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Related Party Transactions
9 Months Ended
Sep. 30, 2011
Related Party Transactions [Abstract] 
Related Party Transactions

21. Related party transactions

The Company has entered into related party transactions with GE and companies in which GE has a majority ownership interest or on which it exercises significant influence (collectively referred to as "GE" herein). The Company has also entered into related party transactions with its non-consolidating affiliates, a customer in which one of the Company's directors has a controlling interest and a customer which has a significant interest in the Company.

The related party transactions can be categorized as follows:

Revenue from services

Prior to December 31, 2004, substantially all of the revenues of the Company were derived from services provided to GE entities. In connection with the 2004 Reorganization, GE entered into a Master Service Agreement, or MSA, with the Company. The GE MSA, as amended, provides that GE will purchase services in an amount not less than a minimum volume commitment, or MVC, of $360,000 per year for seven years beginning January 1, 2005, $270,000 in 2012, $180,000 in 2013 and $90,000 in 2014. Revenues in excess of the MVC can be credited, subject to certain limitations, against shortfalls in the subsequent years.

On January 26, 2010, the Company extended its MSA, with GE by two years, through the end of 2016, including the minimum annual volume commitment of $360,000. The MSA also provides that the minimum annual volume commitment for each of the years 2014, 2015 and 2016 is $250,000, $150,000 and $90,000, respectively.

For the nine months ended September 30, 2010 and 2011, the Company recognized net revenues from GE of $353,791 and $358,487 respectively, representing 39% and 31%, respectively, of the consolidated total net revenues.

For the three months ended September 30, 2010 and 2011, the Company recognized net revenues from GE of $122,673 and $123,075 respectively, representing 38% and 29%, respectively, of the consolidated total net revenues.

For the nine months ended September 30 2010 and 2011, the Company recognized net revenues of $220 and $293, respectively, and for the three months ended 30 September 2010 and 2011, the Company recognized net revenues of $86 and $135, respectively, from a customer in which one of the Company's directors has a controlling interest.

For the nine months ended September 30 2010 and 2011, the Company recognized net revenues of $0 and $255, respectively, and for the three months ended 30 September 2010 and 2011, the Company recognized net revenues of $0 and $80, respectively, from a customer which has a significant interest in the Company.

 

Cost of revenue from services

The Company purchases certain services from GE mainly relating to communication and leased assets, which are included as part of operational expenses included in cost of revenue. For the nine months ended September 30, 2010 and 2011, cost of revenue, net of recovery, included amounts of $3,542 and $2,747, respectively, and for the three months ended September 30, 2010 and 2011, cost of revenue, net of recovery, included amounts of $960 and $680, respectively relating to services procured from GE. For the nine months ended September 30, 2010 and 2011, cost of revenue from services also include training and recruitment cost of $897 and $945, respectively, and $318 and $588, for the three months ended September 30, 2010 and 2011, respectively, from its non-consolidating affiliates.

Selling, general and administrative expenses

The Company purchases certain services from GE mainly relating to communication and leased assets, which are included as part of operational expenses included in selling, general and administrative expenses. For the nine months ended September 30, 2010 and 2011, selling, general and administrative expenses, net of recovery, included amounts of $420 and $308, respectively, and for the three months ended September 30, 2010 and 2011, selling, general and administrative expenses, net of recovery, included amounts of $107 and $26, respectively, relating to services procured from GE. For the nine months ended September 30, 2010 and 2011, selling, general, and administrative expenses also include training and recruitment cost and cost recovery, net, of $397 and $118, respectively, and for the three months ended September 30, 2010 and 2011, selling, general, and administrative expenses also include training and recruitment cost and cost recovery, net, of $97 and $122, respectively, from its non-consolidating affiliates.

Other operating (income) expense, net

The Company provides certain shared services such as facility, recruitment, training, and communication to GE. Recovery for such services has been included as other operating income in the Consolidated Statements of Income. For the nine months ended September 30, 2010 and 2011, income from these services was ($1,867) and ($1,633), respectively, and for the three months ended September 30, 2010 and 2011, income from these services was ($626) and ($533), respectively.

Interest income

The Company earned interest income on short-term deposits placed with GE. For the nine months ended September 30, 2010 and 2011, interest income earned on these deposits was $118 and $0, respectively, and for the three months ended September 30, 2010 and 2011, interest income earned on these deposits was $0 and $0, respectively.

Interest expense

The Company incurred interest expense on finance lease obligations from GE. For the nine months ended September 30, 2010 and 2011, interest expense relating to such related party debt amounted to $265 and $264, respectively, and for the three months ended September 30, 2010 and 2011, interest expense relating to such related party debt amounted to $123 and $73, respectively.

Equity-method investment

During the nine months ended September 30, 2010 and 2011, the Company has made an investment of $2,324 and $0, respectively, in its non-consolidating affiliates and for the three months ended September 30, 2010 and 2011, the Company has made an investment of $0 and $0, respectively, in its non-consolidating affiliates. Further, during the three months ended September 30, 2011, the Company acquired the balance outstanding interest in one of its non-consolidating affiliates (HPP) for a contingent consideration amounting to $6,417 which resulted in such affiliate becoming a wholly owned subsidiary. The results of operations and the fair value of the assets and liabilities of such wholly owned subsidiary are included in the Company's Consolidated Financial Statements from the date of acquisition. Also refer to Note 3(d).