Three Months Ended        Nine Months Ended
                                      September 30,            September 30,
                                    2012          2011       2012         2011
Revenue from top ten customers       67 %           73 %      66 %          73 %

Revenue from specific customers:
  AT&T                               17 %           23 %      17 %          25 %
  DIRECTV®                           16 %           22 %      17 %          19 %

In addition, we derived 11% of our revenues for the nine month period ended September 30, 2011 from El Paso Corporation.
Our relationship with AT&T is primarily based upon master service agreements, other service agreements and construction/installation contracts for both AT&T's wireless and wireline infrastructure businesses. Our relationship with DIRECTV® is based upon an agreement to provide installation and maintenance services for DIRECTV®.

In May 2012, Red Ventures exercised its option to purchase the DirectStar Business, and we consummated the sale of the DirectStar Business to Red Ventures in June 2012 for a net sale price of $98.9 million in cash. DirectStar provides marketing and sales services on behalf of DIRECTV®. The sale of the DirectStar Business reduced our revenues from DIRECTV®.
Additionally, in September 2012, MasTec's board of directors approved a plan of sale for the projects and net assets of its wholly-owned subsidiary, Globetec Construction LLC and subsidiaries ("Globetec"), to be completed on or before September 30, 2013. In connection with our decision to sell Globetec, we recognized impairment losses of $12.7 million in the third quarter of 2012. Accordingly, DirectStar and Globetec are each presented as a discontinued operation in the condensed unaudited consolidated financial statements for all periods presented. See Note 4 - Discontinued Operations in the notes to the condensed unaudited consolidated financial statements for additional details.

Overview of Financial Results
Third quarter revenue grew to $1.1 billion, an increase of $251 million, or 31%, from the prior year. Strong end-user demand for power generation and industrial as well as oil and gas pipeline and facility projects contributed to this growth. Costs of revenue, excluding depreciation and amortization, as a percent of revenue increased from 86.1% in the third quarter of 2011 to 86.6% in 2012. This increase was driven primarily by lower margins on oil and gas pipeline and facility projects, as well as certain power generation and industrial projects, as compared with 2011. Depreciation and amortization expense and general and administrative costs also increased, due in part to our 2011 acquisitions, as well as from increased levels of investment in our business. While depreciation and amortization and general and administrative costs increased in dollar terms, as a percentage of revenue they declined versus the same period in the prior year. This improvement is largely due to improved leverage of these costs as a result of higher revenues.
Our third quarter results were also affected by a $9.6 million legal settlement reserve that we recorded in connection with the Sintel legal matter. See Note 14
- Commitments and Contingencies in the notes to the condensed unaudited consolidated financial statements. Third quarter 2012 income from continuing operations was $36.1 million, or $0.45 cents per diluted share. Third quarter 2012 income from continuing operations includes an after-tax effect of $5.8 million, or $0.07 per share, resulting from the legal settlement charge discussed above. Excluding this charge, third quarter income from continuing operations and diluted earnings per share were $41.9 million and $0.53 cents, respectively. As compared with our third quarter 2011 results, income from continuing operations and diluted earnings per share increased by approximately $11.1 million and $0.18 cents per share, or approximately 36% and 51%, respectively. See "Adjusted Income From Continuing Operations and Adjusted Income From Continuing Operations Per Diluted Share" below. Diluted earnings per share was also favorably affected by the purchase of treasury shares. Beginning in the fourth quarter of 2011 and as of September 30, 2012, we have repurchased 9.5 million shares of our common stock. In addition, we had fewer dilutive "premium" shares included in our diluted share count as compared with the prior year period due to a lower average stock price. See Note
2 - Earnings Per Share in the notes to the condensed unaudited consolidated financial statements.
Economic, Industry and Market Factors
We recognize that we continue to operate in a challenging business environment, as do our customers. We closely monitor the effects that changes in economic and market conditions may have on our customers. General economic conditions, as well as the highly competitive nature of our industry, have resulted in pricing pressure for the services we provide. Work is often awarded through a bidding process, where price is a principal factor in the selection process. In the face of increased pricing pressure, we strive to maintain our profit margins through productivity improvements and cost reduction programs. Other market and industry factors, such as tightened access to capital for customers in the industries we serve and/or changes to our customers' capital spending plans, can result, and have resulted, in decreased levels of demand in certain portions of our business, such as our power generation and industrial projects, which were negatively affected by such trends in 2011, and our wireless projects, which have been negatively affected by reduced work order volume during 2012. In addition, we operate in industries affected by market and regulatory impacts beyond our control. Changes in technology, tax and other incentives, renewable energy portfolio standards and new or changing regulatory requirements affecting the industries we serve can impact demand for our services. Fluctuations in market prices for oil, gas and other fuel sources can also impact demand for our oil and gas pipeline and facility construction services, as well as our power generation and industrial construction services. While we actively monitor economic, industry and market factors affecting our business, we cannot predict the impact such factors may have on our future results of operations, liquidity and cash flows.
Impact of Seasonality and Cyclical Nature of Business Our revenues and results of operations can be subject to seasonal and other variations. These variations are influenced by weather, customer spending patterns, bidding seasons, project schedules and timing, particularly for large non-recurring projects, and holidays. Typically, our revenues are lowest in the first quarter of the year because cold, snowy or wet conditions cause delays. Revenues in the second quarter are typically higher than in the first quarter, as some projects begin, but continued cold and wet weather can often impact second quarter productivity. The third and fourth quarters are typically the best of the year, as a greater number of projects are underway and weather is normally more accommodating to work on projects. In the fourth quarter, many projects tend to be completed by customers seeking to spend their capital budgets before the end of the year, which generally has a positive impact on our revenues. However, the holiday season and inclement weather can cause delays, which could reduce revenues and increase costs on affected projects. Any quarter may be positively or negatively affected by out of the ordinary weather patterns, such as excessive rainfall or warm winter weather, making it difficult to predict quarterly revenue and profitability variations.

Additionally, our industry tends to be highly cyclical. Fluctuations in end-user demand within the industries we serve, or in the supply of services within those industries, can impact demand for our services. As a result, our revenues may be adversely affected by industry declines or by delays in new projects. Variations in project schedules or unanticipated changes in project schedules, in particular in connection with large construction and installation projects, can create fluctuations in revenues, which may adversely affect us in a given period. The financial condition of our customers and their access to capital; variations in project profitability; regional, national and global economic and market conditions; regulatory or environmental influences; and acquisitions, dispositions or strategic investments can also materially affect quarterly results. Accordingly, our operating results in any particular period may not be indicative of the results that can be expected for any other period. Revenue
Customer revenues from continuing operations by industry for the periods indicated were as follows (in millions):

                        Three Months Ended                        Nine Months Ended
                           September 30,                            September 30,
                      2012                2011                2012                 2011
Communications $   436.8     41 %   $ 435.8     53 %   $ 1,164.7     42 %   $ 1,101.6     52 %
Utilities          627.3     59 %     373.4     46 %     1,617.8     58 %       981.1     47 %
Government           3.2      0 %       7.0      1 %        11.9      0 %        17.0      1 %
               $ 1,067.3    100 %   $ 816.2    100 %   $ 2,794.4    100 %   $ 2,099.7    100 %

Approximately 40% of our revenue is derived from projects performed under master service and other 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 large 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. Services provided under these agreements range from engineering, project management and installation work to maintenance and upgrade services. Master service agreements and other service agreements are frequently awarded on a competitive bidding basis, although customers are sometimes willing to negotiate contract extensions beyond their original terms without re-bidding. Our master service and other service agreements have various terms, depending upon the nature of the services provided, and typically provide for termination on short or no advance notice.
The remainder of our work is generated pursuant to contracts for specific 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, generally 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.
Revenues from continuing operations by type of contract for the periods indicated were as follows (in millions):

                                      Three Months Ended                              Nine Months Ended
                                         September 30,                                  September 30,
                                  2012                   2011                   2012                    2011
Master service and other
service agreements        $   424.8        40 %   $ 499.6        61 %   $ 1,207.7        43 %   $ 1,225.9        58 %
Installation/construction
project agreements            642.5        60 %     316.6        39 %     1,586.7        57 %       873.8        42 %
                          $ 1,067.3       100 %   $ 816.2       100 %   $ 2,794.4       100 %   $ 2,099.7       100 %

As shown in the table above, approximately 60% of our third quarter revenues from continuing operations were from non-recurring, project specific work. Seasonality tends to have a greater impact on our non-recurring project revenues. The proportion of our revenues from non-recurring project work in any given quarter can fluctuate based upon our project mix. If we are not able to replace work from completed projects with new project work, we may not be able to maintain our current revenue levels, or our current level of capacity and resource utilization. We actively review our backlog of project work and take appropriate action to minimize such exposure.

Backlog
Estimated backlog represents the amount of revenue we expect to realize over the next 18 months from future work on uncompleted contracts, including new contractual agreements on which work has not begun. Our backlog estimates include amounts under master service and other service agreements in addition to construction projects. We determine the amount of backlog for work under master service and other service agreements based on historical trends, anticipated seasonal impacts and estimates of customer demand based on communications with our customers. The following presents 18-month backlog for our business as of the dates indicated (in millions):

(1) Backlog attributable to Globetec and the DirectStar Business of approximately $247 million has been removed from previously reported figures due to the reclassification of Globetec and the DirectStar Business as discontinued operations.

While our backlog estimates include amounts under master service and other service agreements, our customers are not contractually committed to purchase a minimum amount of services under these agreements, most of which can be canceled on short or no advance notice. There can be no assurance as to our customers' requirements or that our estimates are accurate. In addition, timing of revenues for construction and installation projects included in our backlog can be subject to change as a result of customer delays, regulatory requirements and other project related factors. These changes could cause estimated revenues to be realized in periods later than originally expected, or not at all. As a result, our backlog as of any particular date is an uncertain indicator of future revenues and earnings.
Critical Accounting Policies and Estimates This discussion and analysis of our financial condition and results of operations is based upon our condensed unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). 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, estimates to complete and provisions for contract losses, allowances for doubtful accounts, accrued self-insured claims, estimated fair values of goodwill and intangible assets, acquisition-related contingent consideration, assets and liabilities classified as held-for-sale, securities available for sale and certain convertible debt obligations, reserves and accruals, impairment of assets, income taxes 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, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. As management estimates, by their nature, involve judgment regarding future uncertainties, actual results may differ from these estimates if conditions change or if certain key assumptions used in making these estimates ultimately prove to be materially incorrect. Refer to Note 1 - Business, Basis of Presentation and Significant Accounting Policies in the notes 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, as amended, for further information regarding our critical accounting policies and estimates.

Results of Operations
Comparison of Quarterly Results
The following table reflects our consolidated results of operations in dollar
and percentage of revenue terms for the periods indicated (dollar amounts in
millions):
                                            Three Months Ended                                Nine Months Ended
                                               September 30,                                    September 30,
                                        2012                    2011                    2012                     2011
Revenue                        $ 1,067.3     100.0  %   $ 816.2     100.0  %   $ 2,794.4     100.0  %   $ 2,099.7     100.0  %
Costs of revenue, excluding
depreciation and amortization      924.3      86.6  %     703.0      86.1  %     2,445.1      87.5  %     1,806.0      86.0  %
Depreciation and amortization       22.6       2.1  %      19.6       2.4  %        65.1       2.3  %        52.8       2.5  %
General and administrative
expenses                            42.5       4.0  %      35.2       4.3  %       118.2       4.2  %        97.7       4.7  %
Interest expense, net                9.4       0.9  %       9.0       1.1  %        27.9       1.0  %        25.2       1.2  %
Other expense (income), net          8.9       0.8  %       0.6       0.1  %         7.9       0.4  %       (28.9 )    (1.4 )%
Income from continuing
operations before provision
for income taxes               $    59.6       5.6  %   $  48.8       6.0  %   $   130.2       4.6  %   $   146.9       7.0  %
Provision for income taxes         (23.5 )    (2.2 )%     (18.0 )    (2.2 )%       (51.2 )    (1.8 )%       (56.4 )    (2.7 )%
Income from continuing
operations before
non-controlling interests      $    36.1       3.4  %   $  30.8       3.8  %   $    79.0       2.8  %   $    90.5       4.3  %
(Loss) income from
discontinued operations, net
of tax                              (9.3 )    (0.9 )%       1.0       0.1  %        (7.9 )    (0.3 )%         6.9       0.3  %
 Net income                    $    26.8       2.5  %   $  31.8       3.9  %   $    71.1       2.5  %   $    97.4       4.6  %
Net loss attributable to
non-controlling interests              -         -  %         -         -  %           -         -  %           -         -  %
Net income attributable to
MasTec                         $    26.8       2.5  %   $  31.8       3.9  %   $    71.1       2.5  %   $    97.4       4.6  %

Three Months Ended September 30, 2012 Compared to Three Months Ended September 30, 2011
Revenue. Our revenue was $1.1 billion for the three months ended September 30, 2012, as compared with $816.2 million for the same period in 2011, representing an increase of approximately $251.1 million or 30.8%. Third quarter 2012 revenues were favorably affected by demand for our power generation and industrial, electrical transmission and oil and gas pipeline and facility services. Key customers driving growth during the second quarter of 2012 included Chesapeake Midstream Partners LP, Mid-American Energy and Energy Transfer Company. Revenue from power generation and industrial projects of $201.9 million increased by approximately $176.9 million for the three months ended September 30, 2012 as compared to the same period in the prior year. The growth in power generation and industrial project work has been driven largely by customers seeking to complete wind installation projects under the current federal production tax credit program, which requires that qualified facilities be placed in service by December 31, 2012. In addition, solar project activity increased versus the prior year. Third quarter 2012 oil and gas pipeline and facility project work benefited from approximately $72.3 million of incremental revenue from natural gas and petroleum pipeline infrastructure project activities.

