Comfort Systems USA (FIX) 10-K risk factor changes: FY2014 vs FY2013

Our contract prices are established largely upon estimates and assumptions of our projected costs, including assumptions about: future economic conditions; prices, including commodities prices; [added: availability of labor, including the costs of providing labor, equipment, and materials; and other factors outside our control.]

The percentage of our profits and revenue attributable to projects performed directly or indirectly for federal, state, and local government entities increased during and as a result of the economic downturn, in part because the private-sector decreased its investment in construction and building projects, but has decreased during [removed: 2013.][added: 2014.]

We believe that our practice of placing significant decision making powers with local management is important to our successful growth and allows us to be responsive to opportunities and to our [removed: customers' needs.]

[added: Further, if a subsidiary location] fails to follow the Company's compliance policies, we could be made party to a contract, arrangement or situation that requires the assumption of large liabilities or has less advantageous terms than is typically found in the market.

Our [removed: 88] [added: 92] locations are located in 29 states, which exposes us to a variety of different state and local laws and regulations, particularly those pertaining to contractor licensing requirements.

[added: Various local, state and federal laws and] regulations impose licensing standards on technicians who install and service HVAC systems.

If any of the variety of instruments, processes or strategies we use to manage our exposure to various types of risk are not effective, [removed: which could include a failed transition of the prior risk manager's work duties,] we may incur losses that are not covered by our insurance policies or that exceed our accruals or coverage limits.

[added: A variety of events may cause the market price of our common stock to fluctuate significantly, including the following: (i) the risk factors described in this Report on] Form 10-K; (ii) a shortfall in operating revenue or net income from that expected by securities analysts and investors; (iii) quarterly fluctuations in our operating results; (iv) changes in securities analysts' estimates of our financial performance or that of our competitors or companies in our industry generally; (v) general conditions in our customers' industries; (vi) general conditions in the securities markets; (vii) our announcements of significant contracts, milestones, acquisitions; (viii) our relationship with other companies; (ix) our investors' view of the sectors and markets in which we operate; and (x) additions or departures of key personnel.

[removed: An] adverse outcome of such a review of examination could adversely affect our operating results and financial condition.

[removed: _A] [added: _Information technology system failures, network disruptions or] cyber security [removed: breach] [added: breaches] could adversely affect our business._

[removed: These] [added: In addition, these] systems, networks, and infrastructure may be vulnerable to deliberate [removed: attacks or accidental events] [added: cyber-attacks] that interfere with their functionality or the confidentiality of our information or our customers' data.

Information technology system failures, including suppliers' or vendors' system failures, could disrupt our operations by causing transaction errors, processing inefficiencies, the loss of customers, other business disruptions or the loss of employee personal information.

These events could impact our customers, employees and reputation and lead to financial losses from remediation actions, loss of business or potential liability or an increase in expense, all of which may have a material adverse effect on our business.

These actions and proceedings may involve claims for, among other things, compensation for alleged personal injury, workers' compensation, employment discrimination, breach of contract or property damage.

In addition, we may be subject to class action lawsuits involving allegations of violations of the Fair Labor Standards Act and state wage and hour laws.

Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of any such actions or proceedings.

customers' needs.

_Failure to remain in compliance with covenants under our credit agreement, service our indebtedness, or fund our other liquidity needs could adversely impact our business._

Our credit agreement and related restrictive and financial covenants are more fully described in Note 9 of "Notes to the Consolidated Financial Statements." Our failure to comply with any of these covenants, or to pay principal, interest or other amounts when due thereunder, would constitute an event of default under the credit agreement.

Default under our credit agreement could result in (1) us no longer being entitled to borrow under the agreement; (2) termination of the agreement; (3) acceleration of the maturity of outstanding indebtedness under the agreement; and/or (4) foreclosure on any collateral securing the obligations under the agreement.

On July 22, 2014, we executed an amendment to the credit agreement, which terms include, among other things a revised maximum Total Leverage Ratio.

If we are unable to service our debt obligations or fund our other liquidity needs, we could be forced to curtail our operations, reorganize our capital structure (including through bankruptcy proceedings) or liquidate some or all of our assets in a manner that could cause holders of our securities to experience a partial or total loss of their investment in us.

_Our inability to properly utilize our workforce could have a negative impact on our profitability_

The extent to which we utilize our workforce affects our profitability.

Underutilizing our workforce could result in lower gross margins and, consequently, a decrease in short-term profitability.

On the other hand, overutilization of our workforce could negatively impact safety, employee satisfactions and project execution, leading to a potential decline in future project awards.

The utilization of our workforce is impacted by numerous factors, including:

our estimate of headcount requirements and our ability to manage attrition;

efficiency in scheduling projects and our ability to minimize downtime between project assignments; and

productivity.

_Misconduct by our employees, subcontractors or partners or our overall failure to comply with laws or regulations could harm our reputation, damage our relationships with customers, reduce our revenues and profits, and subject us to criminal and civil enforcement actions._

Misconduct, fraud, non-compliance with applicable laws and regulations, or other improper activities by one or more of our employees, subcontractors or partners could have a significant negative impact on our business and reputation.

Examples of such misconduct include employee or subcontractor theft, the failure to comply with safety standards, laws and regulations, customer requirements, environmental laws and any other applicable laws or regulations.

While we take precautions to prevent and detect these activities, such precautions may not be effective and are subject to inherent limitations, including human error and fraud.

Our failure to comply with applicable laws or regulations or acts of misconduct could subject us to fines and penalties, harm our reputation, damage our relationships with customers, reduce our revenues and profits and subject us to criminal and civil enforcement actions.

_Unsatisfactory safety performance may subject us to penalties, affect customer relationships, result in higher operating costs, negatively impact employee morale and result in higher employee turnover._

Our projects are conducted at a variety of sites including construction sites and industrial facilities.

Each location is subject to numerous safety risks, including electrocutions, fires, explosions, mechanical failures, weather-related incidents, transportation accidents and damage to equipment.

These hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment and other consequential damages and could lead to suspension of operations, large damage claims and, in extreme cases, criminal liability.

While we have taken what we believe are appropriate precautions to minimize safety risks, we have experienced serious accidents, including fatalities, in the past and may experience additional accidents in the future.

Serious accidents may subject us to penalties, civil litigation or criminal prosecution.

Claims for damages to persons, including claims for bodily injury or loss of life, could result in significant costs and liabilities, which could adversely affect our financial condition and results of operations.

Poor safety performance could also jeopardize our relationships with our customers and harm our reputation.

_Future climate change could adversely affect us._

Climate change may create physical and financial risk.

Physical risks from climate change could, among other things, include an increase in extreme weather events (such as floods or hurricanes), rising sea levels and limitations on water availability and quality.

Such extreme weather conditions may limit the availability of resources, increasing the costs of our projects, or may cause projects to be delayed or cancelled.

Legislation, nationwide protocols, regulation or other restrictions related to climate change could negatively impact our operations or our customers' operations.

Such legislation or restrictions could increase the costs of projects for our customers or, in some cases, prevent a project from going forward, which could in turn have an adverse effect on our financial condition and results of operations.

_Deliberate, malicious acts, including terrorism and sabotage, could damage our facilities, disrupt our operations or injure employees, contractors, customers or the public and result in liability to us._

Intentional acts of destruction could damage or destroy our facilities, reducing our operational production capacity and requiring us to repair or replace our facilities at substantial cost.

availability of labor, including the costs of providing labor, equipment, and materials; and other factors outside our control.

Further, if a subsidiary location

Various local, state and federal laws and

In January 2009 our company-wide risk manager left the company, and his former job responsibilities continue to be shared between several of our officers.

Most of the actions against us arise out of the normal course of our performing services on project sites.

A variety of events may cause the market price of our common stock to fluctuate significantly, including the following: (i) the risk factors described in this Report on

Our inability to prevent cyber-attacks or adequately protect against other disruptions could adversely affect our business.

Approximately [removed: 83%] [added: 82%] of our revenue is earned on a project basis for installation of HVAC systems in newly constructed facilities or for replacement of HVAC systems in existing facilities.

We also perform some project work on a cost-plus or a time and materials basis, under which we are paid our costs incurred plus an agreed upon profit [removed: margin.][added: margin, although such projects are sometimes subject to a guaranteed maximum cost.]

These margins are [removed: typically] [added: frequently] less than fixed-price contract margins because there is less risk of unrecoverable cost overruns in cost-plus or time and materials work.

As of December 31, [removed: 2013,] [added: 2014,] we had [removed: 3,321] [added: 4,074] projects in process.

Our average project takes six to nine months to complete, with an average contract price of approximately [removed: $538,000.][added: $488,000.]

As of December 31, [removed: 2013,] [added: 2014,] we had [removed: 11] [added: 16] projects in process with a contract price greater than $15 million, [removed: 16] [added: 14] projects between $10 million and $15 million, [removed: 53] [added: 64] projects between $5 million and $10 million, and [removed: 282] [added: 297] projects between $1 million and $5 million.

Taken together, projects with contract prices of $1 million or more totaled [removed: $1,470.3] [added: $1,607.5] million of aggregate contract value as of December 31, [removed: 2013,] [added: 2014,] or approximately [removed: 82%,] [added: 81%,] out of a total contract value for all projects in progress of [removed: $1,787.4] [added: $1,988.3] million.

In addition to project work, approximately [removed: 17%] [added: 18%] of our revenue represent maintenance and repair service on already installed HVAC and controls systems.

These systems track the status of ongoing service and installation work, [removed: and may also monitor system performance data.]

We manage our [removed: 36] [added: 37] operating units based on a variety of factors.

[removed: We experienced significant industry activity declines] [added: Nonresidential building construction and renovation activity, as reported by the federal government, declined] over the four year period from 2009 to 2012, and 2013 [added: and 2014] activity levels have been [added: relatively] stable [removed: compared to recent] [added: at the low levels of the preceding] years.

