10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 29, 2012

OR

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

COMMISSION FILE NUMBER 001-34867

UNITEK GLOBAL SERVICES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	75-2233445
(State or Other Jurisdiction of Incorporation)	(I.R.S. Employer Identification No.)

1777 Sentry Parkway West, Gwynedd Hall, Suite 302

Blue Bell, Pennsylvania 19422

(Address of Principal Executive Offices)

(267) 464-1700

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   x  No   o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   o  No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

On November 2, 2012, 18,712,747 shares of the registrant’s common stock, $0.00002 par value per share, were outstanding.

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

INDEX

		PAGE NO.
PART I:	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (Unaudited) as of September 29, 2012 and December 31, 2011	3
	Condensed Consolidated Statements of Comprehensive Income or Loss (Unaudited) for the three and nine months ended September 29, 2012 and October 1, 2011	4
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 29, 2012 and October 1, 2011	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	47
PART II:	OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	49
SIGNATURES		50

PART I: FINANCIAL INFORMATION

Item 1.  Financial Statements

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	September 29,			December 31,
	2012			2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	445		$	95
Restricted cash	25			68
Accounts receivable and unbilled revenue, net of allowances	116,464			91,533
Inventories	17,307			10,985
Prepaid expenses and other current assets	2,610			3,299
Assets held for sale	18,746			—
Total current assets	155,597			105,980
Property and equipment, net	29,419			39,022
Amortizable customer relationships, net	40,802			29,783
Other amortizable intangible assets, net	4,280			4,635
Goodwill	136,525			163,797
Deferred tax assets, net	1,078			568
Other assets	5,418			5,095
Total assets	$	373,119		$	348,880
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	50,536		$	33,367
Accrued liabilities	42,007			32,597
Contingent consideration	1,947			26,958
Current portion of long-term debt	1,350			1,000
Current income taxes	165			904
Current portion of capital lease obligations	9,083			9,631
Other current liabilities	508			518
Liabilities held for sale	9,151			—
Total current liabilities	114,747			104,975
Long-term debt, net of current portion	163,604			111,217
Long-term capital lease obligations, net of current portion	8,875			16,283
Deferred income taxes	801			5,511
Other long-term liabilities	1,330			1,664
Total liabilities	289,357			239,650
STOCKHOLDERS’ EQUITY
Preferred Stock, $0.00002 par value (20 million shares authorized, no shares issued or outstanding)	—			—
Common Stock, $0.00002 par value (200 million shares authorized, 18,712,747 and 16,305,369 issued and outstanding at September 29, 2012 and December 31, 2011, respectively)	—			—
Additional paid-in capital	260,694			249,745
Accumulated other comprehensive income	53			18
Accumulated deficit	(176,985		)	(140,533		)
Total stockholders’ equity	83,762			109,230
Total liabilities and stockholders’ equity	$	373,119		$	348,880

See accompanying notes

3

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS

(Amounts in thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 29,			October 1,			September 29,			October 1,
	2012			2011			2012			2011
Revenues	$	132,124		$	101,863		$	326,762		$	261,991
Cost of revenues	104,517			78,632			260,937			206,214
Gross profit	27,607			23,231			65,825			55,777
Selling, general and administrative expenses	10,590			11,649			32,597			34,322
Change in fair value of contingent consideration	—			—			(724		)	—
Restructuring charges	1,594			—			6,400			—
Depreciation and amortization	6,710			5,624			19,799			18,112
Operating income	8,713			5,958			7,753			3,343
Interest expense	3,883			3,313			10,496			11,259
Loss on extinguishment of debt	—			—			—			3,466
Other income, net	(77		)	(57		)	(1,147		)	(163		)
Income (loss) from continuing operations before income taxes	4,907			2,702			(1,596		)	(11,219		)
Income tax expense	293			354			315			150
Income (loss) from continuing operations	4,614			2,348			(1,911		)	(11,369		)
(Loss) income from discontinued operations, net of income taxes	(30,669		)	73			(34,541		)	(448		)
Net (loss) income	$	(26,055	)	$	2,421		$	(36,452	)	$	(11,817	)
Net (loss) income per share – basic and diluted:
Continuing operations	$	0.25		$	0.14		$	(0.11	)	$	(0.72	)
Discontinued operations	(1.64		)	0.01			(1.92		)	(0.03		)
Net (loss) income	$	(1.39	)	$	0.15		$	(2.03	)	$	(0.75	)
Weighted average shares of common stock outstanding – basic and diluted	18,732			16,350			17,969			15,839
Comprehensive (loss) income	$	(26,061	)	$	2,100		$	(36,417	)	$	(12,072	)

See accompanying notes

4

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Nine Months Ended
	September 29,			October 1,
	2012			2011
Cash flows from operating activities:
Net loss	$	(36,452	)	$	(11,817	)
Adjustments to reconcile net loss to net cash used in operating activities – continuing operations:
Loss (income) from discontinued operations, net of income taxes	34,541			448
Provision for doubtful accounts	1,435			384
Depreciation and amortization	19,799			18,112
Amortization of deferred financing fees	649			878
Change in fair value of derivatives	108			191
Accretion of debt discount	385			556
Change in fair value of contingent consideration	(724		)	—
Loss on extinguishment of debt	—			3,466
Stock-based compensation	4,050			4,376
Gain on sale of fixed assets	(1,164		)	(220		)
Deferred taxes	281			(136		)
Changes in assets and liabilities:
Accounts receivable and unbilled revenue	(45,919		)	(8,770		)
Inventories	(4,774		)	(1,163		)
Prepaid expenses and other assets	(372		)	72
Accounts payable and accrued liabilities	23,927			(7,438		)
Payment of contingent consideration	(2,427		)	—
Net cash used in operating activities – continuing operations	(6,657		)	(1,061		)
Net cash provided by operating activities – discontinued operations	1,464			1,367
Net cash (used in) provided by operating activities	(5,193		)	306
Cash flows from investing activities:
Acquisition of property and equipment	(3,734		)	(2,939		)
Proceeds from sale of property and equipment	1,701			318
Cash paid for acquisition of businesses, net of cash acquired	(16,858		)	(12,581		)
Net cash used in investing activities – continuing operations	(18,891		)	(15,202		)
Net cash used in investing activities – discontinued operations	(652		)	(1,258		)
Net cash used in investing activities	(19,543		)	(16,460		)
Cash flows from financing activities:
Proceeds from revolving credit facilities, net	19,490			22,683
Proceeds from long-term debt, net of debt discount	33,750			97,000
Repayment of long-term debt	(888		)	(109,400		)
Repayment of capital leases	(7,702		)	(6,394		)
Payment of contingent consideration	(17,114		)	—
Financing fees	(1,016		)	(3,929		)
Other financing activities	(194		)	(824		)
Net cash provided by (used in) financing activities – continuing operations	26,326			(864		)
Net cash used in financing activities – discontinued operations	(1,226		)	(468		)
Net cash provided by (used in) financing activities	25,100			(1,332		)
Effect of exchange rate on cash and cash equivalents	(14		)	(161		)
Net increase (decrease) in cash and cash equivalents	350			(17,647		)
Cash and cash equivalents at beginning of period	95			17,716
Cash and cash equivalents at end of period	$	445		$	69
Supplemental cash flow information:
Interest paid	$	8,993		$	10,591
Income taxes paid, net		784			244
Significant non-cash items:
Fair value of equity paid for acquisition	$	7,093		$	8,453
Acquisition of property and equipment financed by capital leases		3,788			8,851

See accompanying notes

5

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

1.             Business

UniTek Global Services, Inc. (“UniTek” or the “Company”) is a premier provider of high-quality, specialized infrastructure services including engineering, construction management and installation fulfillment services to the wireless telecommunications, public safety, broadband cable and satellite industries. UniTek has created a scalable platform through which it can rapidly deploy a highly skilled workforce across the United States and Canada, delivering a comprehensive end-to-end suite of permanently outsourced infrastructure services. The Company operates in two reportable segments: (1) Fulfillment, which performs installation and other services for the satellite and broadband cable pay television industry; and (2) Engineering and Construction, which performs engineering and construction services on wireless telecommunications networks.

2.             Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of September 29, 2012 and for the three and nine months ended September 29, 2012 and October 1, 2011, have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments, which are of a normal and recurring nature, necessary to present fairly the results of its operations and cash flows at the dates and for the periods indicated. The results of operations for the interim periods are not necessarily indicative of the results for the full fiscal year. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed with the SEC on March 7, 2012.

3.             Summary of Significant Accounting Policies

The following is a summary of the significant accounting policies followed in the preparation of the accompanying condensed consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, amounts contained in certain of the notes to the condensed consolidated financial statements, and the revenues and expenses reported for the periods covered by the financial statements. Although such assumptions are based on management’s best knowledge of current events and actions the Company may undertake in the future, actual results could differ significantly from those estimates and assumptions. The Company’s more significant estimates relate to revenue recognition, allowances for bad debts, accruals for legal obligations, medical insurance and workers’ compensation insurance and the valuation of goodwill and intangible assets.

In the ordinary course of accounting for the items discussed above, the Company makes changes in estimates as appropriate and as the Company becomes aware of circumstances surrounding those estimates. Such changes in estimates are reflected in reported results of operations in the period in which the changes are made and, if material, their effects are disclosed in the notes to the condensed consolidated financial statements.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents are invested in investment-grade, short-term investment instruments with high-quality financial institutions.

6

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

Restricted Cash

Restricted cash represents collateral held for a letter of credit issued in conjunction with a facility lease.

Accounts Receivable and Unbilled Revenue, Net of Allowances

Accounts receivable are customer obligations for services rendered to such customers under normal trade terms. The Company’s customers are video content providers, communications carriers and other corporate entities located primarily in the United States and Canada. The Company performs periodic credit evaluations of its customers’ financial condition. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Unbilled revenue represents revenue on uncompleted infrastructure equipment construction and installation contracts that are not yet billed or billable and revenue recognized on completed projects that are not yet billed pursuant to contract terms. Deferred revenues principally represent the value of services to customers that have been billed as of the balance sheet date but for which the requisite services have not yet been rendered. Any costs in excess of billings are deferred and recorded as a component of accrued liabilities.

The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable and unbilled revenue. A specific reserve for bad debts is recorded for known or suspected doubtful accounts receivable or unbilled revenue. For all other accounts, the Company recognizes a general reserve for bad debts based on the length of time receivables are past due and historical write-off experience. The adequacy of the reserve is evaluated using several factors including length of time a receivable is past due, changes in the customer’s credit worthiness, the customer’s payment history, the length of the customer’s relationship with the Company, specific customer issues, availability of mechanics’ and other liens, existence of payment bonds and other sources of payment, current industry trends and the current economic climate. Account balances are charged off against the allowance when the Company believes it is probable that the receivable will not be recovered. Provisions for doubtful accounts are recorded in selling, general and administrative expenses.

Inventories

Inventories consist primarily of materials and supplies purchased from the customer and other suppliers used for installation fulfillment services and wireless construction. Inventories are stated at the lower of cost or market, as determined by the first-in, first-out method for the Fulfillment segment and the average cost method for the Engineering and Construction segment.

Property and Equipment

Property and equipment consist of vehicles, equipment and computers, land and buildings, leasehold improvements and assets under capital leases. Each class of asset is recorded at cost and depreciated using the straight-line method over the estimated useful lives, which range from a period of three to five years, except as follows. Leasehold improvements are depreciated over the term of the lease or the estimated useful life, whichever is shorter. Buildings are depreciated over 27.5 years. Assets under capital leases are depreciated over the lesser of the lease term or the asset’s estimated useful life. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized. The Company capitalizes certain costs incurred in connection with developing or obtaining internal use software, which are included within equipment and computers. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of comprehensive income or loss. All depreciation of property and equipment is included in the consolidated statements of comprehensive income or loss in depreciation and amortization.

Leases

The Company leases vehicles primarily for performing fulfillment services to the pay television industry. Leases are accounted for either as operating or capital depending on the terms of the lease. Each lease is evaluated and a determination is made whether the lease is an operating or capital lease. Operating lease payments are expensed as incurred. Capital leases are included on the condensed consolidated balance sheets as property and equipment and capital lease obligations.

7

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

Impairment of Long-Lived Assets

The Company periodically reviews long-lived assets, consisting primarily of property and equipment and intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. In analyzing potential impairment, management uses projections of future undiscounted cash flows from the assets. These projections are based on management’s view of growth rates for the related business, anticipated future economic conditions and estimates of residual values and are considered to be impaired when the undiscounted net cash flows are less than its carrying value. The impairment recognized is the amount by which the carrying value exceeds the fair value based on assumptions that marketplace participants would use in their estimates of fair value.

Goodwill and Other Intangible Assets

Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. The Company amortizes intangible assets, consisting of customer relationships, trade names, technology, backlog and non-compete agreements from acquired businesses on a straight-line basis over the 9- to 129-month lives of those agreements.

Goodwill is subject to an assessment for impairment using a two-step, fair value-based test with the first step performed at least annually, or more frequently if events or circumstances exist that indicate that goodwill may be impaired. The Company completes an annual analysis of the reporting units at the beginning of the fourth quarter of each fiscal year. The first step requires the Company to determine the fair value of each reporting unit and compare it to its carrying value, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment test is performed to determine the implied value of goodwill for that reporting unit. If the implied value is less than the carrying amount of goodwill for that reporting unit, an impairment loss is recognized for that reporting unit.

Foreign Currency Translation

The balance sheets of foreign subsidiaries are translated into U.S. dollars at current period-end rates, and the statements of comprehensive income or loss are translated at average monthly rates during each monthly period. Net exchange gains or losses resulting from the translation of foreign financial statements and the effect of exchange rate changes on intercompany transactions of a long-term investment nature are accumulated and credited or charged directly to a separate component of stockholders’ equity. Any foreign currency gains or losses related to transactions are charged to other income (expense), net.

Other Assets

Costs associated with obtaining long-term debt are deferred and amortized to interest expense on a straight-line basis, which approximates the effective interest method, over the term of the related debt. At September 29, 2012 and December 31, 2011, $3.8 million and $3.4 million (net), respectively, is included in other assets related to deferred financing fees.

8

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an agreement exists, delivery has occurred or services have been rendered, the price is fixed and determinable and collection is reasonably assured. Revenue is recognized net of any estimated allowances.

Revenues from fulfillment services provided to the pay television industry are recognized as the services are rendered. Fulfillment services are generally performed under master or other services agreements and are billed on a contractually agreed price per unit, work order basis. Under master service and similar type service agreements, the Company furnishes specified units of service for a separate fixed price per unit of service. The Company recognizes revenue from fulfillment services net of equipment costs payable to the customer because the Company has determined that it acts as an agent specific to the equipment costs.

Within the Engineering and Construction segment, revenue from site acquisition and zoning service contracts performed on a standalone basis is based upon output measures using contract milestones as the basis. Revenue from infrastructure construction, equipment installation and project management contracts is recorded under the percentage-of-completion method based on the percentage of costs incurred to-date compared to estimated total costs at completion. Costs used to determine percentage-of-completion include direct costs such as materials, labor and subcontractor costs and indirect costs specifically allocable or identifiable to each contract such as indirect labor, supplies, tools and repairs. Losses relating to Engineering and Construction work are recognized when such losses become known.

Certain contracts within the Engineering and Construction segment include multiple deliverables, typically involving the design, construction and implementation of public safety radio networks with a separate maintenance component for a specific period of time following implementation. The maintenance component of these contracts is typically for a period of one to ten years. The Company accounts for the maintenance component of these contracts as a separate unit of accounting with the revenue being recognized on a pro-rata basis over the term of the maintenance period. The revenue for the remaining portion of the contract is recognized on the percentage of completion method. The value assigned to each unit of accounting is objectively determined and obtained primarily from sources such as the separate selling price for that item or a similar item or from competitor prices for similar items. The liability associated with these maintenance contracts is reflected within other current liabilities and other long-term liabilities.

The Company is also subject to costs arising from vendor and subcontractor change orders (work performed that was not in original scope), which may or may not be pre-approved by the customer. The Company determines the likelihood that such costs will be recovered based upon past practices with the customer or specific discussions, correspondence or negotiation with the customer. The Company accounts for costs relating to change orders as contract costs to be expensed in the period incurred, unless persuasive evidence exists that the costs will be recovered. Unbilled revenue represents revenue on uncompleted infrastructure equipment construction and installation contracts that are not yet billed or billable and revenue recognized on completed projects that are not yet billed, pursuant to contract terms. Deferred revenues principally represent the value of services to customers that have been billed as of the balance sheet date but for which the requisite services have not yet been rendered. Any costs in excess of billings are deferred and recorded as a component of accrued liabilities.

9

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

Net Income or Loss per Share

Basic net income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted net income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the periods adjusted for the dilutive effect, if any, of the exercise or conversion of instruments into common stock, such as non-vested restricted stock units (“RSUs”), non-vested restricted shares, stock options or warrants.

During the three and nine months ended September 29, 2012 and October 1, 2011, there were no differences in the amount of basic and diluted net income or loss per share.

During the three and nine months ended September 29, 2012 and the three and nine months ended October 1, 2011, 0.8 million, 0.8 million, 0.7 million and 0.7 million shares, respectively, were excluded from the computation of diluted net income or loss per share because their effects were anti-dilutive to the computation.

Insurance Reserves

The Company maintains a high-deductible casualty insurance program, subject to per claim deductibles of $0.35 million for its workers’ compensation policy with a $0.15 million corridor policy effective July 1, 2011, $0.25 million for its general liability policy and $0.35 million for its automobile liability policy. The Company also has excess umbrella coverage up to $50.0 million per claim and in the aggregate subject to policy terms and conditions. Because most claims do not exceed the deductibles under its insurance policies, the Company is effectively self-insured for substantially all claims. The Company also has a self-insured plan for medical and dental claims. The Company determines any liabilities for unpaid claims and associated expenses, including incurred but not reported losses, and reflects the undiscounted value of those liabilities in the balance sheet within accrued liabilities. The determination of such claims and expenses and the appropriateness of the related liability is reviewed and updated quarterly. As of September 29, 2012 and December 31, 2011, the liability for insurance reserves was $15.8 million and $13.7 million, respectively. Known amounts for claims that are in the process of being settled, but have been paid in periods subsequent to those being reported, are recorded in the subsequent reporting periods. The Company’s insurance accruals are based upon known facts, historical trends and reasonable estimates of future expenses.

10

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

Income Taxes

The Company follows the asset and liability method of accounting for income taxes. Income taxes consist of taxes currently due plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is recorded against a deferred tax asset when it is determined to be more-likely-than-not that the asset will not be realized.

The Company recognizes uncertain tax positions in its financial statements when minimum recognition criteria are met in accordance with current accounting guidance. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of December 31, 2011, the Company had accrued $0.9 million in federal and state taxes, interest and penalties, substantially all of which had been settled as of September 29, 2012. The Company’s tax returns for the years ended December 31, 2008 through December 31, 2011 are still subject to examination by tax jurisdictions. The Company provides an intra-period tax allocation of the income tax expense or benefit for the year to continuing operations and discontinued operations.

Stock-based Compensation

The Company measures and recognizes compensation expense for all stock-based awards made to employees and directors based on estimated grant-date fair values.

The condensed consolidated financial statements include stock-based compensation expense of $1.0 million and $0.8 million for the three months ended September 29, 2012 and October 1, 2011, respectively, and $4.0 million and $4.4 million for the nine months ended September 29, 2012 and October 1, 2011, respectively, within selling, general, and administrative expenses in the consolidated statements of comprehensive income or loss.

Stock-based compensation expense is based on the fair value of awards ultimately expected to vest. The Company estimates forfeitures at the time of grant in order to estimate the amount of awards that will ultimately vest. Limited historical forfeiture data is available. As such, management has based the estimated forfeiture rate on expected employee turnover and reevaluates its estimates each period. The Company estimates the fair value of RSUs and non-vested restricted shares on the date of grant based on quoted market prices for the Company’s common stock and the fair value of stock options on the date of grant primarily using the Black-Scholes option-pricing model. Compensation expense for all stock-based awards is recognized on a straight-line basis over the requisite service periods. The Company records the cash flows resulting from the tax deductions in excess of the compensation cost recognized for those options (excess tax benefit) as financing cash flows.

11

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

Fair Value Measurements

Fair value is a market-based measurement, not an entity-specific measurement, and represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost) may be used to determine fair value, which are each based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.

The Company uses a three-tier valuation hierarchy based upon observable and non-observable inputs, as described below:

Level 1 – Quoted market prices in active markets for identical assets or liabilities at the measurement date.

Level 2 – Observable market based inputs or other observable inputs corroborated by market data at the measurement date, other than quoted prices included in Level 1, either directly or indirectly.

Level 3 – Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using valuation models that utilize management’s estimates of market participant assumptions.

The Company determines the estimated fair value of assets and liabilities using available market information and commonly accepted valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different assumptions or estimation methodologies could have a material effect on the estimated fair values.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentration of credit risk consist principally of accounts receivable and unbilled revenue. The Company does not enter into financial instruments for trading or speculative purposes.

Comprehensive Income or Loss

Comprehensive income or loss is a measure of net income or loss and all other changes in equity that result from transactions other than those with stockholders. The following table presents the components of comprehensive income or loss:

	Three Months Ended						Nine Months Ended
	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Net (loss) income	$	(26,055	)	$	2,421		$	(36,452	)	$	(11,817	)
Foreign currency translation (loss) gain	(6		)	(321		)	35			(255		)
Comprehensive (loss) income	$	(26,061	)	$	2,100		$	(36,417	)	$	(12,072	)

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UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

Recent Accounting Pronouncements

Fair Value

In May 2011, the Financial Accounting Standards Board (“FASB”) updated its accounting guidance for fair value measurement to converge guidance of the FASB and the International Accounting Standards Board on fair value measurement and disclosure. This update changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and disclosing information about fair value measurements, clarifies the FASB’s intent about the application of existing fair value measurement requirements, and changes particular principles or requirements for measuring fair value or for disclosing information about fair value measurements. The updated guidance is effective prospectively for interim and annual periods beginning after December 15, 2011. The Company adopted this guidance beginning with its Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

Presentation of Comprehensive Income

In June 2011, the FASB updated its accounting guidance for the presentation of comprehensive income. The objective of the updated guidance is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. It provides the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. Companies are no longer permitted to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In December 2011, the FASB deferred the specific requirement to present items that are reclassified from accumulated other comprehensive income to net income separately within their respective components of net income and other comprehensive income.

The updated guidance, other than the items subject to the December 2011 deferral, was effective retrospectively for interim and annual periods beginning after December 15, 2011. The Company adopted this guidance beginning with its Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

Goodwill Impairment

In September 2011, the FASB updated its accounting guidance for testing of goodwill for impairment. The updated guidance permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. The updated accounting guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The Company will adopt this guidance beginning with its annual assessment of goodwill impairment as of September 30, 2012. The Company is evaluating the impact that this standard will have on that assessment.

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UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

4.             Business Combinations

Acquisition of Skylink

On September 14, 2012, the Company entered into an asset purchase agreement to purchase substantially all of the assets of Skylink LTD (“Skylink”) relating to its business of conducting video, internet and multi-dwelling unit fulfillment and installation for satellite television companies in various markets in Indiana, Ohio and West Virginia.

In accordance with the asset purchase agreement, the Company agreed to pay the former owners of Skylink an aggregate purchase price of up to $24.2 million, subject to certain conditions and adjustments as set forth in the agreement, consisting of (i) a cash payment at closing of $14.0 million, (ii) a scheduled payment of an estimated working capital adjustment of $0.7 million, based on the actual net working capital at the closing date compared to an agreed target net working capital, (iii) a $4.0 million minimum portion of the second earn-out payment as described in further detail below, and (iv) contingent consideration of up to $5.5 million.

The contingent consideration is in the form of earn-out payments. The initial earn-out payment, payable in December 2012, is based upon the achievement of certain metrics related the timely transition of operations to the Company. The second earn-out payment, payable no later than May 31, 2013, is based upon the achievement of revenues as defined in the asset purchase agreement. The criteria for the initial earn-out payment were met by September 29, 2012, and the amount payable will be $3.5 million. The second earn-out payment will be up to $6.0 million payable with a minimum payment at that date of $4.0 million.

The right to the earn-out payments is evidenced by and subject to an earn-out confirmation agreement, also dated September 14, 2012, which provides that if the earn-out payments are not paid when due, the earn-out payments may, subject to the terms, conditions and limitations of the earn-out confirmation agreement, be converted into shares of UniTek common stock, which will be valued at the volume-weighted average of the closing prices of the common stock as quoted on the Nasdaq Global Market for the twenty (20) days prior to the applicable conversion date.

The purchase accounting for Skylink is based on estimates of the fair value of consideration paid and the net assets acquired as of the date of acquisition. The calculation of purchase price is preliminary and subject to potential adjustment upon finalization of the fair value measurements for contingent consideration as of the date of acquisition and the finalization of the expected working capital adjustment. The allocation of the purchase price is preliminary and subject to potential adjustment upon finalization of the fair value measurements used to perform the allocation.

The following table presents the calculation of the preliminary purchase price:

Cash	$	14,000
Fair value of deferred consideration:
Expected working capital adjustment	696
Minimum portion of second earn-out payment	3,936
Fair value of contingent consideration	5,332
Total purchase price	$	23,964

The following table presents the allocation of the preliminary purchase price to the fair value of assets acquired and liabilities assumed as of the date of acquisition:

Accounts receivable	$	1,853
Inventories	1,548
Property and equipment	1,115
Amortizable intangible assets	17,790
Goodwill	3,446
Accounts payable and accrued expenses	(1,788		)
Total fair value of net assets acquired	$	23,964

14

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

During the three and nine months ended September 29, 2012, the acquisition of Skylink contributed revenues of approximately $1.3 million and operating income of approximately $0.3 million. Acquisition related costs for the three and nine months ended September 29, 2012 were $0.1 million, which were recorded as a component of selling, general and administrative expenses. The Company has recognized goodwill of $3.4 million, which is expected to be tax-deductible, arising from the acquisition representing the value of the existing workforce as well as expected synergies from the combination of operations. The goodwill associated with the acquisition of Skylink is included in the Fulfillment segment’s assets.

The following table presents amortizable intangible assets acquired as of the date of acquisition:

	Estimated		Weighted-average
	fair value		amortization period
Customer relationships and backlog	$	17,300	7.0 years
Non-compete agreements	490		3.0 years
Total	$	17,790	6.9 years

Acquisition of Pinnacle

Effective April 3, 2011, UniTek completed the acquisition of Pinnacle Wireless, Inc. (“Pinnacle”) pursuant to an asset purchase agreement dated as of March 30, 2011, as amended on March 28, 2012. Pinnacle specializes in large-scale communications projects for transportation, public safety, entertainment, hospitality and enterprise-grade commercial real estate, which has expanded the Company’s presence in the two-way radio and wireless communications systems integration markets.

In accordance with the asset purchase agreement, UniTek agreed to pay an aggregate purchase price of up to $50.7 million, subject to certain conditions and adjustments, consisting of a base purchase price of $20.7 million and earn-out payments of up to $30.0 million. The base purchase price of $20.7 million consisted of $12.7 million in cash and $8.0 million in shares of UniTek common stock. The number of shares of common stock was determined using the volume-weighted average of the closing prices of the common stock as quoted on the Nasdaq Global Market for the 20 days prior to March 31, 2011, which was $8.65 per share, resulting in the issuance of 924,856 shares of the Company’s common stock. Of the consideration paid in shares of the Company’s common stock, 578,037 shares were delivered at closing and 346,819 shares were placed into escrow, to be held until their release in accordance with the terms of the asset purchase agreement.

