View Filing Data

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2011	Dec. 31, 2010
CURRENT ASSETS:
Cash and cash equivalents	$ 43,692	$ 86,346
Accounts receivable, less allowance for doubtful accounts of $4,766 and $5,096, respectively	259,769	233,893
Other receivables	9,598	6,682
Income tax receivable	11,478	9,544
Inventories	9,742	9,365
Prepaid expenses and other	24,602	30,470
Costs and estimated earnings in excess of billings	29,121	26,648
Total current assets	388,002	402,948
PROPERTY AND EQUIPMENT, NET	40,475	43,620
GOODWILL	93,640	147,818
IDENTIFIABLE INTANGIBLE ASSETS, NET	36,099	39,616
OTHER NONCURRENT ASSETS	7,430	6,018
Total assets	565,646	640,020
CURRENT LIABILITIES:
Current maturities of long-term debt	300	300
Current maturities of notes to former owners	510	967
Accounts payable	101,421	101,134
Accrued compensation and benefits	36,805	42,577
Billings in excess of costs and estimated earnings	62,218	63,422
Accrued self-insurance expense	30,799	28,994
Other current liabilities	23,699	30,816
Total current liabilities	255,752	268,210
LONG-TERM DEBT, NET OF CURRENT MATURITIES	2,400	2,700
NOTES TO FORMER OWNERS, NET OF CURRENT MATURITIES	24,969	25,969
DEFERRED INCOME TAX LIABILITIES	11,599	18,871
OTHER LONG-TERM LIABILITIES	6,278	11,486
Total liabilities	300,998	327,236
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par, 5,000,000 shares authorized, none issued and outstanding
Common stock, $.01 par, 102,969,912 shares authorized, 41,123,365 and 41,123,365 shares issued, respectively	411	411
Treasury stock, at cost, 3,626,473 and 3,221,775 shares, respectively	(38,642)	(34,714)
Additional paid-in capital	324,617	326,467
Retained earnings (deficit)	(21,738)	20,620
Total stockholders' equity	264,648	312,784
Total liabilities and stockholders' equity	$ 565,646	$ 640,020

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2011	Dec. 31, 2010
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 4,766	$ 5,096
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	102,969,912	102,969,912
Common stock, shares issued	41,123,365	41,123,365
Treasury stock, shares	3,626,473	3,221,775

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
REVENUE	$ 328,113	$ 307,648	$ 922,320	$ 793,711
COST OF SERVICES	279,005	257,339	791,493	661,929
Gross profit	49,108	50,309	130,827	131,782
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	41,493	41,885	126,043	114,905
GOODWILL IMPAIRMENT	55,134		55,134	4,446
GAIN ON SALE OF ASSETS	(58)	(29)	(162)	(502)
Operating income (loss)	(47,461)	8,453	(50,188)	12,933
OTHER INCOME (EXPENSE):
Interest income	16	39	65	183
Interest expense	(478)	(832)	(1,431)	(1,406)
Changes in the fair value of contingent earn-out obligations	5,077	650	5,566	650
Other	(16)	19	(68)	25
Other income (expense)	4,599	(124)	4,132	(548)
INCOME (LOSS) BEFORE INCOME TAXES	(42,862)	8,329	(46,056)	12,385
INCOME TAX EXPENSE (BENEFIT)	(6,293)	2,919	(7,479)	4,164
INCOME (LOSS) FROM CONTINUING OPERATIONS	(36,569)	5,410	(38,577)	8,221
GAIN (LOSS) ON DISPOSITION OF DISCONTINUED OPERATION, NET OF INCOME TAX EXPENSE OF $_, $195, $_ AND $166		(39)		723
NET INCOME (LOSS)	$ (36,569)	$ 5,371	$ (38,577)	$ 8,944
Basic-
Income (loss) from continuing operations (in dollars per share)	$ (0.98)	$ 0.14	$ (1.03)	$ 0.22
Gain on disposition of discontinued operation (in dollars per share)				0.02
Net income (loss) (in dollars per share)	(0.98)	0.14	(1.03)	0.24
Diluted-
Income (loss) from continuing operations (in dollars per share)	(0.98)	0.14	(1.03)	0.22
Gain on disposition of discontinued operation (in dollars per share)				0.02
Net income (loss) (in dollars per share)	$ (0.98)	$ 0.14	$ (1.03)	$ 0.24
SHARES USED IN COMPUTING INCOME PER SHARE:
Basic (in shares)	37,325	37,560	37,496	37,564
Diluted (in shares)	37,325	37,794	37,496	37,821
DIVIDENDS PER SHARE (in dollars per share)	$ 0.050	$ 0.050	$ 0.150	$ 0.150

CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
CONSOLIDATED STATEMENTS OF OPERATIONS
GAIN (LOSS) ON DISPOSITION OF DISCONTINUED OPERATION, INCOME TAX EXPENSE	$ 0	$ 195	$ 0	$ 166

- Definition

Tax expense or benefit on the gain (loss), not previously recognized and resulting from the sale of a business component, which is recognized at the date of sale. A gain (loss) reflects the amount by which the consideration received exceeds (is exceeded by) the net carrying amount (reflecting previous provisions for loss on disposal, if any) of the disposal group.

+ References + Details

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Comprehensive Income (Loss)	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings (Deficit)
BALANCE at Dec. 31, 2009	$ 305,984		$ 411	$ (33,810)	$ 326,103	$ (181)	$ 13,461
BALANCE (in shares) at Dec. 31, 2009			41,123,365	(3,129,460)
Comprehensive income (loss):
Net income (loss)	14,740	$ 14,740					14,740
Realized gain on marketable securities reclassified into earnings, net of tax	181	181				$ 181
Comprehensive income		14,921
Issuance of Stock:
Issuance of shares for options exercised including tax benefit	1,107			$ 1,982	(875)
Issuance of shares for options exercised including tax benefit (in shares)				183,686
Issuance of restricted stock	250			$ 2,864	(2,614)
Issuance of restricted stock (in shares)				235,122
Shares received in lieu of tax withholding payment on vested restricted stock	(616)			$ (616)
Shares received in lieu of tax withholding payment on vested restricted stock (in shares)				(50,575)
Tax benefit from vesting of restricted stock	106				106
Forfeiture of unvested restricted stock				$ (60)	60
Forfeiture of unvested restricted stock (in shares)				(5,610)
Stock-based compensation expense	3,687				3,687
Dividends	(7,581)						(7,581)
Share repurchase	(5,074)			$ (5,074)
Share repurchase (in shares)				(454,938)
BALANCE at Dec. 31, 2010	312,784		$ 411	$ (34,714)	326,467		20,620
BALANCE (in shares) at Dec. 31, 2010			41,123,365	(3,221,775)
Comprehensive income (loss):
Net income (loss)	(38,577)	$ (38,577)					(38,577)
Issuance of Stock:
Issuance of shares for options exercised including tax benefit	371			$ 559	(188)
Issuance of shares for options exercised including tax benefit (in shares)				51,950
Issuance of restricted stock				$ 2,488	(2,488)
Issuance of restricted stock (in shares)				230,702
Shares received in lieu of tax withholding payment on vested restricted stock	(654)			$ (654)
Shares received in lieu of tax withholding payment on vested restricted stock (in shares)				(49,911)
Tax benefit from vesting of restricted stock	54				54
Stock-based compensation expense	2,672				2,672
Dividends	(5,681)				(1,900)		(3,781)
Share repurchase	(6,321)			$ (6,321)
Share repurchase (in shares)				(637,439)
BALANCE at Sep. 30, 2011	$ 264,648		$ 411	$ (38,642)	$ 324,617		$ (21,738)
BALANCE (in shares) at Sep. 30, 2011			41,123,365	(3,626,473)