During [removed: the] [added: these] periods of decline, we responded to market challenges by pursuing work in sectors less affected by the downturn, such as government, educational, and healthcare facilities, and by establishing marketing initiatives that take advantage of our size and range of expertise.

We also responded to declining gross profits [removed: over those years] by [added: emphasizing discipline in project selection, and by emphasizing efficiency in execution while also] reducing our selling, general, and administrative [removed: expenses, and our indirect project and service overhead costs.][added: expenses.]

As a result of our continued strong emphasis on cash flow, [removed: our debt outstanding] [added: we currently have modest indebtedness] under our revolving credit facility [removed: is zero,] and we have substantial uncommitted cash balances, as discussed further in "Liquidity and Capital Resources" below.

[added: We have a credit facility in place with considerably less] restrictive terms than those of our previous facilities; this facility does not expire until [removed: July 2018.][added: October 2019.]

We have strong surety relationships to support our bonding needs, and we believe our relationships with the surety markets are [removed: positive in light of our] strong [added: and benefit from our solid] current results and financial position.

We have generated positive free cash flow in each of the last [removed: fifteen] [added: sixteen] calendar years and will continue our emphasis in this area.

As discussed at greater length in "Results of Operations" below, we [removed: have seen declining activity levels in our industry since late 2008 and we] expect price competition to continue [removed: to be strong,] as [added: our customers and] local and regional competitors respond cautiously to changing conditions.

We will continue our efforts to [added: expand and improve our service business, to] find the more active sectors in our markets, and to increase our regional and national account business.

Our primary emphasis for [removed: 2014] [added: 2015] will be on execution and cost control, [removed: and] [added: but we are beginning to seek growth based] on [removed: maintaining] [added: our belief that industry conditions are beginning to improve, and we believe that] activity levels [removed: that] will permit us to earn reasonable profits while preserving our core workforce.

We have increased our focus on project qualification, estimating, pricing and [removed: management,] [added: management;] and [removed: on] [added: overall we are investing in] service [added: growth and improved] performance.

Approximately [removed: 83%] [added: 82%] of our revenue was earned on a project basis and recognized through the percentage of completion method of accounting.

[removed: Purchased equipment on our projects is] substantially produced to job specifications and is a value added element to our work.

[added: This] measurement and comparison process requires updates to the estimate of total costs to complete the contract, and these updates may include subjective assessments.

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 [added: we absorb under our insurance arrangements for these risks.]

If other reporting units have had increases in fair value, such increases may not be [removed: recorded.]

| | | [removed: 2013] [added: 2014] | | | | | | [removed: 2012] [added: 2013] | | | | | | [removed: 2011] [added: 2012] | | | | | |

| Revenue | | $ | [removed: 1,357,272] [added: 1,410,795] | | | 100.0 | % | $ | [removed: 1,331,185] [added: 1,357,272] | | | 100.0 | % | $ | [removed: 1,216,654] [added: 1,331,185] | | | 100.0 | % |

| Cost of services | | | [removed: 1,117,389] [added: 1,161,024] | | | 82.3 | % | | [removed: 1,123,564] [added: 1,117,389] | | | [removed: 84.4] [added: 82.3] | % | | [removed: 1,035,124] [added: 1,123,564] | | | [removed: 85.1] [added: 84.4] | % |

| Gross profit | | | [removed: 239,883] [added: 249,771] | | | 17.7 | % | | [removed: 207,621] [added: 239,883] | | | [removed: 15.6] [added: 17.7] | % | | [removed: 181,530] [added: 207,621] | | | [removed: 14.9] [added: 15.6] | % |

| Selling, general and administrative expenses | | | [removed: 194,214] [added: 207,652] | | | [removed: 14.3] [added: 14.7] | % | | [removed: 185,809] [added: 194,214] | | | [removed: 14.0] [added: 14.3] | % | | [removed: 167,053] [added: 185,809] | | | [removed: 13.7] [added: 14.0] | % |

| Goodwill impairment | | | [removed: — | | | — | | | — | | | — | | | 57,354 | | | 4.7] [added: 727] | [removed: %] |

| Gain on sale of assets | | | [removed: (589] [added: (830] | ) | | [removed: —] [added: (0.1] | [added: )%] | | [removed: (491] [added: (589] | ) | | — | | | [removed: (236] [added: (491] | ) | | — | |

| Operating income [removed: (loss)] | | | [removed: 46,258] [added: 42,222] | | | [removed: 3.4] [added: 3.0] | % | | [removed: 22,303] [added: 46,258] | | | [removed: 1.7] [added: 3.4] | % | | [removed: (42,641] [added: 22,303] | [removed: )] | | [removed: (3.5] [added: 1.7] | [removed: )%] [added: %] |

| Interest income | | | [removed: 23] [added: 18] | | | — | | | [removed: 24] [added: 23] | | | — | | | [removed: 128] [added: 24] | | | — | |

| Interest expense | | | [removed: (1,351] [added: (1,858] | ) | | (0.1 | )% | | [removed: (1,595] [added: (1,351] | ) | | (0.1 | )% | | [removed: (1,886] [added: (1,595] | ) | | [removed: (0.2] [added: (0.1] | )% |

| Changes in the fair value of contingent earn-out obligations | | | [removed: 1,646] [added: (245] | [added: )] | | [removed: 0.1] [added: —] | [removed: %] | | [removed: 662] [added: 1,646] | | | [removed: —] [added: 0.1] | [added: %] | | [removed: 5,528] [added: 662] | | | [removed: 0.5] [added: —] | [removed: %] |

| Other income | | | [removed: 204] [added: 91] | | | — | | | [removed: 145] [added: 204] | | | — | | | [removed: 934] [added: 145] | | | [removed: 0.1] [added: —] | [removed: %] |

| Income [removed: (loss)] before income taxes | | | [removed: 46,780] [added: 40,228] | | | [removed: 3.4] [added: 2.9] | % | | [removed: 21,539] [added: 46,780] | | | [removed: 1.6] [added: 3.4] | % | | [removed: (37,937] [added: 21,539] | [removed: )] | | [removed: (3.1] [added: 1.6] | [removed: )%] [added: %] |

| Income tax expense [removed: (benefit)] | | | [removed: 18,148] [added: 11,614] | | | | | | [removed: 10,045] [added: 18,148] | | | | | | [removed: (5,463] [added: 10,045] | [removed: )] | | | |

and may also monitor system performance data.

Purchased equipment on our projects is

recorded.

| Goodwill impairment | | | 727 | | | 0.1 | % | | — | | | — | | | — | | | — | |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

_2014 Compared to 2013_

We completed one acquisition in the first quarter of 2014.

This acquisition was not material and was "tucked-in" with existing operations.

We completed two acquisitions in the second quarter of 2014, one of which was "tucked-in" with existing operations and the second reports as a separate operating location in northern Texas.

No acquisitions were completed in the third quarter of 2014.

An immaterial acquisition was completed and "tucked-in" with existing operations in the fourth quarter of 2014.

_Revenue_—Revenue increased $53.5 million, or 3.9% to $1,410.8 million in 2014 compared to 2013.

The same-store revenue increase is primarily due to our Arkansas operation ($16.1 million) and one of our Virginia operations

($12.9 million) which both performed a significant amount of project work for the institutional sector during 2014.

This increase was partially offset by lower revenues at our Arizona operation ($23.8 million) which performed a significant amount of project work during 2013 which has not reoccurred in 2014 due to its completion.

Backlog as of December 31, 2014 was $757.8 million, a 15.4% increase from September 30, 2014 backlog of $656.8 million and a 25.5% increase from December 31, 2013 backlog of $603.6 million.

Sequential backlog increased primarily due to our EAS operation ($37.3 million) and one of our Virginia operations ($17.2 million) which had increased project bookings.

The year-over-year backlog increase was primarily due to a same-store increase of 17.1% largely related to increased project bookings at many of our operating locations, including our EAS operation ($30.6 million) and one of our Maryland operations ($25.4 million).

In addition, an 8.4% increase was due to the aforementioned acquisition of our Northern Texas operation ($50.8 million) during the current year.

_Gross Profit_—Gross profit increased $9.9 million, or 4.1%, to $249.8 million in 2014 as compared to 2013.

The increase included a $5.6 million, or 2.3%, increase related to the acquisition of our Northern Texas operation and a $4.3 million, or 1.8%, increase on a same-store basis.

The same-store increase in gross profit was primarily due to a $9.8 million increase in profitability at our EAS operation due to improved project execution.

This was partially offset by a decrease in project volumes at our Arizona operation ($4.2 million) and job underperformance at our Southern California operation ($3.9 million) which included a revision in contract estimate on a project in a loss position resulting in a $4.4 million writedown.

As a percentage of revenue, gross profit was stable at 17.7% in 2014 compared to 2013 primarily due to the factors discussed above.

This increase is primarily due to higher compensation expense ($6.5 million) primarily as a result of our increased investment in service growth and information technology, higher training costs ($2.6 million) and a $1.3 million increase in bad debt expense as a result of a $0.8 million gain recorded in the prior year as a result of a receivable settlement.

Amortization expense decreased $0.2 million, or 2.4%.

However, same-store SG&A, excluding amortization, is not considered under generally accepted accounting principles to be a primary measure of an entity's

| | | 2014 | | | 2013 | | |

| SG&A | | $ | 207,652 | | $ | 194,214 | |

| Same-store SG&A, excluding amortization expense | | $ | 196,623 | | $ | 187,222 | |

_Interest Expense_—Interest expense increased $0.5 million, or 37.5%, in 2014.

The increase is due to the increase in borrowings on the revolving credit facility.

_Goodwill Impairment_—We recorded a goodwill impairment charge of $0.7 million during the second quarter of 2014.

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 Southern California could no longer support the related goodwill balance.

No goodwill impairment was recorded in 2013.

This change in estimate was the result of a writedown of $1.6 million which did not reoccur in the current year.

