Greetings, and welcome, ladies and gentlemen, to the Pool Corporation year end 2009 earnings release conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions). As a reminder this conference is being recorded. It is now my pleasure to introduce to your host Mark Joslin, Vice President and Chief Financial Officer of Pool Corporation. Thank you, Mr. Joslin you may begin.

Thank you, Edward, and good morning everyone, and welcome to our year end 2009 call. As usual I would like to remind our listeners that our discussion, comments and responses to questions today may include forward-looking statements including management's outlook for 2010 and future periods. Actual results may differ materially from those discussed today. Information regarding the factors and variables that could cause actual results to differ materially from projected results is discussed in our most recent quarterly filings with the SEC and will be included in our 10-K which we expect to file March 1. Now, I will turn the call over to our President and CEO, Manny Perez de la Mesa. Manny?

Thank you, Mark, and good morning to all. While 2009 marked the most challenging year in the history of our young industry, it seemed like every conceivable external factor went against us. The economy, real estate market, consumer financing availability, consumer confidence and even the weather went against us with virtually no summer in the northern markets. Despite these adverse external factors, the resiliency of our business and dedication of our people were readily apparent. The results speak for themselves: record cash flow from operations of $113 million and a free cash flow of $106 million, a $79 million reduction of bank debt, significant improvement in working capital management with record low stock outs while reducing inventories and lowering DSO and with bad debt expense cut in half, market share gains with sales increases in maintenance and repair product segments including chemicals and parts, record high gross margins realized from improved purchasing and sales execution despite the extremely competitive market conditions. We also completed the acquisition of general pool supply in October to further strengthen our market leading position in northern California. 2009 also marked the end of our equity interest investments in Latham, as Latham went through a pre-packaged bankruptcy as part of our restructuring process to de-leverage the business. As noted in the release, we no longer have an equity interest in Latham although they remain a valued supplier and the largest manufacturer of packaged and fiber glass pool products in the industry. Turning to the seasonally slow fourth quarter, our results were pretty much as expected, excluding the non-cash charges and the seasonal loss from the GPS acquisition, we had a loss of $0.25 per basic share. Our base business sales rate remains consistent with the second and third quarters. Our margin remained intact and our expenses…

Thank you, Manny. My comments will focus primarily on our full year results starting with operating expenses. You can see from the addendum to our release, our base business operating expenses which exclude acquired and closed sites were down 10.3% from 2008 to $346 million in 2009 and were down 10.7% if we exclude non-cash charges. Even though, our base business sales were down 15%, this expense reduction took more work to achieve than it may seem as our costs are primarily driven by the number of sales centers we have and this was largely the same year-to-year. Our focus has been on growing our market share and preserving opportunities for the future. So our cost reductions reflect the actions of employees throughout the organization to drive efficiencies and process improvements. Looking at the major expense drivers, personnel related cost contributed the most to our cost savings for the year and were down $15 million or 7%, with year end head count down 8.5% from 2008, excluding the impact of adding GPS in October. We also overcame a 9% increase in employee healthcare cost, despite the head count reduction, as we experienced more, high dollar medical claims in 2009, than in the past. In what I call our general operating cost category, which includes operating supplies, insurances, T&E, telecom and other odds and ends, we are able to lower our cost $11 million or 12% for the year. We continue to push many initiatives to reduce these costs further, but expect more modest results here in 2010. Delivery cost net of cost to build the customers were down over $6 million for the year, and we benefited from improved efficiencies and lower gas prices. Our bad debt expense was down over $5 million for the year, most of this coming…

Thank you, sir. Ladies and gentlemen, at this time, we would be conducting a question and answer session. (Operator instructions). Our first question today comes from the line of Tom Hayes with Piper Jaffray. Please proceed with your question.

Great, good morning gentlemen, thanks for taking my call. I guess my first question is on the general Pool acquisition, I was just wondering if you comment on the integration, is that done, in progress, or your expected thoughts on when that would be wrapped up?