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (36,569)	$ 5,371	$ (38,577)	$ 8,944
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities-
Loss (gain) on disposition of discontinued operation		39		(723)
Write-off of debt financing costs		181		181
Amortization of identifiable intangible assets	1,722	1,877	5,080	4,023
Depreciation expense	2,974	2,925	9,148	7,859
Goodwill impairment	55,134		55,134	4,446
Bad debt expense	(202)	578	509	701
Deferred tax benefit	(4,939)	(1,484)	(6,255)	(4,750)
Amortization of debt financing costs	56	48	168	102
Gain on sale of assets	(58)	(29)	(162)	(502)
Changes in the fair value of contingent earn-out obligations	(5,077)	(650)	(5,566)	(650)
Stock-based compensation expense	340	517	2,672	2,591
(Increase) decrease in-
Receivables, net	(3,226)	(19,814)	(25,781)	(21,483)
Inventories	320	230	(199)	762
Prepaid expenses and other current assets	(4,172)	(6,777)	(1,969)	(4,448)
Costs and estimated earnings in excess of billings	(2,698)	5,875	(2,473)	4,254
Other noncurrent assets	3,049	(747)	726	(1,079)
Increase (decrease) in-
Accounts payable and accrued liabilities	(5,622)	11,656	(13,468)	(4,634)
Billings in excess of costs and estimated earnings	660	3,385	(1,204)	(2,988)
Taxes paid related to pre-acquisition equity transactions of an acquired company		(7,056)		(7,056)
Other long-term liabilities	(214)	103	252	(21)
Net cash provided by (used in) operating activities	1,478	(3,772)	(21,965)	(14,471)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(2,548)	(2,021)	(6,452)	(4,103)
Proceeds from sales of property and equipment	230	11	611	1,229
Proceeds from businesses sold	39	203	117	1,467
Sale of marketable securities		1,000	2,000	2,925
Cash paid for acquisitions, earn-outs and intangible assets, net of cash acquired	(288)	(38,358)	(2,609)	(41,935)
Net cash used in investing activities	(2,567)	(39,165)	(6,333)	(40,417)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on revolving line of credit	0		0
Payments on other long-term debt	(300)	(16,382)	(1,589)	(17,299)
Debt financing costs	(550)	(911)	(550)	(911)
Payments of dividends to shareholders	(1,864)	(1,881)	(5,667)	(5,652)
Share repurchase program	(2,609)	(851)	(6,321)	(4,504)
Shares received in lieu of tax withholding		(10)	(654)	(619)
Excess tax benefit of stock-based compensation	2	15	206	447
Proceeds from exercise of options	1	16	219	237
Net cash used in financing activities	(5,320)	(20,004)	(14,356)	(28,301)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(6,409)	(62,941)	(42,654)	(83,189)
CASH AND CASH EQUIVALENTS, beginning of period-continuing and discontinued operations	50,101	107,602	86,346	127,850
CASH AND CASH EQUIVALENTS, end of period-continuing and discontinued operations	$ 43,692	$ 44,661	$ 43,692	$ 44,661

Business and Organization

9 Months Ended

Sep. 30, 2011

Business and Organization

Business and Organization

1. Business and Organization

Comfort Systems USA, Inc., a Delaware corporation, provides comprehensive heating, ventilation and air conditioning ("HVAC") installation, maintenance, repair and replacement services within the mechanical services industry. We operate primarily in the commercial, industrial and institutional HVAC markets and perform most of our services within office buildings, retail centers, apartment complexes, manufacturing plants and healthcare, education and government facilities. In addition to standard HVAC services, we provide specialized applications such as building automation control systems, fire protection, process cooling, electronic monitoring and process piping. Certain locations also perform related activities such as electrical service and plumbing. Approximately 42% of our consolidated 2011 revenue is attributable to installation of systems in newly constructed facilities, with the remaining 58% attributable to maintenance, repair and replacement services. The following service activities account for our consolidated 2011 revenue: HVAC 74%, plumbing 16%, building automation control systems 4% and other 6%. These service activities are within the mechanical services industry which is the single industry segment we serve.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2011

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

These interim statements should be read in conjunction with the historical Consolidated Financial Statements and related notes of Comfort Systems included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission ("SEC") for the year ended December 31, 2010 (the "Form 10-K").

The accompanying unaudited consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X of the SEC. Accordingly, these financial statements do not include all the footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the Form 10-K. We believe all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal and recurring nature. The results of operations for interim periods are not necessarily indicative of the results for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities, revenue and expenses and disclosures regarding contingent assets and liabilities. Actual results could differ from those estimates. The most significant estimates used in our financial statements affect revenue and cost recognition for construction contracts, the allowance for doubtful accounts, self-insurance accruals, deferred tax assets, warranty accruals, fair value accounting for acquisitions and the quantification of fair value for reporting units in connection with our goodwill impairment testing.

Cash Flow Information

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Cash paid (in thousands) for:

		Three Months Ended September 30,				Nine Months Ended September 30,

		2011		2010		2011		2010
Interest		$	388	$	308	$	1,198	$	720
Income taxes for continuing operations			118		655		1,116		2,308

	Total	$	506	$	963	$	2,314	$	3,028

Income Taxes

We are subject to income tax in the United States and Puerto Rico and we file a consolidated return for federal income tax purposes. Income taxes are provided for under the liability method, which takes into account differences between financial statement treatment and tax treatment of certain transactions.