The contingent consideration was in the form of earn-out payments based upon the achievement of incremental EBITDA performance targets as defined in the asset purchase agreement. Such payments were originally payable at up to three separate dates, 60% in cash and 40% in equity, but the asset purchase agreement was subsequently amended on March 28, 2012 to limit the total number of shares issued (including those that had been issued in connection with the April 2011 closing of the acquisition) to 3,029,856, with the remainder of the earn-out payments payable in cash. The Company satisfied its obligations under the earn-out provision by making (i) an initial payment of $2.4 million in cash during the quarter ended December 31, 2011, and (ii) a second payment of $27.2 million during the quarter ended June 30, 2012, consisting of $19.5 million of cash and $7.7 million of equity. The number of shares of common stock issued in connection with the second earn-out payment was determined using the volume-weighted average of the closing prices of the common stock as quoted on the Nasdaq Global Market for the 20 days prior to March 31, 2012, which was $3.65 per share, resulting in the issuance of 2,105,000 shares of the Company’s common stock. The fair value of these shares was determined using the Company’s closing stock price on March 30, 2012 of $3.37 per share.

The acquisition-date fair value of the consideration to acquire Pinnacle was $47.0 million, consisting of $12.7 million in cash (net of cash acquired), $8.5 million in equity and contingent consideration of $25.8 million representing the estimated fair value of the earn-out payments. The fair value of the equity was determined based upon the Company’s closing stock price on the last business day prior to April 3, 2011, which was $9.14 per share. The fair value of the contingent consideration was determined on the acquisition date and subsequently updated using a Monte Carlo simulation model applied to the Company’s estimate of Pinnacle’s expected EBITDA performance at each of the measurement dates. Changes in the fair value of the contingent consideration each period subsequent to the acquisition date were recognized in earnings.

15

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

The following table presents the allocation of the purchase price to the fair value of assets acquired and liabilities assumed as of the date of acquisition:

Cash	$	451
Accounts receivable	4,313
Inventories	652
Prepaid expenses and other assets	192
Property and equipment	2,599
Amortizable intangible assets	28,686
Goodwill	16,817
Other assets	445
Accounts payable and accrued expenses	(3,700		)
Billings in excess of costs	(636		)
Deferred revenue	(2,462		)
Capital lease obligations	(377		)
Total fair value of net assets acquired	$	46,980

During the three and nine months ended October 1, 2011, the acquisition of Pinnacle contributed revenues of approximately $9.9 million and $16.2 million, respectively, and operating income of $0.3 million and $0.2 million, respectively. Acquisition related costs for the three and nine months ended October 1, 2011 were $0.2 million and $0.6 million, respectively, which were recorded as a component of selling, general and administrative expenses. The Company has recognized goodwill of $16.8 million, which is tax-deductible, arising from the acquisition representing the value of the existing workforce as well as expected synergies from the combination of operations. The goodwill associated with the acquisition of Pinnacle is included in the Engineering and Construction segment’s assets.

The following table presents amortizable intangible assets acquired as of the date of acquisition:

	Estimated		Weighted-average
	fair value		amortization period
Customer relationships	$	23,530	10.5 years
Non-compete agreements	388		2.0 years
Technology and trade names	4,768		6.5 years
Total	$	28,686	9.7 years

16

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

2012 Cable Acquisitions

On March 2, 2012, the Company acquired substantially all of the assets and assumed certain liabilities of Cableview Communications Inc. (“Cableview”), a company that provides cable television installation services, for a total purchase price of $2.9 million. The purchase price included $0.5 million of cash paid at closing, $1.9 million of cash paid during the quarter ended June 30, 2012 and $0.5 million for the fair value of contingent consideration in the form of earn-outs. The earn-outs are based on the achievement of certain revenue levels for the six- and 12-month periods subsequent to the acquisition date up to maximum amounts of $0.4 million and $1.4 million, respectively. The fair value of the contingent consideration was calculated based on the estimated probabilities of certain revenue levels being achieved. The acquisition expanded the Company’s cable installation geographic footprint and enhanced customer diversification. The intangible assets valued at approximately $0.5 million relate to a non-compete agreement which is being amortized over 12 months and customer contracts that are being amortized over 24 months. The amortization of intangible assets and goodwill will be deductible for tax purposes upon payment of all purchase consideration. The results of Cableview were included in the consolidated results of the Company effective March 2, 2012.

On January 3, 2012, the Company acquired substantially all of the assets and assumed certain liabilities of Streamline Communications, Inc., (“Streamline”), a company that provides cable television installation services in the greater Dallas, Texas market, for a total purchase price of $0.5 million. The acquisition expands the Company’s existing cable installation presence in the Dallas area. The intangible asset valued at $0.2 million relates to customer contracts that are being amortized over 24 months. The amortization of intangible assets and goodwill is deductible for tax purposes. The results of Streamline were included in the consolidated results of the Company effective January 3, 2012.

The purchase accounting for Cableview and Streamline is based on estimates of the fair value of consideration paid and the net assets acquired as of the date of acquisition. The calculation of purchase price is preliminary and subject to potential adjustment upon finalization of the fair value measurements for contingent consideration as of the date of acquisition. The allocation of the purchase price is preliminary and subject to potential adjustment upon finalization of the fair value measurements used to perform the allocation.

The following table presents the preliminary calculation of the purchase prices for these acquisitions:

	Cableview		Streamline
Cash	$	2,400	$	458
Fair value of contingent consideration	484		—
Total purchase price	$	2,884	$	458

The following table presents the allocation of the preliminary purchase prices to the fair value of assets acquired and liabilities assumed at the date of acquisition:

	Cableview			Streamline
Property and equipment	$	501		$	98
Goodwill	2,097			160
Customer contracts	360			200
Non-compete agreement	130			—
Capital lease obligations	(204		)	—
Total fair value of net assets acquired	$	2,884		$	458

17

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

Unaudited Pro Forma Financial Information

The following table presents pro forma revenues and income (loss) from continuing operations as if the acquisitions had occurred on January 1, 2011:

	Three Months Ended				Nine Months Ended
	September 29, 2012		October 1, 2011		September 29, 2012			October 1, 2011
Revenues	$	138,049	$	110,703	$	346,064		$	288,527
Income (loss) from continuing operations	5,244		3,345		(302		)	(10,432		)

The results of Cableview and Streamline were not included in the pro forma operating results presented above because they were not material on a pro forma basis to the Company’s consolidated revenues or income (loss) from continuing operations.

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UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

5.             Accounts Receivable and Unbilled Revenue, Net of Allowances

The following table presents the components of accounts receivable and unbilled revenue, net of allowances:

	September 29,			December 31,
	2012			2011
Accounts receivable	$	73,417		$	60,864
Unbilled revenue	46,014			34,280
	119,431			95,144
Allowance for doubtful accounts	(2,967		)	(3,611		)
Total	$	116,464		$	91,533

6.             Concentration of Credit Risk

The following table presents revenue concentration information as a percentage of total consolidated revenues from continuing operations:

	Three Months Ended		Nine Months Ended
	September 29, 2012	October 1, 2011	September 29, 2012	October 1, 2011	Primary Segment
Revenues from top 10 customers	96%	93%	94%	92%
Revenues from significant customers:
DIRECTV	39%	56%	42%	57%	Fulfillment
AT&T	25%	2%	14%	1%	Engineering & Construction
Comcast	15%	17%	16%	17%	Fulfillment
Eaton Electric	3%	2%	7%	1%	Engineering & Construction

At September 29, 2012 and December 31, 2011, credit risk was concentrated with five customers that accounted for approximately $90.2 million, or 77%, and $47.6 million, or 52%, respectively, of accounts receivable and unbilled revenue.

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UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

7.             Goodwill and Other Intangible Assets

The following table presents the changes in the carrying amount of the Company’s goodwill by segment:

	Fulfillment		Engineering & Construction			Total
Balance at December 31, 2011	$	105,308	$	58,489		$	163,797
Acquisitions	5,703		—			5,703
Impairment	—		(33,005		)	(33,005		)
Other adjustments	30		—			30
Balance at September 29, 2012	$	111,041	$	25,484		$	136,525

Accumulated impairment losses at September 29, 2012 and December 31, 2011 were $65.4 million and $32.4 million, respectively, resulting from impairments of goodwill in the wireline reporting unit during the three months ended September 29, 2012 and during the year ended December 31, 2009.

The following table presents the components of amortizable intangible assets, net:

	September 29,		December 31,
	2012		2011
Amortizable intangible assets:
Customer relationships	$	116,522	$	98,662
Technology and trade names	4,768		4,768
Non-compete agreements	2,591		1,971
Total amortizable intangible assets	123,881		105,401
Accumulated amortization:
Customer relationships	75,720		68,879
Technology and trade names	1,255		628
Non-compete agreements	1,824		1,476
Total accumulated amortization	78,799		70,983
Amortizable intangible assets, net	$	45,082	$	34,418

Amortization expense for the three months ended September 29, 2012 and October 1, 2011 was $2.7 million and $2.4 million, respectively. Amortization expense for the nine months ended September 29, 2012 and October 1, 2011 was $7.8 million and $8.5 million, respectively.

The following table presents estimated amortization expense for the remainder of the current year, for each of the following four years and thereafter:

Three months ending December 31, 2012	$	2,783
2013	7,048
2014	6,144
2015	5,957
2016	5,136
Thereafter	18,014
Total	$	45,082

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UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

8.             Long-Term Debt

On April 15, 2011, the Company completed a refinancing of all of its existing debt by entering into (i) a Credit Agreement (the “Term Loan Agreement”) by and among UniTek, the several banks and other financial institutions or entities that are parties to the Term Loan Agreement (collectively, the “Term Lenders”); and (ii) a Revolving Credit and Security Agreement (the “Revolving Loan Agreement”) by and among UniTek (and certain subsidiaries of UniTek) and PNC Bank, National Association (the “Revolving Lender”).

The Term Loan Agreement provides for a $100.0 million term loan (the “Term Loan”), and the Revolving Loan Agreement provides for a $75.0 million revolving credit facility (“Revolving Loan”). Both the Term Loan and the Revolving Loan may be used for general business purposes. The Term Loan is to be repaid in quarterly installments totaling 1.00% per annum of the term loan amount. Such payments began on June 30, 2011 and will end upon maturity of the debt in 2018. The original borrowing under the Term Loan Agreement was subject to a three percent (3.00%) debt discount totaling $3.0 million, which is being amortized over the life of the loan. The Term Loan bears interest at one, two, three or six month LIBOR (with a floor of 1.50%) plus a margin of 7.50% (9.00% at September 29, 2012). The Revolving Loan matures in 2016. UniTek may draw on the Revolving Loan and repay amounts borrowed in unlimited repetition up to the maximum allowed amount so long as no event of default has occurred and is continuing. The interest rate on the Revolving Loan can be a combination of LIBOR (with no floor) and/or a base rate plus a margin of between 2.25% and 2.75% (the weighted average interest rate of the Revolving Loan was 3.93% at September 29, 2012). Subject to certain terms and conditions, the Term Loan Agreement and the Revolving Loan Agreement include accordion features of $50.0 million and $25.0 million, respectively.

On May 3, 2012, the Company exercised its right to increase its borrowings by $20.0 million under the accordion feature of the Term Loan Agreement (the “First Incremental Term Draw”). The First Incremental Term Draw was subject to a four percent (4.00%) debt discount which is being amortized over the remaining life of the loan. The interest rate, maturity date and terms of the Term Loan Agreement did not change.

On September 13 and 14, 2012, the Company entered into a series of arrangements in order to obtain financing for the acquisition of Skylink. First, the Company entered into an amendment to the Revolving Loan Agreement which provided the consent of the lenders to complete the acquisition and increased the sublimit for letters of credit from $25.0 million to $35.0 million. Next, the Company exercised its right to further increase its borrowings by $15.0 million under the accordion feature of the Term Loan Agreement (the “Second Incremental Term Draw”). The Second Incremental Term Draw was subject to a three percent (3.00%) debt discount which is being amortized over the remaining life of the loan. Finally, the Company entered into an amendment to the Term Loan Agreement which clarified that the fee applicable to any optional future repayments or refinancing also applies to amounts borrowed under the accordion feature of the Term Loan Agreement. There were no other changes to the interest rate, maturity date and terms of the Term Loan Agreement and the Revolving Loan Agreement.

The Term Loan Agreement and the Revolving Loan Agreement contain customary representations and warranties of UniTek as well as provisions for repayment, guarantees, other security and customary events of default. Specifically, the Revolving Loan Agreement and the Term Loan Agreement provide the Revolving Lender and the Term Lenders, respectively, with security interests in the collateral of UniTek (and certain subsidiaries of UniTek). As of September 29, 2012, the Company had $22.9 million in letters of credit outstanding under the Revolving Loan Agreement.

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UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

The following table presents the components of long-term debt:

	September 29,		December 31,
	2012		2011
Revolving Loan	$	35,153	$	15,663
Term Loan, net of debt discounts of $3,561 and $2,696, respectively	129,801		96,554
Total long-term debt	164,954		112,217
Less current portion	1,350		1,000
Long-term debt, net of current portion	$	163,604	$	111,217

The following table presents future maturities of total long-term debt, exclusive of debt discounts:

Three months ending December 31, 2012	$	338
2013	1,350
2014	1,350
2015	1,350
2016	36,503
Thereafter	127,624
Total	$	168,515

The Term Loan Agreement and the Revolving Loan Agreement require the Company to be in compliance with specified financial covenants, including (i) a “Consolidated Leverage Ratio” (as such term is respectively defined and applied in the Term Loan Agreement and the Revolving Loan Agreement) of less than a range of 4.75-3.00 to 1.00 (such ratio declining over time); (ii) a “Fixed Charge Coverage Ratio” (as such term is defined in the Term Loan Agreement and the Revolving Loan Agreement) not less than 1.2 to 1.0 for every fiscal quarter ended after the end of fiscal year 2011; and (iii) certain other covenants related to the operation of UniTek’s business in the ordinary course. In the event of noncompliance with these financial covenants and other defined events of default, the Term Lenders and the Revolving Lender are entitled to certain remedies, including acceleration of the repayment of amounts outstanding on the Term Loan and the Revolving Loan. The Company has to date not experienced any defaults with any such covenants.

22

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

9.             Fair Value Measurements

Assets and Liabilities for which Fair Value is only Disclosed

The carrying values of restricted cash, accounts receivable and unbilled revenue, accounts payable, accrued liabilities and financial instruments included in other assets and other liabilities are reflected in the consolidated balance sheets at historical cost, which is materially representative of their fair value due to the relatively short-term maturities of these assets and liabilities. The carrying values of capital lease obligations and long-term debt approximate fair value because they bear interest at rates currently available to the Company for debt with similar terms and remaining maturities (Level 2 measurements).

Recurring Fair Value Measurements

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 29, 2012:

	Fair Value Measurements at September 29, 2012
	Fair Value at September 29, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	445	$	445	$	—	$	—
Deferred compensation plan assets	767		767		—		—
Total	$	1,212	$	1,212	$	—	$	—
Liabilities
Contingent consideration	$	1,947	$	—	$	—	$	1,947
Interest rate swap	143		—		143		—
Total	$	2,090	$	—	$	143	$	1,947

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2011:

	Fair Value Measurements at December 31, 2011
	Fair Value at December 31, 2011		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	95	$	95	$	—	$	—
Deferred compensation plan assets	551		551		—		—
Total	$	646	$	646	$	—	$	—
Liabilities
Contingent consideration	$	26,958	$	—	$	—	$	26,958
Interest rate swap	133		—		133		—
Total	$	27,091	$	—	$	133	$	26,958

23

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

The Company is required to maintain interest rate hedge agreements covering a notional amount of not less than 50% of the debt outstanding under the Term Loan Agreement. As of September 29, 2012, the Company had entered into interest rate collar agreements having an aggregate notional principal amount of $60.0 million. These interest rate collar agreements mature on July 15, 2013. The Company intends to increase the aggregate notional principal amount of its interest rate collar agreements to $67.5 million during the quarter ended December 31, 2012 in order to maintain 50% coverage as required by the Term Loan Agreement. The fair value of the interest rate collar liability was $0.1 million at September 29, 2012 and December 31, 2011 and was recorded within accrued liabilities with changes in fair value recorded in earnings as a component of interest expense. The change in fair value is also reflected within the condensed consolidated statement of cash flows within the cash flows from operating activities. The valuation of the interest rate collar represents the estimate of the net present value of expected cash flows from each transaction between the Company and the financial institution using relevant mid-market data inputs and based on the assumption of no unusual market conditions or forced liquidations. Due to the Company’s limited use of derivative instruments, there were no significant concentrations of credit risk with respect to derivative transactions as of September 29, 2012.

Nonrecurring Fair Value Measurements

The Company was required to perform certain nonrecurring fair value measurements during the three months ended September 29, 2012. The following table presents the Company’s assets and liabilities measured at fair value on a nonrecurring basis as of September 29, 2012:

	Fair Value at September 29, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value Adjustment
Assets
Property and equipment – wireline	$	3,094	$	—	$	—	$	3,094	$	2,175
Goodwill – wireline	—		—		—		—		33,005
Total	$	3,094	$	—	$	—	$	3,094	$	35,180

The Company determined that the net assets of the wireline business unit met the definition of a disposal group held for sale at September 29, 2012 (the “wireline group”). The Company estimated the future cash flows of the wireline property and equipment and determined that their carrying value exceeded both the sum of their undiscounted cash flows and their fair values, resulting in an impairment charge of $2.2 million. The estimated future cash flows used in the undiscounted cash flow test and the fair value measurement were estimated based on management’s view of growth rates for the wireline business, anticipated future economic conditions and estimates of residual values (Level 3 measurements).

The Company estimated the fair value of the wireline reporting unit and determined that the implied fair value of the goodwill was zero, resulting in an impairment charge of $33.0 million. The fair value of the goodwill was implied by calculating the fair value of the wireline reporting unit and subtracting from that the fair values of the assets attributable to the reporting unit other than goodwill. The fair value of the reporting unit was determined by considering both a market approach, including private bid information obtained by the Company (Level 2 measurements) and the future discounted cash flows attributable to each, which was determined using the Company’s internal operating forecasts, weighted-average cost of capital, and certain other assumptions (Level 3 measurements). The fair values of the other assets and liabilities attributable to the wireline reporting unit, other than property and equipment, were calculated using historical cost, which is materially representative of their fair values due to the relatively short-term nature of the assets and liabilities (Level 2 measurements) and used only for purposes of calculating the implied fair value of goodwill.

Subsequent to the goodwill impairment, the Company measured the fair values of the assets held for sale and the liabilities held for sale of the wireline group, less estimated selling costs, and determined that their carrying values did not exceed this amount.

The $35.2 million of charges for the impairments of property and equipment and goodwill in the wireline reporting unit were included as components of loss from discontinued operations on the statements of comprehensive income or loss for the three and nine months ended September 29, 2012 (see Note 15).

24

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

Fair Value Measurements with Significant Unobservable Inputs

The fair value of contingent consideration for the acquisitions of Skylink, Cableview and Pinnacle was calculated using significant unobservable inputs. The fair value of contingent consideration related to the acquisition of Pinnacle was determined using a Monte Carlo simulation model applied to the Company’s estimate of Pinnacle’s expected EBITDA performance at each of the measurement dates. The significant assumptions used in this calculation included forecasted revenues and earnings, an estimate of the volatility of Pinnacle’s earnings based upon a selected peer group and a risk-free interest rate equal to that of U.S. Treasury bonds with terms approximating the earn-out periods. The fair value of contingent consideration related to the acquisitions of Skylink and Cableview was calculated using the average of probability-weighted scenarios of expected revenues at each of the measurement dates. The significant assumptions used in these calculations included forecasted revenues and the estimated likelihood for each performance scenario.

The following table presents the changes in the fair value of the contingent consideration during the nine months ended September 29, 2012:

	Contingent Consideration
Balance as of December 31, 2011	$	26,958
Acquisitions	5,816
Settlements:
Cash payments	(19,541		)
Reclassifications to accrued liabilities	(3,469		)
Reclassifications to additional paid-in-capital	(7,093		)
Changes in fair value	(724		)
Balance as of September 29, 2012	$	1,947

10.          Legal Proceedings

From time to time, the Company is a party to various lawsuits, claims, or other legal proceedings and is subject, due to the nature of its business, to governmental agency oversight, audits, investigations and review. Such actions may seek, among other things, compensation for alleged personal injury, breach of contract, property damage, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. Under such governmental audits and investigations, the Company may become subject to fines and penalties or other monetary damages. With respect to such lawsuits, claims, proceedings and governmental investigations and audits, the Company accrues reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not believe any of the pending proceedings, individually or in the aggregate, will have a material effect on its consolidated results of operations, cash flows or financial condition.

25

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

11.          Warrants

The following table presents outstanding warrants to purchase shares of the Company’s common stock:

Issued to	Shares	Grant Date	Expiration Date	Exercise Price
UniTek employees	11,384	September 26, 2007	September 26, 2017	$	140.00
Former owners of UniTek Holdings	77,902	September 26, 2007	September 26, 2017	140.00
Former owners of acquired cable business	2,456	December 2, 2010	December 2, 2020	56.00
Total	91,742		Weighted average exercise price	137.75

During the three and nine months ended September 29, 2012 and October 1, 2011, no warrants to purchase shares were exercised, and there were no new issuances of warrants.

12.          Stock Options and Restricted Stock Units

Plan Summary

As of September 29, 2012, the Company sponsored three stock option plans, the 1999 Securities Plan (the “1999 Plan”), the 2007 Equity Incentive Plan (the “2007 Plan”) and the 2009 Omnibus Securities Plan (the “2009 Plan”) (collectively, the “Plans”).

The Plans provide for the grant of RSUs, stock options and certain other stock-based instruments. The terms of these instruments are set by the Company’s Board of Directors. Stock options expire no later than ten years after the date the stock option is granted. As of September 29, 2012, a total of 1.6 million shares of the Company’s common stock had been authorized for issuance under the Plans, of which 0.3 million shares remain eligible for the grant of awards under the Plans.

Tender Offer

On December 9, 2010, the Company commenced a tender offer to exchange certain eligible options to purchase shares of its common stock that were currently outstanding under the following stock option plans: (i) the 1999 Plan; (ii) the 2007 Plan; and (iii) the 2009 Plan. Eligible options fell within one of the following three groups: (i) non-Homerun Portion (as defined below) stock options that were granted under the 2007 Plan and were vested as of December 31, 2010 (“Group 1”); (ii) non-Homerun Portion stock options that were unvested as of December 31, 2010 and any Homerun Portion stock options (whether vested or unvested) that were granted under the 2007 Plan (“Group 2”); and (iii) vested and unvested stock options granted under the 1999 Plan and the 2009 Plan (“Group 3”). The “Homerun Portion” of a 2007 Plan stock option grant was the 40% portion of each stock option grant, whether vested or unvested, that becomes exercisable (at its then current exercise price) only if and when the fair market value of the Company’s common stock is at least $168.00 per share.

Each tendered eligible option was cancelled in exchange for either a grant of RSUs or a replacement option, depending on whether the tendered eligible option was in Group 1, Group 2 or Group 3.  In exchange for each tendered eligible option in Group 1 and Group 3, the holder was granted a replacement option with an exercise price per share equal to the fair market value of the Company’s common stock on the first business day following the expiration of the tender offer, January 10, 2011. Except for the exercise price and the date of grant, all other material terms and provisions (including post-termination exercise periods) of the eligible options remained unchanged.  In exchange for the tender of all eligible options in Group 2, each holder received a grant of RSUs under the 2009 Plan. RSUs represent the right to receive a share of the Company’s common stock for each vested RSU.

The tender offer expired on January 7, 2011, and pursuant to the tender offer, eligible options to purchase an aggregate of 296,833 shares of the Company’s common stock were validly tendered and not withdrawn, and the Company accepted for repurchase these eligible options. The holders of eligible options who validly tendered eligible options received an aggregate of 688,976 RSUs and 96,204 replacement options, repriced at an exercise price of $9.42 per share. For more information, refer to the Company’s Tender Offer Statement on Schedule TO, as filed with the SEC on December 9, 2010, as amended on December 28, 2010 and January 10, 2011. The Company issued an additional 74,202 RSUs on January 10, 2011 to eligible employees and members of the Board of Directors who were not eligible to participate in the tender offer or that did not hold any Group 2 options.

26

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

Long-Term Incentive Plan

At a meeting held on April 3, 2012, the Board of Directors approved a Long-Term Incentive Plan (“LTI Plan”) as part of a broader compensation plan for participating senior executives of the Company. Under the LTI Plan, each participant shall receive an annual target grant of RSUs, valued as a percentage of the participant’s base salary, that consist 50% of time-vested RSUs that vest in equal annual installments on the first four anniversaries of the date of grant, and 50% of performance-vested RSUs that vest at the end of a three-year period following the date of grant, based upon the achievement of annual performance conditions established by the Committee in advance of each year during the grant period. The number of performance-vested RSUs ultimately earned will vary based on achievement with respect to the established performance targets. In this regard, if achievement of the target goal is at less than 90%, no performance-based RSUs will be earned. If achievement is between 90% and 100% of target, then the number of RSUs earned will be prorated from 50% (at 90% achievement) to 100% (at 100% achievement) of the initial grant. If achievement is over 100% of target, then the number of RSUs earned will be increased commensurate with the percentage of achievement over target, with a maximum award of 150% of the initial grant. In connection with this plan, the Company issued 268,509 RSUs.

Other Disclosures

The following table presents the changes in stock options, RSUs and restricted shares under each of the Plans:

	Stock Options2009 and 1999 Plans				RSUs2009 Plan				Restricted SharesNon-Plan
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Price		Shares	Weighted AveragePrice
Outstanding at December 31, 2011	89,291		$	10.28	487,726		$	9.46	—	$	—
Granted	—		—		453,206		3.76		192,307	2.60
Exercised / Vested	—		—		(401,562	)	8.47		—	—
Cancelled / Forfeited	(19,325	)	9.50		(18,873	)	9.42		—	—
Outstanding at September 29, 2012	69,966		10.49		520,497		5.26		192,307	2.60

On July 2, 2012, 82,671 RSUs issued in connection with our tender offer vested. On July 16, 2012, Rocco Romanella joined the Company as Chief Executive Officer and was granted 192,307 restricted shares of the common stock of the Company, which are subject to service-based vesting in four equal annual installments on the dates that are 6, 12, 18 and 24 months following the grant date. In September 2012, the Company’s Chief Administrative Officer left the Company and entered into an agreement which entitled her to the immediate vesting of her 56,543 outstanding RSUs.

During the three months ended September 29, 2012 and October 1, 2011, the Company recorded stock-based compensation expense of $1.0 million and $0.8 million, respectively. During the nine months ended September 29, 2012 and October 1, 2011, the Company recorded stock-based compensation expense of $4.0 million and $4.4 million, respectively. The stock-based compensation expense for the three and nine months ended September 29, 2012 included $0.3 million for the acceleration of RSU vesting related to the separation of the Chief Administrative Officer, and the stock-based compensation for the nine months ended September 29, 2012 included $1.4 million for the acceleration of RSU vesting related to the separation of the Chief Executive Officer and Executive Chairman. As of September 29, 2012, there was $4.2 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 2.0 years.

27

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

13.          Related-Party Transactions

The Company maintains certain policies and procedures for the review, approval and ratification of related-party transactions to ensure that all transactions with selected parties are fair, reasonable and in the Company’s best interest. All significant relationships and transactions are separately identified by management if they meet the definition of a related party or a related-party transaction. Related-party transactions include transactions that occurred during the year, or are currently proposed, in which the Company was or will be a participant and in which any related person had or will have a direct or indirect material interest. All related-party transactions are reviewed, approved and documented by the appropriate level of the Company’s management in accordance with these policies and procedures.

