QUANTA SERVICES INC, 424B5, 2000-07-20

QUANTA SERVICES INC
424B5, 2000-07-20
ELECTRICAL WORK

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<PAGE> 1

FILED PURSUANT TO RULE 424(b)(5)
REGISTRATION NO. 333-39744
PROSPECTUS SUPPLEMENT
(To Prospectus dated June 30, 2000)

$150,000,000

Quanta Services, Inc.

4% CONVERTIBLE SUBORDINATED NOTES DUE 2007
------------------------

Interest Payable on December 31 and July 1
------------------------

HOLDERS MAY CONVERT THE NOTES INTO SHARES OF COMMON STOCK OF QUANTA SERVICES,
INC. AT ANY TIME ON OR BEFORE JUNE 28, 2007, AT A CONVERSION PRICE OF $54.53 PER
SHARE, SUBJECT TO ADJUSTMENT IN CERTAIN EVENTS.

------------------------

ON OR AFTER JULY 3, 2003, WE MAY REDEEM SOME OR ALL OF THE NOTES AT THE
REDEMPTION PRICES SET FORTH IN THIS PROSPECTUS SUPPLEMENT, PLUS ACCRUED
INTEREST.

------------------------

FOR A MORE DETAILED DESCRIPTION OF THE NOTES, SEE "DESCRIPTION OF NOTES"
BEGINNING ON PAGE S-37.

------------------------

OUR COMMON STOCK IS LISTED ON THE NEW YORK STOCK EXCHANGE UNDER THE SYMBOL
"PWR." ON JULY 19, 2000, THE REPORTED LAST SALE PRICE OF OUR COMMON STOCK ON THE
NEW YORK STOCK EXCHANGE WAS $42.94.

------------------------

INVESTING IN THE NOTES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE
S-7.
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PRICE 100% AND ACCRUED INTEREST, IF ANY

------------------------

Quanta Services, Inc. has granted the underwriters the option to purchase up to
an additional $22,500,000 principal amount of the notes to cover
over-allotments.
------------------------

The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
------------------------

Morgan Stanley & Co. Incorporated expects to deliver the notes to purchasers on
July 25, 2000.
------------------------

MORGAN STANLEY DEAN WITTER
BANC OF AMERICA SECURITIES LLC
BEAR, STEARNS & CO. INC.
RAYMOND JAMES & ASSOCIATES, INC.
SUNTRUST EQUITABLE SECURITIES
WACHOVIA SECURITIES, INC.

July 19, 2000
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Summary............................... S-1
Risk Factors.......................... S-7
Special Note Regarding Forward-Looking
Statements.......................... S-10
Ratios of Earnings to Fixed Charges... S-10
Use of Proceeds....................... S-11
Capitalization........................ S-12
Price Range of Common Stock and
Dividend Policy..................... S-13
Selected Financial Data............... S-14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... S-16
Business.............................. S-23
Management............................ S-32
Principal Stockholders................ S-35
Description of Notes.................. S-37
Certain United States Federal Income
Tax Considerations.................. S-46
Underwriters.......................... S-50
Legal Matters......................... S-52
Experts............................... S-52
Where You Can Find More Information... S-52
Incorporation by Reference............ S-52
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS
About This Prospectus................. 1
Where You Can Find More Information... 1
Special Note Regarding Forward-Looking
Statements.......................... 2
The Company........................... 2
Risk Factors.......................... 3
Use of Proceeds....................... 7
Holding Company Structure............. 7
Ratios of Earnings to Fixed Charges
and Earnings to Combined Fixed
Charges and Preferred Dividends..... 7
Description of Debt Securities........ 8
Description of Capital Stock.......... 19
Depositary Shares..................... 25
Description of Warrants............... 27
Plan of Distribution.................. 27
Legal Matters......................... 29
Experts............................... 29
</TABLE>

YOU SHOULD RELY ONLY ON INFORMATION CONTAINED IN OR INCORPORATED INTO THIS
DOCUMENT. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT FROM THAT CONTAINED IN THIS DOCUMENT. THIS DOCUMENT IS NOT AN OFFER TO
SELL THE NOTES AND IS NOT SOLICITING AN OFFER TO BUY THE NOTES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS
DOCUMENT IS ACCURATE ONLY AS OF THE DATE HEREOF, REGARDLESS OF THE TIME OF
DELIVERY OF THIS DOCUMENT OR OF ANY SALE OF THE NOTES.

------------------------

AS USED IN THIS PROSPECTUS SUPPLEMENT, UNLESS THE CONTEXT REQUIRES
OTHERWISE, "WE," "US," "OUR," "COMPANY" OR "QUANTA" REFERS TO QUANTA SERVICES,
INC., THE ISSUER OF THE NOTES, AND ITS SUBSIDIARIES.
<PAGE> 3

SUMMARY

This summary contains basic information about us and the securities we are
offering. You should read the following summary together with the more detailed
information and financial statements and notes to the financial statements
contained elsewhere or incorporated by reference in this prospectus supplement
or the accompanying prospectus. To fully understand this offering, you should
read all of these documents. Unless otherwise indicated, the information
contained in this prospectus supplement does not give effect to the exercise of
the underwriters' over-allotment option. We have adjusted all references to our
common stock in this prospectus supplement to give effect to the three-for-two
stock split paid on April 7, 2000.

QUANTA SERVICES, INC.

OUR BUSINESS

Our operating units had revenues on a combined pro forma basis of $1.33
billion in 1999 compared to $1.09 billion in 1998, representing pro forma
internal revenue growth of 22.0%. To leverage the growth in demand for our
services, we have made strategic acquisitions that expanded our geographic
presence, generated operating synergies with existing businesses and developed
new capabilities to meet our customers' evolving needs.

Our principal offices in 37 states provide us the presence and capability
to quickly and reliably complete turnkey projects nationwide. We perform
services for many of the leading companies in the industries we target.
Representative customers include:

-- AT&T
-- Century Telephone
-- Charter Connections
-- Enron
-- Everest Communications
-- Media One (now AT&T Broadband)
-- Nevada Power
-- PF.Net
-- PG&E
-- Puget Sound Energy
-- Seren
-- Sprint PCS
-- Time Warner
-- U.S. West (now Qwest Communications)
-- UtiliCorp United
-- Williams Communications

INDUSTRY OVERVIEW

We estimate that network infrastructure spending by telecommunications,
cable television and electric power providers exceeded $45.0 billion in 1999. We
believe the following trends in the industries we serve are fueling growth in
our business:

Increased Demand for Bandwidth. To meet increasing demand for bandwidth
required for video, voice and data transmission, telecommunications and cable
television providers are expanding and upgrading their networks.
Deregulation. Deregulation of the telecommunications markets has spurred
significant additional investment by cable television companies, local exchange
carriers and long distance companies as they seek to protect and expand their
customer bases. Deregulation of the utility markets has caused electric power
companies to seek to improve their competitive position by reducing their costs
and entering new lines of business.

S-1
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Increased Outsourcing. Competitive pressures in the industries we serve and
an increased focus on core competencies have caused an acceleration of
outsourcing of network services. Outsourcing network development and maintenance
reduces costs, provides flexibility in budgets and improves the service and
performance of our customers.

Industry Convergence. As business lines between traditional
telecommunications, cable television and electric power markets continue to
blur, our target customers are increasingly seeking single-source providers with
expertise in fiber optic, coaxial, copper and energized power networks.

Increased Demand for Comprehensive End-to-End Solutions. The strategic and
financial value of geographically expanded and technologically improved networks
has caused telecommunications, cable television and electric power companies to
place a premium on the provision of quick and reliable turnkey network
solutions. Accordingly, they are reducing the number of their network service
providers and partnering with experienced companies with broad geographic reach,
financial strength and technical expertise.

OUR COMPETITIVE STRENGTHS

Our competitive strengths include:

Nationwide Capability. We provide our services in all 50 states, which
positions us as one of the few proven network service providers able to deliver
comprehensive network solutions regardless of geographic scope.

Comprehensive End-to-End Service Offering. We believe that we are one of
the few network service providers capable of delivering end-to-end solutions.
Our broad range of services gives us the flexibility to capitalize on the growth
of the Internet and the convergence of traditional telecommunications, cable
television and electric power markets to meet our customers' continually
evolving needs.

Diversified Customer Relationships. We serve over 300 customers throughout
the U.S. and no single customer accounted for more than 10% of our pro forma
revenues in 1999. The diversity of our customer base enables us to take
advantage of the relatively higher margins and levels of capital spending that
may exist during various cycles in any one or more of the industries and
geographic areas we serve. In addition, we maintain strategic alliance
agreements or preferred provider relationships with a number of our customers.

Management Experience. Our Chief Executive Officer and over 30 of our
operating unit executives each have more than 20 years of experience in managing
network infrastructure operations.

GROWTH STRATEGY

The key elements of our growth strategy are:

Focus on Internal Growth and Integration. We believe we can continue to
generate strong internal revenue growth by cross-selling the capabilities of our
operating units to offer our customers comprehensive end-to-end solutions to
their network needs.

Expand Portfolio of Services. We intend to broaden our service offerings by
expanding our geographic reach and technological capabilities through both
internal development and selective acquisitions.

Continue to Expand Operating Efficiencies. In 1999, we increased our gross
profit, operating income and net income margins. We intend to continue to
improve our profitability by capitalizing on the synergies created by our
expanding operations.

S-2
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Our principal executive offices are located at 1360 Post Oak Boulevard,
Suite 2100, Houston, Texas 77056. Our telephone number is (713) 629-7600.

S-3
<PAGE> 6

THE OFFERING

Securities offered......... $150,000,000 aggregate principal amount of 4.0%
convertible subordinated notes due July 1, 2007
(plus an additional $22,500,000 aggregate principal
amount if the underwriters' over-allotment option
is fully exercised).

Interest................... 4.0% per annum on the principal amount, payable
semiannually in arrears in cash on July 1 and
December 31 of each year, beginning December 31,
2000.

Conversion................. You may convert each note into common stock at any
time on or before June 28, 2007 at a conversion
price of $54.53 per share, subject to adjustment if
certain events affecting our common stock occur.

Subordination.............. The notes will be subordinated in right of payment
to all of our existing and future Senior Debt and
are effectively subordinated to all existing and
future indebtedness and other liabilities of our
subsidiaries. Neither we nor our subsidiaries are
limited from incurring debt, including Senior Debt,
under the indenture.

Optional redemption........ We may redeem some or all of the notes at any time
on or after July 3, 2003 by giving you at least 30
days' notice. We may redeem the notes either in
whole or in part at the redemption prices set forth
in this prospectus supplement, together with
accrued and unpaid interest.

Fundamental Change......... Upon occurrence of a Fundamental Change (as defined
herein), you may require us to purchase all or part
of your notes at a purchase price equal to 100% of
the principal amount, plus accrued and unpaid
interest.

Use of proceeds............ We intend to use the proceeds from this offering to
repay indebtedness under our credit facility.

NYSE common stock symbol... PWR

S-4
<PAGE> 7

SUMMARY FINANCIAL DATA

For financial statement presentation purposes, in connection with the
combination of the founding companies concurrently with our initial public
offering, PAR Electrical Contractors, Inc. was identified as the "accounting
acquiror." Between our initial public offering in February 1998 and December 31,
1999, we acquired 52 specialty contracting businesses. Of these, 50 were
accounted for using the purchase method of accounting and two were accounted for
using the pooling-of-interests method of accounting. Through June 30, 2000, we
had acquired 15 additional specialty contracting businesses using the purchase
method of accounting, which are reflected in the pro forma data below, and
subsequent to June 30, 2000 we have acquired two additional specialty
contracting businesses. Quanta's consolidated historical financial statements
represent the financial position and results of operations of PAR as restated to
include the financial position and results of operations of companies acquired
in pooling transactions. The remaining businesses we acquired are reflected in
the financial statements beginning on their respective dates of acquisition. The
tables below present amounts in thousands, except per share data.

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA(1)
------------------------------------------------------ ---------------------------
THREE MONTHS
ENDED THREE MONTHS
YEAR ENDED DECEMBER 31, MARCH 31, YEAR ENDED ENDED
------------------------------- -------------------- DECEMBER 31, MARCH 31,
1997 1998 1999 1999 2000 1999 2000
------- --------- --------- --------- -------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues............................ $80,010 $ 319,259 $ 925,654 $ 127,779 $333,737 $1,329,839 $374,376
Cost of services (including
depreciation)..................... 62,599 257,270 711,353 104,871 261,056 1,008,325 290,409
------- --------- --------- --------- -------- ---------- --------
Gross profit.................. 17,411 61,989 214,301 22,908 72,681 321,514 83,967
Selling, general and administrative
expenses.......................... 12,354 27,160 80,132 11,982 29,951 122,728 33,990
Merger-related charges.............. -- 231 6,574(2) 137 -- 6,574(2) --
Goodwill amortization............... 56 2,513 10,902 1,498 4,216 18,983 4,765
------- --------- --------- --------- -------- ---------- --------
Income from operations........ 5,001 32,085 116,693 9,291 38,514 173,229 45,212
Other income (expense), net......... (1,421) (4,214) (13,755) (1,904) (3,984) (18,908) (5,364)
------- --------- --------- --------- -------- ---------- --------
Income before income tax
provision......................... 3,580 27,871 102,938 7,387 34,530 154,321 39,848
Provision for income taxes(3)....... 1,786 11,683 48,999 3,964 14,986 70,830 17,399
------- --------- --------- --------- -------- ---------- --------
Net income.................... 1,794 16,188 53,939 3,423 19,544 83,491 22,449
Dividends on preferred stock........ -- -- 260 -- 232 930 232
------- --------- --------- --------- -------- ---------- --------
Net income attributable to common
stock............................. $ 1,794 $ 16,188 $ 53,679 $ 3,423 $ 19,312 $ 82,561 $ 22,217
======= ========= ========= ========= ======== ========== ========
Basic earnings per share............ $ 0.29 $ 0.60 $ 1.14 $ 0.09 $ 0.34 $ 1.32 $ 0.35
======= ========= ========= ========= ======== ========== ========
Diluted earnings per share.......... $ 0.29 $ 0.59 $ 1.00 $ 0.09 $ 0.28 $ 1.14 $ 0.30
======= ========= ========= ========= ======== ========== ========
Diluted earnings per share before
merger charges(4)................. $ 0.29 $ 0.60 $ 1.13 $ 0.11 $ 0.28 $ 1.24 $ 0.30
======= ========= ========= ========= ======== ========== ========
CASH FLOW DATA:
Net cash provided by (used in)
operating activities.............. $ 5,321 $ 8,190 $ 46,326 $ (4,407) $ 1,089
Net cash used in investing
activities........................ $(6,188) $(109,107) $(368,262) $(105,877) $(57,981)
Net cash provided by financing
activities........................ $ 844 $ 103,674 $ 329,465 $ 112,295 $ 48,327
OTHER OPERATING DATA:
EBITDA(5)........................... $ 8,362 $ 42,982 $ 158,430 $ 14,778 $ 50,921
EBITDA margin(6).................... 10.5% 13.5% 17.1% 11.6% 15.3%
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 2000
-----------------------------------------------
PRO FORMA PRO FORMA
HISTORICAL COMBINED(7) AS ADJUSTED(7)(8)
---------- ----------- -----------------
<S> <C> <C> <C>
BALANCE SHEET DATA (UNAUDITED):
Working capital........................................... $ 188,802 $ 199,787 $ 253,240
Total assets.............................................. 1,277,268 1,388,330 1,440,497
Long-term debt, net of current maturities................. 198,032 254,204 162,232
Convertible subordinated notes (former)................... 49,350 -- --
Convertible subordinated notes (new issuance)............. -- -- 150,000
Total stockholders' equity................................ 817,408 901,443 901,443
</TABLE>

S-5
<PAGE> 8

------------

(1) The unaudited pro forma combined statements of operations data adjusts the
historical financial information by assuming the acquisition of the
businesses acquired in 1999 and through June 30, 2000 had occurred as of
January 1, 1999. In addition, the unaudited pro forma combined statements
of operations data reflect:

- approximately $6.0 million and $0.2 million for the year ended December
31, 1999 and the three months ended March 31, 2000, respectively, in pro
forma reductions in salaries, bonuses and benefits of the previous owners
and management of the acquired businesses; these amounts are intended to
show you the difference between the historical compensation costs for the
owners and management and the amounts to which they have agreed with us on
a prospective basis;

- amortization of goodwill over a 40-year period for acquired businesses
using the purchase method of accounting;

- an adjustment to interest expense related to borrowings required to fund
the cash portion of the consideration paid for the acquired businesses and
the financing transactions which include the January 1999 follow-on
offering, the conversion of the convertible subordinated notes (former),
and the issuance of the Series A preferred stock and the senior secured
notes; and

- the related tax impact of the aforementioned transactions.

Had this offering occurred on January 1, 1999, pro forma diluted earnings
per share and pro forma diluted earnings per share before merger charges
would have been $1.18 and $1.28, respectively, for the year ended December
31, 1999 and $0.31 for the three months ended March 31, 2000, due to the
reduction in interest expense related to the repayment of outstanding
indebtedness from the proceeds of this offering.

The acquired businesses may have performed differently if they had been
combined as of January 1, 1999. You should not rely on the pro forma
information as being indicative of the historical results we would have had
or the future results that we will experience.

(2) As a result of the termination in June 1999 of an employee stock ownership
plan associated with a company acquired in a pooling transaction, we
incurred a non-cash, non-recurring compensation charge of $5.3 million and
a non-recurring excise tax charge of $1.1 million. In addition, we incurred
$137,000 in merger-related charges associated with a pooling transaction in
the first quarter of 1999.

(3) Reflects the non-deductibility of the merger-related charges. In addition,
for 1999 it includes a non-cash, non-recurring deferred tax charge of
$677,000 as a result of a change in the tax status of a company acquired in
a pooling transaction from an S corporation to a C corporation during the
first quarter of 1999.

(4) Excludes the effect of all non-recurring, merger-related charges.
Additionally, for the three months ended March 31, 1999 and twelve months
ended December 31, 1999, it excludes the non-cash, non-recurring deferred
tax charge of $677,000 described in Note (3) above.

(5) EBITDA represents income from operations before depreciation, amortization
and merger-related charges. We have included EBITDA in Other Operating Data
because we believe such information may be useful to you in evaluating our
ability to service our debt. EBITDA should not be considered as an
alternative to gross profit, net income or net cash provided by operating
activities (or any other measure of performance in accordance with
generally accepted accounting principles), as a measure of our ability to
meet our cash needs or as an indication of our operating performance.
Moreover, EBITDA is not a standardized measure and may be calculated in a
number of ways. Accordingly, the EBITDA information provided may not be
comparable to other similarly titled measures provided by other companies.

(6) Represents EBITDA as a percentage of revenues.

(7) Reflects the acquisition of nine businesses that we acquired between April
1, 2000 and June 30, 2000 as if these acquisitions had occurred on March
31, 2000, including additional borrowings of approximately $46.5 million
under our credit facility and the issuance of approximately 1.0 million
shares of common stock. In addition, it reflects the pro forma effect of
the conversion of the convertible subordinated notes (former) which
occurred in June 2000.

(8) Reflects the effect of the issuance and sale of the notes offered by us in
this prospectus supplement and the application of the resulting net
proceeds as described in "Use of Proceeds."

S-6
<PAGE> 9

RISK FACTORS

In considering whether to purchase the securities we are offering, you
should carefully consider all of the information we have included or
incorporated by reference in this prospectus supplement and the accompanying
prospectus. In particular, you should carefully consider the risk factors
described below as well as those described under "Risk Factors" in the
accompanying prospectus. In addition, please read "Special Note Regarding
Forward-Looking Statements" on page S-10 of this prospectus supplement and on
page 2 of the accompanying prospectus.

PREEMPTIVE RIGHTS OF UTILICORP UNITED MAY RESULT IN DILUTION.

UtiliCorp United currently owns approximately 36% of our outstanding
capital stock on a fully diluted basis. The Series A preferred stock we issued
to UtiliCorp United in September 1999 provides UtiliCorp United with contractual
preemptive rights to acquire additional shares of our stock on a quarterly basis
equal to approximately 12% of most new issuances of equity securities issued in
the previous quarter. UtiliCorp United's preemptive right respecting the notes
to be issued in this offering will be exercisable within the first 10 days of
our next fiscal quarter following the issuance of common stock into which the
notes are convertible. UtiliCorp United's purchase price for each share of our
common stock purchased under this right will be equal to the closing price per
share of our common stock on the date of closing of this offering. The exercise
of these preemptive rights by UtiliCorp United will dilute the relative equity
interests of Quanta stockholders.

FUTURE SALES OF OUR COMMON STOCK MAY ADVERSELY AFFECT OUR STOCK PRICE.

We have issued a significant amount of shares of our common stock as
consideration for our acquisitions. Typically we obtain lock-up agreements from
the stockholders of companies we acquire that restrict them from selling Quanta
shares received by them in such transactions for at least one year. A
significant amount of our outstanding common stock will become available for
resale as these lock-up agreements expire. Future sales of substantial amounts
of our common stock in the public market, or the perception that such sales
could occur, could adversely affect the market price of our common stock, which,
in turn, could adversely affect the market price of the notes. As of June 26,
2000, we had outstanding 61,933,302 shares of common stock, plus 18,358,400
shares of common stock reserved for issuance upon exercise of outstanding
options or conversion of Limited Vote Common Stock and Series A preferred stock.
As of June 26, 2000, approximately 12.6 million of the outstanding shares of our
common stock or Limited Vote Common Stock were subject to lock-up agreements
with Quanta. As of that date, approximately 45.7 million of the outstanding
shares of our common stock and shares of common stock underlying options, Series
A preferred stock and Limited Vote Common Stock were either freely saleable or
saleable subject to certain volume and manner of sale restrictions pursuant to
Rule 144 of the Securities Act of 1933.

We have agreed not to make any offering, sale or other disposition of any
shares of our common stock or other securities convertible into or exchangeable
or exercisable for shares of our common stock for a period of 90 days after the
date of this prospectus supplement, except pursuant to our 1997 Stock Option
Plan or Employee Stock Purchase Plan, upon the exercise of preemptive rights
held by UtiliCorp United, in connection with acquisitions, in connection with
the conversion to common stock of shares of our Limited Vote Common Stock,
Series A preferred stock or the notes, or with the prior written consent of
Morgan Stanley & Co. Incorporated. Our executive officers, UtiliCorp United and
certain of our directors have also agreed not to offer, sell or otherwise
dispose of their shares for a period of 90 days after the date of this
prospectus supplement without the prior written consent of Morgan Stanley & Co.
Incorporated.

THE NOTES ARE SUBORDINATED.

The notes are unsecured and subordinated in right of payment to all of our
existing and future Senior Debt, as defined in the "Description of
Notes--Subordination of Notes" section of this prospectus supplement. In the
event of bankruptcy, liquidation or reorganization of Quanta, and in specific
other events,

S-7
<PAGE> 10

our assets will be available to pay obligations on the notes only after all
Senior Debt has been paid. There may not be sufficient assets remaining to pay
amounts due on any or all of the notes then outstanding. In addition, our credit
facility and our senior secured notes are each secured by a pledge of all of the
capital stock of our operating subsidiaries and the majority of our assets.

The notes are also effectively subordinated to the indebtedness and other
liabilities, including trade payables, of Quanta's subsidiaries. The indenture
governing the notes will not prohibit or limit the incurrence of Senior Debt or
the incurrence of other indebtedness and other liabilities by us or our
subsidiaries. The incurrence of additional indebtedness or other liabilities by
us or our subsidiaries could adversely affect our ability to pay our obligations
on the notes. As of July 18, 2000, we had approximately $325.4 million of Senior
Debt outstanding, including obligations under outstanding letters of credit but
excluding indebtedness of our subsidiaries, $145.4 million of which we expect to
repay with proceeds of this offering. In addition, at May 31, 2000, our
subsidiaries had $21.8 million of indebtedness outstanding. We anticipate that
from time to time we and our subsidiaries will incur additional indebtedness,
including Senior Debt. We will have a borrowing capacity of approximately $320.0
million under our senior credit facility following this offering.

AS A HOLDING COMPANY, QUANTA'S ONLY SOURCE OF CASH IS DISTRIBUTIONS FROM ITS
SUBSIDIARIES.

Quanta Services, Inc. is a holding company with no operations of its own
and conducts all of its business through its subsidiaries. See "Holding Company
Structure" in the accompanying prospectus. The notes will be obligations
exclusively of Quanta. Quanta's only significant asset is the outstanding
capital stock of its subsidiaries, and this capital stock collateralizes our
credit facility and senior secured notes. Quanta is wholly dependent on the cash
flow of its subsidiaries and dividends and distributions to it from its
subsidiaries in order to service its current indebtedness, including payment of
principal, premium, if any, and interest on the notes, and any of its future
obligations. Quanta's subsidiaries are separate and distinct legal entities and
will have no obligation, contingent or otherwise, to pay any amounts due
pursuant to the notes or to make any funds available therefor. The ability of
Quanta's subsidiaries to pay such dividends and distributions will be subject
to, among other things, the terms of any debt instruments of its subsidiaries
then in effect and applicable law. Quanta will need sufficient funds available
to pay cash interest on the notes beginning on December 31, 2000 and to repay
the notes when required. We cannot assure you that Quanta's subsidiaries will
generate cash flow sufficient to pay dividends or distributions to Quanta in
order to pay interest or other payments on the notes.

Quanta's rights, and the rights of its creditors, to participate in the
distribution of assets of any of its subsidiaries upon such subsidiary's
liquidation or reorganization will be subject to the prior claims of such
subsidiary's creditors, except to the extent that Quanta is itself reorganized
as a creditor of such subsidiary in which case Quanta's claims would still be
subject to claims of any secured creditor of such subsidiary.

WE MAY NOT BE ABLE TO REPURCHASE THE NOTES OR REPAY DEBT UNDER OUR CREDIT
FACILITY IN THE EVENT OF A FUNDAMENTAL CHANGE.

Upon the occurrence of a Fundamental Change, holders of the notes may
require us to offer to repurchase all of their notes. We may not have sufficient
funds at the time of the Fundamental Change to make the required repurchases or
restrictions in our credit facility may not allow such repurchases.
Additionally, in certain situations a Fundamental Change would be an event of
default under our credit facility, which would permit the lenders to accelerate
the debt.

The source of funds for any repurchase required as a result of any
Fundamental Change will be our available cash or cash generated from operating
or other sources, including borrowings, sales of assets, sales of equity or
funds provided by a new controlling entity. We cannot assure you, however, that
sufficient funds will be available at the time of any Fundamental Change to make
any required repurchases of the notes tendered and to repay debt under our
credit facility. Furthermore, the use of available cash to fund the potential
consequences of a Fundamental Change may impair our ability to obtain additional
financing in the future. Any future credit agreements or other agreements
relating to indebtedness to which we may become a party may contain similar
restrictions and provisions.

S-8
<PAGE> 11

A TRADING MARKET FOR THE NOTES MAY NOT DEVELOP.

There is no established trading market for the notes. We have not and do
not intend to apply for listing of the notes on any stock exchange. We cannot
predict accurately how or whether the notes will trade in the secondary market
or whether such market will be liquid. A resale market may not develop, or, if
it does, might not give you the opportunity to resell your notes and may not
continue in existence through the date the notes mature. The underwriters
currently intend, but are not obligated, to make a market in the notes. If the
underwriters engage in market-making activities respecting the notes, they may
cease such market-making at any time. Furthermore, if a market for the notes
were to develop, the market price for the notes may be adversely affected by
changes in our financial performance, changes in the overall market of similar
securities and performance or prospects for companies in our industry.

