Quanta Services (PWR) 10-K risk factor changes: FY2016 vs FY2015

[removed: For example, we typically experience lower gross and] operating margins during winter months due to lower demand for our services and more difficult operating conditions in the Northern hemisphere.

| | • | | changes in accounting pronouncements that require us to account for items differently than historical [removed: pronouncements have;] |

These risks, which are not subject to our control, include the volatility [added: and cyclical nature] of natural gas and oil [removed: prices,] [added: prices and] the [removed: lack] [added: resulting effect on demand for the services we provide, and a slowdown in the development or discovery] of [added: natural gas and/or oil reserves.]

Specifically, lower natural gas and oil prices have [removed: resulted in] [added: resulted,] and could continue to [removed: result] [added: result,] in decreased spending by some of our customers in our Oil and Gas Infrastructure Services segment.

As a result, our customers may [removed: also] reduce [added: or delay] capital spending on [removed: mainline pipe,] [added: larger pipeline projects,] gas gathering and compressor systems and [removed: other] related [removed: infrastructure in the future,] [added: infrastructure,] resulting in less demand for our services.

If the profitability of our Oil and Gas Infrastructure Services segment were to [removed: continue to] decline, our overall financial position, results of operations and cash flows could also be adversely affected.

Additionally, [removed: if further] declines in natural gas and oil [removed: prices further reduce investment] [added: prices, and the resulting decline] in the development of resource plays and [removed: meaningfully reduce] oil and natural gas production, [added: can negatively impact] our Electric Power Infrastructure Services [removed: segment could be negatively impacted.][added: segment.]

During depressed markets, [removed: such as the one facing the oil and natural gas industry currently,] our customers may be unable to access capital markets or otherwise obtain financing for budgeted capital expenditures.

[removed: _Project] [added: _A variety of issues outside of our control, can affect the timing of and our] performance [removed: issues, including those caused by third parties, or certain contractual obligations] [added: on projects, which] may result in additional costs to us, reductions or delays in revenues or the payment of liquidated damages._

[removed: We may encounter difficulties as a result of delays in design, engineering information or materials provided by the customer or a third party, delays or difficulties in equipment and material delivery, schedule changes, delays due to our or our customers’ failure to] timely obtain permits or rights of way or meet other regulatory requirements or permitting conditions, weather-related delays and other factors, many of which are beyond our control, that can negatively impact our ability to complete the project and in accordance with the original delivery schedule.

[removed: Also, as we expand our scope of services for larger] [added: Larger] projects, [removed: we may face] [added: in particular, present] additional performance risks due to the larger and more complex work involved.

[removed: The] [added: Furthermore, the] bidding processes for larger projects can also be longer and more complex, often taking six to nine months.

[removed: Further, regulatory] [added: Regulatory] and permitting delays on larger projects tend to be more challenging and cause more uncertainty as to project timing.

In addition, in our Oil and Gas Infrastructure Services segment, there is limited availability of experienced supervisors and foremen that can oversee [removed: large mainline] [added: larger diameter] pipe projects.

[added: We assume] risks related to revenue, cost and profitability on fixed-priced contracts.

| | • | | unforeseen circumstances not included in our cost estimates or covered by our contract for which we cannot obtain adequate compensation, including concealed or unknown environmental [added: or geological] conditions; |

| | • | | unanticipated costs or claims due to customer-caused delays, customer failure to provide required materials or equipment, errors in engineering, specifications or designs, project modifications, or contract termination [added: or suspension] and our inability to obtain reimbursement for such costs or recover on such claims; |

| | • | | failure to perform and delays in performance by our project [removed: owners,] [added: owners or their contractors or our] suppliers or subcontractors; |

| | • | | quality [removed: issues] [added: issues, including those] requiring rework or replacement; |

_Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations — Critical] [added: Operations_ _—_ _Critical] Accounting Policies_ and in the notes to our consolidated financial statements included in Item 8.

_Our failure to adequately recover on [added: contract change orders or] claims brought by us against customers related to payment terms and costs could materially and adversely affect our financial position, results of operations and cash flows._

_Our operating results can be negatively affected by weather [removed: conditions._][added: conditions and the nature of our work environment._]

As a result, adverse weather conditions, such as [removed: rainfall] [added: extreme heat] or [added: cold, rainfall,] snowfall, [added: wind, storms or early thaw,] may affect our productivity or may temporarily prevent us from performing services.

A reduction in our productivity [added: and efficiency] in any given period or our inability to meet guaranteed schedules may adversely affect our financial condition, results of operations and cash flows.

Relatively few barriers prevent entry into some areas of our business, and as a [removed: result] [added: result,] any organization that has adequate financial resources and access to technical expertise may become one of our competitors.

[removed: Certain of our competitors may have lower overhead cost structures, and] therefore may be able to provide the required services at lower rates than us.

Electric power and oil and gas service providers [removed: usually employ personnel who perform] [added: are capable of performing, or acquiring businesses that perform,] some of the same types of services we provide, and we cannot be certain that our existing or prospective customers will continue to outsource these services in the future.

Additionally, renewable energy is generally more expensive to produce than [removed: traditional] energy [added: from traditional] sources and may require additional power generation sources as backup.

Furthermore, funding for renewable energy initiatives is uncertain and [added: in the past] has been constrained by tight credit markets.

These factors [removed: have resulted] [added: could result] in fewer renewable energy projects than anticipated and a delay in the construction of these projects and [removed: the] related infrastructure, which [removed: has adversely affected the demand for] [added: could negatively impact] our [removed: services.][added: business.]

There are also a number of legislative and regulatory proposals [added: and global, non-binding agreements] that address greenhouse gas emissions, which are in various phases of discussion or implementation.

The outcome of these pending federal and state proposals and possible future legislative and regulatory proposals resulting from [removed: the] [added: any] global agreement could negatively affect the operations of our customers through costs of compliance or restraints on projects, which could reduce their demand for our services.

[removed: Our offshore operations are subject to] additional risks, including blowouts, collisions, vessels sinking or capsizing and damage from severe weather conditions.

These hazards could cause personal injury and severe damage to property, equipment and the environment and could lead to suspension of operations [removed: and] [added: and/or] legal liabilities.

We are insured for employer’s liability, [removed: general liability,] [added: workers’ compensation,] auto liability and [removed: workers’ compensation] [added: general liability] claims, but such insurance is subject to deductibles and limits and may be canceled or may not cover all of our losses.

[removed: The deductibles under our insurance programs are $10.0] [added: Under these programs, the deductible for employer’s liability is $1.0] million per [removed: occurrence] [added: occurrence, the deductible] for [removed: general liability and auto liability insurance programs,] [added: workers’ compensation is] $5.0 million per [removed: occurrence] [added: occurrence, and the deductibles] for [removed: workers’ compensation,] [added: auto liability] and [removed: $1.0] [added: general liability are $10.0] million per [removed: occurrence for employer’s liability.][added: occurrence.]

We also have employee health care benefit plans for most employees not subject to collective bargaining agreements, of which the primary plan is subject to a deductible of [removed: $375,000] [added: $0.4 million] per claimant per year.

Losses under all of these insurance programs are accrued based upon our [removed: estimates] [added: estimate] of the ultimate liability for claims reported and an estimate of claims incurred but not reported, with assistance from third-party actuaries.

There can be no assurance that our insurance [removed: coverage] [added: coverages] will be sufficient or effective under all circumstances or against all claims and liabilities which we may be subject.

For example, we have significant operations in California and other [removed: U.S. states] [added: locations] which have [removed: an increased] [added: a higher] risk of wildfires.

For example, we typically experience lower gross and

##### [Index to Financial Statements](#INDEX)

pronouncements have;

##### [Index to Financial Statements](#INDEX)

Despite some recovery and stability in natural gas and oil prices since early 2016, capital spending by exploration and production companies and midstream companies has generally declined in the last few years.

Any future decline in prices, or perceived risk thereof, may place downward pressure on capital programs.

Our business is dependent in part upon projects that can be cyclical in nature and are subject to risks of delay.

The timing of or failure to obtain contracts, delays in awards of, start dates for or completion of projects and the cancellations of projects can result in significant periodic fluctuations in our business and results of operations.

We may encounter difficulties as a result of delays in design, engineering information or materials provided by the customer or a third party, delays or difficulties in equipment and material delivery, schedule changes, delays due to our or our customers’ failure to

##### [Index to Financial Statements](#INDEX)

These types of claims occur due to, among other things, customer-caused delays or changes in project scope, both of which may result in additional cost, which may or may not be recovered until the claim is resolved.

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

| | • | | delays and additional costs attributable to challenges and protests of the siting or specifications of certain projects; |

_Our revenues may be exposed to potential risk if a project is terminated or canceled, if our customers encounter financial difficulties or if we encounter disputes with our customers._

Our contracts often require us to satisfy or achieve certain milestones in order to receive payment for the work performed, or in the case of cost-reimbursable contracts, provide support for billings in advance of receiving payment.

As a result, we may incur significant costs or perform significant amounts of work prior to receipt of payment.

If any of our customers do not proceed with the completion of projects or default on their payment obligations, or if we encounter disputes with our customers with respect to the adequacy of billing support, we may face difficulties in collecting payment of amounts due to us for the costs previously incurred.

In addition, many of our customers for large projects are project-specific entities that do not have significant assets other than their interests in the project and may encounter financial difficulties relating to their businesses.

It may be difficult to collect amounts owed to us by these customers.

If we are unable to collect amounts owed to us, this would have an adverse effect on our future financial condition, results of operations and cash flows.

We have in the past brought, and may in the future bring, claims against our customers related to, among other things, the payment terms of our contracts and change orders relating to our contracts.

##### [Index to Financial Statements](#INDEX)

In some instances, these claims can be the subject of lengthy legal proceedings, and it is difficult to accurately predict when they will be fully resolved.

A failure to promptly recover on these types of claims could have a negative impact on our financial condition, results of operations and cash flows.

Additionally, any such claims may harm our future relationships with our customers.

Furthermore, our work is performed under a variety of conditions, including but not limited to, difficult terrain, difficult site conditions and large urban centers where delivery of materials and availability of labor may be impacted and sites which may have been exposed to harsh and hazardous conditions.

Certain of our competitors may have lower overhead cost structures, and

##### [Index to Financial Statements](#INDEX)

Our offshore operations are subject to

##### [Index to Financial Statements](#INDEX)

We also often operate in densely populated urban areas, which could increase the impact of any of these hazards or other accidents we experience.

In connection with our casualty insurance programs, we are required to issue letters of credit to secure our self-insured obligations.

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

impacted thereby, at our sole expense, and we could also be responsible for other damages if we are not able to adequately satisfy our warranty obligations.

Furthermore, because our projects are often technically complex, our failure to make judgments and recommendations in accordance with applicable professional standards, including engineering standards, could result in damages.

Our business involves professional judgments regarding the planning, design, development, construction, operations and management of electric power transmission and pipeline infrastructure.

While we do not generally accept liability for consequential damages, and although we have adopted a range of insurance, risk management and risk avoidance programs designed to reduce potential liabilities, a significantly adverse or catastrophic event at one of our project sites or completed projects resulting from the services we have performed could result in significant professional or product liability or other claims against us as well as reputational harm, especially if public safety is impacted.

These liabilities could exceed our insurance limits or could impact our ability to obtain insurance in the future.

demand for natural gas and oil, including from power generation from natural gas, and a slowdown in the development or discovery of natural gas and/or oil reserves.

The increase in the global supply of oil and the significant increase in the North American supply of natural gas and oil due to ongoing development of unconventional shale formations has resulted in significant declines in natural gas and oil prices.

Exploration and production companies, as well as some midstream companies, have significantly reduced capital spending and are expected to continue to operate with reduced budgets for the foreseeable future.

A sustained period of lower prices, or the perceived risk of a sustained period of lower prices, may further reduce spending on exploration and production.

We assume

These factors could continue to result in delays or reductions in projects, which could further negatively impact our business.

