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Comfort Systems USA Reports Fourth Quarter And Full Year Results

Note 2: Net income (loss) from continuing operations attributable to Comfort Systems USA, Inc. is income (loss) from continuing operations less net income attributable to noncontrolling interests.

Note 3: The tax rate on these items was computed using the pro forma effective tax rate of the Company exclusive of these charges.

Supplemental Non-GAAP Information – Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) ― (Unaudited):

   
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 %   2010 % 2011 %   2010 %

Net income (loss) including

noncontrolling interests

$   2,085 $  

5,796

$   (36,492 ) $   14,740
Discontinued operation

(723

)

 

Income taxes (693 ) 2,196 (8,172 ) 6,360
Other expense (income), net (1,002 ) (242 ) (934 ) (267 )
Changes in the fair value of contingent earn-out obligations

38

(924

)

(5,528

)

(1,574

)

Interest expense, net 392 283 1,758 1,506
Gain on sale of assets (77 ) (23 ) (239

)

(525 )

Goodwill and other

intangible asset impairments

3,788 1,288 58,922 5,734
Depreciation and amortization     5,825     5,560     20,053     17,442
Adjusted EBITDA $   10,356 3.3% $   13,934 4.4% $   29,368 2.4%

$

  42,693 3.9%

Note 1: The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income (loss) including noncontrolling interests, excluding discontinued operation, income taxes, other (income) expense, net, changes in the fair value of contingent earn-out obligations, interest expense, net, gain on sale of assets, goodwill and other intangible asset impairments and depreciation and amortization. Other companies may define Adjusted EBITDA differently. Adjusted EBITDA is presented because it is a financial measure that is frequently requested by third parties. However, Adjusted EBITDA is not considered under generally accepted accounting principles as a primary measure of an entity’s financial results, and accordingly, Adjusted EBITDA should not be considered an alternative to operating income (loss), net income (loss), or cash flows as determined under generally accepted accounting principles and as reported by the Company.

Comfort Systems USA, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
   
December 31, December 31,
2011 2010
 
 
Cash and cash equivalents $ 51,237 $ 86,346
Accounts receivable, net 267,060 233,893
Costs and estimated earnings in excess of billings 27,163 26,648
Other current assets   41,822   56,061
Total current assets 387,282 402,948
Property and equipment, net 42,013 43,620
Goodwill 107,093 147,818
Identifiable intangible assets, net 48,349 39,616
Other noncurrent assets   6,329   6,018
Total assets $ 591,066 $ 640,020
 
Current maturities of long-term debt $ 300 $ 300
Current maturities of notes to former owners 332 967
Accounts payable 114,255 101,134
Billings in excess of costs and estimated earnings 71,730 63,422
Other current liabilities   91,354   102,387
Total current liabilities 277,971 268,210
Long-term debt, net of current maturities 2,400 2,700
Notes to former owners, net of current maturities 12,349 25,969
Other long-term liabilities   15,240   30,357
Total liabilities   307,960   327,236
Comfort Systems USA, Inc. stockholders’ equity 264,591 312,784
Noncontrolling interests   18,515  
Total stockholders’ equity   283,106   312,784
Total liabilities and stockholders’ equity $ 591,066 $ 640,020

Selected Cash Flow Data (in thousands):

 
Three Months Ended Twelve Months Ended
December 31, December 31,
(unaudited)
    2011     2010 2011 2010
Cash provided by (used in):        
Operating activities $ 51,645 $ 46,620 $ 29,680 $ 32,149
Investing activities $ (29,417 ) $ (2,584 ) $ (35,750 ) $ (43,001 )
Financing activities $ (14,683 ) $ (2,351 ) $ (29,039 ) $ (30,652 )
 
Free cash flow:
Cash from operating activities $ 51,645 $ 46,620 $ 29,680 $ 32,149
Purchases of property and equipment (2,214 ) (2,986 ) (8,666 ) (7,089 )
Proceeds from sales of property and equipment 106 152 717 1,381
Taxes paid related to pre-acquisition equity transactions of an acquired company        

       

7,056

 
Free cash flow $   49,537 $   43,786 $   21,731 $   33,497

Note 1: Free cash flow is defined as cash flow from operating activities excluding items related to the acquisition of businesses less customary capital expenditures, plus the proceeds from asset sales. Other companies may define free cash flow differently. Free cash flow is presented because it is a financial measure that is frequently requested by third parties. However, free cash flow is not considered under generally accepted accounting principles as a primary measure of an entity’s financial results, and accordingly, free cash flow should not be considered an alternative to operating income, net income, or cash flows as determined under generally accepted accounting principles and as reported by the Company.

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