In addition, based on updated measurements of estimated future cash flows in the current year, primarily for our EAS location, we recorded a $0.3 million increase to the earn-out obligation.

The effective rate for 2014 is lower than the federal statutory rate of 35.0% primarily due to a decrease in the valuation allowance primarily associated with our operations in Maryland and Virginia (4.8%), by the impact of the noncontrolling interest of EAS which for tax purposes is treated as a partnership (4.8%) and the effect of the production activity deduction (1.7%).

The decrease in the effective tax rate from 2013

to 2014 is primarily due to impact on the rate from valuation allowance and from noncontrolling interests.

_

Nonresidential building construction and renovation activity, as reported by the federal government, declined over the three year period of 2001 to 2003, expanded moderately during 2004 and 2005, and was strong over the three year period from 2006 to 2008.

We have a credit facility in place with considerably less

This

we absorb under our insurance arrangements for these risks.

| | | | | | | | | | | | | | | | | | | | |

| | | | | | | | |

in earnings.

In addition, we recorded after tax income of $0.3 million in 2012 associated with the reduction of estimated liabilities associated with the sale and shutdown of previous discontinued operations.

_2012 Compared to 2011_

We discontinued operations at one company during 2012.

_Revenue_—Revenue increased $114.5 million, or 9.4% to $1,331.2 million in 2012 compared to 2011.

The same-store revenue increase stemmed primarily from increased activity in the nonresidential markets throughout the United States especially in the manufacturing sector (approximately $79.2 million) as a result of a large, short duration data center project at our large operation headquartered in Virginia that was substantially completed in the first half of 2012.

This increase was partially offset due to decreased revenue in the healthcare sector (approximately $53.4 million).

Backlog as of December 31, 2012 was $618.0 million, a 0.8% decrease from September 30, 2012 backlog of $622.8 million and a 1.8% decrease from December 31, 2011 backlog of $629.5 million.

The sequential backlog decreased primarily related to our Tennessee operation.

The year over year backlog decrease was primarily due to the large, short duration data center project at ColonialWebb as previously discussed.

_Gross Profit_—Gross profit increased $26.1 million, or 14.4%, to $207.6 million in 2012 as compared to 2011.

As a percentage of revenue, gross profit increased from 14.9% in 2011 to 15.6% in 2012.

The increase included a $22.6 million, or 12.5%, increase in gross profit on a same-store basis and a $3.5 million, or 1.9%, increase related to the acquisition of EAS.

The same-store increase in gross profit resulted primarily from improved profitability at our New York and Virginia operations in 2012 (approximately $3.9 million and $8.6 million, respectively) and job underperformance at our Southern Alabama operations in 2011 (approximately $4.8 million).

This was partially offset by a job write-down that we recorded in the first quarter of 2012 on a project that had been accelerated by the owner.

The additional costs associated with this acceleration exceeded $3 million and as of year-end we were pursuing a claim for compensation for such costs.

Following year-end, the Company entered into an agreement with the general contractor regarding the claim and reached an agreement in principal as to the bulk of remaining open issues with its subcontractors.

As a result of these matters, we received $1.6 million of incremental gross profit during the first quarter of 2013.

This increase is primarily due to higher medical costs ($2.5 million) that were due to an increased frequency of large dollar claims and higher compensation

accruals ($3.4 million) related to an increase in bonuses and commissions payable as a result of improved operating results.

Additionally, an increase in bad debt expense ($2.5 million) was primarily due to specific collectability concerns at our operations in Maryland and Tennessee which do not represent trends we expect to continue in the future.

Amortization expense increased $1.2 million, or 18.6%, primarily related to the EAS acquisition in 2011.

| | | 2012 | | | 2011 | | |

| SG&A | | $ | 185,809 | | $ | 167,053 | |

| Same-store SG&A, excluding amortization expense | | $ | 174,298 | | $ | 160,760 | |

_Interest Expense_—Interest expense decreased $0.3 million, or 15.4%, in 2012.

The decrease is due to the decrease in notes to former owners.

At the time that we valued our contingent obligation at ColonialWebb we did not anticipate the duration of weak market conditions and as a result the initial value of the earnout payments was higher than what we expected to incur.

This change in estimate resulted in a $5.2 million writedown of the fair value of the liability.

In 2012, we incurred an additional writedown of $0.6 million related to ColonialWebb based on updated measurements.

The effective rate for 2011 associated with our pre-tax loss in that year is lower than the federal statutory rate of 35.0%.

This rate is lower primarily due to the non-cash goodwill impairment charge of $57.4 million of which $26.4 million was not deductible for income tax purposes resulting in a significant impact on the effective tax rate (24.3%), as well as an increase in the valuation allowance (9.0%) related to deferred tax assets for state net

operating loss carryforwards and other state deferred tax assets primarily in Virginia and Maryland.

We have [removed: limited] exposure to changes in interest rates under our revolving credit facility and the EAS credit line.

The following table presents principal amounts (stated in thousands) and related average interest rates by year of maturity for our debt obligations and their indicated fair market value at December 31, [removed: 2013:][added: 2014:]

| | | [removed: 2014 | | |] 2015 | | | 2016 | | | 2017 | | | 2018 | | | [added: 2019 | | |] Thereafter | | | Total | | |

| Fixed Rate Debt | | $ | [removed: 2,000] [added: —] | | $ | [removed: —] [added: 500] | | $ | [removed: —] [added: 500] | | $ | — | | $ | — | | $ | — | | $ | [removed: 2,000] [added: 1,000] | |

| Average Interest Rate | | | [removed: 3.3] [added: —] | [removed: %] | | [removed: —] [added: 2.5] | [added: %] | | [removed: —] [added: 2.5] | [added: %] | | — | | | — | | | — | | | [removed: 3.3] [added: 2.5] | % |

[removed: We estimate that the] [added: The] weighted average interest rate applicable to [removed: the] borrowings under the Facility [removed: would be] [added: was] approximately [removed: 1.6%] [added: 1.4%] as of December 31, [removed: 2013.][added: 2014.]

We did not recognize any other [removed: impairments] [added: impairments, in the current quarter,] on those assets required to be measured at fair value on a nonrecurring basis.

_

We have a modest level of indebtedness under our debt facility and our indebtedness could increase in the future.

| Variable Rate Debt | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 38,500 | | $ | — | | $ | 38,500 | |

During the quarter ended June 30, 2014, we recorded a goodwill impairment charge of $0.7 million based on Level 3 measurements.

We have a debt facility under which we may borrow funds in the future.

During the year ended December 31, 2013, no goodwill or other intangible asset impairments were recorded.

We have [removed: 36] [added: 37] operating units in [removed: 79] [added: 83] cities and [removed: 88] [added: 92] locations throughout the United States.

We operate primarily in the commercial, industrial and institutional HVAC markets and perform most of our services [removed: within office buildings, retail centers, apartment complexes, manufacturing plants, and] [added: in industrial,] healthcare, [removed: education] [added: education, office, technology, retail] and government facilities.

Approximately 99% of our consolidated [removed: 2013] [added: 2014] revenue was derived from commercial, industrial and institutional customers and large multi-family residential projects.

Approximately [removed: 42%] [added: 44%] of our revenue was attributable to installation services in newly constructed facilities and [removed: 58%] [added: 56%] was attributable to maintenance, repair and replacement services.

[removed: Our consolidated 2013 revenue was derived from the] following service activities, all of which are in the mechanical services industry, the single industry segment we serve:

| HVAC | | | [removed: 75] [added: 74] | % |

| Plumbing | | | [removed: 15] [added: 16] | % |

Our website also includes our code of ethics, titled "Corporate Compliance Policy: Standards and Procedures Regarding Business Practices," together with other governance materials including our corporate governance [removed: guidelines] [added: standards] and our Board committee charters.

Printed versions of our code of ethics and our corporate governance [removed: guidelines] [added: standards] may be obtained upon written request to our Corporate Compliance Officer at our headquarters address.

The HVAC industry can be broadly divided into two [removed: service] functions:

installation in newly constructed facilities, which provided approximately [removed: 42%] [added: 44%] of our revenue in [removed: 2013,] [added: 2014,] and

maintenance, repair and replacement in existing facilities, which provided the remaining [removed: 58%] [added: 56%] of our [removed: 2013] [added: 2014] revenue.

In "design and build" projects, the commercial HVAC company is responsible for designing, engineering and installing a cost-effective, energy-efficient system customized to the specific needs of [removed: the building owner.]

"Plan and spec" installation refers to projects in which a third-party architect or consulting engineer designs the HVAC systems and the installation project is "put out for bid." We believe that "plan and spec" projects usually take longer to complete than "design and build" projects because the system design and installation process generally are not integrated, thus resulting in more frequent adjustments to the technical specifications of the project and [added: corresponding changes in work requirements and schedules.]

The six core competencies are: (i) customer cultivation and rapport, (ii) design and build expertise, (iii) estimating, (iv) job [removed: costing] and [removed: job measurements,] [added: cost tracking,] (v) safety, and (vi) service capability.

[removed: Over the past few years we have made] [added: already] substantial investments in training, including programs for project managers, field superintendents, service managers, sales managers, estimators, and more recently, leadership and development of key managers and leaders.

We believe that the commercial, industrial and institutional HVAC markets are attractive because of their growth opportunities, large and diverse customer base, [removed: reduced weather exposure as compared to residential markets,] attractive margins and potential for long-term relationships with building owners, property managers, general contractors and architects.

For example, we have shifted certain [removed: prefabrication] [added: fabrication] activities into centralized locations [removed: thereby increasing asset utilization] in [removed: these centralized locations and redirecting prefabrication employees into other operational areas.][added: order to increase asset utilization.]

We [removed: also] [added: opportunistically] allocate our engineering, field and supervisory labor from one operation to another to more fully use our employee base, meet our customers' needs and share expertise.

