ACQUISITIONS:

2017 Acquisitions

On July 20, 2017, Quanta acquired Stronghold, a specialized services business located in the United States that provides high-pressure and critical-path solutions to the downstream and midstream energy markets. The aggregate consideration included $351.0 million in cash, subject to certain adjustments, and 2,693,680 shares of Quanta common stock, which had a fair value of $81.3 million at the acquisition date. Additionally, the acquisition includes the potential payment of up to $100.0 million of contingent consideration, payable if the acquired business achieves certain financial targets over a three-year period. Based on the estimated fair value of this contingent consideration, Quanta recorded a $51.1 million liability as of the acquisition date. The results of the acquired business have generally been included in Quanta’s Oil and Gas Infrastructure Services segment and consolidated financial statements since the acquisition date.

During the year ended December 31, 2017, Quanta also acquired a communications infrastructure services contractor and an electrical and communications contractor, both of which are located in the United States. The aggregate consideration for these acquisitions consisted of $11.9 million paid or payable in cash, subject to certain adjustments, and 288,666 shares of Quanta common stock, with a value of $8.3 million as of the respective acquisition dates. The results of the acquired businesses have generally been included in Quanta’s Electric Power Infrastructure Services segment and consolidated financial statements since the acquisition dates.

Quanta is in the process of finalizing its assessments of the fair values of the acquired assets and assumed liabilities related to businesses acquired during 2017, and further adjustments to the purchase price allocations may occur. As of December 31, 2017, the estimated fair values of the net assets acquired were preliminary, with possible updates primarily related to certain tax estimates. The aggregate purchase consideration of the businesses acquired during 2017 was preliminarily allocated to acquired assets and assumed liabilities, which resulted in an allocation of $97.4 million to net tangible assets, $103.8 million to identifiable intangible assets and $302.4 million to goodwill.

2016 Acquisitions

During 2016, Quanta completed five acquisitions. The results of four of the acquired businesses are generally included in Quanta’s Electric Power Infrastructure Services segment. These businesses included an electrical infrastructure services business located in Australia, a utility contracting business located in Canada, a full service medium- and high-voltage powerline contracting business located in the United States and a communications services business located in Canada. Quanta also acquired a pipeline services contractor located in the United States, the results of which are generally included in Quanta’s Oil and Gas Infrastructure Services segment. The aggregate consideration for these acquisitions consisted of $75.9 million paid or payable in cash, subject to certain adjustments, 70,840 shares of Quanta common stock valued at $1.5 million as of the settlement date of the applicable acquisition, and contingent consideration payments of up to $39.5 million, payable if financial targets are achieved by certain of the acquired businesses. Based on the estimated fair value of this contingent consideration, Quanta recorded a total of $18.7 million in liabilities as of the applicable acquisition dates. The results of the acquired businesses have been included in Quanta’s consolidated financial statements since the acquisition dates.

2015 Acquisitions

During 2015, Quanta acquired 11 businesses. The results of eight of the acquired businesses are generally included in Quanta’s Electric Power Infrastructure Services segment. These businesses included a foundation services business located in the United States, an electrical contracting business located in the United States, an electrical engineering business located in Australia, a powerline construction business located in the United States, an engineering business located in Canada, an engineering, procurement and construction services business based in the United States, an underground construction contracting business located in Canada, and a supplier and material procurement specialist for the power and utility industry in Canada. The results of the remaining three acquired businesses are generally included in Quanta’s Oil and Gas Infrastructure Services segment. These businesses include a business that services above-ground storage tanks in the United States, an underground utility distribution contractor that provides services to gas and electric utilities in Canada, and a business that specializes in the engineering, procurement, construction, and commissioning of compression and surface facilities for the high pressure gas industry in Australia. The aggregate consideration for these acquisitions consisted of $110.6 million paid or payable in cash, subject to certain adjustments, 461,037 shares of Quanta common stock valued at $10.1 million as of the settlement dates of the applicable acquisitions, and contingent consideration payments with an estimated fair value of $1.0 million as of the applicable acquisition date. The results of the acquired businesses have been included in Quanta’s consolidated financial statements since the acquisition dates.

2017, 2016 and 2015 Acquisitions

The following table summarizes the aggregate consideration paid or payable as of December 31, 2017 for the 2017 and 2016 acquisitions and presents the allocation of these amounts to the net tangible and identifiable intangible assets based on their estimated fair values as of the respective acquisition dates, inclusive of any purchase price adjustments. This allocation requires a significant use of estimates and is based on information that was available to management at the time these consolidated financial statements were prepared. Quanta uses a variety of information to estimate fair values, including quoted market prices, carrying values and valuation techniques such as discounted cash flows. Third-party appraisal firms are engaged to assist in fair value determination of fixed assets, intangible assets and certain other assets and liabilities when appropriate (in thousands).



