Pool (POOL) 8-K Pool Corporation Reports Fiscal 2007 Results

Exhibit 99.1    

FOR IMMEDIATE RELEASE    

POOL CORPORATION REPORTS FISCAL 2007 RESULTS

COVINGTON, LA. (February 21, 2008) – Pool Corporation (the “Company” or “POOL”) (NASDAQ/GSM: POOL) today announced fourth quarter and full year 2007 results.

“We continue to weather an unprecedented external market environment.  The real estate market issues, with falling home values and tighter credit, intensified throughout 2007, creating a significant drop in new construction activities and negatively affecting our 2007 results.  Despite this, our employees did an outstanding job of executing by providing exceptional value to our customers and suppliers, and these efforts resulted in market share gains and improved our competitive position.  As we continue to improve every facet of how we execute, we will take advantage of the tremendous long-term opportunities present in our young industry,” commented Manuel Perez de la Mesa, President and CEO.

Net sales for the year ended December 31, 2007 increased $18.6 million, or 1%, to $1.93 billion, compared to $1.91 billion in 2006.  The increase in net sales is a result of the Wickham acquisition and sales from new locations opened in new markets.  Base business sales decreased 1% year over year as demand for pool and irrigation construction products was impacted by the weak housing market and less than favorable weather conditions, particularly in the first half of 2007.  Complementary products sales, a majority of which are tied to new construction, decreased 3% from 2006.

Gross profit for the year ended December 31, 2007 decreased $9.3 million, or 2%, to $530.6 million from $539.9 million in 2006.  Gross profit as a percentage of net sales (gross margin) decreased 80 basis points to 27.5% in 2007 from 28.3% in 2006.  The decrease in 2007 gross margin is primarily due to competitive pricing pressures as a result of the market conditions.

Selling and administrative expenses (operating expenses) for 2007 increased $24.3 million, or 7%, to $396.9 million from $372.6 million in 2006.  Operating expenses as a percentage of net sales increased to 20.6% in 2007 from 19.5% in 2006 due to the investments made in 29 new sales centers since the beginning of 2006, sales center expansions and relocations, increases in our accounts receivable reserves and higher freight costs. These increased costs were partially offset by lower incentive expenses and the impact from cost control initiatives.

Operating income decreased $33.6 million, or 20%, to $133.8 million in 2007 from $167.4 million in 2006.  Operating income as a percentage of net sales (operating margin) decreased 190 basis points to 6.9% in 2007 from 8.8% in 2006.  Interest expense increased 46% for 2007 due to higher debt levels for borrowings to fund share repurchases and a higher average effective interest rate compared to the same period in 2006. Earnings for 2007 decreased to $1.37 per diluted share on net income of $69.4 million, compared to $1.74 per diluted share on net income of $95.0 million in 2006.  The opening of 29 new sales centers since the beginning of 2006 is estimated to have had a dilutive impact of approximately $0.16 on earnings per share for 2007.

On the balance sheet, total net receivables decreased 9% compared to December 31, 2006 primarily due to lower fourth quarter 2007 sales and an increase in the allowance for doubtful accounts.  Our inventory levels increased 14% to $379.7 million at December 31, 2007.  The increase reflects inventory for the 12 new sales centers opened in 2007 and higher inventory levels attributable to the decline in fourth quarter sales.  The quality of our inventory remains high as measured by the percentage of total inventory in our fastest-turning inventory classes, which accounted for essentially the entire increase from December 31, 2006.

Cash provided by operations was $71.6 million in 2007, compared to $69.0 million in 2006.  The increase in 2007 cash provided by operations is primarily the result of favorable impacts from changes in working capital balances, which offset the decrease in net income. The Company repurchased 4.1 million shares of its common stock under its repurchase plan during 2007, using $137.7 million in borrowing capacity to fund these purchases.

In the fourth quarter of 2007, net sales decreased $17.7 million, or 6%, to $300.8 million, compared to $318.5 million in the comparable 2006 period.  Gross margin increased 40 basis points to 26.4% in the fourth quarter of 2007 from 26.0% for the same period last year.  The 2007 gross margin benefited from a favorable comparison to fourth quarter 2006 gross margin, which was negatively impacted by an adjustment to vendor incentives earned for the year.  The seasonal operating loss for the fourth quarter was $12.8 million compared to an operating loss of $4.1 million in the same period last year.  The loss per share for the fourth quarter of 2007 was $0.24 per diluted share on a net loss of $11.6 million, compared to a loss of $0.10 per diluted share on a net loss of $5.0 million in the fourth quarter of 2006.

“Our objectives in 2008 are to continue to execute on our business strategies that we believe will provide long-term value to our customers, suppliers and our shareholders, and to exploit business improvement opportunities available to us while maintaining tight control over our expenses.  Given the challenges in the external environment, we will not provide any earnings per share guidance until we gain more visibility for how our 2008 results are tracking,” continued Perez de la Mesa.