We also believe larger regional and national commercial, industrial and institutional entities can benefit from consolidating their HVAC needs [removed: with] [added: through our national] service [removed: companies that are capable of providing those services regionally or nationally.][added: business and we operate a national call center to dispatch technicians to regional and national sites requiring service and small projects.]

_Maintain a Diverse Customer, Geographic and Project Base_—We have [removed: what we believe is] a well-diversified distribution of revenue across end-use sectors that [added: we believe] reduces our exposure to negative developments in any given sector.

We also [removed: believe we] have [removed: a reasonable degree of] [added: significant] geographical [removed: diversification,] [added: diversification across all regions of the United States,] again reducing our exposure to negative developments in any given region.

Our distribution of revenue in [removed: 2013] [added: 2014] by end-use sector was as follows:

| Manufacturing | | | [removed: 23] [added: 24] | % |

| Education | | | [removed: 19] [added: 17] | % |

| Healthcare | | | [removed: 14] [added: 12] | % |

| Government | | | [removed: 12] [added: 11] | % |

| Office Buildings | | | [removed: 10] [added: 12] | % |

| Retail/Restaurants | | | [removed: 8] [added: 7] | % |

| Multi-Family | | | [removed: 5] [added: 7] | % |

| Lodging and Entertainment | | | [removed: 3] [added: 5] | % |

| Distribution | | | [removed: 2] [added: 1] | % |

Approximately [removed: 83%] [added: 82%] of our revenue is earned on a project basis for installation of HVAC systems in newly constructed facilities or for replacement of HVAC systems in existing facilities.

As of December 31, [removed: 2013,] [added: 2014,] we had [removed: 3,321] [added: 4,074] projects in process with an aggregate contract value of approximately [removed: $1,787.4] [added: $1,988.3] million.

Our average project takes six to nine months to complete, with an average contract price of approximately [removed: $538,000.][added: $488,000.]

This [removed: relatively small] average project size, when taken together with the approximately [removed: 17%] [added: 18%] of our revenue derived from maintenance and service, provides us with [removed: what we][added: a broad base of work in]

A stratification of projects in progress as of December 31, [removed: 2013,] [added: 2014,] by contract price, is as follows:

| $5 million - $10 million | | | [removed: 53] [added: 64] | | | [removed: 361.8] [added: 442.5] | |

| $10 million - $15 million | | | [removed: 16] [added: 14] | | | [removed: 191.5] [added: 172.3] | |

| Greater than $15 million | | | [removed: 11] [added: 16] | | | [removed: 257.6] [added: 309.3] | |

Our consolidated 2014 revenue was derived from the

the building owner.

Over the past few years we have increased our

Approximately 99% of our consolidated 2014 revenue was derived from commercial, industrial and institutional customers and large multi-family residential projects.

| ​ | ​ | ​ | ​ | ​ |

| ​ | ​ | ​ | ​ | ​ |

the construction services sector.

| Under $1 million | | | 3,683 | | $ | 380.8 | |

| $1 million - $5 million | | | 297 | | | 683.4 | |

| Total | | | 4,074 | | $ | 1,988.3 | |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

_Strategic Service Initiative._ Over the last two years we have made substantial incremental investments to expand our service revenue.

Our average project takes six to nine months to complete, with an average contract price of approximately $488,000.

Delivery times are typically short

Safety leadership establishes safety programs and benchmarking to improve safety across the company.

Some of these competitors and

Additionally,

_

| | | | | |

corresponding changes in work requirements and schedules.

These adjustments can occur during the bid process or during the project itself, in either case adding weeks or months to the project schedule.

In addition, further restrictions have been placed on the use of certain types of refrigerants used in HVAC systems, which, along with indoor air quality concerns, may increase demand for the reconfiguration and replacement of existing HVAC systems.

We believe that although the end-use is ultimately residential, large multi-family projects have many of the same characteristics as commercial construction and we participate in this market when conditions are favorable.

In response to this opportunity, we operate a national call center to dispatch technicians to regional and national sites requiring service and use web-based proprietary information systems to maintain information on the customer's sites and equipment.

believe is a broad base of work for a company involved in the construction services sector.

| | | | | | | | |

| Under $1 million | | | 2,959 | | $ | 317.1 | |

| $1 million - $5 million | | | 282 | | | 659.4 | |

| Total | | | 3,321 | | $ | 1,787.4 | |

We have based such expansion on existing customers, relationships or expertise, and expect to selectively pursue such opportunities in the future.

We are investing in initiatives to expand the proportion of our revenue that is service based.

Over the last several years, many steel, iron and copper products, in particular, have experienced significant price fluctuation and some constrained availability.

Regional safety directors establish safety programs and benchmarking to improve safety within their region.

In addition, we believe our ability to

March 2010 until December 2011.

Financial Statements and Supplementary [removed: Data](#fa18401_item_8._financial_statements_and_supplementary_data)][added: Data](#fa17801_item_8._financial_statements_and_supplementary_data)]

| [removed: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

| For the Fiscal Year Ended December 31, [removed: 2013] [added: 2014] | | |

The aggregate market value of the voting stock held by non-affiliates of the registrant at June 30, [removed: 2013] [added: 2014] was approximately [removed: $556.8] [added: $596.4] million, based on the [removed: $14.92] [added: $15.80] last sale price of the registrant's common stock on the New York Stock Exchange on June 30, [removed: 2013.][added: 2014.]

As of February [removed: 21, 2014, 37,634,927] [added: 20, 2015, 37,269,779] shares of the registrant's common stock were outstanding (excluding treasury shares of [removed: 3,488,438).][added: 3,853,586).]

The information required by Part III (other than the required information regarding executive officers) is incorporated by reference from the registrant's definitive proxy statement, which will be filed with the Commission not later than 120 days following December 31, [removed: 2013.][added: 2014.]

| [removed: [](#ca18401_item_1._business)] [added: [](#dc17801_item_1._business)] [Item [removed: 1.](#ca18401_item_1._business)] [added: 1.](#dc17801_item_1._business)] | | [removed: [](#ca18401_item_1._business) [Business](#ca18401_item_1._business)] [added: [](#dc17801_item_1._business) [Business](#dc17801_item_1._business)] | | | [removed: [2](#ca18401_item_1._business)] [added: [2](#dc17801_item_1._business)] | |

| [removed: [](#cc18401_item_1a._risk_factors)] [added: [](#de17801_item_1a._risk_factors)] [Item [removed: 1A.](#cc18401_item_1a._risk_factors)] [added: 1A.](#de17801_item_1a._risk_factors)] | | [removed: [](#cc18401_item_1a._risk_factors)] [added: [](#de17801_item_1a._risk_factors)] [Risk [removed: Factors](#cc18401_item_1a._risk_factors)] [added: Factors](#de17801_item_1a._risk_factors)] | | | [removed: [11](#cc18401_item_1a._risk_factors)] [added: [11](#de17801_item_1a._risk_factors)] | |

| [removed: [](#ce18401_item_1b._unresolved_staff_comments)] [added: [](#dg17801_item_1b._unresolved_staff_comments)] [Item [removed: 1B.](#ce18401_item_1b._unresolved_staff_comments)] [added: 1B.](#dg17801_item_1b._unresolved_staff_comments)] | | [removed: [](#ce18401_item_1b._unresolved_staff_comments)] [added: [](#dg17801_item_1b._unresolved_staff_comments)] [Unresolved Staff [removed: Comments](#ce18401_item_1b._unresolved_staff_comments)] [added: Comments](#dg17801_item_1b._unresolved_staff_comments)] | | | [removed: [19](#ce18401_item_1b._unresolved_staff_comments)] [added: [21](#dg17801_item_1b._unresolved_staff_comments)] | |

| [removed: [](#ce18401_item_2._properties)] [added: [](#dg17801_item_2._properties)] [Item [removed: 2.](#ce18401_item_2._properties)] [added: 2.](#dg17801_item_2._properties)] | | [removed: [](#ce18401_item_2._properties) [Properties](#ce18401_item_2._properties)] [added: [](#dg17801_item_2._properties) [Properties](#dg17801_item_2._properties)] | | | [removed: [19](#ce18401_item_2._properties)] [added: [21](#dg17801_item_2._properties)] | |

| [removed: [](#ce18401_item_3._legal_proceedings)] [added: [](#dg17801_item_3._legal_proceedings)] [Item [removed: 3.](#ce18401_item_3._legal_proceedings)] [added: 3.](#dg17801_item_3._legal_proceedings)] | | [removed: [](#ce18401_item_3._legal_proceedings)] [added: [](#dg17801_item_3._legal_proceedings)] [Legal [removed: Proceedings](#ce18401_item_3._legal_proceedings)] [added: Proceedings](#dg17801_item_3._legal_proceedings)] | | | [removed: [19](#ce18401_item_3._legal_proceedings)] [added: [21](#dg17801_item_3._legal_proceedings)] | |

| [removed: [](#ce18401_item_4._mine_safety_disclosures)] [added: [](#dg17801_item_4._mine_safety_disclosures)] [Item [removed: 4.](#ce18401_item_4._mine_safety_disclosures)] [added: 4.](#dg17801_item_4._mine_safety_disclosures)] | | [removed: [](#ce18401_item_4._mine_safety_disclosures)] [added: [](#dg17801_item_4._mine_safety_disclosures)] [Mine Safety [removed: Disclosures](#ce18401_item_4._mine_safety_disclosures)] [added: Disclosures](#dg17801_item_4._mine_safety_disclosures)] | | | [removed: [19](#ce18401_item_4._mine_safety_disclosures)] [added: [21](#dg17801_item_4._mine_safety_disclosures)] | |

