What changed in this filing

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Item 1. Financial Statements

2022-07-28 compared with 2022-04-28 · 64 added, 28 removed, 288 unchanged (24% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Net sales $ 2,055,818 $ 1,787,833 $ 3,468,468 $ 2,848,579

19 unchanged sentences

(In thousands)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Net income $ 307,283 $ 259,695 $ 486,544 $ 358,350

Other comprehensive (loss) income:

Foreign currency translation losses ( 214 ) ( 1,268 )

Change in unrealized gains on interest rate swaps, net of change in taxes of $( 3,866 ) and $( 3,046 )

Total other comprehensive income 11,384 7,869

Foreign currency translation (losses) gains ( 7,125 ) 1,302 ( 7,339 ) 34

Change in unrealized gains (losses) on interest rate swaps, net of change in taxes of $( 1,631 ), $ 719 , $( 5,497 ), and $( 2,327 )

4,893 ( 2,157 ) 16,491 6,980

Total other comprehensive (loss) income ( 2,232 ) ( 855 ) 9,152 7,014

Comprehensive income $ 305,051 $ 258,840 $ 495,696 $ 365,364

3 unchanged sentences

(In thousands, except share data)

March 31, March 31, December 31,

June 30, June 30, December 31,

2022 2021 2021

(Unaudited) (Unaudited)

(Unaudited) (Unaudited) (Audited)

Current assets:

28 unchanged sentences

39,588,231 , 40,131,570 and 40,192,901 shares issued and

outstanding at March 31, 2022, March 31, 2021 and

outstanding at June 30, 2022, June 30, 2021 and

December 31, 2021, respectively

4 unchanged sentences

Total liabilities and stockholders’ equity $ 3,962,105 $ 2,214,035 $ 3,230,131

(1) Derived from audited financial statements.

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

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Operating activities

Net income $ 486,544 $ 358,350

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 15,376 13,884

9 unchanged sentences

Accrued expenses and other current liabilities ( 44,276 ) 58,673

Net cash (used in) provided by operating activities ( 208,109 ) 77,113

Net cash provided by operating activities 28,731 187,228

Investing activities

27 unchanged sentences

Comprehensive

Shares Amount Capital Earnings Income Total

Shares Amount Capital Earnings (Loss) Income Total

Balance at December 31, 2021 40,193 $ 40 $ 551,963 $ 526,874 $ ( 7,484 ) $ 1,071,393

13 unchanged sentences

Balance at March 31, 2022 40,110 $ 40 $ 558,755 $ 611,583 $ 3,900 $ 1,174,278

— — — 307,283 — 307,283

Foreign currency translation

— — — — ( 7,125 ) ( 7,125 )

Interest rate swaps, net of the change in taxes of $( 1,631 )

— — — — 4,893 4,893

Repurchases of common stock, net of retirements

( 547 ) — — ( 216,261 ) — ( 216,261 )

Share-based compensation

— — 3,914 — — 3,914

Issuance of stock under share-based compensation plans

25 — 1,972 — — 1,972

Declaration of cash dividends

— — — ( 39,896 ) — ( 39,896 )

Balance at June 30, 2022 39,588 $ 40 $ 564,641 $ 662,709 $ 1,668 $ 1,229,058

Common Stock Additional

17 unchanged sentences

Balance at March 31, 2021 40,086 $ 40 $ 526,328 $ 137,710 $ ( 6,150 ) $ 657,928

— — — 259,695 — 259,695

Foreign currency translation

— — — — 1,302 1,302

Interest rate swaps, net of the change in taxes of $ 719

— — — — ( 2,157 ) ( 2,157 )

Repurchases of common stock, net of retirements

( 45 ) — — ( 18,619 ) — ( 18,619 )

Share-based compensation

— — 3,712 — — 3,712

Issuance of stock under share-based compensation plans

90 — 5,006 — — 5,006

Declaration of cash dividends

— — — ( 32,119 ) — ( 32,119 )

Balance at June 30, 2021 40,131 $ 40 $ 535,046 $ 346,667 $ ( 7,005 ) $ 874,748

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 2021 Annual Report on Form 10-K.

The results for our three-month period ended March 31, 2022, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2022.

The results for our three and six-month periods ended June 30, 2022, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2022.

We reduce federal and state income taxes payable by the tax benefits associated with the exercise of nonqualified stock options and the lapse of restrictions on restricted stock awards.

1 unchanged sentence

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 restricted stock awards lapse.

We recorded excess tax benefits of $ 7.3 million in the first quarter of 2022 compared to $ 4.0 million in the first quarter of 2021.