The American Recovery and Reinvestment Act of 2009 (ARRA) provides for various stimulus programs, such as grants, loan guarantees, relating to renewable energy, energy efficiency and electric power infrastructure.

Some of these programs have expired, which may affect the economic feasibility of future projects.

Additionally, while a significant amount of stimulus funds have been awarded, we cannot predict the timing and scope of any investments to be made under stimulus funding or whether stimulus funding will result in increased demand for our services.

Investments for renewable energy and electric power infrastructure under ARRA programs may not occur, may be less than anticipated or may be delayed, any of which would negatively impact demand for our services.

The United States is also a party to a recent global, non-binding agreement that includes a voluntary plan to reduce greenhouse gas emissions over the next decade.

but instead must be tested at least annually for impairment, while intangible assets that have finite useful lives are amortized over their useful lives.

Future events and unanticipated changes to assumptions could require additional provisions for impairment in future periods.

the projects.

Our performance of a significant amount of future services in areas that require us to utilize unionized employees covered by these affected plans, or a deterioration in the funding status of any of the plans to which our operating units contribute, could require significant additional contributions, which could detrimentally affect our financial condition, results of operations and cash flows if we are not able to adequately mitigate these costs.

foreign tax regulations and other laws and international treaties.

implementation of the IT solutions.

additional managers and executives.

_We may not be successful in continuing to meet the requirements of the Sarbanes-Oxley Act of 2002._

ACA is intended to expand access to health insurance coverage to many uninsured individuals and expands coverage to those already insured.

The changes and mandates on employers subject to ACA’s “pay or play” requirements could cause us to incur additional group health insurance costs, although we do not expect any material short-term impact on our financial results as a result of ACA.

Most government contracts are awarded through a regulated competitive bidding process.

As we pursue increased opportunities in the government arena, management’s focus associated with the start-up and bidding

process may be diverted away from other opportunities.

The services we provide include the design, installation, upgrade, repair and maintenance of infrastructure within each of the industries we serve, such as electric power transmission and distribution networks, substation facilities, renewable energy facilities, [added: and] pipeline transmission and distribution systems and [removed: facilities, and infrastructure services for the offshore and inland water energy markets.][added: facilities.]

Our consolidated revenues for the year ended December 31, [removed: 2015] [added: 2016] were approximately [removed: $7.57] [added: $7.65] billion, of which [removed: 65%] [added: 63%] was attributable to the Electric Power Infrastructure Services segment and [removed: 35%] [added: 37%] to the Oil and Gas Infrastructure Services segment.

For internal management purposes, [removed: following the disposition of our fiber optic licensing operations,] we are organized into two internal divisions, namely, the Electric Power Infrastructure Services Division and the Oil and Gas Infrastructure Services Division.

[removed: Our operating units may perform joint infrastructure service projects for customers in multiple industries, deliver multiple types of infrastructure services under a single customer contract or provide services across industries, for] [added: For] example, [added: we perform] joint trenching projects to install distribution lines for electric power and natural gas customers.

Corporate costs, such as payroll and benefits, employee travel expenses, facility costs, professional fees, acquisition costs and amortization related to [removed: certain] intangible assets are not allocated.

To a lesser extent, this segment provides services such as the construction of electric power generation facilities, the design, installation, maintenance and repair of commercial and industrial wiring, [added: the] installation of traffic networks and [removed: the installation of] cable and control systems for light rail lines and [removed: limited] ancillary telecommunication infrastructure services.

Services performed by the Oil and Gas Infrastructure Services segment generally include the design, installation, repair and maintenance of pipeline transmission and distribution systems, gathering systems, production systems, storage systems and compressor and pump stations, as well as related trenching, directional boring and [removed: automatic] [added: mechanized] welding services.

We also serve the offshore and inland water energy markets, primarily providing services to oil and gas exploration platforms, including mechanical installation (or “hook-ups”), electrical and instrumentation, pre-commissioning and commissioning, coatings, [removed: fabrication, pipeline construction, integrity services] [added: fabrication] and marine asset repair.

To a lesser extent, this segment designs, installs and maintains fueling [removed: systems] [added: systems,] as well as water and sewer infrastructure.

These companies include a foundation services company located in the United States, an electrical contracting company located in the United States, an electrical engineering company located in Australia, a powerline construction company located in the United States, an engineering company located in Canada, an engineering, procurement and construction services company based in the United States, an underground construction contracting company located in [removed: Canada,] [added: Canada] and a supplier and material procurement specialist for the power and utility industry in Canada.

The aggregate consideration for these acquisitions consisted of approximately [removed: $110.4] [added: $110.6] million paid or payable in cash, subject to net working capital [added: adjustments, 461,037 shares of Quanta common stock valued at approximately $10.1 million as of the settlement dates of the applicable acquisitions, and $1.0 million in contingent consideration.]

[removed: The] [added: As these transactions were effective during 2016, the] results [removed: for each company] have been included in our consolidated financial statements beginning on the respective dates of acquisition.

Any quarter may be positively or negatively affected by atypical weather patterns in any of the areas we serve, such as severe weather, excessive rainfall or [removed: warmer] [added: unusual] winter weather, making it difficult to predict these variations and their effect on particular projects quarter to quarter.

Examples of other items that may cause our results [added: or demand for our services] to fluctuate materially from quarter to quarter include: the financial condition of our customers and their access to capital; [removed: variations in the] margins of projects performed during any particular period; regional, national and global economic and market conditions; [added: our customers capital spending, including on larger pipeline and electrical infrastructure projects; natural gas and oil prices;] the timing of acquisitions, the timing and magnitude of acquisition and integration costs associated with acquisitions; dispositions; [removed: fluctuations in our] equity in earnings (losses) of unconsolidated affiliates; impairments of goodwill, intangible assets, long-lived assets or investments; [added: effective tax rates;] and interest [removed: rate fluctuations.][added: rates.]

[removed: Further declines in prices or a sustained period of low prices could result in further reduction of our customers’] [added: Reduced] capital spending on [removed: mainline pipe and/or other midstream infrastructure, such as] [added: larger pipeline, gas] gathering [added: and compressor] systems and other related [removed: infrastructure, resulting] [added: infrastructure would result] in less demand for our services.

[removed: _Larger versus smaller transmission] [added: _Size, scope and complexity of] projects._ We may experience a decrease or fluctuations in margins [removed: when, as was the case in 2015, larger] [added: when larger, more complex] electric transmission [added: and pipeline] projects across the [removed: industry] [added: industries we serve] experience significant delays.

A greater mix of smaller [added: scale or less complex electric] transmission [added: and pipeline] work also could negatively [removed: impacts] [added: impact] margins due to the inefficiency of [removed: transitions] [added: transitioning] between [added: a greater number of] smaller projects versus [removed: the] continuous production on [added: fewer] larger projects.

[removed: In the event that we believe] [added: Our margins may be further impacted by] delays [removed: are temporary,] [added: in the timing of larger projects or temporary decreases in capital spending by our customers, as] we may choose to maintain a portion of our workforce and equipment in an underutilized capacity to ensure we [removed: were] [added: are] strategically positioned to deliver on larger, more complicated electric transmission [added: or pipeline] projects when they move [removed: forward, as was the case in 2015.][added: forward.]

_Insurance._ As discussed in _Liquidity and Capital [removed: Resources — Self-Insurance_,] [added: Resources_ _—_ _Self-Insurance_,] we are insured for employer’s liability, [removed: general liability,] [added: workers’ compensation,] auto liability and [removed: workers’ compensation] [added: general liability] claims.

_Performance risk._ Margins may fluctuate because of the volume of work and the impacts of pricing and job productivity, which can be affected both favorably and negatively [removed: by] [added: by, among other things,] weather, geography, customer decisions and crew productivity.

Productivity can be influenced by many factors, including where the work is performed (_e.g.,_ rural versus urban area or mountainous or rocky area versus open terrain), whether the work is on an open or encumbered right of way, the [removed: impacts] [added: impact] of inclement [removed: weather or] [added: weather,] the effects of environmental restrictions or regulatory [removed: delays.][added: delays, or the performance of third parties on a project.]

_Foreign currency risk._ Our financial performance is reported on a U.S. dollar-denominated basis [removed: and] [added: but] is [added: partially] subject to [removed: fluctuation] [added: fluctuations] in foreign currency exchange rates.

Selling, general and administrative expenses consist primarily of compensation and related benefits to management, administrative salaries and benefits, marketing, office rent and utilities, communications, [added: professional fees, bad debt expense, acquisition costs, gains and losses on the sale of property and equipment, letter of credit fees and maintenance, training and conversion costs related to the implementation of an information technology solution.]

Additionally, the results of operations for our fiber optic licensing operations, which were disposed of on August 4, 2015, have been reclassified from continuing operations to [added: net] income from discontinued operations for all periods presented.

The following table sets forth selected statements of operations data and such data as a percentage of revenues for the years indicated (dollars in [removed: thousands).][added: thousands):]

| | | [removed: 2015] [added: 2016] | | | | | | | | [removed: 2014] [added: 2015] | | | | | | | | [removed: 2013] [added: 2014] | | | | | | |

| Revenues | | $ | [removed: 7,572,436] [added: 7,651,319] | | | | 100.0 | % | | $ | [removed: 7,747,229] [added: 7,572,436] | | | | 100.0 | % | | $ | [removed: 6,411,577] [added: 7,747,229] | | | | 100.0 | % |

| Cost of services (including depreciation) | | | [removed: 6,648,771] [added: 6,637,519] | | | | [removed: 87.8] [added: 86.7] | | | | [removed: 6,578,435] [added: 6,648,771] | | | | [removed: 84.9] [added: 87.8] | | | | [removed: 5,424,644] [added: 6,578,435] | | | | [removed: 84.6] [added: 84.9] | |

| Gross profit | | | [removed: 923,665] [added: 1,013,800] | | | | [removed: 12.2] [added: 13.3] | | | | [removed: 1,168,794] [added: 923,665] | | | | [removed: 15.1] [added: 12.2] | | | | [removed: 986,933] [added: 1,168,794] | | | | [removed: 15.4] [added: 15.1] | |

| Selling, general and administrative expenses | | | [removed: 592,863] [added: 653,338] | | | | [removed: 7.8] [added: 8.5] | | | | [removed: 705,477] [added: 592,863] | | | | [removed: 9.1] [added: 7.8] | | | | [removed: 485,069] [added: 705,477] | | | | [removed: 7.6] [added: 9.1] | |

| Amortization of intangible assets | | | [removed: 34,848] [added: 31,685] | | | | 0.5 | | | | [removed: 34,257] [added: 34,848] | | | | 0.5 | | | | [removed: 25,865] [added: 34,257] | | | | [removed: 0.4] [added: 0.5] | |

| Asset impairment charges | | | [removed: 58,451] [added: 7,964] | | | | [removed: 0.8] [added: 0.1] | | | | [removed: —] [added: 58,451] | | | | [removed: —] [added: 0.8] | | | | — | | | | — | |

| Operating income | | | [removed: 237,503] [added: 320,813] | | | | [removed: 3.1] [added: 4.2] | | | | [removed: 429,060] [added: 237,503] | | | | [removed: 5.5] [added: 3.1] | | | | [removed: 475,999] [added: 429,060] | | | | [removed: 7.4] [added: 5.5] | |

| Interest expense | | | [removed: (8,024] [added: (14,887] | ) | | | [removed: (0.1] [added: (0.2] | ) | | | [removed: (4,765] [added: (8,024] | ) | | | [removed: —] [added: (0.1] | [added: )] | | | [removed: (2,668] [added: (4,765] | ) | | | [removed: (0.1] [added: —] | [removed: )] |

| Interest income | | | [removed: 1,493] [added: 2,423] | | | | — | | | | [removed: 3,736] [added: 1,493] | | | | — | | | | [removed: 3,378] [added: 3,736] | | | | [removed: 0.1] [added: —] | |

| Equity in [removed: earnings (losses)] [added: losses] of unconsolidated [removed: affiliates, including gain on sale of investment] [added: affiliates] | | | [removed: (466] [added: (979] | ) | | | — | | | | [removed: (332] [added: (466] | ) | | | — | | | | [removed: 112,744] [added: (332] | [added: )] | | | [removed: 1.8] [added: —] | |

| Other income (expense), net | | | [removed: (1,831] [added: 316] | [removed: )] | | | — | | | | [removed: (1,100] [added: (1,831] | ) | | | — | | | | [removed: (1,133] [added: (1,100] | ) | | | — | |

| Income from continuing operations before income taxes | | | [removed: 228,675] [added: 307,686] | | | | [removed: 3.0] [added: 4.0] | | | | [removed: 426,599] [added: 228,675] | | | | [removed: 5.5] [added: 3.0] | | | | [removed: 588,320] [added: 426,599] | | | | [removed: 9.2] [added: 5.5] | |

| Provision for income taxes | | | [removed: 97,472] [added: 107,246] | | | | [removed: 1.3] [added: 1.4] | | | | [removed: 139,007] [added: 97,472] | | | | [removed: 1.8] [added: 1.3] | | | | [removed: 196,875] [added: 139,007] | | | | [removed: 3.1] [added: 1.8] | |

| Net income from continuing operations | | | [removed: 131,203] [added: 200,440] | | | | [removed: 1.7] [added: 2.6] | | | | [removed: 287,592] [added: 131,203] | | | | [removed: 3.7] [added: 1.7] | | | | [removed: 391,445] [added: 287,592] | | | | [removed: 6.1] [added: 3.7] | |

Our operating units may perform joint infrastructure service

##### [Index to Financial Statements](#INDEX)

projects for customers in multiple industries, deliver multiple types of infrastructure services under a single customer contract or provide services across industries.