| [removed: [](#ce18401_item_5._market_for_registrant___ite04666)] [added: [](#di17801_item_5._market_for_registrant___ite04666)] [Item [removed: 5.](#ce18401_item_5._market_for_registrant___ite04666)] [added: 5.](#di17801_item_5._market_for_registrant___ite04666)] | | [removed: [](#ce18401_item_5._market_for_registrant___ite04666)] [added: [](#di17801_item_5._market_for_registrant___ite04666)] [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ce18401_item_5._market_for_registrant___ite04666)] [added: Securities](#di17801_item_5._market_for_registrant___ite04666)] | | | [removed: [20](#ce18401_item_5._market_for_registrant___ite04666)] [added: [22](#di17801_item_5._market_for_registrant___ite04666)] | |

| [removed: [](#cg18401_item_6._selected_financial_data)] [added: [](#dk17801_item_6._selected_financial_data)] [Item [removed: 6.](#cg18401_item_6._selected_financial_data)] [added: 6.](#dk17801_item_6._selected_financial_data)] | | [removed: [](#cg18401_item_6._selected_financial_data)] [added: [](#dk17801_item_6._selected_financial_data)] [Selected Financial [removed: Data](#cg18401_item_6._selected_financial_data)] [added: Data](#dk17801_item_6._selected_financial_data)] | | | [removed: [23](#cg18401_item_6._selected_financial_data)] [added: [25](#dk17801_item_6._selected_financial_data)] | |

| [removed: [](#cg18401_item_7._management_s_discussio__ite03668)] [added: [](#dk17801_item_7._management_s_discussio__ite03668)] [Item [removed: 7.](#cg18401_item_7._management_s_discussio__ite03668)] [added: 7.](#dk17801_item_7._management_s_discussio__ite03668)] | | [removed: [](#cg18401_item_7._management_s_discussio__ite03668)] [added: [](#dk17801_item_7._management_s_discussio__ite03668)] [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#cg18401_item_7._management_s_discussio__ite03668)] [added: Operations](#dk17801_item_7._management_s_discussio__ite03668)] | | | [removed: [24](#cg18401_item_7._management_s_discussio__ite03668)] [added: [26](#dk17801_item_7._management_s_discussio__ite03668)] | |

| [removed: [](#ck18401_item_7a._quantitative_and_qual__ite02669)] [added: [](#do17801_item_7a._quantitative_and_qual__ite02669)] [Item [removed: 7A.](#ck18401_item_7a._quantitative_and_qual__ite02669)] [added: 7A.](#do17801_item_7a._quantitative_and_qual__ite02669)] | | [removed: [](#ck18401_item_7a._quantitative_and_qual__ite02669)] [added: [](#do17801_item_7a._quantitative_and_qual__ite02669)] [Quantitative and Qualitative Disclosures about Market [removed: Risk](#ck18401_item_7a._quantitative_and_qual__ite02669)] [added: Risk](#do17801_item_7a._quantitative_and_qual__ite02669)] | | | [removed: [43](#ck18401_item_7a._quantitative_and_qual__ite02669)] [added: [45](#do17801_item_7a._quantitative_and_qual__ite02669)] | |

| [removed: [](#fa18401_item_8._financial_statements_and_supplementary_data)] [added: [](#fa17801_item_8._financial_statements_and_supplementary_data)] [Item [removed: 8.](#fa18401_item_8._financial_statements_and_supplementary_data)] [added: 8.](#fa17801_item_8._financial_statements_and_supplementary_data)] | | [removed: [](#fa18401_item_8._financial_statements_and_supplementary_data)] [added: [](#fa17801_item_8._financial_statements_and_supplementary_data)] [Financial Statements and Supplementary [removed: Data](#fa18401_item_8._financial_statements_and_supplementary_data)] [added: Data](#fa17801_item_8._financial_statements_and_supplementary_data)] | | | [removed: [44](#fa18401_item_8._financial_statements_and_supplementary_data)] [added: [46](#fa17801_item_8._financial_statements_and_supplementary_data)] | |

| [removed: [](#ga18401_item_9._changes_in_and_disagre__ite03576)] [added: [](#fu17801_item_9._changes_in_and_disagre__ite03576)] [Item [removed: 9.](#ga18401_item_9._changes_in_and_disagre__ite03576)] [added: 9.](#fu17801_item_9._changes_in_and_disagre__ite03576)] | | [removed: [](#ga18401_item_9._changes_in_and_disagre__ite03576)] [added: [](#fu17801_item_9._changes_in_and_disagre__ite03576)] [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ga18401_item_9._changes_in_and_disagre__ite03576)] [added: Disclosure](#fu17801_item_9._changes_in_and_disagre__ite03576)] | | | [removed: [82](#ga18401_item_9._changes_in_and_disagre__ite03576)] [added: [86](#fu17801_item_9._changes_in_and_disagre__ite03576)] | |

| [removed: [](#ga18401_item_9a._controls_and_procedures)] [added: [](#fu17801_item_9a._controls_and_procedures)] [Item [removed: 9A.](#ga18401_item_9a._controls_and_procedures)] [added: 9A.](#fu17801_item_9a._controls_and_procedures)] | | [removed: [](#ga18401_item_9a._controls_and_procedures)] [added: [](#fu17801_item_9a._controls_and_procedures)] [Controls and [removed: Procedures](#ga18401_item_9a._controls_and_procedures)] [added: Procedures](#fu17801_item_9a._controls_and_procedures)] | | | [removed: [82](#ga18401_item_9a._controls_and_procedures)] [added: [86](#fu17801_item_9a._controls_and_procedures)] | |

| [removed: [](#ga18401_item_9b._other_information)] [added: [](#fu17801_item_9b._other_information)] [Item [removed: 9B.](#ga18401_item_9b._other_information)] [added: 9B.](#fu17801_item_9b._other_information)] | | [removed: [](#ga18401_item_9b._other_information)] [added: [](#fu17801_item_9b._other_information)] [Other [removed: Information](#ga18401_item_9b._other_information)] [added: Information](#fu17801_item_9b._other_information)] | | | [removed: [82](#ga18401_item_9b._other_information)] [added: [86](#fu17801_item_9b._other_information)] | |

| [removed: [](#ga18401_part_iii)] [added: [](#fu17801_part_iii)] [Part [removed: III](#ga18401_part_iii)] [added: III](#fu17801_part_iii)] | | | | | | |

| [removed: [](#ga18401_item_10._directors,_executive___ite02336)] [added: [](#fu17801_item_10._directors,_executive___ite02336)] [Item [removed: 10.](#ga18401_item_10._directors,_executive___ite02336)] [added: 10.](#fu17801_item_10._directors,_executive___ite02336)] | | [removed: [](#ga18401_item_10._directors,_executive___ite02336)] [added: [](#fu17801_item_10._directors,_executive___ite02336)] [Directors, Executive Officers and Corporate [removed: Governance](#ga18401_item_10._directors,_executive___ite02336)] [added: Governance](#fu17801_item_10._directors,_executive___ite02336)] | | | [removed: [82](#ga18401_item_10._directors,_executive___ite02336)] [added: [86](#fu17801_item_10._directors,_executive___ite02336)] | |

| [removed: [](#s1)] [added: [](#Items1234)] [Item [removed: 11.](#s1)] [added: 11.](#Items1234)] | | [removed: [](#s1)] [added: [](#Items1234)] [Executive [removed: Compensation](#s1)] [added: Compensation](#Items1234)] | | | [removed: [82](#s1)] [added: [87](#Items1234)] | |

| [removed: [](#s1)] [added: [](#Items1234)] [Item [removed: 12.](#s1)] [added: 12.](#Items1234)] | | [removed: [](#s1)] [added: [](#Items1234)] [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s1)] [added: Matters](#Items1234)] | | | [removed: [82](#s1)] [added: [87](#Items1234)] | |

| [removed: [](#s1)] [added: [](#Items1234)] [Item [removed: 13.](#s1)] [added: 13.](#Items1234)] | | [removed: [](#s1)] [added: [](#Items1234)] [Certain Relationships and Related Transactions, and Director [removed: Independence](#s1)] [added: Independence](#Items1234)] | | | [removed: [82](#s1)] [added: [87](#Items1234)] | |

| [removed: [](#s1)] [added: [](#Items1234)] [Item [removed: 14.](#s1)] [added: 14.](#Items1234)] | | [removed: [](#s1)] [added: [](#Items1234)] [Principal Accounting Fees and [removed: Services](#s1)] [added: Services](#Items1234)] | | | [removed: [82](#s1)] [added: [87](#Items1234)] | |

| [removed: [](#ga18401_item_15._exhibits_and_financial_statement_schedules)] [added: [](#fu17801_item_15._exhibits_and_financial_statement_schedules)] [Item [removed: 15.](#ga18401_item_15._exhibits_and_financial_statement_schedules)] [added: 15.](#fu17801_item_15._exhibits_and_financial_statement_schedules)] | | [removed: [](#ga18401_item_15._exhibits_and_financial_statement_schedules)] [added: [](#fu17801_item_15._exhibits_and_financial_statement_schedules)] [Exhibits and Financial Statement [removed: Schedules](#ga18401_item_15._exhibits_and_financial_statement_schedules)] [added: Schedules](#fu17801_item_15._exhibits_and_financial_statement_schedules)] | | | [removed: [83](#ga18401_item_15._exhibits_and_financial_statement_schedules)] [added: [87](#fu17801_item_15._exhibits_and_financial_statement_schedules)] | |

[removed: FORWARD-LOOKING STATEMENTS][added: _FORWARD-LOOKING STATEMENTS_]

10-K 1 a2223211z10-k.htm 10-K

| [](#dc17801_part_i) [Part I](#dc17801_part_i) | | | | | | |

| [](#di17801_part_ii) [Part II](#di17801_part_ii) | | | | | | |

| [](#fu17801_part_iv) [Part IV](#fu17801_part_iv) | | | | | | |

10-K 1 a2218454z10-k.htm 10-K

| [](#ca18401_part_i) [Part I](#ca18401_part_i) | | | | | | |

| [](#ce18401_part_ii) [Part II](#ce18401_part_ii) | | | | | | |

| [](#ga18401_part_iv) [Part IV](#ga18401_part_iv) | | | | | | |

We own [removed: four] [added: five] properties, [removed: two] [added: three] of which we acquired through acquisition and two that we formerly leased.