S-9
<PAGE> 12

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made statements in this prospectus supplement, including statements
under "Summary," "Risk Factors," and "Business" which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are subject to a number of risks, uncertainties and assumptions,
including, among other things:

-- general economic and business conditions;

-- our expectations and estimates concerning future financial
performance, financing plans and the impact of competition;

-- anticipated trends in our business;

-- existing and future regulations affecting our business;

-- our ability to obtain additional debt and equity financing to support
our growth strategy;

-- our ability to complete acquisitions; and

-- other risk factors described in the section entitled "Risk Factors"
in this prospectus supplement or in the accompanying prospectus.

You can identify these forward-looking statements by forward-looking words
such as "believe," "may," "could," "will," "estimate," "continue," "anticipate,"
"intend," "seek," "plan," "expect," "should," "would" and similar expressions in
this prospectus supplement.

We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this prospectus supplement or in the accompanying
prospectus may not occur and actual results could differ materially from those
anticipated or implied in the forward-looking statements.

RATIOS OF EARNINGS TO FIXED CHARGES

The following table contains our historical and pro forma consolidated
ratios of earnings to fixed charges for the periods indicated. The pro forma
ratios reflect the net change in interest related to the application of the
estimated net proceeds from this offering as if the offering had occurred on
January 1, 1999.

<TABLE>
<CAPTION>
PRO FORMA
------------------------
THREE THREE
MONTHS YEAR MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED ENDED
-------------------------------- MARCH 31, DECEMBER 31, MARCH 31,
1995 1996 1997 1998 1999 2000 1999 2000
---- ---- ---- ---- ---- --------- ------------ ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges....... 2.7 4.2 3.4 6.1 6.4 7.4 10.3 9.6
</TABLE>

For purposes of computing the ratios of earnings to fixed charges and
earnings to fixed charges plus dividends:

(1) "earnings" consists of income before provision for income taxes
plus fixed charges (excluding capitalized interest) and

(2) "fixed charges" consist of interest expensed and capitalized,
amortization of debt discount and expense relating to indebtedness and the
portion of rental expense representative of the interest factor
attributable to leases for rental property.

S-10
<PAGE> 13

USE OF PROCEEDS

We estimate that the net proceeds we will receive from this offering will
be approximately $145.4 million, after deducting the underwriters' discount and
estimated offering expenses payable by Quanta. If the underwriters exercise
their over-allotment option to purchase additional notes in full, we estimate
that the net proceeds will be approximately $167.3 million. We intend to use the
net proceeds from this offering to repay outstanding indebtedness under our
credit facility, which will be available for reborrowing.

Concurrently with this offering, we offered 2,725,000 shares of our common
stock to the public in a separate offering. This offering and the concurrent
common stock offering were not conditioned upon each other. Based on current
market conditions, we have determined not to proceed with the concurrent common
stock offering. In the future, we may seek additional debt or equity financing.

As of July 18, 2000, the outstanding indebtedness under our credit facility
was $171.1 million and the weighted average interest rate on the outstanding
balance was 7.84% per annum. We used the outstanding borrowings under our credit
facility for working capital purposes, for capital expenditures and to fund
acquisitions.

S-11
<PAGE> 14

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2000 (i)
on a historical basis, (ii) as adjusted to give pro forma effect to acquisitions
made by us subsequent to March 31, 2000, and (iii) as further adjusted to give
pro forma effect to this offering and the application of the estimated net
proceeds from this offering as described in "Use of Proceeds."

<TABLE>
<CAPTION>
MARCH 31, 2000
--------------------------------------------
PRO FORMA PRO FORMA
HISTORICAL COMBINED(1) AS ADJUSTED(1)(2)
---------- ----------- -----------------
(UNAUDITED, IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents......................... $ 2,210 $ 5,378 $ 52,970
========== ========== ==========
Current maturities of long-term debt.............. $ 8,456 $ 8,456 $ 8,456
========== ========== ==========
Long-term debt, net of current maturities......... $ 198,032 $ 260,065 $ 162,232
Convertible subordinated notes (former)........... 49,350 -- --
Convertible subordinated notes (new issuance)..... -- -- 150,000
Stockholders' equity:
Preferred stock, $.00001 par value, 10,000,000
shares authorized:
Series A preferred stock--1,860,000 shares
issued and outstanding..................... -- -- --
Common stock, $.00001 par value, 100,000,000
shares authorized; 54,302,161 shares issued
and outstanding; 60,667,700 shares issued and
outstanding pro forma combined and pro forma
as adjusted(3)............................... -- -- --
Limited Vote Common Stock, $.00001 par value,
3,345,333 shares authorized; 2,641,660 shares
issued and outstanding....................... -- -- --
Additional paid-in capital...................... 716,274 800,309 800,309
Retained earnings............................... 101,134 101,134 101,134
---------- ---------- ----------
Total stockholders' equity.............. 817,408 901,443 901,443
---------- ---------- ----------
Total capitalization.................... $1,064,790 $1,161,508 $1,213,675
========== ========== ==========
</TABLE>

------------

(1) Reflects the acquisition of nine businesses that we acquired between April
1, 2000 and June 30, 2000 as if these acquisitions had occurred on March 31,
2000, including additional borrowings of approximately $46.5 million under
our credit facility and the issuance of approximately 1.0 million shares of
common stock. In addition, it reflects the pro forma effect of the
conversion of the convertible subordinated notes (former) which occurred in
June 2000.

(2) Reflects the effect of the issuance and sale of the notes offered by us in
this prospectus supplement and the application of the resulting net proceeds
as described in "Use of Proceeds."

(3) Excludes (i) 7,253,398 shares of common stock reserved for issuance upon the
exercise of outstanding options, (ii) 11,941,660 shares of common stock
issuable upon conversion of the Series A preferred stock and Limited Vote
Common Stock and (iii) shares of common stock issuable upon conversion of
the notes.

S-12
<PAGE> 15

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

We completed our initial public offering on February 12, 1998, at a price
of $6.00 per share. The initial public offering price and all price data in the
following table have been adjusted to give effect to a 3-for-2 stock split paid
on April 7, 2000. Our common stock is listed on the New York Stock Exchange (the
"NYSE") under the symbol "PWR". The following table sets forth the high and low
sales prices per quarter as reported by the NYSE.

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1998
First Quarter (from February 12, 1998).................... $11.17 $ 7.33
Second Quarter............................................ 11.83 8.17
Third Quarter............................................. 10.25 8.00
Fourth Quarter............................................ 15.33 7.50
YEAR ENDED DECEMBER 31, 1999
First Quarter............................................. 19.83 14.42
Second Quarter............................................ 29.59 15.75
Third Quarter............................................. 28.17 13.42
Fourth Quarter............................................ 23.13 15.67
YEAR ENDING DECEMBER 31, 2000
First Quarter............................................. 46.83 17.92
Second Quarter............................................ 63.13 34.00
Third Quarter (through July 19, 2000)..................... 59.87 41.12
</TABLE>

On July 19, 2000, the last sale price for the common stock as reported by
the NYSE was $42.94 per share. As of June 30, 2000, there were 320 holders of
record of common stock, 37 holders of record of Limited Vote Common Stock and
one holder of record of Series A preferred stock. There is no established
trading market for the Limited Vote Common Stock or Series A preferred stock.

We have not paid cash dividends on our common stock since our initial
public offering. Further, we currently intend to retain our future earnings, if
any, to finance the growth, development and expansion of our business.
Accordingly, we do not intend to declare or pay any cash dividends on our common
stock in the immediate future. The declaration, payment and amount of future
cash dividends, if any, will be at the discretion of our board of directors
after taking into account various factors. These factors include: our 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, the terms of our
credit facility include restrictions on the payment of cash dividends without
the consent of the lenders.

SERIES A PREFERRED STOCK DIVIDEND AND PENDING EXCHANGE

Our Series A preferred stock accrues a dividend at a rate of 0.5% per annum
on a stated amount per share currently equal to $53.99 per share. Dividends of
$492,000 were accrued on the Series A preferred stock from the September 1999
issue date through March 31, 2000. Dividends on the Series A preferred stock
accumulate until paid. Our stockholders approved a proposal at our annual
meeting on May 24, 2000 that would allow UtiliCorp United to exchange up to
7,924,806 shares of common stock for up to 1,584,961 additional shares of Series
A preferred stock, at a rate of five shares of common stock for one share of
Series A preferred stock. The stockholders also approved reducing the stated
amount per share of Series A preferred stock on which dividends are paid from
$100 per share to $53.99 per share. It is contemplated that the proposed
exchange will be consummated during July 2000. The proposed exchange will not
adversely affect our other holders of common stock or Limited Vote Common Stock.
The additional shares of Series A preferred stock to be issued to UtiliCorp
United in the exchange will not give UtiliCorp United any greater voting power
than it presently has as a holder of the common stock to be exchanged and will
not give UtiliCorp United any additional veto power. In addition, the Series A
preferred stock has no liquidation preference, and the certificate of
designation relating to the Series A preferred stock was amended so that the
aggregate dividend payable to UtiliCorp United on the Series A preferred stock
is, as a result of the change in the stated amount per share, unaffected by the
proposed exchange.

S-13
<PAGE> 16

SELECTED FINANCIAL DATA

For financial statement presentation purposes, in connection with the
combination of the founding companies, concurrent with our initial public
offering, PAR Electrical Contractors, Inc. was identified as the "accounting
acquiror." Between our initial public offering in February 1998 and December 31,
1999, we acquired 52 specialty contracting businesses. Of these, 50 were
accounted for using the purchase method of accounting and two were accounted for
using the pooling-of-interests method of accounting. Through June 30, 2000, we
had acquired 15 additional specialty contracting businesses using the purchase
method of accounting, which are reflected in the pro forma data below, and
subsequent to June 30, 2000 we have acquired two additional specialty
contracting businesses. Quanta's consolidated historical financial statements
represent the financial position and results of operations of PAR as restated to
include the financial position and results of operations of companies acquired
in pooling transactions. The remaining businesses we acquired are reflected in
the financial statements beginning on their respective dates of acquisition. The
tables below present amounts in thousands, except per share data.

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA(1)
----------------------------------------------------------------------- ---------------------------
THREE MONTHS
ENDED THREE MONTHS
YEAR ENDED DECEMBER 31, MARCH 31, YEAR ENDED ENDED
------------------------------------------------- ------------------- DECEMBER 31, MARCH 31,
1995 1996 1997 1998 1999 1999 2000 1999 2000
------- ------- ------- -------- -------- -------- -------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Revenues................ $56,482 $78,230 $80,010 $319,259 $925,654 $127,779 $333,737 $1,329,839 $374,376
Cost of services
(including
depreciation)......... 47,266 62,772 62,599 257,270 711,353 104,871 261,056 1,008,325 290,409
------- ------- ------- -------- -------- -------- -------- ---------- --------
Gross profit...... 9,216 15,458 17,411 61,989 214,301 22,908 72,681 321,514 83,967
Selling, general and
administrative
expenses.............. 6,787 10,445 12,354 27,160 80,132 11,982 29,951 122,728 33,990
Merger-related
charges............... -- -- -- 231 6,574(2) 137 -- 6,574(2) --
Goodwill amortization... 50 55 56 2,513 10,902 1,498 4,216 18,983 4,765
------- ------- ------- -------- -------- -------- -------- ---------- --------
Income from
operations...... 2,379 4,958 5,001 32,085 116,693 9,291 38,514 173,229 45,212
Other income (expense),
net................... (785) (1,127) (1,421) (4,214) (13,755) (1,904) (3,984) (18,908) (5,364)
------- ------- ------- -------- -------- -------- -------- ---------- --------
Income before income tax
provision............. 1,594 3,831 3,580 27,871 102,938 7,387 34,530 154,321 39,848
Provision for income
taxes(3).............. 353 1,389 1,786 11,683 48,999 3,964 14,986 70,830 17,399
------- ------- ------- -------- -------- -------- -------- ---------- --------
Net income........ 1,241 2,442 1,794 16,188 53,939 3,423 19,544 83,491 22,449
Dividends on preferred
stock................. -- -- -- -- 260 -- 232 930 232
------- ------- ------- -------- -------- -------- -------- ---------- --------
Net income attributable
to common stock....... $ 1,241 $ 2,442 $ 1,794 $ 16,188 $ 53,679 $ 3,423 $ 19,312 $ 82,561 $ 22,217
======= ======= ======= ======== ======== ======== ======== ========== ========
Basic earnings per
share................. $ 0.20 $ 0.39 $ 0.29 $ 0.60 $ 1.14 $ 0.09 $ 0.34 $ 1.32 $ 0.35
======= ======= ======= ======== ======== ======== ======== ========== ========
Diluted earnings per
share................. $ 0.20 $ 0.39 $ 0.29 $ 0.59 $ 1.00 $ 0.09 $ 0.28 $ 1.14 $ 0.30
======= ======= ======= ======== ======== ======== ======== ========== ========
Diluted earnings per
share before merger
charges(4)............ $ 0.20 $ 0.39 $ 0.29 $ 0.60 $ 1.13 $ 0.11 $ 0.28 $ 1.24 $ 0.30
======= ======= ======= ======== ======== ======== ======== ========== ========
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 2000
DECEMBER 31, ---------------------------
--------------------------------------------------- PRO FORMA
1995 1996 1997 1998 1999 HISTORICAL AS ADJUSTED(5)
------- ------- ------- -------- ---------- ---------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................. $ 1,117 $ 2,797 $ 2,381 $ 57,106 $ 164,140 $ 188,802 $ 253,240
Total assets................................ 26,191 31,607 37,561 339,081 1,159,636 1,277,268 1,440,497
Long-term debt, net of current maturities... 4,430 6,665 7,638 60,281 150,308 198,032 162,232
Convertible subordinated notes (former)..... -- -- -- 49,350 49,350 49,350 --
Convertible subordinated notes (new
issuance)................................. -- -- -- -- -- -- 150,000
Total stockholders' equity.................. 8,982 9,385 11,402 171,503 756,925 817,408 901,443
</TABLE>

S-14
<PAGE> 17

------------

- approximately $6.0 million and $0.2 million for the year ended December 31,
1999 and the three months ended March 31, 2000, respectively, in pro forma
reductions in salaries, bonuses and benefits of the previous owners and
management of the acquired businesses; these amounts are intended to show
you the difference between the historical compensation costs for the owners
and management and the amounts to which they have agreed with us on a
prospective basis;

- amortization of goodwill over a 40-year period for acquired businesses
using the purchase method of accounting;

- the related tax impact of the aforementioned transactions.

Had this offering occurred on January 1, 1999, pro forma diluted earnings per
share and pro forma diluted earnings per share before merger charges would
have been $1.18 and $1.28, respectively, for the year ended December 31, 1999
and $0.31 for the three months ended March 31, 2000, due to the reduction in
interest expense related to the repayment of outstanding indebtedness from the
proceeds of this offering.

(2) As a result of the termination in June 1999 of an employee stock ownership
plan associated with a company acquired in a pooling transaction, we
incurred a non-cash, non-recurring compensation charge of $5.3 million and a
non-recurring excise tax charge of $1.1 million. In addition, we incurred
$137,000 in merger-related charges associated with a pooling transaction in
the first quarter of 1999.

(4) Excludes the effect of all non-recurring, merger-related charges.
Additionally, for the three months ended March 31, 1999 and for the twelve
months ended December 31, 1999, it excludes the non-cash, non-recurring
deferred tax charge of $677,000 described in Note (3) above.

(5) Reflects: (i) the acquisition of nine businesses we acquired between April
1, 2000 and June 30, 2000 as if these acquisitions had occurred on March 31,
2000, including additional borrowings of approximately $46.5 million under
our credit facility and the issuance of approximately 1.0 million shares of
common stock, (ii) the pro forma effect of the conversion of the convertible
subordinated notes (former) which occurred in June 2000, and (iii) the
effect of the issuance and sale of the notes offered by us in this
prospectus supplement and the application of the resulting net proceeds as
described in "Use of Proceeds."

S-15
<PAGE> 18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We derive our revenues from one reportable segment by providing specialized
contracting services and offering comprehensive network solutions. Our customers
include telecommunications, cable television and electric power companies, as
well as commercial, industrial and governmental entities. Including all
companies we acquired prior to June 30, 2000, we had pro forma combined revenues
for the year ended December 31, 1999 of $1.33 billion, of which 32% was
attributable to telecommunications customers, 14% was attributable to cable
television operators, 28% was attributable to electric power companies, and 26%
was attributable to ancillary services, such as installing intelligent traffic
networks, cable and control systems for light rail lines, airports and highways,
and providing specialty rock trenching, directional boring and road milling for
industrial and commercial customers. We acquired 40 companies in 1999, 32 of
which have continued as separate operating and reporting subsidiaries, or
"platform" companies, while the remaining eight acquired companies were
"tuck-in" acquisitions whose operating and accounting activities were absorbed
into other operating subsidiaries.

We enter into contracts principally on the basis of competitive bids, the
final terms and prices of which we frequently negotiate with the customer.
Although the terms of our contracts vary considerably, most are either a lump
sum or unit price basis in which we agree to do the work for a fixed amount for
the entire project (lump sum) or for units of work performed (unit price). We
also perform services on a cost-plus or time and materials basis. We are
generally able to achieve higher margins on lump sum and unit price contracts
than on cost-plus contracts as a result of our experience in bidding and
performance. Our exposure to loss on fixed price contracts has historically been
limited by the high volume and relatively short duration of the fixed price
contracts we undertake. However, as we perform larger projects, our reported
margins may be significantly affected by actual results on these projects.

We complete most installation projects within one year, while we frequently
provide maintenance and repair work under open-ended, unit price master service
agreements which are renewable annually. We generally record revenues from lump
sum contracts on a percentage-of-completion basis, using the cost-to-cost method
based on the percentage of total costs incurred to date in proportion to total
estimated costs to complete the contract. We recognize revenue when services are
performed except when work is being performed under fixed price or cost-plus-fee
contracts. Such contracts generally require that the customer accept completion
of progress to date and compensate us for services rendered, measured typically
in terms of units installed, hours expended or some other measure of progress.
Some of our customers require us to post performance and payment bonds upon
execution of the contract, depending upon the nature of the work to be
performed. Our fixed price contracts often include payment provisions pursuant
to which the customer withholds a 5% to 10% retainage from each progress payment
and forwards the retainage to us upon completion and approval of the work.

Costs of services consist primarily of salaries and benefits to employees,
depreciation, fuel and other vehicle expenses, equipment rentals, subcontracted
services, materials, parts and supplies. Our gross margin, which is gross profit
expressed as a percentage of revenues, is typically higher on projects where
labor, rather than materials, constitutes a greater portion of the cost of
services. We can predict materials costs more accurately than labor costs.
Therefore, to compensate for the potential variability of labor costs, we seek
to maintain higher margins on labor-intensive projects. Certain of our
subsidiaries were previously subject to deductibles ranging from $100,000 to
$1,000,000 for workers' compensation insurance and in the future we may have
similar large deductibles in our insurance program. Fluctuations in insurance
accruals related to these deductibles could have an impact on gross margins in
the period in which such adjustments are made. Selling, general and
administrative expenses consist primarily of compensation and related benefits
to management, administrative salaries and benefits, marketing, office rent and
utilities, communications and professional fees.

S-16
<PAGE> 19

For those acquisitions we accounted for using the purchase method of
accounting through March 31, 2000, based upon preliminary allocations of the
respective purchase price, subject to final adjustment, we recognized goodwill
of $665.9 million which equaled the excess amount we paid for such businesses
over the fair value of the tangible and intangible assets of such businesses. In
addition, we recorded goodwill of $25.6 million for the issuance of 5,017,999
shares of Limited Vote Common Stock we issued prior to our initial public
offering to the initial stockholders and management. We amortize this $691.5
million aggregate goodwill over its estimated useful life of 40 years as a
non-cash charge to operating income. We are unable to deduct the majority of
amortized goodwill from our income for tax purposes. We expect the pro forma
effect of this amortization expense to be approximately $17.3 million per year.

RESULTS OF OPERATIONS

For financial statement presentation purposes, in connection with the
combination of the founding companies concurrent with our initial public
offering, PAR has been identified as the accounting acquiror. As such, our
financial statements for periods prior to February 18, 1998 are the financial
statements of PAR as restated for the acquisition of the two businesses we
acquired in pooling transactions. The operations of the other businesses we
acquired have been included from their respective acquisition dates.

The following table sets forth selected statements of operations data and
such data as a percentage of revenues for the periods indicated. The table below
presents dollars in thousands:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
----------------------------------------------------- -----------------------------------
1997 1998 1999 1999 2000
--------------- ---------------- ---------------- ---------------- ----------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............................ $80,010 100.0% $319,259 100.0% $925,654 100.0% $127,779 100.0% $333,737 100.0%
Cost of services (including
depreciation)...................... 62,599 78.2 257,270 80.6 711,353 76.8 104,871 82.1 261,056 78.2
------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Gross profit........................ 17,411 21.8 61,989 19.4 214,301 23.2 22,908 17.9 72,681 21.8
Selling, general and administrative
expenses........................... 12,354 15.4 27,160 8.5 80,132 8.7 11,982 9.4 29,951 9.0
Merger related charges.............. -- -- 231 0.1 6,574 0.7 137 0.1 -- 0.0
Goodwill amortization............... 56 0.1 2,513 0.8 10,902 1.2 1,498 1.2 4,216 1.3
------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Income from operations.............. 5,001 6.3 32,085 10.0 116,693 12.6 9,291 7.2 38,514 11.5
Interest expense.................... (1,290) (1.6) (4,855) (1.5) (15,184) (1.6) (2,224) (1.7) (4,533) (1.4)
Other income (expense), net......... (131) (0.2) 641 0.2 1,429 0.1 320 0.3 549 0.2
------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Income before income tax
provision.......................... 3,580 4.5 27,871 8.7 102,938 11.1 7,387 5.8 34,530 10.3
Provision for income taxes.......... 1,786 2.3 11,683 3.6 48,999 5.3 3,964 3.1 14,986 4.4
------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Net income.......................... $ 1,794 2.2% $ 16,188 5.1% $ 53,939 5.8% $ 3,423 2.7% $ 19,544 5.9%
======= ===== ======== ===== ======== ===== ======== ===== ======== =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

Revenues. Revenues increased $206.0 million, or 161.2%, to $333.7 million
for the three months ended March 31, 2000. This increase was primarily
attributable to revenues of $114.7 million from platform companies acquired
subsequent to January 1, 1999 which continued to exist as separate reporting
subsidiaries. In addition, we have experienced strong growth in key business
areas as a result of greater demand for bandwidth, increased outsourcing,
deregulation and industry convergence.

Gross profit. Gross profit increased $49.8 million, or 217.3%, to $72.7
million for the three months ended March 31, 2000. Gross margin increased from
17.9% for the three months ended March 31, 1999 to 21.8% for the three months
ended March 31, 2000. This increase in our gross margin resulted from a shift in
our revenue mix to higher margin cable television and telecommunications
services. We also experienced improved margins in our electric power network
services as a result of better asset utilization and more favorable pricing.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased $18.0 million, or 150.0%, to $30.0 million for
the three months ended March 31, 2000. Of this increase, $7.7 million was
attributable to the platform companies we acquired subsequent to March 31, 1999
and $1.6 million was attributable to an increase in accruals associated with a
company-wide incentive program that pays bonuses to management at the operating
units and to corporate management for exceeding their performance targets.
Selling, general and administrative expenses also included a full three months
of costs in

S-17
<PAGE> 20

2000 associated with those companies acquired during the first three months of
1999. The remainder of the increase was attributable to tuck-in acquisitions and
the continued establishment of infrastructure to facilitate our growth and to
integrate our acquired businesses. As a percentage of revenues, selling, general
and administrative expenses decreased slightly due to better absorption of the
fixed component of overhead costs by the higher level of revenues.

Interest expense. Interest expense increased $2.3 million, or 103.8%, to
$4.5 million for the three months ended March 31, 2000 due to higher levels of
debt resulting from the acquisitions of the companies we purchased subsequent to
March 31, 1999. In addition, we borrowed funds under our credit facility for
equipment purchases and other operating activities in connection with the
addition of certain of the companies purchased subsequent to March 31, 1999 and
to support higher levels of revenue.

Provision for income taxes. The provision for income taxes was $15.0
million for the three months ended March 31, 2000 with an effective tax rate of
43.4% compared to $4.0 million for the three months ended March 31, 1999 and an
effective tax rate of 53.7%. In 1999, the provision reflects the
non-deductibility of the merger related charges and a non-cash, non-recurring
tax charge of $677,000 as a result of a change in the tax status of a company
acquired in a pooling-of-interest transaction from an S corporation to a C
corporation.

Net Income. Net income increased $16.1 million, or 471.0%, to $19.5 million
for the three months ended March 31, 2000 compared to $3.4 million for the three
months ended March 31, 1999.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

Revenues. Revenues increased $606.4 million, or 189.9%, to $925.7 million
for the year ended December 31, 1999. This increase was primarily attributable
to revenues of $403.5 million from platform companies acquired in 1999 which
continued to exist as separate reporting subsidiaries, as well as a full year of
contributed revenues in 1999 for those companies acquired in 1998. We are
experiencing strong growth in key business areas as a result of greater demand
for bandwidth, increased outsourcing, deregulation and industry convergence.
Because the businesses we acquired in 1998 and 1999 had aggregate revenues that
were much larger than our revenues at the beginning of the 1998 period, we
believe that pro forma revenue growth is a more meaningful measure of our
business performance. Operating units we owned as of December 31, 1999
experienced aggregate internal revenue growth on a pro forma combined basis of
21.7% in 1999 and at a compound annual rate of 24.7% between 1996 and 1999.

Gross profit. Gross profit increased $152.3 million, or 245.7%, to $214.3
million for the year ended December 31, 1999. Gross margin increased from 19.4%
for the year ended December 31, 1998 to 23.2% for the year ended December 31,
1999. This increase in our gross margin resulted from a shift in our revenue mix
to higher margin cable television and telecommunications services. We also
experienced improved margins in our electric power network services as a result
of better asset utilization and more favorable pricing.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased $53.0 million, or 195.0%, to $80.1 million for
the year ended December 31, 1999. Of this increase, $25.8 million was
attributable to the platform companies we acquired in 1999 and $5.4 million was
attributable to the implementation in 1999 of a company-wide incentive program
that paid bonuses to management at the operating units that exceeded their
performance targets and to corporate management. Selling, general and
administrative expenses also included a full year of costs in 1999 associated
with those companies acquired in 1998. The remainder of the increase was
attributable to tuck-in acquisitions and the continued establishment of
infrastructure to facilitate our growth and to integrate our acquired
businesses. As a percentage of revenues, selling, general and administrative
expenses remained relatively constant.

Merger-related charges. Merger-related charges for the year ended December
31, 1999 included $5.3 million of non-cash compensation charges related to the
allocation of shares of common stock to participants of an ESOP associated with
one of the companies acquired in a pooling transaction, and $1.1 million of
excise tax charges. We did not recognize significant merger-related charges in
1998.

Interest expense. Interest expense increased $10.3 million, or 212.7%, to
$15.2 million for the year ended December 31, 1999, due to higher levels of debt
resulting from the acquisitions of the companies we purchased
S-18
<PAGE> 21

in 1999. In addition, we borrowed funds under our credit facility for equipment
purchases and other operating activities in connection with the addition of
certain of the companies purchased in 1999. The issuance of the 6 7/8%
convertible subordinated notes in late 1998 also increased interest expense.

Provision for income taxes. The provision for income taxes was $49.0
million for the year ended December 31, 1999 with an effective tax rate of 47.6%
compared to $11.7 million for the year ended December 31, 1998 and an effective
tax rate of 41.9%. In 1999, the provision reflects the non-deductibility of the
merger related charges and a non-cash non-recurring tax charge of $677,000 as a
result of a change in the tax status of a company acquired in a
pooling-of-interest transaction from an S corporation to a C corporation.

