1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 11-K --------------------- [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________ COMMISSION FILE NUMBER 1-13011 A. Full title of the Plan and address of the Plan, if different from that of the issuer named below: COMFORT SYSTEMS, USA, INC. 401(K) PLAN 777 POST OAK BLVD., SUITE 500 HOUSTON, TX 77056 B. Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office: COMFORT SYSTEMS, USA, INC. 777 POST OAK BLVD., SUITE 500 HOUSTON, TX 77056 ================================================================================ 2 COMFORT SYSTEMS USA, INC. 401(k) PLAN INDEX Report of Independent Public Accountants Statements of Net Assets Available for Plan Benefits as of December 31, 2000 and 1999 Statement of Changes in Net Assets Available for Plan Benefits for the Year Ended December 31, 2000 Notes to Financial Statements as of December 31, 2000 and 1999 Schedule I--Schedule of Assets (Held at End of Year) as of December 31, 2000 Schedule II--Schedule of Nonexempt Transactions for the Year Ended December 31, 2000 3 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Plan Administrator of the Comfort Systems USA, Inc. 401(k) Plan: We have audited the accompanying statements of net assets available for plan benefits of the Comfort Systems USA, Inc. 401(k) Plan as of December 31, 2000 and 1999, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 2000. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 2000 and 1999, and the changes in net assets available for plan benefits for the year ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets (held at end of year) as of December 31, 2000, and nonexempt transactions for the year ended December 31, 2000, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Houston, Texas June 15, 2001 4 COMFORT SYSTEMS USA, INC. 401(k) PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AS OF DECEMBER 31, 2000 AND 1999 The accompanying notes are an integral part of these financial statements.
2000 1999 ------------ ------------ ASSETS: Investments, at fair value $ 66,809,230 $ 44,730,229 Employer contributions receivable 1,236,644 1,101,843 Employee contributions receivable 867,428 583,354 Cash (noninterest-bearing) 38,591 -- ------------ ------------ NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 68,951,893 $ 46,415,426 ============ ============ 5 COMFORT SYSTEMS USA, INC. 401(k) PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE YEAR ENDED DECEMBER 31, 2000 The accompanying notes are an integral part of this financial statement.
CONTRIBUTIONS: Employer $ 3,308,582 Employee 8,157,282 Rollovers 744,078 INVESTMENT INCOME: Interest and dividends 657,112 Net depreciation in fair value of investments (5,268,138) TRANSFER OF ASSETS DUE TO MERGERS (Note 3) 18,806,932 ------------ Total receipts 26,405,848 BENEFIT PAYMENTS 3,843,130 ADMINISTRATIVE EXPENSES 26,251 ------------ Total disbursements 3,869,381 ------------ NET INCREASE 22,536,467 NET ASSETS AVAILABLE FOR PLAN BENEFITS: Beginning of year 46,415,426 ------------ End of year $ 68,951,893 ============ 6 COMFORT SYSTEMS USA, INC. 401(k) PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 1. GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: General The Comfort Systems USA, Inc. 401(k) Plan (the Plan) is a defined contribution plan and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and is qualified under the provisions of the Internal Revenue Code of 1986, as amended (the IRC). The Plan was adopted October 1, 1998, for the exclusive benefit of eligible employees of Comfort Systems USA, Inc., and adopting subsidiaries (collectively, the Company). Basis of Presentation The accompanying financial statements of the Plan have been prepared on the accrual basis of accounting. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to use estimates and assumptions that affect the accompanying financial statements and disclosures. Actual results could differ from those estimates. Expenses Expenses related to the administration of the Plan shall be paid from the Plan unless paid by the Company. For the year ended December 31, 2000, the Company paid for substantially all Plan expenses. Investment Valuation and Gains (Losses) on Investments Investments are reported at fair market value. The Company's common stock is valued based upon the quoted market price. The pooled separate accounts and the declared rate funds are stated at fair value, as determined by the asset's trustee, by reference to published market data, if available, of the underlying assets. The CIGNA Charter Guaranteed Income Fund, which invests primarily in fixed income instruments, is fully benefit-responsive and is recorded at contract value which approximates fair value. Interest rates are declared in advance and are guaranteed for six-month periods (January 1 through June 30 and July 1 through December 31). The guaranteed rate for 2000 was 5.2 percent. Realized gains (losses) on sale of investments and unrealized appreciation (depreciation) of investments are based on the value of the assets at the beginning of the Plan year or at time of purchase during the current year and are shown as net appreciation (depreciation) in fair value of investments in the statement of changes in net assets available for plan benefits. 7 -2- Investments The following presents investments during 2000 and 1999, that represent 5 percent or more of the Plan's net assets: During 2000, the Plan's investments depreciated in value by $5,268,138 as follows:
2000- CIGNA Charter Balanced Fund $ 5,321,220 CIGNA Charter Growth & Income Fund 4,634,309 CIGNA Charter Guaranteed Income Fund 15,038,749 CIGNA Charter Large Company Stock - Growth Fund 8,672,440 CIGNA Charter Large Company Stock Index Fund 3,922,241 CIGNA Charter Small Company Stock - Growth Fund 5,567,917 CIGNA Fidelity Advisor Equity Growth Fund 3,647,929 CIGNA INVESCO Dynamics Fund 6,207,017 CIGNA Janus Worldwide Fund 5,606,116 1999- CIGNA Charter Balanced Fund 6,817,130 CIGNA Charter Guaranteed Income Fund 8,790,374 CIGNA Charter Large Company Stock - Growth Fund 9,506,930 CIGNA Charter Large Company Stock Index Fund 2,836,960 CIGNA INVESCO Dynamics Fund 4,744,227 CIGNA Janus Worldwide Fund 3,069,226 2. SUMMARY OF PLAN: The following description of the Plan provides only general information. Participants should refer to the Plan document for a more complete description of the Plan. Eligibility and Contributions Prior to July 1, 2000, each employee (a) who was not covered by a collective bargaining agreement or (b) who was not a nonresident alien, with no U.S. income, became an eligible employee with respect to making elective deferrals and sharing in the adopting subsidiary's matching and/or discretionary contributions as of the enrollment date coinciding with or next following the date on which he or she has completed one year of eligibility service, as defined. Effective July 1, 2000, the Plan was amended so that employees will become eligible on the first day of each Plan-year quarter coinciding with or next following his or her hire date. With respect to eligibility to share in the adopting subsidiary's matching and/or discretionary contributions, the eligibility service remained at one year. Certain adopting subsidiaries are granted prior service for employment prior to the adopting subsidiary acquisition. Participants may contribute on a pretax basis up to 15 percent of their compensation, as defined, per Plan year, up to the maximum deferrable amount allowed under the IRC of $10,500 for 2000. Each adopting subsidiary may make a matching contribution to the Plan in an amount equal to the percentage, determined by the adopting subsidiary, in its discretion. In addition, each adopting subsidiary may make discretionary contributions to the Plan.
Pooled separate accounts $ (4,484,360) Common stock (783,778) ------------- $ (5,268,138) ============= 8 -3- Each participant's account is credited with the participant's contribution, the adopting subsidiary matching and discretionary contributions, if any, and the participant's shares of the earnings, losses and any appreciation (depreciation) of the funds invested. Vested Retirement Benefits A participant's vested interest in his contributions shall be at all times 100 percent. A participant's vested interest in the Company's matching and discretionary contributions allocated to his/her account shall be determined in accordance with the following schedule: The Plan provides for a participant to be fully vested upon the earliest of (a) death, (b) permanent physical or mental disability such that he/she can no longer continue in the service of his/her employer as determined by the Plan administrator on the basis of a written certificate of a physician acceptable to it, (c) his/her normal retirement date (age 59-1/2) or (d) the date he/she attains age 55 and has completed five years of vesting service. The Plan also provides that forfeitures, if any, are treated as a reduction of the adopting subsidiary's future contributions. Trustee CG Trust Company is the trustee of the Plan. The trustee is the Plan's asset custodian and is responsible for receiving contributions, managing the Plan's assets and making payments to members as instructed. Investments Each participant in the Plan determines the allocation of his/her account balance among pooled separate accounts, a declared rate fund and Company stock. Participants may transfer all or a portion of their account balance among any of the options on a daily basis. Assets not yet allocated to participant accounts at year-end are held in a separate declared rate fund until the allocation is determined. Loans A participant may borrow from the Plan an amount not to exceed the lesser of (a) $50,000 or (b) 50 percent of the value of the participant's vested interest in his/her accounts. The loans are secured by the participant's vested account balance. The loans bear interest at a reasonable rate commensurate with current interest rates. All loans will be considered an investment of the participant's account; therefore, any interest income will be credited directly to the participant's account. The repayment period shall not exceed five years, except loans for the purpose of acquiring a principal residence, which shall not exceed 10 years. Benefits After becoming eligible to receive a distribution, the participant may elect to receive the vested value of his/her account, net of any outstanding loans, either in a lump-sum payment or in the form of an annuity contract payable for his/her life or the joint lives of the participant and his/her spouse.