Deferred income taxes are based on the difference between the financial reporting and tax basis of assets and liabilities. The deferred income tax provision represents the change during the reporting period in the deferred tax assets and deferred tax liabilities, net of the effect of acquisitions and dispositions. Deferred tax assets include tax loss and credit carry-forwards and are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

We regularly evaluate valuation allowances established for deferred tax assets for which future realization is uncertain. We perform this evaluation each quarter. Estimations of required valuation allowances include estimates of future taxable income. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the activity underlying these assets becomes deductible. We consider projected future taxable income and tax planning strategies in making this assessment. If actual future taxable income is less than the estimates, we may not realize all or a portion of the recorded deferred tax assets.

Significant judgment is required in assessing the timing and amounts of deductible and taxable items. We establish reserves when, despite our belief that our tax return positions are fully supportable, we believe that certain positions may be challenged and potentially disallowed. When facts and circumstances change, we adjust these reserves through our provision for income taxes.

To the extent interest and penalties may be assessed by taxing authorities on any underpayment of income tax, such amounts have been accrued and are classified as a component of income tax expense in our consolidated statements of operations.

For the nine months ended September 30, 2011 our tax benefit is $7,479 with an effective tax rate of 16.2% as compared to tax expense of $4,164 with an effective tax rate of 33.6% for the nine months ended September 30, 2010. The effective tax rate in the current year was lower than the federal statutory rate primarily due to the impact of a permanent difference related to the portion of the goodwill impairment charge that is not deductible for tax purposes and an increase in valuation allowances related to certain state net operating loss carryforwards. This was partially offset by permanent differences generated by acquisition related fair value adjustments. The effective tax rate in 2010 was lower than the federal statutory rate due to the release of certain valuation allowances during the second quarter of 2010. Tax reserves are analyzed and adjusted quarterly as events occur to warrant such changes. Adjustments to tax reserves are a component of the effective tax rate.

Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, other receivables, accounts payable, notes to former owners and a revolving credit facility. We believe that the carrying values of these instruments on the accompanying balance sheets approximate their fair values.

Segment Disclosure

Our activities are within the mechanical services industry which is the single industry segment we serve. Each operating subsidiary represents an operating segment and these segments have been aggregated, as the operating units meet all of the aggregation criteria.

Reclassifications

Certain reclassifications have been made in prior period financial statements to conform to current period presentation. These reclassifications are of a normal and recurring nature and have not resulted in any changes to previously reported net income for any periods.

Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Fair Value Measurements

Fair Value Measurements

3. Fair Value Measurements

We classify and disclose assets and liabilities carried at fair value in one of the following three categories:

•

Level 1—quoted prices in active markets for identical assets and liabilities;

•

Level 2—observable market based inputs or unobservable inputs that are corroborated by market data; and

•

Level 3—significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following table summarizes the fair values and levels within the fair value hierarchy in which the fair value measurements fall for assets and liabilities measured on a recurring basis as of September 30, 2011 (in thousands):

			Fair Value Measurements at Reporting Date Using

	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	43,692	$	43,692	$	—	$	—
Contingent earn-out obligations	$	1,900	$	—	$	—	$	1,900

Cash and cash equivalents consist primarily of highly rated money market funds at a variety of well-known institutions with original maturities of three months or less. The original cost of these assets approximates fair value due to their short term maturity.

As of December 31, 2010, our marketable securities consisted of $2.0 million of auction rate securities, which are variable rate debt instruments, having long-term maturities (with final maturities up to June 2032). We sold the entire $2.0 million of these auction rate securities (Level 2) during the first quarter of 2011 at face value.

The valuation of the Company's contingent earn-out obligations is determined using a probability weighted discounted cash flow method. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreements (e.g., minimum and maximum payments, length of earn-out periods, manner of calculating any amounts due, etc.) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows and a discount rate. The contingent earn-out obligations are measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings.

The table below presents a reconciliation of the fair value of our contingent earn-out obligations that use significant unobservable inputs (Level 3).