Net income. Net income increased $37.8 million, or 233%, to $53.9 million
for the year ended December 31, 1999 compared to $16.2 million for the year
ended December 31, 1998.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

Revenues. Revenues increased $239.2 million, or 299.0%, to $319.3 million
for the year ended December 31, 1998. This increase in revenues was primarily
attributable to revenues from companies we acquired in 1998 of $225.0 million.

Gross profit. Gross profit increased $44.6 million, or 256.0%, to $62.0
million for the year ended December 31, 1998. Gross margin decreased from 21.8%
for the year ended December 31, 1997 to 19.4% for the year ended December 31,
1998. This decrease in gross margin was primarily due to a larger amount of high
margin storm and emergency work performed by PAR in 1997 compared to 1998, and
the acquisition of certain companies which earned lower margins than those
experienced in 1997 by PAR and one of the companies acquired in a pooling
transaction.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased $14.8 million, or 119.8%, to $27.2 million for
the year ended December 31, 1998, due to acquisitions we completed in 1998, and
the establishment of a corporate office and administrative infrastructure during
1998. As a percentage of revenues, selling, general and administrative expenses
decreased due to excess compensation paid to the owners of PAR in 1997 compared
to agreed upon salary levels commencing with our initial public offering and due
to one of the companies acquired in a pooling transaction having a higher sales
commission structure than the other companies.

Interest expense. Interest expense increased $3.6 million, or 276.4%, to
$4.9 million for the year ended December 31, 1998 due to higher levels of debt
resulting from cash paid and debt assumed in connection with the acquisition of
certain of the companies acquired in 1998. In addition, we borrowed funds under
our credit facility for equipment purchases and other operating activities in
connection with the addition of certain of the companies acquired in 1998. Also,
interest expense increased due to the addition of the convertible subordinated
notes, partially offset by lower overall effective borrowing rates in 1998
compared to 1997.

Provision for income taxes. The provision for income taxes was $11.7
million for the year ended December 31, 1998 with an effective tax rate of 41.9%
compared to $1.8 million for the year ended December 31, 1997 and an effective
tax rate of 49.9%. In 1997, the provision does not reflect a tax benefit
associated with the operating loss of one of the businesses acquired in a
pooling transaction which was converted from an S-corporation to a C-corporation
on the acquisition date.

Net income. Net income increased $14.4 million to $16.2 million for the
year ended December 31, 1998 compared to $1.8 million for the year ended
December 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2000, we had cash and cash equivalents of $2.2 million,
working capital of $188.8 million and long-term debt of $198.0 million, net of
current maturities, including borrowings of $35.8 million under our credit
facility. We also had $5.3 million of letters of credit outstanding under our
credit facility. In addition, at March 31, 2000, we had $49.4 million of
convertible subordinated notes outstanding that have been converted to common
stock subsequent to March 31, 2000.

S-19
<PAGE> 22

During the three months ended March 31, 2000, operating activities provided
net cash flow of $1.1 million. Changes in working capital accounts are affected
by the acquisitions throughout the quarter and as such are not comparable to
prior periods. We used net cash in investing activities of $58.0 million,
including $39.0 million used for the purchase of businesses, net of cash
acquired. Financing activities provided a net cash flow of $48.3 million,
resulting primarily from $150.0 million from the private placement of senior
secured notes, partially offset by $103.3 million in repayments of our credit
facility.

As of December 31, 1999, we had cash and cash equivalents of $10.8 million,
working capital of $164.1 million and long-term debt of $199.7 million, net of
current maturities. Our long-term debt balance at that date included borrowings
of $138.6 million under our credit facility and $49.4 million of convertible
subordinated notes and $11.7 million of other debt. In addition, we had $5.5
million of letters of credit outstanding under our credit facility.

During the year ended December 31, 1999, operating activities provided net
cash to us of $46.3 million. Acquisitions created the largest changes in our
working capital accounts throughout the year and such accounts are not
comparable to prior periods. We used net cash in investing activities of $368.3
million, including $308.7 million used for the purchase of businesses, net of
cash acquired. Financing activities provided net cash of $329.5 million,
resulting primarily from $82.9 million from net borrowings under our credit
facility, $101.1 million of net proceeds from a January 1999 public equity
offering and $182.1 million of net proceeds from the issuance of the Series A
preferred stock, partially offset by $43.3 million in repayments of debt assumed
in connection with acquisitions.

In January 1999, we completed a public offering of common stock, which
included the issuance of 6,900,000 shares of common stock (including 900,000
shares pursuant to the underwriters' over-allotment option) at a price of $15.50
per share (before deducting underwriting discounts and commissions). We realized
proceeds from this transaction, net of the discounts and commissions and after
deducting the expenses of the offering, of approximately $101.1 million. Of this
amount, we used $57.8 million to repay outstanding indebtedness under our credit
facility and the remainder to acquire additional businesses.

In June 1999, we expanded our bank group from nine to 14 banks and
increased our $175.0 million credit facility to $350.0 million. The credit
facility is secured by a pledge of all of the capital stock of our operating
subsidiaries and the majority of our assets. We use the credit facility to
provide funds to be used for working capital, to finance acquisitions and for
other general corporate purposes. Amounts borrowed under the credit facility
bear interest at a rate equal to either (a) LIBOR plus 1.00 percent to 2.00
percent, as determined by the ratio of our total funded debt to EBITDA (as
defined in the credit facility) or (b) the bank's prime rate plus up to 0.25
percent, as determined by the ratio of our total funded debt to EBITDA. We owe
commitment fees of 0.25 percent to 0.50 percent (based on total funded debt to
EBITDA) on any unused borrowing capacity under the credit facility. Our
subsidiaries guarantee repayment of all amounts due under the credit facility,
and the credit facility restricts pledges of material assets. We agreed to usual
and customary covenants for a credit facility of this nature, including a
prohibition on the payment of dividends on common stock, certain financial
ratios and indebtedness covenants and a requirement to obtain the consent of the
lenders for acquisitions exceeding a certain level of cash consideration.

In September 1999, we issued 1,860,000 shares of Series A preferred stock
to UtiliCorp United for an initial investment of $186,000,000, before
transaction costs. The Series A preferred stock bears a dividend rate of 0.5%
per annum and is convertible into common stock at any time at the option of
UtiliCorp United at $20.00 per share, subject to customary adjustments for
certain dilutive events. We used the net proceeds from the investment to reduce
outstanding borrowings under our credit facility.

We also entered into a management services agreement with UtiliCorp United
for advice and services including financing activities; corporate strategic
planning; research on the restructuring of the power industries; the
development, evaluation and marketing of our products, services and
capabilities; identification of and evaluation of potential U.S. acquisition
candidates and other merger and acquisition advisory services; and other
services that we may reasonably request. In consideration of the advice and
services rendered by UtiliCorp United, we agreed to pay UtiliCorp United, on a
quarterly basis in arrears, a fee of $2,325,000. The UtiliCorp United management
services agreement lasts for six years, but can be extended by mutual
S-20
<PAGE> 23

agreement of the parties. We have the right to terminate the management services
agreement at any time if, in our reasonable judgment, changes in the nature of
our relationship with UtiliCorp United make effective provision of the services
to be provided unlikely.

During 1999, we acquired 40 companies for an aggregate consideration of
15.0 million shares of common stock and $323.6 million in cash and notes. From
January 1, 2000 through June 30, 2000, we acquired 15 companies for an aggregate
consideration of $86.5 million in cash and 2.6 million shares of common stock.
The cash portion of such consideration was provided by borrowings under our
credit facility and proceeds from our January 1999 public offering of common
stock. We intend to use cash and shares of our common stock to finance
additional acquisitions we complete.

In March 2000, we closed a private placement of senior secured notes with
16 lenders, primarily insurance companies, for $150.0 million. The senior
secured notes have maturities of five, seven or ten years with a weighted
average interest rate of 8.52% and, pursuant to an intercreditor agreement, rank
pari passu in right of repayment with our credit facility indebtedness and are
secured by a pledge of all of the capital stock of our operating subsidiaries
and the majority of our assets. The senior secured notes have financial
covenants similar to the credit facility. We used the proceeds from this private
placement to reduce outstanding borrowings under the credit facility.
Accordingly, as of July 18, 2000, we had a borrowing availability of $174.6
million under the credit facility.

We anticipate that our cash flow from operations, our credit facility and
the proceeds to Quanta from this offering will provide sufficient cash to enable
us to meet our working capital needs, debt service requirements and planned
capital expenditures for property and equipment for at least the next 12 months.
However, if companies we wish to acquire are unwilling to accept our common
stock as part of the consideration for the sale of their businesses, we could be
required to utilize more cash to complete acquisitions. If sufficient funds were
not available from operating cash flow or through borrowings under the credit
facility, we may be required to seek additional financing through the public or
private sale of equity or debt securities. There can be no assurance that we
could secure such financing if and when we need it or on terms we would deem
acceptable.

INFLATION

Due to relatively low levels of inflation experienced during the years
ended December 31, 1997, 1998 and 1999, inflation did not have a significant
effect on our results.

YEAR 2000

The Company did not experience any significant operational difficulties nor
are we aware of any of our suppliers, customers or service providers
experiencing any significant operational difficulties as a result of Year 2000
issues. We will continue to monitor all critical systems for any incidents of
delayed complications or disruptions and problems encountered through third
parties with whom we deal so that they may be timely addressed.

SEASONALITY; FLUCTUATIONS OF QUARTERLY RESULTS

Our results of operations can be subject to seasonal variations. During the
winter months, demand for new projects may be lower due to reduced construction
activity. However, demand for repair and maintenance services attributable to
damage caused by inclement weather during the winter months may partially offset
the loss of revenues from lower demand for new projects. Additionally, our
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 in
the U.S. Typically, we experience lower gross and operating margins during the
winter months. The timing of acquisitions, variations in the margins of projects
performed during any particular quarter, the timing and magnitude of acquisition
assimilation costs and regional economic conditions may also materially affect
quarterly results. Accordingly, our operating results in any particular quarter
may not be indicative of the results that can be expected for any other quarter
or for the entire year.

S-21
<PAGE> 24

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk primarily related to potential adverse
changes in interest rates as discussed below. Management is actively involved in
monitoring exposure to market risk and continues to develop and utilize
appropriate risk management techniques. We are not exposed to any other
significant market risks, including commodity price risk, foreign currency
exchange risk or interest rate risks from the use of derivative financial
instruments. Management does not presently use derivative financial instruments.

Therefore, our exposure to changes in interest rates primarily results from
our short-term and long-term debt with both fixed and floating interest rates.
Our debt at December 31, 1999 with fixed interest rates primarily consisted of
our 6 7/8% convertible subordinated notes issued in September 1998, which have
subsequently been converted to common stock. Our debt with variable interest
rates was primarily our credit facility. The following table presents principal
amounts (stated in thousands) and related average interest rates by year of
maturity for our debt obligations and their indicated fair market value at
December 31, 1999:

<TABLE>
<CAPTION>
2000 2001 2002 2003 2004 THEREAFTER TOTAL
------ ------ ------ ------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Liabilities--Long-Term
Debt Variable Rate...... $ -- $ -- $ -- $ -- $138,630 $ -- $138,630
Average Interest Rate... 7.6% 7.6% 7.6% 7.6% 7.6% 7.6% 7.6%
Fixed Rate.............. $ -- $ -- $ -- $ -- $ -- $49,350 $ 49,350
Average Interest Rate... 6.875% 6.875% 6.875% 6.875% 6.875% 6.875% 6.875%
</TABLE>

<TABLE>
<CAPTION>
FAIR VALUE
----------
<S> <C>
Liabilities--Long-Term Debt:
Variable Rate......................................... $138,630
Fixed Rate............................................ $ 49,350
</TABLE>

For comparative purposes, the following table presents principal amounts
(stated in thousands) and related average interest rates by year of maturity for
our 1998 debt obligations and their indicated fair market value at December 31,
1998:

<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 THEREAFTER TOTAL
------ ------ ------ ------ ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Liabilities--Long-Term Debt
Variable Rate............. $ -- $ -- $ -- $ -- $56,000 $ -- $56,000
Average Interest Rate..... 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%
Fixed Rate................ $ -- $ -- $ -- $ -- $ -- $49,350 $49,350
Average Interest Rate..... 6.875% 6.875% 6.875% 6.875% 6.875% 6.875% 6.875%
</TABLE>

<TABLE>
<CAPTION>
FAIR VALUE
----------
<S> <C>
Liabilities--Long-Term Debt:
Variable Rate......................................... $56,000
Fixed Rate............................................ $49,350
</TABLE>

Subsequent to December 31, 1999, we issued $150.0 million of senior notes.
The senior notes have maturities of five, seven and ten years with a weighted
average interest rate of 8.52%. The proceeds were used to pay down our credit
facility.

S-22
<PAGE> 25

BUSINESS

GENERAL

At December 31, 1999, our operating units had revenues on a combined pro
forma basis of $1.33 billion in 1999 compared to $1.09 billion in 1998,
representing pro forma internal revenue growth of 22.0%. To leverage the growth
in demand for our services, we made strategic acquisitions that expanded our
geographic presence, generated operating synergies with existing businesses and
developed new capabilities to meet our customers' evolving needs.

<TABLE>
<S> <C>
-- AT&T -- PG&E
-- Century Telephone -- Puget Sound Energy
-- Charter Communications -- Seren
-- Enron -- Sprint PCS
-- Everest Connections -- Time Warner
-- Media One (now AT&T Broadband) -- U.S. West (now Qwest Communications)
-- Nevada Power -- UtiliCorp United
-- PF.Net -- Williams Communications
</TABLE>

Our reputation for speed, performance, geographic reach and a comprehensive
service offering has also enabled us to develop profitable strategic alliances
with customers such as Enron and UtiliCorp United.

INDUSTRY OVERVIEW

Increased Demand for Bandwidth. To meet increasing demand for bandwidth
required for video, voice and data transmission, telecommunications and cable
television providers are expanding and upgrading their networks. According to
industry sources, broadband Internet subscriptions across all categories (cable,
DSL and wireless) are expected to increase from 0.6 million in 1998 to 34.3
million in 2008. By 2003, it is expected that 54.0 million, or approximately
half, of U.S. homes will have Internet access. We believe that many new entrants
into the local and long distance telephone, Internet and cable television
markets will have an immediate need to install and expand their networks to be
competitive.

Deregulation. Deregulation of the telecommunications markets has spurred
significant additional investment by cable television companies, local exchange
carriers and long distance companies as they seek to protect and expand their
customer bases. Deregulation of the utility markets has caused electric power
companies to seek to improve their competitive position by reducing their costs
and entering new lines of business. Deregulation will drive increased
competition in these industries and force companies to find new ways to maintain
or increase their competitive advantage.

Increased Outsourcing. Competitive pressures in the industries we serve and
an increased focus on core competencies have caused an acceleration of
outsourcing of network services. For instance, while investor-owned utilities
have expanded their services and increased their power generation, total
employment has
S-23
<PAGE> 26

declined in the last decade. Outsourcing network development and maintenance
reduces costs, provides flexibility in budgets and improves the service and
performance of our customers.

Industry Convergence. Telecommunications, cable television and electric
power providers are leveraging their rights-of-way and existing networks to
deliver comprehensive, value-added services to their customer base. For
instance, according to the Edison Electric Institute, over one-half of
investor-owned electric utilities now have a telecommunications-related
subsidiary as part of their corporate structure. As business lines between
traditional telecommunications, cable television and electric power markets
continue to blur, our target customers are increasingly seeking single-source
providers with expertise in fiber optic, coaxial, copper and energized power
networks.

Increased Demand for Comprehensive End-to-End Solutions. We believe that
our customers seek service providers who can rapidly and effectively design,
install and maintain networks and continue to meet their evolving needs as they
enter new geographic and product markets. The strategic and financial value to
these companies of geographically expanded and technologically improved networks
has caused them to place a premium on the provision of quick and reliable
turnkey network solutions. Accordingly, they are reducing the number of their
network service providers and partnering with experienced companies with broad
geographic reach, financial strength and technical expertise.

Increased Need to Upgrade Electric Power Transmission and Distribution
Networks. We believe that aging networks and increased competition will spur
increased investment in electric power transmission and distribution networks.
As competition allows consumers and businesses more choice as to their provider
of electric power, concerns about power quality and reliability will result in
increased investment in transmission and distribution infrastructure.
Additionally, as deregulation accelerates the selling of electricity across
regional networks, capacity and reliability will become increasingly important.

OUR COMPETITIVE STRENGTHS

Our competitive strengths include:

Nationwide Capability. We provide our services in all 50 states, which
positions us as one of the few experienced network service providers able to
deliver comprehensive network solutions regardless of geographic scope. For
example, our recently announced PF.Net network installation spans nine states.

Comprehensive End-to-End Service Offering. We believe that we are one of
the few network service providers capable of delivering end-to-end solutions.
Starting from one end point, such as a telephone company switching system, cable
television head end or electric power generation plant and extending through
fiber optic, copper, power and coaxial cable or wireless transmission
infrastructure to the end user's terminal, data port or cellular station, we can
design, build, install and maintain a telecommunications, cable television or
electric power network. We apply our technical expertise and innovative
technologies to provide cost effective solutions to our customers. For instance,
we are the sole owner of the U.S. rights to the patented Line Master(R) robotic
arm that can be used to facilitate the repair of high voltage power transmission
lines without disrupting service. In addition, our broad range of services gives
us the flexibility to capitalize on the growth of the Internet and the
convergence of traditional telecommunications, cable television and electric
power markets to meet our customers' continually evolving needs.

Management Experience. Several of our top corporate executives, including
our Chief Executive Officer, have more than 20 years of experience in managing
network infrastructure operations. In addition, more than 30 executives of our
operating units have over 20 years experience. Cooperation among our operating
units by sharing best practices and innovative technology leverages this
management expertise throughout our company.
S-24
<PAGE> 27

GROWTH STRATEGY

The key elements of our growth strategy are:

Focus on Internal Growth and Integration. We believe we can continue to
generate strong internal revenue growth by providing our customers comprehensive
end-to-end solutions for their infrastructure needs. Our operating units share
best practices and innovative technology, as well as equipment and human
resources. Accordingly, each operating unit is well-positioned to expand its
relationship with current customers and develop relationships with new
customers. By cross-selling the capabilities of our operating units, we offer
our customers cost-effective, turnkey solutions to their network needs.

Expand Portfolio of Services. We plan to expand our portfolio of services,
providing our customers with a completely outsourced solution to their evolving
network infrastructure needs. We intend to broaden our service offering,
including geographic reach and technological capabilities, through both internal
development and selective acquisitions.

Continue to Expand Operating Efficiencies. In 1999, we increased our gross
profit, operating income and net income margins. We intend to continue to
improve our profitability by:

-- focusing on growth in our more profitable services;

-- combining overlapping operations of certain of the businesses we
acquire;

-- using our assets more efficiently;

-- increasing purchasing power to gain volume discounts in areas such as
vehicles and equipment, materials, marketing, bonding, employee
benefits and insurance;

-- sharing of pricing, bidding, licensing and other business practices
among our operating units; and

-- developing and expanding the use of management information systems to
facilitate financial control and asset allocation.

Pursue Selected Acquisitions. We plan to continue to pursue acquisitions of
profitable companies with strong management teams and good reputations to
broaden our customer base, expand our geographic area and grow our portfolio of
services. We have successfully integrated over 60 acquisitions since our initial
public offering in February 1998. We expect that there will continue to be a
large number of attractive acquisition candidates due to the highly fragmented
nature of the industry, the inability of many companies to expand and modernize
due to capital constraints, and the desire of owners for liquidity. We believe
that our financial strength and experienced management will be attractive to
acquisition candidates.

SERVICES

We deliver end-to-end network solutions to the telecommunications, cable
television and electric power industries as well as commercial, industrial and
governmental entities. Our comprehensive services include designing, installing,
repairing and maintaining network infrastructure.

Telecommunications Network Services. Our services to the telecommunications
industry generated 32% of our pro forma combined revenues for the year ended
December 31, 1999. These services include:

-- fiber optic, copper and coaxial cable installation and maintenance
for video, data and voice transmission;

-- designing, building and maintaining DSL networks;

-- engineering and erecting cellular, digital, PCS(R), microwave and
other wireless communications towers;

-- designing and installing switching systems for incumbent local
exchange carriers, competitive local exchange carriers, regional Bell
operating companies and long distance providers;

S-25
<PAGE> 28

-- trenching and plowing applications;

-- horizontal directional boring;

-- rock saw, rock wheel and rock trench capabilities;

-- vacuum excavation services;

-- splicing and testing of fiber optic and copper networks; and

-- cable locating.

Cable Television Network Services. Our services to the cable television
industry generated 14% of our pro forma combined revenues for the year ended
December 31, 1999. These services include:

-- fiber optic and coaxial cable installation and maintenance for voice,
video and data transmission;

-- system design and installation;

-- upgrading power and telecommunications infrastructure for cable
installations;

-- system splicing, balance, testing and sweep certification; and

-- analog and digital residential installation and customer connects for
cable television, telephone and Internet services.

Electric Power Network Services. Our services to the electrical power
industry generated 28% of our pro forma combined revenues for the year ended
December 31, 1999. These services include:

-- installation, repair and maintenance of electric transmission lines
from 69,000 volts to 760,000 volts;

-- installation, repair and maintenance of electric power distribution
projects;

-- designing and constructing substation projects;

-- installing fiber optic lines for voice, video and data transmission
on existing electric power infrastructure;

-- installing and maintaining joint trench natural gas distribution
systems;

-- trenching and horizontal boring for underground installations;

-- cable and fault locating; and

-- storm damage restoration work.

Ancillary Services. Our ancillary services to commercial, industrial and
governmental entities generated 26% of our pro forma combined revenues for the
year ended December 31, 1999. These services include:

-- installing intelligent traffic networks such as traffic signals,
controllers, synchronized signals, variable message signs, closed
circuit television and other monitoring devices for governments;

-- installing cable and control systems for light rail lines, airports
and highways;

-- designing, installing, maintaining and repairing electrical
components, fiber optic cabling and building control and automation
systems;

-- installing and maintaining natural gas transmission systems; and

-- providing specialty rock trenching, directional boring and road
milling for industrial and commercial customers.

S-26
<PAGE> 29

CUSTOMERS, STRATEGIC ALLIANCES AND PREFERRED PROVIDER RELATIONSHIPS

Our customers include telecommunications, cable television and electric
power companies, as well as commercial, industrial and governmental entities.
Telecommunications companies currently represent our largest customer base. Our
10 largest customers accounted for less than 30% of our pro forma revenues in
1999.

Management at each of our operating units is responsible for developing and
maintaining successful long-term relationships with customers. Our management is
encouraged to cross-sell additional services of other operating units to their
customers. In addition, our corporate marketing staff promotes and markets our
services for prospective large national accounts and projects that require
services from multiple business units, such as our recently announced contracts
with Everest Connections and PF.Net. Many of our customers and prospective
customers have qualification procedures for approved bidders or vendors based
upon the satisfaction of particular performance and safety standards set by the
customer. These customers typically maintain a list of vendors meeting such
standards and award contracts for individual jobs only to such vendors. We
strive to maintain our status as a preferred or qualified vendor to such
customers.

We believe that our strategic relationships with large providers of
telecommunications services and electric power providers will provide
opportunities for future growth. In September 1999, UtiliCorp United invested
$186.0 million in Quanta and agreed to use Quanta as a preferred contractor in
outsourced transmission and distribution infrastructure construction and
maintenance and natural gas distribution construction and maintenance in all
areas serviced by Quanta. In October 1998, in connection with a $49.4 million
investment in Quanta, we entered into a strategic alliance agreement with an
affiliate of Enron regarding the design, construction and maintenance of
electric power transmission and distribution systems and fiber optic
communications systems.

We also maintain strategic alliance agreements or preferred provider
relationships with several other leading companies competing in the
telecommunications and electric power industries. Strategic alliances are
typically agreements for periods of approximately two to four years that may
include an option to add one to two years at the end of a contract. Many of the
strategic alliance agreements we have secured include exclusivity clauses
providing that Quanta will be awarded all contracts for a certain type of work
or in a certain geographic region. None of these contracts, however, guarantee a
specific dollar amount of work to be performed by Quanta. Preferred provider
agreements typically indicate the intention to work together and certain of
these agreements provide us with preferential bidding procedures. Certain of our
strategic alliances and preferred provider relationships are listed in the
following table:

<TABLE>
<CAPTION>
START OF
RELATIONSHIP RELATIONSHIP
------------ ------------
<S> <C>
Everest Connections................................... 2000
UtiliCorp United...................................... 1999
Enron................................................. 1998
Washington Water & Power (Avista)..................... 1996
Century Telephone..................................... 1993
Nevada Power Company.................................. 1989
MidAmerican Energy Corp............................... 1988
Western Resources..................................... 1979
Kansas City Power & Light............................. 1978
Intermountain R.E.A................................... 1953
</TABLE>

ACQUISITIONS

During 1999, we acquired 40 network service or related businesses for a
combined consideration of $323.6 million in cash and notes and 15.0 million
shares of common stock. In addition, from December 31, 1999 to June 30, 2000, we
acquired 15 additional businesses for a combined consideration of $86.5 million
in cash and 2.6 million shares of common stock.

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<PAGE> 30

We have developed a set of financial, geographic and management criteria
designed to assist management in the evaluation of acquisition candidates as
compatible with Quanta's business strategy. These criteria evaluate a variety of
factors, including:

-- historical and projected financial performance;

-- experience and reputation of the candidate's management and
operations;

-- composition and size of the candidate's customer base;

-- whether the geographic location of the candidate will enhance or
expand our market area or ability to attract other acquisition
candidates;

-- whether the acquisition will augment or increase Quanta's market
share or services offered or help protect our existing customer base;

-- potential synergies gained by combining the acquisition candidate
with our existing operations; and

-- liabilities, contingent or otherwise, of the candidate.

EMPLOYEES

As of March 31, 2000, we had approximately 8,600 employees, of which
approximately 1,100 were salaried employees and approximately 7,500 were hourly
employees. Salaried employees include executive officers, project managers or
engineers, job superintendents, staff and clerical personnel. The number of
hourly employees fluctuates depending upon the number and size of the projects
we undertake at any particular time. We do not anticipate any overall reductions
in staff as a result of the consolidation of the businesses we acquire, although
there may be some job realignments and new assignments in an effort to eliminate
overlapping and redundant positions.

Approximately 35% of our employees at March 31, 2000 were covered by
collective bargaining agreements, primarily with the International Brotherhood
of Electrical Workers. Under these agreements with our unions, we agree to pay
specified wages to our union employees, observe certain workplace rules and make
employee benefit payments to multi-employer pension plans and employee benefit
trusts rather than administering the funds on behalf of these employees. These
collective bargaining agreements have varying terms and expiration dates. The
majority of the collective bargaining agreements contain provisions that
prohibit work stoppages or strikes, even during specified negotiation periods
relating to agreement renewal, and provide for binding arbitration dispute
resolution in the event of prolonged disagreement. None of our operating units
has experienced any strikes or work stoppages in the past 20 years; however,
there can be no assurance that work stoppages or strikes will not occur from
time to time.

Each of our operating units provides a variety of health, welfare and
benefit plans for their employees who are not covered by collective bargaining
agreements. We are currently considering replacing these various employee
benefit plans with a single plan covering all of our non-bargaining employees.
In February 1999, Quanta adopted a 401(k) plan pursuant to which eligible
employees who are not provided retirement benefits through a collective
bargaining agreement may make contributions through a payroll deduction. Quanta
makes matching contributions of 100% of each employee's contribution up to 3% of
that employee's salary and 50% of each employee's contribution between 3% and 6%
of such employee's salary. Quanta also has an employee stock purchase plan which
provides that eligible employees may contribute up to 10% of their cash
compensation, up to $25,000 annually, toward the semi-annual purchase of
Quanta's common stock at a discounted price. Over 1,100 of our employees
participated in the initial offering period for this plan.

