Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the Act). The rules refer to the controls and other procedures designed to ensure that information required to be disclosed in reports that we file or submit under the Act is (1) recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. As of December 31, 2021, management, including the CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures. Based on that evaluation, management, including the CEO and CFO, concluded that as of December 31, 2021, our disclosure controls and procedures were effective.
We maintain a system of internal control over financial reporting that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Based on the most recent evaluation, we have concluded that no change in our internal control over financial reporting occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
84
Management’s Report on Internal Control Over Financial Reporting
Pool Corporation’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Any evaluation or projection of effectiveness to future periods is also subject to risk that controls may become inadequate due to changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Pool Corporation’s management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the Internal Control-Integrated Framework (2013 Framework) . Based on this assessment, management has concluded that, as of December 31, 2021, Pool Corporation’s internal control over financial reporting was effective.
The independent registered public accounting firm that audited the Consolidated Financial Statements included in Item 8 of this Form 10-K has issued a report on Pool Corporation’s internal control over financial reporting. This report appears below.
85
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Pool Corporation
Opinion on Internal Control over Financial Reporting
We have audited Pool Corporation’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Pool Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”) and our report dated February 25, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
New Orleans, Louisiana
February 25, 2022
86
Item 9B. Other Information
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III.
Item 10. Directors, Executive Officers and Corporate Governance
Incorporated by reference to Pool Corporation’s 2022 Proxy Statement to be filed with the SEC.
We have a Code of Business Conduct and Ethics (the Code) that applies to all of our employees, officers and directors, and is available on our website at www.poolcorp.com . Any substantive amendments to the Code, or any waivers granted to any directors or executive officers, including our principal executive officer, principal financial officer or principal accounting officer and controller, will be disclosed on our website and remain there for at least 12 months.
Item 11. Executive Compensation
Incorporated by reference to Pool Corporation’s 2022 Proxy Statement to be filed with the SEC.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Incorporated by reference to Pool Corporation’s 2022 Proxy Statement to be filed with the SEC.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Incorporated by reference to Pool Corporation’s 2022 Proxy Statement to be filed with the SEC.
Item 14. Principal Accountant Fees and Services
Incorporated by reference to Pool Corporation’s 2022 Proxy Statement to be filed with the SEC.
87
PART IV.
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this report:
(1) Consolidated Financial Statements:
Page
Report of Independent Registered Public Accounting Firm
49
Consolidated Statements of Income
52
Consolidated Statements of Comprehensive Income
53
Consolidated Balance Sheets
54
Consolidated Statements of Cash Flows
55
Consolidated Statements of Changes in Stockholders’ Equity
56
Notes to Consolidated Financial Statements
57
(2) Financial Statement Schedules.
All schedules are omitted because they are not applicable or are not required or because the required information is provided in our Consolidated Financial Statements or accompanying Notes included in Item 8 of this Form 10-K.
(3) The exhibits listed in the Index to Exhibits.
Item 16. Form 10-K Summary
None.
88
INDEX TO EXHIBITS
Incorporated by Reference
No. Description Filed/
Furnished
with this
Form 10-K Form File No. Date Filed
3.1 Restated Certificate of Incorporation of the Company.
10-Q 000-26640 08/09/2006
3.2 Amended and Restated By - laws of the Company.
8-K 000-26640 02/08/2019
4.1 Form of certificate representing shares of common stock of the Company.
8-K 000-26640 05/19/2006
4.2 Description of the Securities of Pool Corporation Registered Under Section 12 of the Securities and Exchange Act of 1934.
10-K 000-26640 02/27/2020
10.1 * Pool Corporation Amended and Restated Employee Stock Purchase Plan.
8-K 000-26640 05/06/2016
10.2 * Pool Corporation Amended and Restated 2007 Long - Term Incentive Plan.
8-K 000-26640 05/06/2016
10.3 * Form of Stock Option Agreement for Employees under the Amended and Restated 2007 Long - Term Incentive Plan.
X
10.4 * Form of Performance-Based Restricted Stock Agreement under the Pool Corporation Amended and Restated 2007 Long-Term Incentive Plan.
X
10.5 * Form of Stock Option Agreement for Directors under the Amended and Restated 2007 Long‑Term Incentive Plan.
8-K 000-26640 05/06/2009
10.6 * Form of Restricted Stock Agreement for Directors under the Amended and Restated 2007 Long-Term Incentive Plan.
8-K 000-26640 05/06/2009
10.7 * Form of Employment Agreement.
10-K 000-26640 03/18/2003
10.8 * Employment Agreement, dated January 17, 2003, between SCP Distributors, LLC and A. David Cook.
10-K 000-26640 03/01/2005
10.9 * Employment Agreement, dated December 20, 2016, between SCP Distributors, LLC and Peter D. Arvan.
10-K 000-26640 02/24/2017
10.10 * Nonqualified Deferred Compensation Plan Basic Plan Document, dated March 1, 2005.
10-Q 000-26640 04/29/2005
10.11 * Nonqualified Deferred Compensation Plan Adoption Agreement by and among SCP Distributors, L.L.C., Superior Pool Products, L.L.C. and Cypress, Inc., dated March 1, 2005.
10-Q 000-26640 04/29/2005
10.12 Trust Agreement by and among SCP Distributors, L.L.C., Superior Pool Products, L.L.C. and Cypress, Inc. and T. Rowe Price Trust Company, dated March 1, 2005.
10-Q 000-26640 04/29/2005
10.13 * Pool Corporation Executive Officer Annual Incentive Plan .
10-K 000-26640 02/27/2019
10.14 * Pool Corporation Strategic Plan Incentive Program.
