QUANTA SERVICES INC, QUANTA SERVICES MANAGEMENT ...

Operating income decreased $197.7 million, or 165.9%, to a loss of $78.5 million for the year ended
December 31, 2011. Operating income as a percentage of revenues decreased to a negative 7.7% for the year
ended December 31, 2011 from 8.5% for the year ended December 31, 2010. These decreases were primarily due
to the impact of increased project costs related to performance issues caused by adverse weather conditions and
regulatory restrictions on certain gas transmission projects completed during 2011. Also contributing to these
decreases was a $32.6 million charge to this segment’s operating results in 2011 associated with the withdrawal
of certain of our subsidiaries from an underfunded multi-employer pension plan, as well as the negative impact of
the lower overall revenues described above, which negatively impacted this segment’s ability to cover fixed and
overhead costs.
Telecommunications Infrastructure Services Segment Results
Revenues for this segment increased $84.3 million, or 22.6%, to $457.3 million for the year ended
December 31, 2011. This increase in revenues was primarily due to an increase in the volume of work associated
with stimulus-funded fiber optic network projects during the second half of 2011 as well as higher revenues from
fiber to the cell site initiatives resulting from higher capital spending by our customers. These increases were
partially offset by a decrease in the volume of work associated with a long-haul fiber installation performed
during 2010 that was not replaced during 2011.
Operating income increased $21.9 million, or 147.4%, to $36.8 million for the year ended
December 31, 2011. Operating income as a percentage of revenues increased from 4.0% for the year ended
December 31, 2010 to 8.0% for the year ended December 31, 2011. These increases were primarily due to an
increase in the demand for our services allowing for margin expansion during the second half of 2011, as well as
lower selling, general and administrative expenses that resulted from the restructuring of certain operating units,
which reduced the overall amount of fixed costs associated with the segment.
Fiber Optic Licensing Segment Results
Revenues for this segment increased $5.3 million, or 4.9%, to $112.0 million for the year ended
December 31, 2011. This increase in revenues was primarily a result of our continued network expansion and the
associated revenues from licensing the right to use point-to-point fiber optic telecommunications facilities.
Operating income increased nominally to $54.2 million for the year ended December 31, 2011. Operating
income as a percentage of revenues for the year ended December 31, 2011 decreased to 48.4% from 49.3% for
the year ended December 31, 2010, primarily due to higher network maintenance costs incurred during 2011, as
well as higher construction revenues earned during 2011, which bear lower margins than the fiber optic licensing
revenues generated by this segment.
Corporate and Non-allocated Costs
Certain selling, general and administrative expenses and amortization of intangible assets are not allocated
to segments. Corporate and non-allocated costs for the year ended December 31, 2011 decreased $12.3 million to
$124.3 million. This decrease was primarily due to a decrease of $8.6 million in amortization expense as
previously acquired intangible assets have become fully amortized and a decrease of $7.9 million in acquisition
and integration costs. Partially offsetting these decreases was a $3.0 million increase in costs associated with
various business development initiatives.
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