There were 10 locations that came with that acquisition. We have done several -- I believe it was four that we’ve consolidated by this point. And then the others remain intact. So, that part of it is done. In terms of the back office side, some of that work has been transitioned over and we have garnered some efficiencies and there is some that will be done after the 2010 season. But essentially, that’s progressing pretty much as scheduled, and in fact some of the lease exit costs that we booked in the fourth quarter were related to the GPS transaction, which according to the new accounting pronouncements are expensed and when the decision is made.

My next question, you guys have done a great job on balance sheet issues, I guess two quick questions. One can I get your thoughts on how you feel you are positioned as far as inventory levels? I mean you had mentioned in the release that January, maybe part of February, is a little slower. And then just secondly, on your comments of moving more customers towards kind of a cash transition base, with your tighter credit terms, are you seeing different order levels, your customers have been kind of transitioned into a cash basis versus your traditional credit customers?

Let me just clarify that, just to make sure there is no misunderstanding. We still provide credit terms to the lion’s share of our customers. What we have been doing is we have been, two things have happened, one is there has been a business shift over time the last several years as new construction has become a smaller part of our total business. The day to day maintenance and repair type customers, which may be, which may not have credit terms, become a bigger part of the total business. Secondly, we have been very judicious in terms of enforcement of credit terms given the current environment and have provided less latitude than perhaps three years ago in terms of those customers that fell behind on their terms and therefore putting them on COD.

You guys have done a great job on that. So I guess just to follow up on the inventory levels, you’re well positioned heading into the second quarter?

Yeah, the inventory levels at this juncture, we're probably -- not probably, we are definitely better balanced than we have been at any time in our history in terms of how we start the year. Also, the quality and caliber of our regional inventory managers throughout our operations in our eight countries is better than ever before. We’ve significantly enhanced the training and the programs and the tools to enable them to do a much better job and that's showing through clearly as evidenced by the results in 2009.

Thank you. Our next question comes from the line of David Manthey with Robert W. Baird. Please proceed with your question.

This is actually Kyle O'Meara for Dave. Just in terms of your 2010 guidance, you called out the unfavorable weather trends, could you quantify how much that impacted your 2010 guidance?

Sure. Not that we use weather as a factor in terms of long term but the first six weeks have been pretty lousy in terms of weather with very, very wet conditions and colder than normal conditions in markets like Florida. And therefore, a lot of the consumables that would normally be sold in those sunbelt markets were not sold to the same degree. So therefore, that impacted us. And it’s probably, it could be $0.02 or $0.03 in terms of that impact. You look at it over the course of a year and you think that these things will normalize and when it rains a lot or it's abnormally cold. That may be a month or two later, it'll be abnormally warm. If that happens then we’ll pick that back up but we’re not counting on it. So therefore, that’s the basis for our guidance. Kyle O’Meara - Robert W. Baird: Thanks. And you've kind of called out your expectations for the new pool and irrigation construction kind of going forward in 2010 - 2011. Could you kind of talk about what you guys are expecting in the major refurbish, repair. Do you expect that to be a similar drag or could we actually see some growth in those end markets in 2010?

In terms of the underpinnings of our guidance on the pool side of our business, the blue side of our business, we are expecting new construction to be relatively flat year-on-year. On the green side, we see some ongoing drag in terms of new construction. They tend to lag about, on the green side about six to twelve months, the blue side. So therefore, we see some drag there and some modest decreases for the year. In terms of the replacement, refurbishment side, we are looking at flat to modestly up. The flat is more built in to our dollar type number. The modestly up is factored into the higher end of the range. Kyle O’Meara - Robert W. Baird: And are you still expecting a 1% to 2% drag from pricing?

