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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

OR

FOR THE TRANSITION PERIOD FROM              TO             .

COMMISSION FILE NO.: 0-26640

SCP POOL CORPORATION

(Exact name of Registrant as specified in its charter)

985-892-5521

(Registrant’s telephone number, including area code)

(former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)    YES  x    NO  ¨

At October 22, 2004, there were 52,157,956 outstanding shares of the registrant’s common stock, $.001 par value per share.

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SCP POOL CORPORATION

Form 10-Q

For the Quarter Ended September 30, 2004

INDEX

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SCP POOL CORPORATION

Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets

Note: The balance sheet at December 31, 2003 has been derived from the audited financial statements at that date.

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

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Consolidated Statements of Income

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

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Condensed Consolidated Statements of Cash Flows

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

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Notes to Consolidated Financial Statements (Unaudited)

1. Basis of Presentation

SCP Pool Corporation (the Company, which may be referred to as we, us or our) prepared the consolidated financial statements following accounting principles generally accepted in the United States (GAAP) for interim financial information and the requirements of the Securities and Exchange Commission (SEC). As permitted under those rules, certain footnotes or other financial information required by GAAP for complete financial statements have been condensed or omitted. In management’s opinion, the financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our financial position and operating results. The results for the three- and nine-month periods ended September 30, 2004 are not necessarily indicative of the results to be expected for the twelve months ended December 31, 2004.

You should also read the financial statements and notes included in our 2003 Annual Report on Form 10-K. The accounting policies used in preparing these financial statements are the same as those described in our Annual Report.

2. Earnings Per Share

We calculate basic earnings per share (EPS) by dividing net income by the weighted average number of common shares outstanding. Diluted EPS includes the dilutive effects of stock awards.

Also, see Note 5 for a discussion of a stock split during the current quarter.

3. Stock-Based Compensation

We account for our employee stock options under the intrinsic value method described by Accounting Principles Bulletin 25, Accounting for Stock Issued to Employees. Accordingly, we do not record compensation expense for options issued with an exercise price equal to the stock’s market price on the grant date. If we had accounted for our employee stock options using the fair value method described in Statement of Financial Accounting Standards 123, Accounting for Stock-Based Compensation, our net income and earnings per share would have been reduced to the pro-forma amounts below (in thousands, except per share data):

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Notes to Consolidated Financial Statements (Unaudited) (continued)

4. Comprehensive Income

Comprehensive income consists of net income and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income. In our case, these consist of foreign currency translation gains and losses and unrealized gains and losses on cash flow hedges, net of related income tax effects.

Comprehensive income for the quarter was $22.5 million at September 30, 2004 and $18.4 million at September 30, 2003. For the nine month period, comprehensive income was $70.2 million at September 30, 2004 and $54.4 million at September 30, 2003.

5. Stock Split

In August, our Board of Directors declared a three-for-two stock split of our common stock, which was paid in the form of a stock dividend on September 10, 2004 to the stockholders of record at the close of business on August 23, 2004. Accordingly, all share and per share data and the related capital amounts for all periods presented reflect the effects of this split.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with Management’s Discussion and Analysis included in our 2003 Annual Report on Form 10-K.

Overview

Based on industry knowledge, management believes that we are the world’s largest wholesale distributor of swimming pool supplies and related equipment. We purchase products from a large number of manufacturers and then distribute these goods to a customer base consisting of swimming pool remodelers and builders, retail swimming pool stores and swimming pool repair and service companies.

We distribute more than 91,000 products through 198 service centers in North America and Europe. Approximately 95% of our net sales are domestic. We operate two networks: the SCP Distributors network (SCP), which consists of 141 locations, and the Superior Pool Products network (SPP), which consists of 57 locations. We adopted this strategy to offer our customers a choice of different distributors, each featuring distinctive product selections and supplier relationships, and to encourage continued improvements in customer service through healthy competition between the two networks.

We expect to continue to expand our networks with new service center openings and via opportunistic acquisitions, although at a slower rate than in the past.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview (continued)

We expect that sales from complementary products will be approximately 8% of our total sales in 2004 and will continue to grow at a faster rate than our overall business for the next several years. Over this period, we believe that complementary products as a percentage of our total sales could increase by approximately 2% per year as a percent of net sales. Complementary products may account for over 20% of our net sales over the long term.

