QUANTA SERVICES INC, QUANTA SERVICES MANAGEMENT ...

The business of our Fiber Optic Licensing segment is capital intensive and requires substantial investments,
and returns on investments may be less than expected for various reasons.
The business of our Fiber Optic Licensing segment requires substantial amounts of capital investment to
build out new fiber networks. In 2012, our proposed capital expenditures for our fiber optic licensing business are
approximately $40 million to $50 million, $14.1 million of which is related to committed licensing arrangements
as of December 31, 2011. Although we generally do not commit capital to new networks until we have a
committed license arrangement in place with at least one customer, we may not be able to recoup our initial
investment in the network if that customer defaults on its commitment. Even if the customer does not default or
we add additional customers to the network, we still may not realize a return on the capital investment for an
extended period of time. Furthermore, the amount of capital that we invest in our fiber optic network may exceed
planned expenditures as a result of various factors, including difficulty in obtaining permits or rights of way or
unexpected increases in costs due to labor, materials or project productivity, which would result in a decrease in
the returns on our capital investments if licensing fees for the network were committed and could not be
renegotiated. New or developing technologies or significant competition in any of our markets could also
negatively impact the business of our Fiber Optic Licensing segment. If any of the above events occur, it could
adversely affect our results of operations or result in an impairment of our fiber optic network.
We extend credit to customers for purchases of our services and may enter into longer-term deferred
payment arrangements or provide other financing or investment arrangements with certain of our
customers, which subjects us to potential credit or investment risk that could, if realized, adversely affect
our results of operations or financial condition.
We grant credit, generally without collateral, to our customers, which include electric power utilities, natural
gas and oil companies, telecommunications service providers, governmental entities, general contractors, and
builders, owners and managers of renewable energy facilities and commercial and industrial properties located
primarily in the United States and Canada. We may also agree to allow our customers to defer payment on
projects until certain milestones have been met or until the projects are substantially completed, and customers
typically withhold some portion of amounts due to us as retainage. In addition, we may provide other forms of
financing to our customers or make investments in our customers’ projects, typically in situations where we also
provide services in connection with the projects. Our payment arrangements with our customers subject us to
potential credit risk related to changes in business and economic factors affecting our customers, including
material changes in our customers’ revenues or cash flows. These changes may also reduce the value of any
financing or equity investment arrangements we have with our customers. Many of our customers have been
negatively impacted by the recent economic downturn, and some may experience financial difficulties (including
bankruptcies) that could impact our ability to collect amounts owed to us or impair the value of our investments
in them. If we are unable to collect amounts owed to us, our cash flows would be reduced and we could
experience losses if the uncollectible amounts exceeded current allowances. We would also recognize losses with
respect to any investments that are impaired as a result of our customers’ financial difficulties. Losses
experienced could materially and adversely affect our financial condition and results of operation. The risks of
collectability and impairment losses may increase for projects where we provide services as well as make a
financing or equity investment.
The loss of key personnel could disrupt our business.
We depend on the continued efforts of our executive officers and on senior management of our operating
units, including the businesses we acquire. Although we have entered into employment agreements with terms of
one to three years with most of our executive officers and certain other key employees, we cannot be certain that
any individual will continue in such capacity for any particular period of time. The loss of key personnel, or the
inability to hire and retain qualified employees, could negatively impact our ability to manage our business. We
do not carry key-person life insurance on any of our employees.
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