AT&T represents 11% and 7% of our total consolidated revenue for the quarter ended March 31, 2009 and 2008, respectively. Our relationship with AT&T is primarily based upon master service agreements, other service agreements and construction/installation contracts for both AT&T's wireline and wireless infrastructure.
Although our revenue for the first quarter of 2009 was up sharply, it was nevertheless negatively impacted by the weak state of the U.S. economy and the resulting delay in expenditures by our customers. We are also uncertain as to when the governmental stimulus initiatives will begin to have a noticeable impact on the industries we serve, however we do anticipate increased capital spending on infrastructure as the year progresses. Revenue
We provide services to our customers which are companies in the communications and utilities industries, as well as government customers.
Revenue for customers in these industries is as follows (in thousands):

                                     For the Three Months Ended March 31,
                                         2009                       2008
              Communications   $    199,623           58 %   $ 183,784        70 %
              Utilities             123,768           36 %      64,622        25 %
              Government             18,728            6 %      13,586         5 %

                               $    342,119          100 %   $ 261,992       100 %

A significant portion of our revenue is derived from projects performed under service agreements. We also provide services under master service agreements which are generally multi-year agreements. Certain of our master service agreements are exclusive up to a specified dollar amount per work order for each defined geographic area, but do not obligate our customers to undertake any infrastructure projects or other work with us. Work performed under master service and other service agreements is typically generated through work orders, each of which is performed for a fixed fee. The majority of these services typically are of a maintenance nature and, to a lesser extent, upgrade services. These master service agreements and other service agreements are frequently awarded on a competitive bid basis, although customers are sometimes willing to negotiate contract extensions beyond their original terms without re-bidding. Our master service agreements and other service agreements have various terms, depending upon the nature of the services provided and are typically subject to termination on short notice.
The remainder of our work is generated pursuant to contracts for specific installation/construction projects or jobs that may require the construction and installation of an entire infrastructure system or specified units within an infrastructure system. Customers are billed with varying frequency: weekly, monthly or upon attaining specific milestones. Such contracts generally include retainage provisions under which 2% to 15% of the contract price is withheld from us until the work has been completed and accepted by the customer.
Revenue by type of contract is as follows (in thousands):

                                                              For the Three Months Ended March 31,
                                                               2009                             2008
Master service and other service agreements        $    206,270              60 %      $ 184,235            70 %
Installation/construction projects agreements           135,849              40 %         77,757            30 %

                                                   $    342,119             100 %      $ 261,992           100 %

Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts

reported in our financial statements and the accompanying notes. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, allowance for doubtful accounts, intangible assets, reserves and accruals, impairment of assets, income taxes, insurance reserves and litigation and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. As management estimates, by their nature, involve judgment regarding future uncertainties, actual results may differ materially from these estimates. Refer to Note 3 to our condensed unaudited consolidated financial statements of this Quarterly Report on Form 10-Q and to our most recent Annual Report on Form 10-K for further information regarding our critical accounting policies and estimates.
Litigation and Contingencies
Litigation and contingencies are reflected in our condensed unaudited consolidated financial statements based on our assessments of the expected outcome. If the final outcome of any litigation or contingencies differs significantly from our current expectations, a charge to earnings could result. See Note 10 to our condensed unaudited consolidated financial statements in this Form 10-Q for updates to our description of legal proceedings and commitments and contingencies.
Results of Operations
Comparison of Quarterly Results
The following table reflects our consolidated results of operations in dollar (in thousands) and percentage of revenue terms for the periods indicated. Our consolidated results of operations are not necessarily comparable from period to period due to the impact of recent acquisitions.

                                                         For the Three Months Ended March 31,
                                                         2009                             2008
Revenue                                       $   342,119          100.0 %      $ 261,992          100.0 %
Costs of revenue, excluding depreciation
and amortization                                  290,926           85.0 %        226,844           86.6 %
Depreciation and amortization                      10,643            3.1 %          5,028            1.9 %
General and administrative expenses                23,255            6.8 %         19,806            7.6 %
Interest expense, net of interest income            5,762            1.7 %          2,496            1.0 %
Other income, net                                     497            0.1 %            151            0.1 %

Income from continuing operations before
income taxes                                       12,030            3.5 %          7,969            3.0 %
Income taxes                                         (101 )          0.0 %            (33 )          0.0 %