During 2016, we completed five acquisitions.

The results of four of the acquired companies are generally included in our Electric Power Infrastructure Services segment.

These companies included an electrical infrastructure services company located in Australia, a utility contracting company located in Canada, a full service medium- and high-voltage powerline contracting company located in the United States and a telecommunications company located in Canada.

We also acquired a pipeline service contractor located in the United States, the results of which are generally included in our Oil and Gas Infrastructure Services segment.

The aggregate consideration for these acquisitions consisted of approximately $75.9 million paid or payable in cash, subject to certain adjustments, 70,840 shares of Quanta common stock valued at approximately $1.5 million as of the settlement date of the applicable acquisition, and contingent consideration payments of up to $39.5 million, which will be paid if certain financial targets are achieved.

Based on the estimated fair value of this contingent consideration, we have recorded an $18.7 million liability.

These acquisitions should enable us to further enhance our service offerings in the United States, Canada and Australia.

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

Larger projects with higher voltage capacities, larger diameter throughput capacities, increased construction or design complexities, more difficult terrain requirements or longer distance requirements typically yield opportunities for higher margins as we assume a greater degree of performance risk and allow for a higher degree of utilization of our resources for longer construction timeframes.

Conversely, smaller or less complex electric transmission and pipeline projects typically provide lower margin opportunities as there are a greater number of competitors capable of performing in this market, and competitors at times may more aggressively pursue available volumes of work to absorb fixed costs.

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

| Net income attributable to common stock | | $ | 198,383 | | | | 2.6 | % | | $ | 310,907 | | | | 4.1 | % | | $ | 296,714 | | | | 3.8 | % |

_2016 compared to 2015_

Contributing to the increase was a $165.7 million increase in revenues from oil and gas infrastructure services, partially offset by a $86.8 million decrease in revenues from electric power infrastructure services.

The increase in revenues from oil and gas infrastructure services primarily resulted from increased capital spending by our customers associated with larger projects, certain of which moved into full construction during the second half of 2016, after experiencing regulatory and permitting delays in the first half of 2016, as well as from increased customer spending for natural gas distribution services.

Consolidated revenues were also favorably

##### [Index to Financial Statements](#INDEX)

impacted by approximately $125 million due to revenues generated by acquired companies, primarily in the Electric Power Infrastructure Services segment.

The decrease in revenues from electric power infrastructure services resulted from reduced customer spending associated with larger electric transmission projects as customers continued to face heightened regulatory and environmental requirements from state and federal agencies and more stringent permitting processes with various regional system operators.

This regulatory environment negatively impacted the timing of existing projects and delayed the development of other infrastructure projects, which resulted in decreased demand for our services.

In addition, revenues contributed by our international operations were negatively impacted by approximately $41 million due to less favorable average foreign currency translation rates in 2016 as compared to 2015, primarily attributable to the strengthening of the U.S. dollar against the Canadian dollar throughout 2016.

These increases were primarily due to better utilization of certain larger transmission project resources, mainly in the second half of 2016, as compared to the utilization of similar resources during 2015.

Also contributing to these increases was improved performance of ongoing larger pipeline and electric power projects, as we experienced increased productivity compared to the year ended December 31, 2015 which was negatively impacted by heavy snowfall and other unfavorable weather conditions in certain areas of Canada and the northern United States.

Also contributing to these increases was the contribution of profits from higher overall revenues during the current period.

Gross profit and gross profit as a percentage of revenues were adversely impacted during 2016 by project losses of $54.8 million related to a power plant construction project in Alaska, which are discussed further in the results of operations for the Electric Power Infrastructure Services segment, as compared to project losses of $66.1 million during 2015 related to the same project and an electric transmission project in Canada completed in the third quarter of 2015.

This increase was primarily attributable to $9.8 million in incremental costs associated with acquired companies, net of reduced acquisition costs; $8.9 million in higher salaries and benefits from annual compensation increases and increased personnel; $8.6 million in higher incentive compensation costs associated with levels of profitability; $7.1 million in higher costs associated with ongoing technology and business development initiatives.

Also contributing to the increase were $6.3 million in severance costs associated with the departure of Quanta’s former president and chief executive officer and severance and restructuring costs primarily associated with certain operations within the Oil and Gas Infrastructure Services segment; $2.5 million in higher legal costs related to ongoing litigation, which included $6.9 million of litigation costs related to our disposition of certain telecommunication operations; and $2.3 million contributed to a university endowment.

This decrease was primarily due to reduced amortization expense from previously acquired intangible assets as certain of these assets became fully amortized, partially offset by increased amortization of intangible assets associated with acquired companies.

_Asset impairment charges._ Asset impairment charges were $8.0 million for the year ended December 31, 2016 compared to $58.5 million for the year ended December 31, 2015.

During the fourth quarter of 2015, we recorded an asset impairment of $6.6 million related to certain international renewable energy services operations.

These assets were further impaired during the fourth quarter of 2016 as a result of the pending disposition of these operations.

Additionally, during the fourth quarter of 2015, we recorded a $39.8 million goodwill impairment and a $12.1 million impairment of other intangible assets related to certain operations within our Oil and Gas Infrastructure Services Division, which were primarily attributable to lower levels of expected activity in the U.S. Gulf of Mexico and, to a lesser extent, due to the extended low commodity price environment with respect to certain directional drilling operations in Australia.

##### [Index to Financial Statements](#INDEX)

_Interest expense._ Interest expense increased $6.9 million to $14.9 million for the year ended December 31, 2016 primarily due to increased borrowing activity and a higher weighted average interest rate during the year ended December 31, 2016.

As a result of the sale of our fiber optic licensing operations on August 4, 2015, we have presented our fiber optic licensing operations as discontinued operations and our ancillary telecommunications infrastructure services as part of our Electric Power Infrastructure Services segment.

adjustments, 461,037 shares of Quanta common stock valued on the settlement dates of the acquisitions at approximately $10.1 million, and $1.0 million in contingent consideration.

During 2013, we acquired six businesses, which included three electric power and three oil and gas infrastructure services companies.

The electric power acquisitions expanded our geographic presence primarily in the northeastern, midwestern and western regions of the United States and in the central region of Canada, while the oil and gas infrastructure services companies increased our capacity to provide mechanical installations for the offshore oil and gas industry and pipeline logistics services throughout the United States and expanded our geographic presence to include pipeline construction services in Australia.

The aggregate consideration paid for these acquisitions consisted of approximately $341.1 million in cash and 3,547,482 shares of our common stock valued, as of the respective dates of issuance, at approximately $88.9 million.

On December 6, 2013, we sold all of our equity ownership interest in Howard Midstream Energy Partners, LLC (HEP) for proceeds of approximately $220.9 million in cash, which resulted in a pre-tax gain of approximately $112.7 million.

We and our customers continue to operate in an uncertain business environment, with heightened regulatory and environmental requirements, stringent permitting processes and only gradual recovery in the economy from recessionary levels.

Furthermore, significant declines in oil and natural gas prices since mid-2014 have cast uncertainty on the demand for our oil and gas infrastructure services, which may be exacerbated if we experience a sustained period of lower oil and natural gas prices.

However, we expect that, as the current oversupply of global oil corrects and global demand for oil increases over time, oil prices could recover from current levels over the long term.

We believe that long-term production of natural gas and oil from North American unconventional shale formations and the Canadian oil sands will continue, which we expect to create demand for our infrastructure services over time.

We are closely monitoring our customers and the effect that changes in economic and market conditions have or may have on them.

Certain of our customers have reduced or delayed spending in recent years, which we attribute primarily to regulatory and permitting hurdles and negative economic and market conditions, and we

anticipate that these issues may continue to affect demand for some of our services in the near term.

As mentioned previously, there have been significant decreases in oil prices and natural gas prices since mid-2014.

We have experienced a decrease in demand for some of our services, primarily infrastructure services in Australia, Canada and the Gulf of Mexico, as a result of low oil prices.

We believe that most of our customers, many of whom are regulated utilities, remain financially stable in general and will be able to continue with their business plans in the long term.

This has, and may again in the future, lead to an increasingly competitive smaller transmission market, as competitors more aggressively pursue higher volumes of work to absorb fixed costs.

We believe that the delay in larger transmission projects is temporary, as a number of large projects are awaiting permitting and other approvals.

professional fees, bad debt expense, acquisition costs, gains and losses on the sale of property and equipment, letter of credit fees and maintenance, training and conversion costs related to the implementation of an information technology solution.

_Interest income._ Interest income decreased $2.2 million to $1.5 million for the year ended December 31, 2015.

The decrease was primarily due to lower average cash balances during the year ended December 31, 2015 as compared to the year ended December 31, 2014.

_Equity in earnings (losses) of unconsolidated affiliates._ Equity in earnings (losses) of unconsolidated affiliates were losses of $0.5 million and $0.3 million for the years ended December 31, 2015 and 2014.

_2014 compared to 2013_

This increase was due in part to higher electric power infrastructure services revenues, which increased $760.7 million, or 16.7%, to $5.30 billion as a result of increased activity from electric power transmission, distribution and power generation projects in connection with increased capital spending by our customers and approximately $225 million in revenues generated by acquired companies.

Also contributing to the increase were additional revenues from oil and gas infrastructure services, which increased $574.9 million, or 30.8%, to $2.44 billion, primarily due to approximately $500 million in revenues generated by acquired companies.

Also favorably impacting oil and gas infrastructure services was increased capital spending by our customers.

This increase was primarily due to higher overall revenues earned during the year ended December 31, 2014 as compared to the year ended December 31, 2013.

This decrease in gross margin was primarily due to the negative impact of wet weather conditions, primarily in Canada and northern regions of the United States, as these areas experienced a late thaw from the winter season, as well as lower margins recognized on certain power generation projects ongoing during the year ended December 31, 2014 as compared to similar projects completed during the year ended December 31, 2013 and less favorable foreign currency exchange rates.

These lower margins were partially offset by the contribution of mainline pipe revenues, which typically yield higher margins.

This increase was primarily attributable to an aggregate $102.5 million charge to provision for long-term contract receivable recorded in the third and fourth quarters of 2014 associated with an electric power infrastructure services project completed in 2012 and an aggregate $38.8 million expense associated with an adverse arbitration decision regarding a contract dispute on a 2010 directional drilling project, $68.2 million in incremental general and administrative costs associated with acquired companies, $11.6 million in higher professional fees and $7.6 million in higher ancillary administration costs.