No. We expect no pricing benefit this year. There was a fair amount of inflation in 2008 and going into 2009. As manufacturers sought to recover a number of the cost increases they incurred in '07 and through '08. And there was no such -- with weak economic contraction and everything else, prices have been, raw material prices and all the rest inputs from manufacturers have remained pretty well intact. So therefore, there are some price adjustments positive and negatives across the board, but net-net is virtually flat.

Thank you. Our next question comes from the line of Anthony Lebiedzinski with Sidoti & Company. Please proceed with your question Anthony Lebiedzinski - Sidoti & Company: Couple of questions, when you guys gave your guidance in October, were you factoring these non-cash charges and also foreign currency swings as well?

No, we were not. Anthony Lebiedzinski - Sidoti & Company: And also just to clarify, I think I heard you say that you expect for the first half of this year for sales and margins to be down, so we should think about a re-pack [ph] and loaded recovery?

Yes, certainly the first quarter, I would anticipate it being down particularly given the first six weeks of the year, and the weather conditions, part of the first quarter. In terms of the second quarter, I would guess is going to be speculative at this point, it'll be pretty close to a wash vis-à-vis last year, modestly up, very modestly down, and then, but certainly by the third quarter, we expect that you should have positive comps. Anthony Lebiedzinski - Sidoti & Company: And what gives you confidence that you can actually have positive base business sales?

When we look at all the underlying dynamics where we look at pool permits being pooled in the larger markets and where those are trending at this juncture versus where they were last year, at the same timeframe, and the fact that they are flattening out, when new construction is flattening out and that's certainly the most discretionary component to demand. That I think speaks volumes about the opportunity for flattening recovery. Anthony Lebiedzinski - Sidoti & Company: And also can you tell us in 2009, how much were your maintenance and repair sales up?

In terms of certain product categories for example, chemical sales were up 6%, part sales were up I believe close to 3%. And those are the two largest categories; in fact, those two categories represent almost, collectively almost one third of our sales and SCP/Superior channels. Anthony Lebiedzinski - Sidoti & Company: Okay, and my last question, what are you estimating as far as impact of higher fuel prices now versus last year on your business?

We are really not looking at higher fuel prices in any significant way. That could certainly affect our freight cost net by $1 million to $2 million on one end of the spectrum or the other, but we're not looking at $4 gas prices like we experienced in 2008.

Thank you. Our next question comes from the line of David Mann with Johnson Rice. Please proceed with your question. David Mann - Johnson Rice & Company : Manny, can you talk about in terms of the irrigation business, what was the extent of the operating loss in 2009? How much did that change from '08 and how are you looking to reduce that drag as I think you talked about in the past in 2010?

The impact in terms of change in EBIT or EBITDA from the green business was north of $12 million from 2008 to 2009, as that business, the sales in that business was down over 30%, not only for the quarter but also for the year. And in terms of industry checks that we’ve done there with major manufacturers, that is pretty much along the lines of what the industry is down overall. So we’re not alone in that respect. We have and we did take very aggressive actions during the course of the year. In fact, in most cases, doing that ahead of many of our competitors. So our cost in that business were down $13 million, operating costs were down $13 million year-on-year as we began to take actions in late 2008. And then, during the course of 2009, we also end that side of the business, adjusted our inventories and net-net provided record cash flows overall, but unfortunately we did have a $12 plus million hit from EBIT standpoint year-on-year. David Mann - Johnson Rice & Company : The level of the loss in 09, and how do you look to improve it in 2010?

Some of the loss – I can’t remember the exact number here, but let’s say its north of $5 million dollars. And we have, there are certain expenses and actions we took, again, from starting in 2008 through 2009, which will result in about $5 million reduced expense base for 2009 -- excuse me, for 2010 from the 2009 levels. So that will mitigate to some degree further market, adverse market conditions that we anticipate in the first part of 2010. Again, as I mentioned earlier, we expect and have seen over time that tends to lag the blue side of our business by about 6 to 12 months. So, we are anticipating an moderating of that segment a little later in the year and again we are also looking to take market share and improve our execution as well and like we do everywhere throughout the company. So as that happens, we expect to bring that business back to a breakeven type level for 2010. David Mann - Johnson Rice & Company : Okay. In the past few quarters, you have given us an update on a market by market performance and base business sales, can you give us that again for Florida, California, Texas and Arizona?

