QUANTA SERVICES INC, QUANTA SERVICES MANAGEMENT ...

QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
intangibles and long-lived asset impairments, equity investments, loan receivables, purchase price allocations,
liabilities for self-insured and other claims, multi-employer pension plan withdrawal liabilities, revenue
recognition for construction contracts and fiber optic licensing, share-based compensation, operating results of
reportable segments, as well as the provision (benefit) for income taxes and the calculation of uncertain tax
positions.
Reclassifications
Certain reclassifications have been made in prior years’ segment disclosures to conform to classifications
used in the current year.
Cash and Cash Equivalents
Quanta had cash and cash equivalents of $315.3 million and $539.2 million as of December 31, 2011 and
2010. Cash consisting of interest-bearing demand deposits is carried at cost, which approximates fair value.
Quanta considers all highly liquid investments purchased with an original maturity of three months or less to be
cash equivalents, which are carried at fair value. At December 31, 2011 and 2010, cash equivalents were $165.9
million and $460.8 million, which consisted primarily of money market mutual funds and investment grade
commercial paper and are discussed further in “Fair Value Measurements” below. As of December 31, 2011 and
2010, cash and cash equivalents held in domestic bank accounts were approximately $230.9 million and $509.6
million and cash and cash equivalents held in foreign bank accounts were approximately $84.4 million and $29.6
million.
Current and Long-Term Accounts and Notes Receivable and Allowance for Doubtful Accounts
Quanta provides an allowance for doubtful accounts when collection of an account or note receivable is
considered doubtful, and receivables are written off against the allowance when deemed uncollectible. Inherent
in the assessment of the allowance for doubtful accounts are certain judgments and estimates including, among
others, the customer’s access to capital, the customer’s willingness or ability to pay, general economic and
market conditions and the ongoing relationship with the customer. Quanta considers accounts receivable
delinquent after 30 days but does not generally include delinquent accounts in its analysis of the allowance for
doubtful accounts unless the accounts receivable have been outstanding for at least 90 days. In addition to
balances that have been outstanding for 90 days or more, Quanta also includes accounts receivable balances that
relate to customers in bankruptcy or with other known difficulties in its analysis of the allowance for doubtful
accounts. Under certain circumstances such as foreclosures or negotiated settlements, Quanta may take title to
the underlying assets in lieu of cash in settlement of receivables. Material changes in Quanta’s customers’
business or cash flows, which may be impacted by negative economic and market conditions, could affect its
ability to collect amounts due from them. As of December 31, 2011 and 2010, Quanta had total allowances for
doubtful accounts of approximately $3.8 million and $7.3 million, of which approximately $3.8 million and $6.1
million was included as a reduction of net current accounts receivable. Should customers experience financial
difficulties or file for bankruptcy, or should anticipated recoveries relating to receivables in existing bankruptcies
or other workout situations fail to materialize, Quanta could experience reduced cash flows and losses in excess
of current allowances provided.
The balances billed but not paid by customers pursuant to retainage provisions in certain contracts are
generally due upon completion of the contracts and acceptance by the customer. Based on Quanta’s experience
with similar contracts in recent years, the majority of the retainage balances at each balance sheet date are
expected to be collected within the next twelve months. Current retainage balances as of December 31, 2011 and
2010 were approximately $117.1 million and $119.4 million and are included in accounts receivable. Retainage
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