Monitoring and Oversight Agreement

On January 27, 2010, the Company entered into an Amended and Restated Monitoring and Oversight Agreement (the “M&O Agreement”) with HM Capital Partners LP (“HM LP”).

In connection with the closing of the equity offering completed in November 2010 (the “Equity Offering”), the parties to the M&O Agreement agreed to terminate the M&O Agreement and the Company has agreed to pay a termination fee of $4.3 million (payable in cash or stock, as described below) that would only become payable only upon certain conditions being met as outlined below.

·The Sector Performance Fund, which is an affiliate of HM LP, sells its entire ownership stake in the Company, and

·The average price per share of common stock realized by the Sector Performance Fund is above its basis, which was calculated as of the closing of the Equity Offering and includes the conversion of the Series B Preferred and all other shares owned by Sector Performance Fund prior to the Equity Offering. Subsequent to the Equity Offering and as of September 29, 2012, the Sector Performance Fund’s basis in its stock was significantly above the quoted market price of the Company’s common stock.

If the two conditions above are met and the termination payment becomes payable, the Company will be entitled to satisfy this obligation in either cash or shares of its common stock, at its sole discretion. If payment is made in shares of common stock, the stock price would be calculated using the 20-day trailing average share price as of the date that the two conditions above are met and the termination payment becomes payable.

The termination fee resulting from the termination of the M&O Agreement represents a loss contingency. As of September 29, 2012, the Company believes it does not yet meet the requirements to be recorded as a liability since the Company’s quoted stock price is currently trading well below the Sector Performance Fund basis and a sale of their stock would not meet the conditions precedent required to trigger payment of the termination fee. The Company will continue to evaluate this loss contingency on an ongoing basis and as of each reporting period in order to determine the probability of the triggering conditions being met.

28

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

14.          Income Taxes

For the three months ended September 29, 2012, the Company’s income tax expense was $0.3 million, which consisted primarily of a deferred tax expense of $0.2 million related to tax deductible goodwill and deferred tax expense of $0.1 million related to the Company’s Canadian operations. During the three months ended October 1, 2011, the Company’s income tax expense was $0.4 million and consisted primarily of a current tax expense of $0.3 million related to state income taxes and unrecognized tax benefits and a deferred tax expense of $0.1 million related to the Company’s Canadian operations.

For the nine months ended September 29, 2012, the Company’s income tax expense was $0.3 million, which consisted primarily of a deferred tax expense of $0.3 million related to tax deductible goodwill. For the nine months ended October 1, 2011, the Company’s income tax expense was $0.2 million, which consisted primarily of a current tax expense of $0.2 million related to state income taxes and unrecognized tax benefits.

Because the Company has not yet achieved profitable operations outside of Canada, management believes the potential tax benefits from other deferred tax assets do not satisfy the criteria for recognition and accordingly has recorded a valuation allowance for substantially its entire gross deferred tax asset. Additionally, for tax purposes, certain goodwill is being amortized. In periods when the book basis of tax deductible goodwill exceeds its respective tax basis, a net deferred tax liability is recorded in the consolidated financial statements, since the basis difference is not expected to reverse within the periods that the Company’s deferred tax assets will be recognized.

15.          Discontinued Operations

During the three months ended September 29, 2012, management of the Company committed to a plan to sell the net assets of the wireline group. The Company will continue to operate this business until completion of the sale, which is expected to occur during the fourth quarter of 2012. As of September 29, 2012, the wireline group consisted of $14.4 million of accounts receivable and unbilled receivables, $0.3 million of inventories, $0.9 million of prepaid expenses and other current assets, $3.1 million of property and equipment, $6.0 million of accounts payable and accrued expenses, and $3.1 million of capital lease obligations. As of September 29, 2012, the assets of the wireline group have been reclassified as assets held for sale, and the liabilities of the wireline group have been reclassified as liabilities held for sale. These assets and liabilities have historically been included in the Company’s Engineering and Construction segment.

The results of operations of the wireline group have been included in discontinued operations in the statements of comprehensive income or loss for the three and nine months ended September 29, 2012 and October 1, 2011. Discontinued operations for the three and nine months ended September 29, 2012 include pre-tax impairment charges of $35.2 million related to the impairments of property and equipment and goodwill in the wireline reporting unit. Additionally, discontinued operations for the three and nine months ended September 29, 2012 include an income tax benefit of $7.1 million and $5.5 million, respectively, which represents the difference between the Company’s total income tax expense originally computed and the amount attributable to continuing operations, and also reflects changes in deferred tax assets and liabilities that were triggered by the impairment charges of the wireline reporting unit.

Discontinued operations for the three and nine months ended September 29, 2012 and October 1, 2011 also include the results of certain cable fulfillment and wireless service locations that were shut down and discontinued due to lack of continuing revenues.

29

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

The following table presents the results of the Company’s discontinued operations:

	Three Months Ended					Nine Months Ended
	September 29, 2012			October 1, 2011		September 29, 2012			October 1, 2011
Revenues	$	10,499		$	19,007	$	39,735		$	57,143
(Loss) income from discontinued operations before income taxes	(37,732		)	955		(40,042		)	2,038
Income tax (benefit) expense from discontinued operations	(7,063		)	882		(5,501		)	2,486
(Loss) income from discontinued operations, net of income taxes	$	(30,669	)	$	73	$	(34,541	)	$	(448	)

30

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

16.          Segment Reporting

Generally accepted accounting principles require the reporting of information about operating segments in the annual financial statements of public business enterprises and require that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. Operating segments are components of an enterprise about which separate financial information is available and regularly evaluated by the chief operating decision makers of an enterprise. The Company reports its financial results on the basis of two reportable segments: (1) Fulfillment and (2) Engineering and Construction.  The Fulfillment segment performs installation and other services for the satellite and broadband cable pay television industry. This reportable segment includes the aggregation of the satellite and broadband cable operating segments of the Company. The Engineering and Construction segment performs engineering and construction services on wireless telecommunications networks. Transactions within and between segments are generally made on a basis to reflect the market value of the services and have been eliminated in consolidation.

During the three months ended September 29, 2012, management of the Company committed to a plan to sell the net assets of the wireline group. As a result, its results of operations have been excluded from the reported results of the Engineering and Construction segment, and segment information for periods prior to September 29, 2012 has been restated to reflect the discontinued operation classification.

The Company evaluates the performance of its operating segments based on several factors of which the primary financial measure is segment EBITDA. Management believes segment operating income or loss represents the closest GAAP measure to segment EBITDA.

The following table presents selected segment financial information for the three months ended September 29, 2012 and October 1, 2011:

	Three Months Ended
	September 29, 2012							October 1, 2011
	Fulfillment		Engineering & Construction		Total			Fulfillment		Engineering & Construction			Total
Revenues	$	84,579	$	47,545	$	132,124		$	81,708	$	20,155		$	101,863
Cost of revenues	65,382		39,135		104,517			61,228		17,404			78,632
Gross profit	19,197		8,410		27,607			20,480		2,751			23,231
Selling, general and administrative expenses	6,337		4,253		10,590			7,386		4,263			11,649
Restructuring charges	957		637		1,594			—		—			—
Depreciation and amortization	4,977		1,733		6,710			3,724		1,900			5,624
Operating income (loss)	$	6,926	$	1,787	$	8,713		$	9,370	$	(3,412	)	$	5,958
Interest expense					3,883								3,313
Other income, net					(77		)						(57		)
Income from continuing operations before income taxes					$	4,907							$	2,702

31

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

(Unaudited)

The following table presents selected segment financial information for the nine months ended September 29, 2012 and October 1, 2011:

	Nine Months Ended
	September 29, 2012									October 1, 2011
	Fulfillment			Engineering & Construction			Total			Fulfillment		Engineering & Construction			Total
Revenues	$	224,752		$	102,010		$	326,762		$	213,775	$	48,216		$	261,991
Cost of revenues	178,263			82,674			260,937			164,257		41,957			206,214
Gross profit	46,489			19,336			65,825			49,518		6,259			55,777
Selling, general and administrative expenses	19,511			13,086			32,597			21,813		12,509			34,322
Change in fair value of contingent consideration	(400		)	(324		)	(724		)	—		—			—
Restructuring charges	3,975			2,425			6,400			—		—			—
Depreciation and amortization	14,694			5,105			19,799			13,764		4,348			18,112
Operating income (loss)	$	8,709		$	(956	)	$	7,753		$	13,941	$	(10,598	)	$	3,343
Interest expense							10,496								11,259
Loss on extinguishment of debt							—								3,466
Other income, net							(1,147		)						(163		)
Loss from continuing operations before income taxes							$	(1,596	)						$	(11,219	)

At September 29, 2012, the total assets of the Fulfillment segment were $202.2 million and the total assets of the Engineering and Construction segment were $170.9 million. This compares to $169.5 million and $179.4 million at December 31, 2011 for the Fulfillment segment and the Engineering and Construction segment, respectively. The increase of $32.7 million in the assets of the Fulfillment segment was primarily due to the acquisitions of Skylink, Cableview and Streamline. The decrease of $8.5 million in the assets of the Engineering and Construction segment compared to December 31, 2011 was primarily due the impairments of property and equipment and goodwill in the wireline reporting unit of $35.2 million, offset by increases in accounts receivable and unbilled revenue due to higher revenues in the wireless business.

32

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information included in this quarterly report of UniTek Global Services, Inc. (“UniTek,” the “Company,” “we,” “our,” or “us”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the attainment of which involves various risks and uncertainties. All statements other than statements of historical fact included in this quarterly report are forward-looking statements. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may,” “will,” “expects,” “believes,” “estimates,” “anticipates,” “planned,” “scheduled,” “continue” or similar terms, variations of those terms or the negative of those terms.

These forward-looking statements are based on assumptions that we have made in light of our experience in the industry in which we operate, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this quarterly report, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial condition or results of operations and cause actual results to differ materially from those in the forward-looking statements. These factors include, among other things:

·our financial condition and strategic direction;

·our future capital requirements and our ability to satisfy our capital needs;

·the potential generation of future revenues and/or earnings and our ability to manage and control costs;

·changes in our ability to adequately staff our service offerings;

·opportunities for us from new and emerging technologies in our industries;

·changes in our ability to obtain additional financing and the potential for restrictive covenants within our credit agreements;

·our growth strategy and our ability to consummate acquisitions and integrate them into our existing operations;

·trends in the satellite television, broadband cable and telecommunications industries;

·key drivers of change in our business, as identified in this quarterly report;

·our competitive position and the competitive landscape;

·shortages in fuel supply or increases in fuel prices that could increase operating expense; and

·other statements that contain words like “may,” “will,” “expects,” “believes,” “estimates,” “anticipates,” “planned,” “scheduled,” “continue” and similar expressions that are also used to identify forward-looking statements.

It is important to note that all of our forward-looking statements are subject to a number of risks, assumptions and uncertainties, such as risks:

·related to a concentration in revenues from a small number of customers and competition;

·associated with the consolidation of our customers;

·associated with competition in the satellite television, broadband cable and telecommunications industries;

·related to the current transition within our executive leadership team;

·that we will not be able to generate positive cash flow; and

·that we may not be able to obtain additional financing.

This list is only an example of the risks that may affect the forward-looking statements. If any of these risks or uncertainties materialize or fail to materialize, or if the underlying assumptions are incorrect, then actual results may differ materially from those projected in the forward-looking statements.

Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, without limitation, those discussed elsewhere in this quarterly report. It is important not to place undue reliance on these forward-looking statements, which reflect our analysis, judgment, belief or expectation only as of the date of this quarterly report. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this quarterly report.

Critical Accounting Policies and Estimates

There have been no changes to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.

33

Summary of Financial Condition and Results of Operations

Overview

The following sections present consolidated selected financial information. The balance sheet data as of September 29, 2012 and December 31, 2011 and the results of operations data for the three and nine months ended September 29, 2012 and October 1, 2011 have been derived from our unaudited condensed consolidated financial statements that, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary to state fairly the data for such period. We operate in two reportable segments: (1) Fulfillment and (2) Engineering and Construction.

Recent Developments

During the three months ended September 29, 2012, we committed to a plan to sell the net assets of our wireline business unit (“wireline group”), which we expect will be completed during the fourth quarter of 2012. As a result of our plan to sell the wireline group, its results of operations have been excluded from the reported results of our Engineering and Construction segment. As of September 29, 2012, the assets of the wireline group have been reclassified as assets held for sale, and the liabilities of the wireline group have been reclassified as liabilities held for sale.

The results of operations of the wireline group have been included in discontinued operations in our statements of comprehensive income or loss for the three and nine months ended September 29, 2012 and October 1, 2011. Discontinued operations for the three and nine months ended September 29, 2012 include pre-tax impairment charges of $35.2 million related to the impairment of property and equipment and goodwill in our wireline reporting unit. Additionally, discontinued operations for the three and nine months ended September 29, 2012 include an income tax benefit of $7.1 million and $5.5 million, respectively, which represents the difference between the Company’s total income tax expense originally computed and the amount attributable to continuing operations, and also reflects changes in deferred tax assets and liabilities that were triggered by the impairment charges of the wireline reporting unit.

Discontinued operations for the three and nine months ended September 29, 2012 and October 1, 2011 also include the results of certain cable fulfillment and wireless service locations that were shut down and discontinued due to lack of continuing revenues.

On September 14, 2012, we completed the acquisition of Skylink LTD (“Skylink”). The operating results of Skylink are included in our consolidated results as a component of the Fulfillment segment beginning September 14, 2012.

During 2012 and 2011, the Company acquired substantially all of the assets and assumed certain liabilities of the following cable fulfillment companies (the “Cable Acquisitions”):

·Cableview Communications, Inc., which we acquired on March 2, 2012;

·Streamline Communications, Inc., which we acquired on January 3, 2012;

·Oasis Communications, LLC DA d/b/a Wyretech, which we acquired on October 6, 2011; and

·DA Technologies, Inc., which we acquired on February 28, 2011.

The operating results of the Cable Acquisitions are included in our consolidated results as a component of the Fulfillment segment beginning on their respective dates of acquisition.

Effective April 3, 2011, we completed the acquisition of Pinnacle pursuant to an asset purchase agreement, dated as of March 30, 2011, as amended on March 28, 2012. The operating results of Pinnacle are included in our consolidated results as a component of the Engineering and Construction segment beginning April 3, 2011.

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Non-GAAP Financial Measurements

Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) is a key indicator used by our management to evaluate operating performance of our continuing operations and to make decisions regarding compensation and other operational matters. While this Adjusted EBITDA is not intended to replace any presentation included in our consolidated financial statements under generally accepted accounting principles, or GAAP, and should not be considered an alternative to operating performance, we believe this measure is useful to investors in assessing our performance with other companies in our industry. This calculation may differ in method of calculation from similarly titled measures used by other companies. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as supplemental information. Adjusted EBITDA is our EBITDA adjusting for discontinued operations, transaction costs, certain restructuring costs and other non-cash charges.

Net income or loss after certain non-cash adjustments is a key indicator used by our management to evaluate operating performance of our continuing operations. While net income or loss after certain non-cash adjustments is not intended to replace any presentation included in our consolidated financial statements under GAAP, and should not be considered an alternative to operating performance, we believe this measure is useful to investors in assessing our performance in comparison with other companies in our industry. Specifically, (i) non-cash portion of discontinued operations may vary due to infrequent or unusual non-cash items such as impairment charges and losses on disposal of assets, (ii) non-cash compensation expense may vary due to factors influencing the estimated fair value of performance-based rewards, estimated forfeiture rates and amounts granted, (iii) non-cash interest expense varies depending on the timing of amendments to our debt and changes to our debt structure and (iv) amortization of intangible assets is impacted by the Company’s acquisition strategy and timing of acquisitions.

35

Financial Condition

The following table presents a summary of our financial condition.

(in thousands)	September 29, 2012 (unaudited)		December 31, 2011
Current assets	$	155,597	$	105,980
Total assets	373,119		348,880
Current liabilities	114,747		104,975
Long-term debt and capital lease obligations, net of current portion	172,479		127,500
Stockholders’ equity	83,762		109,230

Current Assets

Current assets increased $49.6 million, or 46.8%, to $155.6 million at September 29, 2012 compared to $106.0 million at December 31, 2011. The increase in current assets was primarily due to incremental working capital requirements of our wireless business due to revenue growth from a significant wireless project in the northeastern region of the United States. In addition, current assets increased as a result of business acquisitions in our Fulfillment segment.

Total Assets

Total assets increased $24.2 million, or 6.9%, to $373.1 million at September 29, 2012 compared to $348.9 million at December 31, 2011. The increase in total assets was primarily due to the increase in current assets and business acquisitions, partially offset by impairment charges of $35.2 million related to the impairments of property and equipment and goodwill in our wireline reporting unit.

Current Liabilities

Current liabilities increased $9.8 million, or 9.3%, to $114.7 million at September 29, 2012 compared to $105.0 million at December 31, 2011. The increase in current liabilities was primarily due to incremental working capital requirements of our wireless business due to revenue growth, partially offset by the payment of $17.6 million of contingent consideration related to the acquisition of Pinnacle.

Long-term Debt and Capital Lease Obligations, Net of Current Portion

Long-term debt and capital lease obligations, net of current portion, increased $45.0 million, or 35.3%, to $172.5 million at September 29, 2012 compared to $127.5 million at December 31, 2011. The increase was primarily due to $19.5 million of net proceeds from our Revolving Loan and $32.9 million of net proceeds from our Term Loan, which were used primarily to fund business acquisitions and the incremental working capital requirements of our wireless business due to revenue growth. In addition, we repaid $7.7 of capital lease obligations during the nine months ended September 29, 2012.

Stockholders’ Equity

Stockholders’ equity decreased $25.5 million, or 23.3%, to $83.8 million at September 29, 2012 compared to $109.2 million at December 31, 2011. The decrease in stockholders’ equity was primarily due to net loss of $36.5 million for the nine months ended September 29, 2012, partially offset by additional paid-in capital of $7.1 million from issuing common shares for the acquisition of Pinnacle and $4.0 million of stock-based compensation.

36

Results of Operations – Three Months Ended September 29, 2012 Compared to Three Months Ended October 1, 2011

The following table presents a summary of our results of operations.

	Three Months Ended
	September 29, 2012			October 1, 2011
(in thousands, except per share data)	(unaudited)			(unaudited)
Revenues	$	132,124		$	101,863
Cost of revenues	104,517			78,632
Gross profit	27,607			23,231
Selling, general and administrative expenses	10,590			11,649
Restructuring charges	1,594			—
Depreciation and amortization	6,710			5,624
Operating income	8,713			5,958
Interest expense	3,883			3,313
Other income, net	(77		)	(57		)
Income from continuing operations before income taxes	4,907			2,702
Income tax expense	293			354
Income from continuing operations	4,614			2,348
(Loss) income from discontinued operations, net of income taxes	(30,669		)	73
Net (loss) income	$	(26,055	)	$	2,421
Net (loss) income per share – basic and diluted
Continuing operations	$	0.25		$	0.14
Discontinued operations	$	(1.64	)	$	0.01
Weighted average shares of common stock outstanding – basic and diluted	18,732			16,350
Adjusted EBITDA	$	18,126		$	12,524

Revenues

The following table presents information regarding our revenues by segment for the three months ended September 29, 2012 and October 1, 2011.

	Three Months Ended (unaudited)
	September 29, 2012			October 1, 2011
(Amounts in thousands)	Amount		% of Revenues	Amount		% of Revenues	Change
Fulfillment	$	84,579	64.0%	$	81,708	80.2%	$	2,871
Engineering and Construction	47,545		36.0%	20,155		19.8%	27,390
Total	$	132,124	100.0%	$	101,863	100.0%	$	30,261

We had revenue of $132.1 million for the three months ended September 29, 2012, compared to $101.9 million for the three months ended October 1, 2011. This represents an increase of approximately $30.3 million, or 29.7%.

Revenue for the Fulfillment segment increased by $2.9 million, or 3.5%, from $81.7 million for the three months ended October 1, 2011 to $84.6 million for the three months ended September 29, 2012. The increase in revenues from our Fulfillment segment was primarily attributable to growth in our cable operations, growth in satellite internet installations and the acquisition of Skylink, partially offset by lower volumes in our legacy satellite installation markets.

Revenue for the Engineering and Construction segment was $47.5 million for the three months ended September 29, 2012 and $20.2 million for the three months ended October 1, 2011. This 135.9% increase in revenues in our Engineering and Construction segment was primarily attributable to revenue growth from a significant wireless project in the northeastern region of the United States and various other wireless project ramp-ups.

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Gross Profit

The following table sets forth information regarding our gross profit by segment for the three months ended September 29, 2012 and October 1, 2011.

	Three Months Ended (unaudited)
	September 29, 2012			October 1, 2011
(Amounts in thousands)	Amount		% of Revenues	Amount		% of Revenues	Change
Fulfillment	$	19,197	22.7%	$	20,480	25.1%	$	(1,283	)
Engineering and Construction	8,410		17.7%	2,751		13.6%	5,659
Total	$	27,607	20.9%	$	23,231	22.8%	$	4,376

Our gross profit for the three months ended September 29, 2012 was $27.6 million compared to $23.2 million for the three months ended October 1, 2011, representing an increase of $4.4 million or 18.8%. Our gross profit as a percentage of revenue was approximately 20.9% for the three months ended September 29, 2012, as compared to 22.8% for the three months ended October 1, 2011.

For the Fulfillment segment, gross margin decreased from 25.1% for the three months ended October 1, 2011 to 22.7% for the three months ended September 29, 2012. The decrease in gross margin was attributable to mix of revenue changes between our broadband cable operations and our satellite operations, which is consistent with previous quarters in 2012.

For the Engineering and Construction segment, gross margin increased from 13.6% for the three months ended October 1, 2011 to 17.7% for the three months ended September 29, 2012. The increase in gross margin was attributable to volume leverage and improvements in wireless project mix in 2012.

Selling, General and Administrative Expenses

Selling, general and administrative expense (“SG&A”) for the three months ended September 29, 2012 was $10.6 million as compared to $11.6 million for the three months ended October 1, 2011, representing an overall decrease of $1.0 million. The primary drivers of the decrease in SG&A were decreases in salary and personnel costs, driven in part by lower corporate personnel costs, and lower legal and professional costs.

38

Adjusted EBITDA and Net Income after Certain Non-cash Adjustments

The following table presents the reconciliation of net (loss) income to net income after certain non-cash adjustments and Adjusted EBITDA:

	Three Months Ended (unaudited)
(Amounts in thousands)	September 29, 2012			October 1, 2011
Net (loss) income	$	(26,055	)	$	2,421
Impairment charges from discontinued operations	35,180			—
Non-cash stock-based compensation	1,003			788
Non-cash interest expense	479			340
Non-cash amortization	2,703			2,414
Net income after certain non-cash adjustments	$	13,310		$	5,963
Other discontinued operations, net of tax	(4,511		)	(73		)
Income tax expense	293			354
Restructuring charges	1,594			—
Change in fair value	—			—
Cash interest expense	3,404			2,973
Other income	(77		)	(57		)
Depreciation	4,007			3,210
Transaction costs	106			154
Adjusted EBITDA	$	18,126		$	12,524

Adjusted EBITDA increased by 44.7% to $18.1 million for the three months ended September 29, 2012 from $12.5 million for the three months ended October 1, 2011. The year-over-year increase in Adjusted EBITDA was primarily related to higher gross profit and lower SG&A, partially offset by mix of work and infrastructure investments for wireless growth.

39

Restructuring Charges

We recognized $1.6 million of restructuring charges during the three months ended September 29, 2012 related to the change in management structure, including the elimination of our Chief Administrative Officer position. We recognized no restructuring charges during the three months ended October 1, 2011.

Depreciation and Amortization

Depreciation of fixed assets totaled approximately $4.0 million for the three months ended September 29, 2012 compared to $3.2 million for the three months ended October 1, 2011. The increase in depreciation was primarily attributable to the addition of vehicles in the fourth quarter of 2011 related to our cable business growth.

Amortization of intangible assets totaled approximately $2.7 million for the three months ended September 29, 2012 compared to $2.4 million for the three months ended October 1, 2011. Our intangible asset base increased in 2012 as a result of new acquisitions, resulting in an increase in amortization expense.

Interest Expense

We recognized $3.9 million and $3.3 million of interest expense during the three months ended September 29, 2012 and October 1, 2011, respectively. Interest expense increased due to the incremental draws on our Term Loan in May and September 2012 and additional borrowings on our Revolving Loan to support higher working capital amounts resulting from our revenue growth.

Income Taxes

For the three months ended September 29, 2012, we recognized income tax expense of $0.3 million, which consisted primarily of a deferred tax expense of $0.3 million related to tax deductible goodwill. During the three months ended October 1, 2011, we recognized income tax expense of $0.4 million which consisted primarily of a current tax expense of $0.2 million related to state income taxes and unrecognized tax benefits, a deferred tax benefit of $0.1 million related to our Canadian operations and a deferred tax expense of $0.3 million related to tax deductible goodwill.

Income or Loss from Discontinued Operations

We incurred a loss from discontinued operations of $30.7 million for the three months ended September 29, 2012 compared to income from discontinued operations of $0.1 million for the three months ended October 1, 2011. Discontinued operations for the three months ended September 29, 2012 include pre-tax impairment charges of $35.2 million related to the impairments of property and equipment and goodwill in our wireline reporting unit. Additionally, discontinued operations for the three months ended September 29, 2012 include an income tax benefit of $7.1 million which represents the difference between the Company’s total income tax expense originally computed and the amount attributable to continuing operations, and also reflects changes in deferred tax assets and liabilities that were triggered by the impairment charges of the wireline reporting unit.

Net Income or Loss

We had net loss of $26.1 million for the three months ended September 29, 2012, compared to net income of $2.4 million for the three months ended October 1, 2011. The unfavorable change in net income was primarily due to the unfavorable change in discontinued operations of $30.8 million offset by higher operating income of $2.8 million.

40

Results of Operations – Nine Months Ended September 29, 2012 Compared to Nine Months Ended October 1, 2011

The following table presents a summary of our results of operations.

	Nine Months Ended
	September 29, 2012			October 1, 2011
(in thousands, except per share data)	(unaudited)			(unaudited)
Revenues	$	326,762		$	261,991
Cost of revenues	260,937			206,214
Gross profit	65,825			55,777
Selling, general and administrative expenses	32,597			34,322
Change in fair value of contingent consideration	(724		)	—
Restructuring charges	6,400			—
Depreciation and amortization	19,799			18,112
Operating income	7,753			3,343
Interest expense	10,496			11,259
Loss on extinguishment of debt	—			3,466
Other (income) expense, net	(1,147		)	(163		)
Loss from continuing operations before income taxes	(1,596		)	(11,219		)
Income tax expense	315			150
Loss from continuing operations	(1,911		)	(11,369		)
(Loss) income from discontinued operations, net of income taxes	(34,541		)	(448		)
Net loss	$	(36,452	)	$	(11,817	)
Net loss per share – basic and diluted
Continuing operations	$	(0.11	)	$	(0.72	)
Discontinued operations	$	(1.92	)	$	(0.03	)
Weighted average shares of common stock outstanding – basic and diluted	17,969			15,839
Adjusted EBITDA	$	37,507		$	26,401

Revenues

The following table presents information regarding our revenues by segment for the nine months ended September 29, 2012 and October 1, 2011.