These increases were partially offset by $13.2 million in lower compensation and incentive costs associated with levels of profitability during the year ended December 31, 2014.

The impact of these items was partially offset by better absorption of general and administrative expenses due to the higher revenues described above.

This increase was primarily due to increased amortization of intangibles associated with acquired companies.

_Interest expense._ Interest expense increased $2.1 million to $4.8 million for the year ended December 31, 2014 as compared to the year ended December 31, 2013 due to increased borrowing activity, commitment fees associated with an increase in the unused capacity of our credit facility and higher amortization of deferred financing costs following the amendment and restatement of our credit agreement in 2013.

_Interest income._ Interest income was $3.7 million and $3.4 million for the years ended December 31, 2014 and 2013.

The increase was primarily due to a higher volume of cash in foreign banks during the year ended December 31, 2014, which generally had a higher rate of return than balances in domestic banks, partially offset by lower foreign currency exchange rates in the year ended December 31, 2014 as compared to the year ended December 31, 2013.

_Equity in earnings (losses) of unconsolidated affiliates._ Equity in earnings (losses) of unconsolidated affiliates was a loss of $0.3 million and income of $112.7 million for the years ended December 31, 2014 and 2013.

During the fourth quarter of 2013, we sold all of our equity ownership interest in HEP for proceeds of approximately $220.9 million in cash which resulted in a pre-tax gain of approximately $112.7 million.

The effective tax rates for 2014 and 2013 were impacted by the recording of net tax benefits in the amounts of $8.1 million in 2014 and $9.9 million in 2013 associated with decreases in reserves for uncertain tax positions resulting from the expiration of various federal and state statute of limitations periods.

Excluding the tax benefits from decreases in reserves for uncertain tax positions, the effective tax rates would have been 34.5% and 35.2% for the years ended December 31, 2014 and 2013.

_Credit Risk._ We are subject to concentrations of credit risk related to our cash and cash equivalents and our [removed: accounts receivable, including] [added: net receivable position with customers, which includes] amounts related to [added: billed and] unbilled accounts receivable and costs and estimated earnings in excess of billings on uncompleted [removed: contracts.][added: contracts net of advanced billings with the same customer.]

Substantially all of our cash [removed: investments] [added: and cash equivalents] are managed by what we believe to be high credit quality financial institutions.

[added: In accordance with our investment policies, these] institutions are authorized to invest [removed: this] cash [added: and cash equivalents] in a diversified portfolio of what we believe to be high-quality investments, which primarily include interest-bearing demand [removed: deposits] [added: deposits, money market investments] and money market mutual funds with original maturities of three months or less.

However, we believe the concentration of credit risk related to [removed: trade accounts receivable] [added: billed] and [added: unbilled receivables and] costs and estimated earnings in excess of billings on uncompleted contracts is limited because of the diversity of our customers.

_Interest Rate Risk._ As of December 31, [removed: 2015,] [added: 2016,] we had no derivative financial instruments to manage interest rate risk.

As of December 31, [removed: 2015,] [added: 2016,] the fair value of our variable rate debt of [removed: $466.9] [added: $352.8] million approximated book value.

Our weighted average interest rate [added: on our variable rate debt] for the year ended December 31, [removed: 2015] [added: 2016] was [removed: 1.79%.][added: 2.1%.]

The [added: annual] effect on our pretax earnings of a hypothetical 50 basis point increase or decrease in variable interest rates would be approximately [removed: $2.3] [added: $1.8] million based on our December 31, [removed: 2015] [added: 2016] balance of variable rate debt.

During [removed: 2015,] [added: 2016,] revenues from our foreign operations accounted for [removed: 20.4%] [added: 20.8%] of our consolidated revenues.

[removed: Fluctuations] [added: Additionally, fluctuations] in foreign exchange rates during the year ended December 31, 2015 caused an approximate decrease of $227 million in foreign revenues compared to the year ended December 31, 2014.

There were no outstanding foreign currency derivative contracts at December 31, [removed: 2015.][added: 2016.]

Based on the balance of cash and cash equivalents in foreign banks of [removed: $112.7] [added: $92.7] million as of December 31, [removed: 2015,] [added: 2016,] an assumed 5% adverse change to foreign exchange rates would result in a fair value decline of [removed: $5.6] [added: $4.6] million.

##### [Index to Financial Statements](#INDEX)

Fluctuations in foreign exchange rates during the year ended December 31, 2016 caused an approximate decrease of $41 million in foreign revenues compared to the year ended December 31, 2015.

##### [Index to Financial Statements](#INDEX)

In accordance with our investment policies, these

The services we provide include the design, installation, upgrade, repair and maintenance of infrastructure within each of the industries we serve, such as electric power transmission and distribution networks, substation facilities, renewable energy facilities, pipeline transmission and distribution systems and facilities, and [removed: infrastructure services for the offshore and inland water energy markets.][added: related infrastructure.]

Our consolidated revenues for the year ended December 31, [removed: 2015] [added: 2016] were approximately [removed: $7.57] [added: $7.65] billion, of which [removed: 65%] [added: 63%] was attributable to the Electric Power Infrastructure Services segment and [removed: 35%] [added: 37%] to the Oil and Gas Infrastructure Services segment.

We have established a presence throughout the United States, Canada and Australia with a workforce of approximately [removed: 24,500] [added: 28,100] employees as of December 31, [removed: 2015,] [added: 2016,] which enables us to quickly and reliably serve a diversified customer base.

| • American Electric Power Company, Inc. | | • [removed: ITC Holdings Corp.] [added: Maurepas Pipeline, LLC] |

| • ATCO Electric [removed: LTD] | | • [removed: MidAmerican] [added: Nalcor] Energy [removed: Company] |

| • CenterPoint Energy, Inc. | | • [removed: PG&E Corporation] [added: NextEra Energy, Inc.] |

| • Con Edison Development, Inc. | | • [removed: Rice Energy] [added: PG&E Corporation] |

| • [removed: Duke Energy] [added: Entergy] Corporation | | • Spectra Energy [added: Corp.] |

| • [removed: Enterprise Products Partners L.P.] [added: Eversource Energy] | | • Tallgrass Energy [added: Partners, LP] |

| • [removed: Exelon] [added: FirstEnergy] Corporation | | • TransCanada Corporation |

We were organized as a corporation in the state of Delaware in 1997, and since that [removed: time] [added: time,] we have grown organically and [removed: have made] [added: through] strategic [removed: acquisitions, expanding our geographic presence and scope of services and developing new capabilities to meet our customers’ evolving needs.][added: acquisitions.]

We believe that our business strategies, along with our competitive and financial strengths, are key elements in differentiating us from our competition and position us to capitalize on future capital spending by our [removed: customers.]

Our strategies of expanding the portfolio of services we provide to our existing and potential customer base, increasing our geographic and technological capabilities, promoting best practices and cross-selling our services to our customers, as well as continuing to maintain our financial strength, place us in the position to capitalize on opportunities and trends in the industries we serve and to expand our operations [removed: globally.][added: globally to select international markets.]

On August 4, 2015, we completed the sale [added: of our fiber optic licensing operations to Crown Castle International Corp.] for a purchase price of approximately $1 billion in cash, resulting in after-tax net proceeds of approximately $848 million.

In addition, this segment designs, installs and maintains renewable energy generation facilities, consisting of solar, wind and certain types of natural gas generation facilities, and related switchyards and transmission [removed: infrastructure to transport power.][added: infrastructure.]

To a lesser extent, this segment provides services such as the construction of electric power generation facilities, the design, [added: the] installation, maintenance and repair of commercial and industrial wiring, installation of traffic networks and [removed: the installation of] cable and control systems for light rail lines and [removed: limited] ancillary telecommunication infrastructure services.

Services performed by the Oil and Gas Infrastructure Services segment generally include the design, installation, repair and maintenance of pipeline transmission and distribution systems, gathering systems, production systems, storage systems and compressor and pump stations, as well as related trenching, directional boring and [removed: automatic] [added: mechanized] welding services.

In addition, this segment’s services include pipeline protection, integrity testing, rehabilitation and [removed: replacement] [added: replacement,] and fabrication of pipeline support systems and related structures and facilities.

We also serve the offshore and inland water energy markets, primarily providing services to oil and gas exploration platforms, including mechanical installation (or “hook-ups”), electrical and instrumentation, pre-commissioning and commissioning, coatings, [removed: fabrication, pipeline construction, integrity services] [added: fabrication] and marine asset repair.

To a lesser extent, this segment designs, installs and maintains fueling [removed: systems] [added: systems,] as well as water and sewer infrastructure.

We operate primarily in the United States; however, we derived [removed: $1.54] [added: $1.59] billion, [removed: $1.89] [added: $1.54] billion and [removed: $1.31] [added: $1.89] billion of our revenues from foreign operations during the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] respectively.

Of our foreign revenues, approximately [removed: 85%, 82%] [added: 75%, 85%] and [removed: 86%] [added: 82%] were earned in Canada during the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] respectively.

In addition, we held property and equipment in the amount of [removed: $317.6] [added: $320.7] million and [removed: $372.9] [added: $317.6] million in foreign countries, primarily Canada, as of December 31, [removed: 2015] [added: 2016] and [removed: 2014.][added: 2015.]

_Risk [removed: Factors_ and] [added: Factors,_] Item 7.

[removed: _Management’s Discussion and Analysis of Financial Condition] [added: _Quantitative] and [removed: Results of Operations_] [added: Qualitative Disclosures about Market Risk_] for additional information and discussion regarding the [added: potential] impact of currency rate fluctuations.

We have a large and diverse customer base, including many of the leading companies in [added: the industries we serve.]

Our 10 largest customers accounted for approximately [removed: 36%] [added: 32%] of our consolidated revenues during the year ended December 31, [removed: 2015.][added: 2016.]

Our largest customer accounted for approximately [removed: 8%] [added: 4%] of our consolidated revenues for the year ended December 31, [removed: 2015.][added: 2016.]

The following table presents our total backlog by reportable segment as of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] along with an estimate of the backlog amounts expected to be realized within 12 months of each balance sheet date (in thousands):

| | | Backlog as of December 31, [removed: 2015] [added: 2016] | | | | | | | | Backlog as of December 31, [removed: 2014] [added: 2015] | | | | | | |

| Electric Power Infrastructure Services | | $ | [removed: 3,307,837] [added: 3,369,373] | | | $ | [removed: 6,312,947] [added: 6,657,431] | | | $ | [removed: 3,395,094] [added: 3,307,837] | | | $ | [removed: 6,715,593] [added: 6,312,947] | |

| Oil and Gas Infrastructure Services | | | [removed: 1,900,845] [added: 2,483,963] | | | | [removed: 3,073,950] [added: 3,092,341] | | | | [removed: 1,824,610] [added: 1,900,845] | | | | [removed: 2,520,635] [added: 3,073,950] | |

As of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] MSAs accounted for approximately [removed: 45%] [added: 42%] and [removed: 39%] [added: 45%] of our estimated 12 month backlog and approximately [removed: 50%] [added: 53%] and [removed: 47%] [added: 50%] of total backlog.

Although [added: these companies currently outsource] a significant portion of these [removed: services is currently outsourced by many of our customers,] [added: services,] in particular services relating to larger energy transmission infrastructure projects, there can be no assurance that [removed: our existing or prospective customers] [added: they] will continue to [removed: outsource these services] [added: do so] in the [removed: future.][added: future or that they will not acquire additional in-house capabilities.]

As of December 31, [removed: 2015,] [added: 2016,] we had approximately [removed: 24,500] [added: 28,100] employees, consisting of approximately [removed: 4,200] [added: 5,200] salaried employees, including executive officers, professional and administrative staff, project managers and engineers, job superintendents and clerical personnel, and approximately [removed: 20,300] [added: 22,900] hourly employees, the number of which fluctuates depending upon the number and size of the projects that are ongoing and planned at any particular time.

