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Debt | 12 Months Ended
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Dec. 31, 2011
Debt [Abstract] |
Debt | Note 5 - Debt The components of our debt for the past two years were as follows (in thousands):
|  |  | December 31, |
|  |  | 2011 |  |  | 2010 |
Long-term debt: |  |  |  |  |  |
| Revolving Credit Facility, variable rate (described below) | $ | 147,300 |  | $ | 98,700 |
| Floating Rate Senior Notes (described below) |  | 100,000 |  |  | 100,000 |
Total debt | $ | 247,300 |  | $ | 198,700 |
Revolving Credit Facility On October 19, 2011, we entered into a new $430.0 million unsecured syndicated senior credit facility (the Credit Facility), along with our wholly owned subsidiaries SCP Distributors Canada Inc., as the Canadian Borrower, and SCP Pool B.V., as the Dutch Borrower. The Credit Facility provides us with an increased borrowing capacity under a five-year revolving credit facility that matures on October 19, 2016. The Credit Facility includes sublimits for the issuance of swingline loans and standby letters of credit. Pursuant to an accordion feature, the aggregate maximum principal amount of the commitments under the Credit Facility may be increased at our request and with agreement by the lenders by up to $75.0 million, to a total of $505.0 million. The Credit Facility replaced our amended and restated unsecured senior credit facility (the Previous Credit Facility) dated December 20, 2007, which provided for $240.0 million in borrowing capacity through a five-year revolving credit facility (the Previous Revolver) that was scheduled to mature on December 20, 2012. Our obligations under the Credit Facility are guaranteed by substantially all of our existing and future direct and indirect domestic subsidiaries. The Credit Facility contains terms and provisions (including representations, covenants and conditions) and events of default customary for transactions of this type. If we default under the Credit Facility, the lenders may terminate their obligations under the Credit Facility and may require us to repay all amounts. At December 31, 2011, there was $147.3 million outstanding and $280.0 available for borrowing under the Credit Facility. The weighted average effective interest rate for the Credit Facility as of December 31, 2011 was approximately 2.2%, excluding commitment fees. Revolving borrowings under the Credit Facility bear interest, at our option, at either of the following and in each case plus an applicable margin:
a. | a base rate, which is the highest of (i) the Wells Fargo Bank, National Association prime rate, (ii) the Federal Funds Rate plus 0.500% and (iii) the LIBOR Market Index Rate plus 1.000%; or
b. | the London Interbank Offered Rate (LIBOR).
Borrowings by the Canadian Borrower bear interest, at the Canadian Borrower’s option, at either of the following and in each case plus an applicable margin:
a. | a base rate, which is the greatest of (i) the Canadian Reference Bank prime rate, (ii) the annual rate of interest equal to the sum of the CDOR Rate plus 1.000% and (iii) the LIBOR Market Index Rate plus 1.000%; or
b. | LIBOR.
Borrowings by the Dutch Borrower bear interest at LIBOR plus an applicable margin. The interest rate margins on the borrowings and letters of credit are based on our leverage ratio and will range from 1.225% to 1.900% on LIBOR and swingline loans, and from 0.225% to 0.900% on Base Rate and Canadian Base Rate loans. Borrowings under the swingline loans are based on the LIBOR Market Index Rate plus any applicable margin. We are also required to pay an annual facility fee ranging from 0.150% to 0.350%, depending on our leverage ratio. Based on our intention to repay the Floating Rate Senior Notes using the increased capacity under the Credit Facility, we reclassified the $100.0 million balance from the Current portion of long-term debt and other long-term liabilities to Long-term debt as of September 30, 2011. We also plan to use the Credit Facility for general corporate purposes and to fund future growth initiatives. Floating Rate Senior Notes On February 12, 2007, we issued and sold $100.0 million aggregate principal amount of Floating Rate Senior Notes (the Notes) in a private placement offering pursuant to a Note Purchase Agreement. The Notes are due February 12, 2012 and accrue interest on the unpaid principal balance at a floating rate equal to a spread of 0.600% over three-month LIBOR, as adjusted from time to time. The Notes have scheduled quarterly interest payments that are due on February 12, May 12, August 12 and November 12 of each year. The Notes are unsecured and are guaranteed by each domestic subsidiary that is or becomes a borrower or guarantor under the Credit Facility. In the event we have a change of control, the holders of the Notes will have the right to put the Notes back to us at par. The weighted average effective interest rate on the Notes was approximately 