Our industry, like many industries, is experiencing a shortage of skilled
workers. In response to the shortage, we seek to take advantage of various IBEW
and National Electrical Contractors Association referral programs and hire
graduates of the joint IBEW/NECA apprenticeship program for training qualified
electrical workers.

We believe our relationships with employees and union representatives are
good.

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<PAGE> 31

TRAINING, QUALITY ASSURANCE AND SAFETY

Performance of Quanta's services requires the use of equipment and exposure
to conditions that can be dangerous. Although we are committed to a policy of
operating safely and prudently, we have been and will continue to be subject to
claims by employees, customers and third parties for property damage and
personal injuries resulting from performance of our services. We perform on-site
services using employees who have completed our applicable safety and training
programs. Quanta's policies require that employees complete the prescribed
training and service program of the operating unit for which they work in
addition to those required, if applicable, by NECA and the IBEW prior to
performing more sophisticated and technical jobs. For example, all journeymen
linemen are required by the IBEW and NECA to complete a minimum of 7,000 hours
of on-the-job training, approximately 200 hours of classroom education and
extensive testing and certification. Each operating unit may require additional
training depending upon the sophistication and technical requirements of a
particular job. We intend to establish company-wide training and educational
programs, as well as comprehensive safety policies and regulations, by sharing
"best practices" throughout our operations.

REGULATION

Our operations are subject to various federal, state and local laws and
regulations including:

-- licensing requirements applicable to electricians and engineers;

-- building and electrical codes;

-- permitting and inspection requirements applicable to construction
projects;

-- regulations relating to worker safety and environmental protection;
and

-- special bidding and procurement requirements on government projects.

We believe that we have all the licenses required to conduct our operations
and that we are in substantial compliance with applicable regulatory
requirements. Our failure to comply with applicable regulations could result in
substantial fines or revocation of our operating licenses. Many state and local
regulations governing electrical construction require permits and licenses to be
held by individuals who have passed an examination or met other requirements.
Quanta intends to implement a policy to ensure that, where possible, any such
individual permits or licenses that may be material to Quanta's operations are
held by at least two of our employees with responsibility for the regulated
activity.

Our operations are subject to various laws and regulations governing the
discharge of materials into the environment or otherwise relating to
environmental protection. For example, we own and operate a number of
above-ground and below-ground fuel storage tanks, vehicle maintenance and
vehicle washing facilities, and equipment storage facilities. As a result of
these and other operations, we must comply with air quality regulations under
the federal Clean Air Act, water quality and wastewater disposal regulations
under the federal Clean Water Act, and regulations related to the handling and
storage of hazardous substances (including waste oil, cleaning solvents, and
possibly polychlorinated biphenyls, creosote, and asbestos) under the federal
Resource Conservation and Recovery Act. Other federal, state and local
environmental regulations may also apply to our operations. Failure to comply
with these regulations could result in substantial civil and criminal penalties.
Our operating executives and safety department share responsibility for
overseeing our compliance with environmental regulations.

We could also incur liability under the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA"), also known as the
"Superfund" law. CERCLA imposes liability, without regard to fault or the
legality of the original conduct, on classes of persons who are considered to
have contributed to the release of hazardous substances into the environment.
These classes of persons include the owners or operators of disposal sites or
other sites where releases to the environment occurred as well as companies that
disposed or arranged to dispose of the hazardous substances found at the site.
Persons who are responsible under CERCLA may be subject to joint and several
liability for environmental cleanup costs and for damages

S-29
<PAGE> 32

to natural resources. Also, it is not uncommon for neighboring landowners and
other third parties to file claims for personal injury and damage to property
allegedly caused by the hazardous substances released into the environment.
Because we have purchased businesses that dispose of hazardous substances and
have acquired real property in connection with those purchases, we could be
liable under CERCLA or other similar laws for environmental cleanup costs based
on past or future operations at our facilities.

We believe we are in substantial compliance with current applicable
environmental laws and regulations and that continued compliance with existing
requirements will not have a material adverse impact on us. Furthermore, we are
not aware of any pending or threatened environmental lawsuits, fines, or
enforcement actions that could have a material adverse impact on us. Public
interest in protecting the environment, however, has increased dramatically in
recent years. Therefore, if laws are enacted or other governmental actions are
taken that impose additional environmental protection requirements, our business
prospects could be adversely affected to the extent that our environmental
compliance costs increase.

COMPETITION

The industry in which we operate is highly competitive, requiring
substantial resources and skilled and experienced personnel. Quanta competes
with other independent contractors in most of the markets in which we operate,
several of which are large domestic companies that have greater financial,
technical and marketing resources. In addition, there are relatively few
barriers to entry into the industry in which we operate and, as a result, any
organization that has adequate financial resources and access to technical
expertise may become a competitor. A significant portion of our revenues are
currently derived from fixed price agreements, and price is often an important
factor in the award of such agreements. Accordingly, we could be underbid by our
competitors in an effort by them to procure such business. We believe that as
demand for our services increases, customers will increasingly consider other
factors in choosing a service provider, including technical expertise and
experience, financial and operational resources, nationwide presence, industry
reputation and dependability, which should benefit contractors such as Quanta.
There can be no assurance, however, 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, or 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, including
telecommunication, cable television and electric power companies, that employ
personnel who perform some of the same types of services as those provided by
us. Although a significant portion of these services is currently outsourced,
there can be no assurance that our existing or prospective customers will
continue to outsource services in the future.

RISK MANAGEMENT, INSURANCE AND PERFORMANCE BONDS

The primary risks in our operations are bodily injury, property damage and
injured workers' compensation. We maintain automobile and general liability
insurance for third party bodily injury and property damage and workers'
compensation coverage which we consider sufficient to insure against these
risks. Certain of these policies maintained by our operating units prior to our
acquisition of them were subject to self-insured amounts ranging from $100,000
to $1,000,000. We have consolidated the casualty insurance programs for most of
our subsidiaries, which has resulted in savings from the amounts historically
paid by the operating units. Our current insurance program has no self-insurance
provisions. In the future, however, we may have insurance programs with
significant self-insurance obligations. Self-insured claims under previous
policies are monitored to ensure that remaining accruals are adequate. Accruals
for outstanding claims are estimated based on known facts and our prior
experience. Actual experience and claims could differ from our estimates.

Contracts in the telecommunications, cable television and electrical power
contracting industry may require performance bonds or other means of financial
assurance to secure contractual performance. If we were unable to obtain surety
bonds or letters of credit in sufficient amounts or at acceptable rates, we
might be precluded from entering into additional contracts with certain of our
customers.

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<PAGE> 33

LEGAL PROCEEDINGS

We are from time to time a party to litigation or administrative
proceedings that arise in the normal course of our business. We do not have
pending any litigation that, separately or in the aggregate, would in the
opinion of management have a material adverse effect on our results of
operations or financial condition.

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<PAGE> 34

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning our directors
and executive officers:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John R. Colson............. 53 Chief Executive Officer, Director
James H. Haddox............ 51 Chief Financial Officer
Gary A. Tucci.............. 43 Vice President Western Region, President of
Potelco, Director
John R. Wilson............. 50 Vice President Eastern Region, President of PAR,
Director
Luke T. Spalj.............. 35 Vice President Central Region, Chief Operating
Officer of Spalj Construction Company
Elliott C. Robbins......... 53 Senior Vice President--Operations
James F. O'Neil III........ 41 Vice President--Operational Integration
Nicholas M. Grindstaff..... 37 Treasurer
Brad Eastman............... 32 Vice President, Secretary and General Counsel
Derrick A. Jensen.......... 29 Vice President, Controller and Chief Accounting
Officer
John A. Martell............ 45 Vice President of TRANS TECH, Director
Vincent D. Foster.......... 43 Chairman of the Board of Directors
James R. Ball.............. 57 Director
Michael T. Willis.......... 55 Director
Robert K. Green............ 38 Director
James G. Miller............ 51 Director
</TABLE>

John R. Colson was elected Chief Executive Officer of Quanta in December
1997 and became a director of Quanta effective upon the consummation of our
initial public offering in February 1998. Mr. Colson joined PAR in 1971 and
became its President in 1991. Mr. Colson is currently a member of the Council of
Industrial Relations, governor of the Missouri Valley chapter of NECA and a
director of the Missouri Valley Line Apprenticeship Program, and a director of
U.S. Concrete, Inc., a publicly traded ready-mixed concrete manufacturer and
distributor.

James H. Haddox has been Chief Financial Officer of Quanta since November
1997. From March 1996 until joining Quanta, Mr. Haddox was Senior Vice
President--Finance of Corporate Express Delivery Systems, Inc., a national
provider of same day delivery services. From January 1994 to March 1996, Mr.
Haddox held various positions, including Chief Accounting Officer and Vice
President--Finance, with U.S. Delivery Systems, Inc., a NYSE listed company
which was the largest provider of same day delivery services in the U.S. prior
to its merger in March 1996 with Corporate Express, Inc. From 1991 to 1994 Mr.
Haddox was an independent business consultant providing management services.
From 1987 to 1991, Mr. Haddox held various financial positions, including Chief
Financial Officer and Chief Accounting Officer, at Allwaste, Inc., a NYSE listed
national environmental services company. Mr. Haddox is a certified public
accountant.

Gary A. Tucci has been Vice President--Western Region of Quanta since
August 1998. Mr. Tucci joined Potelco, a subsidiary of Quanta, in 1975 and
became its President in 1988. Mr. Tucci is a member of the Joint NECA/IBEW
Apprenticeship and Training Committee as well as its labor relations board. Mr.
Tucci became a director of Quanta effective upon the consummation of our initial
public offering.

John R. Wilson has been Vice-President--Eastern Region of Quanta since
April 1999 and President of PAR since 1997. Mr. Wilson joined PAR in 1977 and
became an Executive Vice President in 1991. Mr. Wilson became a director of
Quanta effective upon the consummation of our initial public offering.

S-32
<PAGE> 35

Luke T. Spalj has been Vice President--Central Region of Quanta since May
2000 and Chief Operating Officer of Spalj Construction Company since 1998. Mr.
Spalj joined Spalj Construction Company in 1989. Mr. Spalj is a registered
professional engineer and a director of the First National Bank of Deerwood and
the Power Communication Contractors Association.

Elliott C. Robbins has been Senior Vice President--Operations of Quanta
since November 1999 and Chief Executive Officer of Intermountain Electric, Inc.
since 1998. Quanta acquired Intermountain in July 1999. Mr. Robbins held various
positions with the MYR Group, Inc. from 1984 until 1998, most recently as a
member of the Executive Management Committee and Senior Vice President,
Treasurer and Chief Financial Officer. Mr. Robbins is a certified public
accountant and a member of NECA, the America Institute of Certified Public
Accountants, the Illinois CPA Society and the Union League Club.

James F. O'Neil III has been Vice President--Operational Integration of
Quanta since August 1999. From 1980 until 1999, Mr. O'Neil held various
positions with Halliburton Company, most recently as Director, Global Deepwater
Development.

Nicholas M. Grindstaff has been Treasurer of Quanta since October 1999.
From March 1999 until September 1999, Mr. Grindstaff served as Assistant
Treasurer of Quanta. From December 1996 until February 1999, Mr. Grindstaff was
employed by American Residential Services, a consolidator of the HVAC, plumbing
and electrical service industries, most recently as Assistant Treasurer. Prior
to joining American Residential Services, Mr. Grindstaff had various financial
roles with IBM.

Brad Eastman has been Vice President and General Counsel of Quanta since
July 1998 and Secretary since March 1999. From March 1996 until joining Quanta,
Mr. Eastman was an associate in the law firm of Brobeck, Phleger & Harrison LLP
focusing on clients in high growth industries. From October 1994 until March
1996, Mr. Eastman was an associate in the law firm of Sullivan & Cromwell
focusing on clients in the financial services industry. Mr. Eastman holds a J.D.
degree.

Derrick A. Jensen has been Vice President and Controller of Quanta since
December 1997 and Chief Accounting Officer since March 1999. Prior to joining
Quanta, Mr. Jensen was employed by Arthur Andersen LLP, serving most recently as
audit manager focusing on clients in consolidating industries. Mr. Jensen is a
certified public accountant.

John A. Martell founded TRANS TECH Electric, Inc., a subsidiary of Quanta,
in 1983 and serves as its Vice President. He is currently a member of the
National Fire Protection Association and the Illuminating Engineering Society.
Mr. Martell is a registered professional engineer. Mr. Martell became a director
of Quanta effective upon the consummation of our initial public offering.

Vincent D. Foster has been a director of Quanta since November 1997 and
became non-executive Chairman of the Board upon consummation of our initial
public offering. Mr. Foster is a Managing Director of Main Street Equity
Advisors, LLC, a venture capital firm. From September 1988 through October 1997,
Mr. Foster was a partner of Andersen Worldwide and Arthur Andersen. Mr. Foster
was the Director of the Corporate Finance and Mergers and Acquisitions practices
of Arthur Andersen for the southwestern U.S., specializing in structuring and
executing "roll-up" transactions and in providing merger and acquisition and
corporate finance advisory services to clients in consolidating industries. Mr.
Foster is also a director of U.S. Concrete, Inc. and Carriage Services, Inc., a
death-care company. Mr. Foster holds a J.D. degree and is a certified public
accountant.

James R. Ball is a private investor, an industry consultant and a member of
the board of directors of Carbide/Graphite Group, Inc., a producer of graphite
electrode specialty products. From 1969 to 1994, Mr. Ball held several positions
with Vista Chemical Company and its predecessor, Conoco, Inc. Vista was sold in
1991 to RWE-DEA, a unit of RWE AG, a German energy and chemicals concern, and
Mr. Ball served on the board of directors of Vista and was its President and
Chief Executive Officer from 1992 through 1994. Mr. Ball became a director of
Quanta effective upon the consummation of our initial public offering.

S-33
<PAGE> 36

Michael T. Willis is Chairman of the Board, Chief Executive Officer and
President of Comsys Holdings, Inc. an information technology staffing company.
From 1993 until 1999, Mr. Willis was President, Chief Executive Officer and
Chairman of the Board of Metamor Worldwide, formerly CoreStaff, Inc., one of the
largest information technology and staffing companies in the U.S. Prior to
founding Metamor in 1993, Mr. Willis served as Chief Executive Officer and
President of The Talent Tree Corporation, which Mr. Willis founded in 1976 and
built into one of the largest temporary services companies in the U.S. Mr.
Willis sold Talent Tree to Hestair plc in 1987 and then continued as President
and Chief Executive Officer until April 1993. Mr. Willis is a director of
Metamor and is also a director of the Southwest Bancorporation of Texas, Inc., a
publicly-traded financial institution and Lason, Inc., a provider of information
management systems. Mr. Willis became a director of Quanta effective upon the
consummation of our initial public offering.

Robert K. Green has been a director of Quanta since September 1999. Mr.
Green has served as President of UtiliCorp United since February 1996, and
earlier served as Managing Executive Vice President of UtiliCorp United from
January 1993 to February 1996. Mr. Green has held several executive positions at
UtiliCorp United's Missouri Public Service division since 1988, including two
years as President. Mr. Green is Co-Chairman of Kansas City Area Development
Council, President of the Heart of America Council, Boy Scouts of America, a
director of UMB Bank, N.A. and a director of UtiliCorp United.

James G. Miller has been a director of Quanta since September 1999. Mr.
Miller is Senior Vice President, Energy Delivery of UtiliCorp United. Mr. Miller
joined UtiliCorp United in 1989 and served as President of UtiliCorp United's
West Plains Energy division from 1991 to 1994, and President of its Michigan Gas
Utilities division from 1989 to 1991. Before joining UtiliCorp United as part of
the acquisition of Michigan Gas Utilities, Mr. Miller served as that company's
President from 1983 to 1989.

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<PAGE> 37

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information as of June 26, 2000,
with respect to the beneficial ownership of Quanta's common stock and Limited
Vote Common Stock by (i) each person known by Quanta to be a beneficial owner of
more than 5% of Quanta's common stock, (ii) each director and executive officer
of the Company, and (iii) all directors and executive officers of Quanta as a
group. Except as otherwise indicated below, the persons named in the table have
advised Quanta that they have sole voting and investment power with respect to
the shares of Quanta's common stock and Limited Vote Common Stock shown as
beneficially owned by them. Unless otherwise indicated, the number of shares and
percentage of ownership for each of the named stockholders, directors and
executive officers and for the directors and executive officers as a group
assumes that shares of common stock that such stockholders, directors and
executive officers may acquire within 60 days are outstanding. UtiliCorp United
Inc. owns 100% of the outstanding shares of Series A preferred stock, which are
convertible at UtiliCorp United's option into 9,300,000 shares of common stock.

<TABLE>
<CAPTION>
LIMITED VOTE
COMMON
STOCK SHARES COMMON STOCK SHARES PERCENT
BENEFICIALLY OWNED BENEFICIALLY OWNED OF
------------------- ---------------------- TOTAL
PERCENT PERCENT VOTING
NAME NUMBER OF CLASS NUMBER OF CLASS POWER
---- ------- -------- ---------- -------- -------
<S> <C> <C> <C> <C> <C>
UtiliCorp United Inc.(1).................. -- -- 26,155,966 36.7 36.6
John R. Colson(2)(3)...................... -- -- 2,152,860 3.5 3.0
John R. Wilson(4)......................... -- -- 625,162 1.0 *
John A. Martell(5)........................ -- -- 589,226 1.0 *
Gary A. Tucci(6).......................... -- -- 551,439 * *
Luke T. Spalj(7).......................... -- -- 286,085 * *
Vincent D. Foster(8)...................... 192,098 10.6 63,321 * *
Michael T. Willis(2)(9)................... 72,859 4.0 22,500 * *
James H. Haddox(2)(10).................... 70,000 3.9 18,837 * *
James R. Ball(2)(9)....................... 29,625 * 22,500 * *
Robert K. Green(11)(12)................... -- -- 40,000 * *
Derrick A. Jensen(2)(13).................. 37,500 2.1 7,500 * *
Elliott C. Robbins(2)(14)................. 42,868 * *
James G. Miller(11)(15)................... -- -- 19,500 * *
James F. O'Neil(2)(16).................... -- -- 13,875 * *
Brad Eastman(2)(17)....................... -- -- 5,742 * *
Nicholas M. Grindstaff(2)................. -- -- 148 * *
All directors and executive officers as a
group (16 persons)(18).................. 402,082 22.2 4,488,063 7.2 6.3
</TABLE>

(footnotes on following page)

S-35
<PAGE> 38

------------

* Less than 1%

(1) The address for UtiliCorp United is 20 West Ninth Street, Kansas City,
Missouri, 64105. Includes 9,300,000 shares of common stock issuable upon
conversion of 1,860,000 shares of Series A Preferred Stock issued by
Quanta in connection with an investment of $186 million made by UtiliCorp
United.

(2) The address for Messrs. Ball, Colson, Eastman, Grindstaff, Haddox, Jensen,
O'Neil, Robbins and Willis is 1360 Post Oak Boulevard, Suite 2100,
Houston, Texas 77056.

(3) Includes 13,500 shares over which Messrs. Colson and Foster share voting
and dispositive power and options to purchase 69,003 shares of common
stock.

(4) The address for Mr. Wilson is 1440 Iron Street, P.O. Box 12520, North
Kansas City, Missouri 64116. Includes options to purchase 25,162 shares of
common stock.

(5) The address for Mr. Martell is 4601 Cleveland Road, P.O. Box 3915, South
Bend, Indiana 46619. Includes 223,965 shares of common stock owned by
trusts for the benefit of minor children of Mr. Martell, of which he
disclaims beneficial ownership and options to purchase 6,414 shares of
common stock.

(6) The address for Mr. Tucci is 14103 Eight Street East, Sumner, Washington
98390. Includes 463,300 shares of common stock owned by a limited
partnership for which Mr. Tucci serves as the general partner and options
to purchase 46,752 shares of common stock.

(7) The address for Mr. Spalj is P.O. Box 428 Deerwood, Minnesota 56444.
Includes options to purchase 10,743 shares of common stock.

(8) The address for Mr. Foster is 1360 Post Oak Boulevard, Suite 800, Houston,
Texas 77056. Includes options to purchase 45,171 shares of common stock as
well as 4,500 shares of common stock owned by Main Street Equity Advisors,
LLC, a merchant banking firm, of which Mr. Foster disclaims beneficial
ownership and 13,500 shares of common stock over which Messrs. Colson and
Foster share voting and dispositive power.

(9) Includes options to purchase 22,500 shares of common stock.

(10) Includes options to purchase 18,837 shares of common stock.

(11) The address for Messrs. Green and Miller is 20 West Ninth Street, Kansas
City, Missouri 64105.

(12) Includes 25,000 shares of common stock held by RJG Investment, L.P. and
options to purchase 15,000 shares of common stock.

(13) Includes options to purchase 7,500 shares of common stock.

(14) Includes options to purchase 22,500 shares of common stock.

(15) Includes options to purchase 15,000 shares of common stock.

(16) Includes options to purchase 9,375 shares of common stock.

(17) Includes options to purchase 5,625 shares of common stock.

(18) Includes options to purchase 342,082 shares of common stock.

S-36
<PAGE> 39

DESCRIPTION OF NOTES

The following description of the particular terms of the notes supplements
and, to the extent inconsistent therewith, replaces the description of the
general terms and provisions of the Debt Securities set forth in the
accompanying prospectus under the caption "Description of Debt Securities," to
which description reference is hereby made. The following summary is qualified
in its entirety by reference to the Subordinated Indenture referred to in the
accompanying prospectus. Capitalized terms defined in the accompanying
prospectus have the same meanings when used in this prospectus supplement.
Additional defined terms used in this section of the prospectus supplement are
set forth below under "--Subordination of Notes--Certain Definitions."

As used in this "Description of Notes" section, references to "Quanta,"
"we," "our" or "us" refer solely to Quanta Services, Inc. and not its
subsidiaries.

GENERAL

The notes are general unsecured obligations of Quanta, and constitute a
series of Subordinated Debt Securities. Our payment obligations under the notes
are subordinated to our Senior Debt as described under "--Subordination of
Notes." The notes are convertible into common stock as described under
"--Conversion of Notes." The notes are limited to $150,000,000 aggregate
principal amount ($172,500,000 aggregate principal amount if the underwriters'
over-allotment option is fully exercised). The notes will be issued only in
denominations of $1,000 and multiples of $1,000. The notes will mature on July
1, 2007, unless earlier converted, redeemed at our option or repurchased at your
option upon a Fundamental Change.

We are not subject to any financial covenants under the Subordinated
Indenture. In addition, we are not restricted under the Subordinated Indenture
from paying dividends, incurring debt, including Senior Debt, or issuing or
repurchasing our securities.

You are not afforded protection in the event of a highly leveraged
transaction or a change in control of Quanta under the Subordinated Indenture
except to the extent described below under "--Repurchase at Option of the
Holder."

We will pay interest on July 1 and December 31 of each year, beginning
December 31, 2000, to record holders at the close of business on the preceding
June 15 and December 15, as the case may be, except interest payable upon
redemption or repurchase of the notes will be paid to the person to whom
principal is payable, unless the redemption or repurchase date is an interest
payment date.

In case you convert your note into common stock during the period after any
record date but prior to the next interest payment date, you will be entitled to
receive the interest payable on such interest payment date, notwithstanding the
conversion. However, any note not called for redemption during this period that
is submitted for conversion must also be accompanied by an amount equal to the
interest due on the interest payment date on the converted principal amount. See
"--Conversion of Notes."

We will maintain an office in The City of New York for the payment of
interest, which will initially be an office or agency of the Trustee.

We may pay interest by check mailed to your address as it appears in the
note register, provided that if you are a holder with an aggregate principal
amount in excess of $2.0 million, you will be paid, at your written election, by
wire transfer in immediately available funds. However, payments to The
Depository Trust Company, New York, New York, which we refer to as DTC, will be
made by wire transfer of immediately available funds to the account of DTC or
its nominee.

Interest will be computed on the basis of a 360-day year composed of twelve
30-day months.

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<PAGE> 40

FORM, DENOMINATION AND REGISTRATION

The notes will be issued:

-- in fully registered form;

-- without interest coupons; and

-- in denominations of $1,000 principal amount and whole multiples of
$1,000.

Global Note, Book-Entry Form

The notes initially will be evidenced by one or more global securities
deposited with the Trustee as custodian for DTC, and registered in the name of
Cede & Co. as DTC's nominee. Record ownership of the global securities may be
transferred, in whole or in part, only to another nominee of DTC or to a
successor of DTC or its nominee. So long as Cede & Co., as nominee of DTC, is
the registered owner of the global securities, Cede & Co. for all purposes will
be considered the sole holder of the global securities. Except as described in
the accompanying prospectus, owners of beneficial interests in the global
securities:

-- will not be entitled to have certificates registered in their names;

-- will not receive or be entitled to receive physical delivery of
certificates in definitive form; and

-- will not be considered holders of the global securities.

The laws of some states require that certain persons take physical delivery
of securities in definitive form. Consequently, the ability of an owner of a
beneficial interest in a global security to transfer the beneficial interest in
the global security to such persons may be limited.

We will wire, through the facilities of the Trustee, payments of principal,
premium, if any, and interest payments on the global securities to Cede & Co.,
the nominee of DTC, as the registered owner of the global securities. Neither
Quanta, the Trustee nor any paying agent will have any responsibility or be
liable for paying amounts due on the global securities to owners of beneficial
interests in the global securities.

It is DTC's current practice, upon receipt of any payment of principal and
premium, if any, and interest on the global securities, to credit participants'
accounts on the payment date in amounts proportionate to their respective
beneficial interests in the notes represented by the global securities, as shown
on the records of DTC, unless DTC believes that it will not receive payment on
the payment date. Payments by DTC participants to owners of beneficial interests
in debentures represented by the global securities held through DTC participants
will be the responsibility of DTC participants, as is now the case with
securities held for the accounts of customers registered in "street name."

If you would like to convert your notes into common stock, or tender your
notes for repurchase upon a change in control pursuant to the terms of the
notes, you must contact your broker or other direct or indirect DTC participant
to obtain information on procedures, including proper forms and deadlines, for
submitting those requests.

Because DTC can only act on behalf of DTC participants, who in turn act on
behalf of indirect DTC participants and other banks, your ability to pledge your
interest in the notes represented by global securities to persons or entities
that do not participate in the DTC system, or otherwise take actions in respect
of such interest, may be affected by the lack of a physical certificate.

Neither Quanta nor the Trustee (nor any registrar, paying agent or
conversion agent under the Subordinated Indenture) will have any responsibility
for the performance by DTC or direct or indirect DTC participants of their
obligations under the rules and procedures governing their operations.

DTC has advised us that it will take any action permitted to be taken by a
holder of notes, including, without limitation, the presentation of notes for
conversion or repurchase as described below, only at the direction of one or
more direct DTC participants to whose account with DTC interests in the global
securities are credited and only for the principal amount of the notes for which
directions have been given.

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DTC has advised us that DTC is:

-- a limited-purpose trust company organized under the laws of the State
of New York;

-- a member of the Federal Reserve System;

-- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and

-- a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934.

DTC was created to hold securities of institutions that have accounts with
DTC and to facilitate the clearance and settlement of securities transactions
among its participants in securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include:

-- securities brokers and dealers;

-- banks;

-- trust companies;

-- clearing corporations; and

-- certain other organizations.

Access to DTC's book-entry system is also available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, whether directly or indirectly.

CONVERSION OF NOTES

You may convert your note, in whole or in part, into our common stock
through the second business day prior to the final maturity date of the notes,
subject to prior redemption or repurchase of the notes. If we call notes for
redemption, you may convert the notes only until the close of business on the
business day prior to the redemption date unless we fail to pay the redemption
price. If you have submitted your notes for repurchase upon a Fundamental
Change, you may convert your notes only if you withdraw your repurchase
election. You may convert your notes in part so long as this part is $1,000
principal amount or an integral multiple of $1,000.