Income from continuing operations                  11,929            3.5 %          7,936            3.0 %
Loss from discontinued operations                       -            0.0 %           (155 )         (0.1 )%

Net income                                    $    11,929            3.5 %      $   7,781            3.0 %

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008 Revenue. Our revenue was $342.1 million for the three months ended March 31, 2009, compared to $262.0 million for the same period in 2008, representing an increase of $80.1 million or 30.6%. This increase was primarily related to revenue of approximately $82.9 million from three businesses acquired during 2008 partially offset by the negative impact on revenue primarily due to tightened capital expenditures by our customers and slower developing business resulting from the U.S. economy. First quarter revenue does not reflect any economic impact that may be created in the marketplace by the federal and state stimulus initiatives.

Costs of Revenue. Our costs of revenue were $290.9 million or 85.0% of revenue for the three months ended March 31, 2009, compared to $226.8 million or 86.6% of revenue for the corresponding period in 2008, a $64.1 million increase or 28.3%. The increase is primarily attributable to $68.4 million in costs of revenue incurred on three businesses acquired during 2008 partially offset by a 2% decrease in costs of revenue. As a percentage of revenue, cost of revenue improved 160 basis points reflecting slower growth in labor costs when compared to revenue growth plus a decline in fuel costs.
Depreciation and amortization. Depreciation and amortization was $10.6 million for the three months ended March 31, 2009, compared to $5.0 million for the same period in 2008, representing an increase of $5.6 million or 112.0%. The increase was due primarily to three acquisitions which resulted in the addition of $66.9 million in fixed assets and the addition of $1.9 million in amortization of acquisition-related intangibles.
General and administrative expenses. General and administrative expenses were $23.3 million or 6.8% of revenue for the three months ended March 31, 2009, compared to $19.8 million or 7.6% of revenue for the same period in 2008, representing an increase of $3.5 million but a decrease as a percentage of revenue of 80 basis points. The increase was primarily due to a $4.3 million increase in labor cost, partially offset by a $1.6 million reduction in legal settlement expense. Although labor costs increased, the majority of other costs have remained flat resulting in declining general and administrative costs as a percentage of revenue.
Interest expense, net. Interest expense, net of interest income was $5.8 million or 1.7% of revenue for the three months ended March 31, 2009, compared to $2.5 million or 1.0% of revenue for the same period in 2008, representing an increase of approximately $3.3 million. This increase is primarily due to the net impact of a 78% increase in debt incurred to fund the acquisition of three businesses during 2008 further increased by reduced interest income due to lower interest rates and lower cash balances.
Other income, net. Other income, net was $0.5 million for the three months ended March 31, 2009, compared to $0.2 million for the three months ended March 31, 2008, representing an increase of $0.3 million primarily due to higher gains on sale of property and equipment.
Income taxes. Income taxes were approximately $101,000 for the three months ended March 31, 2009, compared to approximately $33,000 for the three months ended March 31, 2008, representing an increase of $68,000 primarily due to higher profitability in certain state taxing jurisdictions where tax liabilities are not offset by our net operating loss carryforwards. Financial Condition, Liquidity and Capital Resources Our primary sources of liquidity are cash flows from continuing operations, availability under our Credit Facility and our cash balances. Our primary liquidity needs are for working capital, capital expenditures, insurance collateral in the form of cash and letters of credit, earn out obligations and debt service. We estimate we will spend between $40 million and $49 million per year on capital expenditures. This increase versus our historic levels of capital expenditures is due, in part, to the equipment intensive nature of our business and the recent growth through acquisitions. We will continue to evaluate lease versus buy decisions to meet our equipment needs and based on this evaluation, our capital expenditures may increase from this estimate in the future. We expect to continue to sell older vehicles and equipment as we upgrade to new equipment, and we expect to generate proceeds from these sales. Additionally, we have made certain acquisitions and