Years of Vesting Service Vested Interest ------------------------ --------------- Less than 1 year 0% 1 but less than 2 20 2 but less than 3 40 3 but less than 4 60 4 but less than 5 80 5 or more 100 9 -4- A participant who is entitled to receive a distribution must expressly consent to receive a distribution of his/her account if the account balance is greater than $5,000. Termination Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. 3. TRANSFER OF ASSETS DUE TO MERGERS: The Company entered into a number of business combination transactions prior to 2000. During 2000, the following plans of the acquired companies, and their respective asset values, merged into the Plan: 4. FEDERAL INCOME TAX STATUS: The Company is preparing the necessary documents to request a determination from the IRS stating that the Plan is designed in accordance with the applicable sections of the IRC. Pending receipt of a determination letter, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC and that the Plan was qualified and the related trust was tax-exempt as of December 31, 2000 and 1999. 5. RISKS AND UNCERTAINTIES: The Plan provides for various investments in Company common stock, pooled separate accounts and declared rate funds. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term. 6. PARTY-IN-INTEREST TRANSACTIONS: Certain Plan investments are units of pooled separate accounts and declared rate funds managed by Connecticut General Life Insurance Company (CIGNA). CIGNA is an affiliate of the trustee and, therefore, these transactions qualify as party-in-interest transactions.
ACI Mechanical 401(k) Profit Sharing Plan $ 396,617 American Mechanical 401(k) Plan 467,910 Armani 401(k) Plan 525,983 Armani Retirement Plan 2,526,186 BCM Controls Corporation 401(k) Plan 1,567,750 Central Mechanical Profit Sharing 401(k) Plan 2,337,776 Climate Control 401(k) Plan 2,578,265 F & G Mechanical 401(k) Plan 755,823 The Fagan Company 401(k) Plan 3,973,387 J & J Mechanical 401(k) Plan 381,553 Kilgust Mechanical 401(k) Plan 721,781 Kuempel Service, Inc. 401(k) Profit Sharing Plan 518,056 Plant Services 401(k) Plan 945,149 Service Refrigeration 401(k) Plan 622,307 Standard Heating & Air Conditioning Company, Inc. 401(k) Plan 250,485 Other 237,904 ------------ $ 18,806,932 ============ 10 -5- 7. NONEXEMPT TRANSACTIONS: As reported on Schedule II, certain Plan contributions were not remitted to the trust within the time frame specified by the Department of Labor Regulation 29 CFR 2510.3-102, thus constituting a nonexempt transaction between the Plan and the Company. 11 SCHEDULE I COMFORT SYSTEMS USA, INC. 401(k) PLAN SCHEDULE OF ASSETS (HELD AT END OF YEAR) AS OF DECEMBER 31, 2000 *Identified party in interest. (a)Cost omitted for participant-directed investments.
