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Equity
12 Months Ended
Dec. 31, 2018
Equity [Abstract]  
Equity EQUITY:
Exchangeable Shares and Preferred Stock
In connection with certain prior acquisitions of Canadian businesses, the former owners of the acquired businesses received exchangeable shares of certain Canadian subsidiaries of Quanta, which may be exchanged at the option of the holders for Quanta common stock on a one-for-one basis. The holders of exchangeable shares can make an exchange only once in any calendar quarter and must exchange a minimum of either 50,000 shares or, if less, the total number of remaining exchangeable shares registered in the name of the holder making the request. Additionally, in connection with two of such acquisitions, Quanta issued one share of Quanta Series F preferred stock and one share of Quanta Series G preferred stock to voting trusts on behalf of the respective holders of the exchangeable shares issued in such acquisitions, which provided such holders with voting rights in Quanta common stock equivalent to the number of exchangeable shares outstanding. The share of Series F preferred stock was redeemed and retired effective October 6, 2017. All holders of exchangeable shares have rights equivalent to Quanta common stockholders with respect to dividends and other economic rights.
During 2017 and 2016, 6.0 million and 0.4 million exchangeable shares were exchanged for Quanta common stock. As of December 31, 2018, the Quanta Series G preferred stock remained outstanding and 0.5 million exchangeable shares remained outstanding, of which 0.4 million were associated with the Quanta Series G preferred stock. On January 1, 2019, 0.4 million exchangeable shares were exchanged for Quanta common stock, and the share of Series G preferred stock was redeemed and retired.
Treasury Stock
General
Treasury stock is recorded at cost. Under Delaware corporate law, treasury stock is not counted for quorum purposes or entitled to vote.
Shares withheld for tax withholding obligations
The tax withholding obligations of employees upon vesting of restricted stock, RSUs and performance units settled in common stock are typically satisfied by Quanta making such tax payments and withholding the number of vested shares having a value on the date of vesting equal to the tax withholding obligation. For the settlement of these employee tax liabilities, Quanta withheld 0.4 million shares of Quanta common stock during the year ended December 31, 2018, which had a total market value of $15.2 million, 0.5 million shares of Quanta common stock during the year ended December 31, 2017, which had a total market value of $18.6 million, and 0.4 million shares of Quanta common stock during the year ended December 31, 2016, which had a total market value of $8.3 million. These shares and the related costs to acquire them were accounted for as adjustments to the balance of treasury stock.
Notional amounts recorded related to deferred compensation plans
For RSUs and performance units that vest but the settlement of which is deferred under Quanta’s deferred compensation plans, Quanta records a notional amount to “Treasury stock” and an offsetting amount to “Additional paid-in capital” (APIC). However, the only shares added to outstanding treasury stock at vesting are shares withheld for tax liabilities other than income taxes, as the shares of Quanta common stock associated with deferred equity awards are not issued. Upon settlement of the deferred equity awards and issuance of the associated Quanta common stock, the original accounting entry is reversed. The amounts recorded to treasury stock related to the deferred compensation plans during the years ended December 31, 2018, 2017 and 2016 were $2.5 million, $2.6 million and $6.8 million, respectively.
Retirement of Treasury Stock
Effective December 1, 2016, Quanta retired 84.8 million shares of treasury stock. These retired shares were restored to the status of authorized and unissued shares as permitted by Delaware law. The retired stock had a carrying amount of $1.95 billion. In accordance with Quanta’s policy, Quanta recorded the formal retirement of treasury stock by deducting the par value from common stock and the excess of cost over par value from APIC.
Stock repurchases
During the second quarter of 2017, Quanta’s Board of Directors approved a stock repurchase program that authorized Quanta to purchase, from time to time through June 30, 2020, up to $300.0 million of its outstanding common stock (the 2017 Repurchase Program). During the third quarter of 2018, Quanta’s Board of Directors approved an additional stock repurchase program that authorizes Quanta to purchase, from time to time through June 30, 2021, up to $500.0 million of its outstanding common stock (the 2018 Repurchase Program). Repurchases under these programs can be made in open market and privately negotiated transactions. During the years ended December 31, 2018 and 2017, Quanta repurchased 13.9 million shares of its common stock in the open market at a cost of $451.3 million and 1.4 million shares of its common stock in the open market at a cost of $50.0 million. Quanta’s policy is to record a stock repurchase as of the trade date; however, the payment of cash related to the repurchase is made on the settlement date of the trade. As a result of this policy, during the years ended December 31, 2018 and 2017, cash payments related to stock repurchases were $443.2 million and $50.0 million. At December 31, 2018, $298.7 million remained under the 2018 Repurchase Program.
During the second quarter of 2016, Quanta received 9.4 million shares of its common stock upon completion of an accelerated share repurchase arrangement that was executed under a prior repurchase program. The cash for such shares was paid in 2015.
Non-controlling Interests
Quanta holds interests in various entities through both joint venture entities that provide infrastructure services under specific customer contracts, either directly or through subcontracting relationships, and other equity investments in partially owned entities
that own and operate certain infrastructure assets, including investments that may be entered into through the partnership structure Quanta has formed with certain infrastructure investors. Quanta has determined that certain of these joint ventures where Quanta provides the majority of the infrastructure services, which management believes most significantly influences the economic performance of such joint ventures, are VIEs. Management has concluded that Quanta is the primary beneficiary of these joint ventures and has accounted for each on a consolidated basis. The other parties’ equity interests in these joint ventures have been accounted for as “Non-controlling interests” in Quanta’s consolidated balance sheets. Net income attributable to the other participants in the amounts of $2.7 million, $3.2 million and $1.7 million for the years ended December 31, 2018, 2017 and 2016, respectively, has been accounted for as a reduction of net income in deriving “Net income attributable to common stock” in Quanta’s consolidated statements of operations.
The carrying amount of the investments held by Quanta in all of its VIEs was $9.6 million and $7.8 million at December 31, 2018 and 2017. The carrying amount of investments held by the non-controlling interests in these VIEs at December 31, 2018 and 2017 was $1.3 million and $4.1 million. During the years ended December 31, 2018, 2017 and 2016, net distributions to non-controlling interests were $4.0 million, $2.0 million and $0.8 million. There were also discharges of notes receivable from a joint venture partner of $1.4 million and $0.5 million, which were accounted for as a “Buyout of a non-controlling interest” in the accompanying consolidated statements of equity for the years ended December 31, 2018 and 2017. There were no other changes in equity as a result of transfers to/from the non-controlling interests during the years ended December 31, 2018, 2017 and 2016. See Note 14 for further disclosures related to Quanta’s joint venture arrangements.
Dividends
On December 6, 2018, Quanta’s Board of Directors declared an initial cash dividend of $0.04 per share of its common stock, payable in the first quarter of 2019 to stockholders of record as of January 2, 2019. The declaration, payment and amount of future cash dividends will be at the discretion of Quanta’s Board of Directors after taking into account various factors, including Quanta’s financial condition, results of operations, cash flows from operations, current and anticipated capital requirements and expansion plans, the income tax laws then in effect and the requirements of Delaware law. In addition, as discussed in Note 8, Quanta’s credit agreement restricts the payment of cash dividends unless certain conditions are met.