QUANTA SERVICES INC, QUANTA SERVICES MANAGEMENT ...

QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Performance Bonds and Parent Guarantees
In certain circumstances, Quanta is required to provide performance bonds in connection with its contractual
commitments. Quanta has indemnified its sureties for any expenses paid out under these performance bonds. As
of December 31, 2011, the total amount of outstanding performance bonds was approximately $2.18 billion, and
the estimated cost to complete these bonded projects was approximately $722.5 million.
Quanta, from time to time, guarantees the obligations of its wholly owned subsidiaries, including
obligations under certain contracts with customers, certain lease obligations and, in some states, obligations in
connection with obtaining contractors’ licenses. Quanta is not aware of any material obligations for performance
or payment asserted against it under any of these guarantees.
Employment Agreements
Quanta has various employment agreements with certain executives and other employees, which provide for
compensation and certain other benefits and for severance payments under certain circumstances. Certain
employment agreements also contain clauses that become effective upon a change of control of Quanta. Quanta
may be obligated to pay certain amounts to employees upon the occurrence of any of the defined events in the
various employment agreements.
Collective Bargaining Agreements
Several of Quanta’s operating units are parties to various collective bargaining agreements with unions that
represent certain of their employees. The collective bargaining agreements expire at various times and have
typically been renegotiated and renewed on terms similar to those in the expiring agreements. The agreements
require the operating units to pay specified wages, provide certain benefits to their union employees and
contribute certain amounts to multi-employer pension plans and employee benefit trusts. Quanta’s multiemployer
pension plan contribution rates generally are specified in the collective bargaining agreements (usually
on an annual basis), and contributions are made to the plans on a “pay-as-you-go” basis based on its union
employee payrolls, which cannot be determined for future periods because the location and number of union
employees that Quanta employs at any given time and the plans in which they may participate vary depending on
the projects Quanta has ongoing at any time and the need for union resources in connection with those projects.
The Pension Protection Act of 2006 also added special funding and operational rules generally applicable to
plan years beginning after 2007 for multi-employer plans that are classified as “endangered,” “seriously
endangered” or “critical” status based on a multitude of factors (including, for example, the plan’s funded
percentage, cash flow position and whether it is projected to experience a minimum funding deficiency). Plans in
these classifications must adopt measures to improve their funded status through a funding improvement or
rehabilitation plan, which may require additional contributions from employers (which may take the form of a
surcharge on benefit contributions) and/or modifications to retiree benefits. Certain plans to which Quanta
contributes are in “endangered,” “seriously endangered” or “critical” status. The amount of additional funds, if
any, that Quanta may be obligated to contribute to these plans in the future cannot be estimated, as such amounts
will likely be based on future levels of work that require the specific use of those union employees covered by
these plans, and the amount of that future work and the number of affected employees that may be needed cannot
reasonably be estimated.
Quanta may be subject to additional liabilities imposed by law as a result of its participation in multiemployer
defined benefit pension plans. For example, the Employee Retirement Income Security Act of 1974, as
amended by the Multi-Employer Pension Plan Amendments Act of 1980, imposes certain liabilities upon an
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