Other than these [removed: four] [added: five] properties, we lease the real property and buildings from which we operate.

As of February [removed: 21, 2014] [added: 20, 2015] there were approximately [removed: 314] [added: 294] stockholders of record of our Common Stock, and the last reported sale price on that date was [removed: $16.54] [added: $16.66] per share.

In addition, our revolving credit agreement limits the amount of dividends we can pay at any time that [removed: the ratio of] our [removed: Adjusted Indebtedness to our Credit Facility Adjusted EBITDA] [added: Net Leverage Ratio] exceeds 1.0.

[removed: ][added: ]

$100 invested on [removed: 12/31/08] [added: 12/31/09] in stock or index, including reinvestment of dividends.

Copyright© [removed: 2014] [added: 2015] S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

Copyright© [removed: 2014] [added: 2015] Russell Investment Group.

Since the inception of the repurchase program, the Board has approved [removed: 6.6] [added: 7.6] million shares to be repurchased.

Since the inception of the program in 2007 and as of December 31, [removed: 2013,] [added: 2014,] we have repurchased a cumulative total of [removed: 6.0] [added: 6.6] million shares at an average price of [removed: $11.00] [added: $11.30] per share.

During the year ended December 31, [removed: 2013,] [added: 2014,] we purchased our common shares in the following amounts at the following weighted-average prices:

| Period | | Total Number of Shares Purchased | | | [removed: Weighted-Average] [added: Weighted- Average] Price Paid Per Share | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | | |

| [removed: September] [added: January] 1 - [removed: September 30] [added: January 31] | | | [removed: 66,359] [added: —] | | $ | [removed: 15.53] [added: —] | | | 6,017,214 | | | 583,323 | |

| [removed: October] [added: February] 1 - [removed: October 31] [added: February 28] | | | — | | $ | — | | | 6,017,214 | | | 583,323 | |

| Fourth Quarter, 2014 | | $ | 17.42 | | $ | 12.81 | | $ | 0.060 | |

| Third Quarter, 2014 | | $ | 16.38 | | $ | 13.55 | | $ | 0.055 | |

| Second Quarter, 2014 | | $ | 17.14 | | $ | 14.61 | | $ | 0.055 | |

| First Quarter, 2014 | | $ | 19.62 | | $ | 15.24 | | $ | 0.055 | |

On October 24, 2014, the Board approved an extension to the program by increasing the shares authorized for repurchase by 1.0 million shares.

| March 1 - March 31 | | | 25,000 | | $ | 16.64 | | | 6,042,214 | | | 558,323 | |

| April 1 - April 30 | | | 6,037 | | $ | 14.86 | | | 6,048,251 | | | 552,286 | |

| May 1 - May 31 | | | — | | $ | — | | | 6,048,251 | | | 552,286 | |

| June 1 - June 30 | | | — | | $ | — | | | 6,048,251 | | | 552,286 | |

| July 1 - July 31 | | | — | | $ | — | | | 6,048,251 | | | 552,286 | |

| August 1 - August 31 | | | 191,222 | | $ | 14.69 | | | 6,239,473 | | | 361,064 | |

| September 1 - September 30 | | | 204,428 | | $ | 14.52 | | | 6,443,901 | | | 156,636 | |

| October 1 - October 31 | | | 117,282 | | $ | 13.79 | | | 6,561,183 | | | 1,000,000 | |

| November 1 - November 30 | | | 5,185 | | $ | 14.26 | | | 6,566,368 | | | 994,815 | |

| December 1 - December 31 | | | — | | $ | — | | | 6,566,368 | | | 994,815 | |

| | | | 549,154 | | $ | 14.52 | | | 6,566,368 | | | 994,815 | |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| Fourth Quarter, 2012 | | $ | 12.16 | | $ | 9.61 | | $ | 0.050 | |

| Third Quarter, 2012 | | $ | 11.82 | | $ | 9.10 | | $ | 0.050 | |

| Second Quarter, 2012 | | $ | 11.25 | | $ | 8.94 | | $ | 0.050 | |

| First Quarter, 2012 | | $ | 12.94 | | $ | 9.97 | | $ | 0.050 | |

| | | | | | | | | | | | | | |

| January 1 - January 31 | | | — | | $ | — | | | 5,891,673 | | | 708,864 | |

| February 1 - February 28 | | | — | | $ | — | | | 5,891,673 | | | 708,864 | |

| March 1 - March 31 | | | 11,700 | | $ | 12.41 | | | 5,903,373 | | | 697,164 | |

| April 1 - April 30 | | | 29,181 | | $ | 13.34 | | | 5,932,554 | | | 667,983 | |

| May 1 - May 31 | | | 9,082 | | $ | 13.30 | | | 5,941,636 | | | 658,901 | |

| June 1 - June 30 | | | — | | $ | — | | | 5,941,636 | | | 658,901 | |

| July 1 - July 31 | | | — | | $ | — | | | 5,941,636 | | | 658,901 | |

| August 1 - August 31 | | | 9,219 | | $ | 15.81 | | | 5,950,855 | | | 649,682 | |

| November 1 - November 30 | | | — | | $ | — | | | 6,017,214 | | | 583,323 | |

| December 1 - December 31 | | | — | | $ | — | | | 6,017,214 | | | 583,323 | |

| | | | 125,541 | | $ | 14.59 | | | 6,017,214 | | | 583,323 | |

| | | [added: 2014 | | |] 2013 | | | 2012 | | | 2011 | | | 2010 | | | [removed: 2009 | | |]

| Revenue | | $ | [removed: 1,357,272] [added: 1,410,795] | | $ | [removed: 1,331,185] [added: 1,357,272] | | $ | [removed: 1,216,654] [added: 1,331,185] | | $ | [removed: 1,063,520] [added: 1,216,654] | | $ | [removed: 1,068,860] [added: 1,063,520] | |

| Operating income (loss)(a) | | $ | [added: 42,222 | | $ |] 46,258 | | $ | 22,303 | | $ | (42,641 | ) | $ | 31,442 | | [removed: $ | 53,812 | |]

| Income (loss) from continuing operations | | $ | [added: 28,614 | | $ |] 28,632 | | $ | 11,494 | | $ | (32,474 | ) | $ | 20,564 | | [removed: $ | 32,900 | |]

| Operating income (loss), net of tax | | $ | [added: (15 | ) | $ |] (76 | ) | $ | 355 | | $ | (4,018 | ) | $ | (6,547 | ) | [removed: $ | 1,357 | |]

| Gain (loss) on disposition, net of tax | | | — | | | — | | | — | | [removed: $] | [removed: 723] [added: —] | | $ | [removed: (75] [added: 723] | [removed: )] |

| Net income (loss) including noncontrolling interests | | $ | [added: 28,599 | | $ |] 28,556 | | $ | 11,849 | | $ | (36,492 | ) | $ | 14,740 | | [removed: $ | 34,182 | |]

| Net income (loss) attributable to Comfort Systems USA, Inc. | | $ | [added: 23,063 | | $ |] 27,269 | | $ | 13,463 | | $ | (36,830 | ) | $ | 14,740 | | [removed: $ | 34,182 | |]

| Income (loss) from continuing operations | | $ | [added: 0.61 | | $ |] 0.73 | | $ | 0.35 | | $ | (0.88 | ) | $ | 0.54 | | [removed: $ | 0.86 | |]

| Income (loss) from operations | | | — | | | [added: — | | |] 0.01 | | | (0.11 | ) | | (0.17 | ) | [removed: | 0.04 | |]

| Gain (loss) on disposition | | | — | | | — | | | — | | | [removed: 0.02] [added: —] | | | [removed: —] [added: 0.02] | |

| Net income (loss) | | $ | [added: 0.61 | | $ |] 0.73 | | $ | 0.36 | | $ | (0.99 | ) | $ | 0.39 | | [removed: $ | 0.90 | |]

| Income (loss) from operations | | | — | | | [added: — | | |] 0.01 | | | (0.11 | ) | | (0.17 | ) | [removed: | 0.03 | |]

| Net income (loss) | | $ | [added: 0.61 | | $ |] 0.73 | | $ | 0.36 | | $ | (0.99 | ) | $ | 0.39 | | [removed: $ | 0.89 | |]

| Cash dividends per share | | $ | [removed: 0.210] [added: 0.225] | | $ | [removed: 0.200] [added: 0.210] | | $ | 0.200 | | $ | 0.200 | | $ | [removed: 0.190] [added: 0.200] | |

| Working capital | | $ | [removed: 127,559] [added: 130,555] | | $ | [removed: 103,966] [added: 127,559] | | $ | [removed: 109,766] [added: 103,966] | | $ | [removed: 134,738] [added: 109,766] | | $ | [removed: 164,125] [added: 134,738] | |

| Total assets | | $ | [removed: 601,822] [added: 665,750] | | $ | [removed: 580,754] [added: 601,822] | | $ | [removed: 593,980] [added: 580,754] | | $ | [removed: 640,020] [added: 593,980] | | $ | [removed: 574,948] [added: 640,020] | |

| Total debt | | $ | [removed: 2,000] [added: 40,346] | | $ | [removed: 7,400] [added: 2,000] | | $ | [removed: 15,381] [added: 7,400] | | $ | [removed: 29,936] [added: 15,381] | | $ | [removed: 7,608] [added: 29,936] | |

| Total stockholders' equity | | $ | [removed: 314,022] [added: 321,393] | | $ | [removed: 287,306] [added: 314,022] | | $ | [removed: 283,106] [added: 287,306] | | $ | [removed: 312,784] [added: 283,106] | | $ | [removed: 305,984] [added: 312,784] | |

| Total Comfort Systems USA, Inc. stockholders' equity | | $ | [removed: 295,834] [added: 306,281] | | $ | [removed: 270,405] [added: 295,834] | | $ | [removed: 264,591] [added: 270,405] | | $ | [removed: 312,784] [added: 264,591] | | $ | [removed: 305,984] [added: 312,784] | |

Included in operating income are goodwill impairment charges of [added: $0.7 million and] $57.3 million for [removed: 2011.][added: 2014 and 2011, respectively.]