The initial conversion price for the notes is $54.53 per share of common
stock, subject to adjustment as described below. We will not issue fractional
shares of common stock upon conversion of notes. Instead, we will pay cash equal
to the market price of the common stock on the most recent trading day prior to
the conversion date. You will not receive any accrued interest or dividends upon
conversion, and therefore notes surrendered for conversion between the record
date for an interest payment and the next interest payment date (except notes
called for redemption on a redemption date during this period) must be
accompanied by an amount equal to the interest payable on the interest payment
date on the converted principal amount.

To convert your note into common stock you must:

-- complete and manually sign a conversion notice in substantially the
form set forth on the reverse of the note and deliver this notice to
the conversion agent;

-- surrender the note to the conversion agent;

-- if required, furnish appropriate endorsements and transfer documents;

-- if required, pay all transfer or similar taxes; and

-- if required, pay funds equal to interest payable on the next interest
payment date.

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The date you comply with these requirements is the conversion date under the
Subordinated Indenture. So long as the notes are issued in book-entry form,
conversion will be subject to compliance with the applicable procedures of DTC.
Please read "--Form, Denomination and Registration--Global Note, Book-Entry
Form."

We will adjust the conversion price relating to the notes as described
under "Description of Debt Securities--Conversion of Debt Securities" in the
accompanying prospectus. In addition, we will adjust the conversion price
relating to the notes in the event that someone other than us, one of our
subsidiaries or UtiliCorp United makes a payment in respect of a tender offer or
exchange offer in which, as of the closing date of the offer, our board of
directors is not recommending rejection of the offer. The adjustment referred to
in this event will only be made if:

-- the tender offer or exchange offer is for an amount that increases
the offeror's ownership of common stock to more than 25% of the total
shares of common stock outstanding, and

-- the cash and value of any other consideration included in the payment
per share of common stock exceeds the current market price per share
of common stock on the trading day next succeeding the last date on
which tenders or exchanges may be made pursuant to the tender or
exchange offer.

However, the adjustment referred to in this event will generally not be
made if, as of the closing of the offer, the offering documents disclose a plan
or an intention to cause us to engage in a consolidation or merger of Quanta or
a sale of all or substantially all of our assets.

Under our stockholder rights plan, upon conversion of the notes into common
stock, to the extent that the rights plan is still in effect upon conversion,
you will receive, in addition to our common stock, the rights under the rights
plan, whether or not the rights have separated from the common stock at the time
of conversion.

In the event of:

-- any reclassification of our common stock; or

-- any consolidation or merger involving Quanta; or

-- a transfer or other disposition to another person of all or
substantially all of the assets of Quanta,

in which holders of our common stock would be entitled to receive securities,
cash or other property for their common stock, holders of notes will generally
be entitled thereafter to convert their notes into the same type of
consideration received by common stock holders as a result of one of these types
of events.

You may in certain situations be deemed to have received a distribution
subject to United States federal income tax as a dividend in the event of any
taxable distribution to holders of common stock or in certain other situations
requiring a conversion price adjustment. Please read "Certain United States
Federal Income Tax Considerations."

We may from time to time reduce the conversion price if our board of
directors deems it advisable to avoid or diminish any federal income tax to
holders of common stock resulting from any stock or rights distribution. See
"Certain United States Federal Income Tax Considerations."

We will not be required to make an adjustment in the conversion price
unless the cumulative adjustments would require a change of at least 1% in the
conversion price. However, we will carry forward any adjustments that are less
than 1% of the conversion price. Except as described above in this section, we
will not adjust the conversion price for any issuance of our common stock or
convertible or exchangeable securities or rights to purchase our common stock or
convertible or exchangeable securities.

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OPTIONAL REDEMPTION BY QUANTA

The notes are not entitled to any sinking fund. At any time on or after
July 3, 2003, we may redeem the notes in whole or in part at the following
prices expressed as a percentage of the principal amount:

<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ ----------
<S> <C>
Beginning on July 3, 2003 and ending on June 30, 2004..... 102.286%
Beginning on July 1, 2004 and ending on June 30, 2005..... 101.714%
Beginning on July 1, 2005 and ending on June 30, 2006..... 101.143%
Beginning on July 1, 2006 and ending on June 30, 2007..... 100.571%
</TABLE>

and 100% at July 1, 2007. In each case, we will pay interest to, but excluding,
the redemption date. If the redemption date is an interest payment date,
interest will be paid to the record holder on the relevant record date. We are
required to give notice of redemption by mail to holders not more than 60 but
not less than 30 days prior to the redemption date.

If less than all of the outstanding notes are to be redeemed, the Trustee
will select the notes to be redeemed by such method as the Trustee considers
fair and appropriate. If a portion of your notes is selected for partial
redemption and you convert a portion of your notes, the converted portion will
be deemed (so far as may be) to be the portion selected for redemption.

We may not redeem the notes if we have failed to pay any interest or
premium on the notes and such failure to pay is continuing. We will issue a
press release if we redeem the notes.

REPURCHASE AT OPTION OF THE HOLDER

If a Fundamental Change occurs prior to July 1, 2007, you may require us to
repurchase your notes, in whole or in part, on a repurchase date that is 30 days
after the date of our notice of the Fundamental Change. The notes will be
repurchaseable in multiples of $1,000 principal amount.

We will repurchase the notes at a price equal to 100% of the principal
amount to be repurchased, plus accrued interest to, but excluding, the
repurchase date. If the repurchase date is an interest payment date, we will pay
interest to the record holder on the relevant record date.

We will mail to all record holders a notice of the Fundamental Change
within 10 days after the occurrence of the Fundamental Change. We are also
required to deliver to the Trustee a copy of the Fundamental Change notice. If
you elect to have us repurchase your notes, you must deliver to us or our
designated agent, on or before the business day preceding the repurchase date,
your repurchase notice and any notes to be repurchased, duly endorsed for
transfer. We will promptly pay the purchase price for notes surrendered for
repurchase following the repurchase date.

We will not be required to make a repurchase offer after the occurrence of
a Fundamental Change if a third party makes the repurchase offer in the manner,
at the times and otherwise in compliance with the requirements applicable to a
repurchase offer made following a Fundamental Change and purchases all notes
validly tendered and not withdrawn under such repurchase offer.

A "Fundamental Change" means any transaction or event in connection with
which all or substantially all of our common stock is exchanged for, converted
into, acquired for or constitutes solely the right to receive, consideration,
whether by means of an exchange offer, liquidation, tender offer, consolidation,
merger, combination, reclassification, recapitalization or otherwise, which is
not all or substantially all common stock listed on, or that will be listed on
or immediately after the transaction or event on:

-- a United States national securities exchange, or

-- approved for quotation on the Nasdaq National Market or any similar
United States system of automated dissemination of quotations of
securities prices.

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We will comply with any applicable provisions of Rule 13e-4 and any other
tender offer rules under the Securities Exchange Act of 1934 in the event of a
Fundamental Change.

These Fundamental Change repurchase rights could discourage a potential
acquiror of Quanta. However, this Fundamental Change repurchase feature is not
the result of management's knowledge of any specific effort to obtain control of
Quanta by means of a merger, tender offer or solicitation, or part of a plan by
management to adopt a series of anti-takeover provisions. The term "Fundamental
Change" is limited to certain specified transactions and may not include other
events that might adversely affect our financial condition. Our obligation to
offer to repurchase the notes upon a Fundamental Change would not necessarily
afford you protection in the event of a highly leveraged transaction,
reorganization, merger or similar transaction involving Quanta.

We may be unable to repurchase the notes in the event of a Fundamental
Change. If a Fundamental Change were to occur, we may not have enough funds to
pay the purchase price for all tendered notes. In addition, in certain
situations, a Fundamental Change would result in an event of default under our
existing credit facility. Our existing credit facility also prohibits
repurchases or redemptions of the notes. Any future credit agreements or other
agreements relating to our indebtedness may contain similar provisions, or
expressly prohibit the repurchase of the notes upon a Fundamental Change or may
provide that a Fundamental Change constitutes an event of default under that
agreement. If a Fundamental Change occurs at a time when we are prohibited from
repurchasing notes, we could seek the consent of our lenders to repurchase the
notes or could attempt to refinance this debt. If we do not obtain a consent, we
could not repurchase the notes. Our failure to repurchase tendered notes would
constitute an event of default under the Subordinated Indenture, which might
constitute a default under the terms of our other indebtedness. In such
circumstances, or if a Fundamental Change would constitute an event of default
under our Senior Debt, the subordination provisions of the Subordinated
Indenture would restrict payments to the holders of notes.

SUBORDINATION OF NOTES

Payment on the notes is, to the extent provided in the Subordinated
Indenture, subordinated in right of payment to the prior payment in full of all
of our Senior Debt. The notes also are effectively subordinated to all debt and
other liabilities, including trade payables and lease obligations, if any, of
our subsidiaries.

Upon any distribution of our assets upon any dissolution, winding up,
liquidation or reorganization of Quanta, whether voluntary or involuntary and
whether or not involving bankruptcy, or upon any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of Quanta, payment
of the principal of, or premium, if any, and interest on the notes will be
subordinated in right of payment to the prior payment in full of all Senior Debt
in cash or other payment satisfactory to the holders of Senior Debt.

We may not make any payment on the notes if:

-- a default occurs in the payment of principal of, premium, if any, or
interest on any Senior Debt (called a "payment default"); or

-- a default other than a payment default on any Designated Senior Debt
occurs and is continuing that permits holders of such Designated
Senior Debt to accelerate its maturity, and we and the Trustee
receive a notice of such default (called a "payment blockage notice")
from any holder of such Designated Senior Debt (called a "non-payment
default").

We may resume payments and distributions on the notes:

-- in case of a payment default, upon the date on which such default is
cured or waived or ceases to exist; and

-- in case of a non-payment default, the earliest of (1) the date on
which such nonpayment default is cured or waived or ceases to exist,
(2) 179 days after the date on which the payment blockage notice is
received or (3) the date the payment blockage is terminated by notice
to the Trustee and Quanta from the person who gave the payment
blockage notice.

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<PAGE> 45

No new period of payment blockage may be commenced pursuant to a payment
blockage notice unless 360 days have elapsed since the initial effectiveness of
the immediately prior payment blockage notice, and there must be at least 181
consecutive days in each 360-day period when no payment blockage is in effect.
No payment default or non-payment default that existed or was continuing on the
date of commencement of any payment blockage period shall be the basis for the
commencement of a subsequent payment blockage period, unless such default has
been cured for a period of at least 90 consecutive days.

If the Trustee of any holder of the notes knowingly receives any payment in
contravention of the subordination provisions on the notes before all Senior
Debt is paid in full in cash or other payment satisfactory to the holders of
Senior Debt, then such payment must be paid over for the benefit of the holders
of Senior Debt to the extent necessary to make payment in full to the holders of
all unpaid Senior Debt.

In the event of our bankruptcy, dissolution or reorganization, holders of
Senior Debt may receive more, ratably, and holders of the notes may receive
less, ratably, than our other creditors. This subordination will not prevent the
occurrence of any event of default under the Subordinated Indenture. Please read
"Description of Debt Securities--Events of Default" in the accompanying
prospectus for a description of the events of default and associated remedies.

The notes are exclusively obligations of Quanta. Our operations are
conducted through our subsidiaries. As a result, our cash flow and our ability
to service our debt, including the notes, is dependent upon the earnings of our
subsidiaries. In addition, we are dependent on the distribution of earnings,
loans or other payments by our subsidiaries to us.

Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the notes. Our subsidiaries are not
required to provide us with funds for our payment obligations, whether by
dividends, distributions, loans or other payments. In addition, any payment of
dividends, distributions, loans or advances by our subsidiaries to us could be
subject to statutory or contractual restrictions. Payments to us by our
subsidiaries will also be contingent upon our subsidiaries' earnings and
business considerations.

Our right to receive any assets of any of our subsidiaries upon its
liquidation or reorganization, and therefore the right of the holders to
participate in those assets, will be effectively subordinated to the claims of
that subsidiary's creditors, including trade creditors. In addition, even if we
were a creditor to any of our subsidiaries, our rights as a creditor would be
subordinated to any security interest in the assets of our subsidiaries and any
indebtedness of our subsidiaries senior to that held by us.

As of July 18, 2000, we had approximately $325.4 million of Senior Debt
outstanding, including obligations under outstanding letters of credit but
excluding indebtedness of our subsidiaries, $145.4 million of which we expect to
repay with proceeds of this offering. In addition, as of May 31, 2000, our
subsidiaries had $21.8 million of indebtedness outstanding. Neither we nor our
subsidiaries are prohibited from incurring debt, including Senior Debt, under
the Subordinated Indenture. We may from time to time incur additional debt,
including Senior Debt. Our subsidiaries may also from time to time incur other
additional debt and liabilities.

We are obligated to pay reasonable compensation to the Trustee and to
indemnify the Trustee against certain losses, liabilities or expenses incurred
by the Trustee in connection with its duties under the Subordinated Indenture.
The Trustee's claims for these payments will generally be senior to those of
noteholders in respect of all funds collected by the Trustee.

Certain Definitions

"Credit Agreement" means the Third Amended and Restated Secured Credit
Agreement, dated as of June 14, 1999, among Quanta, the lenders named therein
and Bank of America, N.A., as administrative agent, including any notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended (including any amendment and
restatement thereof), modified, extended, renewed, refunded, substituted or
replaced or refinanced from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing

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<PAGE> 46

the amount of available borrowings thereunder or adding subsidiaries of Quanta
as additional borrowers or guarantors thereunder), all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agents, creditor, lender or group of creditors
or lenders.

"Designated Senior Debt" means Senior Debt under the Credit Agreement and
the Senior Secured Note Agreement and our obligations under any other particular
Senior Debt that expressly provides that such Senior Debt shall be "Designated
Senior Debt" for purposes of the Subordinated Indenture.

"Indebtedness" means:

(1) all indebtedness, obligations and other liabilities for borrowed
money, including commitment or standby fees, enforcement expenses,
collateral protection expenses and other reimbursement indemnity
obligations with respect to such indebtedness, overdrafts, foreign exchange
contracts, currency exchange agreements, interest rate protection
agreements, and any loans or advances from banks, or evidenced by bonds,
debentures, notes or similar instruments, other than any account payable or
other accrued current liability or obligation incurred in the ordinary
course of business in connection with the obtaining of materials or
services;

(2) obligations with respect to letters of credit, bank guarantees or
bankers' acceptances;

(3) obligations in respect of leases required in conformity with
generally accepted accounting principles to be accounted for as capitalized
lease obligations on our balance sheet;

(4) all obligations and other liabilities under any lease or related
document in connection with the lease of real property that provides that
we are contractually obligated to purchase or cause a third party to
purchase the leased property and thereby guarantee a minimum residual value
of the leased property to the lessor and our obligations under the lease or
related document to purchase or to cause a third party to purchase the
leased property;

(5) all obligations with respect to an interest rate or other swap,
cap or collar agreement or foreign currency hedge, exchange or purchase
agreement;

(6) all direct or indirect guaranties or similar agreements in respect
of our obligations or liabilities to purchase, acquire or otherwise assure
a creditor against loss in respect of, indebtedness, obligations or
liabilities of others of the type described in (1) through (5) above;

(7) any obligations described in (1) through (5) above secured by any
mortgage, pledge, lien or other encumbrance existing on property which is
owned or held by us; and

(8) any renewals, extensions, refundings, refinancings,
restructurings, amendments or modifications to (1) through (7) above.

"Senior Debt" means the principal, premium, if any, interest, including any
interest accruing after bankruptcy, and rent or termination payments on or other
amounts due on our current or future Indebtedness, whether created, incurred,
assumed, guaranteed or in effect guaranteed by us, but only to the extent that
the same are not treated as "unsecured indebtedness" for purposes of section 279
of the Internal Revenue Code. However, all amounts owing by Quanta under the
Credit Agreement and the Senior Secured Note Agreement will constitute Senior
Debt, and Senior Debt will not include:

-- Indebtedness that expressly provides that it shall not be senior in
right of payment to the notes or expressly provides that it is on the
same basis or junior to the notes;

-- our Indebtedness to any of our majority-owned subsidiaries; and

-- the notes.

"Senior Secured Note Agreement" means the Note Purchase Agreement, dated as
of March 1, 2000, among Quanta and the lenders named therein, including any
notes, guarantees, collateral documents,

S-44
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instruments and agreements executed in connection therewith, and in each case as
amended (including any amendment and restatement thereof), modified, extended,
renewed, refunded, substituted or replaced or refinanced from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including increasing the amount of available borrowings
thereunder or adding subsidiaries of Quanta as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agents, creditor, lender or group of creditors or lenders.

EVENTS OF DEFAULT

The notes are subject to events of default as provided under "Description
of Debt Securities -- Events of Default" in the accompanying prospectus.

DEFEASANCE

The notes are subject to defeasance and discharge and to covenant
defeasance as provided under "Description of Debt Securities--Defeasance and
Covenant Defeasance" in the accompanying prospectus.

INFORMATION CONCERNING THE TRUSTEE

We have appointed Chase Bank of Texas, National Association, the Trustee
under the Subordinated Indenture, as paying agent, conversion agent, note
registrar and custodian for the notes. The Trustee or its affiliates may provide
banking and other services to us in the ordinary course of their business.

The Subordinated Indenture contains certain limitations on the rights of
the Trustee, as long as it remains our creditor, to obtain payment of claims in
certain cases or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions with us. However, if the Trustee acquires any conflicting interest
and a default occurs with respect to the notes, the Trustee must eliminate such
conflict within 90 days, apply to the SEC for permission to continue or resign.

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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a general discussion of the material United States federal
income and estate tax consequences of the ownership and disposition of notes and
common stock as of the date hereof by a purchaser of the notes from the
underwriters. Except where noted, this summary addresses only notes and common
stock held as capital assets and does not deal with special situations. For
example, this summary does not address:

-- tax consequences to holders who may be subject to special tax
treatment, such as dealers in securities or currencies, financial
institutions, tax-exempt entities, traders in securities that elect
to use a mark-to-market method of accounting for their securities
holdings or corporations that accumulate earnings to avoid federal
income tax, life insurance companies or certain expatriates;

-- tax consequences to persons holding notes or common stock as part of
a hedging, integrated or constructive sale or conversion transaction
or a straddle;

-- tax consequences to holders of notes or common stock whose
"functional currency" is not the U.S. dollar,

-- alternative minimum tax consequences, if any; or

-- any state, local or foreign tax consequences.

The discussion below is based upon the provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), and regulations, rulings and judicial
decisions as of the date hereof. Those authorities may be changed, perhaps
retroactively, so as to result in United States federal income tax consequences
different from those discussed below.

If a partnership holds the notes or common stock, the tax treatment of a
partner will generally depend upon the status of the partner and the activities
of the partnership. If you are a partner of a partnership holding the notes or
common stock, you should consult your tax advisor.

IF YOU ARE CONSIDERING THE PURCHASE OF NOTES OR COMMON STOCK, YOU SHOULD
CONSULT YOUR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES TO YOU AND ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER
TAXING JURISDICTION.

CONSEQUENCES TO UNITED STATES HOLDERS

"United States holder" means a beneficial owner of a note that is:

-- a citizen or resident of the United States;

-- a corporation or partnership created or organized in or under the
laws of the United States or any political subdivision of the United
States;

-- an estate the income of which is subject to United States federal
income taxation regardless of its source; or

-- a trust that (1) is subject to the supervision of a court within the
United States and the control of one or more United States persons or
(2) has a valid election in effect under applicable United States
Treasury regulations to be treated as a United States person.

Payment of Interest

We expect that the notes will not be issued with more than a de minimis
amount of original issue discount. In such case, interest on a note will
generally be taxable to you as ordinary income at the time it is paid or accrued
in accordance with your method of accounting for tax purposes.

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<PAGE> 49

Sale, Exchange, Redemption and Retirement of Notes

Except as provided below under "--Conversion of Notes into Common Stock,"
you will generally recognize gain or loss upon the sale, exchange, redemption,
retirement or other taxable disposition of a note equal to the difference
between the amount realized (less any accrued interest, which will be taxable as
such if not previously included in income) upon the sale, exchange, retirement
or other disposition and your adjusted tax basis in the note. Your tax basis in
a note will generally be equal to the amount you paid for the note. Any gain or
loss will be capital gain or loss. If you are an individual and have held the
note for more than one year, your capital gain may be taxable at a reduced rate.
Your ability to deduct capital losses may be limited.

Conversion of Notes into Common Stock

You will not recognize gain or loss on the conversion of your notes into
common stock, except to the extent of cash received in lieu of a fractional
common share. The amount of gain or loss on the deemed sale of such fractional
common share will be equal to the difference between the amount of cash you
receive in respect of such fractional common share, and the portion of your tax
basis in notes that is allocable to the fractional common share. The tax basis
of the common stock received upon a conversion will equal the adjusted tax basis
of the note that was converted, reduced by the portion of the tax basis that is
allocable to any fractional common share. Your holding period for common stock
generally will include the period during which you held the notes.

You should contact your tax advisers regarding the tax consequences related
to your ownership of common stock.

Constructive Dividend

The conversion price of the notes will be adjusted in certain
circumstances. Under section 305(c) of the Code, adjustments (or failures to
make adjustments) that have the effect of increasing your proportionate interest
in our assets or earnings may in some circumstances result in a deemed
distribution to you. Any deemed distributions will be taxable as a dividend,
return of capital, or capital gain in accordance with the earnings and profits
rules under the Code.

Information Reporting and Backup Withholding

In general, information reporting requirements will apply to certain
payments of principal and interest paid on the notes and dividends paid on the
common stock and to the proceeds of sale of a note or share of common stock made
to you unless you are an exempt recipient (such as a corporation). A 31% backup
withholding tax will apply to such payments if you fail to provide your taxpayer
identification number or certification of foreign or other exempt status or fail
to report in full dividend and interest income.

Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against your United States federal income tax liability
provided the required information is furnished to the IRS.

CONSEQUENCES TO NON-UNITED STATES HOLDERS

The term "non-United States holder" means a beneficial owner of a note that
is not a United States holder.

U.S. Federal Withholding Tax

The 30% U.S. federal withholding tax will not apply to any payment to you
of principal or interest on a note provided that:

-- you do not actually or constructively (including by reason of
ownership of the notes) own 10% or more of the total combined voting
power of all classes of our stock that are entitled to vote within
the meaning of section 871(h)(3) of the Code;

-- you are not a controlled foreign corporation that is related to us
through stock ownership;
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<PAGE> 50

-- you are not a bank whose receipt of interest on a note is described
in section 881(c)(3)(A) of the Code; and

-- you provide your name and address, and certify, under penalties of
perjury, that you are not a United States person (which certification
may be made on an IRS W-8BEN (or successor form)) or a financial
institution holding the convertible note on your behalf certifies,
under penalties of perjury, that such statement has been received by
it and furnishes a paying agent with a copy thereof.

If you cannot satisfy the requirements described above, payments of
interest will be subject to the 30% U.S. federal withholding tax, unless you
provide us with a properly executed (1) IRS Form W-8BEN (or successor form)
claiming an exemption from or reduction in withholding under the benefit of an
applicable tax treaty or (2) IRS Form W-8ECI (or successor form) stating that
interest paid on the note is not subject to withholding tax because it is
effectively connected with your conduct of a trade or business in the United
States.

Any dividends paid to you with respect to the common stock generally will
be subject to withholding tax at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty. However, dividends that are
effectively connected with the conduct of a trade or business within the United
States and, where a tax treaty applies, are attributable to a United States
permanent establishment, are not subject to the withholding tax, but instead are
subject to United States federal income tax on a net income basis at applicable
graduated individual or corporate rates. In order to be exempt from withholding
tax under this exception, you must provide us with a properly executed IRS Form
W-8ECI (or successor form) stating that dividends paid on the common stock are
not subject to withholding tax because the common stock is effectively connected
with your conduct of a trade or business in the United States. If you are a
foreign corporation, any such effectively connected dividends may, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate or
such lower rate as may be specified by an applicable income tax treaty.

Until December 31, 2000, dividends paid to an address outside the United
States are presumed to be paid to a resident of such country (unless the payer
has knowledge to the contrary) for purposes of the withholding tax discussed
above and, under the current interpretation of United States Treasury
regulations, for purposes of determining the applicability of a tax treaty rate.
However, in order to claim the benefit of an applicable treaty rate (and avoid
backup withholding as discussed below) for dividends paid after December 31,
2000, you are required to provide us with a properly executed IRS Form W-8BEN
(or successor form) claiming an exemption from or reduction in withholding under
the benefit of a tax treaty.

In addition, in the case of common stock held by a partnership, the
certification requirement would generally be applied to the partners of the
partnership (unless the partnership agrees to become a "withholding foreign
partnership") and the partnership would be required to provide certain
information, including a United States taxpayer identification number. The 30%
U.S. federal withholding tax will not apply to any gain that you realize on the
sale, exchange, retirement or other disposition of a note or share of common
stock.

U.S. Federal Estate Tax

The U.S. federal estate tax will not apply to notes owned by you at the
time of your death, provided that (1) you do not own 10% or more of the total
combined voting power of all classes of our voting stock (within the meaning of
the Code and the U.S. Treasury regulations) and (2) interest on the notes would
not have been, if received at the time of your death, effectively connected with
your conduct of a trade or business in the United States. However, common stock
held by you at the time of your death will be included in your gross estate for
United States federal estate tax purposes unless an applicable estate tax treaty
provides otherwise.

U.S. Federal Income Tax

If you are engaged in a trade or business in the United States and interest
on a note or dividends on a share of common stock are effectively connected with
the conduct of that trade or business, you (although exempt from the 30%
withholding tax) will be subject to United States federal income tax on that
interest or
S-48
<PAGE> 51

dividend on a net income basis in the same manner as if you were a United States
person as defined under the Code. In addition, if you are a foreign corporation,
you may be subject to a branch profits tax equal to 30% (or lower applicable
treaty rate) of your earnings and profits for the taxable year, subject to
adjustments, that are effectively connected with your conduct of a trade or
business in the United States. For this purpose, interest and dividends on the
common stock will be included in earnings and profits.

Any gain or income realized on the disposition of a note or share of common
stock generally will not be subject to United States federal income tax unless
(1) that gain or income is effectively connected with the conduct of a trade or
business in the United States by you and where a tax treaty applies, is
attributable to a United States permanent establishment, (2) you are an
individual who is present in the United States for 183 days or more in the
taxable year of that disposition, and certain other conditions are met or (3) we
are or have been a "U.S. real property holding corporation" for United States
federal income tax purposes.

We are not currently a "U.S. real property holding corporation" and do not
expect to become a U.S. real property holding corporation for U.S. federal
income tax purposes. If we are or become a U.S. real property holding
corporation, so long as our common stock is and continues to be regularly traded
on an established securities market:

-- a non-United States holder of common stock who holds or held (at any
time during the shorter of the five year period preceding the date of
disposition or the holder's holding period) more than five percent of
our common stock will be subject to United States federal income tax
on the disposition of our common stock;

-- if the notes are not regularly traded on an established securities
market, only a non-United States holder of notes who holds or held
notes which at the time of acquisition (or subsequent acquisition of
additional notes) had a fair market value greater than the fair market
value of five percent of our common stock at that time will be subject
to United States federal income tax on the disposition of such notes;
and

-- if the notes are regularly traded on an established securities market,
only a non-United States holder of notes who holds or held (at any
time during the shorter of the five year period preceding the date of
disposition or the holder's holding period) more than five percent of
the notes will be subject to United States federal income tax on the
disposition of such notes.

Information Reporting and Backup Withholding

In general, you will not be subject to backup withholding and information
reporting with respect to payments that we make to you that qualify as portfolio
interest as described above under "U.S. Federal Withholding Tax," provided that
we do not have actual knowledge that you are a United States person and you have
given us the required certification on either Form W-8BEN or W-8ECI.

