Selling, general and administrative expenses

$ 4,220,702

^[1]

$ 4,113,239

^[1]

$ 3,944,540

Cost of sales

3,186,118

3,105,882

2,988,138

Gross profit

1,034,584

1,007,357

956,402

688,952

670,609

650,655

Operating income

345,632

336,748

305,747

Interest expense, net

3,713

5,547

5,206

Income before income taxes

341,919

331,201

300,541

105,936

104,677

91,839

Less: net income attributable to non-controlling interest

235,983

226,524

208,702

53,173

53,595

57,315

Net income attributable to Watsco, Inc.

$ 182,810

$ 172,929

$ 151,387

Earnings per share for Common and Class B common stock:

Basic

$ 5.16

^[2]

$ 4.91

^[2]

$ 4.33

Diluted

$ 5.15

^[2]

$ 4.90

^[2]

$ 4.32

[1]

Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly even during the year except for dependence on housing completions and related weather and economic conditions.

[2]

Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year.

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Net income	$ 235,983	$ 226,524	$ 208,702
Other comprehensive gain (loss), net of tax
Foreign currency translation adjustment	6,211	(39,378)	(21,117)
Unrealized (loss) gain on cash flow hedging instruments	(965)	2,713	280
Reclassification of loss (gain) on cash flow hedging instruments into earnings	323	(1,993)
Unrealized gain (loss) on available-for-sale securities	14	(8)	1
Other comprehensive gain (loss)	5,583	(38,666)	(20,836)
Comprehensive income	241,566	187,858	187,866
Less: comprehensive income attributable to non-controlling interest	55,382	38,086	48,752
Comprehensive income attributable to Watsco, Inc.	$ 186,184	$ 149,772	$ 139,114

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 56,010	$ 35,229
Accounts receivable, net	475,974	451,079
Inventories	685,011	673,967
Other current assets	23,161	20,990
Total current assets	1,240,156	1,181,265
Property and equipment, net	90,502	62,715
Goodwill	379,737	378,310
Intangible assets, net	158,564	160,481
Other assets	5,690	5,671
Total assets	1,874,649	1,788,442
Current liabilities:
Current portion of other long-term obligations	200	184
Accounts payable	185,482	145,162
Accrued expenses and other current liabilities	129,206	124,955
Total current liabilities	314,888	270,301
Long-term obligations:
Borrowings under revolving credit agreement	235,294	245,300
Other long-term obligations, net of current portion	348	514
Total long-term obligations	235,642	245,814
Deferred income taxes and other liabilities	72,371	68,606
Commitments and contingencies
Watsco, Inc. shareholders' equity:
Preferred stock, $0.50 par value, 10,000,000 shares authorized; no shares issued
Paid-in capital	592,350	602,522
Accumulated other comprehensive loss, net of tax	(43,530)	(46,904)
Retained earnings	550,482	495,276
Treasury stock, at cost, 6,322,650 shares of Common stock and 48,263 shares of Class B common stock at both December 31, 2016 and 2015	(114,425)	(114,425)
Total Watsco, Inc. shareholders' equity	1,005,828	957,310
Non-controlling interest	245,920	246,411
Total shareholders' equity	1,251,748	1,203,721
Total liabilities and shareholders' equity	1,874,649	1,788,442
Common Stock
Watsco, Inc. shareholders' equity:
Common stock, $0.50 par value	18,341	18,308
Class B Common Stock
Watsco, Inc. shareholders' equity:
Common stock, $0.50 par value	$ 2,610	$ 2,533

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2016	Dec. 31, 2015
Preferred stock, par value	$ 0.50	$ 0.50
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common Stock
Common stock, par value	$ 0.50	$ 0.50
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares outstanding	36,682,562	36,616,197
Treasury stock, shares	6,322,650	6,322,650
Class B Common Stock
Common stock, par value	$ 0.50	$ 0.50
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares outstanding	5,218,754	5,066,209
Treasury stock, shares	48,263	48,263

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock, Class B Common Stock and Preferred Stock	Paid-In Capital	Accumulated Other Comprehensive Loss	Retained Earnings	Treasury Stock	Non-controlling Interest
Beginning balance at Dec. 31, 2013	$ 1,127,392	$ 20,549	$ 606,384	$ (11,474)	$ 339,362	$ (114,425)	$ 286,996
Beginning balance (in shares) at Dec. 31, 2013		34,727,121
Net income	208,702				151,387		57,315
Other comprehensive gain (loss)	(20,836)			(12,273)			(8,563)
Issuances of non-vested restricted shares of common stock (in shares)		218,725
Issuances of non-vested restricted shares of common stock		$ 109	(109)
Forfeitures of non-vested restricted shares of common stock (in shares)		(5,000)
Forfeitures of non-vested restricted shares of common stock		$ (2)	2
Common stock contribution to 401(k) plan	1,759	$ 9	1,750
Common stock contribution to 401(k) plan (in shares)		18,309
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)		73,948
Stock issuances from exercise of stock options and employee stock purchase plan	4,666	$ 37	4,629
Retirement of common stock (in shares)		(26,482)
Retirement of common stock	(2,615)	$ (13)	(2,602)
Share-based compensation	12,006		12,006
Excess tax benefit from share-based compensation	1,828		1,828
Cash dividends declared and paid on Common and Class B common stock	(69,870)				(69,870)
Decrease in non-controlling interest in Carrier Enterprise I	(87,735)		(43,324)				(44,411)
Distributions to non-controlling interest	(43,258)						(43,258)
Ending balance at Dec. 31, 2014	1,132,039	$ 20,689	580,564	(23,747)	420,879	(114,425)	248,079
Ending balance (in shares) at Dec. 31, 2014		35,006,621
Net income	226,524				172,929		53,595
Other comprehensive gain (loss)	(38,666)			(23,157)			(15,509)
Issuances of non-vested restricted shares of common stock (in shares)		200,479
Issuances of non-vested restricted shares of common stock		$ 100	(100)
Forfeitures of non-vested restricted shares of common stock (in shares)		(5,000)
Forfeitures of non-vested restricted shares of common stock		$ (2)	2
Common stock contribution to 401(k) plan	1,963	$ 9	1,954
Common stock contribution to 401(k) plan (in shares)		18,343
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)		124,262
Stock issuances from exercise of stock options and employee stock purchase plan	8,632	$ 62	8,570
Retirement of common stock (in shares)		(33,212)
Retirement of common stock	(4,140)	$ (17)	(4,123)
Share-based compensation	13,233		13,233
Excess tax benefit from share-based compensation	2,422		2,422
Cash dividends declared and paid on Common and Class B common stock	(98,532)				(98,532)
Distributions to non-controlling interest	(39,754)						(39,754)
Ending balance at Dec. 31, 2015	1,203,721	$ 20,841	602,522	(46,904)	495,276	(114,425)	246,411
Ending balance (in shares) at Dec. 31, 2015		35,311,493
Net income	235,983				182,810		53,173
Other comprehensive gain (loss)	5,583			3,374			2,209
Issuances of non-vested restricted shares of common stock (in shares)		183,144
Issuances of non-vested restricted shares of common stock		$ 92	(92)
Forfeitures of non-vested restricted shares of common stock (in shares)		(26,000)
Forfeitures of non-vested restricted shares of common stock		$ (13)	13
Common stock contribution to 401(k) plan	2,348	$ 10	2,338
Common stock contribution to 401(k) plan (in shares)		20,045
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)		72,482
Stock issuances from exercise of stock options and employee stock purchase plan	5,696	$ 36	5,660
Retirement of common stock (in shares)		(30,761)
Retirement of common stock	(4,018)	$ (15)	(4,003)
Share-based compensation	11,848		11,848
Cash dividends declared and paid on Common and Class B common stock	(127,604)				(127,604)
Decrease in non-controlling interest in Carrier Enterprise I	(42,909)		(25,936)				(16,973)
Distributions to non-controlling interest	(38,900)						(38,900)
Ending balance at Dec. 31, 2016	$ 1,251,748	$ 20,951	$ 592,350	$ (43,530)	$ 550,482	$ (114,425)	$ 245,920
Ending balance (in shares) at Dec. 31, 2016		35,530,403

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Net income	$ 235,983	$ 226,524	$ 208,702
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	20,066	19,117	17,927
Share-based compensation	12,319	12,596	11,473
Deferred income tax provision	2,720	4,687	289
Provision for doubtful accounts	3,487	2,688	2,609
Non-cash contribution to 401(k) plan	2,348	1,963	1,759
Gain on sale of property and equipment	(189)	(487)	(1,292)
Excess tax benefits from share-based compensation		(2,422)	(1,828)
Changes in operating assets and liabilities:
Accounts receivable	(26,941)	(26,121)	(41,068)
Inventories	(9,729)	(3,652)	(98,741)
Accounts payable and other liabilities	39,759	(13,225)	45,242
Other, net	(2,067)	(285)	(92)
Net cash provided by operating activities	277,756	221,383	144,980
Cash flows from investing activities:
Capital expenditures	(43,577)	(23,698)	(21,512)
Proceeds from sale of property and equipment	744	760	2,388
Net cash used in investing activities	(42,833)	(22,938)	(19,124)
Cash flows from financing activities:
Dividends on Common and Class B common stock	(127,604)	(98,532)	(69,870)
Purchase of additional ownership from non-controlling interest	(42,909)		(87,735)
Distributions to non-controlling interest	(38,900)	(39,754)	(43,258)
Net (repayments) proceeds under revolving credit agreement	(10,006)	(56,256)	74,729
Net (repayments) proceeds from other long-term obligations	(150)	(157)	235
Payment of fees related to revolving credit agreement			(381)
Excess tax benefits from share-based compensation		2,422	1,828
Net proceeds from issuances of common stock	5,653	5,957	4,245
Net cash used in financing activities	(213,916)	(186,320)	(120,207)
Effect of foreign exchange rate changes on cash and cash equivalents	(226)	(1,343)	(680)
Net increase in cash and cash equivalents	20,781	10,782	4,969
Cash and cash equivalents at beginning of year	35,229	24,447	19,478
Cash and cash equivalents at end of year	$ 56,010	$ 35,229	$ 24,447

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2016

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization, Consolidation and Presentation

Watsco, Inc. (collectively with its subsidiaries, “Watsco,” “we,” “us” or “our”) was incorporated in Florida in 1956 and is the largest distributor of air conditioning, heating and refrigeration equipment and related parts and supplies (“HVAC/R”) in the HVAC/R distribution industry in North America. At December 31, 2016, we operated from 565 locations in 37 U.S. states, Canada, Mexico and Puerto Rico with additional market coverage on an export basis to portions of Latin America and the Caribbean.

The consolidated financial statements include the accounts of Watsco, all of its wholly owned subsidiaries and the accounts of three joint ventures with Carrier Corporation (“Carrier”), in each of which Watsco maintains a controlling interest. All significant intercompany balances and transactions have been eliminated in consolidation.

Foreign Currency Translation and Transactions

The functional currency of our operations in Canada is the Canadian dollar. Foreign currency denominated assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, and income and expense items are translated at the average exchange rates in effect during the applicable period. The aggregate effect of foreign currency translation is recorded in accumulated other comprehensive loss in our consolidated balance sheets. Our net investment in our Canadian operations is recorded at the historical rate and the resulting foreign currency translation adjustments are included in accumulated other comprehensive loss in our consolidated balance sheets. Gains or losses resulting from transactions denominated in U.S. dollars are recognized in earnings primarily within cost of sales in our consolidated statements of income.

Our operations in Mexico consider their functional currency to be the U.S. dollar because the majority of their transactions are denominated in U.S. dollars. Gains or losses resulting from transactions denominated in Mexican pesos are recognized in earnings primarily within selling, general and administrative expenses in our consolidated statements of income.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Significant estimates include valuation reserves for accounts receivable, inventories and income taxes, reserves related to self-insurance programs and the valuation of goodwill and indefinite lived intangible assets. While we believe that these estimates are reasonable, actual results could differ from such estimates.

Cash Equivalents

All highly liquid instruments purchased with original maturities of three months or less are considered to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable primarily consist of trade receivables due from customers and are stated at the invoiced amount less an allowance for doubtful accounts. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments. When preparing these estimates, we consider a number of factors, including the aging of a customer’s account, past transactions with customers, creditworthiness of specific customers, historical trends and other information. Upon determination that an account is uncollectible, the receivable balance is written off. At December 31, 2016 and 2015, the allowance for doubtful accounts totaled $6,169 and $5,305, respectively.

Inventories

Inventories consist of air conditioning, heating and refrigeration equipment and related parts and supplies and are valued at the lower of cost or market using a weighted-average cost basis and the first-in, first-out methods. As part of the valuation process, inventories are adjusted to reflect excess, slow-moving and damaged inventories at their estimated net realizable value. Inventory policies are reviewed periodically, reflecting current risks, trends and changes in industry conditions. A reserve for estimated inventory shrinkage is also maintained to consider inventory shortages determined from cycle counts and physical inventories.

Vendor Rebates

We have arrangements with several vendors that provide rebates payable to us when we achieve any of a number of measures, generally related to the volume level of purchases. We account for such rebates as a reduction of inventory until we sell the product, at which time such rebates are reflected as a reduction of cost of sales in our consolidated statements of income. Throughout the year, we estimate the amount of the rebate based on our estimate of purchases to date relative to the purchase levels that mark our progress toward earning the rebates. We continually revise our estimates of earned vendor rebates based on actual purchase levels. At December 31, 2016 and 2015, we had $9,926 and $8,086, respectively, of rebates recorded as a reduction of inventory. Substantially all vendor rebate receivables are collected within three months immediately following the end of the year.

