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Earnings Per Share

9 Months Ended

Sep. 30, 2011

Earnings Per Share [Abstract]

Earnings Per Share

2.	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 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 and adjusts for the dilutive effects of outstanding stock options using the treasury stock method. As of September 30, 2011 and 2010, our outstanding Class B common stock was convertible into 2,853,096 and 2,858,592 shares of our Common stock, respectively.

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


		Quarter Ended September 30,								Nine Months Ended September 30,
		2011				2010				2011				2010

Basic Earnings per Share:
Net income attributable to Watsco, Inc. shareholders		$	33,547			$	31,437			$	77,070			$	70,315
Less: distributed and undistributed earnings allocated to non-vested (restricted) common stock			2,295				1,835				5,105				4,182

Earnings allocated to Watsco, Inc. shareholders		$	31,252			$	29,602			$	71,965			$	66,133

Weighted-average Common and Class B common shares outstanding for basic earnings per share			30,694,844				30,499,889				30,660,843				30,442,941

Basic earnings per share for Common and Class B common stock		$	1.02			$	0.97			$	2.35			$	2.17

Allocation of earnings for Basic:
Common stock		$	28,347			$	26,828			$	65,268			$	59,923
Class B common stock			2,905				2,774				6,697				6,210

		$	31,252			$	29,602			$	71,965			$	66,133

Diluted Earnings per Share:
Net income attributable to Watsco, Inc. shareholders		$	33,547			$	31,437			$	77,070			$	70,315
Less: distributed and undistributed earnings allocated to non-vested (restricted) common stock			2,293				1,833				5,101				4,178

Earnings allocated to Watsco, Inc. shareholders		$	31,254			$	29,604			$	71,969			$	66,137

The diluted earnings per share calculation assumes the conversion of all of our Class B common stock into Common stock as of the beginning of the period; therefore, no allocation of earnings to Class B common stock is required.


Weighted-average Common and Class B common shares outstanding for basic earnings per share			30,694,844				30,499,889				30,660,843				30,442,941
Effect of dilutive stock options			63,688				101,332				80,452				115,792

Weighted-average Common and Class B common shares outstanding for diluted earnings per share			30,758,532				30,601,221				30,741,295				30,558,733



Diluted earnings per share for Common and Class B common stock		$	1.02			$	0.97			$	2.34			$	2.16



Anti-dilutive stock options not included in above			132,750				199,826				22,322				144,756