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FILED PURSUANT TO 424(b)(1)
Registration No. 333-81419
168,618 Shares
[Logo of Quanta appears here]
Common Stock
The 168,618 shares of our common stock being offered by this prospectus are
being offered by the selling stockholders listed under the heading "Selling
Stockholders" on page 12. The shares of common stock will be sold by the selling
stockholders from time to time.
We will not receive any of the proceeds from the sale of the common stock
by the selling stockholders. Our common stock is traded on the New York Stock
Exchange under the symbol "PWR." On June 18, 1999, the last reported sale price
for the common stock on the New York Stock Exchange was $37.00 per share.
Investing in our common stock involves risks which are described in the section
entitled "Risk Factors" beginning on page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
______________________________
The date of this prospectus is July 1, 1999
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You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not authorized any other
person to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. We are not
making an offer to sell these securities in any jurisdiction where the offer or
sale is not permitted. You should assume that the information appearing in this
prospectus supplement is accurate as of the date on the front cover of this
prospectus supplement only. Our business, financial condition, results of
operations and prospects may have changed since that date.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements, and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements, or other information we file with the SEC at its
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public at the
SEC's web site at http://www.sec.gov. In addition, you can inspect and copy our
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reports, proxy statements and other information at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005, on which our common
stock is listed.
We filed a registration statement on Form S-3 to register with the SEC our
common stock offered by the selling stockholders. This prospectus is part of
that registration statement. As permitted by SEC rules, this prospectus does not
contain all of the information you can find in the registration statement or the
exhibits to the registration statement.
The SEC allows us to "incorporate by reference" the information we filed
with them, which means that we can disclose important information to you by
referring to another document filed separately with the SEC. The information
incorporated by reference is considered to be a part of this prospectus, and
information later filed with the SEC will update and supersede this information.
We incorporate by reference the documents listed below:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1998;
2. Quarterly Report on Form 10-Q for the three months ended March 31,
1999.
3. Current Report on Form 8-K filed February 26, 1999, as amended by Form
8-K/A filed April 23, 1999.
4. Current Report on Form 8-K filed June 17, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning:
Quanta Services, Inc.
Attn: Corporate Secretary
1360 Post Oak Blvd., Suite 2100
Houston, Texas 77056
(713) 629-7600
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of the document.
ABOUT QUANTA SERVICES, INC.
We are a leading provider of specialty contracting and maintenance services
primarily for the electric and telecommunications infrastructure in North
America. We also install transportation
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control and lighting systems and provide specialty contracting services to
commercial and industrial customers.
We are a Delaware corporation and our executive offices are located at 1360
Post Oak Blvd., Suite 2100, Houston, Texas 77056. Our telephone number at that
address is (713) 629-7600.
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the risks described below and the other information
contained in this prospectus before deciding to invest in our common stock. We
believe the following risks represent the known, material risks facing our
company, in addition to the risks which typically face any company in our
industry. If any of the following risks actually occur, our business, financial
condition and operating results could be materially adversely affected. In that
case, the trading price of our common stock could decline, and you could lose a
part or all of your investment.
We have a limited history of operating and integrating our acquired businesses
If we are unable to integrate or successfully manage the companies we have
acquired or may acquire in the future, our business, financial condition and
results of operations could be materially and adversely affected. We were
founded in August 1997 but conducted no operations and generated no revenues
prior to acquiring four businesses in February 1998. These four businesses and
the other businesses we have acquired since February 1998 have been operating as
separate entities and we expect that these businesses and any others we acquire
will continue to operate as separate entities with a large degree of operating
autonomy. To manage the combined enterprise on a profitable basis, we must
institute certain necessary common systems and procedures. We intend to
integrate the computer, accounting and financial reporting systems, and certain
of the operational, administrative, banking and insurance procedures of the
businesses we acquire. However, we cannot be certain that we will successfully
institute these common systems and procedures. In addition, we cannot be certain
that our recently assembled management group will be able to successfully manage
the businesses we acquire as a combined entity and effectively implement our
operating or growth strategies.