Marketable Securities

Investments in marketable equity securities are classified as available-for-sale and are included in other assets in our consolidated balance sheets. These equity securities are recorded at fair value using the specific identification method with unrealized holding losses, net of deferred taxes, included in accumulated other comprehensive loss within shareholders’ equity. Dividend and interest income are recognized in the statements of income when earned.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is computed using the straight-line method. Buildings and improvements are depreciated or amortized over estimated useful lives ranging from 3-40 years. Leasehold improvements are amortized over the shorter of the respective lease terms or estimated useful lives. Furniture and fixtures are depreciated over estimated useful lives ranging from 5-7 years. Estimated useful lives for other depreciable assets range from 3-10 years.

Goodwill and Other Intangible Assets

Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of the net identified tangible and intangible assets acquired. We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. We test goodwill for impairment by first comparing the fair value of our reporting unit to its carrying value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of impairment loss.

Other intangible assets primarily consist of the value of trade names and trademarks, distributor agreements, customer relationships and non-compete agreements. Indefinite lived intangibles not subject to amortization are assessed for impairment at least annually, or more frequently if events or changes in circumstances indicate they may be impaired, by comparing the fair value of the intangible asset to its carrying amount to determine if a write-down to fair value is required. Finite lived intangible assets are amortized using the straight-line method over their respective estimated useful lives.

We perform our annual impairment tests each year and have determined there to be no impairment for any of the periods presented. There were no events or circumstances identified from the date of our assessment that would require an update to our annual impairment tests.

Long-Lived Assets

Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability is evaluated by determining whether the amortization of the balance over its remaining life can be recovered through undiscounted future operating cash flows. We measure the impairment loss based on projected discounted cash flows using a discount rate reflecting the average cost of funds and compared to the asset’s carrying value. As of December 31, 2016, there were no such events or circumstances.

Fair Value Measurements

We carry various assets and liabilities at fair value in the consolidated balance sheets. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are classified based on the following fair value hierarchy:


Level 1		Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.


Level 2		Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; or model-driven valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3		Unobservable inputs for the asset or liability. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability.

Revenue Recognition

Revenue primarily consists of sales of air conditioning, heating and refrigeration equipment and related parts and supplies and is recorded when shipment of products or delivery of services has occurred. Substantially all customer returns relate to products that are returned under warranty obligations underwritten by manufacturers, effectively mitigating our risk of loss for customer returns. Taxes collected from our customers and remitted to governmental authorities are presented in our consolidated statements of income on a net basis.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2016, 2015 and 2014, were $22,242, $21,150 and $19,754, respectively.

Shipping and Handling

Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through cost of sales as inventories are sold. Shipping and handling costs associated with the delivery of products is included in selling, general and administrative expenses. Shipping and handling costs included in selling, general and administrative expenses for the years ended December 31, 2016, 2015 and 2014, were $42,809, $41,345 and $43,324, respectively.

Share-Based Compensation

The fair value of stock option and non-vested restricted stock awards are expensed on a straight-line basis over the vesting period of the awards. Share-based compensation expense is included in selling, general and administrative expenses in our consolidated statements of income. Cash flows from the tax benefits resulting from tax deductions in excess of the compensation expense recognized for those options (windfall tax benefits) were classified as financing cash flows for the years ended December 31, 2015 and 2014. Tax benefits resulting from tax deductions in excess of share-based compensation expense realized in 2016 are recognized in our provision for income taxes in the consolidated income statement. Tax benefits resulting from tax deductions in excess of share-based compensation expense recognized were credited to paid-in capital in the consolidated balance sheets for the years ended December 31, 2015 and 2014. Refer to “Share-Based Payments” within New Accounting Standards contained in this Note 1 for additional information.

Income Taxes

We record United States federal, state and foreign income taxes currently payable, as well as deferred taxes due to temporary differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities reflect the temporary differences between the financial statement and income tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date. We and our eligible subsidiaries file a consolidated United States federal income tax return. As income tax returns are generally not filed until well after the closing process for the December 31 financial statements is complete, the amounts recorded at December 31 reflect estimates of what the final amounts will be when the actual income tax returns are filed for that calendar year. In addition, estimates are often required with respect to, among other things, the appropriate state income tax rates to use in the various states that we and our subsidiaries are required to file, the potential utilization of operating loss carryforwards and valuation allowances required, if any, for tax assets that may not be realizable in the future.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

Earnings per Share

We compute earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Shares of our non-vested restricted stock are considered participating securities because these awards contain a non-forfeitable right to dividends irrespective of whether the awards ultimately vest. Under the two-class method, earnings per common share for our Common and Class B common stock is computed by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted-average number of shares of Common and Class B common stock outstanding for the period. In applying the two-class method, undistributed earnings are allocated to Common stock, Class B common stock and participating securities based on the weighted-average shares outstanding during the period.

Diluted earnings per share reflects the dilutive effect of potential common shares from stock options. The dilutive effect of outstanding stock options is computed using the treasury stock method, which assumes any proceeds that could be obtained upon the exercise of stock options, would be used to purchase common stock at the average market price for the period. The assumed proceeds include the purchase price the optionee pays, the windfall tax benefit that we receive upon assumed exercise and the unrecognized compensation expense at the end of each period.

Derivative Instruments and Hedging Activity

We have used derivative instruments, including forward contracts and swaps, to manage our exposure to fluctuations in foreign currency exchange rates and interest rates. The use of these derivative instruments modifies the exposure of these risks with the intent to reduce the risk or cost to us. We use derivative instruments as risk management tools and not for trading purposes. All derivatives, whether designated as hedging relationships or not, are recorded on the balance sheet at fair value. Cash flows from derivative instruments are classified in the consolidated statements of cash flows in the same category as the cash flows from the items subject to the designated hedge or undesignated (economic) hedge relationships. The hedging designation may be classified as one of the following:

No Hedging Designation. The gain or loss on a derivative instrument not designated as an accounting hedging instrument is recognized in earnings within selling, general and administrative expenses.

Cash Flow Hedge. A hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability is considered a cash flow hedge. The effective portion of the change in the fair value of a derivative that is designated as a cash flow hedge is recorded in other comprehensive income and reclassified to earnings as a component of cost of sales in the period for which the hedged transaction affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings.

Fair Value Hedge. A hedge of a recognized asset or liability or an unrecognized firm commitment is considered a fair value hedge. Fair value hedges, both the effective and ineffective portions of the changes in the fair value of the derivative, along with the gain or loss on the hedged item that is attributable to the hedged risk, are recorded in earnings.

See Note 13 for additional information pertaining to derivative instruments.

New Accounting Standards

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued a standard on revenue recognition that provides a single, comprehensive revenue recognition model for all contracts with customers. The standard is principle-based and provides a five-step model to determine the measurement of revenue and timing of when it is recognized. This standard will be applied using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption, which requires additional footnote disclosures. This standard is effective for our interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for annual reporting periods beginning after December 15, 2016. We will adopt this guidance on January 1, 2018. While we are currently evaluating the method of adoption and the impact of the provisions of this standard, we expect similar performance obligations to result under this guidance as compared with deliverables and separate units of accounting currently identified. As a result, we expect the timing of our revenue recognition to generally remain the same.

Presentation of Debt Issuance Costs

In April 2015, the FASB issued guidance that will require that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, rather than as an asset. This guidance is effective retrospectively for interim and annual reporting periods beginning after December 15, 2015. The adoption of this guidance did not have an impact on our consolidated financial statements.

Measurement of Inventory

In July 2015, the FASB issued guidance that simplifies the measurement of inventory by replacing the lower of cost or market test with a lower of cost and net realizable value test. The guidance applies to all inventory that is measured using first-in, first-out or average cost methods. This guidance must be applied prospectively and will be effective for interim and annual reporting periods beginning after December 15, 2016. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

Classification of Deferred Taxes

In November 2015, the FASB issued guidance that requires deferred tax assets and liabilities to be classified as noncurrent in a classified balance sheet. This guidance can be applied either prospectively or retrospectively and will be effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. We do not expect the adoption of this guidance to have a material impact to our consolidated balance sheets.

Leases

In February 2016, the FASB issued guidance on accounting for leases, which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. This guidance will be applied using a modified retrospective approach and is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. We will adopt this guidance on January 1, 2019. While we are still evaluating the impact of adopting this guidance on our consolidated financial statements, including the option to elect certain practical expedients, we expect that upon adoption the right-of-use assets and lease liabilities recorded could be material to our consolidated balance sheets. However, we do not expect a material impact to our consolidated statements of income.

Share-Based Payments

In March 2016, the FASB issued amended guidance related to employee share-based payment accounting. The guidance requires that all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. The guidance also requires presentation of excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. The guidance increases the amount companies can withhold to cover income taxes on awards without triggering liability classification for shares used to satisfy statutory income tax withholding obligations and requires application of a modified retrospective transition method. The amended guidance will be effective for interim and annual periods beginning after December 15, 2016. Early adoption is permitted if all provisions are adopted in the same period.

We elected to early adopt the amended guidance during the quarter ended June 30, 2016, which required us to reflect any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The primary impact of adoption was the recognition of excess tax benefits in our provision for income taxes rather than paid-in capital for all periods in 2016. We elected to apply the presentation requirements for cash flows related to excess tax benefits prospectively. The accounting for income taxes and minimum statutory withholding tax requirements had no impact to retained earnings as of January 1, 2016, where the cumulative effect of these changes are required to be recorded. We have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period.

Adoption of the amended guidance resulted in the recognition of excess tax benefits in our provision for income taxes rather than paid-in capital of $2,898 for 2016, and impacted our previously reported quarterly results for March 31, 2016 as follows:


*Quarter Ended March 31, 2016*	As Reported			As Adjusted
Income Statement:
Income taxes	$	15,508		$	14,654
Net income	$	34,174		$	35,028
Diluted earnings per share	$	0.71		$	0.74
Diluted weighted-average common shares outstanding		32,537,225			32,546,314

Balance Sheet:
Paid-in capital	$	610,285		$	609,431

Cash Flow Statement:
Net cash provided by operating activities	$	41,852		$	42,706
Net cash used in financing activities	$	(41,638	)	$	(42,492	)

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2016

EARNINGS PER SHARE

2. EARNINGS PER SHARE

The following table presents the calculation of basic and diluted earnings per share for our Common and Class B common stock:


*Years Ended December 31,*	2016		2015		2014
Basic Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	182,810	$	172,929	$	151,387
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		14,806		13,634		11,444

Earnings allocated to Watsco, Inc. shareholders	$	168,004	$	159,295	$	139,943

Weighted-average common shares outstanding - Basic		32,582,385		32,435,961		32,308,073

Basic earnings per share for Common and Class B common stock	$	5.16	$	4.91	$	4.33


Allocation of earnings for Basic:
Common stock	$	154,021	$	146,037	$	128,214
Class B common stock		13,983		13,258		11,729

	$	168,004	$	159,295	$	139,943


Diluted Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	182,810	$	172,929	$	151,387
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		14,801		13,626		11,435

Earnings allocated to Watsco, Inc. shareholders	$	168,009	$	159,303	$	139,952

Weighted-average common shares outstanding - Basic		32,582,385		32,435,961		32,308,073
Effect of dilutive stock options		34,119		44,395		50,781

Weighted-average common shares outstanding - Diluted		32,616,504		32,480,356		32,358,854

Diluted earnings per share for Common and Class B common stock	$	5.15	$	4.90	$	4.32

Diluted earnings per share for our Common stock assumes the conversion of all of our Class B common stock into Common stock as of the beginning of the fiscal year; therefore, no allocation of earnings to Class B common stock is required. At December 31, 2016, 2015 and 2014, our outstanding Class B common stock was convertible into 2,711,811, 2,699,710 and 2,707,725 shares of our Common stock, respectively.

Diluted earnings per share excluded 31,839, 67,014 and 9,984 shares for the years ended December 31, 2016, 2015 and 2014, respectively, related to stock options with an exercise price per share greater than the average market value, resulting in an anti-dilutive effect on diluted earnings per share.

