Quanta Services, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Components of Income Before Income Taxes

The components of income from continuing operations before income taxes are as follows (in thousands):


	Year Ended December 31,
	2012		2011		2010
Income from continuing operations before income taxes:
Domestic	$	390,734	$	181,520	$	215,263
Foreign		73,846		11,988		18,695

Total	$	464,580	$	193,508	$	233,958

Provision for Income Taxes

The components of the provision for income taxes for continuing operations are as follows (in thousands):


	Year Ended December 31,
	2012		2011			2010
Current:
Federal	$	109,272	$	42,874		$	39,818
State		12,397		11,998			9,650
Foreign		14,657		7,668			6,260

Total current tax provision		136,326		62,540			55,728

Deferred:
Federal		16,134		4,487			31,539
State		1,627		965			2,062
Foreign		4,772		(4,896	)		(445	)

Total deferred tax provision		22,533		556			33,156

Total provision for income taxes	$	158,859	$	63,096		$	88,884

Effective Income Tax Rate Reconciliation

The actual income tax provision differs from the income tax provision computed by applying the U.S. federal statutory corporate rate to income from continuing operations before provision for income taxes as follows (in thousands):


	Year Ended December 31,
	2012			2011			2010
Provision at the statutory rate	$	162,603		$	67,727		$	81,885
Increases (decreases) resulting from —
State taxes		10,980			6,375			8,058
Foreign taxes		(5,841	)		(2,815	)		182
Contingency reserves, net		(3,880	)		(7,262	)		(4,184	)
Production activity deduction		(7,081	)		(2,394	)		(2,650	)
Employee per diems, meals and entertainment		6,441			4,149			4,725
Taxes on unincorporated joint ventures		(5,609	)		(4,142	)		(833	)
Other		1,246			1,458			1,701

	$	158,859		$	63,096		$	88,884

Deferred Tax Assets and Liabilities

Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and tax purposes. The tax effects of these temporary differences, representing deferred tax assets and liabilities, result principally from the following (in thousands):


	December 31,
	2012			2011
Deferred income tax liabilities —
Property and equipment	$	(205,977	)	$	(204,918	)
Goodwill		(48,201	)		(43,057	)
Other intangibles		(46,661	)		(54,206	)
Book/tax accounting method difference		(45,159	)		(27,924	)

Total deferred income tax liabilities		(345,998	)		(330,105	)

Deferred income tax assets —
Accruals and reserves		33,357			40,619
Accrued insurance		53,163			55,169
Deferred revenue		16,259			14,243
Net operating loss carryforwards		17,115			15,615
Other		20,540			13,140

Subtotal		140,434			138,786
Valuation allowance		(9,344	)		(8,783	)

Total deferred income tax assets		131,090			130,003

Total net deferred income tax liabilities	$	(214,908	)	$	(200,102	)

Net Deferred Income Tax Assets and Liabilities

The net deferred income tax assets and liabilities are comprised of the following (in thousands):


	December 31,
	2012			2011
Current deferred income taxes:
Assets	$	41,961		$	51,373
Liabilities		(31,819	)		(17,831	)

		10,142			33,542

Non-current deferred income taxes:
Assets		89,129			78,630
Liabilities		(314,179	)		(312,274	)

		(225,050	)		(233,644	)

Total net deferred income tax liabilities	$	(214,908	)	$	(200,102	)

Reconciliation of Unrecognized Tax Benefit

A reconciliation of unrecognized tax benefit balances is as follows (in thousands):


	December 31,
	2012			2011			2010
Balance at beginning of year	$	47,379		$	50,632		$	45,201
Additions based on tax positions related to the current year		15,411			10,133			10,602
Additions for tax positions of prior years		1,607			131			5,183
Reductions for tax positions of prior years		(293	)		—			—
Reductions for audit settlements		(895	)		(4,877	)		(93	)
Reductions resulting from a lapse of the applicable statutes of limitations		(11,965	)		(8,640	)		(10,261	)

Balance at end of year	$	51,244		$	47,379		$	50,632

Balances of Unrecognized Tax Benefits

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):


	December 31,
	2012		2011		2010
Unrecognized tax benefits	$	51,244	$	47,379	$	50,632
Portion that, if recognized, would reduce tax expense and effective tax rate		43,910		39,824		43,077
Accrued interest on unrecognized tax benefits		6,088		7,180		6,524
Accrued penalties on unrecognized tax benefits		127		163		163
Reasonably possible reduction to the balance of unrecognized tax benefits in succeeding 12 months	$	0 to $11,479	$	0 to $12,110	$	0 to $8,786
Portion that, if recognized, would reduce tax expense and effective tax rate	$	0 to $9,645	$	0 to $10,221	$	0 to $6,896

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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- Definition

Tabular disclosure of unrecognized tax benefits for which a material change is reasonably possible in the next twelve months, typically including the nature of the uncertainty, the event(s) that could cause a material change, and an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made. An unrecognized tax benefit is the difference between a tax position taken in a tax return and the amounts recognized in the financial statements for which it is more likely than not, based on the technical merits of the position, that the tax position will not be sustained upon examination.

+ References + Details