We recorded excess tax benefits of $ 1.6 million in the second quarter of 2022 compared to $ 7.7 million in the second quarter of 2021 and $ 8.9 million in the six months ended June 30, 2022, compared to $ 11.7 million in the six months ended June 30, 2021.

Retained Earnings

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

As of March 31, 2022, 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 $ 1.7 billion and cumulative dividends of $ 822.5 million.

As of June 30, 2022, 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 $ 1.9 billion and cumulative dividends of $ 862.4 million.

Accumulated Other Comprehensive Income (Loss)

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

March 31, December 31,

June 30, December 31,

2022 2021 2021

Foreign currency translation adjustments $ ( 16,919 ) $ ( 4,882 ) $ ( 9,580 )

Unrealized gains on interest rate swaps, net of tax

Unrealized gains (losses) on interest rate swaps, net of tax

18,587 ( 2,123 ) 2,096

13 unchanged sentences

The provisions of these updates are only available until December 31, 2022, when the reference rate replacement activity is expected to be completed.

Our exposure related to the expected cessation of LIBOR is limited to the interest expense and certain fees we incur on balances outstanding under our three major credit facilities.

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

3 unchanged sentences

Our participating securities include share-based payment awards that contain a non-forfeitable right to receive dividends and are considered to participate in undistributed earnings with common shareholders.

Participating securities excluded from weighted average common shares outstanding were 239,000 for the three months ended March 31, 2022.

Participating securities excluded from weighted average common shares outstanding were 218 thousand in the second quarter of 2022 and 229 thousand for the six months ended June 30, 2022.

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Net income $ 307,283 $ 259,695 $ 486,544 $ 358,350

12 unchanged sentences

Note 3 – Acquisitions

In April 2022, we acquired the distribution assets of Tri-State Pool Distributors, a wholesale distributor of swimming pool equipment, chemicals and supplies, adding one location in West Virginia.

On December 16, 2021, we acquired Porpoise Pool & Patio, Inc.

(“Porpoise”) for $ 788.7 million, net of cash acquired, subject to certain customary closing adjustments.

(“Porpoise”) for $ 788.7 million, net of cash acquired.

The acquisition was funded with borrowings on our amended and restated revolving credit facility (the “Credit Facility”).

21 unchanged sentences

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

Fair Value at March 31,

Fair Value at June 30,

Unrealized gains on interest rate swaps $ 24,828 $ 4,641

18 unchanged sentences

Interest rate swap 3 February 5, 2020 February 26, 2021 February 28, 2025 $ 150.0 1.3800 %

For the interest rate swap contracts in effect at March 31, 2022, a portion of the change in the estimated fair value between periods relates to future interest expense.

For the interest rate swap contracts in effect at June 30, 2022, 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 income (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 three-month period ended March 31, 2022.

This amount was not material in the six-month period ended June 30, 2022.

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

These swap contracts will convert the variable interest rate to a fixed interest rate on our variable rate borrowings.

Changes in the estimated fair value of these forward-starting interest rate swap contracts are recorded to Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

We record changes in the estimated fair value of these forward-starting interest rate swap contracts to Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

The following table provides details related to each of our forward-starting interest rate swap contracts:

5 unchanged sentences

In this case, we would still be obligated to pay the variable interest payments underlying our debt agreements.

Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements if we continue to be in a net pay position.

Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements if we were in a net pay position.

Our interest rate swap contracts and forward-starting interest rate swap contracts are subject to master netting arrangements.

3 unchanged sentences

Generally, our assets, including long-lived assets, goodwill and intangible assets, are recorded at fair value on a nonrecurring basis as a result of impairment charges or business combinations.

In the three months ended March 31, 2022, we did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

In the six months ended June 30, 2022, we did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

The carrying values of cash, receivables, accounts payable and accrued liabilities approximate fair value due to the short maturity of those instruments.

17 unchanged sentences

On January 4, 2022, we drew the $ 250.0 million incremental term loan available under our December 30, 2021 amendment to our Second Amended and Restated Credit Agreement (the “Credit Facility”) and used the net proceeds to reduce our revolving borrowings under the Credit Facility.

At March 31, 2022, $ 500.0 million of term loans available under the Credit Facility were fully drawn.

At June 30, 2022, the $ 500.0 million of term loans available under the Credit Facility were fully drawn.

Our accounts receivable securitization facility (the “Receivables Facility”) provides for the sale of certain of our receivables to a wholly owned subsidiary (the “Securitization Subsidiary”).

5 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