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Filed Pursuant to rule: 424(B)(1)
Registration No.: 333-90961
2,034,849 Shares
[Logo of Quanta appears here]
Common Stock
The 2,034,849 shares of our common stock being offered by this prospectus
are being offered by the selling stockholder listed under the heading "Selling
Stockholder" on page 12. The shares of common stock will be sold by the selling
stockholder from time to time.
We will not receive any of the proceeds from the sale of the common stock
by the selling stockholder. Our common stock is traded on the New York Stock
Exchange under the symbol "PWR." On November 11, 1999, the last reported sale
price for the common stock on the New York Stock Exchange was $30.9375 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 December 22, 1999
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You should rely only on the information contained in this 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 is accurate as of the date on the
front cover of this prospectus 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
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 stockholder. 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. Quarterly Report on Form 10-Q for the three months ended June 30, 1999;
4. Quarterly Report on Form 10-Q for the three months ended September 30, 1999;
5. Current Report on Form 8-K filed February 26, 1999, as amended by Form 8-K/A
filed April 23, 1999;
6. Current Report on Form 8-K filed June 17, 1999;
7. Current Report on Form 8-K filed on November 15, 1999.
8. Current Report on Form 8-K filed on December 21, 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.
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ABOUT QUANTA SERVICES, INC.
We are a leading provider of specialized contracting services to electric
utilities, telecommunication and cable television operators, and governmental
entities. We also install transportation control and lighting systems and
provide specialty electric power and communication services for industrial and
commercial 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 many of these businesses and many 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 55 businesses. 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 OR
ACQUISITION STRATEGY
As of September 30, 1999, approximately 36% 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. As of
October 30, 1999 we have outstanding 36,461,949 shares of common stock and
Limited Vote Common Stock, assuming no exercise of outstanding options after
October 30, 1999 and no conversion of our convertible subordinated notes or
Series A Preferred Stock. Of these shares, the 2,034,849 shares offered by this
prospectus, together with 26,220,670 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 STOCK 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 stockholder.
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SELLING STOCKHOLDER
The following table sets forth certain information regarding the ownership
of our common stock as of November 1, 1999. The shares offered by this
prospectus may be offered and sold from time to time by the selling
stockholder, or by pledgees, donees or transferees of, or certain other
successors in interest to, the selling stockholder.
<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 STOCKHOLDER:
Billy R. Jones....... 2,051,436 6.1% 2,034,849 16,587 *
Total........... 2,051,436 6.1% 2,034,849 16,587 *
========= =========== ========= ========== =======
</TABLE>
- ----------------------------
* Represents less than 1.0%
Mr. Jones has contractually agreed with us not to sell 1,017,425
shares of our common stock until August 13, 2000, and 508,712 shares of our
common stock until August 13, 2001.
PLAN OF DISTRIBUTION
The common stock may be sold or distributed from time to time by the
selling stockholder, or by pledgees, donees or transferees of, or other
successors in interest to, the selling stockholder, 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 stockholder or his 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 stockholder. The selling stockholder or his 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 stockholder (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 stockholder 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 stockholder can presently estimate the amount of such compensation.
We know of no existing arrangements between the 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 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 stockholder. We will pay substantially all of the
expenses incident to this offering of the shares by the selling stockholder 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 Brad Eastman, Quanta's Vice President, Secretary and
General Counsel.
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