OTHER COMPREHENSIVE GAIN (LOSS)

12 Months Ended

Dec. 31, 2016

OTHER COMPREHENSIVE GAIN (LOSS)

3. OTHER COMPREHENSIVE GAIN (LOSS)

Other comprehensive gain (loss) consists of the foreign currency translation adjustment associated with our Canadian operations’ use of the Canadian dollar as its functional currency and changes in the unrealized gains (losses) on cash flow hedging instruments and available-for-sale securities. The tax effects allocated to each component of other comprehensive loss were as follows:


*Years Ended December 31,*	2016			2015			2014
Foreign currency translation adjustment	$	6,211		$	(39,378	)	$	(21,117	)

Unrealized (loss) gain on cash flow hedging instruments		(1,321	)		3,716			384
Income tax benefit (expense)		356			(1,003	)		(104	)

Unrealized (loss) gain on cash flow hedging instruments, net of tax		(965	)		2,713			280


Reclassification of loss (gain) on cash flow hedging instruments into earnings		442			(2,730	)		—
Income tax (benefit) expense		(119	)		737			—

Reclassification of loss (gain) on cash flow hedging instruments into earnings, net of tax		323			(1,993	)		—


Unrealized gain (loss) on available-for-sale securities		27			(12	)		1
Income tax (expense) benefit		(13	)		4			—

Unrealized gain (loss) on available-for-sale securities, net of tax		14			(8	)		1


Other comprehensive gain (loss)	$	5,583		$	(38,666	)	$	(20,836	)

The changes in each component of accumulated other comprehensive loss, net of tax, were as follows:


*Years Ended December 31,*	2016			2015			2014
Foreign currency translation adjustment:
Beginning balance	$	(47,204	)	$	(23,623	)	$	(11,181	)
Current period other comprehensive gain (loss)		3,745			(23,581	)		(12,442	)

Ending balance		(43,459	)		(47,204	)		(23,623	)


Cash flow hedging instruments:
Beginning balance		600			168			—
Current period other comprehensive (loss) income		(579	)		1,628			168
Less reclassification adjustment		194			(1,196	)		—

Ending balance		215			600			168


Available-for-sale securities:
Beginning balance		(300	)		(292	)		(293	)
Current period other comprehensive income (loss)		14			(8	)		1

Ending balance		(286	)		(300	)		(292	)


Accumulated other comprehensive loss, net of tax	$	(43,530	)	$	(46,904	)	$	(23,747	)

The entire disclosure for comprehensive income, which includes, but is not limited to, 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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SHARE-BASED COMPENSATION AND BENEFIT PLANS

SUPPLIER CONCENTRATION

12 Months Ended

Dec. 31, 2016

SUPPLIER CONCENTRATION

4. SUPPLIER CONCENTRATION

Purchases from our top ten suppliers comprised 85%, 84% and 82% of all purchases made in 2016, 2015 and 2014, respectively. Our largest supplier, Carrier and its affiliates, accounted for 62%, 62% and 61% of all purchases made in 2016, 2015 and 2014, respectively. See Note 16. A significant interruption by Carrier, or any of our other key suppliers, in the delivery of products could impair our ability to maintain current inventory levels and could materially impact our consolidated results of operations and consolidated financial position.

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2016

PROPERTY AND EQUIPMENT

5. PROPERTY AND EQUIPMENT

Property and equipment, net, consists of:


*December 31,*	2016			2015
Land	$	820		$	820
Buildings and improvements		71,082			69,675
Machinery, vehicles and equipment		74,640			43,150
Furniture and fixtures		15,090			14,311
Computer hardware and software		42,515			38,876

		204,147			166,832
Accumulated depreciation and amortization		(113,645	)		(104,117	)

	$	90,502		$	62,715

Depreciation and amortization expense related to property and equipment included in selling, general and administrative expenses for the years ended December 31, 2016, 2015 and 2014, were $14,853, $13,802 and $12,158, respectively.

DEBT

12 Months Ended

Dec. 31, 2016

DEBT

6. DEBT

We maintain an unsecured, syndicated revolving credit agreement that provides for borrowings of up to $600,000. Borrowings are used to fund seasonal working capital needs and for other general corporate purposes, including acquisitions, dividends (if and as declared by our Board of Directors), capital expenditures, stock repurchases and issuances of letters of credit. The credit agreement matures on July 1, 2019. Included in the credit facility are a $90,000 swingline subfacility, a letter of credit subfacility and a $75,000 multicurrency borrowing sublimit. On January 24, 2017, we entered into an amendment to this credit agreement, which reduced the letter of credit subfacility from $50,000 to $10,000 and modified certain definitions.

Borrowings under the credit facility bear interest at either LIBOR-based rates plus a spread, which ranges from 87.5 to 250.0 basis-points (LIBOR plus 100.0 basis-points at December 31, 2016), depending on our ratio of total debt to EBITDA, or on rates based on the higher of the Prime rate or the Federal Funds Rate, in each case plus a spread which ranges from 0 to 150.0 basis-points (0 basis-points at December 31, 2016), depending on our ratio of total debt to EBITDA. We pay a variable commitment fee on the unused portion of the commitment under the revolving credit agreement, ranging from 12.5 to 35.0 basis-points (15.0 basis-points at December 31, 2016).

At December 31, 2016 and 2015, $235,294 and $245,300, respectively, were outstanding under the revolving credit agreement. The revolving credit agreement contains customary affirmative and negative covenants, including financial covenants with respect to consolidated leverage and interest coverage ratios, and other customary restrictions. We believe we were in compliance with all covenants at December 31, 2016.

INCOME TAXES

12 Months Ended

Dec. 31, 2016

INCOME TAXES

7. INCOME TAXES

The components of income tax expense from our wholly-owned operations and investments and our controlling interest in joint ventures with Carrier are as follows:


*Years Ended December 31,*	2016		2015		2014
U.S. Federal	$	86,719	$	85,585	$	74,561
State		9,801		9,431		10,325
Foreign		9,416		9,661		6,953

	$	105,936	$	104,677	$	91,839

Current	$	103,216	$	99,990	$	91,550
Deferred		2,720		4,687		289

	$	105,936	$	104,677	$	91,839

We calculate our income tax expense and our effective tax rate for 100% of income attributable to our wholly-owned operations and for our controlling interest of income attributable to our joint ventures with Carrier, which are primarily taxed as partnerships for income tax purposes.

Following is a reconciliation of the effective income tax rate:


*Years Ended December 31,*	2016			2015			2014
U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit and other		2.1			2.3			3.0
Excess tax benefits from share-based compensation		(1.0	)		—			—
Tax effects on foreign income		(0.1	)		(0.3	)		(1.0	)

Effective income tax rate attributable to Watsco, Inc.		36.0			37.0			37.0
Taxes attributable to non-controlling interest		(5.0	)		(5.4	)		(6.4	)

Effective income tax rate		31.0	%		31.6	%		30.6	%

The following is a summary of the significant components of our current and long-term deferred tax assets and liabilities:


*December 31,*	2016			2015
Current deferred tax assets:
Capitalized inventory costs and inventory reserves	$	2,301		$	1,794
Allowance for doubtful accounts		1,379			1,053
Self-insurance reserves		500			519
Other current deferred tax assets		1,778			1,921

Total current deferred tax assets (1)		5,958			5,287

Long-term deferred tax assets:
Share-based compensation		26,239			23,603
Other long-term deferred tax assets		449			352
Net operating loss carryforwards		209			207

		26,897			24,162
Valuation allowance		—			—

Total long-term deferred tax assets (2)		26,897			24,162


Current deferred tax liabilities:
Other current deferred tax liabilities		(473	)		(686	)

Total current deferred tax liabilities (1)		(473	)		(686	)

Long-term deferred tax liabilities:
Deductible goodwill		(88,581	)		(83,868	)
Depreciation		(5,883	)		(3,774	)
Other long-term deferred tax liabilities		(1,160	)		(1,533	)

Total long-term deferred tax liabilities (2)		(95,624	)		(89,175	)

Net deferred tax liabilities	$	(63,242	)	$	(60,412	)

(1)	Current deferred tax assets and liabilities have been included in the consolidated balance sheets in other current assets.

(2)	Long-term deferred tax assets and liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities.

Amounts earned by foreign subsidiaries are generally subject to United States income taxation upon repatriation. United States income taxes have not been provided on undistributed earnings of our foreign subsidiaries. The cumulative undistributed earnings related to foreign operations were approximately $130,000 at December 31, 2016. It is not practicable to estimate the amount of tax that might be payable. Our intention is to indefinitely reinvest these earnings outside of the United States or to repatriate the earnings only when it is tax effective to do so.

Management has determined that no valuation allowance was necessary at both December 31, 2016 and 2015. At December 31, 2016, there were state and other net operating loss carryforwards of $6,872, which expire in varying amounts from 2017 through 2036. These amounts are available to offset future taxable income. There were no federal net operating loss carryforwards at December 31, 2016.

We are subject to United States federal income tax, income tax of multiple state jurisdictions and foreign income tax. We are subject to tax audits in the various jurisdictions until the respective statutes of limitations expire. We are no longer subject to United States federal tax examinations for tax years prior to 2013. For the majority of states, we are no longer subject to tax examinations for tax years prior to 2012.

As of December 31, 2016 and 2015, the total amount of gross unrecognized tax benefits (excluding the federal benefit received from state positions) was $3,695 and $3,513, respectively. Of these totals, $2,573 and $2,416, respectively, (net of the federal benefit received from state positions) represent the amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate. Our continuing practice is to recognize penalties within selling, general and administrative expenses and interest related to income tax matters in income tax expense in the consolidated statements of income. As of December 31, 2016 and 2015, the cumulative amount of estimated accrued interest and penalties resulting from such unrecognized tax benefits was $414 and $384, respectively, and is included in deferred income taxes and other liabilities in the accompanying consolidated balance sheets.

The changes in gross unrecognized tax benefits are as follows:


Balance at December 31, 2013	$	3,135
Additions based on tax positions related to the current year		751
Reductions due to lapse of applicable statute of limitations		(167	)

Balance at December 31, 2014		3,719
Additions based on tax positions related to the current year		871
Reductions due to lapse of applicable statute of limitations and tax assessments		(1,077	)

Balance at December 31, 2015		3,513
Additions based on tax positions related to the current year		547
Reductions due to lapse of applicable statute of limitations		(365	)

Balance at December 31, 2016	$	3,695

SHARE-BASED COMPENSATION AND BENEFIT PLANS

12 Months Ended

Dec. 31, 2016

8. SHARE-BASED COMPENSATION AND BENEFIT PLANS

Share-Based Compensation Plans

We maintain the 2014 Incentive Compensation Plan (the “2014 Plan”) that provides for the award of a broad variety of share-based compensation alternatives such as non-vested restricted stock, non-qualified stock options, incentive stock options, performance awards, dividend equivalents, deferred stock and stock appreciation rights at no less than 100% of the market price on the date the award is granted. To date, awards under the 2014 Plan consist of non-qualified stock options and non-vested restricted stock. The 2014 Plan replaced the Watsco, Inc. Amended and Restated 2001 Incentive Compensation Plan (the “2001 Plan”) upon its expiration in 2014.

Under the 2014 Plan, the number of shares of Common and Class B common stock available for issuance is (i) 2,000,000, plus (ii) 45,421 shares of Common stock or Class B common stock that remained available for grant in connection with awards under the Watsco, Inc. Amended and Restated 2001 Incentive Compensation Plan (the “2001 Plan”) as of the date our shareholders approved the 2014 Plan plus (iii) shares underlying currently outstanding awards issued under the 2001 Plan, which shares become reissuable under the 2014 Plan to the extent that such underlying shares are not issued due to their forfeiture, expiration, termination or otherwise. A total of 293,950 shares of Common stock, net of cancellations, and 326,623 shares of Class B common stock, had been awarded under the 2014 Plan as of December 31, 2016. As of December 31, 2016, 1,424,848 shares of common stock were reserved for future grants under the 2014 Plan. Options under the 2014 Plan vest over two to four years of service and have contractual terms of five years. Awards of non-vested restricted stock, which are granted at no cost to the employee, vest upon attainment of a specified age, generally toward the end of an employee’s career at age 62 or older. Vesting may be accelerated in certain circumstances prior to the original vesting date.

The 2001 Plan expired during 2014; therefore, no additional options may be granted. There were 37,750 options to exercise common stock outstanding under the 2001 Plan at December 31, 2016. Options under the 2001 Plan vest over two to four years of service and have contractual terms of five years.

The following is a summary of stock option activity under the 2014 Plan and the 2001 Plan as of and for the year ended December 31, 2016:


	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding at December 31, 2015		257,334		$	102.96
Granted		107,000			140.41
Exercised		(63,084	)		71.18
Forfeited		(7,000	)		127.56

Options outstanding at December 31, 2016		294,250		$	122.80		3.56	$	7,451

Options exercisable at December 31, 2016		24,419		$	109.81		2.92	$	935

The following is a summary of non-vested restricted stock activity as of and for the year ended December 31, 2016:


	Shares			Weighted- Average Grant Date Fair Value
Non-vested restricted stock outstanding at December 31, 2015		2,819,196		$	49.99
Granted		183,144			130.01
Vested		(77,450	)		63.26
Forfeited		(26,000	)		112.79

Non-vested restricted stock outstanding at December 31, 2016		2,898,890		$	54.13

The weighted-average grant date fair value of non-vested restricted stock granted during 2016, 2015 and 2014 was $130.01, $114.55 and $96.84, respectively. The fair value of non-vested restricted stock that vested during 2016, 2015 and 2014 was $10,096, $2,468 and $5,789, respectively.

During 2016, 30,413 shares of Common and Class B common stock with an aggregate fair market value of $3,967 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. During 2015, 7,206 shares of Common stock with an aggregate fair market value of $889 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. During 2014, 21,028 shares of Common stock with an aggregate fair market value of $2,125 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. These shares were retired upon delivery.

Share-Based Compensation Fair Value Assumptions

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing valuation model based on the weighted-average assumptions noted in the table below. The fair value of each stock option award, which is subject to graded vesting, is expensed, net of estimated forfeitures, on a straight-line basis over the requisite service period for each separately vesting portion of the stock option. We use historical data to estimate stock option forfeitures. The expected term of stock option awards granted represents the period of time that stock option awards granted are expected to be outstanding and was calculated using the simplified method for plain vanilla options, which we believe provides a reasonable estimate of expected life based on our historical data. The risk-free rate for periods within the contractual life of the stock option award is based on the yield curve of a zero-coupon United States Treasury bond on the date the stock option award is granted with a maturity equal to the expected term of the stock option award. Expected volatility is based on historical volatility of our stock.