have agreed to pay earn-out payments to certain of the sellers, generally based on the future performance of the investment or acquired business. Certain of these earn-out payments may be made in either cash or, under certain circumstances, MasTec common stock at our option. During the three months ended March 31, 2009 and 2008, we made cash payments of $6.5 million and $5.7 million, respectively, related to such earn-out obligations.
We need working capital to support seasonal variations in our business, primarily due to the impact of weather conditions on external construction and maintenance work, including storm restoration work, and the corresponding spending by customers on their annual capital expenditure budgets. Our business is typically slower in the first and fourth quarters of each calendar year and stronger in the second and third quarters. Accordingly, we generally experience seasonal working capital needs from approximately April through September to support growth in unbilled revenue and accounts receivable, and to a lesser extent, inventory. Our billing terms are generally net 30 to 60 days, and some of our contracts allow our customers to retain a portion (from 2% to 15%) of the contract amount until the job is completed according to the terms and conditions therein. We maintain inventory to meet the material requirements of certain of our contracts. Certain of our customers pay us in advance for a portion of the materials we purchase for their projects, or allow us to pre-bill them for materials purchases up to specified amounts. Our vendors generally offer us terms ranging from 30 to 90 days. Our agreements with subcontractors often contain a "pay when-paid" provision, whereby our payments to subcontractors are made only after we are paid by our customers.
Through March 31, 2009, our cash flows and liquidity have not been significantly impacted by the slow economy and the general lack of credit availability. Given the generally good credit quality of our customer base, we do not expect a collections issue that would impact our liquidity in the foreseeable future. As a result of our current capital structure, including our Credit Facility, we do not anticipate the current restricted credit markets will impact our liquidity. We anticipate that funds generated from continuing operations, borrowings under our Credit Facility and our cash balances will be sufficient to meet our working capital requirements, anticipated capital expenditures, insurance collateral requirements, earn-out obligations, letters of credit and debt service obligations for at least the next twelve months. Sources and Uses of Cash
As of March 31, 2009, we had $105.1 million in working capital, defined as current assets less current liabilities, compared to $105.3 million as of December 31, 2008. Cash and cash equivalents, including approximately $18.1 million of restricted cash, increased by $10.3 million from $47.3 million at December 31, 2008 to $57.6 million at March 31, 2009. Restricted cash related to collateral for certain letters of credit is invested in certificates of deposit with a maturity of 90 days.
Sources and uses of cash are summarized below (in millions):

                                                        For the Three Months Ended
                                                                 March 31,
                                                          2009               2008
Net cash provided by operating activities             $        49.3       $       7.3
Net cash (used in) provided by investing activities           (13.1 )             0.8
Net cash used in financing activities                         (25.9 )            (0.9 )

Net increase in cash and cash equivalents             $        10.3       $       7.2

Net cash provided by operating activities increased by $42.0 million to $49.3 million for the three months ended March 31, 2009 from $7.3 million for the three months ended March 31, 2008 as net income adjusted for non-cash items, such as higher depreciation and amortization, improved by $9.9 million and net collections of accounts receivable, unbilled revenue and retainage, net, increased by $77.3 million. These cash flows were partially offset by an increase of $37.4 million in payments to vendors and changes in other accrued liabilities, including payments of approximately $5.3 million related to the resolution of legacy legal litigation.
Net cash used in investing activities increased by $13.9 million to $13.1 million for the three months ended March 31, 2009 from net cash provided by investing activities of $0.8 million for the three months ended March 31, 2008. The

