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Related Party Transactions
9 Months Ended
Sep. 30, 2017
Related Party Transactions [Abstract]  
Related Party Transactions
Note 15 - Related Party Transactions
For the three month periods ended September 30, 2017 and 2016, revenue recognized by the Company’s Pacer subsidiary for work performed for a contractual joint venture in which it holds a 35% undivided interest totaled $0.6 million and $0.2 million, respectively, and for the nine month periods ended September 30, 2017 and 2016, totaled $0.9 million and $0.8 million, respectively. As of September 30, 2017 and December 31, 2016, receivables from this contractual joint venture totaled $0.9 million and $0.7 million, respectively. Related performance guarantees, which are based on the original full contract value, as of both September 30, 2017 and December 31, 2016, totaled Canadian $132.1 million (or approximately $105.9 million and $98.3 million, respectively). In connection with this contractual joint venture, the Company provided project-related financing of $2.7 million and $5.9 million, respectively, for the three and nine month periods ended September 30, 2017, and $0.8 million and $5.6 million, respectively, for the three and nine month periods ended September 30, 2016. As of September 30, 2017, there were no additional amounts committed to this entity.
In connection with an April 2017 acquisition, the Company acquired a 40% interest in an entity, valued at $0.4 million, which is accounted for as an equity method investment. The Company has a subcontracting arrangement with this entity. For the nine month period ended September 30, 2017, the Company incurred $0.2 million of expenses under this subcontracting arrangement, and there were no amounts outstanding as of September 30, 2017. During the nine month period ended September 30, 2017, the Company advanced $0.3 million to this entity, net, of which $0.3 million was outstanding as of September 30, 2017. The acquired company had a vendor financing arrangement with an entity that was owned by a member of subsidiary management, which arrangement was completed in the third quarter of 2017. The payments made under this arrangement for the three and nine month periods ended September 30, 2017 totaled $1.4 million and $5.3 million, respectively, and no amounts were outstanding as of September 30, 2017.
MasTec purchases, rents and leases equipment used in its business from a number of different vendors on a non-exclusive basis, including CCI, in which the Company has a cost method investment. Juan Carlos Mas, who is the brother of Jorge Mas, Chairman of MasTec’s Board of Directors, and José R. Mas, serves as the chairman of CCI. For the three month periods ended September 30, 2017 and 2016, MasTec paid CCI approximately $22.9 million and $10.0 million, respectively, for equipment supplies, rentals, leases and servicing. For the nine month periods ended September 30, 2017 and 2016, MasTec paid CCI approximately $34.9 million and $13.7 million, respectively, net of rebates. As of September 30, 2017 and December 31, 2016, related payables totaled approximately $6.1 million and $1.5 million, respectively.
MasTec has a subcontracting arrangement with an entity for the performance of construction services, the minority owners of which include an entity controlled by Jorge Mas and José R. Mas, along with two members of management of a MasTec subsidiary. For the three month periods ended September 30, 2017 and 2016, MasTec incurred $39.2 million and $5.6 million, respectively, of expenses under this subcontracting arrangement, and for the nine month periods ended September 30, 2017 and 2016, MasTec incurred $54.8 million and $8.8 million, respectively. During the third quarter of 2016, the Company sold equipment totaling $0.3 million to this entity. As of September 30, 2017 and December 31, 2016, related amounts payable totaled $20.1 million and $0.1 million, respectively.
MasTec leases employees to a customer in which Jorge Mas and José R. Mas own a majority interest. For both three month periods ended September 30, 2017 and 2016, MasTec charged approximately $0.2 million to this customer, and for both the nine month periods ended September 30, 2017 and 2016, charged $0.6 million. As of both September 30, 2017 and December 31, 2016, outstanding receivables from employee leasing arrangements with this customer totaled $0.2 million. The Company also provides satellite communication services to this customer. For both the three month periods ended September 30, 2017 and 2016, revenue from satellite communication services provided to this customer totaled approximately $0.2 million, and for the nine month periods ended September 30, 2017 and 2016, satellite communication revenues totaled $0.6 million and $0.7 million, respectively. As of September 30, 2017 and December 31, 2016, receivables from this arrangement totaled approximately $0.3 million and $0.4 million, respectively.
MasTec has a leasing arrangement with an independent third party that leases an aircraft from a Company owned by Jorge Mas. For the three month periods ended September 30, 2017 and 2016, MasTec paid $0.5 million and $0.7 million, respectively, under this leasing arrangement, and for the nine month periods ended September 30, 2017 and 2016, MasTec paid $1.5 million and $2.0 million, respectively. As of both September 30, 2017 and December 31, 2016, related amounts payable were de minimis.
For the three month periods ended September 30, 2017 and 2016, related party lease payments for operational facilities and equipment, which are primarily associated with members of subsidiary management, totaled approximately $11.3 million and $12.5 million, respectively, and for the nine month periods ended September 30, 2017 and 2016, related party lease payments totaled approximately $38.4 million and $31.6 million, respectively. Payables associated with related party leases totaled approximately $0.6 million and $0.3 million as of September 30, 2017 and December 31, 2016, respectively. Additionally, payments for various types of supplies and services, including ancillary construction services, project-related site restoration and marketing and business development activities associated with members of subsidiary management totaled approximately $26.4 million and $7.4 million for the three month periods ended September 30, 2017 and 2016, respectively, and totaled $41.0 million and $14.2 million for the nine month periods ended September 30, 2017 and 2016, respectively. As of September 30, 2017 and December 31, 2016, associated amounts payable totaled approximately $0.8 million and $3.7 million, respectively. In addition, MasTec performs construction services for an entity associated with a member of subsidiary management. Revenue from this arrangement totaled $1.0 million for the three month period ended September 30, 2017, and related receivables totaled $0.5 million as of September 30, 2017. The oil and gas pipeline equipment company that was acquired by MasTec in the third quarter of 2017 was formerly owned by a member of subsidiary management. MasTec previously leased equipment from this company. The Company paid $40.6 million in cash and $57.3 million of contingent consideration in connection with this acquisition.
Non-controlling interests in entities consolidated by the Company represent ownership interests held by certain members of management of several of the Company’s subsidiaries, primarily in our Oil and Gas segment, and the Company has a subcontracting arrangement with one of these entities for the performance of ancillary oil and gas construction services, which transactions are eliminated in consolidation. The Company made distributions of earnings of $1.3 million in the first quarter of 2017 to holders of its non-controlling interests.
Split Dollar Agreements
MasTec has split dollar life insurance agreements with each of José R. Mas and Jorge Mas. In connection with the split dollar agreement for José R. Mas, the Company made no payments in either of the three month periods ended September 30, 2017 and 2016, and paid $0.7 million in each of the nine month periods ended September 30, 2017 and 2016. In connection with the split dollar agreement for Jorge Mas, the Company paid $0.6 million for both the three month periods ended September 30, 2017 and 2016, and paid $1.1 million for both the nine month periods ended September 30, 2017 and 2016. As of September 30, 2017 and December 31, 2016, life insurance assets associated with these agreements totaled $16.6 million and $14.8 million, respectively, which amount is included within other long-term assets.