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Related Party Transactions
3 Months Ended
Mar. 31, 2018
Related Party Transactions [Abstract]  
Related Party Transactions
Note 15 - Related Party Transactions
MasTec purchases, rents and leases equipment and purchases various types of supplies and services used in its business from a number of different vendors on a non-exclusive basis, including entities that are associated with members of subsidiary management. For the three month periods ended March 31, 2018 and 2017, related party lease payments for operational facilities and equipment totaled approximately $7.5 million and $12.7 million, respectively. Payables associated with these related party leases totaled approximately $3.4 million and $0.1 million as of March 31, 2018 and December 31, 2017, respectively. Additionally, payments to related parties for various types of supplies and services, including ancillary construction services, project-related site restoration and marketing and business development activities totaled approximately $9.0 million and $6.6 million for the three month periods ended March 31, 2018 and 2017, respectively. As of March 31, 2018 and December 31, 2017, related amounts payable totaled approximately $1.4 million and $5.2 million, respectively.
In the third quarter of 2017, MasTec entered into an arrangement to perform construction services for an entity of which a member of subsidiary management is a minority owner. Revenue from this arrangement totaled approximately $2.7 million for the three month period ended March 31, 2018, and related amounts receivable totaled approximately $2.0 million and $0.6 million as of March 31, 2018 and December 31, 2017, respectively. In the third quarter of 2017, MasTec acquired an oil and gas pipeline equipment company that was formerly owned by a member of subsidiary management for approximately $40.6 million in cash and an estimated earn-out liability of $59.9 million as of March 31, 2018. MasTec previously leased equipment from this company. In February 2018, MasTec acquired a construction management firm specializing in steel building systems, of which Juan Carlos Mas, who is the brother of Jorge Mas, Chairman of MasTec’s Board of Directors, and José R. Mas, MasTec’s Chief Executive Officer, was a minority owner, for approximately $5.4 million in cash and an estimated earn-out liability of approximately $1.3 million as of March 31, 2018. The net assets acquired included notes payable to the former owners totaling approximately $2.6 million, which amount was subsequently repaid.
MasTec rents and leases equipment and purchases equipment supplies used in its business from CCI, in which it has a 15% equity investment. Juan Carlos Mas serves as the chairman of CCI, and a member of management of a MasTec subsidiary is a minority owner. MasTec paid CCI approximately $5.9 million and $1.0 million, net of rebates, for the three month periods ended March 31, 2018 and 2017, respectively, for equipment supplies, rentals, leases and servicing. Related amounts payable, net of rebates receivable, totaled approximately $3.4 million as of March 31, 2018, and as of December 31, 2017, were de minimis.
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 March 31, 2018 and 2017, MasTec incurred approximately $5.0 million and $0.6 million, respectively, of expenses under this subcontracting arrangement. As of March 31, 2018 and December 31, 2017, related amounts payable totaled approximately $1.0 million and $2.0 million, respectively.
MasTec leases employees to a customer in which Jorge Mas and José R. Mas own a majority interest. For both the three month periods ended March 31, 2018 and 2017, MasTec charged approximately $0.2 million to this customer. As of both March 31, 2018 and December 31, 2017, outstanding receivables from employee leasing arrangements with this customer totaled approximately $0.2 million. The Company also provides satellite communication services to this customer. For the three month periods ended March 31, 2018 and 2017, revenue from satellite communication services provided to this customer totaled approximately $0.3 million and $0.2 million, respectively. As of both March 31, 2018 and December 31, 2017, amounts receivable from this arrangement totaled approximately $0.3 million.
MasTec has a leasing arrangement with an independent third party that leases an aircraft from a Company owned by Jorge Mas. For both the three month periods ended March 31, 2018 and 2017, MasTec paid approximately $0.5 million under this leasing arrangement. As of both March 31, 2018 and December 31, 2017, related amounts payable were de minimis.
The Company has a 40% interest in an entity that is accounted for as an equity method investment. As of both March 31, 2018 and December 31, 2017, advances outstanding from this entity, net, totaled approximately $0.3 million.
The Company’s Pacer subsidiary has a subcontracting arrangement with a contractual joint venture in which it holds a 35% undivided interest. For the three month periods ended March 31, 2018 and 2017, revenue recognized by the Company in connection with this arrangement totaled approximately $0.3 million and $0.1 million, respectively. As of March 31, 2018 and December 31, 2017, accounts receivable, net of BIEC, from this contractual joint venture totaled approximately $0.7 million and $0.8 million, respectively. Outstanding performance guarantees on behalf of this contractual joint venture, which are based on the original full contract value of the associated project, totaled Canadian $132.1 million as of both March 31, 2018 and December 31, 2017 (or approximately $102.4 million and $105.1 million, respectively). Additionally, the Company provided project-related financing in connection with this contractual joint venture of approximately $0.6 million and $0.8 million for the three month periods ended March 31, 2018 and 2017, respectively. As of March 31, 2018, there were no additional amounts committed to this entity.
Non-controlling interests in entities consolidated by the Company represent ownership interests held by members of management of certain of the Company’s subsidiaries, primarily in the Company’s Oil and Gas segment. In October 2017, the Company acquired the remaining non-controlling interests of one of these entities, with which it had a subcontracting arrangement for the performance of ancillary oil and gas construction services, for approximately $21.4 million in cash and an estimated earn-out liability of $9.0 million as of March 31, 2018, which liability is reflected within other current and other long-term liabilities, as appropriate. For the three month periods ended March 31, 2018 and 2017, the Company made distributions of earnings of approximately $0.6 million and $1.3 million, respectively, to holders of these non-controlling interests.
Split Dollar Agreements
In the first quarter of 2018, Jorge Mas, the Company, and José R. Mas and Juan Carlos Mas, as trustees of the Jorge Mas trust, entered into an amended and restated split dollar life insurance agreement that replaced the prior split dollar agreement with Jorge Mas. Additionally, in the first quarter of 2018, José R. Mas, the Company, and Jorge Mas, Juan Carlos Mas and Patricia Mas, as trustees of the José R. Mas trust, entered into an amended and restated split dollar life insurance agreement that replaced the prior split dollar life insurance agreement with José R. Mas. For details of the amended and restated split dollar life insurance agreements with each of Jorge and José R. Mas, see Note 15 - Related Party Transactions in the Company’s 2017 Form 10-K.
No payments were made in connection with either the current or predecessor agreements in either of the three month periods ended March 31, 2018 or 2017. As of both March 31, 2018 and December 31, 2017, life insurance assets associated with these agreements, which amounts are included within other long-term assets, totaled approximately $16.6 million.