QUANTA SERVICES INC | 2013 | FY | 3


6. GOODWILL AND OTHER INTANGIBLE ASSETS:

A summary of changes in Quanta’s goodwill is as follows (in thousands):

 

     Electric Power
Division
    Oil and Gas
Infrastructure
Division
    Fiber Optic
Licensing Division
    Total  

Goodwill balance at December 31, 2011

   $ 988,702      $ 113,598      $ 368,511      $ 1,470,811   

Goodwill acquired during 2012

     57,451        7,328        —          64,779   

Foreign currency translation related to goodwill

     2,087        (32     —          2,055   

Operating unit reorganization

     16,912        16,809        (33,721     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Goodwill balance at December 31, 2012

     1,065,152        137,703        334,790        1,537,645   

Goodwill acquired during 2013

     112,549        143,257        —          255,806   

Foreign currency translation related to goodwill

     (9,617     (3,117     —          (12,734
  

 

 

   

 

 

   

 

 

   

 

 

 

Goodwill balance at December 31, 2013

   $ 1,168,084      $ 277,843      $ 334,790      $ 1,780,717   
  

 

 

   

 

 

   

 

 

   

 

 

 

As described in Note 2, Quanta’s operating units are organized into one of Quanta’s three internal divisions and, accordingly, Quanta’s goodwill associated with each of its operating units has been aggregated on a divisional basis and reported in the table above. These divisions are closely aligned with Quanta’s reportable segments based on the predominant type of work performed by the operating units within the divisions. From time to time, operating units may be reorganized among Quanta’s internal divisions, as Quanta periodically re-evaluates strategies to better align its operations as business environments evolve. The table above presents these changes as reclassifications during the period in which the reorganization occurred. During 2012, two separate and unrelated operating units in the fiber optic licensing division were recategorized in order to improve the productivity of certain operations and more effectively accomplish management’s overall strategic plan. One operating unit was reorganized into the electric power division and the other operating unit was reorganized into the oil and gas infrastructure division. Based on Quanta’s strategic plan, management determined that that these operating units’ performance could be improved and their operations could potentially be increased by assigning their business lines into comparable or synergistic operations. The reorganization also resulted in reductions in redundant administrative costs, reassignments of strategic customer relationships and progress toward management’s business development strategies.

 

Activity in Quanta’s intangible assets consists of the following (in thousands):

 

     As of
December 31, 2012
    Twelve Months Ended
December 31, 2013
    As of
December 31, 2013
 
     Intangible
Assets
     Accumulated
Amortization
    Amortization
Expense
    Additions      Foreign
Currency
Adjustments
    Intangible
Assets, Net
     Remaining
Weighted
Average
Amortization
Period in
Years
 

Customer relationships

   $ 170,465       $ (47,777   $ (12,096   $ 31,854       $ (2,639   $ 139,807         10.4   

Backlog

     126,057         (119,068     (9,698     12,405         (98     9,598         1.3   

Trade names

     32,559         (3,014     (1,251     8,321         (501     36,114         23.9   

Non-compete agreements

     27,406         (20,706     (2,368     1,944         (241     6,035         3.1   

Patented rights and developed technology

     20,931         (7,517     (2,102     600         (89     11,823         5.1   
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

Total intangible assets subject to amortization

     377,418         (198,082     (27,515     55,124         (3,568     203,377         11.8   

Other intangible assets not subject to amortization

     4,500         —          —          —           —          4,500         N/A   
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

Total intangible assets

   $ 381,918       $ (198,082   $ (27,515   $ 55,124       $ (3,568   $ 207,877         N/A   
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

Amortization expense for intangible assets was $27.5 million, $37.7 million and $29.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. The estimated future aggregate amortization expense of intangible assets as of December 31, 2013 is set forth below (in thousands):

 

For the Fiscal Year Ending December 31,       

2014

   $ 27,917   

2015

     19,492   

2016

     18,664   

2017

     17,705   

2018

     17,418   

Thereafter

     102,181   
  

 

 

 

Total

   $ 203,377   
  

 

 

 

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