	2017						2016
	Stronghold			Other Acquisitions			All Acquisitions
Consideration:
Cash paid or payable	$	351,014		$	11,904		$	75,941
Value of Quanta common stock issued	81,337			8,267			1,508
Contingent consideration	51,084			—			18,683
Fair value of total consideration transferred or estimated to be transferred	$	483,435		$	20,171		$	96,132

Accounts receivable	$	77,478		$	7,157		$	14,414
Costs and estimated earnings in excess of billings on uncompleted contracts	11,913			193			1,237
Other current assets	20,914			170			8,582
Property and equipment	51,258			1,480			44,863
Other assets	1,513			12			2,553
Identifiable intangible assets	95,700			8,091			11,467
Current liabilities	(71,835		)	(2,798		)	(12,097		)
Deferred tax liabilities, net	—			—			(13,484		)
Other long-term liabilities	(48		)	—			(5,326		)
Total identifiable net assets	186,893			14,305			52,209
Goodwill	296,542			5,866			43,923
	$	483,435		$	20,171		$	96,132

Goodwill represents the excess of the purchase price over the net amount of the fair values assigned to assets acquired and liabilities assumed. The 2017, 2016 and 2015 acquisitions strategically expanded Quanta’s Canadian, Australian and domestic electric power, oil and gas and communications service offerings, which Quanta believes contributes to the recognition of the goodwill. In connection with the 2017 acquisitions, as of the acquisition dates and inclusive of purchase price adjustments, goodwill of $5.9 million was recorded for the acquired businesses that were included within Quanta’s Electric Power Infrastructure Services Division, and goodwill of $296.5 million was recorded for Stronghold, which was included within Quanta’s Oil and Gas Infrastructure Services Division. In connection with the 2016 acquisitions, as of the acquisition dates and inclusive of purchase price adjustments, goodwill of $23.6 million was recorded for the acquired businesses included within Quanta’s Electric Power Infrastructure Services Division and goodwill of $20.3 million was recorded for the acquired business included within Quanta’s Oil and Gas Infrastructure Services Division. In connection with the 2015 acquisitions, as of the acquisition dates and inclusive of purchase price adjustments, goodwill of $31.5 million was recorded for acquired businesses that were included within Quanta’s Electric Power Infrastructure Services Division, and goodwill of $20.4 million was recorded for the acquired businesses that were included within Quanta’s Oil and Gas Infrastructure Services Division. Goodwill of $302.4 million related to the 2017 acquisitions is expected to be deductible for income tax purposes, and goodwill of $2.0 million related to the 2016 acquisitions is expected to be deductible for income tax purposes.

The following table summarizes the estimated fair values of identifiable intangible assets for the 2017 acquisitions as of the acquisition dates and the related weighted average amortization periods by type (in thousands, except for weighted average amortization periods, which are in years).



	Estimated		Weighted Average
	Fair Value		Amortization Period in Years
Customer relationships	$	76,213	6.8
Backlog	333		2.0
Trade names	18,815		15.0
Non-compete agreements	8,430		5.0
Total intangible assets subject to amortization acquired in 2017 acquisitions	$	103,791	8.1

The following unaudited supplemental pro forma results of operations have been provided for illustrative purposes only and do not purport to be indicative of the actual results that would have been achieved by the combined companies for the periods presented or that may be achieved by the combined companies in the future. Future results may vary significantly from the results reflected in the following pro forma financial information because of future events and transactions, as well as other factors (in thousands, except per share amounts):



	Year Ended December 31,
	2017		2016		2015
Revenues	$	9,712,820	$	8,183,104	$	7,770,744
Gross profit	$	1,301,322	$	1,129,661	$	956,925
Selling, general and administrative expenses	$	821,084	$	734,900	$	612,979
Amortization of intangible assets	$	40,356	$	46,579	$	39,947
Net income from continuing operations	$	320,768	$	207,956	$	136,608
Net income from continuing operations attributable to common stock	$	317,521	$	206,241	$	125,691

Earnings per share from continuing operations:
Basic	$	2.01	$	1.29	$	0.64
Diluted	$	2.00	$	1.29	$	0.64

The pro forma combined results of operations for the years ended December 31, 2017 and 2016 were prepared by adjusting the historical results of Quanta to include the historical results of the 2017 acquisitions as if they occurred January 1, 2016. The pro forma combined results of operations for the year ended December 31, 2016 have also been prepared by adjusting the historical results of Quanta to include the historical results of the 2016 acquisitions as if they occurred January 1, 2015. The pro forma combined results of operations for the year ended December 31, 2015 have been prepared by adjusting the historical results of Quanta to include the historical results of the 2016 acquisitions as if they occurred January 1, 2015 and the historical results of the 2015 acquisitions as if it occurred January 1, 2014. These pro forma combined historical results were adjusted for the following: a reduction of interest expense as a result of the repayment of outstanding indebtedness of the acquired businesses; a reduction of interest income or an increase in interest expense as a result of the cash consideration paid net of cash received; an increase in amortization expense due to the incremental intangible assets recorded; changes in depreciation expense within cost of services to adjust acquired property and equipment to the acquisition date fair value and to conform with Quanta’s accounting policies; an increase in the number of outstanding shares of Quanta common stock; and reclassifications to conform the acquired companies’ presentation to Quanta’s accounting policies. The pro forma results of operations do not include any adjustments to eliminate the impact of acquisition related costs or any cost savings or other synergies that resulted or may result from the acquisitions. As noted above, the pro forma results of operations do not purport to be indicative of the actual results that would have been achieved by the combined company for the periods presented or that may be achieved by the combined company in the future.

Revenues of approximately $207.4 million and a loss from continuing operations before income taxes of approximately $8.1 million, which included $5.4 million of acquisition-related costs, were included in Quanta’s consolidated results of operations for the year ended December 31, 2017 related to the 2017 acquisitions. Revenues of approximately $68.5 million and a loss from continuing operations before income taxes of approximately $5.6 million, which included $0.3 million of acquisition-related costs, were included in Quanta’s consolidated results of operations for the year ended December 31, 2016 related to the 2016 acquisitions. Additionally, revenues of approximately $104.6 million and income from continuing operations before income taxes of approximately $0.3 million, which included $3.6 million of acquisition-related costs, were included in Quanta’s consolidated results of operations for the year ended December 31, 2015 related to the 2015 acquisitions.