Balance at beginning of year		$	7,466
	Issuances		—
	Settlements		—
	Adjustments to fair value		(5,566	)

Balance at end of period		$	1,900

We measure certain assets at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. During the nine months ended September 30, 2011, we recorded a goodwill impairment charge of $55.1 million as discussed in Note 5 "Goodwill and Identifiable Intangible Assets, Net". We did not recognize any other impairments on those assets required to be measured at fair value on a nonrecurring basis.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
-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 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
-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 FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
-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 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
-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 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
-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 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
-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 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 17-22, 27, 28
-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 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258

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-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13537-108611

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-SubTopic 10
-Section 50
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612

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-Topic 825
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13433-108611

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

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-Topic 825
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+ Details

Acquisitions

9 Months Ended

Sep. 30, 2011

Acquisitions

Acquisitions

4. Acquisitions

Acquisition of ColonialWebb

On July 28, 2010, we entered into a stock purchase agreement to purchase all of the issued and outstanding stock of ColonialWebb Contractors Company ("ColonialWebb"). ColonialWebb operates as a comprehensive, single-source construction, service, manufacturing and refrigeration service firm servicing the Mid-Atlantic region. ColonialWebb is headquartered in Richmond, Virginia with seven other locations. The acquisition date fair value of consideration transferred was $110.3 million, of which $49.9 million was allocated to goodwill. See Note 5 "Goodwill and Identifiable Intangible Assets, Net" for discussion of the goodwill impairment of ColonialWebb recorded during the third quarter of 2011.

Other Acquisitions

We completed one acquisition in the first quarter and one in the third quarter of 2011. There were two acquisitions for the nine months ending September 30, 2010. These acquisitions were not material, individually or in the aggregate, and were "tucked-in" with existing operations. Our consolidated balance sheet includes preliminary allocations of the purchase price to the assets acquired and liabilities assumed based on estimates of fair value, pending completion of final valuation and purchase price adjustments. The results of operations of acquisitions are included in our consolidated financial statements from their respective acquisition dates. Additional contingent purchase price ("earn-out") has been or will be paid if certain acquisitions achieve predetermined profitability targets.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 88-16
-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.

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-Publisher FASB
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-Number 141
-Paragraph 51, 52
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-Paragraph F4
-Subparagraph e

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+ Details

Goodwill and Identifiable Intangible Assets, Net

9 Months Ended

Sep. 30, 2011

Goodwill and Identifiable Intangible Assets, Net

Goodwill and Identifiable Intangible Assets, Net

5. Goodwill and Identifiable Intangible Assets, Net

Goodwill

The changes in the carrying amount of goodwill are as follows (in thousands):

	September 30, 2011			December 31, 2010

Balance at beginning of year	$	147,818		$	100,194
Additions		956			53,358
Impairment adjustment		(55,134	)		(5,734	)

Balance at end of period	$	93,640		$	147,818

During the third quarter of 2011 and prior to our annual impairment testing on October 1, we concluded that impairment indicators existed at four reporting units serving the Virginia, Maryland and North Carolina markets, including ColonialWebb, based upon year to date results and recent forecasts. Significant declines in year to date revenues and operating margins through the summer months when the demand for new installation and replacement services is generally higher caused us to revise our expectations in our financial models for these reporting units.

We performed a step one goodwill impairment test for these four reporting units and concluded that the carrying value exceeded the fair value for each of the units tested. Therefore, we commenced the required second step of the assessment for these four reporting units in which the implied fair value of the goodwill is compared to the book value of the goodwill. There is a significant amount of work required to perform the second step of the impairment assessment and that work has not been completed as of the date of filing these financial statements. Our preliminary assessment is that the book value of each of the reporting units' goodwill exceeded the implied fair value. These reporting units had a total goodwill balance of $75.7 million. Our best estimate of the impairment is a $55.1 million non-cash goodwill impairment charge which we recorded during the third quarter of 2011. Any adjustments to this estimated goodwill impairment charge will be recognized in the fourth quarter of 2011.

There were no changes in our methodologies for valuing goodwill during the current year. The fair value of each reporting unit was estimated using a discounted cash flow model combined with market valuation approaches. We assigned a weighting of 50% to the discounted cash flow analysis, 50% to the public company approach and 0% to the transaction approach due to the lack of comparable market data. The material assumptions used for the income approach included a weighted average cost of capital of 13% and a long-term growth rate of 2-3%.

Under the income approach which is weighted 50%, a one percentage point increase in the discount rate and a one percentage point decrease in the long-term growth rate would have decreased the fair value of each of these reporting units ranging from $0.1 million to $1.8 million. Under the public company market approach which has a weighting of 50%, a 10% decrease in the market approach multiples would have decreased the fair value of each of these reporting units by $0.2 million to $2.5 million.