For the balance of 2004 and for 2005, we expect our suppliers to increase prices on petroleum and steel-based products and we anticipate being able to recover these increases through higher selling prices. We further expect that industry supply constraints experienced in certain raw materials in early and mid 2004, primarily steel and cement, will not have a material adverse impact on our business operations or results.

We invest significant resources to promote the growth of the swimming pool industry. Our marketing philosophy incorporates a focus on increasing consumer awareness of the benefits and merits of pool ownership and the affordability and ease of maintaining a pool.

Our business is highly seasonal. We experience the majority of our sales, profitability and cash inflows during the peak swimming months in North America, primarily late spring through early fall. This peak period may be extended or shortened by weather trends affecting regional markets. During off-season periods, especially November through January, our profitability declines and we may experience operating losses.

Our business is subject to significant risks, including weather, competition, general economic conditions and other risks detailed below in our “Cautionary Statement for Purpose of the ‘Safe Harbor’ Provisions of the Private Securities Litigation Reform Act of 1995”.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The following table presents information derived from the Consolidated Statements of Income expressed as a percentage of net sales.

We calculate base business growth by excluding the following service centers from the calculation for 15 months:

Additionally, we allocate overhead expenses to the base business by considering base business net sales as a percentage of total net sales.

For purposes of comparing operating results for the three and nine month periods ended September 30, 2004 to the comparative periods ended September 30, 2003, 193 service centers were included in the base business calculations, and 5 service centers were excluded because they were acquired within the last 15 months.

The effect of service center acquisitions and consolidations in the tables below includes the operations of the following:

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations (continued)

Three Months Ended September 30, 2004 Compared to Three Months Ended September 30, 2003

Net Sales

Base business growth of 5% contributed $15.9 million to the increase in net sales in the third quarter of 2004, while acquired service centers accounted for the remaining increase. Base business net sales increased primarily due to the following:

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations (continued)

Gross Profit

Base business gross profit growth of 11% contributed $9.7 million to the increase, while acquired service centers accounted for the remaining increase. The base business gross profit growth is primarily due to the growth in base business net sales as discussed above and the growth in our gross profit margins.

Base business gross margin improved to 28.8% in the third quarter of 2004 from 27.2% in the third quarter of 2003 primarily due to improved selling and supply chain management practices, including an increase in vendor negotiated price concessions projected to be earned by the Company by year-end.

Going forward, we expect to continue to increase our focus on supply chain management, including expansion of international sourcing and private labeling opportunities, particularly where margin expansion opportunities exist.

Operating Expenses

Operating expenses relating to the base business contributed $4.1 million to the increase in the third quarter of 2004, while acquired service centers accounted for the remaining increase. The increase in base business operating expenses is primarily related to the activities necessary to support the growth in base business sales.

Base business operating expenses as a percentage of net sales increased slightly to 18.2% in the third quarter of 2004 from 17.9% in the third quarter of 2003. Total operating expenses as a percentage of net sales increased to 18.6% in the third quarter of 2004 from 18.0% in the third quarter of 2003 primarily due to an $0.8 million increase in incentive compensation, a $1.3 million adjustment for leased facilities having contractual periodic step-lease escalation provisions and higher operating expense ratios of new and acquired service centers added since the third quarter of 2003.

Interest Expense

Interest expense decreased slightly to $0.9 million in the third quarter of 2004 from $1.1 million in the third quarter of 2003. Although average debt outstanding of $124.3 million was 6% higher in the third quarter of 2004 and the effective interest rate increased to 2.5% in the third quarter of 2004 from 2.3% in the comparable 2003 period, amortization expense related to capitalized finance costs were lower in the 2004 period by $0.2 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations (continued)

Income Taxes

Income taxes increased to $14.1 million in the third quarter of 2004 from $11.8 million in the third quarter of 2003. The increase in income taxes is due to the $5.9 million increase in income before income taxes from the third quarter of 2003 to the third quarter of 2004. Our effective income tax rate remained unchanged at 39% at September 30, 2003 and September 30, 2004.

Nine Months Ended September 30, 2004 Compared to Nine Months Ended September 30, 2003

Net Sales

Base business growth of 10% contributed $97.1 million to the increase in net sales in the first nine months of 2004, while acquired service centers and service centers consolidated with acquired locations accounted for the remaining increase. Base business net sales increased primarily due to the following:

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations (continued)

Gross Profit

Base business gross profit growth of 15% contributed $39.4 million to the increase in the first nine months of 2004, while acquired service centers and service centers consolidated with acquired locations accounted for the remaining increase. The base business gross profit growth is primarily due to the growth in base business net sales as discussed above.

