Quarterly report pursuant to Section 13 or 15(d)

Equity

 v2.3.0.11
Equity
6 Months Ended
Jun. 30, 2011
Equity [Abstract]  
EQUITY
 
7.   EQUITY:
 
Exchangeable Shares and Series F Preferred Stock
 
In connection with acquisition of Valard as discussed in Note 1, certain former owners of Valard received exchangeable shares of Quanta Services EC Canada Ltd. (EC Canada); one of Quanta’s wholly owned Canadian subsidiaries. The exchangeable shares 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.
 
Limited Vote Common Stock
 
Effective May 19, 2011, each outstanding share of Quanta’s Limited Vote Common Stock was reclassified and converted into 1.05 shares of Common Stock, as set forth in a Certificate of Amendment to Restated Certificate of Incorporation approved by the stockholders of Quanta and filed with the Secretary of State of the State of Delaware on May 19, 2011. At June 30, 2011 and December 31, 2010, there were 0 and 432,485 shares of Limited Vote Common Stock outstanding. The Certificate of Amendment also eliminated entirely the class of Limited Vote Common Stock. The shares of Limited Vote Common Stock had rights similar to shares of common stock, except with respect to voting. Holders of Limited Vote Common Stock were entitled to vote as a separate class to elect one director and did not vote in the election of other directors. Holders of Limited Vote Common Stock were entitled to one-tenth of one vote for each share held on all other matters submitted for stockholder action. Shares of Limited Vote Common Stock were convertible into common stock upon disposition by the holder of such shares in accordance with the transfer restrictions applicable to such shares. During the three and six months ended June 30, 2011, no shares of Limited Vote Common Stock were converted to common stock upon transfer, and 432,485 shares of Limited Vote Common Stock were reclassified and converted into 454,107 shares of Quanta common stock pursuant to the Certificate of Amendment approved by stockholders. During the three and six months ended June 30, 2010, 229,808 shares of Limited Vote Common Stock were exchanged for 241,300 shares of Quanta common stock through voluntary exchanges initiated by individual stockholders.
 
Treasury Stock
 
During the second quarter of 2011, Quanta’s board of directors approved a stock repurchase program authorizing Quanta to purchase, from time to time, up to $150.0 million of its outstanding common stock. These repurchases may be made in open market transactions, in privately negotiated transactions, including block purchases, or otherwise, at management’s discretion based on market and business conditions, applicable legal requirements and other factors. This program does not obligate Quanta to acquire any specific amount of common stock and will continue until it is completed or otherwise modified or terminated by Quanta’s board of directors at any time in its sole discretion and without notice. The stock repurchase program is funded with cash on hand. During the three months ended June 30, 2011, Quanta repurchased 4,915,225 shares of its common stock under this program at a cost of $94.5 million. These shares and the related cost to acquire them were accounted for as an adjustment to the balance of treasury stock. Under Delaware corporate law, treasury stock is not entitled to vote or be counted for quorum purposes.
 
Under the stock incentive plans described in Note 8, employees may elect to satisfy their tax withholding obligations upon vesting of restricted stock by having Quanta make such tax payments and withhold a number of vested shares having a value on the date of vesting equal to their tax withholding obligation. As a result of such employee elections, Quanta withheld 277,923 and 218,149 shares of Quanta common stock during the six months ended June 30, 2011 and 2010, with a total market value of $6.2 million and $4.2 million, in each case for settlement of employee tax liabilities. These shares and their related value were accounted for as an adjustment to the balance of treasury stock.
 
Noncontrolling Interests
 
Quanta holds investments in several joint ventures that provide infrastructure services under specific customer contracts. Each joint venture is owned equally by its members. Quanta has determined that certain of these joint ventures are variable interest entities, with Quanta providing the majority of the infrastructure services to the joint venture, which management believes most significantly influences the economic performance of the joint venture. Management has concluded that Quanta is the primary beneficiary of each of these joint ventures and has accounted for each of these joint ventures on a consolidated basis. The other parties’ equity interests in these joint ventures has been accounted for as a noncontrolling interest in the accompanying condensed consolidated financial statements. Income attributable to the other joint venture members has been accounted for as a reduction of reported net income attributable to common stock in the amount of $2.5 million and $0.3 million for the three months ended June 30, 2011 and 2010 and $3.8 million and $0.7 million for the six months ended June 30, 2011 and 2010. Equity in the consolidated assets and liabilities of these joint ventures that is attributable to the other joint venture members has been accounted for as a component of noncontrolling interests within total equity in the accompanying balance sheets.
 
The carrying value of the investments held by Quanta in all of its variable interest entities was approximately $4.7 million and $1.4 million at June 30, 2011 and December 31, 2010. The carrying value of investments held by the noncontrolling interests in these variable interest entities at June 30, 2011 and December 31, 2010 was $4.7 million and $1.4 million. There were no changes in equity as a result of transfers to/from the noncontrolling interests during the period. See Note 9 for further disclosures related to Quanta’s joint venture arrangements.
 
Comprehensive Income
 
Quanta’s foreign operations are translated into U.S. dollars, and a translation adjustment is recorded in other comprehensive income (loss), net of tax, as a result. Additionally, unrealized gains and losses from certain hedging activities are recorded in other comprehensive income (loss), net of tax. The following table presents the components of comprehensive income for the periods presented (in thousands):
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2011     2010     2011     2010  
 
Net income
  $ 34,313     $ 33,323     $ 18,008     $ 57,423  
Foreign currency translation adjustment, net of tax
    (2,183 )     (3,437 )     8,995       (184 )
Change in unrealized gain (loss) on foreign currency cash flow hedges, net of tax
          625             494  
                                 
Comprehensive income
    32,130       30,511       27,003       57,733  
Less: Comprehensive income attributable to the noncontrolling interests
    2,512       337       3,801       693  
                                 
Comprehensive income attributable to common stock
  $ 29,618     $ 30,174     $ 23,202     $ 57,040