QUANTA SERVICES INC, QUANTA SERVICES MANAGEMENT ...

in excess of billings on uncompleted contracts. Substantially all of our cash investments are managed by what we
believe to be high credit quality financial institutions. In accordance with our investment policies, these
institutions are authorized to invest this cash in a diversified portfolio of what we believe to be high quality
investments, which primarily include interest-bearing demand deposits, money market mutual funds and
investment grade commercial paper with original maturities of three months or less. Although we do not
currently believe the principal amount of these investments is subject to any material risk of loss, economic
conditions have significantly impacted the interest income we receive from these investments and is likely to
continue to do so in the future. In addition, we grant credit under normal payment terms, generally without
collateral, to our customers, which include electric power, natural gas and pipeline companies,
telecommunications service providers, governmental entities, general contractors, and builders, owners and
managers of commercial and industrial properties located primarily in the United States and Canada.
Consequently, we are subject to potential credit risk related to changes in business and economic factors
throughout the United States and Canada, which may be heightened as a result of depressed economic and
financial market conditions that have existed in recent years. However, we generally have certain statutory lien
rights with respect to services provided. Under certain circumstances, such as foreclosures or negotiated
settlements, we may take title to the underlying assets in lieu of cash in settlement of receivables. In such
circumstances, extended time frames may be required to liquidate these assets, causing the amounts realized to
differ from the value of the assumed receivable. Historically, some of our customers have experienced significant
financial difficulties, and others may experience financial difficulties in the future. These difficulties expose us to
increased risk related to collectability of billed and unbilled receivables and costs and estimated earnings in
excess of billings on uncompleted contracts for services we have performed. One customer accounted for
approximately 11% of consolidated revenues during the year ended December 31, 2010 and approximately 12%
of billed and accrued receivables at December 31, 2010. Business with this customer is included in the Natural
Gas and Pipeline Infrastructure Services segment. No other customers represented 10% or more of revenues for
the years ended December 31, 2011, 2010 and 2009 or of billed and unbilled accounts receivable as of
December 31, 2011 and 2010.
Litigation and Claims
We are from time to time party to various lawsuits, claims and other legal proceedings that arise in the
ordinary course of business. These actions typically seek, among other things, compensation for alleged personal
injury, breach of contract and/or property damages, employment-related damages, punitive damages, civil
penalties or other losses, or injunctive or declaratory relief. With respect to all such lawsuits, claims and
proceedings, we record a reserve when it is probable that a liability has been incurred and the amount of loss can
be reasonably estimated. In addition, we disclose matters for which management believes a material loss is at
least reasonably possible. See Note 14 of the Notes to Consolidated Financial Statements in Item 8. “Financial
Statements and Supplementary Data” for additional information regarding litigation and claims.
Related Party Transactions
In the normal course of business, we enter into transactions from time to time with related parties. These
transactions typically take the form of facility leases with prior owners of certain acquired companies.
Inflation
Due to relatively low levels of inflation experienced during the years ended December 31, 2011, 2010 and
2009, inflation did not have a significant effect on our results.
New Accounting Pronouncements
Adoption of New Accounting Pronouncements. During the quarter ended December 31, 2011, we adopted
Accounting Standards Update (ASU) 2011-09, “Compensation — Retirement Benefits — Multiemployer Plans
(Subtopic 715-80): Disclosures about an Employer’s Participation in a Multiemployer Plan” (ASU 2011-09).
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