Yeah, I don’t have those numbers with me right now, David. But I will tell you that they are basically largely intact in terms of the trends. I think there were no significant changes as weighed and incorporated in my prepared comments. But really nothing significant; they are just very similar to the third quarter.

Thank you. Our next question comes from the line of Mark Rupe with Longbow Research. Please proceed with your question.

Hi, good morning. This is Leah Villalobos [ph] in for Mark. I was wondering if you could talk a little bit more about how long consumers are able to defer replacement purchases and we have this, are you expecting some of the replacement purchases from 2009 to come back this year or they continue to defer this year?

That’s a very good question, Leah, and that varies all over the place depending on the nature of what's needed. In some cases, take a pump, for example, there is really virtually no discretion. If a pump breaks, you have to replace it, if not you have a problem very shortly thereafter. Same thing can be said about filter. There are other items whether it be the pool finish needing re-plaster and retiled, heater and certain controls that can be deferred and really it’s anyone's guess. We estimate from an industry standpoint that replacement activity was down about 30% in 2009 from the 2008 levels. So therefore, at some point we're going to get that back. I don’t necessarily see that happening in a major way in 2010. I do see a flat environment versus 2009 where some level of recovery until such time as consumer confidence, unemployment, some of those factors begin to bolster consumer confidence and they have the willingness to spend to do those kind of things. These are not major extraordinary expenses in terms of requiring financing and things of that nature but they do involve taking amount of some money set aside for a rainy day, that type of perspective and being utilized. And again, I think in the current environment until people see through the other side, we won’t see a mass recovery.

Okay, that's helpful. And then just a quick follow up on GPS, I know you consolidated, I think you said four locations, and when you did the acquisition, I think the run rate was about $40 million in sales. Should we still be looking at that same incremental amount?

Yes, with the caveat being that some of those sales, we are realizing in the near fourth quarter. So I cannot remember the exact number, but the actual net incremental for 2010 would be in the low to mid 30’s

Thank you. Our next question comes from the line of Brent Rakers with Morgan Keegan. Please proceed with your question. Brent Rakers – Morgan Keegan: Maybe first, Manny, just a clarification on the green business. You are talking about getting that business back to breakeven for the full year 2010? Is that a target?

Yes. Brent Rakers – Morgan Keegan: And then I guess, looking at that on the base guidance, in order to get to kind of the starting points you are using, doesn't that then imply the low end of the pool business is going to weaken year-over-year at the low end of the guidance range?

That implies basically that two things, A, that the recovery isn’t that all existent and therefore, we don’t get to breakeven because of continuing weakness on the green side. And then also on the blue side of our business that there is basically adverse weather conditions persist for a little while longer. If you think about it another way instead of using the low end or the high end, take the mid point, right, and that’s kind of like our normalized basis. And then, we have kind of fledge [ph] factor on either side. Brent Rakers – Morgan Keegan: Okay. Fair enough. Then, if I could, maybe if Mark could provide a little bit more currency commentary. I can obviously see the amount in, I guess, in the other expense line, but you also mentioned kind of an offsetting negative impact of currency embedded in the other portion of the result. I am assuming, Mark, in SG&A that maybe you can explain that in a little more in detail?

Brent, it really just translating foreign currency sales and earnings back into dollars. So, obviously, our foreign operations, primarily in Europe, transact business in euros and we had a loss on the translation of those earnings back into US dollars, that's in our US dollar statements. That doesn't happen kind of in one transaction, it happens through just the translation of financial statements versus the gain that we recorded, that was on the transfer of cash that was at a different base rate than what we transferred it into. Brent Rakers – Morgan Keegan: And then approximately how much of Pool's total business now on the revenue side is international whether it be Canada or Europe?