Pool Corporation is the largest wholesale distributor of swimming pool and related backyard products.  Currently, POOL operates 281 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.  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 and manufacturers, competition from other leisure product alternatives and mass merchants, changes in the economy and the housing market and other risks detailed in POOL’s 2006 Annual Report on Form 10-K and 2007 Quarterly Reports on Form 10-Q 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 Operations

(Unaudited)

(In thousands, except per share data)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2007			2006			2007			2006
Net sales	$	300,755		$	318,486		$	1,928,367		$	1,909,762
Cost of sales		221,319			235,581			1,397,721			1,369,814
Gross profit		79,436			82,905			530,646			539,948
Percent		26.4	%		26.0	%		27.5	%		28.3	%
Selling and administrative expenses		92,232			86,975			396,872			372,566
Operating income (loss)		(12,796	)		(4,070	)		133,774			167,382
Percent		(4.3	)%		(1.3	)%		6.9	%		8.8	%
Interest expense, net		5,383			4,213			22,148			15,196
Income (loss) before income taxes and         equity earnings (loss)		(18,179	)		(8,283	)		111,626			152,186
Provision (benefit) for income taxes		(6,964	)		(3,198	)		43,154			58,759
Equity earnings (loss) in unconsolidated investments, net		(374	)		84			922			1,597
Net income (loss)	$	(11,589	)	$	(5,001	)	$	69,394		$	95,024
Earnings (loss) per share:
Basic	$	(0.24	)	$	(0.10	)	$	1.42		$	1.83
Diluted	$	(0.24	)	$	(0.10	)	$	1.37		$	1.74
Weighted average shares outstanding:
Basic		47,448			50,750			48,887			51,866
Diluted		47,448			50,750			50,802			54,662
Cash dividends declared per common share	$	0.12		$	0.105		$	0.465		$	0.405

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POOL CORPORATION

Condensed Consolidated Balance Sheets

 (Unaudited)

(In thousands)

		December 31,		December 31,		Change
		2007		2006		$		%
Assets
Current assets:
Cash and cash equivalents	$	15,825	$	16,734	$	(909	)	(5	)%
Receivables, net		45,257		51,116		(5,859	)	(11	)
Receivables pledged under receivables facility		95,860		103,821		(7,961	)	(8	)
Product inventories, net		379,663		332,069		47,594		14
Prepaid expenses and other current assets		8,265		8,005		260		3
Deferred income taxes		9,139		7,676		1,463		19
Total current assets		554,009		519,421		34,588		7
Property and equipment, net		34,223		33,633		590		2
Goodwill		155,247		154,244		1,003		1
Other intangible assets, net		14,504		18,726		(4,222	)	(23	)
Equity interest investments		33,997		32,509		1,488		5
Other assets, net		22,874		16,029		6,845		43
Total assets	$	814,854	$	774,562	$	40,292		5	%
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	194,178	$	177,544	$	16,634		9	%
Accrued and other current liabilities		37,216		35,610		1,606		5
Short-term financing		68,327		74,286		(5,959	)	(8	)
Current portion of long-term debt and other long-term liabilities		3,439		4,350		(911	)	(21	)
Total current liabilities		303,160		291,790		11,370		4
Deferred income taxes		17,714		15,023		2,691		18
Long-term debt		279,525		188,157		91,368		49
Other long-term liabilities		5,664		1,908		3,756		197
Total liabilities		606,063		496,878		109,185		22
Total stockholders’ equity		208,791		277,684		(68,893	)	(25	)
Total liabilities and stockholders’ equity	$	814,854	$	774,562	$	40,292		5	%

1. The allowance for doubtful accounts was $9.9 million at December 31, 2007 and $4.9 million at December 31, 2006.

2. The inventory reserve was $5.4 million at December 31, 2007 and $4.8 million at December 31, 2006.

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POOL CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