In addition, you will not be subject to backup withholding or information
reporting with respect to the proceeds of the sale of a note or common share
within the United States or conducted through certain U.S.-related financial
intermediaries, if the payor receives the statement described above and does not
have actual knowledge that you are a United States person, as defined under the
Code, or you otherwise establish an exemption.

U.S. Treasury regulations were issued that generally modify the information
reporting and backup withholding rules applicable to certain payments made after
December 31, 2000. In general, these U.S. Treasury regulations will not
significantly alter the present rules discussed above, except in certain special
situations.

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<PAGE> 52

UNDERWRITERS

Under the terms and subject to the conditions contained in the underwriting
agreement dated the date hereof, the underwriters named below have severally
agreed to purchase, and we have agreed to sell to them, the respective principal
amounts of the notes set forth after their names below at a purchase price of
97.25% of the principal amount thereof, plus accrued interest, if any, from July
19, 2000 to the date of payment and delivery:

<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
----------- ----------------
<S> <C>
Morgan Stanley & Co. Incorporated................ $ 67,875,000
Banc of America Securities LLC................... 30,375,000
Bear, Stearns & Co. Inc. ........................ 22,875,000
Raymond James & Associates, Inc. ................ 7,875,000
SunTrust Equitable Securities Corporation........ 7,875,000
Wachovia Securities, Inc. ....................... 7,875,000
Sanders Morris Harris Inc. ...................... 5,250,000
------------
Total.................................. $150,000,000
============
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the notes offered hereby are
subject to the approval of certain legal matters by their counsel and to certain
other conditions. The underwriters are obligated to take and pay for all of the
notes offered hereby, other than those covered by the over-allotment option
described below, if any such notes are taken.

The underwriters initially propose to offer the notes to the public at the
public offering price set forth on the cover page hereof, plus accrued interest,
if any, from July 19, 2000, and to certain dealers at a price that represents a
concession not in excess of 1.65% of the principal amount of such notes. After
the initial offering of the notes, the public offering price and other selling
terms may be changed. The underwriters have agreed to reimburse Quanta for up to
$431,250 in expenses incurred in connection with this notes offering.

We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus supplement, to purchase up to an aggregate of
$22,500,000 additional principal amount of notes at the public offering price
set forth on the cover page hereof, less underwriting discounts and commissions.
The underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, made in connection with this offering of notes. To the
extent this option is exercised, each underwriter will become obligated, subject
to certain conditions, to purchase approximately the same percentage of
additional notes as the number set forth next to the underwriter's name in the
preceding table bears the total aggregate principal amount of notes set forth
next to the names of all underwriters in the preceding table.

Each of us, our executive officers, UtiliCorp United and certain of our
directors has agreed, without the prior written consent of Morgan Stanley & Co.
Incorporated on behalf of the underwriters, during the period ending 90 days
after the date of this prospectus supplement, subject to certain exceptions, not
to, directly or indirectly:

-- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose
of, directly or indirectly, any shares of common stock or any
securities convertible into or exercisable or exchangeable for common
stock (whether such shares or any such securities are then owned by
such person or are thereafter acquired directly from us); or

-- enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of
common stock, whether any such transaction described above is to be
settled by delivery of common stock or such other securities, in cash
or otherwise.

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<PAGE> 53

The foregoing restrictions shall not apply to:

-- the sale of any shares to the underwriters;

-- transactions by any person other than us relating to shares of common
stock or other securities acquired in open market transactions after
the date of this prospectus supplement;

-- as to Quanta, any options granted or shares of common stock issued
upon exercise of options granted pursuant to our 1997 Stock Option
Plan or shares issued pursuant to our Employee Stock Purchase Plan;

-- as to Quanta, shares issued upon the conversion into common stock of
Limited Vote Common Stock, Series A preferred stock or the notes;

-- as to Quanta, shares issued upon the exercise of preemptive rights
held by UtiliCorp United;

-- the issuance by us of shares of our common stock as consideration for
the purchase by us of any businesses, products or technologies that
are subject to our customary lock-up agreement with us that cannot be
waived during the 90 day period;

-- any private placement or transfer of convertible notes or shares of
common stock or options or warrants to purchase shares of common
stock to an investor who agrees to be bound by the restrictions
above; or

-- any transfer to a family member or trust affiliated with a security
holder who agrees to be bound by the restrictions above.

Our common stock is quoted on the New York Stock Exchange under the symbol
"PWR."

In order to facilitate the offering of the notes, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the notes or the common stock. Specifically, the underwriters may over-allot in
connection with the offering, creating a short position in the notes for their
own account. In addition, to cover over-allotments or to stabilize the price of
the notes, the underwriters may bid for, and purchase, shares of notes or common
stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
notes in the offering if the syndicate repurchases previously distributed notes
in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market price of the notes or common stock above independent market levels. The
underwriters are not required to engage in these activities and may end any of
these activities at any time.

The underwriting agreement provides that Quanta and the underwriters will
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

The underwriters have engaged in transactions and performed various
investment banking and other services for us in the ordinary course of business
for which they have received customary fees, and they may continue to do so from
time to time in the future.

Bank of America, N.A., an affiliate of Banc of America Securities LLC, and
SunTrust Bank, Atlanta, an affiliate of SunTrust Equitable Securities
Corporation, are lenders under Quanta's credit facility. Because more than 10%
of the net proceeds of this offering may be paid to affiliates of members of the
National Association of Securities Dealers, this offering is being made pursuant
to Rule 2710(c)(8) of the Conduct Rules of the NASD. Morgan Stanley & Co.
Incorporated will assume the responsibilities of acting as qualified independent
underwriter.

S-51
<PAGE> 54

LEGAL MATTERS

The validity of the notes offered hereby will be passed upon for Quanta by
Akin, Gump, Strauss, Hauer & Feld, L.L.P., San Antonio, Texas. Certain legal
matters related to this notes offering will be passed upon for the underwriters
by Vinson & Elkins L.L.P., Houston, Texas.

EXPERTS

The annual financial statements of Quanta incorporated by reference in this
prospectus supplement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.

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.

INCORPORATION BY REFERENCE

The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. We hereby incorporate by reference in this
prospectus supplement the following documents and any future filings which we
make with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934, prior to termination of this offering:

1. Annual Report on Form 10-K for the fiscal year ended December 31,
1999.

2. Quarterly Report on Form 10-Q for the period ended March 31, 2000.

3. Current Report on Form 8-K as filed with the SEC on May 20, 2000.

4. Current Report on Form 8-K as filed with the SEC on July 12, 2000.

5. The description of our common stock contained in our Form 8-A dated
January 23, 1998, including any amendment to that form that we may have
filed in the past, or may file in the future, for the purpose of updating
the description of our common stock.

6. The description of our preferred stock purchase rights contained in
our Form 8-A dated March 21, 2000.

We will provide you with a copy of any document incorporated by reference
without charge. Direct your request for copies to:

QUANTA SERVICES, INC.
ATTN: CORPORATE SECRETARY
1360 POST OAK BLVD., SUITE 2100
HOUSTON, TEXAS 77056

S-52
<PAGE> 55

PROSPECTUS

$500,000,000

Quanta Services, Inc.

------------------------

WE WILL OFFER AND SELL, FROM TIME TO TIME, IN ONE OR MORE OFFERINGS, THE DEBT
AND EQUITY SECURITIES DESCRIBED IN THIS PROSPECTUS. THE TOTAL OFFERING PRICE OF
THESE SECURITIES, IN THE AGGREGATE, WILL NOT EXCEED $500 MILLION. WE WILL
PROVIDE SPECIFIC TERMS OF THESE OFFERINGS AND SECURITIES IN SUPPLEMENTS TO THIS
PROSPECTUS.

------------------------

WE WILL OFFER AND SELL, FROM TIME TO TIME, IN ONE OR MORE OFFERINGS:

-- COMMON STOCK

-- DEBT SECURITIES

-- PREFERRED STOCK

-- WARRANTS

------------------------

YOU SHOULD READ THIS PROSPECTUS AND ANY SUPPLEMENT TO THIS PROSPECTUS CAREFULLY
BEFORE YOU INVEST, INCLUDING THE RISK FACTORS WHICH BEGIN ON PAGE 3 OF THIS
PROSPECTUS.

------------------------

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

------------------------

This prospectus may not be used to consummate sales of securities unless
accompanied by a prospectus supplement.

------------------------

This prospectus is dated June 30, 2000.
<PAGE> 56

TABLE OF CONTENTS

<TABLE>
<S> <C>
About This Prospectus....................................... 1
Where You Can Find More Information......................... 1
Special Note Regarding Forward-Looking Statements........... 2
The Company................................................. 2
Risk Factors................................................ 3
Use of Proceeds............................................. 7
Holding Company Structure................................... 7
Ratios of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Dividends..................... 7
Description of Debt Securities.............................. 8
Description of Capital Stock................................ 19
Depositary Shares........................................... 25
Description of Warrants..................................... 27
Plan of Distribution........................................ 27
Legal Matters............................................... 29
Experts..................................................... 29
</TABLE>

i
<PAGE> 57

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf registration process, we may sell any combination of the
securities described in this prospectus in one or more offerings up to a total
dollar amount of $500 million. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities we will
provide a prospectus supplement that will contain specific information about the
terms of the offering and the offered securities. The prospectus supplement may
also add, update or change information contained in this prospectus. Any
statement that we make in this prospectus will be modified or superseded by any
inconsistent statement made by us in a prospectus supplement. You should read
both this prospectus and any prospectus supplement together with additional
information described under the heading "Where You Can Find More Information."

You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else 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 or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the SEC located at
7 World Trade Center, Suite 1300, New York, New York 10048 and at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You may obtain information
on the operation of the SEC's public reference room in Washington, D.C. by
calling the SEC at 1-800-SEC-0330. We also file such information with the New
York Stock Exchange, on which our common stock is listed. Such reports, proxy
statements and other information may be read and copied at 30 Broad Street, New
York, New York 10005.

The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents filed by us listed below and any further filings made
by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the securities or we terminate this
offering:

-- Annual Report on Form 10-K for the year ended December 31, 1999;

-- Current Report on Form 8-K filed March 20, 2000;

-- Quarterly Report on Form 10-Q for the period ended March 31, 2000;

-- The description of our common stock contained in our Form 8-A dated
January 23, 1998, including any amendment to that form that we may
have filed in the past, or may file in the future, for the purpose of
updating the description of our common stock; and

-- The description of our preferred stock purchase rights contained in
our Form 8-A dated March 21, 2000.

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<PAGE> 58

You may request a copy of these filings at no cost by writing or
telephoning us at the following address:

Quanta Services, Inc.
1360 Post Oak Blvd., Suite 2100
Houston, Texas 77056
Attention: Corporate Secretary
(713) 629-7600

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus, including the documents that we incorporated by reference,
contains statements that constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Exchange Act. These statements appear in a number of places in this prospectus
and include statements regarding our plans, beliefs or current expectations,
including those plans, beliefs and expectations of our officers and directors
with respect to, among other things:

-- general economic and business conditions;

-- our expectations and estimates concerning future financial
performance, financing plans and the impact of competition;

-- anticipated trends in our business;

-- existing and future regulations affecting our business;

-- our ability to obtain additional debt and equity financing to support
our growth strategy;

-- our ability to complete acquisitions; and

-- other risk factors described in the section entitled "Risk Factors"
in this prospectus.

We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this prospectus may not occur and actual results
could differ materially from those anticipated or implied in the forward-looking
statements.

THE COMPANY

We are a leading provider of specialized contracting services, including
designing, installing, repairing and maintaining network infrastructure. We
offer end-to-end network solutions to the telecommunications, cable television
and electric power industries. The Internet and the resulting growth in demand
for increased bandwidth coupled with deregulation, increased outsourcing by our
customers and the convergence of the telecommunications, cable television and
electric power industries have resulted in significant growth in demand for our
services. To leverage the growth in demand for our services, we have made
strategic acquisitions that expanded our geographic presence, generated
operating synergies with existing businesses and developed new capabilities to
meet our customers' evolving needs.

Our principal offices in 37 states, as of the date of this prospectus,
provide us the presence and capability to quickly and reliably complete turnkey
projects nationwide. We perform services for many of the leading companies in
the industries we target.

Our principal executive offices are located at 1360 Post Oak Blvd., Suite
2100, Houston, Texas 77056, and our telephone number is (713) 629-7600.

Additional information concerning us and our subsidiaries is included in
our reports and other documents incorporated by reference in this prospectus.
See "Where You Can Find More Information."
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<PAGE> 59

RISK FACTORS

You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations. You should be aware that the occurrence of any of the events
described in the Risk Factors section and elsewhere in this prospectus could
have a material adverse effect on our business, financial condition or results
of operations.

THE INDUSTRIES WE SERVE ARE SUBJECT TO RAPID TECHNOLOGICAL AND STRUCTURAL
CHANGES THAT COULD REDUCE THE DEMAND FOR THE SERVICES WE PROVIDE.

The telecommunications, cable television and electric power industries are
undergoing rapid change as a result of technological advances and deregulation
that could in certain cases reduce the demand for our services or otherwise
adversely affect our business. New or developing technologies could displace the
systems used for voice, video and data transmissions, and improvements in
existing technology may allow telecommunications and cable television companies
to significantly improve their networks without physically upgrading them. In
addition, consolidation in the telecommunications, cable television and electric
power industries may result in the loss of one or more of our customers.

WE MAY BE UNSUCCESSFUL AT GENERATING INTERNAL GROWTH.

Our ability to generate internal growth will be affected by, among other
factors, our success in:

-- expanding the range of services we offer to customers to address
their evolving network needs;

-- attracting new customers;

-- increasing the number of projects performed for existing customers;

-- hiring and retaining employees;

-- opening additional facilities; and

-- reducing 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 AT INTEGRATING COMPANIES THAT WE ACQUIRE.

We cannot be sure that we can successfully integrate our acquired companies
with our other operations without substantial costs, delays or other operational
or financial problems. If we do not implement proper overall business controls,
our decentralized operating strategy could result in inconsistent operating and
financial practices at the companies we acquire, and our overall profitability
could be adversely affected. Integrating our acquired companies involves a
number of special risks which could materially and adversely affect our
business, financial condition and results of operations, including:

-- failure of acquired companies to achieve the results we expect;

-- diversion of our management's attention from operational matters;

-- difficulties integrating the operations, management information
systems and personnel of acquired companies;

-- inability to retain key personnel of the acquired companies;

-- risks associated with unanticipated events or liabilities;

3
<PAGE> 60

-- the potential disruption of our business; and

-- the difficulty of maintaining uniform standards, controls, procedures
and policies.

If one of our acquired companies suffers customer dissatisfaction or
performance problems, the reputation of our entire company could be materially
and adversely affected.

WE MAY NOT HAVE ACCESS IN THE FUTURE TO SUFFICIENT FUNDING TO FINANCE DESIRED
GROWTH.

If we cannot secure additional financing from time to time in the future on
acceptable terms, we may be unable to support our growth strategy. We cannot
readily predict the timing, size and success of our acquisition efforts and
therefore the capital that we will need for these efforts. Using cash for
acquisitions limits our financial flexibility and makes us more likely to seek
additional capital through future debt or equity financings. Our existing debt
agreements contain significant restrictions on our operational and financial
flexibility, including our ability to incur additional debt if certain operating
ratios are not satisfied, and if we seek more debt we may have to agree to
additional covenants that limit our operational and financial flexibility. 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 credit facility requires that we obtain the consent of the lenders
for acquisitions exceeding a certain level of cash consideration.

OUR OPERATING RESULTS MAY VARY SIGNIFICANTLY FROM QUARTER TO QUARTER.

During the winter months, demand for our services may be lower due to
inclement weather. Additionally, our quarterly results may also be materially
affected by:

-- variations in the margins of projects performed during any particular
quarter;

-- regional or general economic conditions;

-- the budgetary spending patterns of customers;

-- the timing and volume of work under new agreements;

-- the termination of existing agreements;

-- costs that we incur to support growth internally or through
acquisitions or otherwise;

-- losses experienced in our operations not otherwise covered by
insurance;

-- the change in mix of our customers, contracts and business;

-- the timing of acquisitions;

-- the timing and magnitude of acquisition assimilation costs; and

-- increases in construction and design costs.

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.

OUR DEPENDENCE UPON FIXED PRICE CONTRACTS 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 cause actual revenue and gross profits for a project to
differ from those we originally estimated and could result in reduced
profitability or losses on projects. Depending upon the size of a particular
project, variations from the estimated contract costs can have a significant
impact on our operating results for any fiscal quarter or year.

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<PAGE> 61

MANY OF OUR CONTRACTS MAY BE CANCELED ON SHORT NOTICE AND WE MAY BE UNSUCCESSFUL
IN REPLACING OUR CONTRACTS AS THEY ARE COMPLETED OR EXPIRE.

Any of the following contingencies may have a material adverse effect on
our revenue, net income and liquidity:

-- our customers cancel a significant number of contracts;

-- we fail to win a significant number of our existing contracts upon
re-bid; or

-- we complete the required work under a significant number of
non-recurring projects and cannot replace them with similar projects.

Many of our customers may cancel their contracts on short notice, typically
30 to 90 days, even if we are not in default under the contract. Certain of our
customers assign work to us on a project-by-project basis under master service
agreements. Under these agreements, our customers often have no obligation to
assign work to us. Our operations could be materially and adversely affected if
the volume of work we anticipate receiving from these customers is not assigned
to us. Many of our contracts, including our master service agreements, are
opened to public bid at the expiration of their terms. We cannot assure you that
we will be the successful bidder on our existing contracts that come up for bid.

OUR BUSINESS GROWTH COULD OUTPACE THE CAPABILITY OF OUR CORPORATE MANAGEMENT
INFRASTRUCTURE.

We cannot be certain that our systems, procedures and controls will be
adequate to support our operations as they expand. Future growth will also
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.

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 that we acquire. Although we intend to enter into
an employment agreement with each of our executive officers and certain other
key employees, we cannot be certain that any individual will continue in such
capacity for a particular period of time. The loss of key personnel, or the
inability to hire and retain qualified employees, could adversely affect our
business, financial condition and results of operations. We do not carry
key-person life insurance on any of our employees.

OUR BUSINESS IS LABOR INTENSIVE AND WE MAY BE UNABLE TO ATTRACT AND RETAIN
QUALIFIED EMPLOYEES.

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 operating 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. Labor
shortages as well as increased labor costs may have a material adverse affect on
our ability to implement our growth strategy and our operations.

OUR UNIONIZED WORKFORCE COULD ADVERSELY AFFECT OUR OPERATIONS AND ACQUISITION
STRATEGY.

A significant percentage of our employees are 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
selective 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
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agreements of a business we want to acquire and some businesses may not want to
become affiliated with a unionized company.

OUR INDUSTRY IS HIGHLY COMPETITIVE.

Our industry includes numerous small, owner-operated private companies, a
few public companies and several large regional companies. In addition, there
are few barriers to 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 than we do and may therefore be able to provide their services
at lower rates than we can provide the same 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 within our industry. We may also face competition from the
in-house service organizations of our existing or prospective customers.
Telecommunications, cable television and electric power service providers
usually employ personnel who perform some of the same types of services we do.
We cannot be certain that our existing or prospective customers will continue to
outsource services in the future.

OUR RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED AS A RESULT OF GOODWILL
AMORTIZATION.

When we acquire a business using purchase accounting, we record an asset
called "goodwill" equal to the excess amount we pay for the business, including
liabilities assumed, over the fair value of the tangible assets of the business
we acquire. Pursuant to generally accepted accounting principles, we amortize
this goodwill over its estimated useful life. We amortize goodwill over 40 years
following the acquisition, which directly impacts our earnings in those years.
Furthermore, we continually evaluate whether events or circumstances have
occurred that indicate that the remaining useful life of goodwill may warrant
revision or that the remaining balance may not be recoverable. Should we be
required to accelerate the amortization of goodwill or write it off completely
because of impairments or changes in accepted accounting principles, our results
from operations may be materially and adversely affected.

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,
polychlorinated biphenyls, fuel storage and air quality. As a result of past and
future operations at our facilities, we may 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.

CERTAIN PROVISIONS OF OUR CORPORATE GOVERNING DOCUMENTS COULD MAKE AN
ACQUISITION OF OUR COMPANY MORE DIFFICULT.

Certain provisions in our certificate of incorporation and bylaws, our
stockholders rights plan and Delaware law could discourage potential acquisition
proposals, delay or prevent a change in control of Quanta 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
restrict 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 may 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. In addition, in March 2000 we adopted a stockholders rights plan
that could cause substantial dilution to a person or group that attempts to
acquire us on terms not approved by our board of directors.

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FUTURE SALES OF OUR COMMON STOCK MAY ADVERSELY AFFECT OUR STOCK PRICE.

USE OF PROCEEDS

Unless otherwise provided in a prospectus supplement, we will use the net
proceeds from the sale of the securities offered by this prospectus and any
prospectus supplement for general corporate purposes, including repayment of
borrowings, working capital, capital expenditures and acquisitions.

HOLDING COMPANY STRUCTURE

Quanta Services, Inc. is a holding company and our assets consist primarily
of investments in our subsidiaries. Quanta's rights and the rights of our
creditors, including holders of our debt securities, to participate in the
distribution of assets of any person in which Quanta owns an equity interest
will be subject to prior claims of the subsidiary's creditors upon the
subsidiary's liquidation or reorganization. Although Quanta may itself be a
creditor with recognized claims against such a subsidiary, claims of Quanta
would still be subject to the prior claims of any secured creditor of such a
subsidiary and of any holder of indebtedness of such a subsidiary that is senior
to that held by Quanta. Accordingly, the holder of our debt securities may be
deemed to be effectively subordinated to those claims.

RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS

The following table contains our consolidated ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred dividends for the
periods indicated.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------- THREE MONTHS ENDED
1995 1996 1997 1998 1999 MARCH 31, 2000
---- ---- ---- ---- ---- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges........................... 2.7 4.2 3.4 6.1 6.4 7.4
Ratio of earnings to combined fixed
charges and preferred dividends... 2.7 4.2 3.4 6.1 6.2 6.9
</TABLE>

For purposes of computing the ratios of earnings to fixed charges and
earnings to fixed charges plus dividends:

(1) earnings consist of income before provision for income taxes plus
fixed charges (excluding capitalized interest) and

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DESCRIPTION OF DEBT SECURITIES

The Debt Securities will be either our senior debt securities ("Senior Debt
Securities") or our subordinated debt securities ("Subordinated Debt
Securities"). The Senior Debt Securities and the Subordinated Debt Securities
will be issued under separate Indentures between Quanta and Chase Bank of Texas,
National Association (the "Trustee"). Senior Debt Securities will be issued
under a "Senior Indenture" and Subordinated Debt Securities will be issued under
a "Subordinated Indenture." Together the Senior Indenture and the Subordinated
Indenture are called "Indentures." The terms of the Debt Securities include
those stated in the Indentures and those made part of the Indentures by
reference to the Trust indenture Act of 1939, as amended. For purposes of this
Description of Debt Securities, references to "we," "us," "our," "Company" or
"Quanta" include only Quanta Services, Inc. and not its subsidiaries.

The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series which are offered by a prospectus supplement
will be described in the prospectus supplement.

We have summarized selected provisions of the Indentures below. The summary
is not complete. The form of each Indenture is filed as an exhibit to the
registration statement of which this prospectus forms a part and you should read
the Indenture for provisions that may be important to you. In the summary below
we have included references to section numbers of the applicable Indentures so
that you can easily locate these provisions. Whenever we refer in this
prospectus or in the prospectus supplement to particular sections or defined
terms of the Indenture, such sections or defined terms are incorporated by
reference herein or therein, as applicable. Capitalized terms used in the
summary have the meanings specified in the Indentures.

GENERAL

The Indentures provide that Debt Securities in separate series may be
issued thereunder from time to time without limitation as to aggregate principal
amount. We may specify a maximum aggregate principal amount for the Debt
Securities of any series. (Section 301) We will determine the terms and
conditions of the Debt Securities, including the maturity, principal and
interest, but those terms must be consistent with the Indenture. The Debt
Securities will be our unsecured obligations.

The Subordinated Debt Securities will be subordinated in right of payment
to the prior payment in full of all of our Senior Debt (as defined) as described
under "--Subordination of Subordinated Debt Securities" and in the prospectus
supplement applicable to any Subordinated Debt Securities. If the prospectus
supplement so indicates, the Debt Securities will be convertible into our common
stock as described under "--Conversion of Debt Securities."

The applicable prospectus supplement will set forth the price or prices at
which the Debt Securities to be offered will be issued and will describe, among
other things, the following terms of such Debt Securities:

(1) the title of the Debt Securities;

(2) whether the Debt Securities are Senior Debt Securities or
Subordinated Debt Securities and, if Subordinated Debt Securities, the
related subordination terms;

(3) any limit on the aggregate principal amount of the Debt
Securities;

(4) the dates on which the principal of the Debt Securities will be
payable;

(5) the interest rate which the Debt Securities will bear and the
interest payment dates for the Debt Securities;

(6) the places where payments on the Debt Securities will be payable;

(7) any terms upon which the Debt Securities may be redeemed, in
whole or in part, at our option;

(8) any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem the Debt Securities;

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<PAGE> 65

(9) the portion of the principal amount, if less than all, of the
Debt Securities that will be payable upon declaration of acceleration of
the Maturity of the Debt Securities;

(10) whether the Debt Securities are defeasible;

(11) any addition to or change in the Events of Default;

(12) whether the Debt Securities are convertible into our common
stock and, if so, the terms and conditions upon which conversion will be
effected, including the initial conversion price or conversion rate ("the
Conversion Price") and any adjustments thereto in addition to or different
from those described in this prospectus, the conversion period and other
conversion provisions in addition to or in lieu of those described in this
prospectus;

(13) any addition to or change in the covenants in the Indenture
applicable to any of the Debt Securities; and

(14) any other terms of the Debt Securities not inconsistent with the
provisions of the Indenture. (Section 301)

Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Federal income tax
considerations, including special United States federal income tax
considerations applicable to Debt Securities sold at an original issue discount,
may be described in the applicable prospectus supplement. In addition, special
United States federal income tax or other considerations applicable to any Debt
Securities that are denominated in a currency or currency unit other than United
States dollars may be described in the applicable prospectus supplement.

SUBORDINATION OF SUBORDINATED DEBT SECURITIES

The indebtedness evidenced by the Subordinated Debt Securities will, to the
extent set forth in the Subordinated Indenture with respect to each series of
Subordinated Debt Securities, be subordinate in right of payment to the prior
payment in full of all of our Senior Debt, including the Senior Debt Securities.
The prospectus supplement relating to any Subordinated Debt Securities will
summarize the subordination provisions of the Subordinated Indenture applicable
to that series including:

-- the applicability and effect of such provisions upon any payment or
distribution of our assets to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit
of creditors or marshaling of assets or any bankruptcy, insolvency or
similar proceedings;

-- the applicability and effect of such provisions in the event of
specified defaults with respect to any Senior Debt, including the
circumstances under which and the periods in which we will be
prohibited from making payments on the Subordinated Debt Securities;
and

-- the definition of Senior Debt applicable to the Subordinated Debt
Securities of that series and, if the series is issued on a senior
subordinated basis, the definition of Subordinated Debt applicable to
that series.

The prospectus supplement will also describe as of a recent date the approximate
amount of Senior Debt to which the Subordinated Debt Securities of that series
will be subordinated.

The failure to make any payment on any of the Subordinated Debt Securities
by reason of the subordination provisions of the Subordinated Indenture
described in the prospectus supplement will not be construed as preventing the
occurrence of an Event of Default with respect to the Subordinated Debt
Securities arising from any such failure to make payment.

The subordination provisions described above will not be applicable to
payments in respect of the Subordinated Debt Securities from a defeasance trust
established in connection with any defeasance or covenant defeasance of the
Subordinated Debt Securities as described under "--Defeasance and Covenant
Defeasance."