3.3% for the year ended December 31, 2011. See discussion of our interest rate swaps below. Interest Rate Swaps As of December 31, 2011, we had three interest rate swap agreements to reduce our exposure to fluctuations in interest rates on the Credit Facility. Two of these swap agreements convert the variable interest rate to a fixed rate of 1.185% on notional amounts of $25.0 million. These swap agreements were effective on November 21, 2011 and terminate on October 19, 2016. The third swap agreement converts the variable interest rate to a fixed rate of 1.100% on a notional amount of $50.0 million. This swap agreement was effective on December 21, 2011 and terminates on October 19, 2016. We have not recognized any gains or losses on these swaps and there has been no effect on income from hedge ineffectiveness. We had two previous interest rate swap agreements in effect that reduced our exposure to fluctuations in interest rates on the Notes and the Previous Revolver. One interest rate swap agreement converted the variable interest rate on the Notes to a fixed rate of 5.088% on a notional amount of $50.0 million. This swap agreement was effective February 12, 2007 and was scheduled to terminate on February 12, 2012. Our other interest rate swap agreement converted the variable interest rate on the Previous Revolver to a fixed rate of 1.725% on a notional amount of $50.0 million. This swap agreement was effective January 27, 2010 and was scheduled to terminate on January 27, 2012. We de-designated this interest rate swap when we replaced the Previous Revolver in October 2011. In December 2011, we terminated both of these interest rate swaps and realized a loss of $0.3 million. The net difference between interest paid and interest received related to our swap agreements resulted in incremental interest expense of $3.6 million in 2011 and $4.0 million in 2010. The table below presents the estimated fair value of our swap agreements (in thousands):
|  | Unrealized Losses at December 31, |
Balance Sheet Line Item |  | 2011 |  |  | 2010 |
Accrued expenses and other current liabilities | $ | (420 | ) | $ | (3,349 | )
Failure of our swap counterparties would result in the loss of any potential benefit to us under our swap agreements. 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. Financial and Other Covenants Financial covenants on the Credit Facility and the Notes are closely aligned and include a minimum fixed charge coverage ratio and maintenance of a maximum average total leverage ratio, which are our most restrictive covenants. The Credit Facility also limits the declaration and payment of dividends on our common stock to no more than 50% of the preceding year’s Net Income (as defined in the Credit Facility), provided no default or event of default has occurred and is continuing, or would result from the payment of dividends. Further, dividends must be declared and paid in a manner consistent with our past practice. Under the Credit Facility, we may repurchase shares of our common stock provided no default or event of default has occurred and is continuing, or would result from the repurchase of shares, and our maximum average total leverage ratio (determined on a pro forma basis) is less than 2.50 to 1.00. Other covenants include restrictions on our ability to grant liens, incur indebtedness, make investments, merge or consolidate, and sell or transfer assets. Failure to comply with any of our financial covenants or any other terms of the Credit Facility could result in penalty payments, higher interest rates on our borrowings or the acceleration of the maturities of our outstanding debt. As of December 31, 2011, we were in compliance with all covenants and financial ratio requirements related to the Credit Facility and the Notes. Deferred Financing Costs We capitalize financing costs we incur related to implementing and amending our debt arrangements. We record these costs as Other assets on our Consolidated Balance Sheets and amortize them over the contractual life of the related debt arrangements. The changes in deferred financing costs are as follows (in thousands):
| 2011 |  | 2010 |
Deferred financing costs: |  |  |  |  |  |
Balance at beginning of year | $ | 2,172 |  | $ | 2,027 |
Financing costs deferred |  | 1,674 |  |  | 145 |
Write-off fully amortized deferred financing costs |  | (395 | ) |  | — |
Balance at end of year |  | 3,451 |  |  | 2,172 |
Accumulated amortization of deferred financing costs: |  |  |  |  |  |
Balance at beginning of year |  | (1,652 | ) |  | (1,160 | )
Amortization of deferred financing costs |  | (324 | ) |  | (492 | )
Write-off fully amortized deferred financing costs |  | 395 |  |  | — |
Balance at end of year |  | (1,581 | ) |  | (1,652 | )
Deferred financing costs, net of accumulated amortization | $ | 1,870 |  | $ | 520 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 + Details
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