July 6, 2016 November 20, 2019 November 20, 2020 $ 150.0 1.1425 %

For the interest rate swap contract in effect at June 30, 2020, a portion of the change in the estimated fair value between periods relates to future interest expense.

For the interest rate swap contract in effect at September 30, 2020, a portion of the change in the estimated fair value between periods relates to future interest expense.

Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive loss on the Consolidated Balance Sheets to Interest and other non-operating expenses, net on the Consolidated Statements of Income.

This amount was not material in the six month period ended June 30, 2020.

This amount was not material in the nine month period ended September 30, 2020.

We have entered into forward-starting interest rate swap contracts to extend the hedged period for future interest payments on our variable rate borrowings.

23 unchanged sentences

The table below presents the components of our debt (in thousands):

September 30,

Variable rate debt

17 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements