Annual report pursuant to Section 13 and 15(d)

SEGMENT INFORMATION

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SEGMENT INFORMATION
 12 Months Ended
Dec. 31, 2012
SEGMENT INFORMATION
16. SEGMENT INFORMATION:

Quanta presents its operations under three reportable segments: (1) Electric Power Infrastructure Services, (2) Natural Gas and Pipeline Infrastructure Services and (3) Fiber Optic Licensing and Other. This structure is generally based on the broad end-user markets for Quanta’s services. See Note 1 for additional information regarding Quanta’s reportable segments.

Quanta’s segment results are derived from the types of services provided across its operating units in each of the end user markets described above. Quanta’s entrepreneurial business model allows each of its operating units to serve the same or similar customers and to provide a range of services across end user markets. Quanta’s operating units are organized into one of three internal divisions, namely, the electric power division, natural gas and pipeline division and fiber optic division. These internal divisions are closely aligned with the reportable segments described above based on their operating units’ predominant type of work.

Reportable segment information, including revenues and operating income by type of work, is gathered from each operating unit for the purpose of evaluating segment performance in support of Quanta’s market strategies. These classifications of Quanta’s operating unit revenues by type of work for segment reporting purposes can at times require judgment on the part of management. Quanta’s operating units may perform joint infrastructure service projects for customers in multiple industries, deliver multiple types of network services under a single customer contract or provide service across industries, for example, joint trenching projects to install distribution lines for electric power and natural gas customers.

In addition, Quanta’s integrated operations and common administrative support at each of its operating units require that certain allocations, including allocations of shared and indirect costs, such as facility costs, indirect operating expenses, including depreciation, and general and administrative costs, to determine operating segment profitability. Corporate costs, such as payroll and benefits, employee travel expenses, facility costs, professional fees, acquisition costs and amortization related to certain intangible assets are not allocated.

Summarized financial information for Quanta’s reportable segments is presented in the following table (in thousands):

 

     Year Ended December 31,  
     2012     2011     2010  

Revenues:

       

Electric Power

    $ 4,206,509      $ 3,022,659      $ 2,028,734   

Natural Gas and Pipeline

      1,534,713        1,011,248        1,392,824   

Fiber Optic Licensing and Other

      179,047        159,857        207,875   
  

 

 

    

 

 

    

 

 

  

Consolidated

    $ 5,920,269      $ 4,193,764      $ 3,629,433   
  

 

 

    

 

 

    

 

 

  

Operating income (loss):

       

Electric Power

    $ 520,834      $ 337,726      $ 204,088   

Natural Gas and Pipeline

      55,410        (78,307 )      118,816   

Fiber Optic Licensing and Other

      61,299        53,476        52,952   

Corporate and non-allocated costs

      (172,421 )      (118,053 )      (131,865 ) 
  

 

 

    

 

 

    

 

 

  

Consolidated

    $ 465,122      $ 194,842      $ 243,991   
  

 

 

    

 

 

    

 

 

  

Depreciation:

       

Electric Power

    $ 55,205      $ 49,038      $ 40,249   

Natural Gas and Pipeline

      43,285        41,051        43,407   

Fiber Optic Licensing and Other

      15,173        14,736        13,749   

Corporate and non-allocated costs

      6,640        5,049        3,794   
  

 

 

    

 

 

    

 

 

  

Consolidated

    $ 120,303      $ 109,874      $ 101,199   
  

 

 

    

 

 

    

 

 

  

 

Separate measures of Quanta’s assets and cash flows by reportable segment, including capital expenditures, are not produced or utilized by management to evaluate segment performance. Quanta’s fixed assets, which are held at the operating unit level, include operating machinery, equipment and vehicles, as well as office equipment, buildings and leasehold improvements, are used on an interchangeable basis across its reportable segments. As such, for reporting purposes, total depreciation expense is allocated each quarter among Quanta’s reportable segments based on the ratio of each reportable segment’s revenue contribution to consolidated revenues.

Foreign Operations

During 2012, 2011, and 2010, Quanta derived $861.5 million, $535.0 million and $256.1 million, respectively, of its revenues from foreign operations. Of Quanta’s foreign revenues, approximately 96%, 97% and 88% was earned in Canada during the years ended December 31, 2012, 2011 and 2010, respectively. In addition, Quanta held property and equipment of $151.9 million and $114.8 million in foreign countries, primarily Canada, as of December 31, 2012 and 2011. The increase in foreign revenues and assets is primarily due to the timing of the acquisitions of Valard, McGregor Construction 2000 Ltd. and certain of its affiliated entities and Coe Drilling Pty. Ltd.