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<PAGE> 66

CONVERSION OF DEBT SECURITIES

The Indentures may provide for a right of conversion of Debt Securities
into our common stock (or cash in lieu thereof). (Sections 301 and 1701). The
following provisions will apply to Debt Securities that are convertible Debt
Securities unless otherwise provided in the prospectus supplement for such Debt
Securities.

The Holder of any convertible Debt Securities will have the right
exercisable at any time prior to the close of business on the second Business
Day prior to their Stated Maturity, unless previously redeemed or otherwise
purchased by us, to convert such Debt Securities into shares of common stock at
the Conversion Price set forth in the prospectus supplement, subject to
adjustment. (Section 1702). The Holder of convertible Debt Securities may
convert any portion thereof which is $1,000 in principal amount or any multiple
thereof. (Section 1702).

In certain events, the Conversion Price will be subject to adjustment as
set forth in the applicable Indenture. Such events include:

(a) any payment of a dividend (or other distribution) payable in
common stock on any class of our Capital Stock;

(b) any subdivision, combination or reclassification of common stock;

(c) any issuance to all holders of common stock of rights, options or
warrants entitling them to subscribe for or purchase common stock at less
than the then current market price (as determined in accordance with the
Indenture) of common stock; provided, however, that if such rights, options
or warrants are only exercisable upon the occurrence of certain triggering
events relating to control and provided for in shareholders' rights plans,
then the Conversion Price will not be adjusted until such triggering events
occur, and provided further that if any such rights, options or warrants
expire unexercised, the Conversion Price will be readjusted to take into
account only the number of such rights, options or warrants actually
exercised;

(d) any distribution to all holders of common stock of evidences of
indebtedness, shares of our Capital Stock other than common stock, cash or
other assets (including securities, but excluding those dividends and
distributions referred to above for which an adjustment must be made and
excluding regular dividends and distributions paid exclusively in cash);

(e) any distribution consisting exclusively of cash (excluding any
cash portion of distributions referred to in (d) above, or cash distributed
upon a merger or consolidation to which the third succeeding paragraph
applies) to all holders of common stock in an aggregate amount that,
combined together with (1) all other such all-cash distributions made
within the then preceding 12 months in respect of which no adjustment has
been made and (2) any cash and the fair market value of other consideration
paid or payable in respect of any tender offer by us or any of our
Subsidiaries for common stock concluded within the preceding 12 months in
respect of which no adjustment has been made, exceeds 15% of our company's
market capitalization (defined as being the product of the then current
market price of the common stock times the aggregate number of shares of
common stock, Limited Vote Common Stock and Series A preferred stock, on an
as converted basis, then outstanding) on the record date of such
distribution; and

(f) the completion of a tender or exchange offer made by us or any of
our Subsidiaries for common stock that involves an aggregate consideration
that, together with (1) any cash and the fair market value of other
consideration payable in a tender or exchange offer by us or any of our
Subsidiaries for common stock expiring within the 12 months preceding the
expiration of such tender or exchange offer in respect of which no
adjustment has been made and (2) the aggregate amount of any such all-cash
distributions referred to in (e) above to all holders of common stock
within the 12 months preceding the expiration of such tender or exchange
offer in respect of which no adjustments have been made, exceeds 15% of our
market capitalization on the expiration of such tender offer.

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No adjustment of the Conversion Price will be required to be made until the
cumulative adjustments amount to 1.0% or more of the Conversion Price as last
adjusted. We reserve the right to make such reductions in the Conversion Price
in addition to those required in the preceding provisions as we consider to be
advisable in order that any event treated for federal income tax purposes as a
dividend of a stock or stock rights will not be taxable to the recipients.
Should we elect to make such a reduction in the Conversion Price, we will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder if and to the extent that such laws
and regulations are applicable in connection with the reduction of the
Conversion Price. (Section 1704).

If we distribute rights, options or warrants (other than those referred to
in (c) in the preceding paragraph) pro rata to holders of common stock, so long
as any such rights, options or warrants have not expired or been redeemed by us,
the Holder of any convertible Debt Security surrendered for conversion will be
entitled to receive upon such conversion, in addition to the shares of common
stock issuable upon such conversion (the "Conversion Shares"), a number of
rights, options or warrants to be determined as follows:

(1) if such conversion occurs on or prior to the date for the
distribution to the holders of rights, options or warrants of separate
certificates evidencing such rights or warrants (the "Distribution Date"),
the same number of rights, options or warrants to which a holder of a
number of shares of common stock equal to the number of Conversion Shares
is entitled at the time of such conversion in accordance with the terms and
provisions of and applicable to the rights, options or warrants; and

(2) if such conversion occurs after such Distribution Date, the
number of rights, options or warrants to which a holder of the number of
shares of common stock into which such Debt Security was convertible
immediately prior to such Distribution Date would have been entitled on
such Distribution Date in accordance with the terms and provisions of and
applicable to the rights, options or warrants.

The Conversion Price will not be subject to adjustment on account of any
declaration, distribution or exercise of such rights or warrants. (Section
1704).

Fractional shares of common stock will not be issued upon conversion, but,
instead, we will pay a cash adjustment based on the then current market price
for the common stock. (Section 1703) Upon conversion, no adjustments will be
made for accrued interest or dividends, and therefore convertible Debt
Securities surrendered for conversion between the record date for an interest
payment and the Interest Payment Date (except convertible Debt Securities called
for redemption on a redemption date during such period) must be accompanied by
payment of an amount equal to the interest thereon which the Holder is to
receive. (Sections 1704 and 1702).

In the case of any reclassification of the Conversion Shares, consolidation
or merger of our company with or into another Person or any merger of another
Person with or into us (with certain exceptions), or in case of any transfer or
other disposition of all or substantially all of our assets, each convertible
Debt Security then outstanding will, without the consent of any Holder, become
convertible only into the kind and amount of securities, cash and other property
receivable upon such reclassification, consolidation, merger, conveyance,
transfer or lease by a holder of the number of shares of common stock into which
such Debt Security was convertible immediately prior thereto, after giving
effect to any adjustment event, who failed to exercise any rights of election
and received per share the kind and amount received per share by a plurality of
non-electing shares. (Section 1705).

FORM, EXCHANGE AND TRANSFER

The Debt Securities of each series will be issuable only in fully
registered form, without coupons, and, unless otherwise specified in the
applicable prospectus supplement, only in denominations of $1,000 and integral
multiples thereof. (Section 302)

At the option of the Holder, subject to the terms of the applicable
Indenture and the limitations applicable to Global Securities, Debt Securities
of each series will be exchangeable for other Debt Securities

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of the same series of any authorized denomination and of a like tenor and
aggregate principal amount. (Section 305)

Subject to the terms of the applicable Indenture and the limitations
applicable to Global Securities, Debt Securities may be presented for exchange
as provided above or for registration of transfer (duly endorsed or with the
form of transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by us for such
purpose. No service charge will be made for any registration of transfer or
exchange of Debt Securities, but we may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith. Such
transfer or exchange will be effected upon the Security Registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. The Security Registrar and any
other transfer agent initially designated by us for any Debt Securities will be
named in the applicable prospectus supplement. (Section 305) We may at any time
designate additional transfer agents or rescind the designation of any transfer
agent or approve a change in the office through which any transfer agent acts,
except that we will be required to maintain a transfer agent in each Place of
Payment for the Debt Securities of each series. (Section 1002).

If the Debt Securities of any series (or of any series and specified terms)
are to be redeemed in part, we will not be required to (i) issue, register the
transfer of or exchange any Debt Security of that series (or of that series and
specified terms, as the case may be) during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption of any such
Debt Security that may be selected for redemption and ending at the close of
business on the day of such mailing or (ii) register the transfer of or exchange
any Debt Security so selected for redemption, in whole or in part, except the
unredeemed portion of any such Debt Security being redeemed in part. (Section
305)

GLOBAL SECURITIES

Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more Global Securities which will have an aggregate
principal amount equal to that of the Debt Securities represented thereby. Each
Global Security will be registered in the name of a Depositary or its nominee
identified in the applicable prospectus supplement, will be deposited with such
Depositary or nominee or its custodian and will bear a legend regarding the
restrictions on exchanges and registration of transfer thereof referred to below
and any such other matters as may be provided for pursuant to the applicable
Indenture.

Notwithstanding any provision of the Indentures or any Debt Security
described in this prospectus, no Global Security may be exchanged in whole or in
part for Debt Securities registered, and no transfer of a Global Security in
whole or in part may be registered, in the name of any person other than the
Depositary for such Global Security or any nominee of such Depositary unless:

(1) the Depositary has notified us that it is unwilling or unable to
continue as Depositary for such Global Security or has ceased to be
qualified to act as such as required by the applicable Indenture and a
successor Depositary has not been obtained;

(2) an Event of Default with respect to the Debt Securities
represented by such Global Security has occurred and is continuing and the
Security Registrar has received a written request from the Depositary to
issue certificated Debt Securities; or

(3) other circumstances exist, in addition to or in lieu of those
described above, as may be described in the applicable prospectus
supplement.

All Debt Securities issued in exchange for a Global Security or any portion
thereof will be registered in such names as the Depositary may direct. (Sections
205 and 305)

As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities that it represents for all purposes under the Debt Securities and the
applicable Indenture. Except in the limited circumstances referred to above,
owners of beneficial interests in a Global Security will
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<PAGE> 69

not be entitled to have such Global Security or any Debt Securities that it
represents registered in their names, will not receive or be entitled to receive
physical delivery of certificated Debt Securities in exchange therefor and will
not be considered to be the owners or Holders of such Global Security or any
Debt Securities that is represents for any purpose under the Debt Securities or
the applicable Indenture. All payments on a Global Security will be made to the
Depositary or its nominee, as the case may be, as the Holder of the security.
The laws of some jurisdictions require that some purchasers of Debt Securities
take physical delivery of such Debt Securities in definitive form. These laws
may impair the ability to transfer beneficial interests in, or pledge, a Global
Security.

Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial interests
in a Global Security will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depositary
(with respect to participants' interests) or any such participant (with respect
to interests of persons held by such participants on their behalf). Payments,
transfers, exchanges and other matters relating to beneficial interests in a
Global Security may be subject to various policies and procedures adopted by the
Depositary from time to time. None of us, the Trustees or our agents will have
any responsibility or liability for any aspect of the Depositary's or any
participant's records relating to, or for payments made on account of,
beneficial interests in a Global Security, or for maintaining, supervising or
reviewing any records relating to such beneficial interests.

PAYMENT AND PAYING AGENTS

Unless otherwise indicated in the applicable prospectus supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest. (Section 307)

Unless otherwise indicated in the applicable prospectus supplement,
principal of and any premium and interest on the Debt Securities of a particular
series will be payable at the office of such Paying Agent or Paying Agents as we
may designate for such purpose from time to time, except that at our option
payment of any interest may be made by check mailed to the address of the Person
entitled thereto as such address appears in the Security Register. Unless
otherwise indicated in the applicable prospectus supplement, the corporate trust
office of the Trustee under the Senior Indenture in The City of New York will be
designated as sole Paying Agent for payments with respect to Senior Debt
Securities of each series, and the corporate trust office of the Trustee under
the Subordinated Indenture in The City of New York will be designated as the
sole Paying Agent for payment with respect to Subordinated Debt Securities of
each series. Any other Paying Agents initially designated by us for the Debt
Securities of a particular series will be named in the applicable prospectus
supplement. We may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office through which
any Paying Agent acts, except that we will be required to maintain a Paying
Agent in each Place of Payment for the Debt Securities of a particular series.
(Section 1002)

All moneys paid by us to a Paying Agent for the payment of the principal of
or any premium or interest on any Debt Security which remain unclaimed at the
end of two years after such principal, premium or interest has become due and
payable will be repaid to us, and the Holder of such Debt Security thereafter
may look only to us for payment thereof. (Section 1003)

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CONSOLIDATION, MERGER AND SALE OF ASSETS

We may not consolidate with or merge into, or transfer, lease or otherwise
dispose of all or substantially all of our assets to, any Person (a "successor
Person"), and may not permit any Person to consolidate with or merge into us,
unless:

(1) the successor Person (if any) is a corporation, partnership,
trust or other entity organized and validly existing under the laws of any
domestic jurisdiction and assumes our obligations on the Debt Securities
and under the Indentures;

(2) immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing; and

(3) several other conditions, including any additional conditions
with respect to any particular Debt Securities specified in the applicable
prospectus supplement, are met. (Section 801)

EVENTS OF DEFAULT

Unless otherwise specified in the prospectus supplement, each of the
following will constitute an Event of Default under the applicable Indenture
with respect to Debt Securities of any series:

(1) failure to pay principal of or any premium on any Debt Security
of that series when due, whether or not, in the case of Subordinated Debt
Securities, such payment is prohibited by the subordination provisions of
the Subordinated Indenture;

(2) failure to pay any interest on any Debt Securities of that series
when due, continued for 30 days, whether or not, in the case of
Subordinated Debt Securities, such payment is prohibited by the
subordination provisions of the Subordinated Indenture;

(3) failure to deposit any sinking fund payment, when due, in respect
of any Debt Security of that series, whether or not, in the case of
Subordinated Debt Securities, such deposit is prohibited by the
subordination provisions of the Subordinated Indenture;

(4) failure to perform any of our other covenants in such Indenture
(other than a covenant included in such Indenture solely for the benefit of
a series other than that series), continued for 60 days after written
notice has been given by the applicable Trustee, or the Holders of at least
25% in principal amount of the Outstanding Debt Securities of that series,
as provided in such Indenture;

(5) failure to perform or comply with the provisions described under
"Consolidation, Merger and Sale of Assets"; and

(6) certain events of bankruptcy, insolvency or reorganization
affecting us, any Significant Subsidiary or any group of Subsidiaries that
together would constitute a Significant Subsidiary. (Section 501)

If an Event of Default (other than an Event of Default described in clause
(6) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the applicable Trustee or the
Holders of at least 25% in principal amount of the Outstanding Debt Securities
of that series by notice as provided in the Indenture may declare the principal
amount of the Debt Securities of that series (or, in the case of any Debt
Security that is an Original Issue Discount Debt Security or the principal
amount of which is not then determinable, such portion of the principal amount
of such Debt Security, or such other amount in lieu of such principal amount, as
may be specified in the terms of such Debt Security) to be due and payable
immediately. If an Event of Default described in clause (6) above with respect
to the Debt Securities of any series at the time Outstanding shall occur, the
principal amount of all the Debt Securities of that series (or, in the case of
any such Original Issue Discount Security or other Debt Security, such specified
amount) will automatically, and without any action by the applicable Trustee or
any Holder, become immediately due and payable. After any such acceleration, but
before a judgment or decree based on acceleration, the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series
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may, under certain circumstances, rescind and annul such acceleration if all
Events of Default, other than the non-payment of accelerated principal (or other
specified amount), have been cured or waived as provided in the applicable
Indenture. (Section 502) For information as to waiver of defaults, see
"--Modification and Waiver" below.

Subject to the provisions of the Indentures relating to the duties of the
Trustees in case an Event of Default shall occur and be continuing, each Trustee
will be under no obligation to exercise any of its rights or powers under the
applicable Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to such Trustee reasonable indemnity. (Section
603) Subject to such provisions for the indemnification of the Trustees, the
Holders of a majority in principal amount of the Outstanding Debt Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Debt Securities
of that series. (Section 512)

No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the applicable Indenture, or for the appointment
of a receiver or a trustee, or for any other remedy thereunder, unless:

(1) such Holder has previously given to the Trustee under the
applicable Indenture written notice of a continuing Event of Default with
respect to the Debt Securities of that series;

(2) the Holders of at least 25% in principal amount of the
Outstanding Debt Securities of that series have made written request, and
such Holder or Holders have offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee; and

(3) the Trustee has failed to institute such proceeding, and has not
received from the Holders of a majority in principal amount of the
Outstanding Debt Securities of that series a direction inconsistent with
such request, within 60 days after such notice, request and offer. (Section
507)

However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for the enforcement of payment of the principal of or any premium
or interest on such Debt Security on or after the applicable due date specified
in such Debt Security or, if applicable, to convert such Debt Security. (Section
508)

We will be required to furnish to each Trustee annually a statement by
certain of our officers as to whether or not we, to their knowledge, are in
default in the performance or observance of any of the terms, provisions and
conditions of the applicable Indenture and, if so, specifying all such known
defaults. (Section 1004)

MODIFICATION AND WAIVER

Modifications and amendments of an Indenture may be made by us and the
applicable Trustee with the consent of the Holders of a majority in principal
amount of the Outstanding Debt Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Debt
Security affected thereby:

(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Debt Security;

(2) reduce the principal amount of, or any premium or interest on,
any Debt Security;

(3) reduce the amount of principal of an Original Issue Discount
Security or any other Debt Security payable upon acceleration of the
Maturity thereof;

(4) change the place or currency of payment of principal of, or any
premium or interest on, any Debt Security;

(5) impair the right to institute suit for the enforcement of any
payment on or any conversion right with respect to any Debt Security;

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(6) in the case of Subordinated Debt Securities, modify the
subordination provisions in a manner adverse to the Holders of the
Subordinated Debt Securities;

(7) in the case of convertible Debt Securities, modify the conversion
provisions in a manner adverse to the Holders of the convertible Debt
Securities;

(8) reduce the percentage in principal amount of Outstanding Debt
Securities of any series, the consent of whose Holders is required for
modification or amendment of the Indenture;

(9) reduce the percentage in principal amount of Outstanding Debt
Securities of any series necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults;

(10) modify such provisions with respect to modification and waiver;
or

(11) following the making of an offer to purchase Debt Securities
made pursuant to a covenant contained in the Indenture, modify the
provisions of the Indenture with respect to such offer to purchase in a
manner adverse to the Holders of such Debt Securities. (Section 902)

Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more supplemental indentures, for any of the following purposes:

(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company;

(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Debt Securities or to surrender any right
or power conferred upon the Company;

(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Debt Securities;

(4) to add to or change any of the provisions of the Indenture to
permit or facilitate the issuance of Debt Securities in bearer form,
registrable or not registrable as to principal, and with or without
interest coupons, or to permit or facilitate the issuance of Debt
Securities in uncertificated form;

(5) to add to, change or eliminate any of the provisions of the
Indenture in respect of one or more series of Debt Securities, provided
that any such addition, change or elimination (A) shall neither (i) apply
to any Debt Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such provision nor
(ii) modify the rights of the Holder of any such Debt Security with respect
to such provision or (B) shall become effective only when there is no such
Debt Security outstanding;

(6) to secure the Debt Securities;

(7) to establish the form or terms of Debt Securities of any series
as permitted by the Indenture;

(8) to evidence and provide for the acceptance of appointment by a
successor Trustee with respect to the Debt Securities of one or more series
and to add to or change any of the provisions of the Indenture to provide
for or facilitate the administration of the trusts by more than one
Trustee;

(9) to cure any ambiguity, to correct or supplement any provision
which may be defective or inconsistent with any other provision in the
Indenture, or to make any other provisions with respect to matters or
questions arising under the Indenture, provided that such action pursuant
to this Clause (9) shall not adversely affect the interests of the Holders
of Debt Securities of any series in any material respect; or

(10) to provide for the continuation of conversion rights in the case
of certain mergers, consolidations or asset sales pursuant to Section 1705
of the Indenture. (Section 901)

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The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may waive compliance by us with certain restrictive
provisions of the applicable Indenture. (Section 1009) The Holders of a majority
in principal amount of the Outstanding Debt Securities of any series may waive
any past default under the applicable Indenture, except a default in the payment
of principal, premium or interest and certain covenants and provisions of the
Indenture which cannot be amended without the consent of the Holder of each
Outstanding Debt Security of such series affected. (Section 513)

The Indentures provide that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver or other action under such
Indenture as of any date:

(1) the principal amount of an Original Issue Discount Security that
will be deemed to be Outstanding will be the amount of the principal
thereof that would be due and payable as of such date upon acceleration of
the Maturity thereof to such date;

(2) if, as of such date, the principal amount payable at the Stated
Maturity of a Debt Security is not determinable (for example, because it is
based on an index), the principal amount of such Debt Security deemed to be
Outstanding as of such date will be an amount determined in the manner
prescribed for such Debt Security; and

(3) the principal amount of a Debt Security denominated in one or
more foreign currencies or currency units that will be deemed to be
Outstanding will be the U.S. dollar equivalent, determined as of such date
in the manner prescribed for such Debt Security, of the principal amount of
such Debt Security (or, in the case of a Debt Security described in clause
(1) or (2) above, of the amount described in such clause).

Certain Debt Securities, including those for whose payment or redemption money
has been deposited or set aside in trust for the Holders and those that have
been fully defeased pursuant to Section 1502, will not be deemed to be
Outstanding. (Section 101)

Except in certain limited circumstances, we will be entitled to set any day
as a record date for the purpose of determining the Holders of Outstanding Debt
Securities of any series entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action under the
applicable Indenture, in the manner and subject to the limitations provided in
the Indenture. If a record date is set for any action to be taken by Holders of
a particular series, such action may be taken only by persons who are Holders of
Outstanding Debt Securities of that series on the record date. To be effective,
such action must be taken by Holders of the requisite principal amount of such
Debt Securities within a specified period following the record date. For any
particular record date, this period will be 180 days or such other period as may
be specified by us, and may be shortened or lengthened (but not beyond 180 days)
from time to time. (Section 104)

DEFEASANCE AND COVENANT DEFEASANCE

If and to the extent indicated in the applicable prospectus supplement, we
may elect, at our option at any time, to have the provisions of Section 1502,
relating to defeasance and discharge of indebtedness, or Section 1503, relating
to defeasance of certain restrictive covenants applied to the Debt Securities of
any series, or to any specified part of a series. (Section 1501)

Defeasance and Discharge. The Indentures provide that, upon our exercise of
our option (if any) to have Section 1502 applied to any Debt Securities, we will
be discharged from all our obligations, and, if such Debt Securities are
Subordinated Debt Securities, the provisions of the Subordinated Indenture
relating to subordination (but not to conversion, if applicable) will cease to
be effective, with respect to such Debt Securities (except for certain
obligations to exchange or register the transfer of Debt Securities, to replace
stolen, lost or mutilated Debt Securities, to maintain paying agencies and to
hold moneys for payment in trust) upon the deposit in trust for the benefit of
the Holders of such Debt Securities of money or U.S. Government Obligations, or
both, which, through the payment of principal and interest in respect thereof in
accordance

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with their terms, will provide money in an amount sufficient to pay the
principal of and any premium and interest on such Debt Securities on the
respective Stated Maturities or Redemption Date in accordance with the terms of
the applicable Indenture and such Debt Securities. Such defeasance or discharge
may occur only if, among other things:

(1) we have delivered to the applicable Trustee an Opinion of Counsel
to the effect that we have received from, or there has been published by,
the United States Internal Revenue Service a ruling, or there has been a
change in tax law, in either case to the effect that Holders of such Debt
Securities will not recognize gain or loss for federal income tax purposes
as a result of such deposit, defeasance and discharge and will be subject
to federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge were not to occur;

(2) no Event of Default or event that with the passing of time or the
giving of notice, or both, shall constitute an Event of Default shall have
occurred and be continuing;

(3) such deposit, defeasance and discharge will not result in a
breach or violation of, or constitute a default under, any agreement or
instrument to which we are a party or by which we are bound;

(4) in the case of Subordinated Debt Securities, at the time of such
deposit, no default in the payment of all or a portion of principal of (or
premium, if any) or interest on any of our Senior Debt shall have occurred
and be continuing, no event of default shall have resulted in the
acceleration of any of our Senior Debt and no other event of default with
respect to any of our Senior Debt shall have occurred and be continuing,
permitting after notice or the lapse of time, or both, the acceleration
thereof; and

(5) we have delivered to the Trustee an Opinion of Counsel to the
effect that such deposit shall not cause the Trustee or the trust so
created to be subject to the Investment Company Act of 1940. (Sections 1502
and 1504)

Defeasance of Certain Covenants. The Indentures provide that, upon our
exercise of our option (if any) to have Section 1503 applied to any Debt
Securities, we may omit to comply with certain restrictive covenants, including
those that may be described in the applicable prospectus supplement, the
occurrence of certain Events of Default, which are described above in clause (4)
(with respect to such restrictive covenants) under "Events of Default" and any
that may be described in the applicable prospectus supplement, will not be
deemed to either be or result in an Event of Default and, if such Debt
Securities are Subordinated Debt Securities, the provisions of the Subordinated
Indenture relating to subordination (but not to conversion, if applicable) will
cease to be effective, in each case with respect to such Debt Securities. In
order to exercise such option, we must deposit, in trust for the benefit of the
Holders of such Debt Securities, money or U.S. Government Obligations, or both,
which, through the payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an amount sufficient to pay
the principal of and any premium and interest on such Debt Securities on the
respective Stated Maturities or Redemption Date in accordance with the terms of
the applicable Indenture and such Debt Securities. Such covenant defeasance may
occur only if we have delivered to the applicable Trustee an Opinion of Counsel
that in effect says that Holders of such Debt Securities will not recognize gain
or loss for federal income tax purposes as a result of such deposit and
defeasance of certain obligations and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been the
case if such deposit and defeasance were not to occur, and the requirements set
forth in clauses (2), (3), (4) and (5) above are satisfied. If we exercise this
option with respect to any Debt Securities and such Debt Securities were
declared due and payable because of the occurrence of any Event of Default, the
amount of money and U.S. Government Obligations so deposited in trust would be
sufficient to pay amounts due on such Debt Securities at the time of their
respective Stated Maturities or Redemption Debt but may not be sufficient to pay
amounts due on such Debt Securities upon any acceleration resulting from such
Event of Default. In such case, we would remain liable for such payments.
(Sections 1503 and 1504)

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NOTICES

Notices to Holders of Debt Securities will be given by mail to the
addresses of such Holders as they may appear in the Security Register. (Sections
101 and 106)

TITLE

We, the Trustees and any agent of us or a Trustee may treat the Person in
whose name a Debt Security is registered as the absolute owner of the Debt
Security (whether or not such Debt Security may be overdue) for the purpose of
making payment and for all other purposes. (Section 308)

GOVERNING LAW

The Indentures and the Debt Securities will be governed by, and construed
in accordance with, the law of the State of New York. (Section 112)

DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 100,000,000 shares of common
stock, par value $.00001 per share, 3,345,333 shares of Limited Vote Common
Stock, par value $.00001 per share, and 10,000,000 shares of preferred stock,
par value $.00001 per share.

COMMON STOCK AND LIMITED VOTE COMMON STOCK

The holders of common stock are entitled to one vote for each share on all
matters voted upon by stockholders, including the election of directors. Such
holders are not entitled to vote cumulatively for the election of directors.
Holders of a majority of the shares of common stock entitled to vote in any
election of directors may elect six members of our board of directors. Shares of
common stock are not subject to any redemption provisions and are not
convertible into any of our other securities. All outstanding shares of common
stock are fully paid and non-assessable. Any additional common stock we issue
will also be fully paid and non-assessable.

Holders of Limited Vote Common Stock, voting together as a single class,
are entitled to elect one director. Holders of Limited Vote Common Stock are not
entitled to vote on the election of any other directors. Only the holders of the
Limited Vote Common Stock may remove the director such holders are entitled to
elect. Holders of Limited Vote Common Stock are entitled to one-tenth of one
vote for each share held on all other matters on which they are entitled to
vote.

