15615--3/2/2009--MASTEC

related topics

{cost, contract, operation}

{cost, regulation, environmental}

{customer, product, revenue}

{tax, income, asset}

{stock, price, operating}

{loss, insurance, financial}

{capital, credit, financial}

{interest, director, officer}

{financial, litigation, operation}

{condition, economic, financial}

{stock, price, share}

{regulation, government, change}

{investment, property, distribution}

{debt, indebtedness, cash}

{competitive, industry, competition}

{product, market, service}

{personnel, key, retain}

{regulation, change, law}

Many of the industries we serve are subject to consolidation and rapid technological and regulatory change, and our inability or failure to adjust to our customers changing needs could reduce demand for our services. Our industry is highly competitive, which may reduce our market share and harm our financial performance. Risks Related to Our Business We derive a significant portion of our revenue from a few customers, and the loss of one of these customers or a reduction in their demand for our services could impair our financial performance. Our profitability and liquidity could decline if certain customers reduce the amounts they pay for our services or if our customers are unable to pay for our services. Most of our contracts do not obligate our customers to undertake any infrastructure projects or other work with us. We recorded unrealized losses in 2007 and 2008 to reduce the carrying value of certain auction rate securities we hold, and we may incur additional impairment charges with respect to auction rate securities in future periods. Most of our contracts may be canceled on short notice, so our revenue is not guaranteed. We may not accurately estimate the costs associated with our services provided under fixed-price contracts which could impair our financial performance. Our failure to properly manage projects may result in additional costs or claims, which could have a material adverse effect on our operating results, cash flows and liquidity. We recognize revenue for our installation/construction fixed price contracts using the percentage-of-completion method, therefore, variations of actual results from our assumptions may reduce our profitability. Amounts included in our backlog may not result in actual revenue or translate into profits. Our business is seasonal and is affected by adverse weather conditions and the spending patterns of our customers, exposing us to variable quarterly results. Warranty claims resulting from our services could have a material adverse effect on our business. We are self-insured against many potential liabilities. Increases in our insurance premiums or collateral requirements could significantly reduce our profitability, liquidity and availability under our credit facility. We may be unable to obtain sufficient bonding capacity to support certain service offerings, and the need for performance and surety bonds may reduce our availability under our credit facility. The impact of the Stimulus Act is uncertain. Changes to renewable portfolio standards could negatively impact our results of operations, cash flows and liquidity. We have agreed to keep certain liabilities related to the state Department of Transportation related projects and assets that were sold in February 2007. We may incur goodwill impairment charges in our reporting entities which could harm our profitability. We may incur restructuring or impairment charges which could reduce our profitability. Our revolving credit facility and senior notes impose restrictions on us which may prevent us from engaging in transactions that might benefit us, including responding to changing business and economic conditions or securing additional financing, if needed. If we are unable to attract and retain qualified managers and skilled employees, we will be unable to operate efficiently which could reduce our revenue, profitability and liquidity. Increases in the costs of fuel could reduce our operating margins. Our subcontractors may fail to satisfy their obligations to us or other parties, or we may be unable to maintain these relationships, either of which may have a material adverse affect our results of operations, cash flows and liquidity. We may choose, or be required, to pay our subcontractors even if our customers do not pay, or delay paying, us for the related services. Our failure to comply with environmental laws could result in significant liabilities. Our failure to comply with the regulations of the U.S. Occupational Safety and Health Administration, the U.S. Department of Transportation and other state and local agencies that oversee transportation and safety compliance could reduce our revenue, profitability and liquidity. Our financial results are based, in part, upon estimates and assumptions that may differ from actual results. Our business is subject to hazards that could result in substantial liabilities and weaken our financial condition. Many of our customers are highly regulated and the addition of new regulations or changes to existing regulations may adversely impact their demand for our specialty contracting services and the profitability of those services. Claims, lawsuits and proceedings could reduce our profitability, cash flows and liquidity. Acquisitions involve risks that could result in a reduction of our operating results, cash flows and liquidity. Our inability to enforce non-competition agreements with former principals and key management of the businesses we acquire may adversely affect our operating results, cash flows and liquidity. Risks Related to Our Company and Our Common Stock The market price of our common stock has been, and may continue to be, highly volatile. In connection with certain completed acquisitions, we have issued shares of our common stock or securities that are convertible into shares of our common stock or have the option to issue shares of our common stock instead of cash as consideration for future earn-out obligations, and we may agree to issue such additional securities in connection with other future acquisitions; which, if issued, would dilute your share ownership and could lead to volatility in our common stock price. A small number of our existing shareholders have the ability to influence major corporate decisions.

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15615--3/2/2009--MASTEC_INC