		Year Ended  December 31,
			2007		2006		Change
Operating activities
Net income		$	69,394	$	95,024	$	(25,630	)
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation		9,289		8,162		1,127
	Amortization		4,694		4,742		(48	)
	Share-based compensation		7,398		7,204		194
	Excess tax benefits from share-based compensation		(8,482	)	(14,627	)	6,145
	Equity earnings in unconsolidated investments		(1,523	)	(2,602	)	1,079
	Other		1,926		(2,329	)	4,255
Changes in operating assets and liabilities, net of effects of acquisitions:
	Receivables		8,822		(5,301	)	14,123
	Product inventories		(48,001	)	5,882		(53,883	)
	Accounts payable		16,505		(5,269	)	21,774
	Other current assets and liabilitites		11,622		(21,876	)	33,498
Net cash provided by operating activities			71,644		69,010		2,634	)
Investing activities
Acquisition of businesses, net of cash acquired			(2,087	)	(26,662	)	24,575
Proceeds from sale of investment			75		—		75
Purchase of property and equipment, net of sale proceeds			(10,626	)	(14,777	)	4,151
Net cash used in investing activities			(12,638	)	(41,439	)	28,801
Financing activities
Proceeds from revolving line of credit			477,246		442,495		34,751	)
Payments on revolving line of credit			(482,878	)	(380,438	)	(102,440	)
Proceeds from asset-backed financing			87,479		93,347		(5,868	)
Payments on asset-backed financing			(93,438	)	(84,718	)	(8,720	)
Proceeds from long-term debt			100,000		—		100,000
Payments on long-term debt and other long-term liabilities			(4,321	)	(1,514	)	(2,807	)
Payments of capital lease obligations			(257	)	(257	)	—
Payments of deferred financing costs			(1,152	)	(156	)	(996	)
Excess tax benefits from share-based compensation			8,482		14,627		(6,145	)
Issuance of common stock under stock plans			7,292		7,220		72
Payments of cash dividends			(22,734	)	(21,080	)	(1,654	)
Purchases of treasury stock			(139,676	)	(111,112	)	(28,564	)
Net cash used in financing activities			(63,957	)	(41,586	)	(22,371	)
Effect of exchange rate changes on cash			4,042		3,883		159
Change in cash and cash equivalents			(909	)	(10,132	)	9,223
Cash and cash equivalents at beginning of year			16,734		26,866		(10,132	)
Cash and cash equivalents at end of year		$	15,825	$	16,734	$	(909	)

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Addendum

The following table breaks out our consolidated results into the base business component and the acquired and new market component (sales centers excluded from base business):

(Unaudited)		Base Business				Acquired & New Market					Total
(In thousands)		Three Months Ended				Three Months Ended					Three Months Ended
		December 31,				December 31,					December 31,
		2007		2006		2007		2006			2007		2006
Net sales	$	296,304	$	314,536	$	4,451	$	3,950		$	300,755	$	318,486
Gross profit		78,433		81,698		1,003		1,207			79,436		82,905
Gross margin		26.5	%	26.0	%	22.5	%	30.6	%		26.4	%	26.0	%
Selling and administrative expenses		91,036		86,242		1,196		733			92,232		86,975
Expenses as a % of net sales		30.7	%	27.4	%	26.9	%	18.6	%		30.7	%	27.3	%
Operating income (loss)		(12,603	)	(4,544	)	(193	)	474			(12,796	)	(4,070	)
Operating margin		(4.3	)%	(1.4	)%	(4.3	)%	12.0	%		(4.3	)%	(1.3	)%

(Unaudited)		Base Business				Acquired & New Market					Total
(In thousands)		Year Ended				Year Ended					Year Ended
		December 31,				December 31,					December 31,
		2007		2006		2007		2006			2007		2006
Net sales	$	1,877,107	$	1,894,169	$	51,260	$	15,593		$	1,928,367	$	1,909,762
Gross profit		516,375		535,510		14,271		4,438			530,646		539,948
Gross margin		27.5	%	28.3	%	27.8	%	28.5	%		27.5	%	28.3	%
Selling and administrative expenses		384,853		369,498		12,019		3,068			396,872		372,566
Expenses as a % of net sales		20.5	%	19.5	%	23.4	%	19.7	%		20.6	%	19.5	%
Operating income		131,522		166,012		2,252		1,370			133,774		167,382
Operating margin		7.0	%	8.8	%	4.4	%	8.8	%		6.9	%	8.8	%

We exclude the following sales centers from base business for a period of 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 and new market sales centers on the basis of their net sales as a percentage of total net sales.

Due to the timing of the five sales centers closed or consolidated during the fourth quarter of 2007, these locations have not been excluded for the purpose of calculating base business for all periods presented.

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The acquired and new market component in the tables above consists of the operations of two new market sales centers for the fourth quarter, an average of four new market sales centers for the year to date and the following acquisitions for the periods indicated:

Acquired	Acquisition Date	Sales Centers Acquired	Period Excluded(1)
Wickham Supply, Inc. and Water Zone, LP	August 2006	14	January – October 2007 and August – October 2006
Tor-Lyn, Limited	February 2007	1	February – December 2007

(1) After 15 months of operations, we include acquired sales centers in the base business calculation including the comparative prior year period.

We define EBITDA as net income plus interest expense, income taxes, share-based compensation, 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 expenses related to share-based compensation, depreciation of tangible assets and 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,
			2007		2006
Net income		$	69,394	$	95,024
	Add:
	Interest expense, net		22,148		15,196
	Provision for income taxes		43,154		58,759
	Income taxes on equity earnings		602		1,005
	Share based compensation		7,398		7,204
	Depreciation		9,289		8,162
	Amortization (1)		4,468		4,609
EBITDA		$	156,453	$	189,959

 (1)  Excludes amortization included in interest expense, net

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