Approximately [removed: 55%] [added: 58%] of our hourly employees at December 31, [removed: 2015] [added: 2016] were covered by collective bargaining agreements, which require the payment of specified wages to our union employees, the observance of certain workplace rules and the payment of certain amounts to multiemployer pension plans and employee benefit trusts rather than us sponsoring or administering the benefit programs provided on behalf of our employees.

We also have a 401(k) plan pursuant to which eligible employees who are not provided retirement [added: benefits through a collective bargaining agreement may make contributions through a payroll deduction.]

As we continue to expand our comprehensive engineering, procurement and construction offerings, [removed: particularly associated with utility scale solar projects,] the cost of materials may become a proportionately larger component of our consolidated cost of services.

We [removed: purchase such materials from a variety of sources and] do not anticipate experiencing any significant difficulties in procuring such [removed: materials.][added: materials as we purchase such materials from a variety of sources.]

[removed: Our] [added: In response to these inherent hazards and as part of our commitment to employee safety, our] operating units have established safety programs, policies and procedures requiring that employees complete prescribed training and service programs prior to starting work.

| • Ameren Corporation | | • ITC Holdings Corp. |

| • Duke Energy Corporation | | • Puget Sound Energy, Inc. |

| • Enbridge, Inc. | | • San Diego Gas & Electric Company |

| • Exelon Corporation | | • Southern California Edison Company |

This growth has expanded our geographic presence and scope of services and developed new capabilities to meet our customers’ evolving needs.

##### [Index to Financial Statements](#INDEX)

customers.

##### [Index to Financial Statements](#INDEX)

_Management’s Discussion and Analysis of Financial Condition and Results of Operations_ and Item 7A.

##### [Index to Financial Statements](#INDEX)

| Total | | $ | 5,853,336 | | | $ | 9,749,772 | | | $ | 5,208,682 | | | $ | 9,386,897 | |

##### [Index to Financial Statements](#INDEX)

Our operating units performing more sophisticated and technical jobs utilize, when applicable, training programs

##### [Index to Financial Statements](#INDEX)

During 2016, we expanded the capabilities of our training facility to include training for beginning linemen, lead and cable splicing and directional drilling in addition to our existing energized electric power and pipeline training.

##### [Index to Financial Statements](#INDEX)

operator, regardless of whether we directly caused the contamination or violated any law at the time of discharge or disposal.

Climate change could also have a negative impact on the demand for fossil fuels, which in turn could negatively impact demand for certain of our services.

##### [Index to Financial Statements](#INDEX)

As a result of the sale of our fiber optic licensing operations on August 4, 2015, we have presented our fiber optic licensing operations as discontinued operations and our ancillary telecommunications infrastructure services as part of our Electric Power Infrastructure Services segment for all periods presented in the accompanying consolidated financial statements.

| | | |

| --- | --- | --- |

| • Ameren Corporation | | • Google Inc. |

| • American Transmission Co. | | • Kinder Morgan, Inc. |

| • Anchorage Municipal Light & Power | | • Marathon Pipeline, LLC |

| • APA Group | | • Maurepas Pipeline, LLC |

| • Australia Pacific LNG | | • Nalcor Energy |

| • BC Hydro | | • National Grid plc |

| • Cenovus Energy Inc. | | • NiSource |

| • Central Maine Power Company | | • PPL EnergyPlus |

| • Columbia Pipeline Group | | • Puget Sound Energy |

##### [Table of Contents](#toc)

| • ConocoPhillips | | • SaskPower |

| • Dominion Resources, Inc. | | • Shell |

| • Enbridge, Inc. | | • Southern California Edison Co. |

| • Entergy Corporation | | • Suncor Energy Inc. |

| • Eversource Energy | | • United States Department of Defense |

| • First Energy | | • Williams Companies Inc. |

| • Georgia Power | | • Xcel Energy Inc. |

We and our customers continue to operate in an uncertain business environment, and although there has been gradual improvement in the economy, our customers continue to face heightened regulatory and environmental requirements as they implement projects to enhance and expand their infrastructure.

Further, significant declines in oil prices and natural gas prices, since mid-2014 have reduced demand for some of our oil and gas infrastructure services, which could persist if market uncertainty continues due to an extended period of low oil and natural gas prices.

These economic,regulatory and other factors have negatively affected demand for our services in the past and may create uncertainty with regard to anticipated customer spending in future periods.

We cannot definitively predict the timing or magnitude of the effect that industry trends may have on our business, particularly in the near-term.

On April 29, 2015, we entered into a stock purchase agreement with Crown Castle International Corp. (Crown Castle) pursuant to which we agreed to sell our fiber optic licensing operations.

The purchase agreement contained customary representations and warranties, covenants and indemnities.

the industries we serve.

| Total | | $ | 5,208,682 | | | $ | 9,386,897 | | | $ | 5,219,704 | | | $ | 9,236,228 | |

benefits through a collective bargaining agreement may make contributions through a payroll deduction.

electrical arcs.

Therefore, significant changes in historical weather

patterns could significantly impact our future operating results.

With respect to all such lawsuits, claims and proceedings, we record a reserve when it is probable that a [removed: liability] [added: loss] has been incurred and the amount of loss can be reasonably estimated.

| [removed: x] [added: ☒] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the fiscal year ended December 31, [removed: 2015][added: 2016]

| [removed: ¨] [added: ☐] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

Yes [removed: x] [added: ☒] No [removed: ¨][added: ☐]

Yes [removed: ¨] [added: ☐] No [removed: x][added: ☒]

| Large accelerated filer | | [removed: x] [added: ☒] | | Accelerated filer | | [removed: ¨] [added: ☐] |

| Non-accelerated filer | | [removed: ¨] [added: ☐] (Do not check if smaller reporting company) | | Smaller reporting company | | [removed: ¨] [added: ☐] |

As of June 30, [removed: 2015] [added: 2016] (the last business day of the Registrant’s most recently completed second fiscal quarter), the aggregate market value of the Common Stock of the Registrant held by non-affiliates of the Registrant, based on the last sale price of the Common Stock reported by the New York Stock Exchange on such date, was approximately [removed: $5.7] [added: $3.3] billion.

As of February [removed: 23, 2016,] [added: 21, 2017,] the number of outstanding shares of Common Stock of the Registrant was [removed: 152,907,166.][added: 145,133,163.]

As of the same date, 3,500,000 exchangeable shares of a Canadian subsidiary of the Registrant associated with one share of Series F Preferred Stock of the Registrant were outstanding, 449,929 exchangeable shares of a Canadian subsidiary of the Registrant associated with one share of Series G Preferred Stock of the Registrant were outstanding and an additional [removed: 2,926,113] [added: 2,144,620] exchangeable shares of certain other Canadian subsidiaries of the Registrant were outstanding.

Portions of the Registrant’s Definitive Proxy Statement for the [removed: 2016] [added: 2017] Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

For the Year Ended December 31, [removed: 2015][added: 2016]

| ITEM 1. | | [removed: [Business](#tx69866_1)] [added: [Business](#tx295903_1)] | | | 2 | |

| ITEM 1A. | | [Risk [removed: Factors](#tx69866_2)] [added: Factors](#tx295903_2)] | | | [removed: 10] [added: 9] | |

| ITEM 1B. | | [Unresolved Staff [removed: Comments](#tx69866_3)] [added: Comments](#tx295903_3)] | | | [removed: 29] [added: 31] | |

| ITEM 2. | | [removed: [Properties](#tx69866_4)] [added: [Properties](#tx295903_4)] | | | [removed: 30] [added: 31] | |

| ITEM 3. | | [Legal [removed: Proceedings](#tx69866_5)] [added: Proceedings](#tx295903_5)] | | | [removed: 30] [added: 31] | |

| ITEM 4. | | [Mine Safety [removed: Disclosures](#tx69866_6)] [added: Disclosures](#tx295903_6)] | | | [removed: 30] [added: 31] | |

| ITEM 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#tx69866_7)] [added: Securities](#tx295903_7)] | | | [removed: 31] [added: 32] | |

| ITEM 6. | | [Selected Financial [removed: Data](#tx69866_8)] [added: Data](#tx295903_8)] | | | [removed: 34] [added: 35] | |

| ITEM 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#tx69866_9)] [added: Operations](#tx295903_9)] | | | [removed: 36] [added: 37] | |

| ITEM 7A. | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#tx69866_10)] [added: Risk](#tx295903_10)] | | | [removed: 78] [added: 83] | |

| ITEM 8. | | [Financial Statements and Supplementary [removed: Data](#tx69866_11)] [added: Data](#tx295903_11)] | | | [removed: 80] [added: 85] | |

| ITEM 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#tx69866_12)] [added: Disclosure](#tx295903_12)] | | | [removed: 139] [added: 147] | |

| ITEM 9A. | | [Controls and [removed: Procedures](#tx69866_13)] [added: Procedures](#tx295903_13)] | | | [removed: 139] [added: 147] | |

| ITEM 9B. | | [Other [removed: Information](#tx69866_14)] [added: Information](#tx295903_14)] | | | [removed: 140] [added: 148] | |

| ITEM 10. | | [Directors, Executive Officers and Corporate [removed: Governance](#tx69866_15)] [added: Governance](#tx295903_15)] | | | [removed: 141] [added: 149] | |

| ITEM 11. | | [Executive [removed: Compensation](#tx69866_16)] [added: Compensation](#tx295903_16)] | | | [removed: 141] [added: 149] | |

| ITEM 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#tx69866_17)] [added: Matters](#tx295903_17)] | | | [removed: 141] [added: 149] | |

| ITEM 13. | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#tx69866_18)] [added: Independence](#tx295903_18)] | | | [removed: 141] [added: 149] | |

| ITEM 14. | | [Principal Accounting Fees and [removed: Services](#tx69866_19)] [added: Services](#tx295903_19)] | | | [removed: 141] [added: 149] | |

| ITEM 15. | | [Exhibits and Financial Statement [removed: Schedules](#tx69866_20)] [added: Schedules](#tx295903_20)] | | | [removed: 142] [added: 150] | |

10-K 1 d295903d10k.htm FORM 10-K

##### [Index to Financial Statements](#INDEX)

Yes ☒ No ☐

Yes ☒ No ☐

Yes ☐ No ☒

##### [Index to Financial Statements](#INDEX)

| | | | | | | |

| ITEM 16. | | [Form 10-K Summary](#tx295903_21) | | | 155 | |

##### [Index to Financial Statements](#INDEX)

10-K 1 d69866d10k.htm FORM 10-K

##### [Table of Contents](#toc)

As of December 31, [removed: 2015,] [added: 2016,] the total size of the rolling-stock fleet was approximately [removed: 36,778] [added: forty thousand] units.

As of December 31, 2016, we owned 54 of our facilities and leased the remainder.

As of December 31, 2015, we owned 48 of the facilities we occupy, many of which are encumbered by a security interest granted under our credit agreement, and we leased the remainder.

##### [Index to Financial Statements](#INDEX)

| 2nd Quarter | | [added: $] | 30.61 | | | [added: $] | 27.68 | |

| 3rd Quarter | | [added: $] | 29.10 | | | [added: $] | 21.35 | |

| 4th Quarter | | [added: $] | 27.05 | | | [added: $] | 18.46 | |

| Year Ended December 31, [removed: 2014] [added: 2016] | | | | | | | | |

On February [removed: 23, 2016,] [added: 21, 2017,] there were [removed: 756] [added: 724] holders of record of our common stock, [removed: 16] [added: eight] holders of record of exchangeable shares of Canadian subsidiaries of Quanta, one holder of record of our Series F preferred stock and one holder of record of our Series G preferred stock.