The following table presents the weighted-average assumptions used for stock options granted:


*Years Ended December 31,*	2016			2015			2014
Expected term in years		4.25			4.25			4.25
Risk-free interest rate		1.24	%		1.25	%		1.35	%
Expected volatility		18.65	%		20.96	%		22.07	%
Expected dividend yield		2.54	%		2.29	%		1.69	%
Grant date fair value	$	16.37		$	17.17		$	15.75

Exercise of Stock Options

The total intrinsic value of stock options exercised during 2016, 2015 and 2014 was $4,490, $7,525 and $3,746, respectively. Cash received from the exercise of stock options during 2016, 2015 and 2014 was $4,447, $4,850 and $3,324, respectively. During 2016, 2015 and 2014, 348 shares of Common stock with an aggregate fair market value of $51, 26,006 shares of Class B common stock with an aggregate fair market value of $3,251 and 5,454 shares of Class B common stock with an aggregate fair market value of $490, respectively, were withheld as payment in lieu of cash for stock option exercises and related tax withholdings. These shares were retired upon delivery.

Share-Based Compensation Expense

The following table provides information on share-based compensation expense:


*Years Ended December 31,*	2016		2015		2014
Stock options	$	1,149	$	952	$	801
Non-vested restricted stock		11,170		11,644		10,672

Share-based compensation expense	$	12,319	$	12,596	$	11,473

At December 31, 2016, there was $2,096 of unrecognized pre-tax compensation expense related to stock options granted under the 2014 Plan and 2001 Plan, which is expected to be recognized over a weighted-average period of approximately 1.8 years. The total fair value of stock options that vested during 2016, 2015 and 2014 was $736, $856 and $1,145, respectively.

At December 31, 2016, there was $100,397 of unrecognized pre-tax compensation expense related to non-vested restricted stock, which is expected to be recognized over a weighted-average period of approximately 11 years. Of this amount, approximately $59,000 is related to awards granted to our Chief Executive Officer (“CEO”), of which approximately $13,000 and $46,000 vest in approximately 6 and 10 years upon his attainment of age 82 and 86, respectively. In the event that vesting is accelerated for any circumstance, as defined in the related agreements, the remaining unrecognized share-based compensation expense would be immediately recognized as a charge to earnings with a corresponding tax benefit. At December 31, 2016, we were obligated to issue 67,853 shares of non-vested restricted stock to our CEO that vest in 10 years and 25,774 shares of non-vested restricted stock to our President that vest in 27 years in connection with 2016 performance based incentive compensation.

Employee Stock Purchase Plan

The Watsco, Inc. Fourth Amended and Restated 1996 Qualified Employee Stock Purchase Plan (the “ESPP”) provides for up to 1,500,000 shares of Common stock to be available for purchase by our full-time employees with at least 90 days of service. The ESPP allows participating employees to purchase shares of Common stock at a 5% discount to the fair market value at specified times. During 2016, 2015 and 2014, employees purchased 5,956, 6,463 and 6,995 shares of Common stock at an average price of $125.84, $112.53 and $90.89 per share, respectively. Cash dividends received by the ESPP were reinvested in Common stock and resulted in the issuance of 3,442, 3,183 and 2,953 additional shares during 2016, 2015 and 2014, respectively. We received net proceeds of $1,206, $1,107 and $921, respectively, during 2016, 2015 and 2014, for shares of our Common stock purchased under the ESPP. At December 31, 2016, 496,160 shares remained available for purchase under the ESPP.

401(k) Plan

We have a profit sharing retirement plan for our employees that is qualified under Section 401(k) of the Internal Revenue Code. Annual matching contributions are made based on a percentage of eligible employee compensation deferrals. The contribution has historically been made with the issuance of Common stock to the plan on behalf of our employees. For the years ended December 31, 2016, 2015 and 2014, we issued 20,045, 18,343 and 18,309 shares of Common stock, respectively, to the plan, representing the Common stock discretionary matching contribution of $2,348, $1,963 and $1,759, respectively.

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

PURCHASE OF ADDITIONAL OWNERSHIP INTEREST IN JOINT VENTURES

PURCHASE OF ADDITIONAL OWNERSHIP INTEREST IN JOINT VENTURES

12 Months Ended

Dec. 31, 2016

9. PURCHASE OF ADDITIONAL OWNERSHIP INTEREST IN JOINT VENTURES

On November 29, 2016, we purchased an additional 10% ownership interest in Carrier Enterprise (“Carrier Enterprise II”) for cash consideration of $42,909, and, on February 13, 2017, we purchased an additional 10% ownership interest in Carrier Enterprise II for cash consideration of $42,688, following which we have an 80% controlling interest in Carrier Enterprise II.

On July 1, 2014, we exercised our second option to acquire an additional 10% ownership interest in Carrier Enterprise, LLC (“Carrier Enterprise I”) for cash consideration of $87,735, following which we have an 80% controlling interest in Carrier Enterprise I. Neither we nor Carrier has any remaining options to purchase additional ownership interests in Carrier Enterprise I.

GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2016

GOODWILL AND OTHER INTANGIBLE ASSETS

10. GOODWILL AND OTHER INTANGIBLE ASSETS

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


Balance at December 31, 2014	$	387,311
Foreign currency translation adjustment		(9,001	)

Balance at December 31, 2015		378,310
Foreign currency translation adjustment		1,427

Balance at December 31, 2016	$	379,737

Other intangible assets are comprised of the following:

December 31,

Estimated
Useful Lives

2016

2015

Indefinite lived intangible assets - Trade names, trademarks and distribution rights

120,288

118,205

Finite lived intangible assets:

Customer relationships

10-15 years

70,194

68,981

Trade name

10 years

1,150

1,150

Non-compete agreements

7 years

369

369

Accumulated amortization

(33,437

)

(28,224

)

Finite lived intangible assets, net

38,276

42,276

158,564

160,481

Amortization expense related to finite lived intangible assets included in selling, general and administrative expenses for the years ended December 31, 2016, 2015 and 2014, were $5,213, $5,315 and $5,769, respectively. Amortization of finite lived intangible assets for 2017 through 2020 is expected to be approximately $5,200 per year and in 2021 is expected to be approximately $4,300.

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

SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2016

SHAREHOLDERS' EQUITY

11. SHAREHOLDERS’ EQUITY

Common Stock

Common stock and Class B common stock share equally in earnings and are identical in most other respects except (i) Common stock is entitled to one vote on most matters and each share of Class B common stock is entitled to ten votes; (ii) shareholders of Common stock are entitled to elect 25% of the Board of Directors (rounded up to the nearest whole number) and Class B shareholders are entitled to elect the balance of the Board of Directors; (iii) cash dividends may be paid on Common stock without paying a cash dividend on Class B common stock and no cash dividend may be paid on Class B common stock unless at least an equal cash dividend is paid on Common stock and (iv) Class B common stock is convertible at any time into Common stock on a one-for-one basis at the option of the shareholder.

Preferred Stock

We are authorized to issue preferred stock with such designation, rights and preferences as may be determined from time to time by our Board of Directors. Accordingly, the Board of Directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of our Common stock and Class B common stock and, in certain instances, could adversely affect the market price of this stock. We had no preferred stock outstanding at December 31, 2016 or 2015.

Stock Repurchase Plan

In September 1999, our Board of Directors authorized the repurchase, at management’s discretion, of up to 7,500,000 shares of common stock in the open market or via private transactions. Shares repurchased under the program are accounted for using the cost method and result in a reduction of shareholders’ equity. No shares were repurchased during 2016, 2015 or 2014. In aggregate, 6,322,650 shares of Common stock and 48,263 shares of Class B common stock have been repurchased at a cost of $114,425 since the inception of the program. At December 31, 2016, there were 1,129,087 shares remaining authorized for repurchase under the program.

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2016

FINANCIAL INSTRUMENTS

12. FINANCIAL INSTRUMENTS

Recorded Financial Instruments

Recorded financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, the current portion of long-term obligations, borrowings under our revolving credit agreement and debt instruments included in other long-term obligations. At December 31, 2016 and 2015, the fair values of cash and cash equivalents, accounts receivable, accounts payable and the current portion of long-term obligations approximated their carrying values due to the short-term nature of these instruments.

The fair values of variable rate borrowings under our revolving credit agreement and debt instruments included in long-term obligations also approximate their carrying value based upon interest rates available for similar instruments with consistent terms and remaining maturities.

Off-Balance Sheet Financial Instruments

At December 31, 2016 and 2015, we were contingently liable under standby letters of credit aggregating $2,430 and $2,690, respectively, which are primarily used as collateral to cover any contingency related to additional risk assessments pertaining to our self-insurance programs. Additionally, at December 31, 2016 and 2015, we were contingently liable under various performance bonds aggregating approximately $8,000 and $4,000, respectively, which are used as collateral to cover any contingencies related to our nonperformance under agreements with certain customers. We do not expect that any material losses or obligations will result from the issuance of the standby letters of credit or performance bonds because we expect to meet our obligations under our self-insurance programs and to certain customers in the ordinary course of business. Accordingly, the estimated fair value of these instruments is zero.

Concentrations of Credit Risk

Financial instruments which potentially subject us to concentrations of credit risk consist principally of accounts receivable. Concentrations of credit risk are limited due to the large number of customers comprising the customer base and their dispersion across many different geographical regions. We also have access to credit insurance programs which are used as an additional means to mitigate credit risk.

DERIVATIVES

12 Months Ended

Dec. 31, 2016

DERIVATIVES

13. DERIVATIVES

We enter into foreign currency forward contracts to offset the earnings impact that foreign exchange rate fluctuations would otherwise have on certain monetary liabilities that are denominated in nonfunctional currencies.

Cash Flow Hedging Instruments

We enter into foreign currency forward contracts that are designated as cash flow hedges. The settlement of these derivatives results in reclassifications from accumulated other comprehensive loss to earnings for the period in which the settlement of these instruments occur. The maximum period for which we hedge our cash flow using these instruments is 12 months. Accordingly, at December 31, 2016, all of our open foreign currency forward contracts had maturities of one year or less. The total notional value of our foreign currency exchange contracts designated as cash flow hedges at December 31, 2016 was $33,200, and such contracts have varying terms expiring through September 2017.

The impact from foreign exchange derivative instruments designated as cash flow hedges were as follows:


*Years Ended December 31,*	2016			2015
(Loss) gain recorded in accumulated other comprehensive loss	$	(1,321	)	$	3,716
Loss (gain) reclassified from accumulated other comprehensive loss into earnings	$	442		$	(2,730	)

At December 31, 2016, we expected an estimated $490 pre-tax gain to be reclassified into earnings to reflect the fixed prices obtained from foreign exchange hedging within the next 12 months.

Derivatives Not Designated as Hedging Instruments

We have also entered into foreign currency forward contracts that are either not designated as hedges or did not qualify for hedge accounting. These derivative instruments were effective economic hedges for all of the periods presented. The fair value gains and losses on these contracts are recognized in earnings as a component of selling, general and administrative expenses. The total notional value of our foreign currency exchange contracts not designated as hedging instruments at December 31, 2016 was $4,650, and such contracts have varying terms expiring through March 2017.

We recognized (losses) gains of $(306), $2,552 and $142 from foreign currency forward contracts not designated as hedging instruments in our consolidated statements of income for 2016, 2015 and 2014, respectively.

The following table summarizes the fair value of derivative instruments, which consist solely of foreign currency forward contracts, included in other current assets and accrued expenses and other current liabilities in our consolidated balance sheets. See Note 14.


	Asset Derivatives				Liability Derivatives
*December 31,*	2016		2015		2016		2015
Derivatives designated as hedging instruments	$	227	$	923	$	35	$	3
Derivatives not designated as hedging instruments		14		326		4		4

Total derivative instruments	$	241	$	1,249	$	39	$	7

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

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FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2016

FAIR VALUE MEASUREMENTS

14. FAIR VALUE MEASUREMENTS

The following tables present our assets and liabilities carried at fair value that are measured on a recurring basis:


		Total		Fair Value Measurements at December 31, 2016 Using
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities	Other assets	$	281	$	281		—		—
Derivative financial instruments	Other current assets	$	241		—	$	241		—

Liabilities:
Derivative financial instruments	Accrued expenses and other current liabilities	$	39		—	$	39		—

		Total		Fair Value Measurements at December 31, 2015 Using
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities	Other assets	$	254	$	254		—		—
Derivative financial instruments	Other current assets	$	1,249		—	$	1,249		—

Liabilities:
Derivative financial instruments	Accrued expenses and other current liabilities	$	7		—	$	7		—

The following is a description of the valuation techniques used for these assets and liabilities, as well as the level of input used to measure fair value:

Available-for-sale securities – these investments are exchange-traded equity securities. Fair values for these investments are based on closing stock prices from active markets and are therefore classified within Level 1 of the fair value hierarchy.

Derivative financial instruments – these derivatives are foreign currency forward contracts. See Note 13. Fair value is based on observable market inputs, such as forward rates in active markets; therefore, we classify these derivatives within Level 2 of the valuation hierarchy.

There were no transfers in or out of Level 1 and Level 2 during 2016 or 2015.

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

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2016

15. COMMITMENTS AND CONTINGENCIES

Litigation, Claims and Assessments

In December 2015, a purported Watsco shareholder, Nelson Gaskins, filed a derivative lawsuit in the U.S. District Court for the Southern District of Florida against Watsco’s Board of Directors. The Company is a nominal defendant. The lawsuit alleges breach of fiduciary duties regarding CEO incentive compensation and seeks to recover alleged excessive incentive compensation and unspecified damages. The defendants believe the claims are entirely without merit and intend to vigorously defend against them. We believe the ultimate outcome of this matter will not have a material adverse effect on our consolidated results of operations and consolidated financial position.