There are risks related to our operating and internal growth strategies
A key element of our strategy is to increase the profitability and revenues
of the businesses we acquire. Although we have begun to implement this strategy
by various means, we cannot be certain that we will be able to continue to do so
successfully. Another key component of our strategy is to operate the businesses
we acquire on a decentralized basis, with local management retaining
responsibility for day-to-day operations, profitability and the internal growth
of the individual business. If we do not implement proper overall business
controls, this decentralized operating strategy could result in inconsistent
operating and financial practices at the businesses we acquire, and our overall
profitability could be adversely affected. Our ability to generate internal
growth will be affected by, among other factors, our ability to:
. expand the range of services we offer to customers;
. attract new customers;
. increase the number of projects performed for existing customers;
. hire and retain employees;
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. open additional facilities; and
. reduce operating and overhead expenses.
Many of the factors affecting our ability to generate internal growth may
be beyond our control, and we cannot be certain that our strategies will be
successful or that we will be able to generate cash flow sufficient to fund our
operations and to support internal growth. Our inability to achieve internal
growth could materially and adversely affect our business, financial condition
and results of operations.
We may be unsuccessful in identifying or integrating acquired companies
We have grown rapidly through the acquisition of our 24 existing operating
subsidiaries. A principal part of our business growth strategy will be to make
additional acquisitions on a selective basis as opportunities arise. One of our
principal growth strategies is to increase our revenues and the markets we serve
through the acquisition of additional electric and telecommunications
infrastructure contracting companies. We expect to face competition for
acquisition candidates, which may limit the number of acquisition opportunities
and may lead to higher acquisition prices. We cannot be sure that we will be
able to identify, acquire or profitably manage additional businesses. We also
cannot be sure that we can integrate successfully any acquired businesses with
our other operations without substantial costs, delays or other operational or
financial problems. Further, acquisitions involve a number of special risks
which could materially and adversely affect our business, financial condition
and results of operations. These special risks include:
. failure of the acquired businesses to achieve the results we
expect;
. diversion of our management's attention from operational matters;
. our inability to retain key personnel of the acquired businesses;
. risks associated with unanticipated events or liabilities;
. difficulties integrating the operations and personnel of acquired
companies;
. the potential disruption of our business;
. the difficulty of maintaining uniform standards, controls,
procedures and policies; and
. customer dissatisfaction or performance problems at the acquired
business may materially and adversely affect the reputation of our
company.
We may not have access to sufficient funding to finance future acquisitions
If we cannot secure additional financing on acceptable terms, we may be
unable to pursue our acquisition strategy successfully and we may be unable to
support our growth strategy. We cannot readily predict the timing, size and
success of our acquisition efforts or the capital we will need for these
efforts. We intend to continue to use our common stock for all or a portion of
the consideration for future acquisitions. These issuances could have a dilutive
effect on our then existing
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stockholders. If our common stock does not maintain a sufficient market value or
potential acquisition candidates are unwilling to accept our common stock as
part of the consideration for the sale of their businesses, we may be required
to utilize more of our cash resources to pursue our acquisition program. Using
cash for acquisitions limits our financial flexibility and makes us more likely
to seek additional capital through future debt or equity financings. If we seek
more debt, we may have to agree to financial covenants that limit our
operational and financial flexibility. If we seek more equity, we may dilute the
ownership interests of our then existing stockholders. When we seek additional
debt or equity financings, we cannot be certain that additional debt or equity
will be available to us at all or on terms acceptable to us. Our $350 million
revolving credit facility contains a requirement to obtain the consent of the
lenders for acquisitions exceeding a certain level of cash consideration.
Our business growth could outpace the capability of our corporate management and
systems
We expect to grow both internally and through acquisitions. We expect to
expend significant time and effort in evaluating, completing and integrating
acquisitions and opening new facilities. We cannot be certain that our systems,
procedures and controls will be adequate to support our operations as they
expand. Any future growth also will impose significant additional
responsibilities on members of our senior management, including the need to
recruit and integrate new senior level managers and executives. We cannot be
certain that we can recruit and retain such additional managers and executives.
To the extent that we are unable to manage our growth effectively, or are unable
to attract and retain additional qualified management, our financial condition
and results of operations could be materially and adversely affected.