	Nine Months Ended (unaudited)
	September 29, 2012			October 1, 2011
(Amounts in thousands)	Amount		% of Revenues	Amount		% of Revenues	Change
Fulfillment	$	224,752	68.8%	$	213,775	81.6%	$	10,977
Engineering and Construction	102,010		31.2%	48,216		18.4%	53,794
Total	$	326,762	100.0%	$	261,991	100.0%	$	64,771

We had revenue of $326.8 million for the nine months ended September 29, 2012, compared to $262.0 million for the nine months ended October 1, 2011. This represents an increase of $64.8 million, or 24.7%.

Revenue for the Fulfillment segment increased by $11.0 million, or 5.1%, from $213.8 million for the nine months ended October 1, 2011 to $224.8 million for the nine months ended September 29, 2012. The increase in revenues from our Fulfillment segment was primarily attributable to growth in our cable operations and growth in satellite internet installations, partially offset by lower volumes in our legacy satellite installation markets.

Revenue for the Engineering and Construction segment was $102.0 million for the nine months ended September 29, 2012 and $48.2 million for the nine months ended October 1, 2011. The growth in revenue was primarily attributable to revenue growth from a significant wireless project in the northeastern region of the United States, the impact of new public safety network construction projects and various other wireless project ramp-ups.

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Gross Profit

The following table sets forth information regarding our gross profit by segment for the nine months ended September 29, 2012 and October 1, 2011.

	Nine Months Ended (unaudited)
	September 29, 2012			October 1, 2011
(Amounts in thousands)	Amount		% of Revenues	Amount		% of Revenues	Change
Fulfillment	$	46,489	20.7%	$	49,518	23.2%	$	(3,029	)
Engineering and Construction	19,336		19.0%	6,259		13.0%	13,077
Total	$	65,825	20.1%	$	55,777	21.3%	$	10,048

Our gross profit for the nine months ended September 29, 2012 was $65.8 million compared to $55.8 million for the nine months ended October 1, 2011, representing an increase of $10.0 million or 18.0%. Our gross profit as a percentage of revenue was approximately 20.1% for the nine months ended September 29, 2012, as compared to 21.3% for the nine months ended October 1, 2011.

For the Fulfillment segment, gross margin decreased from 23.2% for the nine months October 1, 2011 to 20.7% for the nine months ended September 29, 2012. The decrease in gross margin was attributable to mix of revenue changes between our broadband cable operations and our satellite operations.

For the Engineering and Construction segment, gross margin increased from 13.0% for the nine months ended October 1, 2011 to 19.0% for the nine months ended September 29, 2012. The increase in gross margin was attributable volume leverage and to improvements in wireless project mix in 2012.

Selling, General and Administrative Expenses

SG&A for the nine months ended September 29, 2012 was $32.6 million as compared to $34.3 million for the nine months ended October 1, 2011, representing an overall decrease of $1.7 million. Salary and personnel costs decreased $1.4 million driven by lower corporate personnel cost, including the vacancy of our Chief Executive Officer position which was filled in July 2012. Stock-based compensation expense decreased $0.4 million due to the impact of the tender offer in January 2011, partially offset by the accelerated vesting of RSUs in 2012.

42

Adjusted EBITDA and Net Income after Certain Non-cash Adjustments

The following table presents the reconciliation of net loss to net income after certain non-cash adjustments and Adjusted EBITDA:

	Nine Months Ended (unaudited)
(Amounts in thousands)	September 29, 2012			October 1, 2011
Net loss	$	(36,452	)	$	(11,817	)
Impairment charges from discontinued operations	35,180			—
Non-cash stock-based compensation	4,050			4,376
Loss on extinguishment of debt	—			3,466
Non-cash interest expense	1,142			1,625
Non-cash amortization	7,819			8,544
Net income after certain non-cash adjustments	$	11,739		$	6,194
Other discontinued operations, net of tax	(639		)	448
Income tax expense	315			150
Restructuring charges	6,400			—
Change in fair value	(724		)	—
Cash interest expense	9,354			9,634
Other income	(1,147		)	(163		)
Depreciation	11,980			9,568
Transaction costs	229			570
Adjusted EBITDA	$	37,507		$	26,401

Adjusted EBITDA increased by 42.1% to $37.5 million for the nine months ended September 29, 2012 from $26.4 million for the nine months ended October 1, 2011. The year-over-year increase in Adjusted EBITDA was primarily related to higher gross profit and lower SG&A, partially offset by mix of work and infrastructure investments for wireless growth.

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Restructuring Charges

We recognized $6.4 million of restructuring charges during the nine months ended September 29, 2012 related to the change in management structure, including the separation of our Chief Executive Officer and the elimination of our Executive Chairman and our Chief Administrative Officer positions. We recognized no restructuring charges during the nine months ended October 1, 2011.

Depreciation and Amortization

Depreciation of fixed assets totaled approximately $12.0 million for the nine months ended September 29, 2012 compared to $9.6 million for the nine months ended October 1, 2011.  The increase in depreciation was primarily attributable to the addition of vehicles in the fourth quarter of 2011 related to our cable business growth.

Amortization of intangible assets totaled approximately $7.8 million for the nine months ended September 29, 2012 compared to $8.5 million for the nine months ended October 1, 2011. A portion of our customer related intangible assets arising from acquisitions completed in prior years reached the end of their estimated useful lives resulting in a decrease in amortization expense, which was partially offset by an increase in our intangible asset base in 2012 as a result of new acquisitions.

Interest Expense

We recognized $10.5 million and $11.3 million of interest expense during the nine months ended September 29, 2012 and October 1, 2011, respectively. The decrease of approximately $0.8 million was primarily attributable to lower overall effective interest expense resulting from the debt refinancing on April 15, 2011, partially offset by additional expense associated with the incremental draws on our Term Loan and additional borrowings on our Revolving Loan.

Income Taxes

For the nine months ended September 29, 2012, we recognized income tax expense of $0.3 million, which consisted primarily of a deferred tax benefit of $0.5 million related to our Canadian operations and a deferred tax expense of $0.8 million related to tax deductible goodwill. For the nine months ended October 1, 2011, we recognized income tax expense of $0.2 million, which consisted primarily of a current tax expense of $0.2 million related to state income taxes and unrecognized tax benefits, a deferred tax benefit of $0.3 million related to our Canadian operations and a deferred tax expense of $0.3 million related to tax deductible goodwill.

Income or Loss from Discontinued Operations

We incurred a loss from discontinued operations of $34.5 million for the nine months ended September 29, 2012 compared to a loss from discontinued operations of $0.4 million for the nine months ended October 1, 2011. Discontinued operations for the nine months ended September 29, 2012 include pre-tax impairment charges of $35.2 million related to the impairments of property and equipment and goodwill in our wireline reporting unit. Additionally, discontinued operations for the nine months ended September 29, 2012 include an income tax benefit of $5.5 million which represents the difference between the Company’s total income tax expense originally computed and the amount attributable to continuing operations, and also reflects changes in deferred tax assets and liabilities that were triggered by the impairment charges of the wireline reporting unit.

Net Income or Loss

We had net loss of $36.5 million for the nine months ended September 29, 2012, compared to net loss of $11.8 million for the nine months ended October 1, 2011. The decrease in net loss was primarily due to the unfavorable change in discontinued operations of $34.1 million offset by higher operating income of $4.4 million, a prior year loss on extinguishment of debt of $3.5 million, higher other income of $1.0 million and lower interest expense of $0.8 million.

44

Liquidity and Capital Resources

At September 29, 2012, we had consolidated current assets of approximately $155.6 million. We had a total cash balance and current availability under the Revolving Loan Agreement of $4.0 million based on the September 29, 2012 borrowing base levels. We had an additional availability under the Revolving Loan Agreement of $13.4 million for incremental eligible accounts receivable above the September 29, 2012 amount. Our cash management process applies daily cash received from customers directly to the outstanding balance under the revolving credit facility.

Historically, we have funded our operations primarily through operating cash flows and borrowings under loan arrangements. Our primary liquidity needs are for working capital, debt service, insurance collateral in the form of cash and letters of credit, capital expenditures, and funding our growth through strategic mergers and acquisitions. During the nine months ended September 29, 2012, we funded the initial cash payment for the acquisition of Skylink, the cash portion of an earn-out payment for the Pinnacle acquisition and scheduled payments for the Cableview acquisition. These payments were funded by incremental draws under the Term Loan Agreement, as discussed in additional detail below, with the remainder funded by operations. Aside from this, the principal uses of cash during the three and nine months ended September 29, 2012 were for working capital purposes.

We need working capital primarily to support the expected growth in our business, particularly in our Engineering and Construction segment as a result of wireless growth. We are also subject to seasonal variations in our business, which occur primarily due to the impact of weather on our Engineering and Construction work, as well as seasonal fluctuations within our Fulfillment segment. Our business is typically slower during the first quarter and second half of the fourth quarter of each calendar year. As a result, we generally experience seasonal working capital needs from approximately July through November of each calendar year in order to support growth in accounts receivable and unbilled revenue. Our billing terms are generally 30 days, and in addition, we also maintain inventory to meet the material requirements of certain of our contracts. Our vendors typically offer us terms ranging from 30 to 90 days, while our agreements with subcontractors are generally 14 to 21 days, with some terms as long as 35 to 45 days.

On May 3, 2012, we exercised our right to increase our borrowings by $20.0 million under the accordion feature of the Term Loan Agreement (the “First Incremental Term Draw”). The First Incremental Term Draw was subject to a four percent (4.00%) debt discount which is being amortized over the remaining life of the loan. The interest rate, maturity date and terms of the Term Loan Agreement did not change. The funds were used for the scheduled payments of $1.9 million for the Cableview acquisition and for the $4.3 million of incremental cash required by the March 28, 2012 amendment to the asset purchase agreement for Pinnacle. The remaining funds after payment of fees were used to reduce the outstanding balance under the Revolving Loan Agreement, creating approximately $12.6 million of incremental liquidity for working capital and other cash obligations.

On September 13 and 14, 2012, the Company entered into a series of arrangements in order to obtain financing for the acquisition of Skylink, which included exercising our right to increase our borrowings by $15.0 million under the accordion feature of the Term Loan Agreement (the “Second Incremental Term Draw”). The Second Incremental Term Draw was subject to a three percent (3.00%) debt discount which is being amortized over the remaining life of the loan. The funds were used primarily to fund the $14.0 million cash payment due at closing for the Skylink acquisition.

We believe that our cash, cash equivalents and availability under our credit facilities will be sufficient to meet our anticipated cash requirements within our existing businesses for at least the next 12 months. If we make additional acquisitions or our growth in revenues exceeds our current projections, we may need to seek additional sources of liquidity. If our available cash and cash equivalents are insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or debt securities or obtain an additional credit facility. The sale of additional equity and debt securities may result in additional dilution to our stockholders. If we raise additional funds through the issuance of debt securities or preferred stock, these securities could have rights senior to those of our common stock and could contain covenants that would restrict our operations. We may require additional capital beyond our currently forecasted amounts. Any such required additional capital may not be available on reasonable terms, if at all. If we are unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned development and operations, which could harm our business.

45

Capital Leases and Other Contractual Obligations

We rent office space, equipment and trucks under non-cancelable operating and capital leases, certain of which contain purchase option terms. Operating lease payments are expensed as incurred. Leases meeting certain criteria are capitalized, with the related asset being recorded in property and equipment and an offsetting amount recorded as a liability. These capital leases are non-cash transactions and, accordingly, have been excluded from the consolidated statements of cash flows. As of September 29, 2012 and December 31, 2011, the total cost of the assets under capital leases was approximately $33.5 million and $38.8 million, respectively, the related accumulated depreciation was approximately $16.4 million and $13.7 million, respectively, and the total capital lease liability related to these assets was $18.0 million and $25.9 million, respectively.

Summary of Cash Flows

The following table summarizes our cash flows for the nine months ended September 29, 2012 and October 1, 2011:

	Nine Months Ended (unaudited)
(Amounts in thousands)	September 29, 2012			October 1, 2011
Net cash (used in) provided by operating activities	$	(5,193	)	$	306
Net cash used in investing activities	(19,543		)	(16,460		)
Net cash provided by (used in) financing activities	25,100			(1,332		)

Cash Flows from Operating Activities

Net cash used in operating activities for the nine months ended September 29, 2012 was approximately $5.2 million, and net cash provided by operations for the nine months ended October 1, 2011 was approximately $0.3 million. During the nine months ended September 29, 2012, cash flows resulting from operating activities were impacted by increases in net working capital of $27.1 million compared to increases in net working capital of $17.3 million during the nine months ended October 1, 2011, a net difference of $9.8 million, which was associated with the higher revenues in our wireless business as well as payment of contingent consideration of $2.4 million, partially offset by increases in operating income.

Cash Flows from Investing Activities

Net cash used in investing activities for the nine months ended September 29, 2012 and October 1, 2011 was approximately $19.5 million and $16.5 million, respectively. The change in net cash used in investing activities was driven by business acquisitions. Cash paid for acquisitions during the nine months ended September 29, 2012 and October 1, 2011 was approximately $16.9 million and $12.6 million, respectively, which reflects the acquisition of Skylink during the third quarter of 2012, two cable acquisitions during the first quarter of 2012, two cable acquisitions during the first and third quarters of 2011 and the acquisition of Pinnacle during the second quarter of 2011. The majority of the remaining change in net cash used in investing activities was the result of increased proceeds from sale of property and equipment, which were $1.7 million and $0.3 million for the nine months ended September 29, 2012 and October 1, 2011, respectively.

Cash Flows from Financing Activities

Net cash provided by financing activities for the nine months ended September 29, 2012 was approximately $25.1 million, and net cash used in financing activities for the nine months ended October 1, 2011 was approximately $1.3 million. During the nine months ended September 29, 2012, we had net proceeds of $32.9 million under our Term Loan and $19.5 million under our Revolving Loan Agreement, offset by payment of contingent consideration of $17.1 million, capital lease repayments of $7.7 million and $1.0 million of financing fees. During the nine months ended October 1, 2011, we had net proceeds of $119.7 million from the refinancing of our long-term debt, offset by $109.4 million to repay the pre-existing debt, $3.9 million of financing fees and capital lease repayments of $6.4 million.

46

Off-Balance Sheet Arrangements

We provide letters of credit to secure our obligations related to our insurance arrangements and bonding requirements. Total letters of credit issued as of September 29, 2012 and December 31, 2011 were $22.9 million and $18.2 million, respectively, which were issued under the Revolving Loan Agreement. We expect that the total letters of credit issued will peak during 2012 as we build a longer loss and claim history under our existing insurance plans.

In the ordinary course of business, we are required by certain customers and state license agencies to provide performance, payment and permit bonds for some of our contractual commitments related to projects in process. These bonds provide a guarantee to the customer that we will perform under the terms of a contract and that we will pay subcontractors and other vendors. As of September 29, 2012 and December 31, 2011, the Company had $64.4 million and $58.9 million, respectively, in bonds outstanding.

Effect of Inflation

We do not believe that our businesses are impacted by inflation to a significantly different extent than the general economy. However, there can be no assurance that inflation will not have a material effect on our operations in the future.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our market risk since our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 4.  Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15(d)-15(e) of the Exchange Act. Based upon that evaluation, such officers have concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this report, to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Security and Exchange Commission’s rules and forms, and that information required to be disclosed by us in the reports we file or submit under the Exchange Act, is accumulated and communicated to our management, including our Principal Executive and Financial Officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

47

PART II: OTHER INFORMATION

Item 1.  Legal Proceedings

We are subject to various litigation claims that occur in the ordinary course of business, which the Company believes, even if decided adversely to us, would not have a material adverse effect on our business, financial condition, results of operations and liquidity.

Item 1A. Risk Factors

There have been no material changes to any of the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

48

Item 6. Exhibits

(a)  Exhibits

2.1	Asset Purchase Agreement, dated as of September 14, 2012, among the Company, DirectSat USA, LLC, Skylink LTD and Mr. John Larbus. (Incorporated herein by reference from Company’s Current Report on Form 8-K filed on September 14, 2012.)*
10.1	Employment Agreement, dated as of July 16, 2012, between the Company and Rocco Romanella. (Incorporated herein by reference from Company’s Current Report on Form 8-K filed on July 16, 2012.)
10.2	Restricted Stock Agreement, dated as of July 16, 2012, between the Company and Rocco Romanella. (Incorporated herein by reference from Company’s Current Report on Form 8-K filed on July 16, 2012.)
10.3	Earnout Confirmation Agreement, dated as of September 14, 2012, among the Company, DirectSat USA, LLC, Skylink LTD and Mr. John Larbus. (Incorporated herein by reference from Company’s Current Report on Form 8-K filed on September 14, 2012.)
10.4	Term Loan Amendment, dated as of September 14, 2012, among the Company, the lending and other financial institutions from time to time party thereto and FBR Capital Markets LT, Inc. (Incorporated herein by reference from Company’s Current Report on Form 8-K filed on September 14, 2012.)
10.5	Revolver Amendment, dated as of September 13, 2012, among the Company, UniTek Acquisition, Inc., NexLink Global Services, Inc., UniTek USA, LLC, Advanced Communications USA, Inc., DirectSat USA, LLC, FTS USA, LLC, the financial institutions party to the Loan Agreement and PNC Bank, National Association. (Incorporated herein by reference from Company’s Current Report on Form 8-K filed on September 14, 2012.)
**31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
**31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
***32.1	Certification of our Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
***101.INS	XBRL Instance Document
***101.SCH	XBRL Taxonomy Extension Schema
***101.CAL	XBRL Taxonomy Extension Calculation Linkbase
***101.LAB	XBRL Taxonomy Extension Label Linkbase
***101.PRE	XBRL Taxonomy Extension Presentation Linkbase
***101.DEF	XBRL Taxonomy Extension Definition Linkbase

* Schedules to the agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K.  The Company undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC.

** Filed herewith.

*** Furnished herewith.

49

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNITEK GLOBAL SERVICES, INC.

Date: November 8, 2012	By:	/s/ Rocco Romanella
		Rocco Romanella
		Chief Executive Officer
		(Principal Executive Officer)
Date: November 8, 2012	By:	/s/ Ronald J. Lejman
		Ronald J. Lejman
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)
Date: November 8, 2012	By:	/s/ Kevin McClelland
		Kevin McClelland
		Corporate Controller
		(Principal Accounting Officer)

50

EX-31.1

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION:

I, Rocco Romanella, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of UniTek Global Services, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2012	By:	/s/ Rocco Romanella
		Rocco Romanella
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION:

I, Ronald J. Lejman, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of UniTek Global Services, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2012	By:	/s/ Ronald J. Lejman
		Ronald J. Lejman
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of UniTek Global Services, Inc., a Delaware corporation (the “Company”), does hereby certify that, to his knowledge:

The Quarterly Report on Form 10-Q for the quarter ended September 29, 2012 (the “Periodic Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2012	By:	/s/ Rocco Romanella
		Rocco Romanella
		Chief Executive Officer
		(Principal Executive Officer)
Date: November 8, 2012	By:	/s/ Ronald J. Lejman
		Ronald J. Lejman
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Periodic Report or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to UniTek Global Services, Inc. and will be retained by UniTek Global Services, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Accounts Receivable and Unbilled Revenue, Net of Allowances (Details) (USD $) In Thousands, unless otherwise specified	Sep. 29, 2012	Dec. 31, 2011
Accounts Receivable and Unbilled Revenue, Net of Allowances
Accounts receivable	$ 73,417	$ 60,864
Unbilled revenue	46,014	34,280
Receivables, Gross, Current, Total	119,431	95,144
Allowance for doubtful accounts	(2,967)	(3,611)
Total	$ 116,464	$ 91,533

XML

Income Taxes (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011
Income Taxes
Income tax expense	$ 293,000	$ 354,000	$ 315,000	$ 150,000
Income tax expense/(benefit), current		300,000		200,000
Deferred tax benefit, Canadian operations	100,000	100,000
Deferred tax expense, tax deductible goodwill	$ 200,000		$ 300,000

XML

Fair Value Measurements (Details 3) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 29, 2012
Additional disclosure on discontinued operation
Impairment charge related to goodwill	$ (33,005)
Wireline disposal group
Additional disclosure on discontinued operation
Impairment charge related to goodwill	33,005
Impairment charge related to property and equipment	2,175
Loss due to difference between carrying value and fair value	35,180
Charges for the impairment of property and equipment and goodwill	35,180
Nonrecurring Fair Value Measurements | Wireline disposal group
Assets
Property and equipment - wireline	3,094
Goodwill - wireline	0
Total	3,094
Nonrecurring Fair Value Measurements | Significant Unobservable Inputs (Level 3) | Wireline disposal group
Assets
Property and equipment - wireline	3,094
Goodwill - wireline	0
Total	$ 3,094

XML

Discontinued Operations (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011
Results of the discontinued operations
Revenues	$ 10,499,000	$ 19,007,000	$ 39,735,000	$ 57,143,000
(Loss) income from discontinued operations before income taxes	(37,732,000)	955,000	(40,042,000)	2,038,000
Income tax (benefit) expense from discontinued operations	(7,063,000)	882,000	(5,501,000)	2,486,000
(Loss) income from discontinued operations, net of income taxes	(30,669,000)	73,000	(34,541,000)	(448,000)
Wireline disposal group
Discontinued operations
Accounts receivable and unbilled receivables	14,400,000		14,400,000
Inventories	300,000		300,000
Prepaid expenses and other assets	900,000		900,000
Property and equipment	3,100,000		3,100,000
Accounts payable and accrued expenses	6,000,000		6,000,000
Capital lease obligations	3,100,000		3,100,000
Pre-tax impairment charges related to property and equipment and goodwill	35,180,000		35,180,000
Results of the discontinued operations
Income tax (benefit) expense from discontinued operations	$ (7,063,000)		$ (5,501,000)

XML

Fair Value Measurements (Details) (Recurring Fair Value Measurements, USD $) In Thousands, unless otherwise specified	Sep. 29, 2012	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 445	$ 95
Deferred compensation plan assets	767	551
Total	1,212	646
Liabilities
Contingent consideration	1,947	26,958
Interest rate swap	143	133
Total	2,090	27,091
Quoted Prices in Active Markets (Level 1)
Assets
Cash and cash equivalents	445	95
Deferred compensation plan assets	767	551
Total	1,212	646
Significant Other Observable Inputs (Level 2)
Liabilities
Interest rate swap	143	133
Total	143	133
Significant Unobservable Inputs (Level 3)
Liabilities
Contingent consideration	1,947	26,958
Total	$ 1,947	$ 26,958

XML

Segment Reporting (Tables)

9 Months Ended

Sep. 29, 2012

Segment Reporting

Selected Segment Financial Information

	Three Months Ended
	September 29, 2012							October 1, 2011
	Fulfillment		Engineering & Construction		Total			Fulfillment		Engineering & Construction			Total
Revenues	$	84,579	$	47,545	$	132,124		$	81,708	$	20,155		$	101,863
Cost of revenues	65,382		39,135		104,517			61,228		17,404			78,632
Gross profit	19,197		8,410		27,607			20,480		2,751			23,231
Selling, general and administrative expenses	6,337		4,253		10,590			7,386		4,263			11,649
Restructuring charges	957		637		1,594			—		—			—
Depreciation and amortization	4,977		1,733		6,710			3,724		1,900			5,624
Operating income (loss)	$	6,926	$	1,787	$	8,713		$	9,370	$	(3,412	)	$	5,958
Interest expense					3,883								3,313
Other income, net					(77		)						(57		)
Income from continuing operations before income taxes					$	4,907							$	2,702

	Nine Months Ended
	September 29, 2012									October 1, 2011
	Fulfillment			Engineering & Construction			Total			Fulfillment		Engineering & Construction			Total
Revenues	$	224,752		$	102,010		$	326,762		$	213,775	$	48,216		$	261,991
Cost of revenues	178,263			82,674			260,937			164,257		41,957			206,214
Gross profit	46,489			19,336			65,825			49,518		6,259			55,777
Selling, general and administrative expenses	19,511			13,086			32,597			21,813		12,509			34,322
Change in fair value of contingent consideration	(400		)	(324		)	(724		)	—		—			—
Restructuring charges	3,975			2,425			6,400			—		—			—
Depreciation and amortization	14,694			5,105			19,799			13,764		4,348			18,112
Operating income (loss)	$	8,709		$	(956	)	$	7,753		$	13,941	$	(10,598	)	$	3,343
Interest expense							10,496								11,259
Loss on extinguishment of debt							—								3,466
Other income, net							(1,147		)						(163		)
Loss from continuing operations before income taxes							$	(1,596	)						$	(11,219	)

XML

Segment Reporting (Details 2) (USD $)			3 Months Ended	9 Months Ended			9 Months Ended
	Sep. 29, 2012	Dec. 31, 2011	Sep. 29, 2012 Wireline disposal group	Sep. 29, 2012 Wireline disposal group	Sep. 29, 2012 Fulfillment	Dec. 31, 2011 Fulfillment	Sep. 29, 2012 Engineering and Construction	Dec. 31, 2011 Engineering and Construction
Segment Reporting
Assets	$ 373,119,000	$ 348,880,000			$ 202,200,000	$ 169,500,000	$ 170,900,000	$ 179,400,000
Increase (Decrease) in segment assets				(8,500,000)	32,700,000		(8,500,000)
Impairment of property and equipment and goodwill			$ 35,180,000	$ 35,180,000

XML

Accounts Receivable and Unbilled Revenue, Net of Allowances (Tables)

9 Months Ended

Sep. 29, 2012

Accounts Receivable and Unbilled Revenue, Net of Allowances

Accounts Receivable and Unbilled Revenue Net of Allowances

	September 29,			December 31,
	2012			2011
Accounts receivable	$	73,417		$	60,864
Unbilled revenue	46,014			34,280
	119,431			95,144
Allowance for doubtful accounts	(2,967		)	(3,611		)
Total	$	116,464		$	91,533

XML

Warrants (Details) (USD $)	Sep. 29, 2012
Warrants
Shares	91,742
Price (in dollars per share)	$ 137.75
Unitek employees
Warrants
Shares	11,384
Price (in dollars per share)	$ 140.00
Former owners of UniTek Holdings
Warrants
Shares	77,902
Price (in dollars per share)	$ 140.00
Former owners of acquired cable business
Warrants
Shares	2,456
Price (in dollars per share)	$ 56.00

XML

Goodwill and Other Intangible Assets (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011	Dec. 31, 2011
Changes in the carrying amount of the Company's goodwill by segment
Beginning Balance			$ 163,797,000
Acquisitions			5,703,000
Impairment			(33,005,000)
Other adjustments			30,000
Ending balance	136,525,000		136,525,000
Amortization expense	2,700,000	2,400,000	7,800,000	8,500,000
Components of goodwill assets, net
Accumulated impairments losses	65,400,000		65,400,000		32,400,000
Fulfillment
Changes in the carrying amount of the Company's goodwill by segment
Beginning Balance			105,308,000
Acquisitions			5,703,000
Other adjustments			30,000
Ending balance	111,041,000		111,041,000
Engineering and Construction
Changes in the carrying amount of the Company's goodwill by segment
Beginning Balance			58,489,000
Impairment			(33,005,000)
Ending balance	$ 25,484,000		$ 25,484,000