X
10.15 Second Amended and Restated Credit Agreement dated as of September 27, 2021, by and among Pool Corporation, as U.S. Borrower, SCP Distributors Canada Inc., as Canadian Borrower, SCP International, Inc., as Euro Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and certain other lenders party thereto.
8-K 000-26640 9/29/2021
10.16 as amended by First Amendment to Second Amended and Restated Credit Agreement
X
Incorporated by Reference
No. Description Filed/
Furnished
with this
Form 10-K Form File No. Date Filed
10.17 Receivables Sale and Contribution Agreement, dated as of October 11, 2013, between SCP Distributors LLC, Horizon Distributors, Inc., Superior Pool Products LLC and Poolfx Supply LLC, as Originators and Superior Commerce LLC, as Buyer.
8-K 000-26640 10/17/2013
10.18 Receivables Purchase Agreement, dated as of October 11, 2013, among Superior Commerce LLC as Seller, SCP Distributors LLC, as the Servicer, the Purchasers from time to time thereto, The Bank of Tokyo‑Mitsubishi UFJ, Ltd., New York Branch, as the Victory Group Co-Agent and Wells Fargo Bank, National Association, as the Wells Group Co-Agent and as Administrative Agent.
8-K 000-26640 10/17/2013
10.19 as amended by Second Amendment to the Receivables Purchase Agreement dated as of June 25, 2014.
10-Q 000-26640 07/30/2014
10.20 as amended by Third Amendment to the Receivables Purchase Agreement dated as of October 24, 2014.
8-K 000-26640 10/28/2014
10.21 as amended by Fourth Amendment to the Receivables Purchase Agreement dated as of October 1, 2015.
8-K 000-26640 10/20/2015
10.22 as amended by Fifth Amendment to the Receivables Purchase Agreement dated as of October 15, 2015.
8-K 000-26640 10/20/2015
10.23 as amended by Sixth Amendment to the Receivables Purchase Agreement dated as of October 28, 2016.
8-K 000-26640 10/31/2016
10.24 as amended by Seventh Amendment to the Receivables Purchase Agreement dated as of August 31, 2017.
8-K 000-26640 09/01/2017
10.25 as amended by Eighth Amendment to the Receivables Purchase Agreement dated as of November 28, 2017.
8-K 000-26640 11/29/2017
10.26 as amended by Ninth Amendment to the Receivables Purchase Agreement dated as of October 31. 2018.
8-K 000-26640 11/02/2018
10.27 as amended by Tenth Amendment to the Receivables Purchase Agreement dated as of November 1, 2019.
8-K 000-26640 11/04/2019
10.28 Omnibus Amendment No. 1, dated November 1, 2021, among Superior Commerce LLC, as Seller, SCP Distributors LLC, as the Servicer, Pool Corporation as the Performance Guarantor, the Purchasers from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent.
8-K 000-26640 11/01/2021
10.29 Performance Undertaking, dated as of October 11, 2013, by and between Pool Corporation and Superior Commerce LLC.
8-K 000-26640 10/17/2013
10.30 Credit Agreement, dated as of December 30, 2019, among Pool Corporation as the Borrower, Certain Subsidiaries of the Borrower Party Hereto, as the Guarantors, and Bank of America, N.A., as the Lender.
8-K 000-26640 01/02/2020
10.31 First Amendment to Credit Agreement, dated October 12, 2021 by and among Pool Corporation as Borrower, the Guarantors and BANK OF AMERICA, N.A as Lender.
10-Q 000-26640 10/28/2021
21.1
Subsidiaries of the registrant. X
23.1
Consent of Ernst & Young LLP. X
31.1
Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X
31.2
Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X
Incorporated by Reference
No. Description Filed/
Furnished
with this
Form 10-K Form File No. Date Filed
32.1
Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X
101.INS + Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X
101.SCH + Inline XBRL Taxonomy Extension Schema Document X
101.CAL + Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF + Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB + Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE + Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 + Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) X
* Indicates a management contract or compensatory plan or arrangement
+ Attached as Exhibit 101 to this report are the following items formatted in iXBRL (Inline Extensible Business Reporting Language):
1. Consolidated Statements of Income for the years ended December 31, 2021, December 31, 2020 and December 31, 2019;
2. Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, December 31, 2020 and December 31, 2019;
3. Consolidated Balance Sheets at December 31, 2021 and December 31, 2020;
4. Consolidated Statements of Cash Flows for the years ended December 31, 2021, December 31, 2020 and December 31, 2019;
5. Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021, December 31, 2020 and December 31, 2019; and
6. Notes to Consolidated Financial Statements.
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 on February 25, 2022.
POOL CORPORATION
By: /s/ JOHN E. STOKELY
John E. Stokely, Chairman of the Board
and Lead Independent Director
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 in the capacities indicated on February 25, 2022.
Signature: Title:
/s/ JOHN E. STOKELY
John E. Stokely Chairman of the Board and Lead Independent Director
/s/ PETER D. ARVAN
Peter D. Arvan President, Chief Executive Officer and Director (principal executive officer)
/s/ MELANIE M. HOUSEY HART
Melanie M. Housey Hart Vice President and Chief Financial Officer (principal financial officer and principal accounting officer)
/s/ MARTHA S. GERVASI
Martha S. Gervasi Director
/s/ TIMOTHY M. GRAVEN
Timothy M. Graven Director
/s/ DEBRA S. OLER
Debra S. Oler Director
/s/ MANUEL J. PEREZ DE LA MESA
Manuel J. Perez de la Mesa Director
/s/ HARLAN F. SEYMOUR
Harlan F. Seymour Director
/s/ ROBERT C. SLEDD
Robert C. Sledd Director
/s/ DAVID G. WHALEN
David G. Whalen Director