There are significant inherent uncertainties and management judgment involved in estimating the fair value of each reporting unit. While we believe we have made reasonable estimates and assumptions to estimate the fair value of our reporting units, it is possible that a material change could occur. If actual results are not consistent with our current estimates and assumptions, or the current economic downturn worsens or the projected recovery is significantly delayed beyond our projections, goodwill impairment charges may be recorded in future periods.

During 2010, we recorded a goodwill impairment charge of $4.4 million during the second quarter and an impairment charge for $1.3 million in the fourth quarter. Based on market activity declines and write-downs incurred on several jobs, we determined that the operating environment, conditions and performance at our operating location based in Delaware could no longer support the related goodwill balance.

Identifiable Intangible Assets, Net

Identifiable intangible assets consist of the following (dollars in thousands):

			September 30, 2011					December 31, 2010

		Estimated Useful Lives in Years	Gross Book Value		Accumulated Amortization			Gross Book Value		Accumulated Amortization
Customer relationships		2 - 15	$	27,451	$	(8,695	)	$	25,948	$	(5,378	)
Backlog		1 - 2		4,790		(4,639	)		4,740		(4,253	)
Noncompete agreements		2 - 7		3,500		(2,190	)		3,490		(1,710	)
Tradenames		2 - 25		19,570		(3,688	)		19,570		(2,791	)

	Total		$	55,311	$	(19,212	)	$	53,748	$	(14,132	)

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Long-Term Debt Obligations

9 Months Ended

Sep. 30, 2011

Long-Term Debt Obligations

Long-Term Debt Obligations

6. Long-Term Debt Obligations

Long-term debt obligations consist of the following (in thousands):

		September 30, 2011			December 31, 2010

Revolving credit facility		$	—		$	—
Other debt			2,700			3,000
Notes to former owners			25,479			26,936

	Total debt		28,179			29,936
	Less—current portion		(810	)		(1,267	)

	Total long-term portion of debt	$	27,369		$	28,669

Revolving Credit Facility

On September 23, 2011, we amended our $125.0 million senior credit facility (the "Facility") provided by a syndicate of banks. The Facility, which is available for borrowings and letters of credit, now expires in September 2016 and is secured by the capital stock of our current and future subsidiaries. As of September 30, 2011, we had no outstanding borrowings, $42.7 million in letters of credit outstanding, and $82.3 million of credit available.

There are two interest rate options for borrowings under the Facility, the Base Rate Loan Option and the Eurodollar Rate Loan Option. These rates are floating rates determined by the broad financial markets, meaning they can and do move up and down from time to time. Additional margins are then added to these two rates.

The following is a summary of the additional margins:

	Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA

	Less than 0.75			0.75 to 1.25			1.25 to 2.00			2.00 to 2.50			2.50 or greater
Additional Per Annum Interest Margin Added Under:
Base Rate Loan Option		0.75	%		1.00	%		1.25	%		1.50	%		1.75	%
Eurodollar Rate Loan Option		1.75	%		2.00	%		2.25	%		2.50	%		2.75	%

We estimate that the interest rate applicable to the borrowings under the Facility would be approximately 2.3% as of September 30, 2011.

We have used letters of credit to guarantee performance under our contracts and to ensure payment to our subcontractors and vendors under those contracts. Our lenders issue such letters of credit through the Facility for a fee. We have never had a claim made against a letter of credit that resulted in payments by a lender or by us and believe such claims are unlikely in the foreseeable future. The letter of credit fees range from 1.30% to 2.10% per annum, based on the ratio of Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA, as defined in the credit agreement.

Commitment fees are payable on the portion of the revolving loan capacity not in use for borrowings or letters of credit at any given time. These fees range from 0.25% to 0.50% per annum, based on the ratio of Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA, as defined in the credit agreement.

The Facility contains financial covenants defining various financial measures and the levels of these measures with which we must comply. Covenant compliance is assessed as of each quarter end. Credit Facility Adjusted EBITDA is defined under the Facility for financial covenant purposes as net earnings for the four quarters ending as of any given quarterly covenant compliance measurement date, plus the corresponding amounts for (a) interest expense; (b) income taxes; (c) depreciation and amortization; (d) other non-cash charges and (e) pre-acquisition results of acquired companies.