Unregistered Sales of Securities During the Fourth Quarter of [removed: 2015][added: 2016]

Issuer Purchases of Equity Securities During the Fourth Quarter of [removed: 2015][added: 2016]

The following table contains information about our purchases of equity securities during the three months ended December 31, [removed: 2015.][added: 2016.]

| Period | | Total Number of Shares Purchased | | | | Average Price Paid per Share | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | | Maximum Number (or Approximate Dollar Value) of Shares That May Yet be Purchased Under the Plans or [removed: Programs (1)] [added: Programs(1)] | | |

| (1) | On August 5, 2015, we issued a press release announcing that our board of directors approved a stock repurchase program authorizing us to purchase, from time to time through February 28, 2017, up to $1.25 billion of our outstanding common stock. Repurchases under the program can be made in open market or privately negotiated transactions, including pursuant to an accelerated share repurchase arrangement, issuer repurchase plan or otherwise, at our discretion, based on market and business conditions, applicable contractual and legal requirements and other factors. This program does not obligate us to acquire any specific amount of common stock and may be modified or terminated by our board of directors at any time at its sole discretion and without notice. [removed: We have paid $150.0 million under an accelerated share repurchase arrangement (the ASR), entered into on August 10, 2015, for shares expected to be delivered upon final settlement of the ASR.] As of December 31, [removed: 2015, after consideration of the settlement of the ASR, approximately $50.1 million remained available] [added: 2016, we had repurchased an aggregate $1.20 billion in Quanta common stock] under [removed: the] [added: this] program. [removed: For additional information on the program and the ASR, please see] [added: As discussed in] _Liquidity and Capital [removed: Resources—Cash Requirements_] [added: Resources_ _—_ _Debt Instruments_ _—_ _Credit Facility_] in Item 7. _Management’s Discussion and Analysis of Financial Condition and Results of Operations_ of Part II of this Annual Report on Form [removed: 10-K.] [added: 10-K, our credit agreement includes certain limitations on the repurchase of common stock.] |

| (2) | Includes shares purchased from employees to satisfy tax withholding obligations in connection with the vesting of restricted stock [removed: and restricted stock] unit awards. |

[removed: Please see] [added: In addition, as discussed in] _Liquidity and Capital [removed: Resources — Debt_ _Instruments] [added: Resources_] — [removed: Credit] [added: _Debt Instruments_ _—_ _Credit] Facility_ in Item 7.

We did not declare any cash dividends on our common stock during the years ended December 31, [removed: 2015] [added: 2016] or [removed: 2014,] [added: 2015,] or in any previous periods.

The following graph compares, for the period from December 31, [removed: 2010] [added: 2011] to December 31, [removed: 2015,] [added: 2016,] the cumulative stockholder return on our common stock with [removed: a peer group selected by our management that includes public companies within our industries and] the cumulative total return of the Standard & Poor’s [removed: 500 Index (the S&P 500 Index).]

The companies in [removed: the] [added: each] peer group were selected to represent a broad group of publicly held corporations with operations similar to ours.

The [added: current] peer group [removed: (Peer] [added: (the 2016 Peer] Group) includes AECOM Technology Corporation, Chicago Bridge & Iron Company N.V., EMCOR Group Inc., Fluor Corporation, Jacobs Engineering Group Inc., KBR, Inc., MasTec, Inc., MYR Group [removed: Inc.,] [added: Inc. and] Primoris Services [removed: Corporation and Willbros Group, Inc.][added: Corporation.]

The graph below assumes an investment of $100 (with reinvestment of all dividends) in our common stock, the [added: S&P 500 Index, the 2016] Peer Group and the [removed: S&P 500 Index] [added: 2015 Peer Group] on December 31, [removed: 2010] [added: 2011] and tracks their relative performance through December 31, [removed: 2015.][added: 2016.]

The returns of each company in the Peer Group [removed: is] [added: are] weighted based on the market capitalization of that company at the beginning of the measurement period.

Among Quanta Services, Inc., the [added: 2016] Peer [added: Group, the 2015 Peer] Group and the S&P 500 Index

[removed: ][added: ]

| 4th Quarter | | $ | 36.85 | | | $ | 27.29 | |

| 3rd Quarter | | $ | 28.14 | | | $ | 22.58 | |

| 2nd Quarter | | $ | 24.47 | | | $ | 21.60 | |

| 1st Quarter | | $ | 22.87 | | | $ | 16.77 | |

During the three months ended December 31, 2016, we issued 104,942 shares of our common stock to certain former owners of an acquired company in exchange, on a one-for-one basis, for exchangeable shares in a Canadian subsidiary of Quanta that were held by certain former owners.

Additionally, subsequent to December 31, 2016, we issued 420,904 shares of our common stock to certain former owners of an acquired company in exchange, on a one-for-one basis, for exchangeable shares in a Canadian subsidiary of Quanta that were held by certain former owners.

Each of the former owners originally received the exchangeable shares as partial consideration for the sale of the acquired company.

The shares of common stock issued in the above transactions were issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as the shares were issued to the owners of businesses acquired in a privately negotiated transactions not involving any public offering or solicitation.

##### [Index to Financial Statements](#INDEX)

| October 1 – 31, 2016 (2) | | | 19,145 | | | $ | 27.88 | | | | — | | | | | |

| November 1 – 30, 2016 (2) | | | 9,606 | | | $ | 32.88 | | | | — | | | | | |

| December 1 – 31, 2016 | | | — | | | $ | — | | | | — | | | | | |

| Total | | | 28,751 | | | | | | | | — | | | $ | 50,120,407 | |

##### [Index to Financial Statements](#INDEX)

500 Index (the S&P 500 Index) and two peer groups selected by our management that include public companies within our industries.

The peer group used in the prior year (the 2015 Peer Group) included each of the foregoing companies as well as Willbros Group, Inc. We determined not to include Willbros Group, Inc. in the 2016 Peer Group due to dissimilarities with respect to its trading liquidity and operational performance history.

| (1) | The 2016 Peer Group and the 2015 Peer Group performed similarly during the five-year performance period, therefore their cumulative total returns overlap in the graph. |

| --- | --- |

| | | 12/11 | | | | 12/12 | | | | 12/13 | | | | 12/14 | | | | 12/15 | | | | 12/16 | | |

| Quanta Services, Inc. | | $ | 100.00 | | | $ | 126.69 | | | $ | 146.52 | | | $ | 131.80 | | | $ | 94.01 | | | $ | 161.79 | |

| 2016 Peer Group | | | 100.00 | | | | 116.43 | | | | 163.14 | | | | 116.63 | | | | 106.15 | | | | 130.02 | |

| 2015 Peer Group | | | 100.00 | | | | 116.61 | | | | 163.73 | | | | 116.97 | | | | 105.94 | | | | 129.74 | |

| S&P 500 | | | 100.00 | | | | 116.00 | | | | 153.58 | | | | 174.60 | | | | 177.01 | | | | 198.18 | |

##### [Index to Financial Statements](#INDEX)

| 1st Quarter | | $ | 37.28 | | | $ | 29.85 | |

| 2nd Quarter | | | 37.42 | | | | 32.50 | |

| 3rd Quarter | | | 37.49 | | | | 32.86 | |

| 4th Quarter | | | 36.34 | | | | 25.34 | |

None.

| October 1 – 31, 2015 | | | | | | | | | | | | | | | | |

| Open Market Stock Repurchases (2015 Repurchase Program) (1) | | | 3,579,775 | | | $ | 21.45 | | | | 3,579,775 | | | | | |

| November 1 – 30, 2015 | | | | | | | | | | | | | | | | |

| Tax Withholdings (2) | | | 12,958 | | | $ | 21.72 | | | | | | | | | |

| December 1 – 31, 2015 | | | | | | | | | | | | | | | | |

| Tax Withholdings (2) | | | 54 | | | $ | 21.66 | | | | | | | | | |

| Total | | | 3,592,787 | | | | | | | | 3,579,775 | | | $ | 200,120,407 | |

_Management’s Discussion and Analysis of Financial Condition and Results of Operations_ of Part II of this Annual Report on Form 10-K for a discussion of our credit agreement, which includes certain limitations on the repurchase of common stock without consent of our lenders.

In addition, as discussed in _Liquidity and Capital Resources_ — _Debt Instruments — Credit Facility_ in Item 7.

| | | 12/10 | | | | 12/11 | | | | 12/12 | | | | 12/13 | | | | 12/14 | | | | 12/15 | | |

| Quanta Services, Inc. | | $ | 100.00 | | | $ | 108.13 | | | $ | 137.00 | | | $ | 158.43 | | | $ | 142.52 | | | $ | 101.66 | |

| Peer Group | | | 100.00 | | | | 87.39 | | | | 101.91 | | | | 143.09 | | | | 102.22 | | | | 92.58 | |

| S&P 500 | | | 100.00 | | | | 102.11 | | | | 118.45 | | | | 156.82 | | | | 178.29 | | | | 180.75 | |

The following historical selected financial data has been derived from the [added: consolidated] financial statements of Quanta.

| | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |

| Revenues | | $ | [removed: 7,572,436] [added: 7,651,319] | | | $ | [removed: 7,747,229] [added: 7,572,436] | | | $ | [removed: 6,411,577] [added: 7,747,229] | | | $ | [removed: 5,825,085] [added: 6,411,577] | | | $ | [removed: 4,103,756] [added: 5,825,085] | |

| Cost of services (including depreciation) | | | [removed: 6,648,771] [added: 6,637,519] | | | | [removed: 6,578,435] [added: 6,648,771] | | | | [removed: 5,424,644] [added: 6,578,435] | | | | [removed: 4,953,176] [added: 5,424,644] | | | | [removed: 3,604,706] [added: 4,953,176] | [removed: (e)] |

| Gross profit | | | [removed: 923,665] [added: 1,013,800] | | | | [removed: 1,168,794] [added: 923,665] | | | | [removed: 986,933] [added: 1,168,794] | | | | [removed: 871,909] [added: 986,933] | | | | [removed: 499,050] [added: 871,909] | |

| Selling, general and administrative expenses | | | [added: 653,338 | | | |] 592,863 | | | | 705,477 | (c) | | | 485,069 | | | | 421,726 | | [removed: | | 325,791 | |]

| Amortization of intangible assets | | | [removed: 34,848] [added: 31,685] | | | | [removed: 34,257] [added: 34,848] | | | | [removed: 25,865] [added: 34,257] | | | | [removed: 34,049] [added: 25,865] | | | | [removed: 25,034] [added: 34,049] | |

| Asset impairment charges [added: (a)] | | | [removed: 58,451] [added: 7,964] | [removed: (a)] | | | [removed: —] [added: 58,451] | | | | — | | | | — | | | | — | |

| Operating income | | | [removed: 237,503] [added: 320,813] | | | | [removed: 429,060] [added: 237,503] | | | | [removed: 475,999] [added: 429,060] | | | | [removed: 416,134] [added: 475,999] | | | | [removed: 148,225] [added: 416,134] | |

| Interest expense | | | [removed: (8,024] [added: (14,887] | ) | | | [removed: (4,765] [added: (8,024] | ) | | | [removed: (2,668] [added: (4,765] | ) | | | [removed: (3,746] [added: (2,668] | ) | | | [removed: (1,803] [added: (3,746] | ) |

| Interest income | | | [removed: 1,493] [added: 2,423] | | | | [removed: 3,736] [added: 1,493] | | | | [removed: 3,378] [added: 3,736] | | | | [removed: 1,471] [added: 3,378] | | | | [removed: 1,066] [added: 1,471] | |

| Equity in earnings (losses) of unconsolidated affiliates, including gain on sale of investment | | | [added: (979 | ) | | |] (466 | ) | | | (332 | ) | | | 112,744 | (d) | | | 2,084 | | [removed: | | — | |]

| Other income (expense), net | | | [removed: (1,831] [added: 316] | [removed: )] | | | [removed: (1,100] [added: (1,831] | ) | | | [removed: (1,133] [added: (1,100] | ) | | | [removed: (349] [added: (1,133] | ) | | | [removed: (596] [added: (349] | ) |