We may be unable to attract and retain qualified employees
Our ability to provide high-quality services on a timely basis requires
that we employ an adequate number of skilled electricians, journeymen linemen
and project managers. Accordingly, our ability to increase our productivity and
profitability will be limited by our ability to employ, train and retain skilled
personnel necessary to meet our requirements. We, like many of our competitors,
are currently experiencing shortages of qualified personnel. We cannot be
certain that we will be able to maintain an adequate skilled labor force
necessary to operate efficiently and to support our growth strategy or that our
labor expenses will not increase as a result of a shortage in the supply of
skilled personnel.
The extent of our unionized workforce could adversely affect our operations on
acquisition strategy
As of December 31, 1998, approximately 43% of our employees were covered by
collective bargaining agreements. Although the majority of these agreements
prohibit strikes and work stoppages, we cannot be certain that strikes or work
stoppages will not occur in the future. Strikes or work stoppages would
adversely impact our relationship with our customers and could materially and
adversely affect our business, financial condition and results of operations. In
addition, our acquisition strategy could be adversely affected because of our
union status for a variety of reasons. For instance, our union agreements may be
incompatible with the union agreements of a business we want to acquire and some
businesses may not want to become affiliated with a union based company.
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We may be unable to successfully compete with other companies in the industry
The electric and telecommunications infrastructure contracting industry is
highly competitive and is served by numerous small, owner-operated private
companies, public companies and several large regional companies. In addition,
relatively few barriers prevent entry into our industry As a result, any
organization that has adequate financial resources and access to technical
expertise may become one of our competitors. Competition in the industry depends
on a number of factors, including price. Certain of our competitors may have
lower overhead cost structures and may, therefore, be able to provide their
services at lower rates than we can provide such services. In addition, some of
our competitors are larger and have greater resources than us. We cannot be
certain that our competitors will not develop the expertise, experience and
resources to provide services that are superior in both price and quality to our
services. Similarly, we cannot be certain that we will be able to maintain or
enhance our competitive position.
We may also face competition from the in-house service organizations of our
existing or prospective customers. Electric utility and telecommunications
service providers usually employ personnel who perform some of the same types of
services as we do. We cannot be certain that our existing or prospective
customers will continue to outsource services in the future.
Our dependence upon fixed price contracts and master service agreements could
adversely affect our business
We currently generate, and expect to continue to generate, a significant
portion of our revenues under fixed price contracts. We must estimate the costs
of completing a particular project to bid for such fixed price contracts. The
cost of labor and materials, however, may vary from the costs we originally
estimated. These variations, along with other risks inherent in performing fixed
price contracts, may result in actual revenue and gross profits for a project
differing from those we originally estimated and could result in reduced
profitability and losses on projects. Depending upon the size of a particular
project, variations from estimated contract costs can have a significant impact
on our operating results for any fiscal quarter or year.
Certain of our customers assign work to us on a project by project basis
under master service agreements. Under master service agreements, our customer
generally has no obligation to assign work to us. We cannot be certain that
customers with whom we have master service agreements will continue to assign
work to us. A significant decline in work assigned to us under these contracts
could materially and adversely affect our results of operations.
Our operating results may vary significantly quarter-to-quarter
The electric and telecommunications infrastructure contracting business can
be subject to seasonal variations. During the winter months, demand for new
projects and maintenance services may be lower due to inclement weather.
Additionally, the industry can be highly cyclical. As a result, our volume of
business may be adversely affected by declines in new projects in various
geographic regions of the U.S. Our quarterly results may also be materially
affected by:
. the timing of acquisitions;
. variations in the margins of projects performed during any
particular quarter;
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. the timing and magnitude of acquisition assimilation costs;
. the timing and volume of work under new agreements;
. the budgetary spending patterns of customers;
. the termination of existing agreements;
. costs we incur to support growth internally or through acquisitions
or otherwise;
. the change in mix of our customers, contracts and business;
. increases in construction and design costs;and
. regional or general economic conditions.
Accordingly, our operating results in any particular quarter may not be
indicative of the results that you can expect for any other quarter or for the
entire year.
We could have potential exposure to environmental liabilities
Our operations are subject to various environmental laws and regulations,
including those dealing with the handling and disposal of waste products, PCBs,
fuel storage and air quality. As a result of past and future operations at our
facilities, we may be required to incur environmental remediation costs and
other cleanup expenses. In addition, we cannot be certain that we will be able
to identify or be indemnified for all potential environmental liabilities
relating to any acquired business.
The departure of key personnel could disrupt our business
We depend on the continued efforts of our executive officers and on senior
management of the businesses we acquire. Although we intend to enter into an
employment agreement with each of our executive officers and other key
employees, we cannot be certain that any individual will continue in such
capacity for any particular period of time. The loss of key personnel, or the
inability to hire and retain qualified employees, could adversely effect our
business, financial condition and results of operations. We do not intend to
carry key-person life insurance on any of our employees.
Shares eligible for future sale by our current stockholders may adversely affect
our stock price
If our stockholders sell substantial amounts of our common stock (including
shares issued upon the exercise of outstanding options) in the public market
following this offering, the market price of our common stock could fall. Such
sales might make it more difficult for us to sell equity or equity-related
securities in the future at a time and price that we deem appropriate. We have
outstanding 30,733,658 shares of common stock, assuming no exercise of
outstanding options after June 21, 1999 and no conversion of our convertible
subordinated notes. Of these shares, the 168,618 shares offered by this
prospectus, together with 12,988,629 additional shares are freely tradable or
tradable pursuant to Rule 144.
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Certain provisions of our articles of incorporation and bylaws could make an
acquisition of our company more difficult
The following provisions of our certificate of incorporation and bylaws, as
currently in effect, as well as Delaware law, could discourage potential
acquisition proposals, delay or prevent a change in our control or limit the
price that investors may be willing to pay in the future for shares of our
common stock. Our certificate of incorporation permits our Board of Directors to
issue "blank check" preferred stock and to adopt amendments to our bylaws. Our
bylaws contain restrictions regarding the right of stockholders to nominate
directors and to submit proposals to be considered at stockholder meetings.
Also, our certificate of incorporation and bylaws restrict the right of
stockholders to call a special meeting of stockholders and to act by written
consent. We are also subject to provisions of Delaware law which prohibit us
from engaging in any of a broad range of business transactions with an
"interested stockholder" for a period of three years following the date such
stockholder became classified as an interested stockholder.
We do not expect to pay dividends in the near future
We have never paid any cash dividends and do not anticipate paying cash
dividends on our common stock in the immediate future.
The book value of your common may be substantially diluted
In the event that we issue additional common stock in the future, including
shares that may be issued in connection with future acquisitions or other public
or private financings, purchasers of common stock in this offering may
experience dilution.
The year 2000 problem could disrupt our business
Many currently installed computer systems and software products are coded
to accept only two-digit entries in the date code field. Beginning in the year
2000, these date code fields will need to accept four-digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
system and software used by many companies may need to be upgraded to comply
with such "Year 2000" requirements. We cannot be certain that unexpected Year
2000 compliance problems of our systems or of our vendors, customers and service
providers will not materially and adversely affect our business, financial
condition or operating results. The unanticipated failure of one of these
systems to properly recognize date information beyond the year 1999 could have a
significant adverse impact on our ability to deliver services to customers and
to manage our continuing operations.
Our forward-looking statements may prove to be inaccurate
A number of statements in this prospectus address activities, events or
developments which we anticipate may occur in the future, including our strategy
for internal growth and improved profitability, the nature and amount of
additional capital expenditures, acquisitions of assets and businesses and
industry trends. These statements are based on certain assumptions and analyses
we make in light of our perception of historical trends, current business and
economic conditions and expected future developments, as well as other factors
we believe are reasonable or appropriate. However, whether actual results and
developments will conform with our expectations is subject to a number of risks
and uncertainties, including:
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. the risk factors discussed in this prospectus;
. general economic, market or business conditions;
. the business opportunities (or lack thereof) that may be presented
to and pursued by us; and
. changes in laws or regulations and other factors.
Many of these risks and uncertainties are beyond our control. Consequently,
we cannot be certain that the actual results or developments that we anticipate
will be realized or, even if substantially realized, that they will have the
expected effects on our business or operations.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares by the selling
stockholders.
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SELLING STOCKHOLDERS
The following table sets forth certain information regarding the ownership
of our common stock as of June 21, 1999. The shares offered by this prospectus
may be offered and sold from time to time by the selling stockholders, or by
pledgees, donees or transferees of, or certain other successors in interest to,
the selling stockholders.
<TABLE>
<CAPTION>
----------------------------------------------------
Number
Shares Owned Prior of Shares Shares Owned If All
to Offering Being Shares Are Sold
------------------- Registered ------------------
Number Percent For Sale Number Percent
------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
Selling Stockholders:
Brian D. Burghardt........... 83,682 * 83,682 0 *
Philip L. Burghardt.......... 83,682 * 83,682 0 *
John M. Maul................. 627 * 627 0 *
Terry S. Pendergrass......... 627 * 627 0 *
Total................... 168,618 * 168,618 0 *
======= =========== ======= = =========
</TABLE>
- ----------------------------
* Represents less than 1.0%
PLAN OF DISTRIBUTION
The common stock may be sold or distributed from time to time by the
selling stockholders, or by pledgees, donees or transferees of, or other
successors in interest to, the selling stockholders, directly to one or more
purchasers, including pledgees, or through brokers, dealers or underwriters who
may act solely as agents or may acquire shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be changed. The
distribution of the common stock may be effected by one or more of the following
methods:
. ordinary brokers' transactions, which may include long or short
sales;
. transactions involving cross or block trades or otherwise on the
New York Stock Exchange or other stock exchange on which the common
stock may be listed from time to time;
. purchases by brokers, dealers or underwriters as principals and
resale by such purchasers for their own accounts pursuant to this
prospectus ;
. "at the market" to or through market makers or into an existing
market for the common stock;
. in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents;
. through transactions in options, swaps or other derivatives
(whether exchange-listed or otherwise); or
. any combination of the foregoing, or by any other legally available
means.
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In addition, the selling stockholders or their successors in interest may
enter into hedging transactions with broker-dealers who may engage in short
sales of common stock in the course of hedging the positions they assume with
the selling stockholders. The selling stockholders or their successors in
interest may also enter into option or other transactions with broker-dealers
that require the delivery to such broker-dealers of the shares, which shares may
be resold thereafter pursuant to this prospectus.
Brokers, dealers, underwriters or agents participating in the distribution
of the shares as agent may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders (and, if they act as
agent for the purchaser of such shares, from such purchaser). Such discounts
concessions or commissions as to a particular broker, dealer, underwriter or
agent might be greater or less than those customary in the type of transaction
involved.
Any underwriter may engage in stabilizing transactions in accordance with
Rule 104 under the Exchange Act. Rule 104 permits stabilizing bids to purchase
the underlying security so long as the stabilizing bids do not exceed a
specified maximum. The underwriters may over-allot shares of the common stock in
connection with an offering of common stock, thereby creating a short position
in the underwriters' account. These transactions, if commenced, may be
discontinued at any time.
The selling stockholders and any brokers, dealers, underwriters or agents
that participate in the distribution of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any discounts,
commissions or concessions received by any such persons might be deemed to be
underwriting discounts and commissions under the Securities Act. Neither we nor
the selling stockholders can presently estimate the amount of such compensation.
We know of no existing arrangements between any selling stockholder and may
other stockholder, broker, dealer, underwriter or agent relating to the sale or
distribution of the shares.
To the extent required, we will file, during any period in which offers or
sales are being made, a supplement to this prospectus which sets forth, with
respect to a particular offering, the specific number of shares to be sold, the
name of the selling stockholder, the sales price, the name of any participating
broker, dealer, underwriter or agent, any applicable commission or discount and
any other material information with respect to the plan of distribution not
previously disclosed.
We will not receive any of the proceeds from the sale of the shares offered
by the selling stockholders. We will pay substantially all of the expenses
incident to this offering of the shares by the selling stockholders to the
public other than commissions and discounts of brokers, dealers, underwriters or
agents.
In order to comply with certain states' securities laws, if applicable, the
shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the common stock may not be
sold unless the common stock has been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
satisfied.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for Quanta by Akin, Gump, Strauss, Hauer & Feld, L.L.P., San Antonio,
Texas.
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