The following is a reconciliation of Credit Facility Adjusted EBITDA to net income (in thousands):


Net loss	$	(32,781	)
Interest expense, net		1,649
Income taxes—continuing operations		(5,283	)
Depreciation and amortization expense		19,788
Stock compensation expense		3,768
Goodwill impairment		56,422
Pre-acquisition results of acquired companies, as defined in the credit agreement		—

Credit Facility Adjusted EBITDA	$	43,563

The Facility's principal financial covenants include:

Leverage Ratio—The Facility requires that the ratio of our Consolidated Total Indebtedness to our Credit Facility Adjusted EBITDA not exceed 3.00 through December 31, 2013, 2.75 through June 30, 2014 and 2.50 through maturity. The leverage ratio as of September 30, 2011 was 0.65.

Fixed Charge Coverage Ratio—The Facility requires that the ratio of Credit Facility Adjusted EBITDA, less non-financed capital expenditures, tax provision, dividends and amounts used to repurchase stock to the sum of interest expense and scheduled principal payments of indebtedness be at least 2.00; provided that the calculation of the fixed charge coverage ratio excludes stock repurchases and the payment of dividends at any time that the Company's Net Leverage Ratio does not exceed 2.0 through December 31, 2013, 1.5 through June 30, 2014 and 1.0 through maturity. Capital expenditures, tax provision, dividends and stock repurchase payments are defined under the Facility for purposes of this covenant to be amounts for the four quarters ending as of any given quarterly covenant compliance measurement date. The fixed charge coverage ratio as of September 30, 2011 was 12.95.

Other Restrictions—The Facility permits acquisitions of up to $15.0 million per transaction, provided that the aggregate purchase price of such an acquisition and of acquisitions in the preceding 12 month period does not exceed $30.0 million. However, these limitations only apply when the Company's Net Leverage Ratio is equal to or greater than 2.0.

While the Facility's financial covenants do not specifically govern capacity under the Facility, if our debt level under the Facility at a quarter-end covenant compliance measurement date were to cause us to violate the Facility's leverage ratio covenant, our borrowing capacity under the Facility and the favorable terms that we currently have could be negatively impacted by the lenders.

We are in compliance with all of our financial covenants as of September 30, 2011.

Notes to Former Owners

We issued subordinated notes to the former owners of acquired companies as part of the consideration used to acquire these companies. These notes had an outstanding balance of $25.5 million as of September 30, 2011, of which $0.5 million is current, and bear interest, payable annually, at a weighted average interest rate of 3.3%.

Other Debt

In conjunction with our acquisition of ColonialWebb, we acquired long-term debt related to an industrial revenue bond associated with its office building and warehouse. The outstanding balance as of September 30, 2011 was $2.7 million, of which $0.3 million is current. The weighted average interest rate on this variable rate debt as of September 30, 2011 was approximately 0.5%.

- 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 + Details

Commitments and Contingencies

9 Months Ended

Sep. 30, 2011

Commitments and Contingencies

Commitments and Contingencies

7. Commitments and Contingencies

Claims and Lawsuits

We are subject to certain legal and regulatory claims, including lawsuits arising in the normal course of business. We maintain various insurance coverages to minimize financial risk associated with these claims. We have estimated and provided accruals for probable losses and related legal fees associated with certain litigation in the accompanying consolidated financial statements. While we cannot predict the outcome of these proceedings, in management's opinion and based on reports of counsel, any liability arising from these matters individually and in the aggregate will not have a material effect on our operating results or financial condition, after giving effect to provisions already recorded.

In addition to the matters described above, we had accrued $7.1 million as of June 30, 2011 for potential and asserted backcharges from several customers of our large multi-family operation based in Texas. During the third quarter of 2011, the Company reached an agreement related to certain backcharges, and this resulted in a $4.8 million payment and a $0.2 million recovery in the third quarter of 2011. The additions and reductions to the accrual are included in "Cost of Services."

The following summarizes the backcharge activity during the nine months ended September 30, 2011 (in thousands):


Balance at December 31, 2010		$	6,489
	Additions		600
	Cash payments, net of recovery		(4,593	)
	Non-cash reduction		(2,496	)

Balance at September 30, 2011		$	—

Surety

Many customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a financial institution known as a surety. If we fail to perform under the terms of a contract or to pay subcontractors and vendors who provided goods or services under a contract, the customer may demand that the surety make payments or provide services under the bond. We must reimburse the surety for any expenses or outlays it incurs. To date, we are not aware of any losses to our sureties in connection with bonds the sureties have posted on our behalf, and do not expect such losses to be incurred in the foreseeable future.