| Income from continuing operations before income taxes | | | [removed: 228,675] [added: 307,686] | | | | [removed: 426,599] [added: 228,675] | | | | [removed: 588,320] [added: 426,599] | | | | [removed: 415,594] [added: 588,320] | | | | [removed: 146,892] [added: 415,594] | |

| Provision for income taxes (b) | | | [removed: 97,472] [added: 107,246] | | | | [removed: 139,007] [added: 97,472] | | | | [removed: 196,875] [added: 139,007] | | | | [removed: 139,988] [added: 196,875] | | | | [removed: 43,434] [added: 139,988] | |

| Net income from continuing operations | | | [removed: 131,203] [added: 200,440] | | | | [removed: 287,592] [added: 131,203] | | | | [removed: 391,445] [added: 287,592] | | | | [removed: 275,606] [added: 391,445] | | | | [removed: 103,458] [added: 275,606] | |

| Net income [added: (loss)] from discontinued operations | | | [removed: 190,621] [added: (342] | [added: )] | | | [removed: 27,490] [added: 190,621] | | | | [removed: 29,864] [added: 27,490] | | | | [removed: 47,050] [added: 29,864] | | | | [removed: 40,958] [added: 47,050] | |

| Net income | | | [removed: 321,824] [added: 200,098] | | | | [removed: 315,082] [added: 321,824] | | | | [removed: 421,309] [added: 315,082] | | | | [removed: 322,656] [added: 421,309] | | | | [removed: 144,416] [added: 322,656] | |

| Less: Net income attributable to non-controlling interests | | | [removed: 10,917] [added: 1,715] | | | | [removed: 18,368] [added: 10,917] | | | | [removed: 19,388] [added: 18,368] | | | | [removed: 16,027] [added: 19,388] | | | | [removed: 11,901] [added: 16,027] | |

| Net income attributable to common stock | | $ | [removed: 310,907] [added: 198,383] | | | $ | [removed: 296,714] [added: 310,907] | | | $ | [removed: 401,921] [added: 296,714] | | | $ | [removed: 306,629] [added: 401,921] | | | $ | [removed: 132,515] [added: 306,629] | |

| Net income from continuing operations | | $ | [removed: 120,286] [added: 198,725] | | | $ | [removed: 269,224] [added: 120,286] | | | $ | [removed: 372,057] [added: 269,224] | | | $ | [removed: 259,579] [added: 372,057] | | | $ | [removed: 91,557] [added: 259,579] | |

| Basic earnings per share attributable to common stock from continuing operations | | $ | [removed: 0.62] [added: 1.26] | | | $ | [removed: 1.22] [added: 0.62] | | | $ | [removed: 1.73] [added: 1.22] | | | $ | [removed: 1.22] [added: 1.73] | | | $ | [removed: 0.43] [added: 1.22] | |

| Diluted earnings per share attributable to common stock from continuing operations | | $ | [removed: 0.62] [added: 1.26] | | | $ | [removed: 1.22] [added: 0.62] | | | $ | [removed: 1.73] [added: 1.22] | | | $ | [removed: 1.22] [added: 1.73] | | | $ | [removed: 0.43] [added: 1.22] | |

| (a) | [removed: During the fourth quarter of] [added: In 2016 and] 2015, we recorded total asset impairment charges of [added: $8.0 million ($7.1 million net of tax) and] $58.5 million ($44.6 million net of tax). [removed: These impairment] [added: The] charges [added: recorded in 2016 primarily relate to a pending disposition of certain international renewable energy services operations. The charges recorded in 2015] related to goodwill, intangible assets and property and [removed: equipment. Included in these charges was] [added: equipment, including] a $39.8 million goodwill impairment and a $12.1 million [removed: impairment related to customer relationships, trade names and non-compete agreement intangible assets. These goodwill and intangible] |

| (b) | The effective tax rate was [removed: higher] [added: lower] in [added: 2016 primarily due to $20.5 million in tax benefits from decreases in reserves for uncertain tax positions, which resulted from the expiration of federal and state statute of limitations periods. The effective tax rate in] 2015 [added: was higher primarily] due to a lower proportion of income before taxes from international [removed: jurisdictions, which are generally taxed at lower statutory rates.] [added: jurisdictions.] Additionally, certain [removed: of the] asset impairments recorded [added: in 2015] were not [removed: deductible for] tax [removed: purposes. A] [added: deductible, and a] change in the Alberta provincial statutory income [removed: tax, effective as of June 1, 2015] [added: tax] resulted in additional taxes of $5.0 million. [removed: These negative impacts were partially offset by the realization of $4.2 million in tax benefits associated with the realization of a previously unrecognized deferred tax asset related to our investment in a foreign subsidiary. The effective tax rate in 2015 did not reflect a significant decrease in reserves for uncertain tax positions because] [added: In addition,] the [removed: statute of limitations remains open for various tax years currently under audit. The] effective tax rates in 2014, [removed: 2013, 2012] [added: 2013] and [removed: 2011] [added: 2012] were impacted by [removed: the recording of] $8.1 million, $9.9 [removed: million, $7.8] million and [removed: $8.4] [added: $7.8] million [removed: of] [added: in] tax benefits [removed: in each respective year] primarily due to decreases in reserves for uncertain tax positions resulting from the expiration of [removed: various] federal and state statute of limitations periods. |

| (c) | In 2014, selling, general and administrative expenses included a $102.5 million charge to provision for long-term contract receivable associated with an electric power infrastructure services project [removed: completed in 2012. Additionally, we recorded] [added: and a] $38.8 million [removed: of] expense resulting from an arbitration decision associated with a contract dispute on a [removed: 2010] directional drilling project. |

| (d) | In 2013, we recorded a pre-tax gain of approximately $112.7 million from the sale of all of our equity ownership interest in Howard Midstream Energy Partners, [removed: LLC (HEP).] [added: LLC.] |

| Working capital [removed: (a)] | | $ | [removed: 1,073,775] [added: 1,083,517] | | | $ | [removed: 1,389,393] [added: 1,073,775] | | | $ | [removed: 1,226,012] [added: 1,389,393] | | | $ | [removed: 1,310,405] [added: 1,226,012] | | | $ | [removed: 950,535] [added: 1,310,405] | |

| Goodwill | | | [removed: 1,552,658] [added: 1,603,169] | | | | [removed: 1,596,695] [added: 1,552,658] | | | | [removed: 1,445,927] [added: 1,596,695] | | | | [removed: 1,202,854] [added: 1,445,927] | | | | [removed: 1,136,020] [added: 1,202,854] | |

| Total assets | | | [removed: 5,213,543] [added: 5,354,059] | | | | [removed: 6,253,583] [added: 5,213,543] | | | | [removed: 5,731,982] [added: 6,253,583] | | | | [removed: 5,111,408] [added: 5,731,982] | | | | [removed: 4,656,951] [added: 5,111,408] | |

| Long-term debt, net of current maturities | | | [removed: 475,364] [added: 353,562] | | | | [removed: 72,489] [added: 475,364] | | | | [removed: 1,053] [added: 72,489] | | | | [removed: —] [added: 1,053] | | | | — | |

| Total stockholders’ equity | | | [removed: 3,085,494] [added: 3,339,427] | | | | [removed: 4,514,473] [added: 3,085,494] | | | | [removed: 4,234,188] [added: 4,514,473] | | | | [removed: 3,766,548] [added: 4,234,188] | | | | [removed: 3,381,952] [added: 3,766,548] | |

| Net income (loss) from discontinued operations | | | (342 | ) | | | 190,621 | | | | 27,490 | | | | 29,864 | | | | 47,050 | |

| Net income attributable to common stock | | $ | 198,383 | | | $ | 310,907 | | | $ | 296,714 | | | $ | 401,921 | | | $ | 306,629 | |

##### [Index to Financial Statements](#INDEX)

| | impairment to customer relationships, trade names and non-compete agreement intangible assets. These charges were primarily attributable to lower levels of expected activity in the U.S. Gulf of Mexico and, to a lesser extent, due to the extended low commodity price environment with respect to certain directional drilling operations in Australia. In 2015, we also recorded a $6.6 million impairment to property and equipment associated with the same international renewable energy services operations. |

| | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | |

##### [Index to Financial Statements](#INDEX)

| --- | --- |

| | impairments primarily resulted from lower forecasted oil and gas services revenues for our Gulf of Mexico operations and certain operations in Australia, due to the extended low commodity price environment. Additionally, we recorded a property and equipment impairment of $6.6 million related to certain international renewable energy services operations. |

| (e) | In 2011, cost of services included a $32.6 million charge related to our partial withdrawal from an underfunded pension plan. For additional information, see _Collective Bargaining Agreements_ in Note 15 of the Notes to Consolidated Financial Statements in Item 8. _Financial Statements and Supplementary Data._ |

| (a) | During the quarter ended December 31, 2015, we adopted an accounting update that was issued by the FASB that requires deferred tax assets and liabilities to be classified as non-current in a classified balance sheet. The guidance has been applied retrospectively to all periods presented. |

| [Report of [removed: Management](#tx69866_100)] [added: Management](#tx295903_22)] | | | [removed: 81] [added: 86] | |

| [Report of Independent Registered Public Accounting [removed: Firm](#tx69866_101)] [added: Firm](#tx295903_23)] | | | [removed: 83] [added: 88] | |

| [Consolidated Balance [removed: Sheets](#tx69866_102)] [added: Sheets](#tx295903_24)] | | | [removed: 85] [added: 90] | |

| [Consolidated Statements of [removed: Operations](#tx69866_103)] [added: Operations](#tx295903_25)] | | | [removed: 86] [added: 91] | |

| [Consolidated Statements of Comprehensive [removed: Income](#tx69866_104)] [added: Income](#tx295903_26)] | | | [removed: 87] [added: 92] | |

| [Consolidated Statements of Cash [removed: Flows](#tx69866_105)] [added: Flows](#tx295903_27)] | | | [removed: 88] [added: 93] | |

| [Consolidated Statements of [removed: Equity](#tx69866_106)] [added: Equity](#tx295903_28)] | | | [removed: 89] [added: 94] | |

| [Notes to Consolidated Financial [removed: Statements](#tx69866_107)] [added: Statements](#tx295903_29)] | | | [removed: 90] [added: 95] | |

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the criteria established in _Internal [removed: Control — Integrated] [added: Control_ _—_ _Integrated] Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, [removed: 2015] [added: 2016] to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

The effectiveness of Quanta Services, Inc.’s internal control over financial reporting as of December 31, [removed: 2015] [added: 2016] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which appears herein.

Management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, [removed: 2015] [added: 2016] excluded the [removed: 11] [added: five] acquisitions we completed in [removed: 2015.][added: 2016.]

These acquisitions comprised approximately [removed: 1.4%] [added: 1.3% and 0.9%] of our consolidated assets and revenues as of and for the year ended December 31, [removed: 2015.][added: 2016.]

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, cash flows and equity, present fairly, in all material respects, the financial position of Quanta Services, Inc. and its subsidiaries at December 31, [removed: 2015] [added: 2016] and [removed: December 31, 2014,] [added: 2015,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2015] [added: 2016] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2015,] [added: 2016,] based on criteria established in _Internal [removed: Control — Integrated] [added: Control_ _—_ _Integrated] Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded its [removed: 2015] [added: 2016] acquisitions from its assessment of internal control over financial reporting as of December 31, [removed: 2015] [added: 2016] because these acquisitions were made by the Company through purchase business combinations during [removed: 2015.][added: 2016.]

We have also excluded the Company’s [removed: 2015] [added: 2016] acquisitions from our audit of internal control over financial reporting.