XML

Business Combinations (Details 2) (USD $)	3 Months Ended		9 Months Ended		0 Months Ended	3 Months Ended	9 Months Ended	0 Months Ended		1 Months Ended	3 Months Ended	9 Months Ended		1 Months Ended		1 Months Ended		1 Months Ended			0 Months Ended			0 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011	Sep. 14, 2012 Skylink	Sep. 29, 2012 Skylink	Sep. 29, 2012 Skylink	Sep. 14, 2012 Skylink Customer relationships	Sep. 14, 2012 Skylink Non-compete agreements	Apr. 30, 2011 Pinnacle	Oct. 01, 2011 Pinnacle	Oct. 01, 2011 Pinnacle	Apr. 03, 2011 Pinnacle	Apr. 30, 2011 Pinnacle Customer relationships	Apr. 03, 2011 Pinnacle Customer relationships	Apr. 30, 2011 Pinnacle Non-compete agreements	Apr. 03, 2011 Pinnacle Non-compete agreements	Apr. 30, 2011 Pinnacle Technology and Trade Names	Apr. 03, 2011 Pinnacle Technology and Trade Names	Mar. 02, 2012 Cableview	Mar. 02, 2012 Cableview Customer relationships	Mar. 02, 2012 Cableview Non-compete agreements	Jan. 03, 2012 Streamline	Jan. 03, 2012 Streamline Customer relationships
Allocation of purchase price to the fair value of assets acquired and liabilities assumed
Cash													$ 451,000
Accounts receivable					1,853,000								4,313,000
Inventories					1,548,000								652,000
Prepaid expenses and other assets													192,000
Property and equipment					1,115,000								2,599,000							501,000			98,000
Amortizable intangible assets					17,790,000								28,686,000							500,000
Goodwill					3,446,000								16,817,000							2,097,000			160,000
Other assets													445,000
Accounts payable and accrued expenses					(1,788,000)								(3,700,000)
Billings in excess of costs													(636,000)
Deferred revenue													(2,462,000)
Capital lease obligations													(377,000)							(204,000)
Total fair value of net assets acquired					23,964,000								46,980,000							2,884,000			458,000
Additional disclosures
Business acquisition, revenues contributed by acquiree	132,124,000	101,863,000	326,762,000	261,991,000		1,300,000	1,300,000				9,900,000	16,200,000
Business acquisition, operating income contributed by acquiree	8,713,000	5,958,000	7,753,000	3,343,000		300,000	300,000				300,000	200,000
Acquisition related costs						100,000	100,000				200,000	600,000
Business acquisition, finite lived intangible asset useful life					6 years 10 months 24 days			7 years	3 years	9 years 8 months 12 days				10 years 6 months		2 years		6 years 6 months			24 months	12 months		24 months
Estimated fair value					$ 17,790,000			$ 17,300,000	$ 490,000				$ 28,686,000		$ 23,530,000		$ 388,000		$ 4,768,000		$ 360,000	$ 130,000		$ 200,000

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Stock Options and Restricted Stock Units (Details 2) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended			0 Months Ended	9 Months Ended	1 Months Ended	9 Months Ended	0 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012 Chief Administrative Officer	Sep. 29, 2012 Chief Administrative Officer	Sep. 29, 2012 Chief Executive Officer and Executive Chairman	Sep. 29, 2012 Stock Options 2009 and 1999 Plans	Jul. 02, 2012 RSUs 2009 Plan	Sep. 29, 2012 RSUs 2009 Plan	Sep. 30, 2012 RSUs 2009 Plan Chief Administrative Officer	Sep. 29, 2012 Restricted Shares Non-Plan	Jul. 16, 2012 Restricted Shares Non-Plan Rocco Romanella	Jul. 02, 2012 Restricted Shares Non-Plan Rocco Romanella Item	Jul. 02, 2012 Restricted Shares Non-Plan Rocco Romanella Awards that vest 6 months post grant date	Jul. 02, 2012 Restricted Shares Non-Plan Rocco Romanella Awards that vest 12 months post grant date	Jul. 02, 2012 Restricted Shares Non-Plan Rocco Romanella Awards that vest 18 months post grant date	Jul. 02, 2012 Restricted Shares Non-Plan Rocco Romanella Awards that vest 24 months post grant date
Shares
Beginning Balance (in shares)								89,291
Cancelled / Forfeited (in shares)								(19,325)
Ending balance (in shares)								69,966
Weighted Average Exercise Price
Beginning Balance (in dollars per share)								$ 10.28
Cancelled / Forfeited (in dollars per share)								$ 9.50
Ending balance (in dollars per share)								$ 10.49
Shares
Beginning Balance (in shares)										487,726
Granted (in shares)										453,206		192,307	192,307
Exercised / Vested (in shares)									(82,671)	(401,562)	(56,543)
Cancelled / Forfeited (in shares)										(18,873)
Ending balance (in shares)										520,497		192,307
Weighted Average-Price
Beginning Balance (in dollars per share)										$ 9.46
Granted (in dollars per share)										$ 3.76		$ 2.60
Exercised / Vested (in dollars per share)										$ 8.47
Cancelled / Forfeited (in dollars per share)										$ 9.42
Ending balance (in dollars per share)										$ 5.26		$ 2.60
Additional disclosures
Number of equal installments for service based vesting														4
Vesting period															6 months	12 months	18 months	24 months
Stock based compensation expense	$ 1.0	$ 0.8	$ 4.0	$ 4.4
Acceleration compensation cost					0.3	0.3	1.4
Unrecognized compensation expense related to non-vested share-based compensation arrangements	$ 4.2		$ 4.2
Unrecognized compensation costs, period for recognition			2 years

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Fair Value Measurements (Details 2) (USD $) In Millions, unless otherwise specified	Sep. 29, 2012	Dec. 31, 2011	Dec. 31, 2012 Future Plan	Sep. 29, 2012 Term Loan Agreement Minimum
Recurring Fair Value Measurements
Interest rate agreements, notional principal amount	$ 60.0		$ 67.5
Interest rate agreements, percentage of notional amount of debt covered			50.00%	50.00%
Fair value of the interest-rate collar liability	$ 0.1	$ 0.1

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Business Combinations

9 Months Ended

Sep. 29, 2012

Business Combinations

Business Combinations

4.             Business Combinations

Acquisition of Skylink

On September 14, 2012, the Company entered into an asset purchase agreement to purchase substantially all of the assets of Skylink LTD (“Skylink”) relating to its business of conducting video, internet and multi-dwelling unit fulfillment and installation for satellite television companies in various markets in Indiana, Ohio and West Virginia.

In accordance with the asset purchase agreement, the Company agreed to pay the former owners of Skylink an aggregate purchase price of up to $24.2 million, subject to certain conditions and adjustments as set forth in the agreement, consisting of (i) a cash payment at closing of $14.0 million, (ii) a scheduled payment of an estimated working capital adjustment of $0.7 million, based on the actual net working capital at the closing date compared to an agreed target net working capital, (iii) a $4.0 million minimum portion of the second earn-out payment as described in further detail below, and (iv) contingent consideration of up to $5.5 million.

The contingent consideration is in the form of earn-out payments. The initial earn-out payment, payable in December 2012, is based upon the achievement of certain metrics related the timely transition of operations to the Company. The second earn-out payment, payable no later than May 31, 2013, is based upon the achievement of revenues as defined in the asset purchase agreement. The criteria for the initial earn-out payment were met by September 29, 2012, and the amount payable will be $3.5 million. The second earn-out payment will be up to $6.0 million payable with a minimum payment at that date of $4.0 million.

The right to the earn-out payments is evidenced by and subject to an earn-out confirmation agreement, also dated September 14, 2012, which provides that if the earn-out payments are not paid when due, the earn-out payments may, subject to the terms, conditions and limitations of the earn-out confirmation agreement, be converted into shares of UniTek common stock, which will be valued at the volume-weighted average of the closing prices of the common stock as quoted on the Nasdaq Global Market for the twenty (20) days prior to the applicable conversion date.

The purchase accounting for Skylink is based on estimates of the fair value of consideration paid and the net assets acquired as of the date of acquisition. The calculation of purchase price is preliminary and subject to potential adjustment upon finalization of the fair value measurements for contingent consideration as of the date of acquisition and the finalization of the expected working capital adjustment. The allocation of the purchase price is preliminary and subject to potential adjustment upon finalization of the fair value measurements used to perform the allocation.

The following table presents the calculation of the preliminary purchase price:

Cash	$	14,000
Fair value of deferred consideration:
Expected working capital adjustment	696
Minimum portion of second earn-out payment	3,936
Fair value of contingent consideration	5,332
Total purchase price	$	23,964

The following table presents the allocation of the preliminary purchase price to the fair value of assets acquired and liabilities assumed as of the date of acquisition:

Accounts receivable	$	1,853
Inventories	1,548
Property and equipment	1,115
Amortizable intangible assets	17,790
Goodwill	3,446
Accounts payable and accrued expenses	(1,788		)
Total fair value of net assets acquired	$	23,964

During the three and nine months ended September 29, 2012, the acquisition of Skylink contributed revenues of approximately $1.3 million and operating income of approximately $0.3 million. Acquisition related costs for the three and nine months ended September 29, 2012 were $0.1 million, which were recorded as a component of selling, general and administrative expenses. The Company has recognized goodwill of $3.4 million, which is expected to be tax-deductible, arising from the acquisition representing the value of the existing workforce as well as expected synergies from the combination of operations. The goodwill associated with the acquisition of Skylink is included in the Fulfillment segment’s assets.

The following table presents amortizable intangible assets acquired as of the date of acquisition:

	Estimated		Weighted-average
	fair value		amortization period
Customer relationships and backlog	$	17,300	7.0 years
Non-compete agreements	490		3.0 years
Total	$	17,790	6.9 years

Acquisition of Pinnacle

Effective April 3, 2011, UniTek completed the acquisition of Pinnacle Wireless, Inc. (“Pinnacle”) pursuant to an asset purchase agreement dated as of March 30, 2011, as amended on March 28, 2012. Pinnacle specializes in large-scale communications projects for transportation, public safety, entertainment, hospitality and enterprise-grade commercial real estate, which has expanded the Company’s presence in the two-way radio and wireless communications systems integration markets.

In accordance with the asset purchase agreement, UniTek agreed to pay an aggregate purchase price of up to $50.7 million, subject to certain conditions and adjustments, consisting of a base purchase price of $20.7 million and earn-out payments of up to $30.0 million. The base purchase price of $20.7 million consisted of $12.7 million in cash and $8.0 million in shares of UniTek common stock. The number of shares of common stock was determined using the volume-weighted average of the closing prices of the common stock as quoted on the Nasdaq Global Market for the 20 days prior to March 31, 2011, which was $8.65 per share, resulting in the issuance of 924,856 shares of the Company’s common stock. Of the consideration paid in shares of the Company’s common stock, 578,037 shares were delivered at closing and 346,819 shares were placed into escrow, to be held until their release in accordance with the terms of the asset purchase agreement.

The contingent consideration was in the form of earn-out payments based upon the achievement of incremental EBITDA performance targets as defined in the asset purchase agreement. Such payments were originally payable at up to three separate dates, 60% in cash and 40% in equity, but the asset purchase agreement was subsequently amended on March 28, 2012 to limit the total number of shares issued (including those that had been issued in connection with the April 2011 closing of the acquisition) to 3,029,856, with the remainder of the earn-out payments payable in cash. The Company satisfied its obligations under the earn-out provision by making (i) an initial payment of $2.4 million in cash during the quarter ended December 31, 2011, and (ii) a second payment of $27.2 million during the quarter ended June 30, 2012, consisting of $19.5 million of cash and $7.7 million of equity. The number of shares of common stock issued in connection with the second earn-out payment was determined using the volume-weighted average of the closing prices of the common stock as quoted on the Nasdaq Global Market for the 20 days prior to March 31, 2012, which was $3.65 per share, resulting in the issuance of 2,105,000 shares of the Company’s common stock. The fair value of these shares was determined using the Company’s closing stock price on March 30, 2012 of $3.37 per share.

The acquisition-date fair value of the consideration to acquire Pinnacle was $47.0 million, consisting of $12.7 million in cash (net of cash acquired), $8.5 million in equity and contingent consideration of $25.8 million representing the estimated fair value of the earn-out payments. The fair value of the equity was determined based upon the Company’s closing stock price on the last business day prior to April 3, 2011, which was $9.14 per share. The fair value of the contingent consideration was determined on the acquisition date and subsequently updated using a Monte Carlo simulation model applied to the Company’s estimate of Pinnacle’s expected EBITDA performance at each of the measurement dates. Changes in the fair value of the contingent consideration each period subsequent to the acquisition date were recognized in earnings.

The following table presents the allocation of the purchase price to the fair value of assets acquired and liabilities assumed as of the date of acquisition:

Cash	$	451
Accounts receivable	4,313
Inventories	652
Prepaid expenses and other assets	192
Property and equipment	2,599
Amortizable intangible assets	28,686
Goodwill	16,817
Other assets	445
Accounts payable and accrued expenses	(3,700		)
Billings in excess of costs	(636		)
Deferred revenue	(2,462		)
Capital lease obligations	(377		)
Total fair value of net assets acquired	$	46,980

During the three and nine months ended October 1, 2011, the acquisition of Pinnacle contributed revenues of approximately $9.9 million and $16.2 million, respectively, and operating income of $0.3 million and $0.2 million, respectively. Acquisition related costs for the three and nine months ended October 1, 2011 were $0.2 million and $0.6 million, respectively, which were recorded as a component of selling, general and administrative expenses. The Company has recognized goodwill of $16.8 million, which is tax-deductible, arising from the acquisition representing the value of the existing workforce as well as expected synergies from the combination of operations. The goodwill associated with the acquisition of Pinnacle is included in the Engineering and Construction segment’s assets.

The following table presents amortizable intangible assets acquired as of the date of acquisition:

	Estimated		Weighted-average
	fair value		amortization period
Customer relationships	$	23,530	10.5 years
Non-compete agreements	388		2.0 years
Technology and trade names	4,768		6.5 years
Total	$	28,686	9.7 years

2012 Cable Acquisitions

On March 2, 2012, the Company acquired substantially all of the assets and assumed certain liabilities of Cableview Communications Inc. (“Cableview”), a company that provides cable television installation services, for a total purchase price of $2.9 million. The purchase price included $0.5 million of cash paid at closing, $1.9 million of cash paid during the quarter ended June 30, 2012 and $0.5 million for the fair value of contingent consideration in the form of earn-outs. The earn-outs are based on the achievement of certain revenue levels for the six- and 12-month periods subsequent to the acquisition date up to maximum amounts of $0.4 million and $1.4 million, respectively. The fair value of the contingent consideration was calculated based on the estimated probabilities of certain revenue levels being achieved. The acquisition expanded the Company’s cable installation geographic footprint and enhanced customer diversification. The intangible assets valued at approximately $0.5 million relate to a non-compete agreement which is being amortized over 12 months and customer contracts that are being amortized over 24 months. The amortization of intangible assets and goodwill will be deductible for tax purposes upon payment of all purchase consideration. The results of Cableview were included in the consolidated results of the Company effective March 2, 2012.

On January 3, 2012, the Company acquired substantially all of the assets and assumed certain liabilities of Streamline Communications, Inc., (“Streamline”), a company that provides cable television installation services in the greater Dallas, Texas market, for a total purchase price of $0.5 million. The acquisition expands the Company’s existing cable installation presence in the Dallas area. The intangible asset valued at $0.2 million relates to customer contracts that are being amortized over 24 months. The amortization of intangible assets and goodwill is deductible for tax purposes. The results of Streamline were included in the consolidated results of the Company effective January 3, 2012.

The purchase accounting for Cableview and Streamline is based on estimates of the fair value of consideration paid and the net assets acquired as of the date of acquisition. The calculation of purchase price is preliminary and subject to potential adjustment upon finalization of the fair value measurements for contingent consideration as of the date of acquisition. The allocation of the purchase price is preliminary and subject to potential adjustment upon finalization of the fair value measurements used to perform the allocation.

The following table presents the preliminary calculation of the purchase prices for these acquisitions:

	Cableview		Streamline
Cash	$	2,400	$	458
Fair value of contingent consideration	484		—
Total purchase price	$	2,884	$	458

The following table presents the allocation of the preliminary purchase prices to the fair value of assets acquired and liabilities assumed at the date of acquisition:

	Cableview			Streamline
Property and equipment	$	501		$	98
Goodwill	2,097			160
Customer contracts	360			200
Non-compete agreement	130			—
Capital lease obligations	(204		)	—
Total fair value of net assets acquired	$	2,884		$	458

Unaudited Pro Forma Financial Information

The following table presents pro forma revenues and income (loss) from continuing operations as if the acquisitions had occurred on January 1, 2011:

	Three Months Ended				Nine Months Ended
	September 29, 2012		October 1, 2011		September 29, 2012			October 1, 2011
Revenues	$	138,049	$	110,703	$	346,064		$	288,527
Income (loss) from continuing operations	5,244		3,345		(302		)	(10,432		)

The results of Cableview and Streamline were not included in the pro forma operating results presented above because they were not material on a pro forma basis to the Company’s consolidated revenues or income (loss) from continuing operations.

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Goodwill and Other Intangible Assets (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 29, 2012	Dec. 31, 2011
Components of amortizable intangible assets, net
Amortizable intangible assets	$ 123,881	$ 105,401
Accumulated amortization	78,799	70,983
Amortizable intangible assets, net	45,082	34,418
Estimated amortization expense
Three months ending December 31, 2012	2,783
2013	7,048
2014	6,144
2015	5,957
2016	5,136
Thereafter	18,014
Amortizable intangible assets, net	45,082	34,418
Customer relationships and backlog
Components of amortizable intangible assets, net
Amortizable intangible assets	116,522	98,662
Accumulated amortization	75,720	68,879
Amortizable intangible assets, net	40,802	29,783
Estimated amortization expense
Amortizable intangible assets, net	40,802	29,783
Technology and Trade Names
Components of amortizable intangible assets, net
Amortizable intangible assets	4,768	4,768
Accumulated amortization	1,255	628
Non-compete agreements
Components of amortizable intangible assets, net
Amortizable intangible assets	2,591	1,971
Accumulated amortization	$ 1,824	$ 1,476

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 29, 2012

Fair Value Measurements

Schedule of the Company's assets and liabilities measured at fair value on a recurring basis

	Fair Value Measurements at September 29, 2012
	Fair Value at September 29, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	445	$	445	$	—	$	—
Deferred compensation plan assets	767		767		—		—
Total	$	1,212	$	1,212	$	—	$	—
Liabilities
Contingent consideration	$	1,947	$	—	$	—	$	1,947
Interest rate swap	143		—		143		—
Total	$	2,090	$	—	$	143	$	1,947

	Fair Value Measurements at December 31, 2011
	Fair Value at December 31, 2011		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	95	$	95	$	—	$	—
Deferred compensation plan assets	551		551		—		—
Total	$	646	$	646	$	—	$	—
Liabilities
Contingent consideration	$	26,958	$	—	$	—	$	26,958
Interest rate swap	133		—		133		—
Total	$	27,091	$	—	$	133	$	26,958

Schedule of the Company's assets and liabilities measured at fair value on a nonrecurring basis

	Fair Value at September 29, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value Adjustment
Assets
Property and equipment – wireline	$	3,094	$	—	$	—	$	3,094	$	2,175
Goodwill – wireline	—		—		—		—		33,005
Total	$	3,094	$	—	$	—	$	3,094	$	35,180

Changes in the fair value of contingent consideration

	Contingent Consideration
Balance as of December 31, 2011	$	26,958
Acquisitions	5,816
Settlements:
Cash payments	(19,541		)
Reclassifications to accrued liabilities	(3,469		)
Reclassifications to additional paid-in-capital	(7,093		)
Changes in fair value	(724		)
Balance as of September 29, 2012	$	1,947

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Long-Term Debt (Tables)

9 Months Ended

Sep. 29, 2012

Long-Term Debt

Components of Long Term Debt

	September 29,		December 31,
	2012		2011
Revolving Loan	$	35,153	$	15,663
Term Loan, net of debt discounts of $3,561 and $2,696, respectively	129,801		96,554
Total long-term debt	164,954		112,217
Less current portion	1,350		1,000
Long-term debt, net of current portion	$	163,604	$	111,217

Future Maturities of Long-Term Debt

Three months ending December 31, 2012	$	338
2013	1,350
2014	1,350
2015	1,350
2016	36,503
Thereafter	127,624
Total	$	168,515

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Segment Reporting (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012 Item	Oct. 01, 2011
Segment Reporting
Number of reportable segments			2
Selected segment financial information
Revenues	$ 132,124	$ 101,863	$ 326,762	$ 261,991
Cost of revenues	104,517	78,632	260,937	206,214
Gross profit	27,607	23,231	65,825	55,777
Selling, general and administrative expenses	10,590	11,649	32,597	34,322
Change in fair value of contingent consideration			(724)
Restructuring charges	1,594		6,400
Depreciation and amortization	6,710	5,624	19,799	18,112
Operating income	8,713	5,958	7,753	3,343
Interest expense	3,883	3,313	10,496	11,259
Loss on extinguishment of debt				3,466
Other income, net	(77)	(57)	(1,147)	(163)
Income (loss) from continuing operations before income taxes	4,907	2,702	(1,596)	(11,219)
Fulfillment
Selected segment financial information
Revenues	84,579	81,708	224,752	213,775
Cost of revenues	65,382	61,228	178,263	164,257
Gross profit	19,197	20,480	46,489	49,518
Selling, general and administrative expenses	6,337	7,386	19,511	21,813
Change in fair value of contingent consideration			(400)
Restructuring charges	957		3,975
Depreciation and amortization	4,977	3,724	14,694	13,764
Operating income	6,926	9,370	8,709	13,941
Engineering and Construction
Selected segment financial information
Revenues	47,545	20,155	102,010	48,216
Cost of revenues	39,135	17,404	82,674	41,957
Gross profit	8,410	2,751	19,336	6,259
Selling, general and administrative expenses	4,253	4,263	13,086	12,509
Change in fair value of contingent consideration			(324)
Restructuring charges	637		2,425
Depreciation and amortization	1,733	1,900	5,105	4,348
Operating income	$ 1,787	$ (3,412)	$ (956)	$ (10,598)

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Long-Term Debt (Details) (USD $) In Millions, unless otherwise specified			1 Months Ended							1 Months Ended				0 Months Ended
	Sep. 29, 2012 Minimum	Sep. 29, 2012 Maximum	Apr. 30, 2011 Revolving Loan	Sep. 29, 2012 Revolving Loan	Sep. 13, 2012 Revolving Loan	Apr. 15, 2011 Revolving Loan	Apr. 15, 2011 Revolving Loan Minimum	Apr. 15, 2011 Revolving Loan Maximum	Apr. 15, 2011 Term Loan Original	Apr. 30, 2011 Term Loan	Sep. 29, 2012 Term Loan	Apr. 15, 2011 Term Loan	Apr. 15, 2011 Term Loan Minimum	Sep. 14, 2012 Term Loan Incremental Draw	May 03, 2012 Term Loan Incremental Draw
Long-Term Debt
Term loan, face amount									$ 100.0
Revolving credit facility, maximum borrowing capacity						75.0
Term loan, repayment as a percentage of loan amounts												1.00%
Term loan debt discount percentage									3.00%					3.00%	4.00%
Debt discount									3.0
Debt instrument, interest rate terms			The interest rate on the Revolving Loan can be a combination of LIBOR (with no floor) and/or a base rate plus a margin of between 2.25% and 2.75% (the weighted average interest rate of the Revolving Loan was 3.93% at September 29, 2012							The Term Loan bears interest at one, two, three or six month LIBOR (with a floor of 1.50%) plus a margin of 7.50% (9.00% at September 29, 2012)
Term loan, floor rate (as a percent)													1.50%
Debt instrument, margin							2.25%	2.75%				7.50%
Debt instrument, interest rate				3.93%							9.00%
Debt instrument, accordion features						25.0						50.0
Sublimit for letters of credit					25.0
Increased sublimit for letters of credit					35.0
Increase in borrowings under the accordion feature														15.0	20.0
Letters of credit outstanding				$ 22.9
Consolidated leverage ratio		4.75
Consolidated leverage ratio declining over time		3.00
Fixed charge coverage ratio	1.2

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Warrants (Tables)

9 Months Ended

Sep. 29, 2012

Warrants

Outstanding Warrants

Issued to	Shares	Grant Date	Expiration Date	Exercise Price
UniTek employees	11,384	September 26, 2007	September 26, 2017	$	140.00
Former owners of UniTek Holdings	77,902	September 26, 2007	September 26, 2017	140.00
Former owners of acquired cable business	2,456	December 2, 2010	December 2, 2020	56.00
Total	91,742		Weighted average exercise price	137.75

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Stock Options and Restricted Stock Units (Tables)

9 Months Ended

Sep. 29, 2012

Stock Options and Restricted Stock Units

Stock Options, Restricted Stock Units and restricted shares

	Stock Options2009 and 1999 Plans				RSUs2009 Plan				Restricted SharesNon-Plan
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Price		Shares	Weighted AveragePrice
Outstanding at December 31, 2011	89,291		$	10.28	487,726		$	9.46	—	$	—
Granted	—		—		453,206		3.76		192,307	2.60
Exercised / Vested	—		—		(401,562	)	8.47		—	—
Cancelled / Forfeited	(19,325	)	9.50		(18,873	)	9.42		—	—
Outstanding at September 29, 2012	69,966		10.49		520,497		5.26		192,307	2.60

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 29, 2012

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

3.             Summary of Significant Accounting Policies

The following is a summary of the significant accounting policies followed in the preparation of the accompanying condensed consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, amounts contained in certain of the notes to the condensed consolidated financial statements, and the revenues and expenses reported for the periods covered by the financial statements. Although such assumptions are based on management’s best knowledge of current events and actions the Company may undertake in the future, actual results could differ significantly from those estimates and assumptions. The Company’s more significant estimates relate to revenue recognition, allowances for bad debts, accruals for legal obligations, medical insurance and workers’ compensation insurance and the valuation of goodwill and intangible assets.

In the ordinary course of accounting for the items discussed above, the Company makes changes in estimates as appropriate and as the Company becomes aware of circumstances surrounding those estimates. Such changes in estimates are reflected in reported results of operations in the period in which the changes are made and, if material, their effects are disclosed in the notes to the condensed consolidated financial statements.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents are invested in investment-grade, short-term investment instruments with high-quality financial institutions.

Restricted Cash

Restricted cash represents collateral held for a letter of credit issued in conjunction with a facility lease.

Accounts Receivable and Unbilled Revenue, Net of Allowances

Accounts receivable are customer obligations for services rendered to such customers under normal trade terms. The Company’s customers are video content providers, communications carriers and other corporate entities located primarily in the United States and Canada. The Company performs periodic credit evaluations of its customers’ financial condition. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Unbilled revenue represents revenue on uncompleted infrastructure equipment construction and installation contracts that are not yet billed or billable and revenue recognized on completed projects that are not yet billed pursuant to contract terms. Deferred revenues principally represent the value of services to customers that have been billed as of the balance sheet date but for which the requisite services have not yet been rendered. Any costs in excess of billings are deferred and recorded as a component of accrued liabilities.

The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable and unbilled revenue. A specific reserve for bad debts is recorded for known or suspected doubtful accounts receivable or unbilled revenue. For all other accounts, the Company recognizes a general reserve for bad debts based on the length of time receivables are past due and historical write-off experience. The adequacy of the reserve is evaluated using several factors including length of time a receivable is past due, changes in the customer’s credit worthiness, the customer’s payment history, the length of the customer’s relationship with the Company, specific customer issues, availability of mechanics’ and other liens, existence of payment bonds and other sources of payment, current industry trends and the current economic climate. Account balances are charged off against the allowance when the Company believes it is probable that the receivable will not be recovered. Provisions for doubtful accounts are recorded in selling, general and administrative expenses.

Inventories

Inventories consist primarily of materials and supplies purchased from the customer and other suppliers used for installation fulfillment services and wireless construction. Inventories are stated at the lower of cost or market, as determined by the first-in, first-out method for the Fulfillment segment and the average cost method for the Engineering and Construction segment.

Property and Equipment

Property and equipment consist of vehicles, equipment and computers, land and buildings, leasehold improvements and assets under capital leases. Each class of asset is recorded at cost and depreciated using the straight-line method over the estimated useful lives, which range from a period of three to five years, except as follows. Leasehold improvements are depreciated over the term of the lease or the estimated useful life, whichever is shorter. Buildings are depreciated over 27.5 years. Assets under capital leases are depreciated over the lesser of the lease term or the asset’s estimated useful life. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized. The Company capitalizes certain costs incurred in connection with developing or obtaining internal use software, which are included within equipment and computers. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of comprehensive income or loss. All depreciation of property and equipment is included in the consolidated statements of comprehensive income or loss in depreciation and amortization.

Leases

The Company leases vehicles primarily for performing fulfillment services to the pay television industry. Leases are accounted for either as operating or capital depending on the terms of the lease. Each lease is evaluated and a determination is made whether the lease is an operating or capital lease. Operating lease payments are expensed as incurred. Capital leases are included on the condensed consolidated balance sheets as property and equipment and capital lease obligations.

Impairment of Long-Lived Assets

The Company periodically reviews long-lived assets, consisting primarily of property and equipment and intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. In analyzing potential impairment, management uses projections of future undiscounted cash flows from the assets. These projections are based on management’s view of growth rates for the related business, anticipated future economic conditions and estimates of residual values and are considered to be impaired when the undiscounted net cash flows are less than its carrying value. The impairment recognized is the amount by which the carrying value exceeds the fair value based on assumptions that marketplace participants would use in their estimates of fair value.

Goodwill and Other Intangible Assets

Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. The Company amortizes intangible assets, consisting of customer relationships, trade names, technology, backlog and non-compete agreements from acquired businesses on a straight-line basis over the 9- to 129-month lives of those agreements.

Goodwill is subject to an assessment for impairment using a two-step, fair value-based test with the first step performed at least annually, or more frequently if events or circumstances exist that indicate that goodwill may be impaired. The Company completes an annual analysis of the reporting units at the beginning of the fourth quarter of each fiscal year. The first step requires the Company to determine the fair value of each reporting unit and compare it to its carrying value, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment test is performed to determine the implied value of goodwill for that reporting unit. If the implied value is less than the carrying amount of goodwill for that reporting unit, an impairment loss is recognized for that reporting unit.

Foreign Currency Translation

The balance sheets of foreign subsidiaries are translated into U.S. dollars at current period-end rates, and the statements of comprehensive income or loss are translated at average monthly rates during each monthly period. Net exchange gains or losses resulting from the translation of foreign financial statements and the effect of exchange rate changes on intercompany transactions of a long-term investment nature are accumulated and credited or charged directly to a separate component of stockholders’ equity. Any foreign currency gains or losses related to transactions are charged to other income (expense), net.

Other Assets

Costs associated with obtaining long-term debt are deferred and amortized to interest expense on a straight-line basis, which approximates the effective interest method, over the term of the related debt. At September 29, 2012 and December 31, 2011, $3.8 million and $3.4 million (net), respectively, is included in other assets related to deferred financing fees.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an agreement exists, delivery has occurred or services have been rendered, the price is fixed and determinable and collection is reasonably assured. Revenue is recognized net of any estimated allowances.

Revenues from fulfillment services provided to the pay television industry are recognized as the services are rendered. Fulfillment services are generally performed under master or other services agreements and are billed on a contractually agreed price per unit, work order basis. Under master service and similar type service agreements, the Company furnishes specified units of service for a separate fixed price per unit of service. The Company recognizes revenue from fulfillment services net of equipment costs payable to the customer because the Company has determined that it acts as an agent specific to the equipment costs.

Within the Engineering and Construction segment, revenue from site acquisition and zoning service contracts performed on a standalone basis is based upon output measures using contract milestones as the basis. Revenue from infrastructure construction, equipment installation and project management contracts is recorded under the percentage-of-completion method based on the percentage of costs incurred to-date compared to estimated total costs at completion. Costs used to determine percentage-of-completion include direct costs such as materials, labor and subcontractor costs and indirect costs specifically allocable or identifiable to each contract such as indirect labor, supplies, tools and repairs. Losses relating to Engineering and Construction work are recognized when such losses become known.

Certain contracts within the Engineering and Construction segment include multiple deliverables, typically involving the design, construction and implementation of public safety radio networks with a separate maintenance component for a specific period of time following implementation. The maintenance component of these contracts is typically for a period of one to ten years. The Company accounts for the maintenance component of these contracts as a separate unit of accounting with the revenue being recognized on a pro-rata basis over the term of the maintenance period. The revenue for the remaining portion of the contract is recognized on the percentage of completion method. The value assigned to each unit of accounting is objectively determined and obtained primarily from sources such as the separate selling price for that item or a similar item or from competitor prices for similar items. The liability associated with these maintenance contracts is reflected within other current liabilities and other long-term liabilities.

The Company is also subject to costs arising from vendor and subcontractor change orders (work performed that was not in original scope), which may or may not be pre-approved by the customer. The Company determines the likelihood that such costs will be recovered based upon past practices with the customer or specific discussions, correspondence or negotiation with the customer. The Company accounts for costs relating to change orders as contract costs to be expensed in the period incurred, unless persuasive evidence exists that the costs will be recovered. Unbilled revenue represents revenue on uncompleted infrastructure equipment construction and installation contracts that are not yet billed or billable and revenue recognized on completed projects that are not yet billed, pursuant to contract terms. Deferred revenues principally represent the value of services to customers that have been billed as of the balance sheet date but for which the requisite services have not yet been rendered. Any costs in excess of billings are deferred and recorded as a component of accrued liabilities.

Net Income or Loss per Share

Basic net income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted net income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the periods adjusted for the dilutive effect, if any, of the exercise or conversion of instruments into common stock, such as non-vested restricted stock units (“RSUs”), non-vested restricted shares, stock options or warrants.

During the three and nine months ended September 29, 2012 and October 1, 2011, there were no differences in the amount of basic and diluted net income or loss per share.

During the three and nine months ended September 29, 2012 and the three and nine months ended October 1, 2011, 0.8 million, 0.8 million, 0.7 million and 0.7 million shares, respectively, were excluded from the computation of diluted net income or loss per share because their effects were anti-dilutive to the computation.

Insurance Reserves

The Company maintains a high-deductible casualty insurance program, subject to per claim deductibles of $0.35 million for its workers’ compensation policy with a $0.15 million corridor policy effective July 1, 2011, $0.25 million for its general liability policy and $0.35 million for its automobile liability policy. The Company also has excess umbrella coverage up to $50.0 million per claim and in the aggregate subject to policy terms and conditions. Because most claims do not exceed the deductibles under its insurance policies, the Company is effectively self-insured for substantially all claims. The Company also has a self-insured plan for medical and dental claims. The Company determines any liabilities for unpaid claims and associated expenses, including incurred but not reported losses, and reflects the undiscounted value of those liabilities in the balance sheet within accrued liabilities. The determination of such claims and expenses and the appropriateness of the related liability is reviewed and updated quarterly. As of September 29, 2012 and December 31, 2011, the liability for insurance reserves was $15.8 million and $13.7 million, respectively. Known amounts for claims that are in the process of being settled, but have been paid in periods subsequent to those being reported, are recorded in the subsequent reporting periods. The Company’s insurance accruals are based upon known facts, historical trends and reasonable estimates of future expenses.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes. Income taxes consist of taxes currently due plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is recorded against a deferred tax asset when it is determined to be more-likely-than-not that the asset will not be realized.

The Company recognizes uncertain tax positions in its financial statements when minimum recognition criteria are met in accordance with current accounting guidance. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of December 31, 2011, the Company had accrued $0.9 million in federal and state taxes, interest and penalties, substantially all of which had been settled as of September 29, 2012. The Company’s tax returns for the years ended December 31, 2008 through December 31, 2011 are still subject to examination by tax jurisdictions. The Company provides an intra-period tax allocation of the income tax expense or benefit for the year to continuing operations and discontinued operations.

Stock-based Compensation

The Company measures and recognizes compensation expense for all stock-based awards made to employees and directors based on estimated grant-date fair values.

The condensed consolidated financial statements include stock-based compensation expense of $1.0 million and $0.8 million for the three months ended September 29, 2012 and October 1, 2011, respectively, and $4.0 million and $4.4 million for the nine months ended September 29, 2012 and October 1, 2011, respectively, within selling, general, and administrative expenses in the consolidated statements of comprehensive income or loss.

Stock-based compensation expense is based on the fair value of awards ultimately expected to vest. The Company estimates forfeitures at the time of grant in order to estimate the amount of awards that will ultimately vest. Limited historical forfeiture data is available. As such, management has based the estimated forfeiture rate on expected employee turnover and reevaluates its estimates each period. The Company estimates the fair value of RSUs and non-vested restricted shares on the date of grant based on quoted market prices for the Company’s common stock and the fair value of stock options on the date of grant primarily using the Black-Scholes option-pricing model. Compensation expense for all stock-based awards is recognized on a straight-line basis over the requisite service periods. The Company records the cash flows resulting from the tax deductions in excess of the compensation cost recognized for those options (excess tax benefit) as financing cash flows.

Fair Value Measurements

Fair value is a market-based measurement, not an entity-specific measurement, and represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost) may be used to determine fair value, which are each based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.

The Company uses a three-tier valuation hierarchy based upon observable and non-observable inputs, as described below:

Level 1 – Quoted market prices in active markets for identical assets or liabilities at the measurement date.

Level 2 – Observable market based inputs or other observable inputs corroborated by market data at the measurement date, other than quoted prices included in Level 1, either directly or indirectly.

Level 3 – Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using valuation models that utilize management’s estimates of market participant assumptions.

The Company determines the estimated fair value of assets and liabilities using available market information and commonly accepted valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different assumptions or estimation methodologies could have a material effect on the estimated fair values.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentration of credit risk consist principally of accounts receivable and unbilled revenue. The Company does not enter into financial instruments for trading or speculative purposes.

Comprehensive Income or Loss

Comprehensive income or loss is a measure of net income or loss and all other changes in equity that result from transactions other than those with stockholders. The following table presents the components of comprehensive income or loss:

	Three Months Ended						Nine Months Ended
	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Net (loss) income	$	(26,055	)	$	2,421		$	(36,452	)	$	(11,817	)
Foreign currency translation (loss) gain	(6		)	(321		)	35			(255		)
Comprehensive (loss) income	$	(26,061	)	$	2,100		$	(36,417	)	$	(12,072	)

Recent Accounting Pronouncements

Fair Value

In May 2011, the Financial Accounting Standards Board (“FASB”) updated its accounting guidance for fair value measurement to converge guidance of the FASB and the International Accounting Standards Board on fair value measurement and disclosure. This update changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and disclosing information about fair value measurements, clarifies the FASB’s intent about the application of existing fair value measurement requirements, and changes particular principles or requirements for measuring fair value or for disclosing information about fair value measurements. The updated guidance is effective prospectively for interim and annual periods beginning after December 15, 2011. The Company adopted this guidance beginning with its Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

Presentation of Comprehensive Income

In June 2011, the FASB updated its accounting guidance for the presentation of comprehensive income. The objective of the updated guidance is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. It provides the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. Companies are no longer permitted to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In December 2011, the FASB deferred the specific requirement to present items that are reclassified from accumulated other comprehensive income to net income separately within their respective components of net income and other comprehensive income.

The updated guidance, other than the items subject to the December 2011 deferral, was effective retrospectively for interim and annual periods beginning after December 15, 2011. The Company adopted this guidance beginning with its Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

Goodwill Impairment

In September 2011, the FASB updated its accounting guidance for testing of goodwill for impairment. The updated guidance permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. The updated accounting guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The Company will adopt this guidance beginning with its annual assessment of goodwill impairment as of September 30, 2012. The Company is evaluating the impact that this standard will have on that assessment.

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Discontinued Operations (Tables)

9 Months Ended

Sep. 29, 2012

Discontinued Operations

Schedule of the results of the Company's discontinued operations

	Three Months Ended					Nine Months Ended
	September 29, 2012			October 1, 2011		September 29, 2012			October 1, 2011
Revenues	$	10,499		$	19,007	$	39,735		$	57,143
(Loss) income from discontinued operations before income taxes	(37,732		)	955		(40,042		)	2,038
Income tax (benefit) expense from discontinued operations	(7,063		)	882		(5,501		)	2,486
(Loss) income from discontinued operations, net of income taxes	$	(30,669	)	$	73	$	(34,541	)	$	(448	)

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Concentration of Credit Risk (Details) (Customer Concentration Risk, Revenues)	3 Months Ended		9 Months Ended
	Sep. 29, 2012 Item	Oct. 01, 2011 Item	Sep. 29, 2012 Item	Oct. 01, 2011 Item
Top Ten Customers
Concentration of credit risk
Number of major customers	10	10	10	10
Concentration risk percentage	96.00%	93.00%	94.00%	92.00%
DIRECTV | Fulfillment
Concentration of credit risk
Concentration risk percentage	39.00%	56.00%	42.00%	57.00%
AT & T | Engineering and Construction
Concentration of credit risk
Concentration risk percentage	25.00%	2.00%	14.00%	1.00%
Comcast | Fulfillment
Concentration of credit risk
Concentration risk percentage	15.00%	17.00%	16.00%	17.00%
Eaton Electric | Engineering and Construction
Concentration of credit risk
Concentration risk percentage	3.00%	2.00%	7.00%	1.00%

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Related-Party Transactions (Details) (HM Capital, USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 29, 2012 Item	Nov. 16, 2010
HM Capital
Related Party Transaction
Agreed termination fee for Monitoring and Oversight Agreement		$ 4.3
Number conditions required for termination fee to payable	2
Number of trading days used to determine weighted average of the closing prices	20 days

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 29, 2012	Dec. 31, 2011
CURRENT ASSETS
Cash and cash equivalents	$ 445	$ 95
Restricted cash	25	68
Accounts receivable and unbilled revenue, net of allowances	116,464	91,533
Inventories	17,307	10,985
Prepaid expenses and other current assets	2,610	3,299
Assets held for sale	18,746
Total current assets	155,597	105,980
Property and equipment, net	29,419	39,022
Amortizable intangible assets, net	45,082	34,418
Goodwill	136,525	163,797
Deferred tax assets, net	1,078	568
Other assets	5,418	5,095
Total assets	373,119	348,880
CURRENT LIABILITIES
Accounts payable	50,536	33,367
Accrued liabilities	42,007	32,597
Contingent consideration	1,947	26,958
Current portion of long-term debt	1,350	1,000
Current income taxes	165	904
Current portion of capital lease obligations	9,083	9,631
Other current liabilities	508	518
Liabilities held for sale	9,151
Total current liabilities	114,747	104,975
Long-term debt, net of current portion	163,604	111,217
Long-term capital lease obligations, net of current portion	8,875	16,283
Deferred income taxes	801	5,511
Other long-term liabilities	1,330	1,664
Total liabilities	289,357	239,650
STOCKHOLDERS' EQUITY
Preferred Stock, $0.00002 par value (20 million shares authorized, no shares issued or outstanding)
Common Stock, $0.00002 par value (200 million shares authorized, 18,712,747 and 16,305,369 issued and outstanding at September 29, 2012 and December 31, 2011, respectively)
Additional paid-in capital	260,694	249,745
Accumulated other comprehensive income	53	18
Accumulated deficit	(176,985)	(140,533)
Total stockholders' equity	83,762	109,230
Total liabilities and stockholders' equity	373,119	348,880
Customer relationships
CURRENT ASSETS
Amortizable intangible assets, net	40,802	29,783
Other amortizable intangible assets
CURRENT ASSETS
Amortizable intangible assets, net	$ 4,280	$ 4,635

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Long-Term Debt (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 29, 2012	Dec. 31, 2011
Long-Term Debt
Long-term debt	$ 164,954	$ 112,217
Less current portion	1,350	1,000
Long-term debt, net of current portion	163,604	111,217
Future maturities of total long-term debt, exclusive of debt discounts
Three months ending December 31, 2012	338
2013	1,350
2014	1,350
2015	1,350
2016	36,503
Thereafter	127,624
Total	168,515
Revolving Loan
Long-Term Debt
Long-term debt	35,153	15,663
Term Loan
Long-Term Debt
Long-term debt	129,801	96,554
Term Loan, debt discount	$ 3,561	$ 2,696

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Business

9 Months Ended

Sep. 29, 2012

Business

Business

1.             Business

UniTek Global Services, Inc. (“UniTek” or the “Company”) is a premier provider of high-quality, specialized infrastructure services including engineering, construction management and installation fulfillment services to the wireless telecommunications, public safety, broadband cable and satellite industries. UniTek has created a scalable platform through which it can rapidly deploy a highly skilled workforce across the United States and Canada, delivering a comprehensive end-to-end suite of permanently outsourced infrastructure services. The Company operates in two reportable segments: (1) Fulfillment, which performs installation and other services for the satellite and broadband cable pay television industry; and (2) Engineering and Construction, which performs engineering and construction services on wireless telecommunications networks.

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Summary of Significant Accounting Policies (Details) (USD $) Share data in Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011	Dec. 31, 2011
Significant Accounting Policies
Deferred financing fee, net	$ 3,800,000		$ 3,800,000		$ 3,400,000
Shares excluded from the computation of diluted net income or loss per share	0.8	0.7	0.8	0.7
Liability for insurance reserves	15,800,000		15,800,000		13,700,000
Stock based compensation expense	1,000,000	800,000	4,000,000	4,400,000
Net (loss) income	(26,055,000)	2,421,000	(36,452,000)	(11,817,000)
Foreign currency translation (loss) gain	(6,000)	(321,000)	35,000	(255,000)
Comprehensive (loss) income	(26,061,000)	2,100,000	(36,417,000)	(12,072,000)
Federal and State
Significant Accounting Policies
Accrued taxes and penalties related to a prior year audit					900,000
Workers Compensation Policy
Significant Accounting Policies
High-deductible casualty insurance program, per claim deductibles	350,000		350,000
Corridor Policy
Significant Accounting Policies
High-deductible casualty insurance program, per claim deductibles	150,000		150,000
General Liability
Significant Accounting Policies
High-deductible casualty insurance program, per claim deductibles	250,000		250,000
Automobile Liability Policy
Significant Accounting Policies
High-deductible casualty insurance program, per claim deductibles	350,000		350,000
Buildings
Significant Accounting Policies
Property and equipment, estimated useful lives			27 years 6 months
Minimum
Significant Accounting Policies
Property and equipment, estimated useful lives			3 years
Intangible assets consisting of customer relationships and non-compete agreements from acquired businesses, useful life			9 months
Maintenance component of contracts			1 year
Maximum
Significant Accounting Policies
Maximum maturity period of highly liquid instruments to be considered as cash equivalents			3 months
Property and equipment, estimated useful lives			5 years
Intangible assets consisting of customer relationships and non-compete agreements from acquired businesses, useful life			129 months
Maintenance component of contracts			10 years
Maximum | Umbrella Liability
Significant Accounting Policies
Excess umbrella coverage per claim	50,000,000		50,000,000
Aggregate excess umbrella coverage	$ 50,000,000		$ 50,000,000

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 29, 2012

Summary of Significant Accounting Policies

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, amounts contained in certain of the notes to the condensed consolidated financial statements, and the revenues and expenses reported for the periods covered by the financial statements. Although such assumptions are based on management’s best knowledge of current events and actions the Company may undertake in the future, actual results could differ significantly from those estimates and assumptions. The Company’s more significant estimates relate to revenue recognition, allowances for bad debts, accruals for legal obligations, medical insurance and workers’ compensation insurance and the valuation of goodwill and intangible assets.

In the ordinary course of accounting for the items discussed above, the Company makes changes in estimates as appropriate and as the Company becomes aware of circumstances surrounding those estimates. Such changes in estimates are reflected in reported results of operations in the period in which the changes are made and, if material, their effects are disclosed in the notes to the condensed consolidated financial statements.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents are invested in investment-grade, short-term investment instruments with high-quality financial institutions.

Restricted Cash

Restricted Cash

Restricted cash represents collateral held for a letter of credit issued in conjunction with a facility lease.

Accounts Receivable and Unbilled Revenue, Net of Allowances

Accounts Receivable and Unbilled Revenue, Net of Allowances

Accounts receivable are customer obligations for services rendered to such customers under normal trade terms. The Company’s customers are video content providers, communications carriers and other corporate entities located primarily in the United States and Canada. The Company performs periodic credit evaluations of its customers’ financial condition. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Unbilled revenue represents revenue on uncompleted infrastructure equipment construction and installation contracts that are not yet billed or billable and revenue recognized on completed projects that are not yet billed pursuant to contract terms. Deferred revenues principally represent the value of services to customers that have been billed as of the balance sheet date but for which the requisite services have not yet been rendered. Any costs in excess of billings are deferred and recorded as a component of accrued liabilities.

The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable and unbilled revenue. A specific reserve for bad debts is recorded for known or suspected doubtful accounts receivable or unbilled revenue. For all other accounts, the Company recognizes a general reserve for bad debts based on the length of time receivables are past due and historical write-off experience. The adequacy of the reserve is evaluated using several factors including length of time a receivable is past due, changes in the customer’s credit worthiness, the customer’s payment history, the length of the customer’s relationship with the Company, specific customer issues, availability of mechanics’ and other liens, existence of payment bonds and other sources of payment, current industry trends and the current economic climate. Account balances are charged off against the allowance when the Company believes it is probable that the receivable will not be recovered. Provisions for doubtful accounts are recorded in selling, general and administrative expenses.

Inventories

Inventories

Inventories consist primarily of materials and supplies purchased from the customer and other suppliers used for installation fulfillment services and wireless construction. Inventories are stated at the lower of cost or market, as determined by the first-in, first-out method for the Fulfillment segment and the average cost method for the Engineering and Construction segment.

Property and Equipment

Property and Equipment

Property and equipment consist of vehicles, equipment and computers, land and buildings, leasehold improvements and assets under capital leases. Each class of asset is recorded at cost and depreciated using the straight-line method over the estimated useful lives, which range from a period of three to five years, except as follows. Leasehold improvements are depreciated over the term of the lease or the estimated useful life, whichever is shorter. Buildings are depreciated over 27.5 years. Assets under capital leases are depreciated over the lesser of the lease term or the asset’s estimated useful life. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized. The Company capitalizes certain costs incurred in connection with developing or obtaining internal use software, which are included within equipment and computers. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of comprehensive income or loss. All depreciation of property and equipment is included in the consolidated statements of comprehensive income or loss in depreciation and amortization.

Leases

Leases

The Company leases vehicles primarily for performing fulfillment services to the pay television industry. Leases are accounted for either as operating or capital depending on the terms of the lease. Each lease is evaluated and a determination is made whether the lease is an operating or capital lease. Operating lease payments are expensed as incurred. Capital leases are included on the condensed consolidated balance sheets as property and equipment and capital lease obligations.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company periodically reviews long-lived assets, consisting primarily of property and equipment and intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. In analyzing potential impairment, management uses projections of future undiscounted cash flows from the assets. These projections are based on management’s view of growth rates for the related business, anticipated future economic conditions and estimates of residual values and are considered to be impaired when the undiscounted net cash flows are less than its carrying value. The impairment recognized is the amount by which the carrying value exceeds the fair value based on assumptions that marketplace participants would use in their estimates of fair value.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. The Company amortizes intangible assets, consisting of customer relationships, trade names, technology, backlog and non-compete agreements from acquired businesses on a straight-line basis over the 9- to 129-month lives of those agreements.

Goodwill is subject to an assessment for impairment using a two-step, fair value-based test with the first step performed at least annually, or more frequently if events or circumstances exist that indicate that goodwill may be impaired. The Company completes an annual analysis of the reporting units at the beginning of the fourth quarter of each fiscal year. The first step requires the Company to determine the fair value of each reporting unit and compare it to its carrying value, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment test is performed to determine the implied value of goodwill for that reporting unit. If the implied value is less than the carrying amount of goodwill for that reporting unit, an impairment loss is recognized for that reporting unit.

Foreign Currency Translation

Foreign Currency Translation

The balance sheets of foreign subsidiaries are translated into U.S. dollars at current period-end rates, and the statements of comprehensive income or loss are translated at average monthly rates during each monthly period. Net exchange gains or losses resulting from the translation of foreign financial statements and the effect of exchange rate changes on intercompany transactions of a long-term investment nature are accumulated and credited or charged directly to a separate component of stockholders’ equity. Any foreign currency gains or losses related to transactions are charged to other income (expense), net.

Other Assets

Other Assets

Costs associated with obtaining long-term debt are deferred and amortized to interest expense on a straight-line basis, which approximates the effective interest method, over the term of the related debt. At September 29, 2012 and December 31, 2011, $3.8 million and $3.4 million (net), respectively, is included in other assets related to deferred financing fees.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an agreement exists, delivery has occurred or services have been rendered, the price is fixed and determinable and collection is reasonably assured. Revenue is recognized net of any estimated allowances.

Revenues from fulfillment services provided to the pay television industry are recognized as the services are rendered. Fulfillment services are generally performed under master or other services agreements and are billed on a contractually agreed price per unit, work order basis. Under master service and similar type service agreements, the Company furnishes specified units of service for a separate fixed price per unit of service. The Company recognizes revenue from fulfillment services net of equipment costs payable to the customer because the Company has determined that it acts as an agent specific to the equipment costs.

Within the Engineering and Construction segment, revenue from site acquisition and zoning service contracts performed on a standalone basis is based upon output measures using contract milestones as the basis. Revenue from infrastructure construction, equipment installation and project management contracts is recorded under the percentage-of-completion method based on the percentage of costs incurred to-date compared to estimated total costs at completion. Costs used to determine percentage-of-completion include direct costs such as materials, labor and subcontractor costs and indirect costs specifically allocable or identifiable to each contract such as indirect labor, supplies, tools and repairs. Losses relating to Engineering and Construction work are recognized when such losses become known.

Certain contracts within the Engineering and Construction segment include multiple deliverables, typically involving the design, construction and implementation of public safety radio networks with a separate maintenance component for a specific period of time following implementation. The maintenance component of these contracts is typically for a period of one to ten years. The Company accounts for the maintenance component of these contracts as a separate unit of accounting with the revenue being recognized on a pro-rata basis over the term of the maintenance period. The revenue for the remaining portion of the contract is recognized on the percentage of completion method. The value assigned to each unit of accounting is objectively determined and obtained primarily from sources such as the separate selling price for that item or a similar item or from competitor prices for similar items. The liability associated with these maintenance contracts is reflected within other current liabilities and other long-term liabilities.

The Company is also subject to costs arising from vendor and subcontractor change orders (work performed that was not in original scope), which may or may not be pre-approved by the customer. The Company determines the likelihood that such costs will be recovered based upon past practices with the customer or specific discussions, correspondence or negotiation with the customer. The Company accounts for costs relating to change orders as contract costs to be expensed in the period incurred, unless persuasive evidence exists that the costs will be recovered. Unbilled revenue represents revenue on uncompleted infrastructure equipment construction and installation contracts that are not yet billed or billable and revenue recognized on completed projects that are not yet billed, pursuant to contract terms. Deferred revenues principally represent the value of services to customers that have been billed as of the balance sheet date but for which the requisite services have not yet been rendered. Any costs in excess of billings are deferred and recorded as a component of accrued liabilities.

Net Income or Loss per Share

Net Income or Loss per Share

Basic net income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted net income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the periods adjusted for the dilutive effect, if any, of the exercise or conversion of instruments into common stock, such as non-vested restricted stock units (“RSUs”), non-vested restricted shares, stock options or warrants.

During the three and nine months ended September 29, 2012 and October 1, 2011, there were no differences in the amount of basic and diluted net income or loss per share.

During the three and nine months ended September 29, 2012 and the three and nine months ended October 1, 2011, 0.8 million, 0.8 million, 0.7 million and 0.7 million shares, respectively, were excluded from the computation of diluted net income or loss per share because their effects were anti-dilutive to the computation.

Insurance Reserves

Insurance Reserves

The Company maintains a high-deductible casualty insurance program, subject to per claim deductibles of $0.35 million for its workers’ compensation policy with a $0.15 million corridor policy effective July 1, 2011, $0.25 million for its general liability policy and $0.35 million for its automobile liability policy. The Company also has excess umbrella coverage up to $50.0 million per claim and in the aggregate subject to policy terms and conditions. Because most claims do not exceed the deductibles under its insurance policies, the Company is effectively self-insured for substantially all claims. The Company also has a self-insured plan for medical and dental claims. The Company determines any liabilities for unpaid claims and associated expenses, including incurred but not reported losses, and reflects the undiscounted value of those liabilities in the balance sheet within accrued liabilities. The determination of such claims and expenses and the appropriateness of the related liability is reviewed and updated quarterly. As of September 29, 2012 and December 31, 2011, the liability for insurance reserves was $15.8 million and $13.7 million, respectively. Known amounts for claims that are in the process of being settled, but have been paid in periods subsequent to those being reported, are recorded in the subsequent reporting periods. The Company’s insurance accruals are based upon known facts, historical trends and reasonable estimates of future expenses.

Income Taxes

Income Taxes

The Company follows the asset and liability method of accounting for income taxes. Income taxes consist of taxes currently due plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is recorded against a deferred tax asset when it is determined to be more-likely-than-not that the asset will not be realized.

Income Tax Uncertainties

The Company recognizes uncertain tax positions in its financial statements when minimum recognition criteria are met in accordance with current accounting guidance. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of December 31, 2011, the Company had accrued $0.9 million in federal and state taxes, interest and penalties, substantially all of which had been settled as of September 29, 2012. The Company’s tax returns for the years ended December 31, 2008 through December 31, 2011 are still subject to examination by tax jurisdictions. The Company provides an intra-period tax allocation of the income tax expense or benefit for the year to continuing operations and discontinued operations.

Stock-based Compensation

Stock-based Compensation

The Company measures and recognizes compensation expense for all stock-based awards made to employees and directors based on estimated grant-date fair values.

The condensed consolidated financial statements include stock-based compensation expense of $1.0 million and $0.8 million for the three months ended September 29, 2012 and October 1, 2011, respectively, and $4.0 million and $4.4 million for the nine months ended September 29, 2012 and October 1, 2011, respectively, within selling, general, and administrative expenses in the consolidated statements of comprehensive income or loss.

Stock-based compensation expense is based on the fair value of awards ultimately expected to vest. The Company estimates forfeitures at the time of grant in order to estimate the amount of awards that will ultimately vest. Limited historical forfeiture data is available. As such, management has based the estimated forfeiture rate on expected employee turnover and reevaluates its estimates each period. The Company estimates the fair value of RSUs and non-vested restricted shares on the date of grant based on quoted market prices for the Company’s common stock and the fair value of stock options on the date of grant primarily using the Black-Scholes option-pricing model. Compensation expense for all stock-based awards is recognized on a straight-line basis over the requisite service periods. The Company records the cash flows resulting from the tax deductions in excess of the compensation cost recognized for those options (excess tax benefit) as financing cash flows.

Fair Value Measurements

Fair Value Measurements

Fair value is a market-based measurement, not an entity-specific measurement, and represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost) may be used to determine fair value, which are each based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.

The Company uses a three-tier valuation hierarchy based upon observable and non-observable inputs, as described below:

Level 1 – Quoted market prices in active markets for identical assets or liabilities at the measurement date.

Level 2 – Observable market based inputs or other observable inputs corroborated by market data at the measurement date, other than quoted prices included in Level 1, either directly or indirectly.

Level 3 – Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using valuation models that utilize management’s estimates of market participant assumptions.

The Company determines the estimated fair value of assets and liabilities using available market information and commonly accepted valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different assumptions or estimation methodologies could have a material effect on the estimated fair values.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentration of credit risk consist principally of accounts receivable and unbilled revenue. The Company does not enter into financial instruments for trading or speculative purposes.

Comprehensive Income or Loss

Comprehensive Income or Loss

Comprehensive income or loss is a measure of net income or loss and all other changes in equity that result from transactions other than those with stockholders. The following table presents the components of comprehensive income or loss:

	Three Months Ended						Nine Months Ended
	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Net (loss) income	$	(26,055	)	$	2,421		$	(36,452	)	$	(11,817	)
Foreign currency translation (loss) gain	(6		)	(321		)	35			(255		)
Comprehensive (loss) income	$	(26,061	)	$	2,100		$	(36,417	)	$	(12,072	)

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Fair Value

In May 2011, the Financial Accounting Standards Board (“FASB”) updated its accounting guidance for fair value measurement to converge guidance of the FASB and the International Accounting Standards Board on fair value measurement and disclosure. This update changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and disclosing information about fair value measurements, clarifies the FASB’s intent about the application of existing fair value measurement requirements, and changes particular principles or requirements for measuring fair value or for disclosing information about fair value measurements. The updated guidance is effective prospectively for interim and annual periods beginning after December 15, 2011. The Company adopted this guidance beginning with its Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

Presentation of Comprehensive Income

In June 2011, the FASB updated its accounting guidance for the presentation of comprehensive income. The objective of the updated guidance is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. It provides the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. Companies are no longer permitted to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In December 2011, the FASB deferred the specific requirement to present items that are reclassified from accumulated other comprehensive income to net income separately within their respective components of net income and other comprehensive income.

The updated guidance, other than the items subject to the December 2011 deferral, was effective retrospectively for interim and annual periods beginning after December 15, 2011. The Company adopted this guidance beginning with its Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

Goodwill Impairment

In September 2011, the FASB updated its accounting guidance for testing of goodwill for impairment. The updated guidance permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. The updated accounting guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The Company will adopt this guidance beginning with its annual assessment of goodwill impairment as of September 30, 2012. The Company is evaluating the impact that this standard will have on that assessment.

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Business Combinations (Details) (USD $)	0 Months Ended								0 Months Ended	1 Months Ended	3 Months Ended	12 Months Ended				1 Months Ended				1 Months Ended		3 Months Ended
	Sep. 14, 2012 Skylink	Sep. 14, 2012 Skylink Maximum	Sep. 14, 2012 Skylink Expected working capital adjustment	Sep. 14, 2012 Skylink Minimum portion of second earn-out payment	Sep. 14, 2012 Skylink Fair value of contingent consideration	Sep. 29, 2012 Skylink Payable in December, 2012	Sep. 29, 2012 Skylink Payable no later than May 31, 2013 Maximum	Sep. 29, 2012 Skylink Payable no later than May 31, 2013 Minimum	Apr. 03, 2012 Pinnacle	Apr. 30, 2011 Pinnacle	Jun. 30, 2012 Pinnacle	Dec. 31, 2011 Pinnacle	Mar. 31, 2012 Pinnacle	Apr. 03, 2011 Pinnacle Item	Apr. 02, 2011 Pinnacle	Apr. 30, 2011 Pinnacle Maximum	Apr. 03, 2011 Pinnacle Maximum	Mar. 31, 2012 Pinnacle Weighted Average	Mar. 31, 2011 Pinnacle Weighted Average	Apr. 30, 2011 Pinnacle At Closing	Apr. 30, 2011 Pinnacle Held in Escrow	Jun. 30, 2012 Cableview	Mar. 31, 2012 Cableview	Mar. 02, 2012 Cableview	Mar. 02, 2012 Cableview Six Month Earn-out Maximum	Mar. 02, 2012 Cableview Twelve Month Earn-out Maximum	Jan. 03, 2012 Streamline
Business Acquisition
Business acquisition, cash	$ 14,000,000													$ 12,700,000										$ 2,400,000			$ 458,000
Business acquisition, fair value of deferred and contingent consideration			696,000	3,936,000	5,332,000									25,800,000										484,000
Business acquisition, fair value of equity issued														8,500,000
Business acquisition, aggregate purchase price	23,964,000													47,000,000			50,700,000							2,884,000			458,000
Business acquisition, aggregate purchase price		24,200,000															30,000,000
Base purchase price														20,700,000
Business acquisition, payments											27,200,000
Business acquisition, cash paid											19,500,000	2,400,000										1,900,000	500,000
Business acquisition, contingent consideration potential cash payment		5,500,000				3,500,000	6,000,000	4,000,000																500,000	400,000	1,400,000
Number of earn-out payments														3
Earn-out payments payable in cash														60.00%
Earn-out payments payable in shares														40.00%
Shares issuable, per Asset Purchase Agreement														8,000,000
Closing stock price (in dollars per share)													$ 3.37		$ 9.14			$ 3.65	$ 8.65
Number of trading days used to determine weighted average of the closing prices	20 days								20 days
Business acquisition, common stock issued										924,856	2,105,000					3,029,856				578,037	346,819
Business acquisition, equity issued											$ 7,700,000

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Business Combinations (Tables)

9 Months Ended

Sep. 29, 2012

Business Acquisition

Pro forma revenues and income (loss) from continuing operations

	Three Months Ended				Nine Months Ended
	September 29, 2012		October 1, 2011		September 29, 2012			October 1, 2011
Revenues	$	138,049	$	110,703	$	346,064		$	288,527
Income (loss) from continuing operations	5,244		3,345		(302		)	(10,432		)

Skylink

Business Acquisition

Schedule of Calculation of Preliminary purchase price

Cash	$	14,000
Fair value of deferred consideration:
Expected working capital adjustment	696
Minimum portion of second earn-out payment	3,936
Fair value of contingent consideration	5,332
Total purchase price	$	23,964

Schedule of the Allocation of the Purchase Price

Accounts receivable	$	1,853
Inventories	1,548
Property and equipment	1,115
Amortizable intangible assets	17,790
Goodwill	3,446
Accounts payable and accrued expenses	(1,788		)
Total fair value of net assets acquired	$	23,964

Amortizable Intangible Assets Acquired

	Estimated		Weighted-average
	fair value		amortization period
Customer relationships and backlog	$	17,300	7.0 years
Non-compete agreements	490		3.0 years
Total	$	17,790	6.9 years

Pinnacle

Business Acquisition

Schedule of the Allocation of the Purchase Price

Cash	$	451
Accounts receivable	4,313
Inventories	652
Prepaid expenses and other assets	192
Property and equipment	2,599
Amortizable intangible assets	28,686
Goodwill	16,817
Other assets	445
Accounts payable and accrued expenses	(3,700		)
Billings in excess of costs	(636		)
Deferred revenue	(2,462		)
Capital lease obligations	(377		)
Total fair value of net assets acquired	$	46,980

Amortizable Intangible Assets Acquired

	Estimated		Weighted-average
	fair value		amortization period
Customer relationships	$	23,530	10.5 years
Non-compete agreements	388		2.0 years
Technology and trade names	4,768		6.5 years
Total	$	28,686	9.7 years

2012 Cable Acquisitions

Business Acquisition

Schedule of Calculation of Preliminary purchase price

	Cableview		Streamline
Cash	$	2,400	$	458
Fair value of contingent consideration	484		—
Total purchase price	$	2,884	$	458

Schedule of the Allocation of the Purchase Price

	Cableview			Streamline
Property and equipment	$	501		$	98
Goodwill	2,097			160
Customer contracts	360			200
Non-compete agreement	130			—
Capital lease obligations	(204		)	—
Total fair value of net assets acquired	$	2,884		$	458

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Basis of Presentation

9 Months Ended

Sep. 29, 2012

Basis of Presentation

Basis of Presentation

2.             Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of September 29, 2012 and for the three and nine months ended September 29, 2012 and October 1, 2011, have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments, which are of a normal and recurring nature, necessary to present fairly the results of its operations and cash flows at the dates and for the periods indicated. The results of operations for the interim periods are not necessarily indicative of the results for the full fiscal year. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed with the SEC on March 7, 2012.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 29, 2012	Dec. 31, 2011
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred Stock, par value (in dollars per share)	$ 0.00002	$ 0.00002
Preferred Stock, shares authorized	20,000,000	20,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common Stock, par value (in dollars per share)	$ 0.00002	$ 0.00002
Common Stock, shares authorized	200,000,000	200,000,000
Common Stock, shares issued	18,712,747	16,305,369
Common Stock, shares outstanding	18,712,747	16,305,369

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Stock Options and Restricted Stock Units

9 Months Ended

Sep. 29, 2012

Stock Options and Restricted Stock Units

Stock Options and Restricted Stock Units

12.          Stock Options and Restricted Stock Units

Plan Summary

As of September 29, 2012, the Company sponsored three stock option plans, the 1999 Securities Plan (the “1999 Plan”), the 2007 Equity Incentive Plan (the “2007 Plan”) and the 2009 Omnibus Securities Plan (the “2009 Plan”) (collectively, the “Plans”).

The Plans provide for the grant of RSUs, stock options and certain other stock-based instruments. The terms of these instruments are set by the Company’s Board of Directors. Stock options expire no later than ten years after the date the stock option is granted. As of September 29, 2012, a total of 1.6 million shares of the Company’s common stock had been authorized for issuance under the Plans, of which 0.3 million shares remain eligible for the grant of awards under the Plans.

Tender Offer

On December 9, 2010, the Company commenced a tender offer to exchange certain eligible options to purchase shares of its common stock that were currently outstanding under the following stock option plans: (i) the 1999 Plan; (ii) the 2007 Plan; and (iii) the 2009 Plan. Eligible options fell within one of the following three groups: (i) non-Homerun Portion (as defined below) stock options that were granted under the 2007 Plan and were vested as of December 31, 2010 (“Group 1”); (ii) non-Homerun Portion stock options that were unvested as of December 31, 2010 and any Homerun Portion stock options (whether vested or unvested) that were granted under the 2007 Plan (“Group 2”); and (iii) vested and unvested stock options granted under the 1999 Plan and the 2009 Plan (“Group 3”). The “Homerun Portion” of a 2007 Plan stock option grant was the 40% portion of each stock option grant, whether vested or unvested, that becomes exercisable (at its then current exercise price) only if and when the fair market value of the Company’s common stock is at least $168.00 per share.

Each tendered eligible option was cancelled in exchange for either a grant of RSUs or a replacement option, depending on whether the tendered eligible option was in Group 1, Group 2 or Group 3.  In exchange for each tendered eligible option in Group 1 and Group 3, the holder was granted a replacement option with an exercise price per share equal to the fair market value of the Company’s common stock on the first business day following the expiration of the tender offer, January 10, 2011. Except for the exercise price and the date of grant, all other material terms and provisions (including post-termination exercise periods) of the eligible options remained unchanged.  In exchange for the tender of all eligible options in Group 2, each holder received a grant of RSUs under the 2009 Plan. RSUs represent the right to receive a share of the Company’s common stock for each vested RSU.

The tender offer expired on January 7, 2011, and pursuant to the tender offer, eligible options to purchase an aggregate of 296,833 shares of the Company’s common stock were validly tendered and not withdrawn, and the Company accepted for repurchase these eligible options. The holders of eligible options who validly tendered eligible options received an aggregate of 688,976 RSUs and 96,204 replacement options, repriced at an exercise price of $9.42 per share. For more information, refer to the Company’s Tender Offer Statement on Schedule TO, as filed with the SEC on December 9, 2010, as amended on December 28, 2010 and January 10, 2011. The Company issued an additional 74,202 RSUs on January 10, 2011 to eligible employees and members of the Board of Directors who were not eligible to participate in the tender offer or that did not hold any Group 2 options.

Long-Term Incentive Plan

At a meeting held on April 3, 2012, the Board of Directors approved a Long-Term Incentive Plan (“LTI Plan”) as part of a broader compensation plan for participating senior executives of the Company. Under the LTI Plan, each participant shall receive an annual target grant of RSUs, valued as a percentage of the participant’s base salary, that consist 50% of time-vested RSUs that vest in equal annual installments on the first four anniversaries of the date of grant, and 50% of performance-vested RSUs that vest at the end of a three-year period following the date of grant, based upon the achievement of annual performance conditions established by the Committee in advance of each year during the grant period. The number of performance-vested RSUs ultimately earned will vary based on achievement with respect to the established performance targets. In this regard, if achievement of the target goal is at less than 90%, no performance-based RSUs will be earned. If achievement is between 90% and 100% of target, then the number of RSUs earned will be prorated from 50% (at 90% achievement) to 100% (at 100% achievement) of the initial grant. If achievement is over 100% of target, then the number of RSUs earned will be increased commensurate with the percentage of achievement over target, with a maximum award of 150% of the initial grant. In connection with this plan, the Company issued 268,509 RSUs.

Other Disclosures

The following table presents the changes in stock options, RSUs and restricted shares under each of the Plans:

	Stock Options2009 and 1999 Plans				RSUs2009 Plan				Restricted SharesNon-Plan
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Price		Shares	Weighted AveragePrice
Outstanding at December 31, 2011	89,291		$	10.28	487,726		$	9.46	—	$	—
Granted	—		—		453,206		3.76		192,307	2.60
Exercised / Vested	—		—		(401,562	)	8.47		—	—
Cancelled / Forfeited	(19,325	)	9.50		(18,873	)	9.42		—	—
Outstanding at September 29, 2012	69,966		10.49		520,497		5.26		192,307	2.60

On July 2, 2012, 82,671 RSUs issued in connection with our tender offer vested. On July 16, 2012, Rocco Romanella joined the Company as Chief Executive Officer and was granted 192,307 restricted shares of the common stock of the Company, which are subject to service-based vesting in four equal annual installments on the dates that are 6, 12, 18 and 24 months following the grant date. In September 2012, the Company’s Chief Administrative Officer left the Company and entered into an agreement which entitled her to the immediate vesting of her 56,543 outstanding RSUs.

During the three months ended September 29, 2012 and October 1, 2011, the Company recorded stock-based compensation expense of $1.0 million and $0.8 million, respectively. During the nine months ended September 29, 2012 and October 1, 2011, the Company recorded stock-based compensation expense of $4.0 million and $4.4 million, respectively. The stock-based compensation expense for the three and nine months ended September 29, 2012 included $0.3 million for the acceleration of RSU vesting related to the separation of the Chief Administrative Officer, and the stock-based compensation for the nine months ended September 29, 2012 included $1.4 million for the acceleration of RSU vesting related to the separation of the Chief Executive Officer and Executive Chairman. As of September 29, 2012, there was $4.2 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 2.0 years.

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Document and Entity Information	9 Months Ended
	Sep. 29, 2012	Nov. 02, 2012
Document and Entity Information
Entity Registrant Name	UniTek Global Services, Inc.
Entity Central Index Key	0000826773
Document Type	10-Q
Document Period End Date	Sep. 29, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,712,747
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

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Related-Party Transactions

9 Months Ended

Sep. 29, 2012

Related-Party Transactions

Related-Party Transactions

13.          Related-Party Transactions

The Company maintains certain policies and procedures for the review, approval and ratification of related-party transactions to ensure that all transactions with selected parties are fair, reasonable and in the Company’s best interest. All significant relationships and transactions are separately identified by management if they meet the definition of a related party or a related-party transaction. Related-party transactions include transactions that occurred during the year, or are currently proposed, in which the Company was or will be a participant and in which any related person had or will have a direct or indirect material interest. All related-party transactions are reviewed, approved and documented by the appropriate level of the Company’s management in accordance with these policies and procedures.

Monitoring and Oversight Agreement

On January 27, 2010, the Company entered into an Amended and Restated Monitoring and Oversight Agreement (the “M&O Agreement”) with HM Capital Partners LP (“HM LP”).

In connection with the closing of the equity offering completed in November 2010 (the “Equity Offering”), the parties to the M&O Agreement agreed to terminate the M&O Agreement and the Company has agreed to pay a termination fee of $4.3 million (payable in cash or stock, as described below) that would only become payable only upon certain conditions being met as outlined below.

·The Sector Performance Fund, which is an affiliate of HM LP, sells its entire ownership stake in the Company, and

·The average price per share of common stock realized by the Sector Performance Fund is above its basis, which was calculated as of the closing of the Equity Offering and includes the conversion of the Series B Preferred and all other shares owned by Sector Performance Fund prior to the Equity Offering. Subsequent to the Equity Offering and as of September 29, 2012, the Sector Performance Fund’s basis in its stock was significantly above the quoted market price of the Company’s common stock.

If the two conditions above are met and the termination payment becomes payable, the Company will be entitled to satisfy this obligation in either cash or shares of its common stock, at its sole discretion. If payment is made in shares of common stock, the stock price would be calculated using the 20-day trailing average share price as of the date that the two conditions above are met and the termination payment becomes payable.

The termination fee resulting from the termination of the M&O Agreement represents a loss contingency. As of September 29, 2012, the Company believes it does not yet meet the requirements to be recorded as a liability since the Company’s quoted stock price is currently trading well below the Sector Performance Fund basis and a sale of their stock would not meet the conditions precedent required to trigger payment of the termination fee. The Company will continue to evaluate this loss contingency on an ongoing basis and as of each reporting period in order to determine the probability of the triggering conditions being met.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS
Revenues	$ 132,124	$ 101,863	$ 326,762	$ 261,991
Cost of revenues	104,517	78,632	260,937	206,214
Gross profit	27,607	23,231	65,825	55,777
Selling, general and administrative expenses	10,590	11,649	32,597	34,322
Change in fair value of contingent consideration			(724)
Restructuring charges	1,594		6,400
Depreciation and amortization	6,710	5,624	19,799	18,112
Operating income	8,713	5,958	7,753	3,343
Interest expense	3,883	3,313	10,496	11,259
Loss on extinguishment of debt				3,466
Other income, net	(77)	(57)	(1,147)	(163)
Income (loss) from continuing operations before income taxes	4,907	2,702	(1,596)	(11,219)
Income tax expense	293	354	315	150
Income (loss) from continuing operations	4,614	2,348	(1,911)	(11,369)
(Loss) income from discontinued operations, net of income taxes	(30,669)	73	(34,541)	(448)
Net (loss) income	(26,055)	2,421	(36,452)	(11,817)
Net (loss) income per share - basic and diluted:
Continuing operations (in dollars per share)	$ 0.25	$ 0.14	$ (0.11)	$ (0.72)
Discontinued operations (in dollars per share)	$ (1.64)	$ 0.01	$ (1.92)	$ (0.03)
Net (loss) income (in dollars per share)	$ (1.39)	$ 0.15	$ (2.03)	$ (0.75)
Weighted average shares of common stock outstanding - basic and diluted (in shares)	18,732	16,350	17,969	15,839
Comprehensive (loss) income	$ (26,061)	$ 2,100	$ (36,417)	$ (12,072)

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 29, 2012

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

7.             Goodwill and Other Intangible Assets

The following table presents the changes in the carrying amount of the Company’s goodwill by segment:

	Fulfillment		Engineering & Construction			Total
Balance at December 31, 2011	$	105,308	$	58,489		$	163,797
Acquisitions	5,703		—			5,703
Impairment	—		(33,005		)	(33,005		)
Other adjustments	30		—			30
Balance at September 29, 2012	$	111,041	$	25,484		$	136,525

Accumulated impairment losses at September 29, 2012 and December 31, 2011 were $65.4 million and $32.4 million, respectively, resulting from impairments of goodwill in the wireline reporting unit during the three months ended September 29, 2012 and during the year ended December 31, 2009.

The following table presents the components of amortizable intangible assets, net:

	September 29,		December 31,
	2012		2011
Amortizable intangible assets:
Customer relationships	$	116,522	$	98,662
Technology and trade names	4,768		4,768
Non-compete agreements	2,591		1,971
Total amortizable intangible assets	123,881		105,401
Accumulated amortization:
Customer relationships	75,720		68,879
Technology and trade names	1,255		628
Non-compete agreements	1,824		1,476
Total accumulated amortization	78,799		70,983
Amortizable intangible assets, net	$	45,082	$	34,418

Amortization expense for the three months ended September 29, 2012 and October 1, 2011 was $2.7 million and $2.4 million, respectively. Amortization expense for the nine months ended September 29, 2012 and October 1, 2011 was $7.8 million and $8.5 million, respectively.

The following table presents estimated amortization expense for the remainder of the current year, for each of the following four years and thereafter:

Three months ending December 31, 2012	$	2,783
2013	7,048
2014	6,144
2015	5,957
2016	5,136
Thereafter	18,014
Total	$	45,082

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Concentration of Credit Risk

9 Months Ended

Sep. 29, 2012

Concentration of Credit Risk

Concentration of Credit Risk

6.             Concentration of Credit Risk

The following table presents revenue concentration information as a percentage of total consolidated revenues from continuing operations:

	Three Months Ended		Nine Months Ended
	September 29, 2012	October 1, 2011	September 29, 2012	October 1, 2011	Primary Segment
Revenues from top 10 customers	96%	93%	94%	92%
Revenues from significant customers:
DIRECTV	39%	56%	42%	57%	Fulfillment
AT&T	25%	2%	14%	1%	Engineering & Construction
Comcast	15%	17%	16%	17%	Fulfillment
Eaton Electric	3%	2%	7%	1%	Engineering & Construction

At September 29, 2012 and December 31, 2011, credit risk was concentrated with five customers that accounted for approximately $90.2 million, or 77%, and $47.6 million, or 52%, respectively, of accounts receivable and unbilled revenue.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 29, 2012

Summary of Significant Accounting Policies

Comprehensive Income Loss

	Three Months Ended						Nine Months Ended
	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Net (loss) income	$	(26,055	)	$	2,421		$	(36,452	)	$	(11,817	)
Foreign currency translation (loss) gain	(6		)	(321		)	35			(255		)
Comprehensive (loss) income	$	(26,061	)	$	2,100		$	(36,417	)	$	(12,072	)

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Income Taxes

9 Months Ended

Sep. 29, 2012

Income Taxes

Income Taxes

14.          Income Taxes

For the three months ended September 29, 2012, the Company’s income tax expense was $0.3 million, which consisted primarily of a deferred tax expense of $0.2 million related to tax deductible goodwill and deferred tax expense of $0.1 million related to the Company’s Canadian operations. During the three months ended October 1, 2011, the Company’s income tax expense was $0.4 million and consisted primarily of a current tax expense of $0.3 million related to state income taxes and unrecognized tax benefits and a deferred tax expense of $0.1 million related to the Company’s Canadian operations.

For the nine months ended September 29, 2012, the Company’s income tax expense was $0.3 million, which consisted primarily of a deferred tax expense of $0.3 million related to tax deductible goodwill. For the nine months ended October 1, 2011, the Company’s income tax expense was $0.2 million, which consisted primarily of a current tax expense of $0.2 million related to state income taxes and unrecognized tax benefits.

Because the Company has not yet achieved profitable operations outside of Canada, management believes the potential tax benefits from other deferred tax assets do not satisfy the criteria for recognition and accordingly has recorded a valuation allowance for substantially its entire gross deferred tax asset. Additionally, for tax purposes, certain goodwill is being amortized. In periods when the book basis of tax deductible goodwill exceeds its respective tax basis, a net deferred tax liability is recorded in the consolidated financial statements, since the basis difference is not expected to reverse within the periods that the Company’s deferred tax assets will be recognized.