increase in the use of cash was driven by a decrease in net proceeds of $13.4 million from the net sale and purchase of auction rate securities. There were no sales or purchases of auction rate securities during the quarter ended March 31, 2009.
Net cash used in financing activities increased by $25.0 million to $25.9 million for the three months ended March 31, 2009 compared to $0.9 million net cash used in financing activities for the three months ended March 31, 2008. The increase in net cash used in financing activities was driven primarily by net repayments of borrowings under the Credit Facility of $22.5 million and repayments of other borrowings of $3.7 million .
The Company's securities available for sale consist of investment grade auction rate securities that represent interests in pools of student loans guaranteed by the U.S. government under the Federal Family Education Loan Program and structured finance securities. These structured finance securities are collateralized by investment grade credit-linked notes made up of floating rate international bank notes or credit card receivable notes and credit default swap agreements on corporate debt obligations with remaining terms of 8 to 9 years. Under the terms of the credit default swaps, the principal value of these auction rate securities would be impaired at net default rates on the underlying corporate debt obligations ranging from 8% to 11%. All of these auction rate securities carry investment grade ratings from one or more of the major credit rating agencies, and the Company continues to earn and collect interest on these securities.
Liquidity for these auction-rate securities is typically provided by an auction process that resets the applicable interest rate at pre-determined intervals, usually every 7, 28 or 35 days. Due to disruptions in the credit markets, these auctions have not had sufficient bidders to allow investors to complete a sale, indicating that immediate liquidity at par is unavailable. Management has the intent and believes the Company has the ability to hold these securities until they can be sold at par value. Management is uncertain at this time as to when the liquidity issues associated with these investments will improve, and as a result of this uncertainty, has classified the book value of these securities as long-term assets since June 30, 2008. Management is uncertain at this time as to when the Company will be able to exit these investments at their par value or whether additional temporary or other-than temporary impairment related to these investments will be incurred in the future.
As of March 31, 2009, we hold $33.7 million in par value of these auction rate securities, with an estimated fair value and carrying value of $21.0 million, net of a $12.6 million unrealized loss. While the investments are of a high credit quality, at this time we are uncertain when the liquidity issues associated with these investments will improve and when we will be able to exit these investments at their par value. We currently anticipate holding these securities until we can realize their par value and believe our existing cash resources will be sufficient to meet our anticipated needs for working capital and capital expenditures to execute our current business plan. We continue to monitor this situation. See Note 6 - Securities Available for Sale and Note 10 - Commitments and Contingencies in the Notes to the Condensed Unaudited Consolidated Financial Statements. Credit Facility
We amended and restated our Senior Secured Credit Facility effective July 29, 2008, expiring May 10, 2013 (the "Credit Facility"). The Credit Facility has a maximum amount of available borrowing of $210 million, subject to certain restrictions. The maximum available borrowing may be increased to $260 million if certain conditions are met.
As in the past, the amount that we can borrow at any given time is based upon a formula that takes into account, among other things, eligible billed and unbilled accounts receivable, equipment, real estate and eligible cash collateral, which can result in borrowing availability of less than the full amount of the Credit Facility. At March 31, 2009 and December 31, 2008, net availability under the Credit Facility totaled $51.9 million and $82.2 million, respectively, net of outstanding standby letters of credit aggregating $81.9 million and $82.4 million in each period, respectively. These letters of credit mature at various dates and most have automatic renewal provisions subject to prior notice of cancellation. The Credit Facility is collateralized by a first priority security interest in substantially all of our assets and the assets of our wholly-owned subsidiaries and a pledge of the stock of certain of our operating subsidiaries. At March 31, 2009 and

December 31, 2008, we had outstanding cash draws of $20.0 million and $42.5 million under the Credit Facility, respectively. Interest under the Credit Facility accrues at variable rates based, at our option, on the agent bank's base rate (as defined in the Credit Facility) plus a margin of between 1.25% and 1.75%, or at the LIBOR rate plus a margin of between 2.0% and 3.0%, depending on certain financial thresholds. At March 31, 2009, the margin over LIBOR is 2.50% and the margin over the base rate was 1.25%. The Credit Facility includes an unused facility fee ranging from 0.375% to 0.5% based on usage. The weighted average interest rate on the Credit Facility at March 31, 2009 is 4.41%.
The Credit Facility contains customary events of default (including cross-default) provisions and covenants related to our operations that prohibit, among other things, making investments and acquisitions in excess of specified amounts, incurring additional indebtedness in excess of specified amounts, creating liens against our assets, prepaying other indebtedness excluding our 7.625% senior notes and engaging in certain mergers or combinations without the prior written consent of the lenders. The Credit Facility also limits our ability to make certain distributions or pay dividends. In addition, we are required to maintain a minimum fixed charge coverage ratio of 1.20 to 1.00, as defined in the Credit Facility. Any deterioration in the quality of billed and unbilled receivables, reduction in the value of our equipment or an increase in our lease expense related to real estate, would reduce availability under the Credit Facility. At March 31, 2009, we were in compliance with all provisions and covenants of the Credit Facility.
Based upon the current availability under our Credit Facility, liquidity and projections for 2009, we believe we will be in compliance with the Credit Facility's terms and conditions and the minimum availability requirements throughout 2009. We are dependent upon borrowings and letters of credit under . . .