Approximately 12% Brent Rakers – Morgan Keegan: 12%, okay. And then just a couple of other questions on the SG&A, you referenced health care cost and specifically kind of called them out as a problem in the fourth quarter, maybe you can address that? And then I guess on the other side, maybe address bad debt expense on a year-over-year or even on a sequentially basis for Q4 as well?

Yeah, health care as I mentioned, we experienced in 2009 what I call a higher number of large claims and we look at large claims as claims over $10,000 in a month and there was a greater number of those, which I think, was more of a anomaly in 2009. And in the fourth quarter in particular, our cost were up year-over-year there, was about a $1.5 million for the quarter. So I don’t expect that to recur in 2010 and I think we've also made some changes in our plans, which I think will help us going into 2010 in the future. Brent Rakers – Morgan Keegan: Okay. And then on the bad debt expense in the quarter, was it close to zero approximately in the fourth quarter?

In terms of the amount that we recorded? Brent Rakers – Morgan Keegan: Yes.

It wasn’t zero but it was down significantly. The year-over-year change was significant because we had a big up tick in bad debt reserves in the fourth quarter of 2008. So the impact of that in the quarter on a year-over-year basis was a pretty good positive for us, $2 million, $3 million, but that was really offset by a reserve change in management incentives 2008 versus 2009.So net-net, those two things offset each other. Brent Rakers – Morgan Keegan: Just one more question I think. Mark, last time you talked and I think you actually gave the year impact of payroll year-over-year. Could you give us a sense, I know there's obviously a lot of seasonality but maybe what the payroll did sequentially Q3 to Q4?

Well, payroll sequentially, if you just look at payroll itself, salary expense was down, similar, a little bit less than what we've seen earlier in the year, let’s call it 8% or so, 7% - 8%. Brent Rakers – Morgan Keegan: And that's a year-over-year in Q4 right?

That's year-over-year.

Thank you. (Operator's Instructions). Our next question comes from the line of Jeff Germanotta with William Blair. Please proceed with your question. Jeffery Germanotta - William Blair & Company: In the year past, you've done several small acquisitions. Can you first talk to us about the strategy there? And then secondly, as it translates to SG&A expense, the base business is down about $3.5 million year-over-year, that’s mitigated to some degree by recent acquisitions. Is there more expense reduction in the acquisitions to come and how should we think about what part of SG&A expense reductions been permanent versus what we should expect in terms of variable cost recovery going forward?

Jeff, you are testing my memory with the question. Jeffrey Germanotta - William Blair & Company: Let’s start with the strategy on the acquisitions first.

First, on the acquisitions, as many of you know, we look at each individual market and look at our position in those markets. And then, look at how we can enter and participate in all the medium to larger markets. And look at that versus we open up our own locations and we’ve opened up over hundred locations over the course of time. Or whether we enter those markets vis-à-vis an acquisition. And those are constantly evaluated alternatives and we continue to do that today. There is a pecking order in terms of priorities that we update on a regular basis, in terms of markets and how we enter those markets or enhance our position in those markets. And that applies to whether we are looking at a regional distributor or at a local distributor to serve that objective. And that continues on an ongoing basis. There is almost inevitability dialog going on with one, two or three, four different people at any point in time. And that continues. So that strategy as well as for example are opening in markets where we had no presence before. That also continues and we continue to do both. And in fact, in 2010, we have opened one location in a new market for us, and which is Wichita, Kansas. We are also looking to open in a second market, which is new, which is Guadalajara, Mexico. So we continue to do these things on a very, very focused by market by market basis. And from an acquisition standpoint, we have run the gamut in terms of evaluating the company, what that company brings to the table and what we believe we can do with it, since we are looking at an acquisition as a starting point not as an endpoint. In fact,…