Costs of revenue, excluding depreciation and amortization. Our costs of revenue, excluding depreciation and amortization, were $924.3 million, or 86.6% of revenue, for the three months ended 2012, compared to $703.0 million, or 86.1% of revenue, for the corresponding period in 2011, a $221.3 million, or 31.5%, increase. The dollar increase is partially attributable to higher costs associated with increased revenues, as described above. Costs of revenue, excluding depreciation and amortization, increased 50 basis points as a percentage of revenue. Material costs as a percentage of revenue increased by approximately 260 basis points, resulting, in part, from changes in our project mix as compared with 2011. Our power generation and industrial projects, which increased as a proportion of our total revenues, had higher material cost requirements as compared with our mix of project work in the prior year. The increase in material costs as a percentage of revenue was partially offset by a 120 basis point decrease in wage costs, including subcontractor expenses, as a percentage of revenue. In addition, fuel costs as a percent of revenue decreased by approximately 50 basis points as a percentage of revenue due to lower fuel prices, as well as from changes in project mix.
Depreciation and amortization. Depreciation and amortization was $22.6 million, or 2.1% of revenue, for the three months ended September 30, 2012 as compared with $19.6 million, or 2.4% of revenue, for the same period in 2011, representing an increase of approximately $3.0 million, or 15.3%. The increase in depreciation expense resulted from capital spending beginning in the second half of 2011 to support growth in project activity levels. Increased depreciation expense for the quarter ended September 30, 2012 was partially offset by a decrease of approximately $1.0 million in amortization expense from historical acquisitions.

General and administrative expenses. General and administrative expenses were $42.5 million, or approximately 4.0% of revenue, for the three months ended September 30, 2012 as compared with $35.2 million, or 4.3% of revenue, for the same period in 2011, representing an increase of $7.3 million, or approximately 20.7%. The dollar increase resulted from higher labor and other administrative costs associated with growth in our business. As a percentage of revenue, general and administrative costs decreased by 30 basis points. Interest expense, net. Interest expense, net of interest income, was $9.4 million, or approximately 0.9% of revenue, for the three months ended September 30, 2012, as compared with $9.0 million, or 1.1% of revenue, for the same period in 2011, an increase of approximately $0.4 million. The increase was largely attributable to interest expense related to higher average outstanding balances under our Credit Facility.
Other expense (income), net. Other expense, net, was $8.9 million for three months ended September 30, 2012, as compared with other expense, net, of $0.6 million for the three months ended September 30, 2011, an increase of $8.3 million. The increase was driven primarily by a $9.6 million legal settlement reserve that we recorded in connection with the Sintel legal matter in the third quarter of 2012, offset, in part, by changes in gains and losses on sales of assets. Gains on sales of assets were $0.6 million for the three months ended September 30, 2012, as compared with losses on sales of assets of $0.6 million for the same period in 2011. See Note 14 - Commitments and Contingencies in the notes to the condensed unaudited consolidated financial statements for details of the Sintel legal matter.
Income taxes. Income taxes were $23.5 million for the three months ended September 30, 2012, as compared with $18.0 million for the three months ended September 30, 2011, representing an increase of approximately $5.5 million. This increase is primarily attributable to higher income and a higher expected tax rate. Our effective tax rate on income from continuing operations was 39.4% for the three months ended September 30, 2012 as compared with approximately 36.9% for the same period in the prior year. The higher current year effective tax rate is principally attributable to a higher effective state tax rate.
(Loss) income from discontinued operations. Losses from discontinued operations of $9.3 million for the quarter ended September 30, 2012 were driven primarily by impairment charges of $12.7 million in connection with our decision to sell the Globetec operation. Income from discontinued operations, net of tax, was $1.0 million for the quarter ended September 30, 2011. See Note 4 - Discontinued Operations in the notes to the condensed unaudited consolidated financial statements for additional details.

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