Base business gross margin increased to 28.7% in the first nine months of 2004 from 27.4% in the comparable 2003 period primarily due to improved selling and supply chain management practices.

Operating Expenses

Operating expenses relating to the base business contributed $15.5 million to the increase in the first nine months of 2004 in order to support increased sales activity, while acquired service centers and service centers consolidated with acquired locations accounted for the remaining increase.

Base business operating expenses as a percentage of net sales decreased slightly to 17.5% in the first nine months of 2004 from 17.6% in the first nine months of 2003.

Interest Expense

Interest expense decreased to $3.0 million in the first nine months of 2004 from $3.7 million in the comparable 2003 period as a result of lower average outstanding debt in the first nine months of 2004 compared to the first nine months of 2003 and a decline in the effective interest rate to 2.4% in 2004 from 2.6% in 2003.

Income Taxes

Income taxes increased to $44.6 million in the first nine months of 2004 from $34.4 million in the comparable 2003 period. The increase in income taxes is due to the $26.0 million increase in income before income taxes in the first nine months of 2004 compared to the first nine months of 2003. Our effective income tax rate remained unchanged at 39% at September 30, 2003 and September 30, 2004.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Seasonality and Quarterly Fluctuations

Our business is highly seasonal, and weather is the principal external factor affecting our business. The table below presents some of the possible effects resulting from various weather conditions.

In general, sales and operating income are highest during the second and third quarters, which represent the peak months of swimming pool use and installation. Sales are substantially lower during the first and fourth quarters when we may incur net losses.

We typically experience a build-up of product inventories and accounts payable during the winter months in anticipation of our peak selling season. Excluding borrowings to finance acquisitions and share repurchases, our peak borrowing usually occurs during the second quarter, primarily because extended payment terms offered by our suppliers are typically payable in April, May and June, while our peak accounts receivable collections typically occur in June, July and August.

We expect that our quarterly operating results will continue to fluctuate depending on the timing and amount of revenue contributed by new and acquired service centers. We attempt to open new service centers at the end of the fourth quarter or the first quarter of the subsequent year to take advantage of preseason sales programs and the following peak selling season.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Seasonality and Quarterly Fluctuations (continued)

The following table presents certain unaudited quarterly data for the first, second and third quarters of 2004 and the four quarters of 2003. In our opinion, this information reflects all normal and recurring adjustments considered necessary for a fair presentation of this data. Due to the seasonal nature of the swimming pool industry, the results of any one or more quarters are not necessarily an accurate indication of results for an entire fiscal year or of continuing trends.

Liquidity and Capital Resources

Liquidity is defined as the ability to generate adequate amounts of cash to meet current cash needs. We assess our liquidity in terms of our ability to generate cash to fund our operating activities, taking into consideration the seasonal nature of our business. Significant factors which could affect our liquidity include the following:

Our primary capital needs are seasonal working capital obligations and other general corporate purposes, including acquisitions, share repurchases and dividend payments. Our primary sources of working capital are cash from operations supplemented by bank borrowings. Borrowings, together with cash from operations and seller financing, historically have been sufficient to support our growth and finance acquisitions. Our priorities for the use of cash are as follows:

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources (continued)

Our credit agreement, which matures on November 27, 2004, allows us to borrow under a revolving line of credit (the Revolving Credit Facility). In the first quarter of 2004, we decreased our borrowing capacity under the Revolving Credit Facility to $110.0 million from $130.0 million to reduce unused commitment fees. In July 2004, we further decreased our borrowing capacity under the Revolving Credit Facility to $90.0 million.

During the nine months ended September 30, 2004, we made net payments of $14.4 million on the Revolving Credit Facility. At September 30, 2004, there was $24.5 million outstanding and $62.2 million available for borrowing under the Revolving Credit Facility, subject to borrowing base availability supported primarily by product inventories and to a lesser extent by trade accounts receivable. In early November 2004, we expect to replace our existing Revolving Credit Facility with a new facility with terms and conditions similar to or more favorable than our existing facility.

The average effective interest rate of the Revolving Credit Facility was approximately 3.0% for the nine months ended September 30, 2004. Interest on borrowings under the Revolving Credit Facility is paid at either of the following rates, in each case depending on our leverage ratio:

Excluding trade receivables secured under our accounts receivable securitization facility (the Receivables Facility) as discussed below, substantially all of our assets, including capital stock of our wholly-owned subsidiaries, secure our obligations under our existing Revolving Credit Facility. The Revolving Credit Facility has numerous restrictive covenants, which require that we maintain a minimum net worth and fixed charge coverage. As of September 30, 2004, we were in compliance with all covenants and financial ratio requirements.

