WATSCO INC Fair Value Disclosure
17. FAIR VALUE MEASUREMENTS
The following tables present our assets and liabilities carried at fair value that are measured on a recurring basis:
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Fair Value Measurements at December 31, 2025 Using |
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Balance Sheet Location |
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Total |
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Level 1 |
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Level 2 |
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Level 3 |
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Assets: |
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Certificates of deposit |
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Short-term cash investments |
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$ |
300,000 |
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— |
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$ |
300,000 |
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— |
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Derivative financial instruments |
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Other current assets |
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$ |
— |
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— |
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$ |
— |
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— |
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Equity securities |
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Other assets |
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$ |
1,564 |
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$ |
1,564 |
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— |
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— |
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Private equity securities |
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Other assets |
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$ |
3,406 |
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— |
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— |
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$ |
3,406 |
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Fair Value Measurements at December 31, 2024 Using |
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Balance Sheet Location |
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Total |
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Level 1 |
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Level 2 |
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Level 3 |
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Assets: |
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Certificates of deposit |
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Short-term cash investments |
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$ |
255,669 |
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— |
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$ |
255,669 |
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— |
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Derivative financial instruments |
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Other current assets |
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$ |
6 |
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— |
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$ |
6 |
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— |
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Equity securities |
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Other assets |
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$ |
1,078 |
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$ |
1,078 |
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— |
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— |
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Private equity securities |
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Other assets |
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$ |
1,500 |
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— |
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— |
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$ |
1,500 |
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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:
Certificates of deposit – these investments consist of certificates of deposit with varying maturities. We classify these investments within Level 2 of the valuation hierarchy because fair value is based on indirectly observable market inputs.
Equity 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.
Private equity securities – other investments in which fair value inputs are unobservable and are therefore classified within Level 3 of the fair value hierarchy.
Derivative financial instruments – these derivatives are foreign currency forward contracts. See Note 16. 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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 29, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.