Surety market conditions remain challenging as a result of significant losses incurred by many sureties in recent periods, both in the construction industry as well as in certain larger corporate bankruptcies. As a result, less bonding capacity is available in the market and terms have become more restrictive. Further, under standard terms in the surety market, sureties issue bonds on a project-by-project basis, and can decline to issue bonds at any time. Historically, approximately 25% to 35% of our business has required bonds. While we have strong surety relationships to support our bonding needs, current market conditions as well as changes in the sureties' assessment of our operating and financial risk could cause the sureties to decline to issue bonds for our work. If that were to occur, the alternatives include doing more business that does not require bonds, posting other forms of collateral for project performance such as letters of credit or cash, and seeking bonding capacity from other sureties. We would likely also encounter concerns from customers, suppliers and other market participants as to our creditworthiness. While we believe our general operating and financial characteristics, including a significant amount of cash on our balance sheet, would enable us to ultimately respond effectively to an interruption in the availability of bonding capacity, such an interruption would likely cause our revenue and profits to decline in the near term.

Self-Insurance

We are substantially self-insured for workers' compensation, employer's liability, auto liability, general liability and employee group health claims, in view of the relatively high per-incident deductibles we absorb under our insurance arrangements for these risks. Losses up to deductible amounts are estimated and accrued based upon known facts, historical trends and industry averages. Loss estimates associated with the larger and longer-developing risks, such as workers' compensation, auto liability and general liability, are reviewed by a third-party actuary quarterly.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-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 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-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
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-Name Accounting Standards Codification
-Topic 210
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-Paragraph 1
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+ Details

Stockholders' Equity

9 Months Ended

Sep. 30, 2011

Stockholders' Equity

Stockholders' Equity

8. Stockholders' Equity

Earnings Per Share

Basic earnings per share ("EPS") is computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted EPS is computed considering the dilutive effect of stock options and contingently issuable restricted stock.

The effect of 0.1 million and 0.2 million of common stock equivalents have been excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2011, respectively, due to our net loss position in these periods. Assuming dilution, there were approximately 0.8 million and 0.7 million anti-dilutive stock options excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2011, respectively. There were approximately 0.7 million and 0.5 million of anti-dilutive stock options that were excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2010, respectively.

The following table reconciles the number of shares outstanding with the number of shares used in computing basic and diluted earnings per share for each of the periods presented (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,

	2011		2010		2011		2010
Common shares outstanding, end of period(a)		37,134		37,491		37,134		37,491
Effect of using weighted average common shares outstanding		191		69		362		73

Shares used in computing earnings per share—basic		37,325		37,560		37,496		37,564
Effect of shares issuable under stock option plans based on the treasury stock method		—		234		—		257
Effect of contingently issuable restricted stock		—		—		—		—

Shares used in computing earnings per share—diluted		37,325		37,794		37,496		37,821

(a): Excludes 0.4 million and 0.4 million shares of unvested contingently issuable restricted stock outstanding as of September 30, 2011 and 2010, respectively.

Share Repurchase Program

On March 29, 2007, our Board of Directors (the "Board") approved a stock repurchase program to acquire up to one million shares of our outstanding common stock. As of September 30, 2011, the Board approved extensions of the program to acquire up to 5.6 million shares.

The share repurchases will be made from time to time at our discretion in the open market or privately negotiated transactions as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. The Board may modify, suspend, extend or terminate the program at any time. We repurchased 0.6 million shares during the nine months ended September 30, 2011 at an average price of $9.92 per share. Since the inception of the program in 2007 and as of September 30, 2011, we have repurchased a cumulative total of 5.5 million shares at an average price of $11.00 per share.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

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+ Details

Subsequent Events

9 Months Ended

Sep. 30, 2011

Subsequent Events

Subsequent Events

9. Subsequent Events

In October 2011, the Company entered into an agreement to settle a legal matter. This settlement will result in the Company recognizing a gain of approximately $1.0 million in the fourth quarter of 2011. The cash settlement was received in October 2011.

On November 2, 2011, we acquired a 60% majority interest in Environmental Air Systems ("EAS"), headquartered in Greensboro, North Carolina. EAS had 2010 revenue of approximately $67.8 million and pre-tax income of approximately $1.9 million. The purchase price was approximately $30.0 million in cash. Further, the agreement includes a working capital adjustment based upon the balance sheet as of the acquisition date, as well as contingent consideration based upon future earnings.

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2011	Oct. 31, 2011
Document and Entity Information
Entity Registrant Name	COMFORT SYSTEMS USA INC
Entity Central Index Key	0001035983
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		37,455,699
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3