Note 1—Nature of Business

Organization and operations— Primoris Services Corporation is a holding company of various construction and product engineering subsidiaries. The Company’s underground and directional drilling operations install, replace and repair natural gas, petroleum, telecommunications and water pipeline systems, including large diameter pipeline systems. The Company’s industrial, civil and engineering operations build and provide maintenance services to industrial facilities including power plants, petrochemical facilities, and other processing plants; construct multi-level parking structures; and engage in the construction of highways, bridges and other environmental construction activities. The Company is incorporated in the State of Delaware, and its corporate headquarters are located at 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201.

The following table lists the Company’s primary operating subsidiaries and their reportable operating segment:

Subsidiary		Operating Segment
ARB, Inc. (“ARB”)		West Construction Services
ARB Structures, Inc.		West Construction Services
Q3 Contracting, Inc. (“Q3C”)		West Construction Services
Rockford Corporation (“Rockford”)		West Construction Services
Stellaris, LLC.		West Construction Services
Vadnais Trenchless Services, Inc. (“Vadnais”); acquired in 2014		West Construction Services
OnQuest, Inc.		Engineering
OnQuest, Canada, ULC (Born Heaters Canada, ULC prior to 2013)		Engineering
Cardinal Contractors, Inc.		East Construction Services
James Construction Group, LLC (“JCG”)		East Construction Services
Silva Group (“Silva”)		East Construction Services
Primoris Energy Services Corporation (“PES”)		East Construction Services
BW Primoris, LLC (“BWP”)		East Construction Services

Sprint Pipeline Services, L.P. (“Sprint”) was purchased by PES in 2012. PES has operated using the Sprint name as a DBA during 2012 and 2013. PES acquired two subsidiaries, The Saxon Group (“Saxon”) in 2012 and Force Specialty Services, Inc. (“FSSI”) in 2013. On January 1, 2014, the two subsidiaries were merged into PES. Additionally, the Industrial division of JCG was merged into PES. In this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2014 (the “Second Quarter 2014 Report), references to Sprint, FSSI, Saxon and James Industrial are to the divisions of PES, while the references are to the entities or divisions for periods prior to 2014.

The Company owns 50% of the Blythe Power Constructors joint venture (“Blythe”) for the installation of a parabolic trough solar field and steam generation system in California and its operations are included as part of the West Construction Services segment.

In January 2014, the Company created a wholly owned subsidiary, BW Primoris, LLC, a Texas limited liability company (“BWP”) which will be a part of the East Construction Services segment. BWP’s goal is to develop water projects, primarily in Texas, that will need the Company’s construction services to construct a water treatment system and pipeline. On January 22, 2014, BWP entered into an agreement to purchase the assets of Blaus Wasser, LLC, a Wyoming limited liability company for approximately $5 million. During the 2014 first quarter, BWP entered into an intercompany construction contract with Cardinal Contractors, Inc. to build a small water treatment facility in West Texas; intercompany revenue and profit of the project is eliminated in consolidation.

In May 2014, the Company created a wholly owned subsidiary, Vadnais Trenchless Services, Inc., a California company (“Vadnais”), which will be a part of the West Construction Services segment. On June 5, 2014, the Company purchased assets, consisting of equipment, building and land, from Vadnais Corporation for $6.4 million, a general contractor specializing in micro-tunneling. In addition, the sellers were provided a contingent earnout of $0.9 million if Vadnais achieves at least $2.8 million in EBIT through December 31, 2014.

Unless specifically noted otherwise, as used throughout these consolidated financial statements, “Primoris”, “the Company”, “we”, “our”, “us” or “its” refers to the business, operations and financial results of the Company and its wholly-owned subsidiaries.