Reorganization and Reportable Segments

In December 2012, MasTec completed a significant management reorganization resulting in four internal groups consisting of Communications, Electrical Transmission, Oil and Gas, and Power Generation and Industrial. Each is led by a single Group President and each is a reportable segment as defined in Accounting Standards Codification ("ASC ") 280, Segment Reporting. The reorganization focused on concentrating business development efforts and resources based upon broad end-user markets for the Company's construction services. The reorganization began informally in late 2011, after the completion of five acquisitions, and continued during 2012 by hiring group management and modifying reporting lines accordingly. The combination of the entities into each of the four groups is intended to enable each group to achieve better growth, better management and better profitability by leveraging customer relationships to increase cross-selling, offering greater geographic coverage to the Company's customers and achieving higher utilization and efficiency from both employees and equipment.

For instance, the Communications Group includes the Company's install-to-the-home, wireless and wireline businesses. Management believes that integrating all of our communications businesses enhances the Company's ability to take full advantage of all of the opportunities in what has become one commingled and converging communications market. Communications Group infrastructure construction services support a continually converging set of end user services. For example, telephone companies, cable television and satellite television operators now offer bundled telephony, video, data and internet services. We believe this revised organizational structure will enable the Company to better cross-sell and grow revenues in what is now a single communications market. In addition, communications network construction and maintenance utilizes substantially the same employee skill sets and equipment to perform similar work. Management expects that a single Group President should be able to improve costs and productivity more effectively by sharing people and equipment throughout all communications projects. Accordingly, in order to realize these objectives and to maximize opportunities in a converging communications market, these businesses have been organized into a single segment under a single leader.

Segment Discussion

MasTec presents its continuing operations under five reportable segments: (1) Communications; (2) Electrical Transmission; (3) Oil & Gas; (4) Power Generation and Industrial and (5) Other. This structure is generally focused on broad end-user markets for MasTec's labor-based construction services and has been determined in accordance with the criteria in ASC 280, Segment Reporting. All five reportable segments derive their revenues from the engineering, installation and maintenance of infrastructure, primarily in North America.

The Communications segment performs engineering, construction and maintenance of communications infrastructure primarily related to wireless and wireline communications and install to the home, and to a lesser extent, infrastructure for electrical utilities. The Electrical Transmission segment primarily serves the energy and utility industries through the engineering, construction and maintenance of electrical transmission lines and substations. MasTec also performs engineering, construction and maintenance services on oil and natural gas pipelines and processing facilities for the energy and utilities industries through the Oil & Gas segment. The Power Generation and Industrial segment primarily serves the energy and utility end markets and other end markets through the installation and construction of power plants, wind farms, solar farms, related electrical transmission infrastructure, ethanol facilities and various types of industrial infrastructure. The Other category primarily includes small business units that perform construction services for a variety of end markets in Mexico and elsewhere internationally.

The accounting policies of the reportable segments are the same as those described in Note 1 - Business, Basis of Presentation and Significant Accounting Policies. Intercompany revenues and costs among the reportable segments are de minimus and accounted for as if the sales were to third parties because these items are based on negotiated fees between the segments involved. All intercompany transactions and balances are eliminated in consolidation. Eliminations between segments are included in the Eliminations reconciling column in the tables below. Intercompany revenues and costs between entities within a reportable segment are eliminated to arrive at the segment totals. The Corporate column includes amounts related to Corporate functions such as administrative costs, professional fees, and acquisition costs. Segment results include certain allocations of centralized costs such as general liability, medical and workers' compensation insurance and certain information technology costs. Income tax expense is managed by Corporate on a consolidated basis and is not allocated to the reportable segments.

Income from continuing operations before non-controlling interests before interest, taxes, depreciation and amortization (“EBITDA”) is the measure of profitability used by our management to manage our segments and, accordingly, in our segment reporting. As appropriate, we supplement the reporting of our consolidated financial information determined in accordance with U.S. GAAP with certain non-U.S. GAAP financial measures, including EBITDA. We believe these non-U.S. GAAP measures provide meaningful information that helps investors understand our financial results and assess our prospects for future performance. We use EBITDA to evaluate our performance, both internally and versus our peers, because it excludes certain items that may not be indicative of our reportable segment results, as well as items that can vary widely across different industries or among companies within the same industry. Segment EBITDA is calculated in a manner consistent with consolidated EBITDA.

Corporate EBITDA in 2012 includes the $9.6 million legal settlement reserve we recorded in the third quarter of 2012, and in 2011, includes a $29.0 million gain on the remeasurement of our initial equity interest in EC Source to its fair value upon the acquisition of the remaining interest in the company. Total Corporate assets as of December 31, 2010 included the EC Source equity investment balance of approximately $10 million. See Note 17 - Commitments and Contingencies and Note 3 – Acquisitions and Other Investments for further discussion.