Sure, great, okay. Generally speaking, its about 50-50.There are a number of things, whether it be process improvements, efficiencies, that we've put in place over the past 2-3 years in this current market environment that should stay intact permanent. So when you look at our business and when you look at the fact that we've reduced our cost by approximately $40 million on a base business level from year to year, from ‘08 to 09, and from a base business level by approximately $20 million from 2007 to 2008, that's $60 million. About half of that will remain intact, period, going forward. The other half will come back in two forms. It'll come back, and certainly the variable piece, that would come back from a service to the customer standpoint, whether it be additional trucks with additional drivers, additional warehouse workers, things of that nature. So that's one variable piece. And hopefully as the market recovers, as our earnings recover, also the incentive side of compensation would also recover as well. So those pieces will come back and that's about half of the total that we've cut back over the last 2-3 years.

Thank you. Our next question comes from the line of David Mann with Johnson Rice, please proceed with your question. David Rice - Johnson Rice & Company: Manny, can you talk a little bit about some of the gross margin initiatives such as the private label expansion and how that will impact 2010?

That continues to be, David, a great opportunity for us. That continues to evolve and we continue to evaluate products, and not only with private label where we use our own Pool Corp brands but also, we have exclusives to certain products, whether it'd be certain geography or national or throughout our system basis. And those tend to be a growing share of our business. In fact, Craig Hubbard was doing some work on capturing updated data there for us. But that continues to grow and that’s been a big part, again both Pool Corp branded products, as well as the exclusives, in helping us gradually increase our gross margins over time. We have a long ways to go there. But we, it’s important for us as I mentioned in previous calls to do that in a very judicious fashion, because there are two things that we are vary weary off. First and foremost, we never want to upset the customer. We want to make sure that from a customer's perspective, the products are equal to or better than what they are buying before. And therefore, and that includes not only the quality of the product, but also having all the logistics and everything in place to make sure that doesn’t in anyway adversely impair our ability to serve the customers from a service stand point, having the stock in the right place at the right time. And the second factor is also we are very cognizant of existing vendor partner relationships and making sure that we are not disruptive in that sense. And in a number of cases, we are working hand-in-hand with existing vendor partners to develop some of those products to enable us to provide some distinction in terms of our offering vis-à-vis the competition. David Rice - Johnson Rice & Company: And to clarify how margins should progress in 2010, is it going to be similar to what you said on the base business, revenues in terms of perhaps some pressure in the first quarter, flattish second quarter, improving in the back half?

Just to refresh everyone's memory, at the end of 2008, there was a fair amount of inflationary price increases that many factors put forth. We bought into those increases and that helped us garner very significant, contributed to our garnering significant gross margins improvements in the, particularly the quarter of 2009, in a market environment where there is essentially net zero price increase net-net. In that kind of environment, the opportunity to buy in is negated and therefore those buy-in benefits that we garnered in the first quarter of last year are not being -- won't be there this year. Independent of that, we do see ongoing improvement, but from a financial reporting standpoint, you would see gross margins softer in the first quarter and then modestly improving as we progress during the year. David Rice - Johnson Rice & Company: One last question, obviously, you have got really solid cash flow to support the dividend, but I am curious on your thoughts on the dividend outlook or any changes there given sort of that payout ratio covenant that you have in your debt?

We at this juncture don't anticipate any change to our dividend rate, but that's something that the board looks at, at least once a year. But given the current environment, given where we are given our pay, given our dividend rate as it’s related to our stock price and our earnings, I would anticipate that our dividend rate in terms of $0.13 per quarter, $0.52 per year will remain intact.

Thank you, ladies and gentlemen. At this time, we have no time for further questions. I'd like to turn the floor back to management for closing comments.

Thank you all for listening to our fourth quarter and full year 2009 results conference call. Our next call is scheduled for Thursday, April 22nd 2010, when we will discuss our first quarter results. Thank you again and have a great day.

Ladies and gentlemen, this concludes today's teleconference and you may disconnect your lines at this time. Thank you for your participation.