The [removed: 2015] [added: 2016] acquisitions of the Company and its related subsidiaries are wholly owned subsidiaries of the

Company and have total assets and revenues which represent approximately [removed: 1.4%] [added: 1.3% and 0.9%, respectively,] of the related consolidated financial statement amounts as of and for the year ended December 31, [removed: 2015.][added: 2016.]

| | | [added: 2016 | | | |] 2015 | | | | 2014 | | |

| Current [removed: Assets:] [added: assets] | | [added: $] | [added: 24,233] | | | [added: $] | [added: 35,188] | |

| Cash and cash [removed: equivalents] [added: equivalents, beginning of year] | | [removed: $] | 128,771 | | | [removed: $] | 190,515 | | [added: | | 488,777 | |]

| Accounts receivable, net of allowances of [removed: $5,226] [added: $2,752] and [removed: $6,174] [added: $5,226] | | | [removed: 1,621,133] [added: 1,500,115] | | | | [removed: 1,801,110] [added: 1,621,133] | |

| Costs and estimated earnings in excess of billings on uncompleted contracts | | | [removed: 317,745] [added: 473,308] | | | | [removed: 290,447] [added: 317,745] | |

| Inventories | | | [removed: 75,285] [added: 88,548] | | | | [removed: 38,921] [added: 75,285] | |

| Prepaid expenses and other current assets | | | [removed: 134,585] [added: 114,591] | | | | [removed: 161,024] [added: 134,585] | |

| Current [removed: assets] [added: liabilities] of discontinued operations | | | — | | | | [removed: 13,687] [added: 15,313] | |

| Total current assets | | | [removed: 2,277,519] [added: 2,288,745] | | | | [removed: 2,495,704] [added: 2,277,519] | |

| Property and equipment, net of accumulated depreciation of [removed: $755,272] [added: $862,825] and [removed: $651,559] [added: $755,272] | | | [removed: 1,101,959] [added: 1,174,094] | | | | [removed: 1,099,574] [added: 1,101,959] | |

| Other assets, net | | | [removed: 76,333] [added: 101,028] | | | | [removed: 78,964] [added: 76,333] | |

| Other intangible assets, net of accumulated amortization of [removed: $264,674] [added: $297,313] and [removed: $225,367] [added: $264,674] | | | [removed: 205,074] [added: 187,023] | | | | [removed: 243,584] [added: 205,074] | |

| Goodwill | | | [removed: 1,552,658] [added: 1,603,169] | | | | [removed: 1,596,695] [added: 1,552,658] | |

| Total assets | | $ | [removed: 5,213,543] [added: 5,354,059] | | | $ | [removed: 6,253,583] [added: 5,213,543] | |

| Current [removed: Liabilities: | | | |] [added: liabilities:] | | | | |

| Current maturities of long-term debt and short-term [removed: borrowings] [added: debt] | | $ | [removed: 7,067] [added: 7,563] | | | $ | [removed: 8,876] [added: 7,067] | |

| Accounts payable and accrued expenses | | | [removed: 782,134] [added: 922,819] | | | | [removed: 825,231] [added: 782,134] | |

| Billings in excess of costs and estimated earnings on uncompleted contracts | | | [removed: 399,230] [added: 274,846] | | | | [removed: 251,113] [added: 399,230] | |

| [removed: Current] [added: Total current] liabilities of discontinued operations [added: as presented in the consolidated balance sheets] | | [added: $] | 15,313 | | [removed: | | 21,091 | |]

| Total current liabilities | | | [removed: 1,203,744] [added: 1,205,228] | | | | [removed: 1,106,311] [added: 1,203,744] | |

| Long-term debt and notes payable, net of current maturities | | | [removed: 475,364] [added: 353,562] | | | | [removed: 72,489] [added: 475,364] | |

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

March 1, 2017

##### [Index to Financial Statements](#INDEX)

| | | 2016 | | | | 2015 | | |

| Cash and cash equivalents | | $ | 112,183 | | | $ | 128,771 | |

##### [Index to Financial Statements](#INDEX)

| Net income (loss) from discontinued operations | | | (342 | ) | | | 190,621 | | | | 27,490 | |

| Net income attributable to common stock | | $ | 198,383 | | | $ | 310,907 | | | $ | 296,714 | |

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

| Net income | | $ | 200,098 | | | $ | 321,824 | | | $ | 315,082 | |

| Amortization of intangible assets | | | 31,685 | | | | 34,848 | | | | 34,257 | |

| Asset impairment charges | | | 7,964 | | | | 58,451 | | | | — | |

##### [Index to Financial Statements](#INDEX)

| Vests in deferred compensation plan | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,592 | | | | — | | | | — | | | | (6,592 | ) | | | — | | | | — | | | | — | |

| Other comprehensive income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 23,016 | | | | — | | | | 23,016 | | | | — | | | | 23,016 | |

| Acquisitions | | | 70,840 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,508 | | | | — | | | | — | | | | — | | | | 1,508 | | | | — | | | | 1,508 | |

| Restricted stock and restricted stock unit activity | | | 760,395 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 42,843 | | | | — | | | | — | | | | (8,338 | ) | | | 34,505 | | | | — | | | | 34,505 | |

| Settlement of accelerated stock repurchases | | | (9,413,640 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 150,000 | | | | — | | | | — | | | | (150,000 | ) | | | — | | | | — | | | | — | |

| Vests in deferred compensation plan | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,822 | | | | — | | | | — | | | | (6,822 | ) | | | — | | | | — | | | | — | |

| Retirement of treasury stock | | | — | | | | (1 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,946,128 | ) | | | — | | | | — | | | | 1,946,129 | | | | — | | | | — | | | | — | |

| Net income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 198,383 | | | | — | | | | — | | | | 198,383 | | | | 1,715 | | | | 200,098 | |

| Balance, December 31, 2016 | | | 144,710,773 | | | $ | 1 | | | | 6,515,453 | | | $ | — | | | | 1 | | | $ | — | | | | 1 | | | $ | — | | | $ | 1,749,306 | | | $ | 1,876,081 | | | $ | (271,673 | ) | | $ | (14,288 | ) | | $ | 3,339,427 | | | $ | 3,275 | | | $ | 3,342,702 | |

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

Quanta’s ability to collect amounts due from them.

##### [Index to Financial Statements](#INDEX)

Quanta also recorded asset impairments primarily related to certain international renewable energy services operations of $8.0 million in 2016 and $6.6 million in 2015.

##### [Index to Financial Statements](#INDEX)

quantitative impairment test is required.

##### [Index to Financial Statements](#INDEX)

| Discount rates | | 12.5% to 14.5% | | 12.0% to 16.0% | | 12.0% to 14.0% |

After taking into account a 10% decrease in the fair value of each of Quanta’s reporting units, two reporting units within Quanta’s Oil and Gas Infrastructure Division had fair values below their respective carrying values.

Quanta recorded asset impairment charges for these reporting units in 2015.

The fair values determined in 2016 for these reporting units were consistent with the fair values determined in 2015, accordingly the fair values approximate the current carrying values.

As discussed in Note 3 to the consolidated financial statements, the Company has changed the manner in which it accounts for the presentation of deferred income taxes in 2015.

February 29, 2016

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Non-current assets of discontinued operations | | | — | | | | 739,062 | |

| Non-current liabilities of discontinued operations | | | — | | | | 105,532 | |

| (Increase) decrease in — | | | | | | | | | | | | |

| Increase (decrease) in — | | | | | | | | | | | | |

| Cash and cash equivalents, beginning of year | | | 190,515 | | | | 488,777 | | | | 394,701 | |

| Balance, December 31, 2012 | | | 209,270,586 | | | $ | 2 | | | | 3,909,110 | | | $ | — | | | | 1 | | | $ | — | | | | — | | | $ | — | | | $ | 3,287,086 | | | $ | 668,156 | | | $ | 14,453 | | | $ | (203,149 | ) | | $ | 3,766,548 | | | $ | 5,368 | | | $ | 3,771,916 | |

| Other comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (51,689 | ) | | | — | | | | (51,689 | ) | | | — | | | | (51,689 | ) |

| Acquisitions | | | 3,547,482 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 88,896 | | | | — | | | | — | | | | — | | | | 88,896 | | | | — | | | | 88,896 | |

| Restricted stock activity | | | (358,753 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 35,876 | | | | — | | | | — | | | | (12,091 | ) | | | 23,785 | | | | — | | | | 23,785 | |

| Net income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 401,921 | | | | — | | | | — | | | | 401,921 | | | | 19,388 | | | | 421,309 | |

| Deferral plan shares | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 874 | | | | — | | | | — | | | | (874 | ) | | | — | | | | — | | | | — | |

| Deferral plan shares | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,592 | | | | — | | | | — | | | | (6,592 | ) | | | — | | | | — | | | | — | |

During 2013, Quanta acquired six businesses, which included three electric power infrastructure services companies and three oil and gas infrastructure services companies based throughout the United States, Canada and Australia.

assumptions derived from information available at the time such judgments and estimates are made.

Quanta did not recognize any asset impairments during the years ended December 31, 2014 or 2013.

During 2013, Quanta incurred $3.2 million of debt issuance costs related to the amendment and restatement of its credit agreement and recorded a nominal charge to interest expense for the write-off of a portion of the debt issuance costs related to the prior facility.

Qualitative indicators including deterioration in macroeconomic

| Discount rates | | 12% to 16% | | 12% to 14% | | 12% to 14% |

Accordingly, during the fourth quarter of 2015, Quanta recorded a $39.8 million non-cash charge for the impairment of goodwill which primarily resulted from lower forecasted oil and gas services revenues for its Gulf of Mexico operations and certain operations in Australia, due to the extended low commodity price environment.

After giving consideration to a 10% decrease in the fair value of each of Quanta’s reporting units, the results of the assessment at December 31, 2015 did not change.

have been evaluated by management.

In connection with the 2015 assessment, projected annual growth rates by reporting unit varied widely with ranges from (28%) to 54%.

The two reporting units impacted are in Quanta’s Oil and Gas Infrastructure Services Division.

an unincorporated VIE (e.g., a general partnership interest), such amounts are consolidated on a basis proportional to Quanta’s ownership interest in the unincorporated entity.

On December 6, 2013, Quanta sold all of its equity ownership interest in Howard Midstream Energy Partners, LLC (HEP) for proceeds of approximately $220.9 million, which resulted in a pre-tax gain of approximately $112.7 million.

HEP is engaged in the business of owning, operating and constructing midstream plant and pipeline assets in the oil and gas industry.

Quanta held an equity ownership interest of approximately 31% in HEP.

contract value, contract cost and contract profit are recorded as necessary in the period in which the revisions are determined.

Quanta is currently under examination by the Internal Revenue Service (IRS) for tax years 2010, 2011 and 2012, and the federal statute of limitations for examination of all subsequent tax years remains open.

For the 2012-2013 policy year, deductibles for general liability, auto liability and workers’ compensation were $5.0 million per occurrence, and the deductible for employer’s liability was $1.0 million per occurrence.

purposes; however, for accounting purposes, certain transactions may not meet the criteria for cash flow hedge accounting.

transaction between market participants.

In April 2014, the Financial Accounting Standards Board (FASB) issued an update that changes the requirement for reporting discontinued operations.

A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the entity or group of components of an entity meets the criteria to be classified as held for sale or when it is disposed of by sale or other than by sale.

The update also requires additional disclosures about discontinued operations, a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements, and an entity’s significant continuing involvement with a discontinued operation.

Quanta adopted this guidance effective January 1, 2015 and has incorporated the new requirements into its presentation of the disposition of its fiber optic licensing operations as discontinued operations.

Based on this evaluation, these officers have concluded that, as of December 31, [removed: 2015,] [added: 2016,] our disclosure controls and procedures were effective to provide reasonable assurance of achieving their objectives.

There has been no change in our internal control over financial reporting that occurred during the quarter ended December 31, [removed: 2015] [added: 2016] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

##### [Index to Financial Statements](#INDEX)

##### [Index to Financial Statements](#INDEX)

The information required by this Item 10 is incorporated by reference to our definitive proxy statement, which is to be filed with the SEC pursuant to the Exchange Act within 120 days following the end of our [removed: 2015] [added: 2016] fiscal year.

The information required by this Item 11 is incorporated by reference to our definitive proxy statement, which is to be filed with the SEC pursuant to the Exchange Act within 120 days following the end of our [removed: 2015] [added: 2016] fiscal year.