There were no goodwill impairment charges for 2013, [removed: 2012, 2010] [added: 2012] or [removed: 2009.][added: 2010.]

| Income (loss) from continuing operations | | $ | 0.61 | | $ | 0.73 | | $ | 0.35 | | $ | (0.88 | ) | $ | 0.54 | |

| Gain (loss) on disposition | | | — | | | — | | | — | | | — | | | 0.02 | |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

_

| | | | | | | | | | | | | | | | | |

| [removed: [](#fc18401_management_s_report_on_interna__man02650)] [added: [](#fc17801_management_s_report_on_interna__man02650)] [Management's Report on Internal Control over Financial [removed: Reporting](#fc18401_management_s_report_on_interna__man02650)] [added: Reporting](#fc17801_management_s_report_on_interna__man02650)] | | | [removed: [45](#fc18401_management_s_report_on_interna__man02650)] [added: [47](#fc17801_management_s_report_on_interna__man02650)] | |

| [removed: [](#h1)] [added: [](#Report1)] [Report of Independent Registered Public Accounting [removed: Firm](#h1)] [added: Firm](#Report1)] | | | [removed: [46](#h1)] [added: [48](#Report1)] | |

| [removed: [](#h2)] [added: [](#Report2)] [Report of Independent Registered Public Accounting [removed: Firm](#h2)] [added: Firm](#Report2)] | | | [removed: [47](#h2)] [added: [49](#Report2)] | |

| [removed: [](#fi18401_comfort_systems_usa,_inc._cons__com03397)] [added: [](#fe17801_comfort_systems_usa,_inc._cons__com03397)] [Consolidated Balance [removed: Sheets](#fi18401_comfort_systems_usa,_inc._cons__com03397)] [added: Sheets](#fe17801_comfort_systems_usa,_inc._cons__com03397)] | | | [removed: [48](#fi18401_comfort_systems_usa,_inc._cons__com03397)] [added: [50](#fe17801_comfort_systems_usa,_inc._cons__com03397)] | |

| [removed: [](#fk18401_comfort_systems_usa,_inc._cons__com03873)] [added: [](#fg17801_comfort_systems_usa,_inc._cons__com03873)] [Consolidated Statements of [removed: Operations](#fk18401_comfort_systems_usa,_inc._cons__com03873)] [added: Operations](#fg17801_comfort_systems_usa,_inc._cons__com03873)] | | | [removed: [49](#fk18401_comfort_systems_usa,_inc._cons__com03873)] [added: [51](#fg17801_comfort_systems_usa,_inc._cons__com03873)] | |

| [removed: [](#fm18401_comfort_systems_usa,_inc._cons__com04303)] [added: [](#fi17801_comfort_systems_usa,_inc._cons__com04303)] [Consolidated Statements of Stockholders' [removed: Equity](#fm18401_comfort_systems_usa,_inc._cons__com04303)] [added: Equity](#fi17801_comfort_systems_usa,_inc._cons__com04303)] | | | [removed: [50](#fm18401_comfort_systems_usa,_inc._cons__com04303)] [added: [52](#fi17801_comfort_systems_usa,_inc._cons__com04303)] | |

| [removed: [](#fo18401_comfort_systems_usa,_inc._cons__com03000)] [added: [](#fk17801_comfort_systems_usa,_inc._cons__com03000)] [Consolidated Statements of Cash [removed: Flows](#fo18401_comfort_systems_usa,_inc._cons__com03000)] [added: Flows](#fk17801_comfort_systems_usa,_inc._cons__com03000)] | | | [removed: [51](#fo18401_comfort_systems_usa,_inc._cons__com03000)] [added: [53](#fk17801_comfort_systems_usa,_inc._cons__com03000)] | |

| [removed: [](#fq18401_comfort_systems_usa,_inc._note__com02989)] [added: [](#fm17801_comfort_systems_usa,_inc._note__com02990)] [Notes to Consolidated Financial [removed: Statements](#fq18401_comfort_systems_usa,_inc._note__com02989)] [added: Statements](#fm17801_comfort_systems_usa,_inc._note__com02990)] | | | [removed: [52](#fq18401_comfort_systems_usa,_inc._note__com02989)] [added: [54](#fm17801_comfort_systems_usa,_inc._note__com02990)] | |

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, [removed: 2013] [added: 2014] based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (COSO).][added: (COSO 2013 framework).]

Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2013.][added: 2014.]

Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included elsewhere herein, has issued an attestation report auditing the effectiveness of our internal control over financial reporting as of December 31, [removed: 2013.][added: 2014.]

We have audited the accompanying consolidated balance sheets of Comfort Systems USA, Inc. as of December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, [removed: 2013.][added: 2014.]

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Comfort Systems USA, Inc. at December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2013,] [added: 2014,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Comfort Systems USA, Inc.'s internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on criteria established in _Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission_ (1992 framework)] [added: Commission (2013 framework)_] and our report dated February [removed: 27, 2014] [added: 26, 2015] expressed an unqualified opinion thereon.

| Houston, Texas February [removed: 27, 2014] [added: 26, 2015] | | |

We have audited Comfort Systems USA, Inc.'s internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on criteria established in _Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (1992] [added: (2013] framework)_ (the COSO criteria).

Comfort Systems USA, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal [removed: Control.][added: Control over Financial Reporting.]

In our opinion, Comfort Systems USA, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Comfort Systems USA, Inc. as of December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, [removed: 2013] [added: 2014] of Comfort Systems USA, Inc. and our report dated February [removed: 27, 2014] [added: 26, 2015] expressed an unqualified opinion thereon.

| | | [added: 2014 | | |] 2013 | | | 2012 | | |

| Cash and cash equivalents | | $ | [removed: 52,054] [added: 32,064] | | $ | [removed: 40,757] [added: 52,054] | |

| Accounts receivable, less allowance for doubtful accounts of [removed: $4,460] [added: $4,379] and [removed: $6,333,] [added: $4,460,] respectively | | | [removed: 267,470] [added: 303,575] | | | [removed: 256,959] [added: 267,470] | |

| Other receivables | | | [removed: 16,373] [added: 15,520] | | | [removed: 12,376] [added: 16,373] | |

| Inventories | | | [removed: 8,430] [added: 8,646] | | | [removed: 9,638] [added: 8,430] | |

| Prepaid expenses and other | | | [removed: 24,209] [added: 25,591] | | | [removed: 25,037] [added: 24,209] | |

| Costs and estimated earnings in excess of billings | | | [removed: 28,122] [added: 27,620] | | | [removed: 26,204] [added: 28,122] | |

| Assets related to discontinued operations | | | [removed: 339] [added: 176] | | | [removed: 1,582] [added: 339] | |

| Total current assets | | | [removed: 396,997] [added: 413,192] | | | [removed: 372,553] [added: 396,997] | |

| PROPERTY AND EQUIPMENT, NET | | | [removed: 46,861] [added: 55,759] | | | [removed: 41,416] [added: 46,861] | |

| GOODWILL | | | [removed: 114,588] [added: 140,341] | | | 114,588 | |

| IDENTIFIABLE INTANGIBLE ASSETS, NET | | | [removed: 37,383] [added: 45,666] | | | [removed: 44,515] [added: 37,383] | |

| OTHER NONCURRENT ASSETS | | | [removed: 5,993] [added: 10,792] | | | [removed: 7,682] [added: 5,993] | |

| Total assets | | $ | [removed: 601,822] [added: 665,750] | | $ | [removed: 580,754] [added: 601,822] | |

| Current maturities of long-term debt | | $ | — | | $ | [removed: 300] [added: 2,000] | |

| [removed: Current maturities of notes] [added: Notes] to former owners | | | [removed: 2,000] [added: 1,000] | | | [removed: —] [added: 2,000] | |

| Accounts payable | | | [removed: 100,825] [added: 106,211] | | | [removed: 100,641] [added: 100,825] | |

| Accrued compensation and benefits | | | [removed: 44,093] [added: 44,683] | | | [removed: 36,892] [added: 44,093] | |

| Billings in excess of costs and estimated earnings | | | [removed: 64,588] [added: 77,446] | | | [removed: 73,814] [added: 64,588] | |

| Accrued self-insurance expense | | | [removed: 29,398] [added: 28,903] | | | [removed: 29,096] [added: 29,398] | |

| Other current liabilities | | | [removed: 28,168] [added: 24,814] | | | [removed: 27,077] [added: 28,168] | |

| Houston, Texas February 26, 2015 | | |

| | | 2014 | | | 2013 | | |

| Current maturities of long-term capital lease obligations | | | 317 | | | — | |

| LONG-TERM DEBT | | | 39,500 | | | — | |

| LONG-TERM CAPITAL LEASE OBLIGATIONS | | | 529 | | | — | |

| Income from continuing operations | | $ | 0.61 | | $ | 0.73 | | $ | 0.35 | |

| Net income | | $ | 0.61 | | $ | 0.73 | | $ | 0.36 | |

| Net income | | | — | | | — | | | — | | | — | | | — | | | 23,063 | | | 5,536 | | | 28,599 | |

| Issuance of restricted stock | | | — | | | — | | | 115,044 | | | 1,243 | | | (1,243 | ) | | — | | | — | | | — | |

| Dividends | | | — | | | — | | | — | | | — | | | — | | | (8,447 | ) | | — | | | (8,447 | ) |

| Distribution to noncontrolling interest | | | — | | | — | | | — | | | — | | | — | | | — | | | (8,612 | ) | | (8,612 | ) |

| Share repurchase | | | — | | | — | | | (549,154 | ) | | (7,974 | ) | | — | | | — | | | — | | | (7,974 | ) |

| BALANCE AT DECEMBER 31, 2014 | | | 41,123,365 | | $ | 411 | | | (3,853,586 | ) | $ | (43,598 | ) | $ | 320,084 | | $ | 29,384 | | $ | 15,112 | | $ | 321,393 | |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| Proceeds from revolving line of credit | | | 128,500 | | | 43,000 | | | 62,000 | |

| Payments on capital lease obligations | | | (115 | ) | | — | | | — | |

| Distributions to noncontrolling interests | | | (8,612 | ) | | — | | | — | |

December 31, 2014

We quantitatively and qualitatively assessed the materiality of the errors

December 31, 2014

Our operation in Southern California recorded a revision in contract estimate on a project in a loss position resulting in a writedown to this individual project of $4.4 million, on a pre-tax basis, for the twelve months ended December 31, 2014.