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Legal Proceedings

9 Months Ended

Sep. 29, 2012

Legal Proceedings

Legal Proceedings

10.          Legal Proceedings

From time to time, the Company is a party to various lawsuits, claims, or other legal proceedings and is subject, due to the nature of its business, to governmental agency oversight, audits, investigations and review. Such actions may seek, among other things, compensation for alleged personal injury, breach of contract, property damage, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. Under such governmental audits and investigations, the Company may become subject to fines and penalties or other monetary damages. With respect to such lawsuits, claims, proceedings and governmental investigations and audits, the Company accrues reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not believe any of the pending proceedings, individually or in the aggregate, will have a material effect on its consolidated results of operations, cash flows or financial condition.

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Long-Term Debt

9 Months Ended

Sep. 29, 2012

Long-Term Debt

Long-Term Debt

8.             Long-Term Debt

On April 15, 2011, the Company completed a refinancing of all of its existing debt by entering into (i) a Credit Agreement (the “Term Loan Agreement”) by and among UniTek, the several banks and other financial institutions or entities that are parties to the Term Loan Agreement (collectively, the “Term Lenders”); and (ii) a Revolving Credit and Security Agreement (the “Revolving Loan Agreement”) by and among UniTek (and certain subsidiaries of UniTek) and PNC Bank, National Association (the “Revolving Lender”).

The Term Loan Agreement provides for a $100.0 million term loan (the “Term Loan”), and the Revolving Loan Agreement provides for a $75.0 million revolving credit facility (“Revolving Loan”). Both the Term Loan and the Revolving Loan may be used for general business purposes. The Term Loan is to be repaid in quarterly installments totaling 1.00% per annum of the term loan amount. Such payments began on June 30, 2011 and will end upon maturity of the debt in 2018. The original borrowing under the Term Loan Agreement was subject to a three percent (3.00%) debt discount totaling $3.0 million, which is being amortized over the life of the loan. The Term Loan bears interest at one, two, three or six month LIBOR (with a floor of 1.50%) plus a margin of 7.50% (9.00% at September 29, 2012). The Revolving Loan matures in 2016. UniTek may draw on the Revolving Loan and repay amounts borrowed in unlimited repetition up to the maximum allowed amount so long as no event of default has occurred and is continuing. The interest rate on the Revolving Loan can be a combination of LIBOR (with no floor) and/or a base rate plus a margin of between 2.25% and 2.75% (the weighted average interest rate of the Revolving Loan was 3.93% at September 29, 2012). Subject to certain terms and conditions, the Term Loan Agreement and the Revolving Loan Agreement include accordion features of $50.0 million and $25.0 million, respectively.

On May 3, 2012, the Company exercised its right to increase its borrowings by $20.0 million under the accordion feature of the Term Loan Agreement (the “First Incremental Term Draw”). The First Incremental Term Draw was subject to a four percent (4.00%) debt discount which is being amortized over the remaining life of the loan. The interest rate, maturity date and terms of the Term Loan Agreement did not change.

On September 13 and 14, 2012, the Company entered into a series of arrangements in order to obtain financing for the acquisition of Skylink. First, the Company entered into an amendment to the Revolving Loan Agreement which provided the consent of the lenders to complete the acquisition and increased the sublimit for letters of credit from $25.0 million to $35.0 million. Next, the Company exercised its right to further increase its borrowings by $15.0 million under the accordion feature of the Term Loan Agreement (the “Second Incremental Term Draw”). The Second Incremental Term Draw was subject to a three percent (3.00%) debt discount which is being amortized over the remaining life of the loan. Finally, the Company entered into an amendment to the Term Loan Agreement which clarified that the fee applicable to any optional future repayments or refinancing also applies to amounts borrowed under the accordion feature of the Term Loan Agreement. There were no other changes to the interest rate, maturity date and terms of the Term Loan Agreement and the Revolving Loan Agreement.

The Term Loan Agreement and the Revolving Loan Agreement contain customary representations and warranties of UniTek as well as provisions for repayment, guarantees, other security and customary events of default. Specifically, the Revolving Loan Agreement and the Term Loan Agreement provide the Revolving Lender and the Term Lenders, respectively, with security interests in the collateral of UniTek (and certain subsidiaries of UniTek). As of September 29, 2012, the Company had $22.9 million in letters of credit outstanding under the Revolving Loan Agreement.

The following table presents the components of long-term debt:

	September 29,		December 31,
	2012		2011
Revolving Loan	$	35,153	$	15,663
Term Loan, net of debt discounts of $3,561 and $2,696, respectively	129,801		96,554
Total long-term debt	164,954		112,217
Less current portion	1,350		1,000
Long-term debt, net of current portion	$	163,604	$	111,217

The following table presents future maturities of total long-term debt, exclusive of debt discounts:

Three months ending December 31, 2012	$	338
2013	1,350
2014	1,350
2015	1,350
2016	36,503
Thereafter	127,624
Total	$	168,515

The Term Loan Agreement and the Revolving Loan Agreement require the Company to be in compliance with specified financial covenants, including (i) a “Consolidated Leverage Ratio” (as such term is respectively defined and applied in the Term Loan Agreement and the Revolving Loan Agreement) of less than a range of 4.75-3.00 to 1.00 (such ratio declining over time); (ii) a “Fixed Charge Coverage Ratio” (as such term is defined in the Term Loan Agreement and the Revolving Loan Agreement) not less than 1.2 to 1.0 for every fiscal quarter ended after the end of fiscal year 2011; and (iii) certain other covenants related to the operation of UniTek’s business in the ordinary course. In the event of noncompliance with these financial covenants and other defined events of default, the Term Lenders and the Revolving Lender are entitled to certain remedies, including acceleration of the repayment of amounts outstanding on the Term Loan and the Revolving Loan. The Company has to date not experienced any defaults with any such covenants.

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Fair Value Measurements

9 Months Ended

Sep. 29, 2012

Fair Value Measurements

Fair Value Measurements

9.             Fair Value Measurements

Assets and Liabilities for which Fair Value is only Disclosed

The carrying values of restricted cash, accounts receivable and unbilled revenue, accounts payable, accrued liabilities and financial instruments included in other assets and other liabilities are reflected in the consolidated balance sheets at historical cost, which is materially representative of their fair value due to the relatively short-term maturities of these assets and liabilities. The carrying values of capital lease obligations and long-term debt approximate fair value because they bear interest at rates currently available to the Company for debt with similar terms and remaining maturities (Level 2 measurements).

Recurring Fair Value Measurements

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 29, 2012:

	Fair Value Measurements at September 29, 2012
	Fair Value at September 29, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	445	$	445	$	—	$	—
Deferred compensation plan assets	767		767		—		—
Total	$	1,212	$	1,212	$	—	$	—
Liabilities
Contingent consideration	$	1,947	$	—	$	—	$	1,947
Interest rate swap	143		—		143		—
Total	$	2,090	$	—	$	143	$	1,947

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2011:

	Fair Value Measurements at December 31, 2011
	Fair Value at December 31, 2011		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	95	$	95	$	—	$	—
Deferred compensation plan assets	551		551		—		—
Total	$	646	$	646	$	—	$	—
Liabilities
Contingent consideration	$	26,958	$	—	$	—	$	26,958
Interest rate swap	133		—		133		—
Total	$	27,091	$	—	$	133	$	26,958

The Company is required to maintain interest rate hedge agreements covering a notional amount of not less than 50% of the debt outstanding under the Term Loan Agreement. As of September 29, 2012, the Company had entered into interest rate collar agreements having an aggregate notional principal amount of $60.0 million. These interest rate collar agreements mature on July 15, 2013. The Company intends to increase the aggregate notional principal amount of its interest rate collar agreements to $67.5 million during the quarter ended December 31, 2012 in order to maintain 50% coverage as required by the Term Loan Agreement. The fair value of the interest rate collar liability was $0.1 million at September 29, 2012 and December 31, 2011 and was recorded within accrued liabilities with changes in fair value recorded in earnings as a component of interest expense. The change in fair value is also reflected within the condensed consolidated statement of cash flows within the cash flows from operating activities. The valuation of the interest rate collar represents the estimate of the net present value of expected cash flows from each transaction between the Company and the financial institution using relevant mid-market data inputs and based on the assumption of no unusual market conditions or forced liquidations. Due to the Company’s limited use of derivative instruments, there were no significant concentrations of credit risk with respect to derivative transactions as of September 29, 2012.

Nonrecurring Fair Value Measurements

The Company was required to perform certain nonrecurring fair value measurements during the three months ended September 29, 2012. The following table presents the Company’s assets and liabilities measured at fair value on a nonrecurring basis as of September 29, 2012:

	Fair Value at September 29, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value Adjustment
Assets
Property and equipment – wireline	$	3,094	$	—	$	—	$	3,094	$	2,175
Goodwill – wireline	—		—		—		—		33,005
Total	$	3,094	$	—	$	—	$	3,094	$	35,180

The Company determined that the net assets of the wireline business unit met the definition of a disposal group held for sale at September 29, 2012 (the “wireline group”). The Company estimated the future cash flows of the wireline property and equipment and determined that their carrying value exceeded both the sum of their undiscounted cash flows and their fair values, resulting in an impairment charge of $2.2 million. The estimated future cash flows used in the undiscounted cash flow test and the fair value measurement were estimated based on management’s view of growth rates for the wireline business, anticipated future economic conditions and estimates of residual values (Level 3 measurements).

The Company estimated the fair value of the wireline reporting unit and determined that the implied fair value of the goodwill was zero, resulting in an impairment charge of $33.0 million. The fair value of the goodwill was implied by calculating the fair value of the wireline reporting unit and subtracting from that the fair values of the assets attributable to the reporting unit other than goodwill. The fair value of the reporting unit was determined by considering both a market approach, including private bid information obtained by the Company (Level 2 measurements) and the future discounted cash flows attributable to each, which was determined using the Company’s internal operating forecasts, weighted-average cost of capital, and certain other assumptions (Level 3 measurements). The fair values of the other assets and liabilities attributable to the wireline reporting unit, other than property and equipment, were calculated using historical cost, which is materially representative of their fair values due to the relatively short-term nature of the assets and liabilities (Level 2 measurements) and used only for purposes of calculating the implied fair value of goodwill.

Subsequent to the goodwill impairment, the Company measured the fair values of the assets held for sale and the liabilities held for sale of the wireline group, less estimated selling costs, and determined that their carrying values did not exceed this amount.

The $35.2 million of charges for the impairments of property and equipment and goodwill in the wireline reporting unit were included as components of loss from discontinued operations on the statements of comprehensive income or loss for the three and nine months ended September 29, 2012 (see Note 15).

Fair Value Measurements with Significant Unobservable Inputs

The fair value of contingent consideration for the acquisitions of Skylink, Cableview and Pinnacle was calculated using significant unobservable inputs. The fair value of contingent consideration related to the acquisition of Pinnacle was determined using a Monte Carlo simulation model applied to the Company’s estimate of Pinnacle’s expected EBITDA performance at each of the measurement dates. The significant assumptions used in this calculation included forecasted revenues and earnings, an estimate of the volatility of Pinnacle’s earnings based upon a selected peer group and a risk-free interest rate equal to that of U.S. Treasury bonds with terms approximating the earn-out periods. The fair value of contingent consideration related to the acquisitions of Skylink and Cableview was calculated using the average of probability-weighted scenarios of expected revenues at each of the measurement dates. The significant assumptions used in these calculations included forecasted revenues and the estimated likelihood for each performance scenario.

The following table presents the changes in the fair value of the contingent consideration during the nine months ended September 29, 2012:

	Contingent Consideration
Balance as of December 31, 2011	$	26,958
Acquisitions	5,816
Settlements:
Cash payments	(19,541		)
Reclassifications to accrued liabilities	(3,469		)
Reclassifications to additional paid-in-capital	(7,093		)
Changes in fair value	(724		)
Balance as of September 29, 2012	$	1,947

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Warrants

9 Months Ended

Sep. 29, 2012

Warrants

Warrants

11.          Warrants

The following table presents outstanding warrants to purchase shares of the Company’s common stock:

Issued to	Shares	Grant Date	Expiration Date	Exercise Price
UniTek employees	11,384	September 26, 2007	September 26, 2017	$	140.00
Former owners of UniTek Holdings	77,902	September 26, 2007	September 26, 2017	140.00
Former owners of acquired cable business	2,456	December 2, 2010	December 2, 2020	56.00
Total	91,742		Weighted average exercise price	137.75

During the three and nine months ended September 29, 2012 and October 1, 2011, no warrants to purchase shares were exercised, and there were no new issuances of warrants.

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Business (Details)	9 Months Ended
	Sep. 29, 2012 Item
Business
Number of reportable segments	2

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Stock Options and Restricted Stock Units (Details) (USD $)		9 Months Ended	1 Months Ended					9 Months Ended	1 Months Ended					0 Months Ended	1 Months Ended
	Sep. 29, 2012 Item	Sep. 29, 2012 Maximum	Jan. 31, 2011 Employee and Board of Director Member	Jan. 31, 2011 Tender Offers	Jan. 07, 2011 Tender Offers	Dec. 09, 2010 Tender Offers	Dec. 09, 2010 Tender Offers Minimum	Sep. 29, 2012 RSUs 2009 Plan	Apr. 30, 2012 RSUs 2009 Plan Achievement of target less than 90%	Apr. 30, 2012 RSUs 2009 Plan Achievement over 100% of target	Apr. 30, 2012 RSUs 2009 Plan Minimum Achievement between 90% and 100% of target	Apr. 30, 2012 RSUs 2009 Plan Maximum Achievement between 90% and 100% of target	Apr. 30, 2012 RSUs 2009 Plan Maximum Achievement over 100% of target	Apr. 03, 2012 RSUs 2009 Plan Long Term Incentive Plan	Jan. 31, 2011 RSUs 2009 Plan Tender Offers	Jan. 31, 2011 Replacement Stock Options Tender Offers	Apr. 30, 2012 Time Vested Restricted Stock Units	Apr. 30, 2012 Performance Vested Restricted Stock Units
Stock options, restricted stock units and restricted shares
Number of sponsored stock option plans	3
Stock option expiration period from date of grant		10 years
Shares of common stock authorized for issuance	1,600,000
Common stock reserved for issuance, eligible for the grant of awards	300,000
Percentage of stock option grant eligible to purchase shares of common stock						40.00%
Minimum fair market value of common stock per share							$ 168.00
Number of rights to receive Company's common stock for each vested RSU	1
Shares of common stock, eligible options to purchase					296,833
Aggregate RSUs received by holders of eligible options															688,976
Replacement options received by holders of eligible options																96,204
Replacement options, exercise price per share				$ 9.42
RSU shares issued			74,202					453,206
Long term incentive plan, annual target grant RSU's																	50.00%	50.00%
Long term incentive plan, annual target grant RSU's vest period from date of grant																	4 years	3 years
Long term incentive plan, achievement of target goal									90.00%	100.00%	90.00%	100.00%
Long term incentive plan, performance-based RSUs earned as a percentage of initial grant											50.00%	100.00%	150.00%
Long term incentive plan, shares issued														268,509

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Segment Reporting

9 Months Ended

Sep. 29, 2012

Segment Reporting

Segment Reporting

16.          Segment Reporting

Generally accepted accounting principles require the reporting of information about operating segments in the annual financial statements of public business enterprises and require that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. Operating segments are components of an enterprise about which separate financial information is available and regularly evaluated by the chief operating decision makers of an enterprise. The Company reports its financial results on the basis of two reportable segments: (1) Fulfillment and (2) Engineering and Construction.  The Fulfillment segment performs installation and other services for the satellite and broadband cable pay television industry. This reportable segment includes the aggregation of the satellite and broadband cable operating segments of the Company. The Engineering and Construction segment performs engineering and construction services on wireless telecommunications networks. Transactions within and between segments are generally made on a basis to reflect the market value of the services and have been eliminated in consolidation.

During the three months ended September 29, 2012, management of the Company committed to a plan to sell the net assets of the wireline group. As a result, its results of operations have been excluded from the reported results of the Engineering and Construction segment, and segment information for periods prior to September 29, 2012 has been restated to reflect the discontinued operation classification.

The Company evaluates the performance of its operating segments based on several factors of which the primary financial measure is segment EBITDA. Management believes segment operating income or loss represents the closest GAAP measure to segment EBITDA.

The following table presents selected segment financial information for the three months ended September 29, 2012 and October 1, 2011:

	Three Months Ended
	September 29, 2012							October 1, 2011
	Fulfillment		Engineering & Construction		Total			Fulfillment		Engineering & Construction			Total
Revenues	$	84,579	$	47,545	$	132,124		$	81,708	$	20,155		$	101,863
Cost of revenues	65,382		39,135		104,517			61,228		17,404			78,632
Gross profit	19,197		8,410		27,607			20,480		2,751			23,231
Selling, general and administrative expenses	6,337		4,253		10,590			7,386		4,263			11,649
Restructuring charges	957		637		1,594			—		—			—
Depreciation and amortization	4,977		1,733		6,710			3,724		1,900			5,624
Operating income (loss)	$	6,926	$	1,787	$	8,713		$	9,370	$	(3,412	)	$	5,958
Interest expense					3,883								3,313
Other income, net					(77		)						(57		)
Income from continuing operations before income taxes					$	4,907							$	2,702

The following table presents selected segment financial information for the nine months ended September 29, 2012 and October 1, 2011:

	Nine Months Ended
	September 29, 2012									October 1, 2011
	Fulfillment			Engineering & Construction			Total			Fulfillment		Engineering & Construction			Total
Revenues	$	224,752		$	102,010		$	326,762		$	213,775	$	48,216		$	261,991
Cost of revenues	178,263			82,674			260,937			164,257		41,957			206,214
Gross profit	46,489			19,336			65,825			49,518		6,259			55,777
Selling, general and administrative expenses	19,511			13,086			32,597			21,813		12,509			34,322
Change in fair value of contingent consideration	(400		)	(324		)	(724		)	—		—			—
Restructuring charges	3,975			2,425			6,400			—		—			—
Depreciation and amortization	14,694			5,105			19,799			13,764		4,348			18,112
Operating income (loss)	$	8,709		$	(956	)	$	7,753		$	13,941	$	(10,598	)	$	3,343
Interest expense							10,496								11,259
Loss on extinguishment of debt							—								3,466
Other income, net							(1,147		)						(163		)
Loss from continuing operations before income taxes							$	(1,596	)						$	(11,219	)

At September 29, 2012, the total assets of the Fulfillment segment were $202.2 million and the total assets of the Engineering and Construction segment were $170.9 million. This compares to $169.5 million and $179.4 million at December 31, 2011 for the Fulfillment segment and the Engineering and Construction segment, respectively. The increase of $32.7 million in the assets of the Fulfillment segment was primarily due to the acquisitions of Skylink, Cableview and Streamline. The decrease of $8.5 million in the assets of the Engineering and Construction segment compared to December 31, 2011 was primarily due the impairments of property and equipment and goodwill in the wireline reporting unit of $35.2 million, offset by increases in accounts receivable and unbilled revenue due to higher revenues in the wireless business.

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Concentration of Credit Risk (Tables)

9 Months Ended

Sep. 29, 2012

Concentration of Credit Risk

Revenue Concentration as a Percentage of Consolidated Revenue

	Three Months Ended		Nine Months Ended
	September 29, 2012	October 1, 2011	September 29, 2012	October 1, 2011	Primary Segment
Revenues from top 10 customers	96%	93%	94%	92%
Revenues from significant customers:
DIRECTV	39%	56%	42%	57%	Fulfillment
AT&T	25%	2%	14%	1%	Engineering & Construction
Comcast	15%	17%	16%	17%	Fulfillment
Eaton Electric	3%	2%	7%	1%	Engineering & Construction

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Fair Value Measurements (Details 4) (Contingent Consideration, USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 29, 2012
Changes in the fair value of the contingent consideration
Beginning Balance	$ 26,958
Acquisitions	5,816
Changes in fair value	(724)
Ending Balance	1,947
Cash payments
Changes in the fair value of the contingent consideration
Settlements	(19,541)
Reclassifications to accrued liabilities
Changes in the fair value of the contingent consideration
Settlements	(3,469)
Reclassifications to additional paid-in-capital
Changes in the fair value of the contingent consideration
Settlements	$ (7,093)

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Concentration of Credit Risk (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 29, 2012 Item	Dec. 31, 2011 Item
Concentration of credit risk
Accounts receivable and unbilled revenue	$ 116,464	$ 91,533
Credit Concentration Risk | Accounts Receivable | Top Five Customers
Concentration of credit risk
Account receivable concentration, number of major customers	5	5
Accounts receivable and unbilled revenue	$ 90,200	$ 47,600
Concentration risk percentage	77.00%	52.00%

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011
Cash flows from operating activities:
Net loss	$ (36,452)	$ (11,817)
Adjustments to reconcile net loss to net cash used in operating activities - continuing operations:
Loss (income) from discontinued operations, net of income taxes	34,541	448
Provision for doubtful accounts	1,435	384
Depreciation and amortization	19,799	18,112
Amortization of deferred financing fees	649	878
Change in fair value of derivatives	108	191
Accretion of debt discount	385	556
Change in fair value of contingent consideration	(724)
Loss on extinguishment of debt		3,466
Stock-based compensation	4,050	4,376
Gain on sale of fixed assets	(1,164)	(220)
Deferred taxes	281	(136)
Changes in assets and liabilities:
Accounts receivable and unbilled revenue	(45,919)	(8,770)
Inventories	(4,774)	(1,163)
Prepaid expenses and other assets	(372)	72
Accounts payable and accrued liabilities	23,927	(7,438)
Payment of contingent consideration	(2,427)
Net cash used in operating activities - continuing operations	(6,657)	(1,061)
Net cash provided by operating activities - discontinued operations	1,464	1,367
Net cash (used in) provided by operating activities	(5,193)	306
Cash flows from investing activities:
Acquisition of property and equipment	(3,734)	(2,939)
Proceeds from sale of property and equipment	1,701	318
Cash paid for acquisition of businesses, net of cash acquired	(16,858)	(12,581)
Net cash used in investing activities - continuing operations	(18,891)	(15,202)
Net cash used in investing activities - discontinued operations	(652)	(1,258)
Net cash used in investing activities	(19,543)	(16,460)
Cash flows from financing activities:
Proceeds from revolving credit facilities, net	19,490	22,683
Proceeds from long-term debt, net of debt discount	33,750	97,000
Repayment of long-term debt	(888)	(109,400)
Repayment of capital leases	(7,702)	(6,394)
Payment of contingent consideration	(17,114)
Financing fees	(1,016)	(3,929)
Other financing activities	(194)	(824)
Net cash provided by (used in) financing activities - continuing operations	26,326	(864)
Net cash used in financing activities - discontinued operations	(1,226)	(468)
Net cash provided by (used in) financing activities	25,100	(1,332)
Effect of exchange rate on cash and cash equivalents	(14)	(161)
Net increase (decrease) in cash and cash equivalents	350	(17,647)
Cash and cash equivalents at beginning of period	95	17,716
Cash and cash equivalents at end of period	445	69
Supplemental cash flow information:
Interest paid	8,993	10,591
Income taxes paid, net	784	244
Significant non-cash items:
Fair value of equity paid for acquisition	7,093	8,453
Acquisition of property and equipment financed by capital leases	$ 3,788	$ 8,851

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Accounts Receivable and Unbilled Revenue, Net of Allowances

9 Months Ended

Sep. 29, 2012

Accounts Receivable and Unbilled Revenue, Net of Allowances

Accounts Receivable and Unbilled Revenue, Net of Allowances

5.             Accounts Receivable and Unbilled Revenue, Net of Allowances

The following table presents the components of accounts receivable and unbilled revenue, net of allowances:

	September 29,			December 31,
	2012			2011
Accounts receivable	$	73,417		$	60,864
Unbilled revenue	46,014			34,280
	119,431			95,144
Allowance for doubtful accounts	(2,967		)	(3,611		)
Total	$	116,464		$	91,533

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 29, 2012

Goodwill and Other Intangible Assets

Changes in Carrying Amount of Goodwill by Segment

	Fulfillment		Engineering & Construction			Total
Balance at December 31, 2011	$	105,308	$	58,489		$	163,797
Acquisitions	5,703		—			5,703
Impairment	—		(33,005		)	(33,005		)
Other adjustments	30		—			30
Balance at September 29, 2012	$	111,041	$	25,484		$	136,525

Amortizable intangible assets net

	September 29,		December 31,
	2012		2011
Amortizable intangible assets:
Customer relationships	$	116,522	$	98,662
Technology and trade names	4,768		4,768
Non-compete agreements	2,591		1,971
Total amortizable intangible assets	123,881		105,401
Accumulated amortization:
Customer relationships	75,720		68,879
Technology and trade names	1,255		628
Non-compete agreements	1,824		1,476
Total accumulated amortization	78,799		70,983
Amortizable intangible assets, net	$	45,082	$	34,418

Estimated Amortization Expense

Three months ending December 31, 2012	$	2,783
2013	7,048
2014	6,144
2015	5,957
2016	5,136
Thereafter	18,014
Total	$	45,082

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Business Combinations (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011
Business Combinations
Revenue	$ 138,049	$ 110,703	$ 346,064	$ 288,527
Income (loss) from continuing operations	$ 5,244	$ 3,345	$ (302)	$ (10,432)

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Discontinued Operations

9 Months Ended

Sep. 29, 2012

Discontinued Operations

Discontinued Operations

15.          Discontinued Operations

During the three months ended September 29, 2012, management of the Company committed to a plan to sell the net assets of the wireline group. The Company will continue to operate this business until completion of the sale, which is expected to occur during the fourth quarter of 2012. As of September 29, 2012, the wireline group consisted of $14.4 million of accounts receivable and unbilled receivables, $0.3 million of inventories, $0.9 million of prepaid expenses and other current assets, $3.1 million of property and equipment, $6.0 million of accounts payable and accrued expenses, and $3.1 million of capital lease obligations. As of September 29, 2012, the assets of the wireline group have been reclassified as assets held for sale, and the liabilities of the wireline group have been reclassified as liabilities held for sale. These assets and liabilities have historically been included in the Company’s Engineering and Construction segment.

The results of operations of the wireline group have been included in discontinued operations in the statements of comprehensive income or loss for the three and nine months ended September 29, 2012 and October 1, 2011. Discontinued operations for the three and nine months ended September 29, 2012 include pre-tax impairment charges of $35.2 million related to the impairments of property and equipment and goodwill in the wireline reporting unit. Additionally, discontinued operations for the three and nine months ended September 29, 2012 include an income tax benefit of $7.1 million and $5.5 million, respectively, which represents the difference between the Company’s total income tax expense originally computed and the amount attributable to continuing operations, and also reflects changes in deferred tax assets and liabilities that were triggered by the impairment charges of the wireline reporting unit.

Discontinued operations for the three and nine months ended September 29, 2012 and October 1, 2011 also include the results of certain cable fulfillment and wireless service locations that were shut down and discontinued due to lack of continuing revenues.

The following table presents the results of the Company’s discontinued operations:

	Three Months Ended					Nine Months Ended
	September 29, 2012			October 1, 2011		September 29, 2012			October 1, 2011
Revenues	$	10,499		$	19,007	$	39,735		$	57,143
(Loss) income from discontinued operations before income taxes	(37,732		)	955		(40,042		)	2,038
Income tax (benefit) expense from discontinued operations	(7,063		)	882		(5,501		)	2,486
(Loss) income from discontinued operations, net of income taxes	$	(30,669	)	$	73	$	(34,541	)	$	(448	)