QUANTA SERVICES INC, QUANTA SERVICES MANAGEMENT ...

QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For the year ended December 31, 2011, the $8.6 million reduction is primarily due to the expiration of
certain federal and state statutes of limitations for the 2007 tax year and the $4.9 million reduction primarily
relates to settlement with tax authorities regarding a foreign tax credit position taken in a pre-acquisition tax
return of an acquired business. For the year ended December 31, 2010, the $10.3 million reduction is primarily
due to the expiration of certain federal and state statutes of limitations for the 2006 tax year. For the year ended
December 31, 2009, the $25.0 million reduction is primarily due to the expiration of certain federal and state
statutes of limitations for the 2005 tax year.
The balances of unrecognized tax benefits, the amount of related interest and penalties and what Quanta
believes to be the range of reasonably possible changes in the next 12 months are as follows (in thousands):
2011
December 31,
2010 2009
Unrecognized tax benefits ..................... $ 47,379 $ 50,632 $ 45,201
Portion that, if recognized, would reduce tax expense
and effective tax rate ........................ 39,824 43,077 37,054
Accrued interest on unrecognized tax benefits ...... 7,180 6,524 8,694
Accrued penalties on unrecognized tax benefits .....
Reasonably possible reduction to the balance of
unrecognized tax benefits in succeeding
163 163 213
12 months ................................
Portion that, if recognized, would reduce tax expense
$0to$12,110 $0 to $8,786 $0 to $9,300
and effective tax rate ........................ $0to$10,221 $0 to $6,896 $0 to $7,100
Quanta classifies interest and penalties within the provision for income taxes. Quanta recognized $0.7
million of interest expense and $2.2 million and $3.6 million of interest income in the provision for income taxes
for the years ended December 31, 2011, 2010 and 2009, respectively.
Quanta is subject to income tax in the United States, multiple state jurisdictions and a few foreign
jurisdictions. Quanta remains open to examination by the IRS for tax years 2008 through 2011 as these statutes of
limitations have not yet expired. Quanta does not consider any state in which it does business to be a major tax
jurisdiction.
10. EQUITY:
Exchangeable Shares and Series F Preferred Stock
In connection with acquisition of Valard as discussed in Note 4, certain former owners of Valard received
exchangeable shares of a Canadian subsidiary of Quanta which may be exchanged at the option of the holder for
Quanta common stock on a one-for-one basis. The holders of exchangeable shares can make an exchange only
once in any calendar quarter and must exchange a minimum of either 50,000 shares or, if less, the total number
of remaining exchangeable shares registered in the name of the holder making the request. Quanta also issued
one share of Quanta Series F preferred stock to a voting trust on behalf of the holders of the exchangeable shares.
The Series F preferred stock provides the holders of the exchangeable shares voting rights in Quanta common
stock equivalent to the number of exchangeable shares outstanding at any time. The combination of the
exchangeable shares and the share of Series F preferred stock gives the holders of the exchangeable shares rights
equivalent to Quanta common stockholders with respect to dividends, voting and other economic rights.
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