_Recent Accounting Pronouncements_

In April 2014, the FASB issued ASU No. 2014-08, _"Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity."_ ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation.

It is effective for annual periods beginning on or after December 15, 2014.

Early adoption is permitted but only for disposals that have not been reported in financial statements previously issued.

We do not believe this pronouncement will have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, _"Revenue from Contracts with Customers (Topic 606)."_ ASU 2014-09 provides a framework that replaces the existing revenue recognition guidance.

The guidance can be applied on a full retrospective or modified retrospective basis whereby the entity records a cumulative effect of initially applying this update at the date of initial application,

December 31, 2014

and early adoption is not permitted.

It is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period.

We are currently evaluating the potential impact of this authoritative guidance on our consolidated financial statements.

December 31, 2014

current liability in our balance sheet under the caption "Billings in excess of costs and estimated earnings."

| | | 2014 | | | 2013 | | |

| | | $ | (49,826 | ) | $ | (36,466 | ) |

| | | $ | (49,826 | ) | $ | (36,466 | ) |

December 31, 2014

December 31, 2014

December 31, 2014

| | | | | |

| | | | | | | | |

| LONG-TERM DEBT, NET OF CURRENT MATURITIES | | | — | | | 2,100 | |

| NOTES TO FORMER OWNERS, NET OF CURRENT MATURITIES | | | — | | | 5,000 | |

| | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | |

| BALANCE AT DECEMBER 31, 2010 | | | 41,123,365 | | $ | 411 | | | (3,221,775 | ) | $ | (34,714 | ) | $ | 326,467 | | $ | 20,620 | | | — | | $ | 312,784 | |

| Net income (loss) | | | — | | | — | | | — | | | — | | | — | | | (36,830 | ) | | 338 | | | (36,492 | ) |

| Issuance of restricted stock | | | — | | | — | | | 230,702 | | | 2,488 | | | (2,488 | ) | | — | | | — | | | — | |

| Dividends | | | — | | | — | | | — | | | — | | | (3,771 | ) | | (3,781 | ) | | — | | | (7,552 | ) |

| Share repurchase | | | — | | | — | | | (738,590 | ) | | (7,256 | ) | | — | | | — | | | — | | | (7,256 | ) |

| Acquisition of EAS | | | — | | | — | | | — | | | — | | | — | | | — | | | 17,377 | | | 17,377 | |

| Contribution from noncontrolling interest | | | — | | | — | | | — | | | — | | | — | | | — | | | 800 | | | 800 | |

| Goodwill and other intangible asset impairments | | | — | | | — | | | 58,922 | |

| Sales of marketable securities | | | — | | | — | | | 2,000 | |

| Capital contribution from noncontrolling interests | | | — | | | — | | | 800 | |

Other materials

| | | $ | (36,466 | ) | $ | (47,610 | ) |

The market multiples from invested capital

A reserve for warranty costs is

| | | | | | | | | | | | | | |

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.

| Issuances | | | — | | | 140 | |

_Acquisition of EAS_

On November 2, 2011, we acquired a 60% majority interest in Environmental Air Systems, LLC ("EAS").

EAS is a regional mechanical contractor with principal offices in Greensboro and Raleigh, North Carolina.

EAS engages in a broad range of mechanical contracting projects, HVAC service and controls, and sophisticated prefabrication of mechanical systems, in North Carolina, South Carolina and throughout the Atlantic region.

The acquisition date fair value of consideration transferred was $30.4 million, of which $15.7 million was allocated to goodwill.

During 2011, we impaired the intangible assets of $1.6 million associated with this operation as a result of this decision.

market specific conditions, cost factors and events specific to the reporting unit, etc.).

We assigned a weighting of 50% to the discounted cash flow analysis and 50% to the public company approach for the year ended December 31, 2011.

There was no weighting assigned to the transaction approach due to the lack of comparable market data in 2011.

We recorded a goodwill impairment of $57.3 million during 2011 related to four reporting units serving the Virginia, Maryland and North Carolina markets.

| | | | | | | | | | | | | | | | | |

| 2014 | | $ | 6,106 | |

| 2015 | | | 4,873 | |

| 2016 | | | 3,748 | |

| 2017 | | | 2,997 | |

| Thereafter | | | 17,339 | |

| Total | | $ | 37,383 | |

_

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the three months ended December 31, [removed: 2013] [added: 2014] that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

The Company will file with the Commission a definitive proxy statement including the other information to be disclosed under this item in the 120 days following December 31, [removed: 2013] [added: 2014] and such information is hereby incorporated by reference.

The Company will file with the Commission a definitive proxy statement including the information to be disclosed [added: under the items in the 120 days following December 31, 2014 and such information is hereby incorporated by reference.]

under the items in the 120 days following December 31, 2013 and such information is hereby incorporated by reference.

Consolidated Financial Statements (Included Under Item 8): The Index to the Consolidated Financial Statements is included on page [removed: 44] [added: 37] of this annual report on Form 10-K and is incorporated herein by reference.

Date: February [removed: 27, 2014][added: 26, 2015]

| /s/ BRIAN E. LANE Brian E. Lane | | President, Chief Executive Officer, and Director (Principal Executive Officer) | | | February [removed: 27, 2014] [added: 26, 2015] | |

| /s/ WILLIAM GEORGE William George | | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | | | February [removed: 27, 2014] [added: 26, 2015] | |

| /s/ JULIE S. SHAEFF Julie S. Shaeff | | Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) | | | February [removed: 27, 2014] [added: 26, 2015] | |

| [removed: William F. Murdy] [added: /s/ FRANKLIN MYERS Franklin Myers] | | Chairman of the Board | | | February [removed: 27, 2014] [added: 26, 2015] | |

| /s/ DARCY G. ANDERSON Darcy G. Anderson | | Director | | | February [removed: 27, 2014] [added: 26, 2015] | |

| /s/ HERMAN E. BULLS Herman E. Bulls | | Director | | | February [removed: 27, 2014] [added: 26, 2015] | |

| /s/ ALFRED J. GIARDINELLI, JR. Alfred J. Giardinelli, Jr. | | Director | | | February [removed: 27, 2014] [added: 26, 2015] | |

| /s/ ALAN P. KRUSI Alan P. Krusi | | Director | | | February [removed: 27, 2014] [added: 26, 2015] | |

| /s/ JAMES H. SCHULTZ James H. Schultz | | Director | | | February [removed: 27, 2014] [added: 26, 2015] | |

| /s/ CONSTANCE E. SKIDMORE Constance E. Skidmore | | Director | | | February [removed: 27, 2014] [added: 26, 2015] | |

| /s/ VANCE W. TANG Vance W. Tang | | Director | | | February [removed: 27, 2014] [added: 26, 2015] | |

| | *10.28 | | Letter Agreement between the Company and James Mylett | | | [added: 10.28] | | [removed: Filed Herewith] [added: 2013 Form 10-K] |

| | *10.29 | | Form of Change in Control Agreement (2013) | | | [added: 10.29] | | [removed: Filed Herewith] [added: 2013 Form 10-K] |

| | [removed: 101.INS] [added: 101.INS] | | XBRL Instance Document | | | | | |

| | [removed: 101.SCH] [added: 101.SCH] | | XBRL Taxonomy Extension Schema Document | | | | | |

| | [removed: 101.CAL] [added: 101.CAL] | | XBRL Taxonomy Extension Calculation Linkbase Document | | | | | |

| | [removed: 101.LAB] [added: 101.LAB] | | XBRL Taxonomy Extension Label Linkbase Document | | | | | |

| | [removed: 101.PRE] [added: 101.PRE] | | XBRL Taxonomy Extension Presentation Linkbase Document | | | | | |

| | [removed: 101.DEF] [added: 101.DEF] | | XBRL Taxonomy Extension Definition Linkbase Document | | | | | |

| | *10.30 | | Summary of 2014 Incentive Compensation Plan | | | 10.1 | | First Quarter 2014 Form 10-Q |

| | *10.31 | | Form of 2014 Restricted Stock Unit Agreement | | | 10.1 | | March 21, 2014 Form 8-K |

| | *10.32 | | Form of 2014 Dollar-denominated Performance Vesting Restricted Stock Unit Agreement | | | 10.2 | | March 21, 2014 Form 8-K |

| | *10.33 | | Form of Option Award under the Comfort Systems USA, Inc. 2012 Equity Incentive Plan | | | | | Filed Herewith |

| | 10.34 | | Amendment No. 3 to Second Amended and Restated Credit Agreement and Amendment to Other Loan Documents | | | 10.1 | | Third Quarter 2014 Form 10-Q |

| | 10.35 | | Agreement and Plan of Merger between the Company and Dyna Ten Corporation, dated April 7, 2014 | | | 10.1 | | April 7, 2014 Form 8-K |

| /s/ FRANKLIN MYERS Franklin Myers | | Director | | | February 27, 2014 | |

| /s/ ROBERT D. WAGNER, JR. Robert D. Wagner, Jr. | | Director | | | February 27, 2014 | |

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.