Identity of Issue Description Cost Current Value ----------------- ----------- ---- ------------- American General Life Insurance Company of New York* Cash Surrender Value of Life Insurance Policies (a) $ 81,084 Connecticut General Life Insurance Company- Connecticut General Life Insurance Company* Charter Balanced Fund (a) 5,321,220 Connecticut General Life Insurance Company* Charter Growth & Income Fund (a) 4,634,309 Connecticut General Life Insurance Company* Charter Guaranteed Income Fund (a) 15,038,749 Connecticut General Life Insurance Company* Charter Guaranteed Short Term Securities Fund (a) 133,436 Connecticut General Life Insurance Company* Charter Large Company Stock - Growth Fund (a) 8,672,440 Connecticut General Life Insurance Company* Charter Large Company Stock Index Fund (a) 3,922,241 Connecticut General Life Insurance Company* Charter Large Company Stock Value I Fund (a) 3,401,588 Connecticut General Life Insurance Company* Charter Small Company Stock - Growth Fund (a) 5,567,917 Connecticut General Life Insurance Company* Fidelity Advisor Equity Growth Fund (a) 3,647,929 Connecticut General Life Insurance Company* INVESCO Dynamics Fund (a) 6,207,017 Connecticut General Life Insurance Company* Janus Worldwide Fund (a) 5,606,116 Connecticut General Life Insurance Company* Lifetime 20 Fund (a) 527,213 Connecticut General Life Insurance Company* Lifetime 30 Fund (a) 542,306 Connecticut General Life Insurance Company* Lifetime 40 Fund (a) 503,281 Connecticut General Life Insurance Company* Lifetime 50 Fund (a) 517,537 Connecticut General Life Insurance Company* Lifetime 60 Fund (a) 69,636 Comfort Systems USA, Inc.* Comfort Systems USA, Inc., common stock (a) 425,951 Comfort Systems USA, Inc. 401(k) Plan* Participant loans (interest rates ranging from 6.0% to 13.0%) (a) 1,989,260 ------------- Total $ 66,809,230 ============= 12 SCHEDULE II COMFORT SYSTEMS USA, INC. 401(k) PLAN SCHEDULE OF NONEXEMPT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2000
Relationship to Plan, Employer Interest Identity of or Other Description of Transactions, Including Amount Incurred Party Involved Party in Interest Maturity Date, Rate of Interest and Maturity Loaned on Loan - ------------------- ----------------- ---------------------------------------------------- ----------- -------- Comfort Systems USA, Inc. Employer Lending of monies from the Plan to the employer (contributions not timely remitted to the Plan) as follows- Deemed loan dated January 23, 1999, maturity of October 12, 2000, with interest of 89.94% for the period outstanding $ 2,350 $ 966(a) Deemed loan dated December 22, 1999, maturity of January 21, 2000, with interest of 17.43% for the period outstanding 10,975 1,339(a) Deemed loan dated December 22, 1999, maturity of October 13, 2000, with interest of 21.02% for the period outstanding 865 176(a) Deemed loan dated January 21, 2000, maturity of February 22, 2000, with interest of 19.64% for the period outstanding 15,551 3,054 Deemed loan dated January 21, 2000, maturity of October 13, 2000, with interest of 8.02% for the period outstanding 812 65 Deemed loan dated February 22, 2000, maturity of March 2, 2000, with interest of 10.66% for the period outstanding 8,181 872 Deemed loan dated November 21, 2000, maturity of November 22, 2000, with interest of .02% for the period outstanding 708,740 142 Deemed loan dated November 21, 2000, maturity of December 21, 2000, with interest of .40% for the period outstanding 39,137 157 Deemed loan dated November 21, 2000, maturity of March 30, 2001, with interest of 1.84% for the period outstanding 9,146 52(b) 13 SCHEDULE II Continued -2- (a) Represents calculated interest from January 1, 2000, through the date of maturity. (b) Represents calculated interest from the date of the loan through December 31, 2000. (c) The employer remitted interest to the Plan subsequent to Plan year-end.
Relationship to Plan, Employer Interest Identity of or Other Description of Transactions, Including Amount Incurred Party Involved Party in Interest Maturity Date, Rate of Interest and Maturity Loaned on Loan - ------------------- ----------------- ---------------------------------------------------- ----------- -------- Deemed loan dated December 21, 2000, maturity of January 10, 2001, with interest of 5.73% for the period outstanding $ 6,098 $ 192(b) Deemed loan dated December 21, 2000, maturity of January 23, 2001, with interest of 12.43% for the period outstanding 15,781 674(b) Deemed loan dated December 21, 2000, maturity of February 1, 2001, with interest of 12.43% for the period outstanding 5,113 161(b) Deemed loan dated December 21, 2000, maturity of March 30, 2001, with interest of 11.54% for the period outstanding 3,327 60(b) ------- $ 7,910(c) ======= 14 SIGNATURES THE PLAN. Pursuant to the requirements of the Securities and Exchange Act of 1934, the 401(k) Investment Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunder duly authorized. COMFORT SYSTEMS USA, INC. 401(K) PLAN BY: /s/ J. GORDON BEITTENMILLER ---------------------------------- J. Gordon Beittenmiller Executive Vice President and Chief Financial Officer of Comfort Systems USA, Inc. 401(k) Investment Committee Member DATE: June 27, 2001 15 INDEX TO EXHIBIT
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 23.1 Consent of Independent Public Accountants
1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated June 15, 2001, included in this Comfort Systems USA, Inc. 401(k) Plan Annual Report on Form 11-K for the year ended December 31, 2000, into the previously filed Form S-8 Registration Statement File No. 333-44356. ARTHUR ANDERSEN LLP Houston, Texas June 27, 2001