Related Party Transactions

9 Months Ended

Sep. 30, 2014

Related Party Transactions [Abstract]

Related Party Transactions

Note 11 – Related Party Transactions

The following table presents the Company’s transactions with related parties for the three and nine months ended September 30, 2014 and 2013:

	Three months ended September 30,				Nine months ended September 30,
(Dollar amounts in thousands)	2014		2013		2014		2013
Total revenues (1)(2)	$	40,958	$	40,920	$	123,128	$	125,087
Cost of revenues	$	68	$	1,570	$	687	$	6,680
Rent and other fees(3)(4)	$	1,999	$	1,636	$	6,000	$	31,708
Interest earned from and charged by affiliate
Interest income	$	48	$	25	$	150	$	67
Interest expense(5)	$	—	$	—	$	—	$	2,471

⁽¹⁾  Total revenues from Popular as a percentage of revenues were 46%, 46%, 45% and 47% for each of the periods presented above.

⁽²⁾  Includes revenues generated from investee accounted for under the equity method of $0.6 million and $2.0 million for the three and nine months ended September 30, 2014, respectively, and $0.6 million and $2.3 million for the corresponding 2013 periods.

⁽³⁾  Includes management fees to equity sponsors amounting to $20.3 million for the nine months ended September 30, 2013. Management fees paid during 2013 include $16.7 million resulting from the termination of the Consulting Agreements as explained below. It also includes $5.9 million paid to Popular in connection with the redemption premium on the senior notes during the first half of 2013.

⁽⁴⁾  For the periods presented above, $2.0 million, $1.6 million, $6.0 million and $9.1 million were recorded as selling, general and administrative expenses, and $22.6 million was recorded as non-operating expenses for the nine months ended September 30, 2013.

⁽⁵⁾  Interest expense relates to interest accrued on the senior secured term loan and senior notes held by Popular. As a result of the debt refinancing and the redemption of the senior notes in April 2013, Popular’s participation in such debt was extinguished.

On April 17, 2013, EVERTEC entered into a termination agreement with Holdings, EVERTEC Group and Popular and a termination agreement with Holdings, EVERTEC Group and Apollo Management VII, L.P. in connection with our initial public offering in April 2013 (the “Termination Agreements”). The Termination Agreements terminated the consulting agreements (the “Consulting Agreements”), each dated September 30, 2010, entered into by Holdings and EVERTEC Group with each of Popular and Apollo Management, pursuant to which Holdings and EVERTEC Group received certain advisory services from each of Popular and Apollo Management. The Consulting Agreements were terminated in their entirety upon payment of termination fees of approximately $8.5 million to Apollo Management and $8.2 million to Popular, in each case, plus any unreimbursed expenses payable in accordance with the terms of the Termination Agreements.

At September 30, 2014 and December 31, 2013, EVERTEC had the following balances arising from transactions with related parties:

(Dollar amounts in thousands)	September 30, 2014		December 31, 2013
Cash and restricted cash deposits in affiliated bank	$	18,827	$	13,933
Indemnification assets from Popular reimbursement (1)
Accounts receivable	$	1,632	$	1,900
Other long-term assets	$	—	$	1,686
Other due/to from affiliate
Accounts receivable	$	17,717	$	18,799
Prepaid expenses and other assets	$	1,147	$	216
Accounts payable(2)	$	5,907	$	8,886
Unearned income	$	7,485	$	4,100
Other long-term liabilities(2)	$	109	$	333

⁽¹⁾  Recorded in connection with reimbursements from Popular regarding certain software license fees.

⁽²⁾  Includes an account payable of $0.2 million and a long-term liability of $0.3 million for both September 30, 2014 and December 31, 2013, respectively, related to the unvested portion of stock options as a result of the equitable adjustment approved by our Board of Directors on December 18, 2012 that will be payable to executive officers and employees upon vesting of stock options.

At September 30, 2014, EVERTEC Group has a credit facility with Popular for $3.6 million, on behalf of EVERTEC CR, under which a letter of credit of a similar amount was issued.