Summarized financial information for MasTec’s reportable segments is presented and reconciled to consolidated continuing operations financial information for total MasTec in the following tables (in millions):

As of and for the year ended December 31, 2012:



	Communications		Oil & Gas		Electrical Transmission		Power Generation & Industrial		Other		Corporate			Eliminations			Continuing Operations for Consolidated MasTec
Revenue	$	1,772.7	$	959.0	$	312.2	$	668.1	$	16.7	$	—		$	(1.9	)	$	3,726.8
EBITDA	$	192.0	$	99.4	$	38.7	$	32.0	$	2.0	$	(42.0	)	$	—		$	322.1
Depreciation	$	27.0	$	39.6	$	6.0	$	4.1	$	0.1	$	3.0		$	—		$	79.8
Amortization	$	2.1	$	2.5	$	5.0	$	2.6	$	—	$	—		$	—		$	12.2
Total Assets	$	829.2	$	805.5	$	309.9	$	321.6	$	7.0	$	93.5		$	15.0		$	2,381.7
Capital Expenditures	$	19.2	$	40.3	$	11.5	$	5.6	$	—	$	2.9		$	—		$	79.4

As of and for the year ended December 31, 2011:



	Communications		Oil & Gas		Electrical Transmission		Power Generation & Industrial			Other		Corporate		Eliminations			Continuing Operations for Consolidated MasTec
Revenue	$	1,635.1	$	774.3	$	198.3	$	219.6		$	4.8	$	—	$	(0.8	)	$	2,831.3
EBITDA	$	154.3	$	80.1	$	28.7	$	(3.2	)	$	0.4	$	7.6	$	—		$	267.9
Depreciation	$	22.7	$	26.8	$	4.0	$	3.9		$	0.1	$	2.7	$	—		$	60.2
Amortization	$	1.8	$	4.0	$	4.4	$	3.7		$	—	$	—	$	—		$	13.9
Total Assets	$	837.1	$	494.6	$	253.7	$	269.4		$	3.8	$	94.0	$	(10.2	)	$	1,942.4
Capital Expenditures	$	23.0	$	25.7	$	9.3	$	4.6		$	—	$	8.5	$	—		$	71.0

As of and for the year ended December 31, 2010:



	Communications		Oil & Gas		Electrical Transmission			Power Generation & Industrial		Other			Corporate			Eliminations			Continuing Operations for Consolidated MasTec
Revenue	$	1,190.6	$	562.6	$	67.0		$	325.6	$	0.2		$	—		$	(3.0	)	$	2,143.0
EBITDA	$	107.9	$	111.3	$	(3.7	)	$	16.9	$	(1.0	)	$	(31.3	)	$	—		$	200.1
Depreciation	$	13.4	$	20.8	$	3.1		$	4.3	$	—		$	2.4		$	—		$	44.0
Amortization	$	0.8	$	7.2	$	0.1		$	4.6	$	—		$	0.2		$	—		$	12.9
Total Assets	$	598.3	$	392.2	$	38.5		$	283.8	$	0.9		$	204.6		$	(9.6	)	$	1,508.7
Capital Expenditures	$	11.6	$	10.5	$	—		$	3.1	$	0.1		$	2.5		$	—		$	27.8

Revenue generated by utilities customers represented 8.3%, 8.9% and 10.9% of Communications segment revenues in 2012, 2011 and 2010, respectively.

The following table, which may contain slight summation differences due to rounding, presents a reconciliation of EBITDA to consolidated income from continuing operations before provision for income taxes:



	For the Years Ended December 31,
	2012			2011			2010
EBITDA	$	322.1		$	267.9		$	200.1
Less:
Interest expense, net	(37.4		)	(34.5		)	(29.2		)
Depreciation	(79.8		)	(60.2		)	(44.0		)
Amortization	(12.2		)	(13.9		)	(12.9		)
Income from continuing operations before provision for income taxes	$	192.7		$	159.3		$	114.1

A reconciliation of total assets for continuing operations to consolidated total assets as of the dates indicated is as follows:



	As of December 31,
	2012		2011		2010
Total assets for continuing operations	$	2,381.7	$	1,942.4	$	1,508.7
Current assets of discontinued operations	18.6		30.6		43.1
Long-term assets of discontinued operations	7.6		121.7		104.0
Total assets	$	2,407.9	$	2,094.7	$	1,655.8

Foreign Operations. The Company has operations in Canada as well as in parts of Latin America and the Caribbean. For the years ended December 31, 2012, 2011 and 2010, revenues from continuing operations of $156.8 million, $91.5 million and $0.2 million, respectively, were derived from foreign operations and revenues of $3.6 billion, $2.7 billion and $2.1 billion, respectively, were derived in the United States. For the years ended December 31, 2012, 2011 and 2010, revenues within the results of operations from discontinued operations of $5.8 million, $12.4 million and $2.7 million, respectively, were derived from foreign operations, with revenues of $73.1 million, $165.3 million and $162.3 million, respectively, derived in the United States. Long-lived assets held in foreign countries include property and equipment, net of $12.9 million and $12.7 million as of December 31, 2012 and 2011, respectively, of which $1.5 million and $1.6 million, respectively, were classified within long-term assets of discontinued operations. Intangible assets and goodwill, net, of $30.5 million and $30.0 million as of December 31, 2012 and 2011, respectively, were held in foreign countries, none of which was classified within long-term assets of discontinued operations.

Significant Customers

Revenue concentration information for significant customers, as a percent of total consolidated revenue from continuing operations, is as follows:



	2012	2011	2010
Customer:
AT&T	18%	24%	22%
DIRECTV^®	17%	20%	20%

Our relationship with AT&T is based upon master service agreements, other service agreements and construction/installation contracts for both AT&T's wireless and wireline businesses. AT&T activity is included in the Communications segment.

Our relationship with DIRECTV^® is based upon an agreement to provide installation and maintenance services for DIRECTV^®. DIRECTV^® activity is included in the Communications segment.