We are involved in litigation incidental to the operation of our business. We vigorously defend all matters in which we or our subsidiaries are named defendants and, for insurable losses, maintain significant levels of insurance to protect against adverse judgments, claims or assessments that may affect us. Although the adequacy of existing insurance coverage and the outcome of any legal proceedings cannot be predicted with certainty, based on the current information available, we do not believe the ultimate liability associated with any known claims or litigation will have a material adverse effect on our financial condition or results of operations.

Self-Insurance

Self-insurance reserves are maintained relative to company-wide casualty insurance and health benefit programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the self-insurance liabilities and related reserves, management considers a number of factors, which include historical claims experience, demographic factors, severity factors and valuations provided by independent third-party actuaries. Management reviews its assumptions with its independent third-party actuaries to evaluate whether the self-insurance reserves are adequate. If actual claims or adverse development of loss reserves occur and exceed these estimates, additional reserves may be required. Reserves in the amounts of $2,951 and $3,214 at December 31, 2016 and 2015, respectively, were established related to such programs and are included in accrued expenses and other current liabilities in our consolidated balance sheets.

Variable Interest Entity

As of December 31, 2016, in conjunction with our casualty insurance programs, limited equity interests are held in a captive insurance entity. The programs permit us to self-insure a portion of losses, to gain access to a wide array of safety-related services, to pool insurance risks and resources in order to obtain more competitive pricing for administration and reinsurance and to limit risk of loss in any particular year. The entity meets the definition of Variable Interest Entity (“VIE”); however, we do not meet the requirements to include this entity in the consolidated financial statements. The maximum exposure to loss related to our involvement with this entity is limited to approximately $4,300. See “Self-Insurance” above for further information on commitments associated with the insurance programs and Note 12, under the caption “Off-Balance Sheet Financial Instruments,” for further information on standby letters of credit. At December 31, 2016, there were no other entities that met the definition of a VIE.

Operating Leases

We are obligated under various non-cancelable operating lease agreements for real property, equipment, vehicles and a corporate aircraft used in our operations with varying terms through 2025. We are committed to pay a portion of the actual operating expenses under certain of these lease agreements. These operating expenses are not included in the table below. Some of these arrangements have free or escalating rent payment provisions. We recognize rent expense under such arrangements on a straight-line basis over the lease term.

At December 31, 2016, future minimum payments under non-cancelable operating leases over each of the next five years and thereafter were as follows:


2017	$	56,639
2018		48,420
2019		35,926
2020		21,650
2021		13,184
Thereafter		13,362

Total minimum payments	$	189,181

Rental expense for the years ended December 31, 2016, 2015 and 2014, was $83,260, $82,581 and $81,155, respectively.

Purchase Obligations

At December 31, 2016, we were obligated under various non-cancelable purchase orders with our key suppliers for goods aggregating approximately $29,000, of which approximately $17,000 is with Carrier and its affiliates.

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2016

RELATED PARTY TRANSACTIONS

16. RELATED PARTY TRANSACTIONS

Purchases from Carrier and its affiliates comprised 62%, 62% and 61% of all inventory purchases made during 2016, 2015 and 2014, respectively. At December 31, 2016 and 2015, approximately $63,000 and $85,000, respectively, was payable to Carrier and its affiliates, net of receivables. Our joint ventures with Carrier also sell HVAC products to Carrier and its affiliates. Revenues in our consolidated statements of income for 2016, 2015 and 2014 included approximately $56,000, $62,000 and $38,000, respectively, of sales to Carrier and its affiliates. We believe these transactions are conducted on terms equivalent to an arm’s-length basis in the ordinary course of business.

A member of our Board of Directors is the Chairman and Chief Executive Officer of Moss & Associates LLC (“Moss & Associates”), which serves as our general contractor for the remodeling of our corporate headquarters and receives customary payments for these services. Moss & Associates was paid $291 for services performed during 2016 and $109 was payable at December 31, 2016.

INFORMATION ABOUT GEOGRAPHIC AREAS

12 Months Ended

Dec. 31, 2016

INFORMATION ABOUT GEOGRAPHIC AREAS

17. INFORMATION ABOUT GEOGRAPHIC AREAS

Our operations are primarily within the United States, including Puerto Rico, Canada and Mexico. Products are also sold from the United States on an export-only basis to portions of Latin America and the Caribbean Basin. The following tables set forth revenues and long-lived assets by geographical area:


*Years Ended December 31,*	2016		2015		2014
Revenues:
United States	$	3,813,204	$	3,710,977	$	3,525,176
Canada		267,220		263,908		300,289
Mexico		140,278		138,354		119,075

Total revenues	$	4,220,702	$	4,113,239	$	3,944,540


*December 31,*	2016		2015
Long-Lived Assets:
United States	$	467,728	$	441,656
Canada		155,758		154,437
Mexico		5,317		5,413

Total long-lived assets	$	628,803	$	601,506

Revenues are attributed to countries based on the location of the store from which the sale occurred. Long-lived assets consist of property and equipment, goodwill and intangible assets.

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

12 Months Ended

Dec. 31, 2016

18. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information was as follows:


*Years Ended December 31,*	2016		2015		2014
Interest paid	$	3,362	$	4,993	$	4,393
Income taxes net of refunds	$	99,006	$	103,261	$	82,850

SELECTED QUARTERLY FINANCIAL DATA

12 Months Ended

Dec. 31, 2016

SELECTED QUARTERLY FINANCIAL DATA

WATSCO, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA

(UNAUDITED)


*(In thousands, except per share data)*	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Year Ended December 31, 2016
Revenues (1)	$	851,424	$	1,214,435	$	1,241,232	$	913,611	$	4,220,702
Gross profit	$	212,447	$	291,861	$	302,204	$	228,072	$	1,034,584
Net income attributable to Watsco, Inc.	$	25,537	$	64,621	$	63,099	$	29,553	$	182,810

Earnings per share for Common and Class B common stock (2):

Basic	$	0.71	$	1.82	$	1.78	$	0.81	$	5.16

Diluted	$	0.71	$	1.82	$	1.78	$	0.81	$	5.15


Year Ended December 31, 2015
Revenues (1)	$	808,972	$	1,223,439	$	1,177,012	$	903,816	$	4,113,239
Gross profit	$	204,225	$	295,245	$	285,846	$	222,041	$	1,007,357
Net income attributable to Watsco, Inc.	$	23,048	$	65,423	$	57,968	$	26,490	$	172,929

Earnings per share for Common and Class B common stock (2):

Basic	$	0.65	$	1.86	$	1.64	$	0.75	$	4.91

Diluted	$	0.65	$	1.85	$	1.64	$	0.75	$	4.90

(1)

Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly even during the year except for dependence on housing completions and related weather and economic conditions.

(2)	Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation

Organization, Consolidation and Presentation

Foreign Currency Translation and Transactions

Foreign Currency Translation and Transactions

Use of Estimates

Use of Estimates

Cash Equivalents

Cash Equivalents

All highly liquid instruments purchased with original maturities of three months or less are considered to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

Inventories

Inventories

Vendor Rebates

Vendor Rebates

Marketable Securities

Marketable Securities

Property and Equipment

Property and Equipment

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Derivative Instruments and Hedging Activity

Long-Lived Assets

Fair Value Measurements

Fair Value Measurements


Level 1		Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.


Level 2		Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; or model-driven valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3		Unobservable inputs for the asset or liability. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability.

Revenue Recognition

Revenue Recognition

Advertising Costs

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2016, 2015 and 2014, were $22,242, $21,150 and $19,754, respectively.

Shipping and Handling

Shipping and Handling

Share-Based Compensation

Share-Based Compensation

Income Taxes

Income Taxes

Earnings per Share

Earnings per Share

Derivative Instruments and Hedging Activity

See Note 13 for additional information pertaining to derivative instruments.

New Accounting Standards

New Accounting Standards

Revenue Recognition

Presentation of Debt Issuance Costs

Measurement of Inventory

Classification of Deferred Taxes

Leases

Share-Based Payments


*Quarter Ended March 31, 2016*	As Reported			As Adjusted
Income Statement:
Income taxes	$	15,508		$	14,654
Net income	$	34,174		$	35,028
Diluted earnings per share	$	0.71		$	0.74
Diluted weighted-average common shares outstanding		32,537,225			32,546,314

Balance Sheet:
Paid-in capital	$	610,285		$	609,431

Cash Flow Statement:
Net cash provided by operating activities	$	41,852		$	42,706
Net cash used in financing activities	$	(41,638	)	$	(42,492	)

Self-Insurance

Self-Insurance

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2016

Adoption of Amended Guidance Impact on Previously Reported Quarterly Results


*Quarter Ended March 31, 2016*	As Reported			As Adjusted
Income Statement:
Income taxes	$	15,508		$	14,654
Net income	$	34,174		$	35,028
Diluted earnings per share	$	0.71		$	0.74
Diluted weighted-average common shares outstanding		32,537,225			32,546,314

Balance Sheet:
Paid-in capital	$	610,285		$	609,431

Cash Flow Statement:
Net cash provided by operating activities	$	41,852		$	42,706
Net cash used in financing activities	$	(41,638	)	$	(42,492	)

Tabular disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items.

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Schedule of Basic and Diluted Earnings Per Common Share

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2016

The following table presents the calculation of basic and diluted earnings per share for our Common and Class B common stock:


*Years Ended December 31,*	2016		2015		2014
Basic Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	182,810	$	172,929	$	151,387
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		14,806		13,634		11,444

Earnings allocated to Watsco, Inc. shareholders	$	168,004	$	159,295	$	139,943

Weighted-average common shares outstanding - Basic		32,582,385		32,435,961		32,308,073

Basic earnings per share for Common and Class B common stock	$	5.16	$	4.91	$	4.33


Allocation of earnings for Basic:
Common stock	$	154,021	$	146,037	$	128,214
Class B common stock		13,983		13,258		11,729

	$	168,004	$	159,295	$	139,943


Diluted Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	182,810	$	172,929	$	151,387
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		14,801		13,626		11,435

Earnings allocated to Watsco, Inc. shareholders	$	168,009	$	159,303	$	139,952

Weighted-average common shares outstanding - Basic		32,582,385		32,435,961		32,308,073
Effect of dilutive stock options		34,119		44,395		50,781

Weighted-average common shares outstanding - Diluted		32,616,504		32,480,356		32,358,854

Diluted earnings per share for Common and Class B common stock	$	5.15	$	4.90	$	4.32

OTHER COMPREHENSIVE GAIN (LOSS) (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Tax Effects Allocated to Each Component of Other Comprehensive Gain (Loss)

The tax effects allocated to each component of other comprehensive loss were as follows:


*Years Ended December 31,*	2016			2015			2014
Foreign currency translation adjustment	$	6,211		$	(39,378	)	$	(21,117	)

Unrealized (loss) gain on cash flow hedging instruments		(1,321	)		3,716			384
Income tax benefit (expense)		356			(1,003	)		(104	)

Unrealized (loss) gain on cash flow hedging instruments, net of tax		(965	)		2,713			280


Reclassification of loss (gain) on cash flow hedging instruments into earnings		442			(2,730	)		—
Income tax (benefit) expense		(119	)		737			—

Reclassification of loss (gain) on cash flow hedging instruments into earnings, net of tax		323			(1,993	)		—


Unrealized gain (loss) on available-for-sale securities		27			(12	)		1
Income tax (expense) benefit		(13	)		4			—

Unrealized gain (loss) on available-for-sale securities, net of tax		14			(8	)		1


Other comprehensive gain (loss)	$	5,583		$	(38,666	)	$	(20,836	)

Schedule of Accumulated Other Comprehensive Loss

The changes in each component of accumulated other comprehensive loss, net of tax, were as follows:


*Years Ended December 31,*	2016			2015			2014
Foreign currency translation adjustment:
Beginning balance	$	(47,204	)	$	(23,623	)	$	(11,181	)
Current period other comprehensive gain (loss)		3,745			(23,581	)		(12,442	)

Ending balance		(43,459	)		(47,204	)		(23,623	)


Cash flow hedging instruments:
Beginning balance		600			168			—
Current period other comprehensive (loss) income		(579	)		1,628			168
Less reclassification adjustment		194			(1,196	)		—

Ending balance		215			600			168


Available-for-sale securities:
Beginning balance		(300	)		(292	)		(293	)
Current period other comprehensive income (loss)		14			(8	)		1

Ending balance		(286	)		(300	)		(292	)


Accumulated other comprehensive loss, net of tax	$	(43,530	)	$	(46,904	)	$	(23,747	)

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2016

Property and Equipment, Net

Property and equipment, net, consists of:


*December 31,*	2016			2015
Land	$	820		$	820
Buildings and improvements		71,082			69,675
Machinery, vehicles and equipment		74,640			43,150
Furniture and fixtures		15,090			14,311
Computer hardware and software		42,515			38,876

		204,147			166,832
Accumulated depreciation and amortization		(113,645	)		(104,117	)

	$	90,502		$	62,715

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2016

Components of Income Tax Expense

The components of income tax expense from our wholly-owned operations and investments and our controlling interest in joint ventures with Carrier are as follows:


*Years Ended December 31,*	2016		2015		2014
U.S. Federal	$	86,719	$	85,585	$	74,561
State		9,801		9,431		10,325
Foreign		9,416		9,661		6,953

	$	105,936	$	104,677	$	91,839

Current	$	103,216	$	99,990	$	91,550
Deferred		2,720		4,687		289

	$	105,936	$	104,677	$	91,839

Reconciliation of Effective Income Tax Rate

Following is a reconciliation of the effective income tax rate:


*Years Ended December 31,*	2016			2015			2014
U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit and other		2.1			2.3			3.0
Excess tax benefits from share-based compensation		(1.0	)		—			—
Tax effects on foreign income		(0.1	)		(0.3	)		(1.0	)

Effective income tax rate attributable to Watsco, Inc.		36.0			37.0			37.0
Taxes attributable to non-controlling interest		(5.0	)		(5.4	)		(6.4	)

Effective income tax rate		31.0	%		31.6	%		30.6	%

Significant Components of Current and Long-Term Deferred Tax Assets and Liabilities

The following is a summary of the significant components of our current and long-term deferred tax assets and liabilities:


*December 31,*	2016			2015
Current deferred tax assets:
Capitalized inventory costs and inventory reserves	$	2,301		$	1,794
Allowance for doubtful accounts		1,379			1,053
Self-insurance reserves		500			519
Other current deferred tax assets		1,778			1,921

Total current deferred tax assets (1)		5,958			5,287

Long-term deferred tax assets:
Share-based compensation		26,239			23,603
Other long-term deferred tax assets		449			352
Net operating loss carryforwards		209			207

		26,897			24,162
Valuation allowance		—			—

Total long-term deferred tax assets (2)		26,897			24,162


Current deferred tax liabilities:
Other current deferred tax liabilities		(473	)		(686	)

Total current deferred tax liabilities (1)		(473	)		(686	)

Long-term deferred tax liabilities:
Deductible goodwill		(88,581	)		(83,868	)
Depreciation		(5,883	)		(3,774	)
Other long-term deferred tax liabilities		(1,160	)		(1,533	)

Total long-term deferred tax liabilities (2)		(95,624	)		(89,175	)

Net deferred tax liabilities	$	(63,242	)	$	(60,412	)

(1)	Current deferred tax assets and liabilities have been included in the consolidated balance sheets in other current assets.

(2)	Long-term deferred tax assets and liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities.

Changes in Gross Unrecognized Tax Benefits

The changes in gross unrecognized tax benefits are as follows:


Balance at December 31, 2013	$	3,135
Additions based on tax positions related to the current year		751
Reductions due to lapse of applicable statute of limitations		(167	)

Balance at December 31, 2014		3,719
Additions based on tax positions related to the current year		871
Reductions due to lapse of applicable statute of limitations and tax assessments		(1,077	)

Balance at December 31, 2015		3,513
Additions based on tax positions related to the current year		547
Reductions due to lapse of applicable statute of limitations		(365	)

Balance at December 31, 2016	$	3,695

SHARE-BASED COMPENSATION AND BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2016

Summary of Stock Option Activity

The following is a summary of stock option activity under the 2014 Plan and the 2001 Plan as of and for the year ended December 31, 2016:


	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding at December 31, 2015		257,334		$	102.96
Granted		107,000			140.41
Exercised		(63,084	)		71.18
Forfeited		(7,000	)		127.56

Options outstanding at December 31, 2016		294,250		$	122.80		3.56	$	7,451

Options exercisable at December 31, 2016		24,419		$	109.81		2.92	$	935

Summary of Non-Vested Restricted Stock Activity

The following is a summary of non-vested restricted stock activity as of and for the year ended December 31, 2016:


	Shares			Weighted- Average Grant Date Fair Value
Non-vested restricted stock outstanding at December 31, 2015		2,819,196		$	49.99
Granted		183,144			130.01
Vested		(77,450	)		63.26
Forfeited		(26,000	)		112.79

Non-vested restricted stock outstanding at December 31, 2016		2,898,890		$	54.13

Valuation Assumptions Used for Stock Option Awards

The following table presents the weighted-average assumptions used for stock options granted:


*Years Ended December 31,*	2016			2015			2014
Expected term in years		4.25			4.25			4.25
Risk-free interest rate		1.24	%		1.25	%		1.35	%
Expected volatility		18.65	%		20.96	%		22.07	%
Expected dividend yield		2.54	%		2.29	%		1.69	%
Grant date fair value	$	16.37		$	17.17		$	15.75

Share-Based Compensation Expense

The following table provides information on share-based compensation expense:


*Years Ended December 31,*	2016		2015		2014
Stock options	$	1,149	$	952	$	801
Non-vested restricted stock		11,170		11,644		10,672

Share-based compensation expense	$	12,319	$	12,596	$	11,473

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2016

Changes in Carrying Amount of Goodwill

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


Balance at December 31, 2014	$	387,311
Foreign currency translation adjustment		(9,001	)

Balance at December 31, 2015		378,310
Foreign currency translation adjustment		1,427

Balance at December 31, 2016	$	379,737

Finite lived intangible assets

Other intangible assets are comprised of the following:

December 31,

Estimated
Useful Lives

2016

2015

Indefinite lived intangible assets - Trade names, trademarks and distribution rights

120,288

118,205

Finite lived intangible assets:

Customer relationships

10-15 years

70,194

68,981

Trade name

10 years

1,150

1,150

Non-compete agreements

7 years

369

369

Accumulated amortization

(33,437

)

(28,224

)

Finite lived intangible assets, net

38,276

42,276

158,564

160,481

Indefinite Lived Intangible Assets

Other intangible assets are comprised of the following:

December 31,

Estimated
Useful Lives

2016

2015

Indefinite lived intangible assets - Trade names, trademarks and distribution rights

120,288

118,205

Finite lived intangible assets:

Customer relationships

10-15 years

70,194

68,981

Trade name

10 years

1,150

1,150

Non-compete agreements

7 years

369

369

Accumulated amortization

(33,437

)

(28,224

)

Finite lived intangible assets, net

38,276

42,276

158,564

160,481

DERIVATIVES (Tables)

12 Months Ended

Dec. 31, 2016

Impact from Foreign Exchange Derivative Instruments Designated as Cash Flow Hedges

The impact from foreign exchange derivative instruments designated as cash flow hedges were as follows:


*Years Ended December 31,*	2016			2015
(Loss) gain recorded in accumulated other comprehensive loss	$	(1,321	)	$	3,716
Loss (gain) reclassified from accumulated other comprehensive loss into earnings	$	442		$	(2,730	)

Fair Value of Derivative Instruments and Location in the Balance Sheets


	Asset Derivatives				Liability Derivatives
*December 31,*	2016		2015		2016		2015
Derivatives designated as hedging instruments	$	227	$	923	$	35	$	3
Derivatives not designated as hedging instruments		14		326		4		4

Total derivative instruments	$	241	$	1,249	$	39	$	7

FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2016

Assets and Liabilities Measured at Fair Value on Recurring Basis

The following tables present our assets and liabilities carried at fair value that are measured on a recurring basis:


		Total		Fair Value Measurements at December 31, 2016 Using
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities	Other assets	$	281	$	281		—		—
Derivative financial instruments	Other current assets	$	241		—	$	241		—

Liabilities:
Derivative financial instruments	Accrued expenses and other current liabilities	$	39		—	$	39		—

		Total		Fair Value Measurements at December 31, 2015 Using
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities	Other assets	$	254	$	254		—		—
Derivative financial instruments	Other current assets	$	1,249		—	$	1,249		—

Liabilities:
Derivative financial instruments	Accrued expenses and other current liabilities	$	7		—	$	7		—

INFORMATION ABOUT GEOGRAPHIC AREAS (Tables)

12 Months Ended

Dec. 31, 2016

Revenues and Long-Lived Assets by Geographical Area


*Years Ended December 31,*	2016		2015		2014
Revenues:
United States	$	3,813,204	$	3,710,977	$	3,525,176
Canada		267,220		263,908		300,289
Mexico		140,278		138,354		119,075

Total revenues	$	4,220,702	$	4,113,239	$	3,944,540


*December 31,*	2016		2015
Long-Lived Assets:
United States	$	467,728	$	441,656
Canada		155,758		154,437
Mexico		5,317		5,413

Total long-lived assets	$	628,803	$	601,506

SELECTED QUARTERLY FINANCIAL DATA (Tables)

12 Months Ended

Dec. 31, 2016

Selected Quarterly Financial Data

WATSCO, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA

(UNAUDITED)


*(In thousands, except per share data)*	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Year Ended December 31, 2016
Revenues (1)	$	851,424	$	1,214,435	$	1,241,232	$	913,611	$	4,220,702
Gross profit	$	212,447	$	291,861	$	302,204	$	228,072	$	1,034,584
Net income attributable to Watsco, Inc.	$	25,537	$	64,621	$	63,099	$	29,553	$	182,810

Earnings per share for Common and Class B common stock (2):

Basic	$	0.71	$	1.82	$	1.78	$	0.81	$	5.16

Diluted	$	0.71	$	1.82	$	1.78	$	0.81	$	5.15


Year Ended December 31, 2015
Revenues (1)	$	808,972	$	1,223,439	$	1,177,012	$	903,816	$	4,113,239
Gross profit	$	204,225	$	295,245	$	285,846	$	222,041	$	1,007,357
Net income attributable to Watsco, Inc.	$	23,048	$	65,423	$	57,968	$	26,490	$	172,929

Earnings per share for Common and Class B common stock (2):

Basic	$	0.65	$	1.86	$	1.64	$	0.75	$	4.91

Diluted	$	0.65	$	1.85	$	1.64	$	0.75	$	4.90

(1)

(2)	Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year.

Summary of Significant Accounting Policies - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2016 USD ($) Entity State Store	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Significant Accounting Policies [Line Items]
Number of joint ventures \| Entity	3
Allowance for doubtful accounts	$ 6,169,000	$ 5,305,000
Capitalized vendor rebates	9,926,000	8,086,000
Goodwill and other intangible assets impairment	0	0	$ 0
Advertising expense	22,242,000	21,150,000	19,754,000
Shipping and handling costs	42,809,000	41,345,000	43,324,000
Provision (benefit) for income taxes	105,936,000	$ 104,677,000	$ 91,839,000
Adjustments for New Accounting Pronouncement
Significant Accounting Policies [Line Items]
Provision (benefit) for income taxes	$ (2,898,000)
Minimum \| Buildings and Improvements
Significant Accounting Policies [Line Items]
Estimated useful lives in years	3 years
Minimum \| Other Depreciable Assets
Significant Accounting Policies [Line Items]
Estimated useful lives in years	3 years
Minimum \| Furniture and fixtures
Significant Accounting Policies [Line Items]
Estimated useful lives in years	5 years
Maximum \| Buildings and Improvements
Significant Accounting Policies [Line Items]
Estimated useful lives in years	40 years
Maximum \| Other Depreciable Assets
Significant Accounting Policies [Line Items]
Estimated useful lives in years	10 years
Maximum \| Furniture and fixtures
Significant Accounting Policies [Line Items]
Estimated useful lives in years	7 years
Watsco, Inc.
Significant Accounting Policies [Line Items]
Number of locations from which entity operates \| Store	565
Number of states in which entity operates \| State	37

Adoption of Amended Guidance Impact on Previously Reported Quarterly Results (Detail) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2016

Sep. 30, 2016

Jun. 30, 2016

Mar. 31, 2016

Dec. 31, 2015

Sep. 30, 2015

Jun. 30, 2015

Mar. 31, 2015

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Income Statement:

$ 105,936

$ 104,677

$ 91,839

Diluted earnings per share

$ 29,553

$ 63,099

$ 64,621

$ 25,537

$ 26,490

$ 57,968

$ 65,423

$ 23,048

$ 182,810

$ 172,929

$ 151,387

$ 0.81

^[1]

$ 1.78

^[1]

$ 1.82

^[1]

$ 0.71

^[1]

$ 0.75

^[1]

$ 1.64

^[1]

$ 1.85

^[1]

$ 0.65

^[1]

$ 5.15

^[1]

$ 4.90

^[1]

$ 4.32

Diluted weighted-average common shares outstanding

32,616,504

32,480,356

32,358,854

Balance Sheet:

Paid-in capital

$ 592,350

$ 602,522

$ 592,350

$ 602,522

Cash Flow Statement:

Net cash provided by operating activities

277,756

221,383

$ 144,980

Net cash used in financing activities

$ (213,916)

$ (186,320)

$ (120,207)

As Reported

Income Statement:

$ 15,508

Diluted earnings per share

$ 34,174

$ 0.71

Diluted weighted-average common shares outstanding

32,537,225

Balance Sheet:

Paid-in capital

$ 610,285

Cash Flow Statement:

Net cash provided by operating activities

41,852

Net cash used in financing activities

(41,638)

As Adjusted

Income Statement:

14,654

Diluted earnings per share

$ 35,028

$ 0.74

Diluted weighted-average common shares outstanding

32,546,314

Balance Sheet:

Paid-in capital

$ 609,431

Cash Flow Statement:

Net cash provided by operating activities

42,706

Net cash used in financing activities

$ (42,492)

[1]	Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year.

Schedule of Basic and Diluted Earnings per Common Share (Detail) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2016

Sep. 30, 2016

Jun. 30, 2016

Mar. 31, 2016

Dec. 31, 2015

Sep. 30, 2015

Jun. 30, 2015

Mar. 31, 2015

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]

Net income attributable to Watsco, Inc. shareholders

$ 29,553

$ 63,099

$ 64,621

$ 25,537

$ 26,490

$ 57,968

$ 65,423

$ 23,048

$ 182,810

$ 172,929

$ 151,387

Less: distributed and undistributed earnings allocated to non-vested restricted common stock

14,806

13,634

11,444

Earnings allocated to Watsco, Inc. shareholders - Basic

$ 168,004

$ 159,295

$ 139,943

Weighted-average common shares outstanding - Basic

32,582,385

32,435,961

32,308,073

Basic earnings per share for Common and Class B common stock

$ 0.81

^[1]

$ 1.78

^[1]

$ 1.82

^[1]

$ 0.71

^[1]

$ 0.75

^[1]

$ 1.64

^[1]

$ 1.86

^[1]

$ 0.65

^[1]

$ 5.16

^[1]

$ 4.91

^[1]

$ 4.33

Net income attributable to Watsco, Inc. shareholders

$ 29,553

$ 63,099

$ 64,621

$ 25,537

$ 26,490

$ 57,968

$ 65,423

$ 23,048

$ 182,810

$ 172,929

$ 151,387

Less: distributed and undistributed earnings allocated to non-vested restricted common stock

14,801

13,626

11,435

Earnings allocated to Watsco, Inc. shareholders - Diluted

$ 168,009

$ 159,303

$ 139,952

Weighted-average common shares outstanding - Basic

32,582,385

32,435,961

32,308,073

Effect of dilutive stock options

34,119

44,395

50,781

Weighted-average common shares outstanding - Diluted

32,616,504

32,480,356

32,358,854

Diluted earnings per share for Common and Class B common stock

$ 0.81

^[1]

$ 1.78

^[1]

$ 1.82

^[1]

$ 0.71

^[1]

$ 0.75

^[1]

$ 1.64

^[1]

$ 1.85

^[1]

$ 0.65

^[1]

$ 5.15

^[1]

$ 4.90

^[1]

$ 4.32

Common Stock

Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]

Earnings allocated to Watsco, Inc. shareholders - Basic

$ 154,021

$ 146,037

$ 128,214

Class B Common Stock

Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]

Earnings allocated to Watsco, Inc. shareholders - Basic

$ 13,983

$ 13,258

$ 11,729

[1]	Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year.

Earnings Per Share - Additional Information (Detail) - shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Earnings Per Share [Line Items]
Convertible Class B common stock outstanding	2,711,811	2,699,710	2,707,725
Anti-dilutive stock options excluded from earnings per share	31,839	67,014	9,984

Schedule of Tax Effects Allocated to Each Component of Other Comprehensive Loss (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Components Of Other Comprehensive Income Loss [Line Items]
Foreign currency translation adjustment	$ 6,211	$ (39,378)	$ (21,117)
Unrealized (loss) gain on cash flow hedging instruments	(1,321)	3,716	384
Income tax benefit (expense)	356	(1,003)	(104)
Unrealized (loss) gain on cash flow hedging instruments, net of tax	(965)	2,713	280
Reclassification of loss (gain) on cash flow hedging instruments into earnings	442	(2,730)
Income tax (benefit) expense	(119)	737
Reclassification of loss (gain) on cash flow hedging instruments into earnings, net of tax	323	(1,993)
Unrealized gain (loss) on available-for-sale securities	27	(12)	1
Income tax (expense) benefit	(13)	4
Unrealized gain (loss) on available-for-sale securities, net of tax	14	(8)	1
Other comprehensive gain (loss)	$ 5,583	$ (38,666)	$ (20,836)

Schedule of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (46,904)	$ (23,747)
Ending balance	(43,530)	(46,904)	$ (23,747)
Foreign currency translation adjustment
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(47,204)	(23,623)	(11,181)
Current period other comprehensive income (loss)	3,745	(23,581)	(12,442)
Ending balance	(43,459)	(47,204)	(23,623)
Cash flow hedging instruments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	600	168
Current period other comprehensive income (loss)	(579)	1,628	168
Less reclassification adjustment	194	(1,196)
Ending balance	215	600	168
Available-for-sale securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(300)	(292)	(293)
Current period other comprehensive income (loss)	14	(8)	1
Ending balance	$ (286)	$ (300)	$ (292)

Supplier Concentration - Additional Information (Detail) - Supplier Concentration Risk - Vendor	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Concentration Risk [Line Items]
Number of key suppliers	10
Cost of Goods, Total
Concentration Risk [Line Items]
Percentage of purchases from key suppliers	85.00%	84.00%	82.00%
Carrier and Its Affiliates \| Cost of Goods, Total
Concentration Risk [Line Items]
Percentage of purchases from key suppliers	62.00%	62.00%	61.00%

Property and Equipment, Net (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 204,147	$ 166,832
Accumulated depreciation and amortization	(113,645)	(104,117)
Property and equipment, net	90,502	62,715
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	820	820
Buildings and Improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	71,082	69,675
Machinery, vehicles and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	74,640	43,150
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	15,090	14,311
Computer Hardware and Software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 42,515	$ 38,876

Debt - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Jan. 24, 2017	Dec. 31, 2015
Debt Instrument [Line Items]
Revolving credit agreement maximum borrowing capacity	$ 600,000
Revolving credit agreement maturity date	Jul. 01, 2019
Commitment fee percentage on unused portion of the commitment	0.15%
Borrowings under revolving credit agreement	$ 235,294		$ 245,300
Swingline Subfacility
Debt Instrument [Line Items]
Revolving credit agreement maximum borrowing capacity	90,000
Letter of Credit
Debt Instrument [Line Items]
Revolving credit agreement maximum borrowing capacity	50,000
Letter of Credit \| Subsequent Event
Debt Instrument [Line Items]
Revolving credit agreement maximum borrowing capacity		$ 10,000
Multicurrency borrowing sublimit
Debt Instrument [Line Items]
Revolving credit agreement maximum borrowing capacity	$ 75,000
Minimum
Debt Instrument [Line Items]
Commitment fee percentage on unused portion of the commitment	0.125%
Maximum
Debt Instrument [Line Items]
Commitment fee percentage on unused portion of the commitment	0.35%
London Interbank Offer Rate
Debt Instrument [Line Items]
Basis spread	1.00%
London Interbank Offer Rate \| Minimum
Debt Instrument [Line Items]
Basis spread	0.875%
London Interbank Offer Rate \| Maximum
Debt Instrument [Line Items]
Basis spread	2.50%
Prime Rate
Debt Instrument [Line Items]
Basis spread	0.00%
Prime Rate \| Minimum
Debt Instrument [Line Items]
Basis spread	0.00%
Prime Rate \| Maximum
Debt Instrument [Line Items]
Basis spread	1.50%

Components of Income Tax Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Components Of Income Tax Expense Benefit [Line Items]
U.S. Federal	$ 86,719	$ 85,585	$ 74,561
State	9,801	9,431	10,325
Foreign	9,416	9,661	6,953
Income tax expense	105,936	104,677	91,839
Current	103,216	99,990	91,550
Deferred	2,720	4,687	289
Income tax expense	$ 105,936	$ 104,677	$ 91,839

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Income Taxes [Line Items]
Percentage of income attributable to wholly-owned operations and investments for which income tax expense and effective tax rate calculated	100.00%
Undistributed earnings of foreign subsidiaries	$ 130,000
Valuation allowance	0	$ 0
Gross unrecognized tax benefits	3,695	3,513	$ 3,719	$ 3,135
Unrecognized tax benefits that, if recognized, would affect the effective tax rate	2,573	2,416
Estimated accrued interest and penalties resulting from unrecognized tax benefits	$ 414	$ 384
Minimum
Income Taxes [Line Items]
State and other net operating loss carry forwards expiration date	2017
Maximum
Income Taxes [Line Items]
State and other net operating loss carry forwards expiration date	2036
State and other
Income Taxes [Line Items]
Net operating loss carry forwards	$ 6,872
Federal
Income Taxes [Line Items]
Net operating loss carry forwards	$ 0

Reconciliation of Effective Income Tax Rate (Detail)	12 Months Ended
Reconciliation of Effective Income Tax Rate (Detail)	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Reconciliation of Effective Income Tax Rate [Line Items]
U.S. federal statutory rate	35.00%	35.00%	35.00%
State income taxes, net of federal benefit and other	2.10%	2.30%	3.00%
Excess tax benefits from share-based compensation	(1.00%)
Tax effects on foreign income	(0.10%)	(0.30%)	(1.00%)
Effective income tax rate attributable to Watsco, Inc.	36.00%	37.00%	37.00%
Taxes attributable to non-controlling interest	(5.00%)	(5.40%)	(6.40%)
Effective income tax rate	31.00%	31.60%	30.60%

Significant Components of Current and Long-Term Deferred Tax Assets and Liabilities (Detail) - USD ($)
$ in Thousands

Dec. 31, 2016

Dec. 31, 2015

Components Of Deferred Income Tax Assets And Liabilities [Line Items]

Capitalized inventory costs and inventory reserves

$ 2,301

$ 1,794

Allowance for doubtful accounts

1,379

1,053

Self-insurance reserves

500

519

Other current deferred tax assets

1,778

1,921

Total current deferred tax assets

^[1]

5,958

5,287

Share-based compensation

26,239

23,603

Other long-term deferred tax assets

449

352

Net operating loss carryforwards

209

207

Total long-term deferred tax assets

26,897

24,162

Valuation allowance

Total long-term deferred tax assets

^[2]

26,897

24,162

Other current deferred tax liabilities

(473)

(686)

Total current deferred tax liabilities

^[1]

(473)

(686)

Deductible goodwill

(88,581)

(83,868)

Depreciation

(5,883)

(3,774)

Other long-term deferred tax liabilities

(1,160)

(1,533)

Total long-term deferred tax liabilities

^[2]

(95,624)

(89,175)

Net deferred tax liabilities

$ (63,242)

$ (60,412)

[1]	Current deferred tax assets and liabilities have been included in the consolidated balance sheets in other current assets.
[2]	Long-term deferred tax assets and liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities.

Changes in Gross Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Income Tax Contingency [Line Items]
Beginning balance	$ 3,513	$ 3,719	$ 3,135
Additions based on tax positions related to the current year	547	871	751
Reductions due to lapse of applicable statute of limitations	(365)	(1,077)	(167)
Ending balance	$ 3,695	$ 3,513	$ 3,719

Share-Based Compensation and Benefit Plans - Additional Information (Detail) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) Age $ / shares shares	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options of common stock outstanding	294,250	257,334
Total intrinsic value of stock options exercised \| $	$ 4,490	$ 7,525	$ 3,746
Cash received from Common stock issued \| $	4,447	4,850	3,324
Common stock contribution to 401(k) plan \| $	$ 2,348	$ 1,963	$ 1,759
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares of common stock that may be granted	1,500,000
Shares reserved for future grant	496,160
Number of days under which shares to be purchased by employee on such available	90 days
Discount allowed to employees to purchase share	5.00%
Shares purchased under ESPP	5,956	6,463	6,995
Average price of the shares purchased by employees \| $ / shares	$ 125.84	$ 112.53	$ 90.89
Additional shares issued resulting from cash dividends reinvested in common stock	3,442	3,183	2,953
Net proceeds from shares purchased under ESPP \| $	$ 1,206	$ 1,107	$ 921
2014 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of market price that share-based compensation awards are granted at	100.00%
Aggregate shares of common stock that may be granted	2,000,000
Shares reserved for future grant	1,424,848
Contractual term of stock option awards	5 years
2014 Plan \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Years in which options plan vest	2 years
2014 Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Years in which options plan vest	4 years
2014 Plan \| Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares awarded under plan	293,950
2014 Plan \| Common and Class B Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future grant	45,421
2014 Plan \| Class B Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares awarded under plan	326,623
401(k) Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock contribution to 401(k) Plan, shares	20,045	18,343	18,309
Common stock contribution to 401(k) plan \| $	$ 2,348	$ 1,963	$ 1,759
2001 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares of common stock that may be granted	0
Contractual term of stock option awards	5 years
Options of common stock outstanding	37,750
2001 Plan \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Years in which options plan vest	2 years
2001 Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Years in which options plan vest	4 years
Non-Vested Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant date fair value of non-vested (restricted) stock \| $ / shares	$ 130.01	$ 114.55	$ 96.84
Fair value of non-vested stock that vested \| $	$ 10,096	$ 2,468	$ 5,789
Shares withheld as payment for tax withholdings related to share based compensation, shares		7,206	21,028
Shares withheld as payment for tax withholdings related to share based compensation, market value \| $		$ 889	$ 2,125
Unrecognized share-based compensation expense \| $	$ 100,397
Weighted-average period for recognition of share-based compensation expense, in years	11 years
Non-Vested Restricted Stock \| Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense \| $	$ 59,000
Weighted-average period for recognition of share-based compensation expense, in years	10 years
Shares of non-vested (restricted) stock obligated to issue in connection with incentive compensation agreements	67,853
Non-Vested Restricted Stock \| Chief Executive Officer \| Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense \| $	$ 13,000
Weighted-average period for recognition of share-based compensation expense, in years	6 years
Age of Chief Executive Officer when non-vested (restricted) stock vests \| Age	82
Non-Vested Restricted Stock \| Chief Executive Officer \| Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense \| $	$ 46,000
Weighted-average period for recognition of share-based compensation expense, in years	10 years
Age of Chief Executive Officer when non-vested (restricted) stock vests \| Age	86
Non-Vested Restricted Stock \| Employee [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Age of employee when non-vested (restricted) stock vests \| Age	62
Non-Vested Restricted Stock \| President [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average period for recognition of share-based compensation expense, in years	27 years
Shares of non-vested (restricted) stock obligated to issue in connection with incentive compensation agreements	25,774
Non-Vested Restricted Stock \| Common and Class B Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares withheld as payment for tax withholdings related to share based compensation, shares	30,413
Shares withheld as payment for tax withholdings related to share based compensation, market value \| $	$ 3,967
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense \| $	$ 2,096
Weighted-average period for recognition of share-based compensation expense, in years	1 year 9 months 18 days
Fair value of stock options vested \| $	$ 736	$ 856	$ 1,145
Stock Options \| Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares withheld as payment for tax withholdings related to share based compensation, shares	348	26,006	5,454
Shares withheld as payment for tax withholdings related to share based compensation, market value \| $	$ 51	$ 3,251	$ 490

Summary of Stock Option Activity (Detail) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, Outstanding beginning balance \| shares	257,334
Options, Granted \| shares	107,000
Options, Exercised \| shares	(63,084)
Options, Forfeited \| shares	(7,000)
Options, Outstanding ending balance \| shares	294,250
Options, Exercisable \| shares	24,419
Weighted-Average Exercise Price, Outstanding beginning balance \| $ / shares	$ 102.96
Weighted-Average Exercise Price, Granted \| $ / shares	140.41
Weighted-Average Exercise Price, Exercised \| $ / shares	71.18
Weighted-Average Exercise Price, Forfeited \| $ / shares	127.56
Weighted-Average Exercise Price, Outstanding ending balance \| $ / shares	122.80
Weighted-Average Exercise Price, Exercisable \| $ / shares	$ 109.81
Weighted-Average Remaining Contractual Term (in years), Outstanding	3 years 6 months 22 days
Weighted-Average Remaining Contractual Term (in years), Exercisable	2 years 11 months 1 day
Aggregate Intrinsic Value, Outstanding \| $	$ 7,451
Aggregate Intrinsic Value, Exercisable \| $	$ 935

Summary of Non-Vested Restricted Stock Activity (Detail) - Non-Vested Restricted Stock - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Non-vested beginning balance	2,819,196
Shares, Granted	183,144
Shares, Vested	(77,450)
Shares, Forfeited	(26,000)
Shares, Non-vested ending balance	2,898,890	2,819,196
Weighted-Average Grant Date Fair Value, Non-vested beginning balance	$ 49.99
Weighted-Average Grant Date Fair Value, Granted	130.01	$ 114.55	$ 96.84
Weighted-Average Grant Date Fair Value, Vested	63.26
Weighted-Average Grant Date Fair Value, Forfeited	112.79
Weighted-Average Grant Date Fair Value, Non-vested ending balance	$ 54.13	$ 49.99

Weighted-Average Assumptions Used for Stock Options Granted (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term in years	4 years 3 months	4 years 3 months	4 years 3 months
Risk-free interest rate	1.24%	1.25%	1.35%
Expected volatility	18.65%	20.96%	22.07%
Expected dividend yield	2.54%	2.29%	1.69%
Grant date fair value	$ 16.37	$ 17.17	$ 15.75

Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 12,319	$ 12,596	$ 11,473
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	1,149	952	801
Non-Vested Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 11,170	$ 11,644	$ 10,672

Purchase of Additional Ownership Interest in Joint Ventures - Additional Information (Detail) - USD ($) $ in Thousands	Feb. 13, 2017	Nov. 29, 2016	Jul. 01, 2014
Carrier Enterprise II
Business Acquisition [Line Items]
Additional ownership interest acquired		10.00%
Cash consideration		$ 42,909
Carrier Enterprise II \| Subsequent Event
Business Acquisition [Line Items]
Additional ownership interest acquired	10.00%
Cash consideration	$ 42,688
Controlling interest, ownership percentage	80.00%
Carrier Enterprise I
Business Acquisition [Line Items]
Additional ownership interest acquired			10.00%
Cash consideration			$ 87,735
Controlling interest, ownership percentage			80.00%

Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Goodwill [Line Items]
Goodwill, Beginning Balance	$ 378,310	$ 387,311
Foreign currency translation adjustment	1,427	(9,001)
Goodwill, Ending Balance	$ 379,737	$ 378,310

Other Intangible Assets (Detail) - USD ($) $ in Thousands	12 Months Ended
Other Intangible Assets (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Intangible Assets [Line Items]
Indefinite lived intangible assets - Trade names, trademarks and distribution rights	$ 120,288	$ 118,205
Finite lived intangible assets:
Accumulated amortization	(33,437)	(28,224)
Finite lived intangible assets, net	38,276	42,276
Intangible assets, net	158,564	160,481
Customer Relationships
Finite lived intangible assets:
Finite lived intangible assets	$ 70,194	68,981
Customer Relationships \| Minimum
Intangible Assets [Line Items]
Finite lived intangible assets, Estimated Useful lives, years	10 years
Customer Relationships \| Maximum
Intangible Assets [Line Items]
Finite lived intangible assets, Estimated Useful lives, years	15 years
Trade Name
Intangible Assets [Line Items]
Finite lived intangible assets, Estimated Useful lives, years	10 years
Finite lived intangible assets:
Finite lived intangible assets	$ 1,150	1,150
Noncompete Agreements
Intangible Assets [Line Items]
Finite lived intangible assets, Estimated Useful lives, years	7 years
Finite lived intangible assets:
Finite lived intangible assets	$ 369	$ 369

Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Goodwill And Intangible Assets [Line Items]
Amortization expense related to finite lived intangible assets	$ 5,213	$ 5,315	$ 5,769
Amortization of finite lived intangible assets for 2017	5,200
Amortization of finite lived intangible assets for 2018	5,200
Amortization of finite lived intangible assets for 2019	5,200
Amortization of finite lived intangible assets for 2020	5,200
Amortization of finite lived intangible assets for 2021	$ 4,300

Shareholders' Equity - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 1999
Stockholders Equity Note [Line Items]
Preferred stock outstanding	0	0
Number of shares authorized to be repurchased				7,500,000
Treasury stock, shares repurchased	0	0	0
Cost of repurchased shares	$ 114,425	$ 114,425
Remaining number of shares authorized to be repurchased	1,129,087
Common Stock
Stockholders Equity Note [Line Items]
Amount of votes common stock is entitled	One
Percentage of Board entitled to elect	25.00%
Treasury stock, shares	6,322,650	6,322,650
Class B Common Stock
Stockholders Equity Note [Line Items]
Amount of votes common stock is entitled	Ten
Treasury stock, shares	48,263	48,263

Financial Instruments - Additional Information (Detail) - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Financial Instrument [Line Items]
Estimated fair value of contingent liability	$ 0
Standby Letters of Credit
Financial Instrument [Line Items]
Fair value of contingent liability	2,430,000	$ 2,690,000
Performance Bonds
Financial Instrument [Line Items]
Fair value of contingent liability	$ 8,000,000	$ 4,000,000

Derivatives - Additional Information (Detail) - Foreign Currency Forward Contracts - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Derivatives not Designated as Hedging Instruments
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional value of derivatives	$ 4,650
Contract expiring terms	2017-03
(Losses) gains from foreign currency forward contracts not designated as hedging instruments	$ (306)	$ 2,552	$ 142
Cash Flow Hedge
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional value of derivatives	$ 33,200
Contract maturity period	One year or less
Contract expiring terms	2017-09
Pre-tax gain to be reclassified into earnings within the next 12 months	$ 490

Impact from Foreign Exchange Derivative Instruments Designated as Cash Flow Hedges (Detail) - Cash Flow Hedge - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Derivative Instruments, Gain (Loss) [Line Items]
(Loss) gain recorded in accumulated other comprehensive loss	$ (1,321)	$ 3,716
Loss (gain) reclassified from accumulated other comprehensive loss into earnings	$ 442	$ (2,730)

Fair Value of Derivative Instruments and Location in the Balance Sheets (Detail) - Foreign Currency Forward Contracts - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives	$ 241	$ 1,249
Derivative instruments, liabilities derivatives	39	7
Derivatives Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives	227	923
Derivative instruments, liabilities derivatives	35	3
Derivatives not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives	14	326
Derivative instruments, liabilities derivatives	$ 4	$ 4

Fair value, after the effects of master netting arrangements, of a financial liability or contract with one or more underlyings, notional amount or payment provision or both, and the contract can be net settled by means outside the contract or delivery of an asset, expected to be settled within one year or normal operating cycle, if longer. Includes assets not subject to a master netting arrangement and not elected to be offset.

Assets and Liabilities Carried at Fair Value Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Other assets
Assets:
Available-for-sale securities	$ 281	$ 254
Other Current Assets
Assets:
Derivative financial instruments	241	1,249
Accrued expenses and other current liabilities
Liabilities:
Derivative financial instruments	39	7
Fair Value Measurements, Level 1 \| Other assets
Assets:
Available-for-sale securities	281	254
Fair Value Measurements, Level 2 \| Other Current Assets
Assets:
Derivative financial instruments	241	1,249
Fair Value Measurements, Level 2 \| Accrued expenses and other current liabilities
Liabilities:
Derivative financial instruments	$ 39	$ 7

Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Commitments and Contingencies Disclosure [Line Items]
Self-insurance reserves	$ 2,951	$ 3,214
Maximum exposure to loss related to involvement with variable interest entity	$ 4,300
Operating leases maximum maturity date	2025
Rental expense	$ 83,260	$ 82,581	$ 81,155
Carrier and Its Affiliates
Commitments and Contingencies Disclosure [Line Items]
Non-cancelable purchase obligations for goods	29,000
Key Suppliers
Commitments and Contingencies Disclosure [Line Items]
Non-cancelable purchase obligations for goods	$ 17,000

Future Minimum Leases Payments under Non-Cancelable Operating Leases (Detail) $ in Thousands	Dec. 31, 2016 USD ($)
Operating Leases Future Minimum Payments Due [Line Items]
2017	$ 56,639
2018	48,420
2019	35,926
2020	21,650
2021	13,184
Thereafter	13,362
Total minimum payments	$ 189,181

Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Supplier Concentration Risk \| Cost of Goods, Total
Related Party Transaction [Line Items]
Percentage of purchases from key suppliers	85.00%	84.00%	82.00%
Carrier and Its Affiliates \| Supplier Concentration Risk
Related Party Transaction [Line Items]
Amount payable to Carrier and its affiliates, net of receivables	$ 63,000	$ 85,000
Revenues from sales to Carrier and its affiliates	$ 56,000	$ 62,000	$ 38,000
Carrier and Its Affiliates \| Supplier Concentration Risk \| Cost of Goods, Total
Related Party Transaction [Line Items]
Percentage of purchases from key suppliers	62.00%	62.00%	61.00%
Moss & Associates LLC \| Customary Payments for Remodeling of Corporate Headquarters
Related Party Transaction [Line Items]
Payment for related party transaction	$ 291
Payable for related party transaction	$ 109

Revenues and Long-Lived Assets by Geographical Area (Detail) - USD ($)
$ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2016

Sep. 30, 2016

^[1]

Jun. 30, 2016

^[1]

Mar. 31, 2016

^[1]

Dec. 31, 2015

Sep. 30, 2015

^[1]

Jun. 30, 2015

^[1]

Mar. 31, 2015

^[1]

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

$ 913,611

^[1]

$ 1,241,232

$ 1,214,435

$ 851,424

$ 903,816

^[1]

$ 1,177,012

$ 1,223,439

$ 808,972

$ 4,220,702

^[1]

$ 4,113,239

^[1]

$ 3,944,540

628,803

601,506

628,803

601,506

UNITED STATES

3,813,204

3,710,977

3,525,176

467,728

441,656

467,728

441,656

CANADA

267,220

263,908

300,289

155,758

154,437

155,758

154,437

MEXICO

140,278

138,354

$ 119,075

Quarterly Financial Data [Line Items]

$ 5,317

$ 5,413

$ 5,317

$ 5,413

[1]

Supplemental Cash Flow Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Cash Flow Supplemental Disclosures [Line Items]
Interest paid	$ 3,362	$ 4,993	$ 4,393
Income taxes net of refunds	$ 99,006	$ 103,261	$ 82,850

Subsequent Events - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands				12 Months Ended
	Feb. 13, 2017	Jan. 03, 2017	Nov. 29, 2016	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Jan. 24, 2017
Subsequent Event [Line Items]
Cash dividend				$ 3.60	$ 2.80	$ 2.00
Revolving credit agreement maximum borrowing capacity				$ 600,000
Carrier Enterprise II
Subsequent Event [Line Items]
Additional ownership interest acquired			10.00%
Cash consideration			$ 42,909
Carrier Enterprise II \| Subsequent Event
Subsequent Event [Line Items]
Additional ownership interest acquired	10.00%
Cash consideration	$ 42,688
Controlling interest, ownership percentage	80.00%
Letter of Credit
Subsequent Event [Line Items]
Revolving credit agreement maximum borrowing capacity				$ 50,000
Letter of Credit \| Subsequent Event
Subsequent Event [Line Items]
Revolving credit agreement maximum borrowing capacity							$ 10,000
Common Stock \| Subsequent Event
Subsequent Event [Line Items]
Cash dividend		$ 1.05
Dividends, date declared		Jan. 03, 2017
Dividends, payable date		Jan. 31, 2017
Dividends, date of record		Jan. 17, 2017
Class B Common Stock \| Subsequent Event
Subsequent Event [Line Items]
Cash dividend		$ 1.05
Dividends, date declared		Jan. 03, 2017
Dividends, payable date		Jan. 31, 2017
Dividends, date of record		Jan. 17, 2017

Selected Quarterly Financial Data (Detail) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2016

Sep. 30, 2016

Jun. 30, 2016

Mar. 31, 2016

Dec. 31, 2015

Sep. 30, 2015

Jun. 30, 2015

Mar. 31, 2015

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014