In the first quarter of 2004, we renewed the Receivables Facility, which has a seasonal borrowing capacity up to $100.0 million, through March 2005. The Receivables Facility provides for the true sale of certain of our receivables as they are created to a wholly-owned, bankruptcy-remote subsidiary. This subsidiary grants an undivided security interest in the receivables to an unrelated commercial paper conduit. Because of the structure of the bankruptcy-remote subsidiary and our ability to control its activities, we include the transferred receivables and related debt in our consolidated balance sheet. We employed this arrangement because it provides us with a lower cost form of financing. At September 30, 2004, there was $69.8 million outstanding under the Receivables Facility at an average effective interest rate of 1.8%.

Cash provided by operations was $30.9 million in the first nine months of 2004 compared to $58.2 million in the same period in 2003. The decrease in cash provided by operations in the first nine months of 2004 is the result of 1) an increase in inventory acquired in advance of anticipated price increases, 2) a reduction in outstanding accounts payable attributable to a more aggressive payment attitude and the capture of vendor provided terms discounts, and 3) a swing in cash flow benefit realized in the prior year related to inventory from consolidated branches, offset by a $15.8 million increase in net income.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources (continued)

We believe we have adequate availability of capital to fund present operations and anticipated growth, including expansion in existing and targeted market areas. We continually evaluate potential acquisitions and hold discussions with acquisition candidates. If suitable acquisition opportunities or working capital needs arise that would require additional financing, we believe that our financial position and earnings history provide a solid base for obtaining additional financing resources at competitive rates and terms. Additionally, we may issue common or preferred stock to raise funds.

Accounts Receivable and the Allowance for Doubtful Accounts

Due to the seasonal nature of our business, accounts receivable increased $46.6 million to $130.4 million at September 30, 2004 from $83.8 million at December 31, 2003.

Accounts receivable increased $12.5 million, or 11%, to $130.4 million at September 30, 2004 from $117.9 million at September 30, 2003. This increase is consistent with the 14% increase in net sales between periods.

The allowance for doubtful accounts decreased to $3.6 million at September 30, 2004 from $3.8 million at December 31, 2003. The allowance represented 77% of the accounts receivable greater than 60 days past due in September 2004 compared to 54% in December 2003. Our allowance typically increases throughout the year because we accrue for doubtful accounts as a percentage of net sales. The majority of write-offs typically occur in the fourth quarter when the pool season has ended.

The allowance for doubtful accounts decreased to $3.6 million at September 30, 2004 from $4.3 million at September 30, 2003. The allowance as a percentage of accounts receivable greater than 60 days past due decreased to 77% in September 2004 compared to 79% in September 2003.

Product Inventories and the Reserve for Shrink and Obsolescence

Due to the seasonal nature of our business, product inventories decreased $26.9 million to $167.0 million at September 30, 2004 from $193.9 million at December 31, 2003. Inventory increased $25.3 million, or 18%, to $167.0 million at September 30, 2004 compared to $141.7 million at September 30, 2003 due to $6 million in inventories acquired in connection with our acquisition of the Litehouse distribution division in October 2003, an increase in inventory purchases ahead of anticipated vendor price increases and additional inventory acquired to support a 14% increase in net sales between periods.

The inventory reserve increased to $3.7 million at September 30, 2004 from $3.1 million at December 31, 2003. Our inventory reserve typically increases throughout the year as we accrue for inventory shrink. The shrink reserve is then adjusted after the physical inventory count in the fourth quarter.

The inventory reserve decreased to $3.7 million at September 30, 2004 compared to $4.5 million at September 30, 2003 and reflects improvement in our overall inventory. Our fastest moving classes of inventory (classes 1-3) in North America increased to 65.9% of total inventory in September 2004 compared to 63.7% of total inventory in September 2003.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Share Repurchase Program

In the third quarter of 2004, we repurchased 189,000 shares of our common stock at an average price of $26.49 per share. From October 1, 2004 to October 22, 2004, we repurchased 670,722 shares of our common stock at an average price of $26.23 per share.

On October 22, 2004, approximately $27.4 million of the amount authorized by our Board of Directors for future share repurchases remained available. We intend to continue to repurchase shares on the open market from time to time, depending on market conditions.

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Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995