Subject to the rights of any then outstanding shares of preferred stock,
holders of common stock and Limited Vote Common Stock are together entitled to
participate pro rata in such dividends as may be declared in the discretion of
our board of directors out of funds legally available therefor. Holders of
common stock and Limited Vote Common Stock together are entitled to share
ratably in the net assets of Quanta upon liquidation after payment or provision
for all liabilities and any preferential liquidation rights of any preferred
stock then outstanding. Holders of common stock and holders of Limited Vote
Common Stock have no preemptive rights to purchase shares of stock of Quanta.
Shares of common stock are not subject to any redemption provisions and are not
convertible into any other securities of Quanta. Shares of Limited Vote Common
Stock are not subject to any redemption provisions and are convertible into
common stock as described below.

Each share of Limited Vote Common Stock will automatically convert to
common stock on a share-for-share basis in the event of a permitted disposition
of such share of Limited Vote Common Stock by the holder thereof (other than a
distribution by a holder to its partners or beneficial owners or a transfer to a
related party of such holder or to another holder of Limited Vote Common Stock
or a related party thereto (whether a party is a "related party" shall be
determined in accordance with Sections 267, 707, 318 and/or 4946 of the Internal
Revenue Code)). The holders of Limited Vote Common Stock have no rights to
convert Limited

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Vote Common Stock into common stock and the only conversion feature of the
Limited Vote Common Stock is the automatic conversion upon a permitted
disposition.

Our common stock is listed on the NYSE.

PREFERRED STOCK

SERIES A CONVERTIBLE PREFERRED STOCK

In September 1999, Quanta entered into a Securities Purchase Agreement with
UtiliCorp United and issued 1,860,000 shares of Series A convertible preferred
stock for an initial investment of $186,000,000 before transaction costs. The
holders of the Series A convertible preferred stock are entitled to receive
dividends in cash at a rate of 0.5% per annum on an amount equal to $100.00 per
share, plus all unpaid dividends accrued. In addition to the preferred dividend,
the holders are entitled to participate in any cash or non-cash dividends or
distributions declared and paid on the shares of common stock, as if each share
of Series A convertible preferred stock had been converted at the then
applicable conversion price into shares of common stock immediately prior to the
record date for payment of such dividends or distributions. At any time after
the sixth anniversary of the issuance of the Series A convertible preferred
stock, if the closing price per share of our common stock is greater than
$20.00, Quanta may terminate the preferred dividend. If, however, the closing
price per share of our common stock is equal to or less than $20.00, then the
preferred dividend may, at the option of UtiliCorp United, be adjusted to the
then "market coupon rate," which shall equal our after-tax cost of obtaining
financing, excluding common stock, to replace UtiliCorp United's investment in
Quanta.

UtiliCorp United, as the holder of the Series A convertible preferred
stock, is entitled to that number of votes equal to the number of shares of
common stock into which the outstanding shares of Series A convertible preferred
stock are then convertible. Subject to certain limitations, UtiliCorp United is
entitled to elect three of the total number of directors of Quanta. All or any
portion of the outstanding shares of Series A convertible preferred stock may,
at the option of UtiliCorp United, be converted at any time into fully paid and
nonassessable shares of common stock. The conversion price is currently $20.00
and may be adjusted under certain circumstances.

Our stockholders approved a proposal at our annual meeting on May 24, 2000
that allows UtiliCorp United to exchange up to 7,924,806 shares of common stock
for up to 1,584,961 additional shares of Series A convertible preferred stock,
at a rate of five shares of common stock for one share of Series A convertible
preferred stock. When consummated, the exchange will also reduce the stated
amount per share of Series A convertible preferred stock on which dividends are
paid to $53.99 per share. It is contemplated that the exchange will be
consummated during July 2000. The exchange will not adversely affect our other
holders of common stock or Limited Vote Common Stock. The additional shares of
Series A preferred stock to be issued to UtiliCorp United in the exchange will
not give UtiliCorp United any greater voting power than it presently has as a
holder of the common stock to be exchanged, and will not give UtiliCorp United
any additional veto power. In addition, the Series A preferred stock has no
liquidation preference, and the certificate of designation will be amended so
that the aggregate dividend payable to UtiliCorp United on the Series A
convertible preferred stock is, as a result of the change in the stated amount
per share, unaffected by the occurrence of the exchange.

AUTHORIZED BUT UNISSUED PREFERRED STOCK

We will specify in the prospectus supplement any terms of any series of
preferred stock offered, including:

-- the series, the number of shares offered and the liquidation value of
the preferred stock;

-- the price at which the preferred stock will be issued;

-- the dividend rate, the dates on which the dividends will be payable
and other terms relating to the payment of dividends on the preferred
stock;

-- the liquidation preference of the preferred stock;

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-- whether the preferred stock is redeemable or subject to a sinking
fund, and the terms of any such redemption or sinking fund;

-- whether the preferred stock is convertible into or exchangeable for
any other securities, and the terms of any such conversion or
exchange; and

-- any additional rights, preferences, qualifications, limitations or
restrictions of the preferred stock.

The description of the terms of the preferred stock to be set forth in an
applicable prospectus supplement will not be complete and will be subject to and
qualified in its entirety by reference to the statement of resolution relating
to the applicable series of preferred stock. The registration statement of which
this prospectus forms a part will include the statement of resolution as an
exhibit or incorporate it by reference.

Additional preferred stock may be issued from time to time by our board of
directors in one or more series. Subject to the provisions of the certificate of
incorporation and limitations prescribed by law, our board of directors is
expressly authorized to adopt resolutions to issue the shares, to fix the number
of shares and to change the number of shares constituting any series and to
provide for or change the voting powers, designations, preferences and relative,
participating, optional, exchange or other special rights, qualifications,
limitations or restrictions thereof, including dividend rights (including
whether dividends are cumulative), dividend rates, terms of redemption
(including sinking fund provisions), redemption prices, conversion rights and
liquidation preferences of the shares constituting any class or series of the
preferred stock, in each case without any further action or vote by the holders
of common stock.

In addition, the issuance of additional shares of preferred stock, or the
issuance of rights to purchase such shares, could be used to discourage an
unsolicited acquisition proposal. For example, the issuance of a series of
preferred stock might impede a business combination by including class voting
rights that would enable the holders to block such a transaction; or such
issuance might facilitate a business combination by including voting rights that
would provide a required percentage vote of the stockholders. In addition, under
certain circumstances, the issuance of preferred stock could adversely affect
the voting power of the holders of the common stock. Although our board of
directors is required to make any determination to issue such stock based on its
judgment as to the best interests of our stockholders, our board of directors
could act in a manner that would discourage an acquisition attempt or other
transaction that some or a majority of the stockholders might believe to be in
their best interests or in which stockholders might receive a premium for their
stock over the then-market price of such stock. Our board of directors does not
at present intend to seek stockholder approval prior to any issuance of
currently authorized stock, unless otherwise required by law or the rules of any
market on which our securities are traded.

UTILICORP UNITED'S PRE-EMPTIVE RIGHTS

In September 1999, we entered into an Investor's Rights Agreement with
UtiliCorp United, pursuant to which UtiliCorp United received a pre-emptive
right to participate in certain issuances of our securities to an extent that
would allow UtiliCorp United to purchase that number of shares that would
maintain the same equity interest as was represented by the initial issuance of
1,860,000 shares of Series A convertible preferred stock. UtiliCorp United's
purchase price for each share of our common stock purchased pursuant to this
right is equal to the closing price per share of our common stock on the date of
issuance or sale of the securities. UtiliCorp United will have 10 business days
after the end of any fiscal quarter in which we issue new securities to exercise
its pre-emptive right with respect to that issuance. UtiliCorp United's
pre-emptive right will terminate on the first to occur of (a) the expiration of
the 10-day exercise period after a fiscal quarter in which UtiliCorp United
fails to exercise its pre-emptive right in full, or (b) UtiliCorp United's
transfer, sale, assignment, donation, pledge or other encumbrance of any of its
shares of our Series A convertible preferred stock.

STOCKHOLDER RIGHTS PLAN

In March 2000, our board of directors adopted a stockholder rights plan
designed to protect long-term value for our stockholders in the event of any
future unsolicited acquisition attempt. In connection with the

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plan, our board of directors declared a dividend of one preferred share purchase
right (a "Right") for each share of our common stock and Series A convertible
preferred stock (on an as-converted basis) outstanding on March 27, 2000. Each
Right entitles the registered holder to purchase from Quanta one one-thousandth
of a share of our Series B Junior Participating Preferred Stock, par value
$.00001 per share, at a price of $153.33 per one one-thousandth of a share of
Series B preferred stock. The Rights will expire on March 8, 2010, unless we
advance or extend the expiration date or unless we redeem or exchange the Rights
earlier.

The Rights are not exercisable until the earlier of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
has become an "Acquiring Person" or (ii) 10 business days (or such later date as
may be determined by action of our board of directors prior to such time as any
person or group of affiliated or associated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding shares of our
common stock. Except in certain situations, a person or group of affiliated or
associated persons becomes an "Acquiring Person" upon acquiring beneficial
ownership of 15% or more of the outstanding shares of our common stock.
UtiliCorp United will not be deemed to be an Acquiring Person unless and until
(i) UtiliCorp United, or any UtiliCorp United affiliate or associate, acquires,
or announces its intention to acquire, more than 49.9% of the total number of
shares of outstanding common stock (on an as converted basis), assuming full
conversion of all securities convertible into common stock, or (ii) there is a
change in control of UtiliCorp United and UtiliCorp United then beneficially
owns or tenders for 15% or more of our common stock.

Shares of Series B preferred stock purchasable upon exercise of the Rights
will not be redeemable. Subject to the rights of senior securities, each share
of Series B preferred stock will be entitled, when, as and if declared, to a
minimum preferential quarterly dividend payment of the greater of (a) $1.00 per
share, and (b) an amount equal to 1000 times the dividend declared per share of
common stock. In the event of our liquidation, dissolution or winding up, the
holders of the Series B preferred stock will be entitled to a minimum
preferential payment of the greater of (a) $10.00 per share (plus any accrued
but unpaid dividends), and (b) an amount equal to 1000 times the payment made
per share of common stock, subject to the rights of senior securities. Each
share of Series B preferred stock will have 1000 votes, voting together with the
common stock. Finally, in the event of any merger, consolidation or other
transaction in which outstanding shares of common stock are converted or
exchanged, each share of Series B preferred stock will be entitled to receive
1000 times the amount received per share of common stock. These rights are
protected by customary anti-dilution provisions.

In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right that number
of shares of common stock having a market value of two times the exercise price
of the Right.

In the event that, after a person or group has become an Acquiring Person,
we are acquired in a merger or other business combination transaction or 50% or
more of our consolidated assets or earning power are sold, provision will be
made so that each holder of a Right (other than Rights beneficially owned by an
Acquiring Person, which will have become void) will thereafter have the right to
receive upon the exercise of a Right that number of shares of common stock of
the person with whom we have engaged in the foregoing transaction (or its
parent) that at the time of such transaction have a market value of two times
the exercise price of the Right.

At any time after any person or group becomes an Acquiring Person and prior
to the earlier of one of the events described in the previous paragraph or the
acquisition by such Acquiring Person of beneficial ownership of 50% or more of
the outstanding shares of our common stock, our board of directors may exchange
the Rights (other than Rights owned by such Acquiring Person, which will have
become void), in whole or in part, for shares of common stock or Series B
Preferred Stock (or a series of our preferred stock having equivalent rights,
preferences and privileges), at an exchange ratio of one share of common stock,
or a fractional share of Series B Preferred Stock (or other preferred stock)
equivalent in value thereto, per Right.

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At any time prior to the time an Acquiring Person becomes such, our board
of directors may redeem the Rights in whole, but not in part, at a price of $.01
per Right (the "Redemption Price") payable, at our option, in cash, shares of
common stock or such other form of consideration as our board of directors shall
determine. The redemption of the Rights may be made effective at such time, on
such basis and with such conditions as our board of directors in its sole
discretion may establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.

For so long as the Rights are then redeemable, we may, except with respect
to the Redemption Price, amend the Rights Agreement in any manner. After the
Rights are no longer redeemable, we may, except with respect to the Redemption
Price, amend the Rights Agreement in any manner that does not adversely affect
the interests of holders of the Rights.

STATUTORY BUSINESS COMBINATION PROVISION

We are a Delaware corporation and are subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents a Delaware
corporation from engaging in a "business combination" (as defined) with an
"interested stockholder" (defined generally as a person owning 15% or more of a
corporation's outstanding voting stock or affiliate or associate) for three
years following the time such stockholder became an interested stockholder
unless (1) before such person became an interested stockholder, our board of
directors of the corporation approved the business combination or the
transaction in which the interested stockholder became an interested
stockholder, (2) upon consummation of the transaction which resulted in the
interested stockholder's becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding stock held by
directors who are also officers of the corporation and by employee stock plans
that do not provide employees with the rights to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer) or (3) at or subsequent to the time such person became an interested
stockholder, the business combination was approved by our board of directors of
the corporation and authorized at a meeting of stockholders by the affirmative
vote of the holders of 66 2/3% of the outstanding voting stock of the
corporation not owned by the interested stockholder. Under Section 203, the
restrictions described above also do not apply to certain business combinations
proposed by an interested stockholder following the announcement or notification
of one of certain extraordinary transactions involving the corporation and a
person who had not been an interested stockholder during the previous three
years or who became an interested stockholder with the approval of a majority of
the corporation's directors, if such extraordinary transaction is approved or
not opposed by a majority of the directors who were directors prior to any
person becoming an interested stockholder during the previous three years or
were recommended for election or elected to succeed such directors by a majority
of such directors.

LIMITATION ON DIRECTORS' LIABILITY

Delaware law authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of a director's fiduciary duty of care. The duty of care
requires that, when acting on behalf of the corporation, directors must exercise
an informed business judgment based on all material information reasonably
available to them. Absent the limitations authorized by Delaware law, directors
are accountable to corporations and their stockholders for monetary damages for
conduct constituting gross negligence in the exercise of their duty of care.
Delaware law enables corporations to limit available relief to equitable
remedies such as injunction or rescission. Our certificate of incorporation
limits the liability of our directors to us or our stockholders to the fullest
extent permitted by Delaware law. Specifically, our directors will not be
personally liable to us or our stockholders for monetary damages for breach of a
director's fiduciary duty as a director, except for liability for breach of the
duty of loyalty, for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, for unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law or for any transaction in which a
director has derived an improper personal benefit.

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Our certificate of incorporation provides that each of our officers and
directors will be indemnified and held harmless, to the fullest extent permitted
by Delaware law (as amended from time to time), against all expenses,
liabilities and losses reasonably suffered in connection with any action, suit
or proceeding by reason of the fact that he or she is or was a director or
officer of us or, while being at the time a director or officer of us, is or was
serving at our request as a director, trustee, officer, employee or agent of
another entity. We are not, however, permitted to indemnify any person in
connection with a proceeding initiated by that person unless such proceeding was
authorized by our board of directors. Our bylaws also provide for mandatory
advancement of expenses of officers and directors incurred in defending any
covered proceeding in advance of its final disposition. We also carry directors'
and officers' liability insurance.

The inclusion of these provisions in our certificate of incorporation may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefited us and our stockholders.
Our bylaws provide indemnification to our officers and directors and certain
other persons with respect to certain matters.

OTHER MATTERS

Our certificate of incorporation provides that directors may be removed
only for cause, and then only by the affirmative vote of the holders of at least
a majority of the outstanding voting stock entitled to vote with respect to the
election of such director. This provision, in conjunction with the provision of
our bylaws authorizing our board of directors to fill vacant directorships, will
prevent stockholders from removing incumbent directors without cause and filling
the resulting vacancies with their own nominees.

Our certificate of incorporation provides that stockholders may act only at
an annual or special meeting of stockholders and may not act by written consent.
Our certificate of incorporation provides that special meetings of the
stockholders can be called only by the Chairman of the Board pursuant to a
resolution approved by a majority of the whole board of directors.

STOCKHOLDER PROPOSALS

Our bylaws contain provisions (1) requiring that advance notice be
delivered to us of any business to be brought by a stockholder before an annual
meeting of stockholders and (2) establishing certain procedures to be followed
by stockholders in nominating persons for election to our board of directors.
Generally, such advance notice provisions provide that written notice must be
given to our Secretary by a stockholder (a) in the event of business to be
brought by a stockholder before, (1) an annual meeting, not less than 90 nor
more than 180 days prior to the earlier of the date of the meeting or the
anniversary date of the immediately preceding annual meeting of stockholders and
(2) a special meeting, not less than 40 nor more than 60 days prior to the date
of such meeting of stockholders (with certain exceptions if less than 50 days
notice or prior public disclosure of the date of the special meeting is given to
stockholders) and (b) in the event of nominations of persons for election to our
board of directors by any stockholder, (1) with respect to an election to be
held at the annual meeting of stockholders, not less than 90 nor more than 180
days prior to the earlier of the date of the meeting or the anniversary date of
the immediately preceding annual meeting of stockholders and (2) with respect to
an election to be held at a special meeting of stockholders for the election of
directors, not later than the close of business on the 10th day following the
day on which notice of the date of the special meeting was mailed to
stockholders or public disclosure of the date of the special meeting was made,
whichever first occurs. Such notice must set forth specific information
regarding such stockholder and such business or director nominee, as described
in our bylaws. The foregoing summary is qualified in its entirety by reference
to our bylaws.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock
Transfer and Trust Company.

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DEPOSITARY SHARES

GENERAL

We may offer fractional shares of preferred stock, rather than full shares
of preferred stock. If we decide to offer fractional shares of preferred stock,
we will issue receipts for depositary shares. Each depositary share will
represent a fraction of a share of a particular series of preferred stock. The
prospectus supplement will indicate that fraction. The shares of preferred stock
represented by depositary shares will be deposited under a depositary agreement
between us and a bank or trust company that meets certain requirements and is
selected by us (the "Bank Depositary"). Each owner of a depositary share will be
entitled to all the rights and preferences of the preferred stock represented by
the depositary share. The depositary shares will be evidenced by depositary
receipts issued pursuant to the depositary agreement. Depositary receipts will
be distributed to those persons purchasing the fractional shares of preferred
stock in accordance with the terms of the offering.

We have summarized selected provisions of a depositary agreement and the
related depositary receipts. The summary is not complete. The forms of the
deposit agreement and the depositary receipts relating to any particular issue
of depositary shares will be filed with the SEC via a Current Report on Form 8-K
prior to our offering of the depositary shares, and you should read such
documents for provisions that may be important to you.

DIVIDENDS AND OTHER DISTRIBUTIONS

If we pay a cash distribution or dividend on a series of preferred stock
represented by depositary shares, the Bank Depositary will distribute such
dividends to the record holders of such depositary shares. If the distributions
are in property other than cash, the Bank Depositary will distribute the
property to the record holders of the depositary shares. However, if the Bank
Depositary determines that it is not feasible to make the distribution of
property, the Bank Depositary may, with our approval, sell such property and
distribute the net proceeds from such sale to the record holders of the
depositary shares.

REDEMPTION OF DEPOSITARY SHARES

If we redeem a series of preferred stock represented by depositary shares,
the Bank Depositary will redeem the depositary shares from the proceeds received
by the Bank Depositary in connection with the redemption. The redemption price
per depositary share will equal the applicable fraction of the redemption price
per share of the preferred stock. If fewer than all the depositary shares are
redeemed, the depositary shares to be redeemed will be selected by lot or pro
rata as the Bank Depositary may determine.

VOTING THE PREFERRED STOCK

Upon receipt of notice of any meeting at which the holders of the preferred
stock represented by depositary shares are entitled to vote, the Bank Depositary
will mail the notice to the record holders of the depositary shares relating to
such preferred stock. Each record holder of these depositary shares on the
record date (which will be the same date as the record date for the preferred
stock) may instruct the Bank Depositary as to how to vote the preferred stock
represented by such holder's depositary shares. The Bank Depositary will
endeavor, insofar as practicable, to vote the amount of the preferred stock
represented by such depositary shares in accordance with such instructions, and
we will take all action which the Bank Depositary deems necessary in order to
enable the Bank Depositary to do so. The Bank Depositary will abstain from
voting shares of the preferred stock to the extent it does not receive specific
instructions from the holders of depositary shares representing such preferred
stock.

AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT

The form of depositary receipt evidencing the depositary shares and any
provision of the depositary agreement may be amended by agreement between the
Bank Depositary and us. However, any amendment that materially and adversely
alters the rights of the holders of depositary shares will not be effective
unless such amendment has been approved by the holders of at least a majority of
the depositary shares then
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outstanding. The depositary agreement may be terminated by the Bank Depositary
or us only if (i) all outstanding depositary shares have been redeemed or (ii)
there has been a final distribution in respect of the preferred stock in
connection with any liquidation, dissolution or winding up of our company and
such distribution has been distributed to the holders of depositary receipts.

CHARGES OF BANK DEPOSITARY

We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay charges of
the Bank Depositary in connection with the initial deposit of the preferred
stock and any redemption of the preferred stock. Holders of depositary receipts
will pay other transfer and other taxes and governmental charges and any other
charges, including a fee for the withdrawal of shares of preferred stock upon
surrender of depositary receipts, as are expressly provided in the depositary
agreement to be for their accounts.

WITHDRAWAL OF PREFERRED STOCK

Upon surrender of depositary receipts at the principal office of the Bank
Depositary, subject to the terms of the depositary agreement, the owner of the
depositary shares may demand delivery of the number of whole shares of preferred
stock and all money and other property, if any, represented by those depositary
shares. Partial shares of preferred stock will not be issued. If the depositary
receipts delivered by the holder evidence a number of depositary shares in
excess of the number of depositary shares representing the number of whole
shares of preferred stock to be withdrawn, the Bank Depositary will deliver to
such holder at the same time a new depositary receipt evidencing the excess
number of depositary shares. Holders of preferred stock thus withdrawn may not
thereafter deposit those shares under the depositary agreement or receive
depositary receipts evidencing depositary shares therefor.

MISCELLANEOUS

The Bank Depositary will forward to holders of depositary receipts all
reports and communications from us that are delivered to the Bank Depositary and
that we are required to furnish to the holders of the preferred stock.

Neither the Bank Depositary nor we will be liable if we are prevented or
delayed by law or any circumstance beyond our control in performing our
obligations under the depositary agreement. The obligations of the Bank
Depositary and us under the depositary agreement will be limited to performance
in good faith of our duties thereunder, and we will not be obligated to
prosecute or defend any legal proceeding in respect of any depositary shares or
preferred stock unless satisfactory indemnity is furnished. We may rely upon
written advice of counsel or accountants, or upon information provided by
persons presenting preferred stock for deposit, holders of depositary receipts
or other persons believed to be competent and on documents believed to be
genuine.

RESIGNATION AND REMOVAL OF BANK DEPOSITARY

The Bank Depositary may resign at any time by delivering to us notice of
its election to do so, and we may at any time remove the Bank Depositary. Any
such resignation or removal will take effect upon the appointment of a successor
Bank Depositary and its acceptance of such appointment. Such successor Bank
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.

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DESCRIPTION OF WARRANTS

We may issue warrants for the purchase of our common stock. Warrants may be
issued independently or together with Debt Securities, preferred stock or common
stock offered by any prospectus supplement and may be attached to or separate
from any such offered securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a bank or trust
company, as warrant agent, all as set forth in the prospectus supplement
relating to the particular issue of warrants. The warrant agent will act solely
as our agent in connection with the warrants and will not assume any obligation
or relationship of agency or trust for or with any holders of warrants or
beneficial owners of warrants. The following summary of certain provisions of
the warrants does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all provisions of the warrant agreements.

You should refer to the prospectus supplement relating to a particular
issue of warrants for the terms of and information relating to the warrants,
including, where applicable:

(1) the number of shares of common stock purchasable upon exercise of
the warrants and the price at which such number of shares of common stock
may be purchased upon exercise of the warrants;

(2) the date on which the right to exercise the warrants shall
commence and the date on which such right shall expire (the "Expiration
Date");

(3) United States Federal income tax consequences applicable to the
warrants;

(4) the amount of the warrants outstanding as of the most recent
practicable date; and

(5) any other terms of the warrants.

Warrants will be offered and exercisable for U.S. dollars only. Warrants
will be issued in registered form only. Each warrant will entitle its holder to
purchase such number of shares of common stock at such exercise price as shall
in each case be set forth in, or calculable from, the prospectus supplement
relating to such warrant. The exercise price may be subject to adjustment upon
the occurrence of events described in such prospectus supplement. After the
close of business on the Expiration Date (or such later date to which we may
extend such Expiration Date), unexercised warrants will become void. The place
or places where, and the manner in which, warrants may be exercised will be
specified in the prospectus supplement relating to such warrants.

Prior to the exercise of any warrants, holders of the warrants will not
have any of the rights of holders of common stock, including the right to
receive payments of any dividends on the common stock purchasable upon exercise
of the warrants, or to exercise any applicable right to vote.

PLAN OF DISTRIBUTION

We may sell securities pursuant to this prospectus in or outside the United
States (a) through underwriters or dealers, (b) through agents or (c) directly
to one or more purchasers, including our existing stockholders in a rights
offering. The prospectus supplement relating to any offering of securities will
include the following information:

-- the terms of the offering;

-- the names of any underwriters, dealers or agents;

-- the name or names of any managing underwriter or underwriters;

-- the purchase price of the securities from us;

-- the net proceeds to us from the sale of the securities;

-- any delayed delivery arrangements;

-- any underwriting discounts, commissions and other items constituting
underwriters' compensation;

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-- any initial public offering price;

-- any discounts or concessions allowed or reallowed or paid to dealers;
and

-- any commissions paid to agents.

SALE THROUGH UNDERWRITERS OR DEALERS

If we use underwriters in the sale, the underwriters will acquire the
securities for their own account. The underwriters may resell the securities
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Underwriters may offer securities to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more firms acting as underwriters. Unless we inform you
otherwise in the prospectus supplement, the obligations of the underwriters to
purchase the securities will be subject to certain conditions, and the
underwriters will be obligated to purchase all the offered securities if they
purchase any of them. The underwriters may change from time to time any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers.

During and after an offering through underwriters, the underwriters may
purchase and sell the securities in the open market. These transactions may
include overallotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters may also impose a penalty bid, which means that selling concessions
allowed to syndicate members or other broker-dealers for the offered securities
sold for their account may be reclaimed by the syndicate if the offered
securities are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the offered securities, which may be higher than the price that
might otherwise prevail in the open market. If commenced, the underwriters may
discontinue these activities at any time.

If we use dealers in the sale of securities, we will sell the securities to
them as principals. They may then resell those securities to the public at
varying prices determined by the dealers at the time of resale.

DIRECT SALES AND SALES THROUGH AGENTS

We may sell the securities directly. In this case, no underwriters or
agents would be involved. We may sell securities upon the exercise of rights
that we may issue to our securityholders. We may also sell the securities
directly to institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act with respect to any sale
of those securities.

We may sell the securities through agents we designate from time to time.
Unless we inform you otherwise in the prospectus supplement, any agent will
agree to use its reasonable best efforts to solicit purchases for the period of
its appointment.

DELAYED DELIVERY CONTRACTS

If we so indicate in the prospectus supplement, we may authorize agents,
underwriters or dealers to solicit offers from certain types of institutions to
purchase securities from us at the public offering price under delayed delivery
contracts. These contracts would provide for payment and delivery on a specified
date in the future. The contracts would be subject only to those conditions
described in the prospectus supplement. The prospectus supplement will describe
the commission payable for solicitation of those contracts.

GENERAL INFORMATION

We may have agreements with the agents, dealers and underwriters to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments that the agents,
dealers or underwriters may be required to make. Agents, dealers and
underwriters may be customers of, engage in transactions with or perform
services for us in the ordinary course of their business.

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LEGAL MATTERS

Our legal counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P., San Antonio,
Texas, will pass upon certain legal matters in connection with the offered
securities. Any underwriters will be advised about other issues relating to any
offering by their own legal counsel.

EXPERTS

The annual financial statements incorporated by reference in this
prospectus have been audited by Arthur Andersen LLP, independent public
accounts, as indicated in their reports with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports.