EVERTEC, Inc.

building business.
touching lives.

a n n u a l   r e p o r t   2 0 1 7

company profile
Evertec, Inc. (NYSE: EVTC) is a leading full service
transaction processing company in Latin America, focused 
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government agencies and consumers.

We provide mission-critical technology solutions that enable 
our customers to issue, process and accept transactions securely. 
We provide these comprehensive end-to-end transaction processing 
solutions across several channels and geographic markets.

With 29 years of experience in the transaction processing industry, 
we employ over 2,100 professionals, including employees from 
our 65% owned subsidiary, Processa, and PayGroup employees. 
We operate in 11 countries and serve customers with diverse 
businesses across 26 countries.

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Evertec, Inc. (NYSE: EVTC), es una compañía líder que ofrece 
servicios de procesamiento de transacciones en América Latina,   
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Brindamos estas soluciones completas a través de numerosos canales
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Con 29 años de experiencia en la industria de procesamiento de 
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servimos a clientes con diversas operaciones a través de 26 países.

Evertec®, Processa®, PayGroup®, ATH®, ATH Móvil® and ATH Móvil Business® 
are trademarks of Evertec, Inc. or its subsidiaries in the United States of 
America and/or other countries.

POS
mobile payments
ATH® móvil business

infrastructure cloud solutions
applications
business continuity

switch

issuing

acquiring

multi-point monitoring
decision engine

tokenization
point of compromise

management
monitoring
switching

driving

banking correspondents core banking

bill payments
payment engine

payment button
comprehensive collection

 
 
 
 
a n n u a l   r e p o r t   2 0 1 7           |         1

to our valued shareholders:

a nuestros valiosos accionistas:

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(cid:72)(cid:91)(cid:83)(cid:68)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:72)(cid:79)(cid:76)(cid:89)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:17)(cid:3)(cid:3)

En  el  2017  los  clientes  de  Evertec  fueron  testigos  de  la 
fortaleza  de  nuestras  capacidades  y  el  compromiso 
inquebrantable  para  con  el  éxito  de  cada  uno.  Como 
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pagos, nuestra meta es desarrollar y proveer tecnologías y 
servicios innovadores que ofrecen valor directo a nuestros 
(cid:70)(cid:79)(cid:76)(cid:72)(cid:81)(cid:87)(cid:72)(cid:86)(cid:3)(cid:92)(cid:3)(cid:75)(cid:68)(cid:70)(cid:72)(cid:81)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:79)(cid:68)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:86)(cid:76)(cid:121)(cid:81)(cid:3)(cid:192)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:72)(cid:85)(cid:68)(cid:3)(cid:72)(cid:81)(cid:3)(cid:79)(cid:82)(cid:86)(cid:3)(cid:83)(cid:68)(cid:116)(cid:86)(cid:72)(cid:86)(cid:3)
y comunidades donde ofrecen servicios. Nosotros también 
apoyamos  activa  y  directamente  a  estas  comunidades  a 
través de iniciativas de servicios a la comunidad, lideradas 
por el grupo corporativo y los empleados.

Nuestros  valores  y  compromiso  se  pusieron  a  prueba 
este año cuando Puerto Rico y el Caribe enfrentaron dos 
huracanes devastadores, Irma y María. Sobrepasando retos 
inexplicables, Evertec continuó operando durante y después 
de estos huracanes, ofreciendo servicios ininterrumpidos y 
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(cid:71)(cid:72)(cid:3) (cid:81)(cid:88)(cid:72)(cid:86)(cid:87)(cid:85)(cid:82)(cid:86)(cid:3) (cid:70)(cid:79)(cid:76)(cid:72)(cid:81)(cid:87)(cid:72)(cid:86)(cid:15)(cid:3) (cid:70)(cid:82)(cid:81)(cid:3) (cid:72)(cid:79)(cid:3) (cid:192)(cid:81)(cid:3) (cid:71)(cid:72)(cid:3) (cid:84)(cid:88)(cid:72)(cid:3) (cid:83)(cid:88)(cid:71)(cid:76)(cid:72)(cid:85)(cid:68)(cid:81)(cid:3) (cid:69)(cid:85)(cid:76)(cid:81)(cid:71)(cid:68)(cid:85)(cid:3)
bienes y servicios a sus comunidades.

Además,  completamos  la  adquisición  más  grande  en  la 
historia de la compañía, PayGroup, con sede principal en 
(cid:54)(cid:68)(cid:81)(cid:87)(cid:76)(cid:68)(cid:74)(cid:82)(cid:3) (cid:71)(cid:72)(cid:3) (cid:38)(cid:75)(cid:76)(cid:79)(cid:72)(cid:17)(cid:3) (cid:51)(cid:68)(cid:92)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3) (cid:72)(cid:91)(cid:83)(cid:68)(cid:81)(cid:71)(cid:72)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:192)(cid:70)(cid:68)(cid:87)(cid:76)(cid:89)(cid:68)(cid:80)(cid:72)(cid:81)(cid:87)(cid:72)(cid:3)
nuestros  canales  de  distribución  en  América  Latina  y 
provee  múltiples  soluciones  complementarias  para  ser 
ofrecidas  a  nuestros  clientes  y  mercados  existentes. A  su 
vez, demostramos progreso en nuestra iniciativa de entrega 
de  servicios  en  América  Latina,  y  recientemente  fuimos 
recompensados con renovaciones importantes de clientes. 
Estoy  extremadamente  orgulloso  de  mis  colegas  y  lo 
que  logramos  en  el  2017. Ahora  tenemos  productos  más 
competitivos, proveemos soluciones en 26 países y tenemos 
un  banco  de  talento  más  amplio.  Estamos  enfocados  en 
el futuro de Evertec y en oportunidades para promover la 
expansión y proveer valor a los accionistas.

 
2         |         a n n u a l   r e p o r t   2 0 1 7

2017 revenue by segment

payment services,
Latin America,
14%

business
solutions,
43%

payment services,
Puerto Rico and Caribbean,
23%

merchant
acquiring,
20%

2017 performance 
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(cid:7)(cid:23)(cid:22)(cid:3) (cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:85)(cid:72)(cid:87)(cid:88)(cid:85)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3) (cid:87)(cid:82)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)
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(cid:87)(cid:75)(cid:72)(cid:3) (cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:71)(cid:3) (cid:83)(cid:82)(cid:86)(cid:87)(cid:16)(cid:75)(cid:88)(cid:85)(cid:85)(cid:76)(cid:70)(cid:68)(cid:81)(cid:72)(cid:15)(cid:3) (cid:90)(cid:72)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:83)(cid:79)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3) (cid:87)(cid:75)(cid:68)(cid:87)(cid:3) (cid:90)(cid:72)(cid:3)
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(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:86)(cid:87)(cid:82)(cid:85)(cid:80)(cid:86)(cid:15)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:76)(cid:70)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:88)(cid:81)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:72)(cid:79)(cid:76)(cid:89)(cid:72)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:17)

commitment to our customers
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(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:17)(cid:3)(cid:41)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:80)(cid:80)(cid:72)(cid:71)(cid:76)(cid:68)(cid:87)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
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(cid:71)(cid:68)(cid:92)(cid:70)(cid:68)(cid:85)(cid:72)(cid:15)(cid:3)(cid:90)(cid:68)(cid:87)(cid:72)(cid:85)(cid:15)(cid:3)(cid:73)(cid:82)(cid:82)(cid:71)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:71)(cid:76)(cid:87)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:74)(cid:68)(cid:86)(cid:3)
(cid:68)(cid:81)(cid:71)(cid:3) (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:17)(cid:3) (cid:37)(cid:92)(cid:3) (cid:87)(cid:68)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:70)(cid:68)(cid:85)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:92)(cid:3) (cid:90)(cid:72)(cid:85)(cid:72)(cid:3) (cid:68)(cid:69)(cid:79)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:87)(cid:68)(cid:78)(cid:72)(cid:3) (cid:70)(cid:68)(cid:85)(cid:72)(cid:3)
(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:15)(cid:3)(cid:71)(cid:72)(cid:79)(cid:76)(cid:89)(cid:72)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:88)(cid:81)(cid:83)(cid:68)(cid:85)(cid:68)(cid:79)(cid:79)(cid:72)(cid:79)(cid:72)(cid:71)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)
(cid:87)(cid:75)(cid:72)(cid:3)(cid:44)(cid:86)(cid:79)(cid:68)(cid:81)(cid:71)(cid:17)

(cid:36)(cid:86)(cid:3) (cid:89)(cid:68)(cid:85)(cid:76)(cid:82)(cid:88)(cid:86)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3) (cid:74)(cid:85)(cid:68)(cid:83)(cid:83)(cid:79)(cid:72)(cid:71)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3) (cid:82)(cid:90)(cid:81)(cid:3) (cid:83)(cid:82)(cid:90)(cid:72)(cid:85)(cid:15)(cid:3)
(cid:87)(cid:72)(cid:79)(cid:72)(cid:70)(cid:82)(cid:80)(cid:80)(cid:88)(cid:81)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:81)(cid:73)(cid:85)(cid:68)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:86)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)
(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3) (cid:87)(cid:75)(cid:72)(cid:80)(cid:3) (cid:86)(cid:88)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:76)(cid:81)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3)
(cid:86)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3)(cid:88)(cid:81)(cid:72)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:79)(cid:92)(cid:3)(cid:85)(cid:72)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:83)(cid:68)(cid:92)(cid:85)(cid:82)(cid:79)(cid:79)(cid:3)
(cid:73)(cid:88)(cid:81)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3) (cid:71)(cid:76)(cid:86)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:70)(cid:68)(cid:79)(cid:79)(cid:3) (cid:70)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:80)(cid:72)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)
(cid:76)(cid:81)(cid:87)(cid:82)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:82)(cid:73)(cid:192)(cid:70)(cid:72)(cid:86)(cid:17)(cid:3) (cid:40)(cid:89)(cid:72)(cid:85)(cid:87)(cid:72)(cid:70)(cid:3) (cid:86)(cid:87)(cid:82)(cid:82)(cid:71)(cid:3) (cid:68)(cid:86)(cid:3) (cid:68)(cid:3) (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3) (cid:87)(cid:75)(cid:68)(cid:87)(cid:3)

desempeño 2017
El  ingreso  total  para  el  2017  fue  de  $407  millones,  un 
aumento de 5% comparado con el año anterior. El ingreso 
ajustado  por  acción  diluida  fue  de  $1.47,  una  merma  de 
(cid:20)(cid:21)(cid:8)(cid:15)(cid:3) (cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:82)(cid:3) (cid:71)(cid:72)(cid:79)(cid:3) (cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:82)(cid:3) (cid:71)(cid:72)(cid:3) (cid:79)(cid:82)(cid:86)(cid:3) (cid:75)(cid:88)(cid:85)(cid:68)(cid:70)(cid:68)(cid:81)(cid:72)(cid:86)(cid:17)(cid:3) (cid:40)(cid:79)(cid:3) (cid:193)(cid:88)(cid:77)(cid:82)(cid:3) (cid:71)(cid:72)(cid:3)
(cid:72)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:82)(cid:3) (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:70)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3) (cid:73)(cid:88)(cid:72)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:192)(cid:70)(cid:68)(cid:87)(cid:76)(cid:89)(cid:82)(cid:15)(cid:3) (cid:70)(cid:82)(cid:81)(cid:3) (cid:7)(cid:20)(cid:23)(cid:25)(cid:3) (cid:80)(cid:76)(cid:79)(cid:79)(cid:82)(cid:81)(cid:72)(cid:86)(cid:15)(cid:3)
lo  que  nos  permitió  continuar  invirtiendo  en  el  negocio  a 
través  de  gastos  de  capital  de  $33  millones,  completar 
una  adquisición  de  $43  millones  y  el  retorno  de  capital 
a  nuestros  accionistas  a  través  de  la  recompra  de 
acciones y dividendos de aproximadamente $29 millones. 
Aunque  la  Junta  suspendió  temporalmente  el  dividendo 
luego  de  los  huracanes,  nos  place  informarles  que 
(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:68)(cid:80)(cid:82)(cid:86)(cid:3) (cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:81)(cid:71)(cid:82)(cid:3) (cid:88)(cid:81)(cid:3) (cid:193)(cid:88)(cid:77)(cid:82)(cid:3) (cid:71)(cid:72)(cid:3) (cid:72)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:82)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:192)(cid:70)(cid:68)(cid:87)(cid:76)(cid:89)(cid:82)(cid:3)
que  nos  permitirá  sobrepasar  las  tormentas,  invertir  en 
oportunidades de negocio estratégicas y proveerle valor a 
nuestros accionistas.

compromiso con nuestros clientes
En el 2017 demostramos nuestro fuerte compromiso con 
nuestros  clientes.  Inmediatamente  después  del  impacto 
de  los  huracanes,  nuestra  prioridad  fue  atender  las 
necesidades  de  nuestros  clientes  y  empleados.    Dada 
la escasez de los artículos esenciales de vida, nuestros 
empleados necesitaban ayuda especial para habilitar su 
regreso al trabajo. A través de iniciativas internas y con 
la ayuda de nuestros socios, fuimos capaces de proveer 
cuido para niños, agua, alimentos, y acelerar la provisión 
(cid:71)(cid:72)(cid:3)(cid:74)(cid:68)(cid:86)(cid:82)(cid:79)(cid:76)(cid:81)(cid:68)(cid:3)(cid:92)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:76)(cid:82)(cid:86)(cid:3)(cid:192)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:72)(cid:85)(cid:82)(cid:86)(cid:3)(cid:68)(cid:3)(cid:81)(cid:88)(cid:72)(cid:86)(cid:87)(cid:85)(cid:82)(cid:86)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:72)(cid:68)(cid:71)(cid:82)(cid:86)(cid:17)(cid:3)
Gracias a las gestiones hechas con nuestros empleados, 
fuimos capaces de atender a nuestros clientes, ofreciendo 
servicios sin igual en la Isla.

Mientras varios clientes lidiaban con sus propios problemas 
de  energía,  telecomunicaciones  e  infraestructura,  fuimos 
capaces de  ofrecerles respaldo en nuestras instalaciones y 

revenue
$ in millions

$410.0

$400.0

$390.0

$380.0

$370.0

$360.0

$350.0

operating cash flow
$ in millions

$175.0

$407.1

$389.5

$150.0

$168.1

$162.4

$373.5

$145.8

$125.0

a n n u a l   r e p o r t   2 0 1 7           |         3

adjusted earnings
per share1

$1.67

$1.59

$1.47

$1.70

$1.65

$1.60

$1.55

$1.50

$1.45

$1.40

$1.35

2015

2016

2017

2015

2016

2017

2015

2016

2017

1Adjusted earnings per share is a supplemental measure of the Company’s performance is not required by, or presented in accordance with, accounting principles 
generally accepted in the United States of America (“GAAP”). It is not a measurement of the Company’s financial performance under GAAP and should not be considered 
as an alternative to total revenue, net income or any other performance measures derived in accordance with GAAP or as alternatives to cash flows from operating 
activities, as an indicator of cash flows or as a measure of the Company’s liquidity.  In addition to GAAP measures, management uses this non-GAAP measure to focus on 
the factors the company believes are pertinent to the daily management of the Company’s operations and believe it is frequently used by securities analysts, investors and 
other interested parties to evaluate companies in the industry. For a reconciliation of adjusted net income and adjusted earnings per share to the most directly comparable 
GAAP financial performance measures, refer to the chart shown below.

 reconciliation of gaap to non-gaap operating results

Years ended December 31

(Dollar amounts in thousands, except per share data)

 2015 

     2016 

          2017

Net income
Income tax expense (benefit)
Interest expense, net
Depreciation and amortization
EBITDA

$            85,377
(3,335)
23,771
64,974
170,787

$            75,126
8,271
24,240
59,567
167,204

$            55,419
4,780
29,145
64,250
153,594

Software maintenance reimbursement and other costs (1)
Equity (income) loss(2)
Compensation and benefits (3)
Transaction, refinancing and other fees (4)
Purchase accounting (5)
Exit activity (6)
Restatement related expenses(7)
Adjusted EBITDA 

Operating depreciation and amortization (8)
Cash interest expense, net (9)
Income tax expense (10)
Non-controlling interest (11)
Adjusted Net Income 

1,902
(147)
12,237
1,315
82
-
-
186,176

(29,301)
(20,665)
(13,211)
-
$       122,999

Net income per common share (GAAP) diluted
Adjusted earnings per common share (Non-GAAP)
Shares used in computing adjusted earnings per common share

$                1.11
$                1.59
77,181,123

521
52
10,482
7,579
-
-
1,837
187,675

(28,468)
(20,468)
(13,752)
(258)
$       124,729

$                1.01
$                1.67
74,473,369

-
(604)
9,755
2,500
-
12,783
-
178,028

(30,585)
(24,660)
(15,100)
(581)
$       107,102

$                0.76
$                1.47
72,872,188

1Predominantly represents reimbursements received for certain software maintenance expenses as part of the Merger.  2Represents the elimination of non-cash equity earnings 
from our 19.99% equity investment in Dominican Republic, Consorcio de Tarjetas Dominicanas, S.A. (“CONTADO”). 3For the years ended December 31, 2017, 2016, 2015 primarily 
represents share-based compensation and other compensation expense of $9.6 million, $6.4 million, and $5.3 million respectively, and severance payments of $4.1 million and $6.4 
million for the year ended December 31, 2016 and 2015. 4Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, recorded 
as part of selling, general and administrative expense and cost of revenues, as well as relief contributions related to the Hurricanes. 5 Represents the elimination of the effects of 
purchase accounting in connection with certain customer service and software-related arrangements whereby Evertec receives reimbursements from Popular. 6Impairment charge 
and contractual fees accrual for a third party software solution that was determined to be commercially unviable. 7Represents consulting, audit and legal expenses incurred as part 
of the restatement. 8Represents operating depreciation and amortization expense, which excludes amounts generated as a result of the Merger and other from purchase accounting 
intangibles generated from acquisitions. 9Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, 
adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount. 10Represents income tax expense calculated on adjusted pre-tax income using 
the applicable GAAP tax rate. 11Represents the 35% non-controlling equity interest in Processa, net of amortization for intangibles created as part of the purchase. 

 
 
 
4         |         a n n u a l   r e p o r t   2 0 1 7

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acquisition of PayGroup
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trasladarle a  algunos clientes su servicio de nómina, centro 
de llamadas de distribución (call center), y facilidades de 
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una  empresa  en  la  cual  otros  podían  contar  cuando  sus 
propias facilidades estaban inoperables.  

Ayudamos  a  pequeños  y  medianos  comerciantes  a 
reiniciar sus negocios con el remplazo de dispositivos de 
puntos de venta, así como con dispositivos inalámbricos 
en 
telecomunicaciones  estaban 
limitadas.  También,  ofrecimos  nuestra  aplicación  ATH 
Móvil Business libre de costo.

lugares  donde 

las 

Evertec  también  ha  demostrado  su  compromiso  con 
la  comunidad.  A  través  de  la  colaboración  de  varias 
organizaciones, ayudamos a recaudar dinero y recolectar 
alimentos y otros artículos esenciales, para personas con 
necesidades  luego  de  las  tormentas.  Además,  Evertec 
fue  una  de  las  primeras  compañías  en  demostrar  su 
compromiso  con  la  recuperación  al  aportar  $1  millón  en 
donativos. Ayudamos a una las de iniciativas de socorro y 
recuperación más efectivas, liderada por Unidos por Puerto 
Rico, que suplió generadores a pequeñas empresas que 
carecían de acceso al servicio eléctrico.

Estamos  muy  orgullosos  de  lo  que  hemos  logrado  y 
nuestros esfuerzos continúan. Nuestro desempeño en la 
prestación  de  servicios  durante  y  después  del  huracán 
también es testimonio de la diferencia que hacen nuestras 
capacidades en la continuidad de negocios.  Demostramos 
que proveemos un valor único en la Isla al poder ofrecer 
servicios continuos a nuestros clientes durante la tormenta 
y en su secuela.  Como resultado de nuestra experiencia 
y nuestros logros, ahora tenemos una relación fortalecida 
con nuestros clientes, socios y empleados.

la adquisición de PayGroup
En julio completamos la compra de PayGroup, con sede en 
Santiago de Chile. PayGroup aumenta nuestra presencia 
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y  fortaleciendo  aún  más  nuestra  presencia  en  cinco 
mercados actuales. PayGroup provee pagos electrónicos 
y  servicios  de  procesamiento  de  facturación,  así  como 
procesamiento  de  tarjetas  y  comerciantes,  manejo  de 
riesgos y soluciones de inteligencia de negocios.   Estos 
productos se proveen mediante plataformas propietarias, 
que  son  desarrolladas  y  apoyadas  por  empleados  de  la 
empresa en Chile y Uruguay. Su lista de clientes incluye 
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y  procesadores  de  pago  a  través  de  América  Latina. 
PayGroup tiene más de 300 empleados trabajando con un 
grupo gerencial de vasta experiencia y nos complace que 
se unan a la familia de Evertec.

a n n u a l   r e p o r t   2 0 1 7           |         5
a n n u a l   r e p o r t   2 0 1 7           |         5

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innovation
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(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:20)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:88)(cid:86)(cid:72)(cid:85)(cid:86)(cid:17)

La adquisición de PayGroup ya ha rendido frutos al haber  
cerrado recientemente dos importantes oportunidades de 
venta cruzada, una con un cliente en Colombia y otra que 
nos  ayuda  a  retener  la  relación  con  un  cliente  que  está 
migrando  de  otros  productos  de  Evertec.      Lograr  estas 
(cid:71)(cid:82)(cid:86)(cid:3) (cid:89)(cid:76)(cid:70)(cid:87)(cid:82)(cid:85)(cid:76)(cid:68)(cid:86)(cid:3) (cid:68)(cid:3) (cid:70)(cid:82)(cid:85)(cid:87)(cid:82)(cid:3) (cid:83)(cid:79)(cid:68)(cid:93)(cid:82)(cid:3) (cid:71)(cid:72)(cid:80)(cid:88)(cid:72)(cid:86)(cid:87)(cid:85)(cid:68)(cid:3) (cid:72)(cid:79)(cid:3) (cid:69)(cid:72)(cid:81)(cid:72)(cid:192)(cid:70)(cid:76)(cid:82)(cid:3) (cid:71)(cid:72)(cid:3) (cid:79)(cid:68)(cid:3)
compra de PayGroup.

Con  la  adquisición  de  PayGroup  y  Processa,  hemos 
(cid:68)(cid:89)(cid:68)(cid:81)(cid:93)(cid:68)(cid:71)(cid:82)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:192)(cid:70)(cid:68)(cid:87)(cid:76)(cid:89)(cid:68)(cid:80)(cid:72)(cid:81)(cid:87)(cid:72)(cid:3)(cid:72)(cid:81)(cid:3)(cid:81)(cid:88)(cid:72)(cid:86)(cid:87)(cid:85)(cid:68)(cid:3)(cid:72)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:76)(cid:68)(cid:3)(cid:71)(cid:72)(cid:3)(cid:70)(cid:85)(cid:72)(cid:68)(cid:85)(cid:3)
un negocio único de pagos con escala en América Latina.  
Se  anticipa  que  nuestro  ingreso  generado  de  América 
Latina en 2018 sea aproximadamente el doble del de 2015.

innovación
La  innovación  sigue  siendo  parte  de  nuestra  estrategia 
general,  haciendo  posible  que  llevemos  las  mejores 
soluciones  a  nuestros  clientes  e  impulsar  el  crecimiento.  
Como  ejemplo  de  esto,  en  junio  lanzamos  ATH  Móvil 
le  permite  a  pequeños  y  medianos 
Business,  que 
comerciantes,  principalmente  aquellos  que  no  eran  parte 
del  ecosistema  de  pagos,  aceptar  y  procesar  pagos 
electrónicos. La respuesta ha sido muy positiva, con más de 
3,000 negocios usando la aplicación. Aunque esto no será 
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6         |         a n n u a l   r e p o r t   2 0 1 7

looking forward
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que  esta  innovadora  solución  realza  la  marca  ATH  y 
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ATH.  Al día de hoy, ATH Móvil tiene más de 1 millón de 
usuarios.

mirando hacia adelante
A medida que entramos en el año 2018, continuaremos 
respaldando la reconstrucción de Puerto Rico.  Nuestra 
prioridad  principal  será  lograr  que  más  comerciantes 
regresen  a  sus  negocios.     También,  nos  enfocaremos 
en  aumentar  la  aceptación  de  nuestra  solución  ATH 
Móvil  Business.   Además,  estamos  listos  para  abordar 
oportunidades  que  surjan  para  ayudar  al  Gobierno  de 
Puerto Rico en sus esfuerzos de agilizar sus operaciones.

En América Latina continuamos enfocados en mejoras 
de  servicio,  ampliar  nuestras  ofertas  de  producto,  y 
apalancar nuestra base de clientes con oportunidades 
de  venta  cruzada.  Finalmente,  estaremos  enfocados 
en llevarle valor a nuestros accionistas a través de un 
despliegue cuidadoso de capital.

Aunque  el  2017  fue  un  año  de  retos,  fue  también  un 
año de progreso para Evertec, ya que ejecutamos bien 
largo  plazo. 
nuestras  estrategias  principales  a 
Continuamos  comprometidos  con  el  desarrollo  de  un 
negocio  único  en  América  Latina,  enfocado  en 
pagos  y  procesamiento.  Queremos  darle  las  gracias  a 
nuestro  equipo  por  su  compromiso,  expresar  nuestro 
agradecimiento  a 
la  Junta  de  Directores  por  su 
(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:70)(cid:76)(cid:121)(cid:81)(cid:30)(cid:3)(cid:92)(cid:3)(cid:192)(cid:81)(cid:68)(cid:79)(cid:80)(cid:72)(cid:81)(cid:87)(cid:72)(cid:15)(cid:3)(cid:68)(cid:74)(cid:85)(cid:68)(cid:71)(cid:72)(cid:70)(cid:72)(cid:85)(cid:79)(cid:72)(cid:86)(cid:3)(cid:68)(cid:3)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:72)(cid:86)(cid:15)(cid:3)(cid:81)(cid:88)(cid:72)(cid:86)(cid:87)(cid:85)(cid:82)(cid:86)(cid:3)
accionistas,  por  creer  en  nosotros.    Estamos  operando 
con  una  base  más  sólida  y  tomando  acciones  para 
fortalecer  nuestro  negocio  este  año  y  hacia  el  futuro.

Mac Schuessler
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social 
responsibility

responsabilidad social

8         |         a n n u a l   r e p o r t   2 0 1 7

2017 corporate social responsibility 
major contributions
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(cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)

2017 mayores contribuciones de 
responsabilidad social corporativa
Si hay algo que distingue a Evertec, es su compromiso por 
el bienestar de las comunidades en las cuales llevamos a 
cabo nuestras operaciones. Ser un ciudadano corporativo 
responsable y motivar a nuestros empleados a participar en 
el desarrollo de sus comunidades, son pilares de nuestro 
Programa  de  Responsabilidad  Social.  Nuestro  Programa, 
basado  en  estos  pilares,  tiene  tres  áreas  principales  de 
acción:  educación,  comunidad  y  la  conservación  del 
ambiente. 

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Nuestras  contribuciones  corporativas  durante  el  año 
incluyeron  la  aportación  de  más  de  $1.2  millones  que 
fueron  invertidos  entre  donaciones,  auspicios  y  nuestro 
apoyo a los esfuerzos de recuperación por los huracanes. 
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compañía, tal como nuestro “Día del Voluntariado”.  Más 
de 750 empleados de Evertec y sus familiares invirtieron 
sobre  3,800  horas  de  trabajo  voluntario  en  apoyo  a  24 
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Becas, establecido en 2015, otorgó 52 becas a estudiantes 
sobresalientes  de  Puerto  Rico  y  América  Latina.  El 
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miembros de la Junta de Directores, y ha distribuido más 
de $200,000 en tres años.

“Revolución 
Además,  nuestro  programa  ambiental 
Naranja”, celebró 10 años de su implementación y recolectó 
en el 2017 sobre 497,000 libras de materiales reciclables. 

Sin  embargo,  el  2017  fue  un  año  especial  para  todos 
nosotros debido a los huracanes Irma y María. Evertec se 
unió a los esfuerzos de “Unidos por Puerto Rico”, “Embracing 
Puerto  Rico”,  dirigido  por  la  Fundación  Banco  Popular,  y 
se  unió  y  apoyó  el  “Fondo  de  Emergencia  de  CulturArte 
de  Puerto  Rico”  creado  para  asistir  a  los  estudiantes  y 
profesores del Conservatorio de Música de Puerto Rico que 
fueron víctimas de los huracanes. Además, celebramos el 
“Día del Voluntariado María” un evento especial mediante el 
cual logramos apoyar a más de 1,000 familias, distribuimos 
sobre 16,000 libras de alimentos y brindamos más de 1,400 
horas voluntarias. Finalmente, pero no menos importante, 
creamos  “Puerto  Rico  Ponte  en  Marcha”  una  iniciativa 
enfocada  principalmente  en  proveerle  a  los  comerciantes 
soluciones de tecnología y telecomunicaciones, equipos y 
soporte, que los ayudara a retomar las operaciones de sus 
negocios y que a la vez impulsara la recuperación de Puerto 
Rico. 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549 

FORM 10-K 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017 
or 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number 001-35872 

EVERTEC, Inc.
(Exact name of registrant as specified in its charter) 

Puerto Rico
(State or other jurisdiction of
incorporation or organization)

Cupey Center Building, Road 176, Kilometer 1.3,
San Juan, Puerto Rico
(Address of principal executive offices)

66-0783622
(I.R.S. employer
identification number)

00926
(Zip Code)

(787) 759-9999
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: 

Title of each class
Common Stock, $0.01 par value

Name of each exchange on which registered
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  

    No  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  

    No  

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  

    No  

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  

    No  

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be 
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment 
to this Form 10-K.  

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

Non-accelerated filer

  (Do not check if a smaller reporting company)

Smaller reporting company

   Accelerated filer

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised 
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  

    No  

The aggregate market value of the common stock held by non-affiliates of EVERTEC, Inc. was approximately $1,042,574,760 based on the closing price of $17.30 as 
of the close of business on June 30, 2017.

As of February 21, 2018, there were 72,429,141 outstanding shares of common stock of EVERTEC, Inc.

Part III incorporates certain information by reference to the Proxy Statement for the 2018 Annual Meeting of Shareholders 

Documents Incorporated by Reference: 

 
 
  
  
  
 
 
 
 
 
 
 
 
 
  
 
EVERTEC, Inc.
2017 Annual Report on Form 10-K

TABLE OF CONTENTS

Part I

Item 1—Business

Item 1A—Risk Factors

Item 1B—Unresolved Staff Comments

Item 2—Properties

Item 3—Legal Proceedings

Item 4—Mine Safety Disclosures

Part II

Item  5—Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 
Securities

Item 6—Selected Financial Data

Item  7—Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item  7A—Quantitative and Qualitative Disclosures About Market Risks

Item 8—Financial Statements and Supplementary Data

Item  9—Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A—Controls and Procedures

Item 9B—Other Information

Part III

Item 10—Directors, Executive Officers and Corporate Governance

Item 11—Executive Compensation

Item  12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item  13—Certain Relationships and Related Transactions and Director Independence

Item 14—Principal Accounting Fees and Services

Part IV

Signatures

Page

4

14

31

31

31

31

32

34

36

53

55

55

55

56

57

57

57

57

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Forward-Looking Statements 

This Annual Report on Form 10-K, or Report, contains “forward-looking statements” within the meaning of, and subject to the 
protection of, the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of forward-looking 
terminology such as “believes,” “expects,” “may,” “estimates,” “will,” “should,” “plans” or “anticipates” or the negative thereof 
or other variations thereon or comparable terminology, or by discussions of strategy. Readers are cautioned that any such forward-
looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual 
results may vary materially from those in the forward-looking statements as a result of various factors. Among the factors that 
significantly impact our business and could impact our business in the future are:

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our reliance on our relationship with Popular, Inc. (“Popular”) for a significant portion of our revenues pursuant to 
our master services agreement with them, and our reliance on Banco Popular de Puerto Rico (“Banco Popular”), 
Popular’s principal banking subsidiary, to grow our merchant acquiring business; 
as a regulated institution, we most likely will be required to obtain regulatory approval before engaging in certain 
new activities or businesses, whether organically or by acquisition, and may be unable to obtain such approval on 
a timely basis or at all, which may make transactions more expensive or impossible to complete, or make us less 
attractive to potential sellers; 
our ability to renew our client contracts on terms favorable to us, including our contract with Popular; 
our dependence on our processing systems, technology infrastructure, security systems and fraudulent payment 
detection systems, as well as on our personnel and certain third parties with whom we do business, and the risks 
to our business if our systems are hacked or otherwise compromised; 
our ability to develop, install and adopt new software, technology and computing systems; 
a decreased client base due to consolidations and failures in the financial services industry; 
the credit risk of our merchant clients, for which we may also be liable; 
the continuing market position of the ATH network; 
a reduction in consumer confidence, whether as a result of a global economic downturn or otherwise, which leads 
to a decrease in consumer spending; 
our dependence on credit card associations, including any adverse changes in credit card association or network 
rules or fees; 
changes in the regulatory environment and changes in international, legal, tax, political, administrative or 
economic conditions; 
the geographical concentration of our business in Puerto Rico, including our business with the government of 
Puerto Rico and its instrumentalities, which are facing severe fiscal challenges; 
additional adverse changes in the general economic conditions in Puerto Rico, whether as a result of the 
government’s debt crisis or otherwise, including the continued migration of Puerto Ricans to the U.S. mainland, 
which could negatively affect our customer base, general consumer spending, our cost of operations and our 
ability to hire and retain qualified employees; 
operating an international business in Latin America and the Caribbean, in jurisdictions with potential political 
and economic instability; 
our ability to execute our geographic expansion and acquisition strategies, including challenges in successfully 
acquiring new businesses and integrating and growing acquired businesses; 
our ability to protect our intellectual property rights against infringement and to defend ourselves against claims 
of infringement brought by third parties; 
our ability to recruit and retain the qualified personnel necessary to operate our business;
our ability to comply with U.S. federal, state, local and foreign regulatory requirements; 
evolving industry standards and adverse changes in global economic, political and other conditions; 
our high level of indebtedness and restrictions contained in our debt agreements, including the senior secured 
credit facilities, as well as debt that could be incurred in the future; 
our ability to prevent a cybersecurity attack or breach in our information security; 
our ability to generate sufficient cash to service our indebtedness and to generate future profits; 
our ability to refinance our debt; 
the possibility that we could lose our preferential tax rate in Puerto Rico; 
the risk that the counterparty to our interest rate swap agreement fails to satisfy its obligations under the 
agreement
uncertainty of the pending debt restructuring process under Title III of the Puerto Rico Oversight, Management 
and Economic Stability Act (“PROMESA”), as well as actions taken by the Puerto Rico government or by the 
PROMESA Board to address the Puerto Rico fiscal crisis;
uncertainty related to Hurricanes Irma and Maria and their aftermaths’ impact on the economies of Puerto Rico 
and the Caribbean;

1

• 

• 
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the possibility of future catastrophic hurricanes affecting Puerto Rico and/or the Caribbean, as well as other 
potential natural disasters; 
the nature, timing and amount of any restatement; and
other risks and uncertainties detailed in Part I, Item IA “Risk Factors” in this Report.

These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially 
from those suggested by the forward-looking statements. Forward-looking statements should, therefore, be considered in light 
of various factors, including those set forth under “Item 1A. Risk Factors,” in “Item 7. Management’s Discussion and Analysis 
of Financial Condition and Results of Operations” and elsewhere in this Report. These forward-looking statements speak only 
as of the date of this Report, and we do not undertake any obligation to publicly release any revisions to these forward-looking 
statements to reflect events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events.

2

INDUSTRY AND MARKET DATA

This Form 10-K includes industry data that we obtained from periodic industry publications, including the August 2017 Nilson 
Report and the 2017 World Payments Report. Industry publications generally state that the information contained therein has 
been obtained from sources believed to be reliable. This Form 10-K also includes market share and industry data that were 
prepared primarily based on management’s knowledge of the industry and industry data. Unless otherwise noted, statements as 
to our market share and market position relative to our competitors are approximated and based on management estimates 
using the above-mentioned latest-available third-party data and our internal analyses and estimates. While we are not aware of 
any misstatements regarding any industry data presented herein, our estimates, in particular as they relate to market share and 
our general expectations, involve risks and uncertainties and are subject to change based on various factors, including those 
discussed under “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial 
Condition and Results of Operations” in this Form 10-K.

3

Item 1. Business

Part I

Except as otherwise indicated or unless the context otherwise requires, (a) the terms “EVERTEC,” “we,” “us,” “our,” “our 
Company” and “the Company” refer to EVERTEC, Inc. and its subsidiaries on a consolidated basis, (b) the term “Holdings” 
refers to EVERTEC Intermediate Holdings, LLC, but not any of its subsidiaries and (c) the term “EVERTEC Group” refers to 
EVERTEC Group, LLC and its predecessor entities and their subsidiaries on a consolidated basis, including the operations of 
its predecessor entities prior to the Merger (as defined below). EVERTEC Inc.’s subsidiaries include Holdings, EVERTEC 
Group, EVERTEC Dominicana, SAS, Tecnopago SpA, EFT Group SpA, EFT Global Services, SpA, EFT Group S.A., Tecnopago 
España SL, EFT Servicos Profesionales SpA, Paytrue S.A., Caleidon, S.A., Paytrue Solutions Informatica Ltda., EVERTEC 
Panamá, S.A., EVERTEC Costa Rica, S.A. (“EVERTEC CR”), EVERTEC Guatemala, S.A., Processa, SAS ("Processa"), 
EVERTEC USA, LLC and EVERTEC México Servicios de Procesamiento, S.A. de C.V. Neither EVERTEC nor Holdings 
conducts any operations other than with respect to its indirect or direct ownership of EVERTEC Group.

Company Overview

EVERTEC is a leading full-service transaction processing business in Latin America and the Caribbean, providing a broad 
range of merchant acquiring, payment services and business process management services. According to the August 2017 
Nilson Report, we are one of the largest merchant acquirers in Latin America based on total number of transactions and we 
believe we are the largest merchant acquirer in the Caribbean and Central America. We serve 26 countries in the region from 
our base in Puerto Rico. We manage a system of electronic payment networks that process more than two billion transactions 
annually, and offer a comprehensive suite of services for core bank processing, cash processing and technology outsourcing. In 
addition, we own and operate the ATH network, one of the leading personal identification number (“PIN”) debit networks in 
Latin America. We serve a diversified customer base of leading financial institutions, merchants, corporations and government 
agencies with “mission-critical” technology solutions that enable them to issue, process and accept transactions securely. We 
believe our business is well-positioned to continue to expand across the fast-growing Latin American region. 

We are differentiated, in part, by our diversified business model, which enables us to provide our varied customer base with a 
broad range of transaction-processing services from a single source across numerous channels and geographic markets. We 
believe this capability provides several competitive advantages that will enable us to continue to penetrate our existing 
customer base with complementary new services, win new customers, develop new sales channels and enter new markets. We 
believe these competitive advantages include:

•  Our ability to provide best in class products; 
•  Our ability to provide in one package a range of services that traditionally had to be sourced from different vendors; 
•  Our ability to serve customers with disparate operations in several geographies with integrated technology solutions 

that enable them to manage their business as one enterprise; and 

•  Our ability to capture and analyze data across the transaction processing value chain and use that data to provide 

value-added services that are differentiated from those offered by pure-play vendors that serve only one portion of the 
transaction processing value chain (such as only merchant acquiring or payment services). 

Our broad suite of services spans the entire transaction processing value chain and includes a range of front-end customer-
facing solutions such as the electronic capture and authorization of transactions at the point-of-sale, as well as back-end support 
services such as the clearing and settlement of transactions and account reconciliation for card issuers. These include: (i) 
merchant acquiring services, which enable point of sales (“POS”) and e-commerce merchants to accept and process electronic 
methods of payment such as debit, credit, prepaid and electronic benefit transfer (“EBT”) cards; (ii) payment processing 
services, which enable financial institutions and other issuers to manage, support and facilitate the processing for credit, debit, 
prepaid, automated teller machines (“ATM”) and EBT card programs; and (iii) business process management solutions, which 
provide “mission-critical” technology solutions such as core bank processing, as well as IT outsourcing and cash management 
services to financial institutions, corporations and governments. We provide these services through scalable, end-to-end 
technology platforms that we manage and operate in-house and that generates significant operating efficiencies that enable us 
to maximize profitability. 

We sell and distribute our services primarily through a proprietary direct sales force with established customer relationships. 
We are also building a variety of indirect sales channels that enable us to leverage the distribution capabilities of partners in 
adjacent markets, including value-added resellers. We continue to pursue joint ventures and merchant acquiring alliances. 
We benefit from an attractive business model, the hallmarks of which are recurring revenue, scalability, significant operating 
margins and moderate capital expenditure requirements. Our revenue is predominantly recurring in nature because of the 
mission-critical and embedded nature of the services we provide. In addition, we generally negotiate multi-year contracts with 
4

 
our customers. We believe our business model should enable us to continue to grow our business organically in the primary 
markets we serve without significant incremental capital expenditures. 

Financial Information About Operating Segments and Geographic Areas 

In December of 2017, as a result of the PayGroup acquisition, the Chief Operating Decision Maker ("CODM") completed an 
evaluation of the current Company structure and the information regularly reviewed for purposes of allocating resources and 
assessing performance. As a result of this evaluation, Management concluded that the operating segments are driven by the 
products and services the Company provides and the geographic regions in which the Company operates, resulting in four 
business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America (collectively "Payment 
Services segments"), Merchant Acquiring, and Business Solutions. We recasted our segment results for all previous periods to 
conform to the new segment presentation. In addition to these operating segments, Management identified certain functional 
cost areas that operate independently and do not constitute businesses in themselves. These cost areas could neither be 
concluded as operating segments nor could they be combined with any other operating segments. Therefore, these cost areas 
are aggregated and presented as “Corporate and Other” category in the financial statements alongside the operating segments. 
The Corporate and Other category consists of corporate overhead expenses, certain leveraged activities and other non-operating 
and miscellaneous expenses that are not included in the operating segments. For information about our operating segments 
refer to Note 23 of the Notes to Consolidated Financial Statements.

Corporate Background

EVERTEC, Inc. (formerly known as Carib Latam Holdings, Inc.) is a Puerto Rico corporation organized in April 2012. Our 
main operating subsidiary, EVERTEC Group, LLC (formerly known as EVERTEC, LLC and EVERTEC, Inc., hereinafter 
“EVERTEC Group”), was organized in Puerto Rico in 1988. EVERTEC Group was formerly a wholly-owned subsidiary of 
Popular. On September 30, 2010, pursuant to an Agreement and Plan of Merger (as amended, the “Merger Agreement”), AP 
Carib Holdings, Ltd. (“Apollo”), an affiliate of Apollo Global Management LLC, acquired a 51% indirect ownership interest in 
EVERTEC Group as part of a merger (the “Merger”) and EVERTEC Group became a wholly-owned subsidiary of Holdings. 

On April 17, 2012, EVERTEC Group was converted from a Puerto Rico corporation to a Puerto Rico limited liability company 
(the “Conversion”) for the purpose of improving its consolidated tax efficiency by taking advantage of changes to the Puerto 
Rico Internal Revenue Code, as amended (the “PR Code”), that permit limited liability companies to be treated as partnerships 
that are pass-through entities for Puerto Rico tax purposes. Concurrent with the Conversion, Holdings, which is our direct 
subsidiary, was also converted from a Puerto Rico corporation to a Puerto Rico limited liability company. Prior to these 
conversions, EVERTEC, Inc. was formed in order to act as the new parent company of Holdings and its subsidiaries, including 
EVERTEC Group. The transactions described above in this paragraph are collectively referred to as the “Reorganization.” 

History

We have over a 25 year operating history in the transaction processing industry. Prior to the Merger, EVERTEC Group was 
100% owned by Popular, the largest financial institution in the Caribbean, and operated substantially as an independent entity 
within Popular. As mentioned above, following the Merger, Apollo owned a 51% interest in us and shortly thereafter, we began 
the transition to a separate, stand-alone entity. As a stand-alone company, we have made substantial investments in our 
technology and infrastructure, recruited various senior executives with significant transaction processing experience in Latin 
America, enhanced our profitability through targeted productivity and cost savings actions and broadened our footprint beyond 
the markets historically served. 

We continue to benefit from our relationship with Popular. Popular is our largest customer, acts as one of our largest merchant 
referral partners and sponsors us with the card associations (such as Visa or MasterCard), enabling merchants to accept these 
card associations’ credit card transactions. Popular also provides merchant sponsorship as one of the participants of the ATH 
network, enabling merchants to connect to the ATH network and accept ATH debit card transactions. We provide a number of 
critical products and services to Popular, which are governed by a 15-year Amended and Restated Master Services Agreement 
(the “Master Services Agreement”) that runs through 2025. 

On April 17, 2013, the Company completed its initial public offering of 28,789,943 shares of common stock at a price to the 
public of $20.00 per share. On September 18, 2013 and December 13, 2013, the Company completed public offerings of 
23,000,000 and 15,233,273 shares, respectively, of the Company’s common stock by Apollo, Popular, and current and former 
employees. After the completion of these offerings, Popular owned approximately 11.7 million shares of EVERTEC’s common 
stock, or 16.1% as of December 31, 2017, and Apollo no longer owns any of the Company’s common stock. 

5

Principal Stockholder

Popular, Inc. (NASDAQ: BPOP), whose principal banking subsidiary’s history dates back to 1893, is the No. 1 bank holding 
company by both assets and deposits based in Puerto Rico, and, as of September 30, 2017, ranks 48 by assets among U.S. bank 
holding companies. As of December 31, 2017, Popular owned approximately 16.1% of our common stock.

Industry Trends

Shift to Electronic Payments

The ongoing migration from cash, check and other paper methods of payment to electronic payments continues to benefit the 
transaction processing industry globally. This migration is driven by factors including customer convenience, marketing efforts 
by financial institutions, card issuer rewards and the development of new forms of payment. We believe that the penetration of 
electronic payments in the markets where we principally operate is significantly lower relative to more mature U.S. and 
European markets and that this ongoing shift will continue to generate important growth opportunities for our business. In 
addition, in an effort to better capture taxes over generated revenue, legislation in Puerto Rico has required most licensed 
professionals to provide an electronic payment option to their customers, and that all consumer businesses that generate 
revenues in excess of $50,000 provide an electronic payment option, with the exception of certain businesses, further 
expanding the need for an electronic payment network in Puerto Rico.

Fast Growing Latin American and Caribbean Financial Services and Payments Markets

Currently, the penetration of banking products, including electronic payments, in the Latin American and Caribbean region is 
lower relative to the mature U.S. and European markets. As these markets continue to grow, and financial inclusion increases, 
the emergence of a larger and more sophisticated consumer base will influence and drive an increase in card (like debit, credit, 
prepayment, and EBT) and electronic payments usage. According to the 2017 World Payments Report, non-cash payment 
volumes in Latin America grew by 7.2% from 2015 to 2016, and are projected to grow 7.1% through 2020, mainly driven by 
high levels of digital innovation taking place as banks move away from their traditional retail banking strategies and invest in 
digital technologies. In North America, non-cash payments grew by 4.4% and are projected to grow 4.4% through 2020, 
attributable to a significant growth in proximity mobile payments. While in the past mature markets have dominated non-cash 
transaction volumes, a shift in balance is occurring as the developing markets’ share of global non-cash transaction volumes 
have increased from 12% to 27%. If current trends continue, developing markets’ share of global non-cash volumes is expected 
to increase from 27% in 2013 to 33% by 2020. We believe that the attractive characteristics of our markets and our position 
across multiple services and sectors will continue to drive growth and profitability in our businesses. 

Ongoing Technology Outsourcing Trends

Financial institutions globally are facing significant challenges including the entrance of non-traditional competitors, the 
compression of margins on traditional products, significant channel proliferation and increasing regulation that could 
potentially curb profitability. Many of these institutions have traditionally fulfilled their IT needs through legacy computer 
systems, operated by the institution itself. Legacy systems are generally highly proprietary, inflexible and costly to operate and 
maintain and we believe the trend to outsource in-house technology systems and processes by financial institutions will 
continue. We believe our ability to provide integrated, open, flexible, customer-centric and efficient IT products and services 
cater to the evolving needs of our customers, particularly for small- and mid-sized financial institutions in the Latin American 
markets in which we operate. 

Industry Innovation

The electronic payments industry experiences ongoing technology innovation. Emerging payment technologies such as prepaid 
cards, contactless payments, payroll cards, mobile commerce, mobile “wallets” and innovative POS devices facilitate the 
continued shift away from cash, check and other paper methods of payment. The increasing demand for new and flexible 
payment options catering to a wider range of consumer segments is driving growth in the electronic payment processing sector. 

Our Competitive Strengths

Market Leadership in Latin America and the Caribbean

We believe we have an inherent competitive advantage relative to U.S. competitors based on our first-hand knowledge of the 
Latin American and Caribbean markets and technological needs, language and culture. We have built leadership positions 

6

across the transaction processing value chain in the key geographic markets that we serve, which we believe will enable us to 
continue to penetrate our core markets and provide advantages to enter new markets. According to the August 2017 Nilson 
Report, we are one of the largest merchant acquirers in Latin America based on total number of transactions and we believe we 
are the largest merchant acquirer in the Caribbean and Central America. We own and operate the ATH network, one of the 
leading ATM and PIN debit networks in Latin America. EVERTEC processed approximately two billion transactions in 2017, 
which according to management estimates, makes ATH branded products the most frequently used electronic method of 
payment in Puerto Rico. We offer compelling value to our merchants, as noted in the most recent report published by the 
Federal Reserve Board regarding debit network fees, the ATH network ranked as one of the most economical networks for 
merchants. Given our scale and customer base of top tier financial institutions and government entities, we believe we are the 
leading card issuer and core bank processor in the Caribbean and the only non-bank provider of cash processing services to the 
U.S. Federal Reserve in the Caribbean. We believe our competitive position and brand recognition increases card acceptance, 
driving usage of our proprietary network, and presents opportunities for future strategic relationships.

Broad and Deep Customer Relationships and Recurring Revenue Business Model

We have built a strong and long-standing portfolio of financial institution, merchant, corporate and government customers 
across Latin America and the Caribbean, which provides us with a reliable, recurring revenue base and powerful references that 
have helped us expand into new channels and geographic markets. Our Payment Services and Merchant Acquiring segments, as 
well as certain business lines representing the majority of our business solutions segment, generate recurring revenues that 
collectively accounted for approximately 94% of our total revenues in 2017. We receive recurring revenues from services based 
on our customers’ on-going daily commercial activity such as processing loans, hosting accounts and information on our 
servers, and processing everyday payments at grocery stores, gas stations and similar establishments. We generally provide 
these services under one to five year contracts, often with automatic renewals. We also provide a few project-based services 
that generate non-recurring revenues in our business solutions segment such as IT consulting for a specific project or 
integration. Additionally, we entered into a 15-year Master Services Agreement with Popular on September 30, 2010. We 
provide a number of critical payment services and business solutions products and services to Popular and benefit from the 
bank’s distribution network and continued support. Through our long-standing and diverse customer relationships, we are able 
to gain valuable insight into trends in the marketplace that allows us to identify new market opportunities. In addition, we 
believe the recurring nature of our business model provides us with revenue and earnings stability. 

Highly Scalable, End-to-End Technology Platform

Our diversified business model is supported by our scalable, end-to-end technology platforms that allow us to provide a broad 
range of transaction processing services and develop and deploy technology solutions to our customers at low incremental costs 
and increasing operating efficiencies. We have spent over $170 million over the last five years on technology investments, 
including POS, to continue to build the capacity and functionality of our platforms and we have been able to achieve attractive 
economies of scale with flexible product development capabilities. We believe that our platforms will allow us to provide 
differentiated services to our customers and facilitate further expansion into new sales channels and geographic markets. 

Experienced Management Team with a Strong Track Record of Execution

We have grown our revenue organically by introducing new products and services and expanding our geographic footprint 
throughout Latin America. We have a proven track record of creating value from operational and technology improvements and 
capitalizing on cross-selling opportunities. We have combined new leadership at EVERTEC, bringing many years of industry 
experience, with long-standing leadership at the operating business level. Collectively, our management team benefits from an 
average of over 20 years of industry experience and we believe they are well positioned to continue to drive growth across 
business lines and regions. 

Our Growth Strategy

We intend to grow our business by continuing to execute on the following business strategies:

Continue Cross-Sales to Existing Customers

We seek to grow revenue by continuing to sell additional products and services to our existing merchant, financial institution, 
corporate and government customers. We intend to broaden and deepen our customer relationships by leveraging our full suite 
of end-to-end technology solutions. For example, we believe that there is significant opportunity to cross-sell our network 
services, ATM point-of-sale processing and card issuer processing services to our over 180 existing financial institution 

7

customers, particularly in markets outside of Puerto Rico. We will also seek to continue to cross-sell value added services into 
our existing merchant base. 

Leverage Our Franchise to Attract New Customers in the Markets We Currently Serve

We intend to attract new customers by leveraging our comprehensive product and services offering, the strength of our brand 
and our leading end-to-end technology platform. Furthermore, we believe we are well positioned to develop new products and 
services to take advantage of our access to and position in markets we currently serve. For example, in markets we serve 
outside of Puerto Rico, we believe there is a significant opportunity to penetrate small to medium financial institutions with our 
products and services.

Expand in the Latin American Region

We believe there is substantial opportunity to expand our businesses in the Latin American region. We believe that we have a 
competitive advantage relative to U.S. competitors based on our first-hand knowledge of the Latin American and Caribbean 
markets and their technological needs, language  and culture. We believe significant growth opportunities exist in a number of 
large markets such as Colombia, México, and Chile, among others. We also believe that there is an opportunity to provide our 
services to existing financial institution customers in other regions where they operate. Additionally, we continually evaluate 
our strategic plans for geographic expansion, which can be achieved through joint ventures, partnerships, alliances or strategic 
acquisitions. For a description of risks associated with obtaining regulatory approvals and other risks associated with strategic 
transactions, see “Item 1A. Risk Factors—Risks Related to Our Business—Our expansion and selective acquisition strategy 
exposes us to risks, including the risk that we may not be able to successfully integrate acquired businesses.” 

Develop New Products and Services

Our experience with our customers provides us with insight into their needs and enables us to continuously develop new 
transaction processing services. We plan to continue growing our merchant, financial institution, corporate and government 
customer base by developing and offering additional value-added products and services to cross-sell along with our core 
offerings. We intend to continue to focus on these and other new product opportunities in order to take advantage of our 
leadership position in the transaction processing industry in the Latin American and Caribbean region. 

Our Business

We offer our customers end-to-end products and solutions across the transaction processing value chain from a single source 
across numerous channels and geographic markets, as further described below.

Merchant Acquiring

According to the August 2017 Nilson Report, we are one of the largest merchant acquirers in Latin America based on total 
number of transactions and we believe we are the largest merchant acquirer in the Caribbean and Central America. Our 
merchant acquiring business provides services to merchants that allow them to accept electronic methods of payment such as 
debit, credit, prepaid and EBT cards carrying the ATH, Visa, MasterCard, Discover and American Express brands. Our full 
suite of merchant acquiring services includes, but is not limited to, the underwriting of each merchant’s contract, the 
deployment and rental of POS devices and other equipment necessary to capture merchant transactions, the processing of 
transactions at the point-of-sale, the settlement of funds with the participating financial institution, detailed sales reports and 
customer support. In 2017, our merchant acquiring business processed over 358 million transactions.

Payment Services 

We are the largest card processor and card network service provider in the Caribbean. We provide a diversified suite of payment 
processing products and services to blue chip regional and global corporate customers, government agencies, and financial 
institutions across Latin America and the Caribbean. These services provide the infrastructure technology necessary to facilitate 
the processing and routing of payments across the transaction processing value chain. 

At the point-of-sale, we sell transaction processing technology solutions, similar to the services in our merchant acquiring 
business, to other merchant acquirers to enable them to service their own merchant customers. We also offer terminal driving 
solutions to merchants, merchant acquirers (including our merchant acquiring business) and financial institutions, which 
provide the technology to securely operate, manage and monitor POS terminals and ATMs. We also rent POS devices to 
financial institution customers who seek to deploy them across their own businesses. 

8

To connect the POS terminals to card issuers, we own and operate the ATH network, one of the leading ATM and PIN debit 
networks in Latin America. The ATH network connects the merchant or merchant acquirer to the card issuer and enables 
transactions to be routed or “switched” across the transaction processing value chain. The ATH network offers the technology, 
communications standards, rules and procedures, security and encryption, funds settlement and common branding that allow 
consumers, merchants, merchant acquirers, ATMs, card issuer processors and card issuers to conduct commerce seamlessly, 
across a variety of channels, similar to the services provided by Visa and MasterCard. The ATH network and processing 
businesses processed approximately two billion transactions in 2017.

To enable financial institutions, governments and other businesses to issue and operate a range of payment products and 
services, we offer an array of card processing and other payment technology services, such as internet and mobile banking 
software services, bill payment systems and EBT solutions. Financial institutions and certain retailers outsource to us certain 
card processing services such as card issuance, processing card applications, cardholder account maintenance, transaction 
authorization and posting, high volume payment processing fraud and risk management services, and settlement. Our payment 
products include electronic check processing, automated clearing house (“ACH”), lockbox, online, interactive voice response 
and web-based payments through personalized websites, among others. 

We have been the main provider of EBT services to the Puerto Rican government since 1998. Our EBT application allows 
certain agencies to deliver government benefits to participants through a magnetic card system and serves approximately 
800,000 active participants. 

Business Solutions

We provide our financial institutions, corporate and government customers with a wide suite of business process management 
solutions including specifically core bank processing, network hosting and management, IT consulting services, business 
process outsourcing, item and cash processing, and fulfillment. In addition, we believe we are the only non-bank provider of 
cash processing services to the U.S. Federal Reserve in the Caribbean. 

Competition

Competitive factors impacting the success of our services include the quality of the technology-based application or service, 
application features and functions, ease of delivery and integration, ability of the provider to maintain, enhance, and support the 
applications or services, and price. We believe that we compete well in each of these categories. In addition, we believe that our 
relationship with Popular, scale and expertise, and financial institution industry expertise, combined with our ability to offer 
multiple applications, services and integrated solutions to individual customers, enhances our competitiveness against 
companies with more limited offerings and helps us compete with large global competitors with similar assets to ours. 

In merchant acquiring, we compete with several other service providers and financial institutions, including Worldpay, Inc., 
First Data Corporation, Global Payments Inc., Elavon, Inc., Sage Payment Solutions, independent sales organizations and some 
local banks. Also, the card associations and payment networks are increasingly offering products and services that compete 
with ours. The main competitive factors are price, brand awareness, strength of the relationship with financial institutions, 
system functionality, integration service capabilities and innovation. Our business is also impacted by the expansion of new 
payments methods and devices, card association business model expansion, and bank consolidation. 

In payment services, we compete with several other third party card processors and debit networks, including First Data 
Corporation, Tecnocom Telecomunicaciones y Energía, S.A., Fidelity National Information Services, Inc., Fiserv, Inc., Total 
System Services, Inc., Vantiv, Inc., MasterCard, Visa, American Express, Discover and Global Payments Inc. Also, card 
associations and payment networks are increasingly offering products and services that compete with our products and services. 
The main competitive factors are price, system performance and reliability, system functionality, security, service capabilities 
and disaster recovery and business continuity capabilities. 

In business solutions, our main competition includes internal technology departments within financial institutions, retailers, 
data processing or software development departments of large companies and/or large technology and consulting companies. 
Main competitive factors are price, system performance and reliability, system functionality, security, service capabilities, and 
disaster recovery and business continuity capabilities. 

9

Intellectual Property

We own numerous registrations for several trademarks in different jurisdictions and own or have licenses to use certain 
software and technology, which are critical to our business and future success. For example, we own the ATH and EVERTEC 
trademarks in several jurisdictions, which are associated by the public, financial institutions and merchants with high quality 
and reliable electronic commerce, payments, and debit network solutions and services. Such goodwill allows us to be 
competitive, retain our customers, and expand our business. Further, we also use a combination of (i) proprietary software, and 
(ii) duly licensed third party software to operate our business and deliver secure and reliable products and services to our 
customers. The licensed software is subject to terms and conditions that we considered within the industry standards. Most are 
perpetual licenses and the rest are term licenses with renewable terms. In addition, we monitor these license agreements and 
maintain close contact with our suppliers to ensure their continuity of service. 

We seek to protect our intellectual property rights by securing appropriate statutory intellectual property protection in the 
relevant jurisdictions. We also protect proprietary know-how and trade secrets through company confidentiality policies, 
licenses, programs, and contractual agreements.

Employees

As of December 31, 2017, we had approximately 2,100 employees across 11 countries in the United States, Latin America and 
the Caribbean. In Brazil, we have one unionized employee covered by the terms of industry-specific collective agreements. 
None of our other employees are otherwise represented by any labor organization. We consider our relationships with our 
employees to be good. We have not experienced any work stoppages in connection with employee matters.

Government Regulation and Payment Network Rules 

Federal Reserve Regulations 

Popular is a bank holding company that has elected to be treated as a financial holding company under the provisions of the 
Gramm-Leach-Bliley Act of 1999. As long as we are deemed to be a “subsidiary” of Popular for purposes of the Bank Holding 
Company (“BHC”) Act, we will be subject to regulation and oversight by the Board of Governors of the Federal Reserve System 
(the “Federal Reserve Board”) and our activities will be subject to several related significant restrictions, the more significant of 
which are discussed below. 

Transactions with Affiliates 

If we are deemed to be an affiliate of Popular for purpose of the affiliate transaction rules found in Section 23A and 23B of the 
Federal Reserve Act and Regulation W of the Federal Reserve Board, we will be subject to various restrictions on our ability to 
borrow from, and engage in certain other transactions with Popular’s bank subsidiaries, Banco Popular and Banco Popular North 
America (“BPNA”). In general these rules require that any “covered transaction” that we enter into with Banco Popular or BPNA 
(or any of their respective operating subsidiaries), as the case may be, must be secured by designated amounts of specified collateral 
and must be limited to 10% of Banco Popular’s or BPNA’s, as the case may be, capital stock and surplus. In addition, all “covered 
transactions” between Banco Popular or BPNA, on the one hand, and Popular and all of its subsidiaries and affiliates on the other 
hand, must be limited to 20% of Banco Popular’s or BPNA’s, as the case may be, capital stock and surplus. “Covered transactions” 
are defined by statute to include a loan or extension of credit, as well as a purchase of securities issued by an affiliate, a purchase 
of assets (unless otherwise exempted by the Federal Reserve Board) from the affiliate, the acceptance of securities issued by the 
affiliate as collateral for a loan, and the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate. 

In addition, Section 23B and Regulation W require that if we are deemed an affiliate of Banco Popular or BPNA, all transactions 
between us and either Banco Popular or BPNA be on terms and conditions, including credit standards, that are substantially the 
same or at least as favorable to Banco Popular or BPNA, as the case may be, as those prevailing at the time for comparable 
transactions involving other non-affiliated companies or, in the absence of comparable transactions, on terms and conditions, 
including credit standards, that in good faith would be offered by Banco Popular or BPNA to, or would apply to, non-affiliated 
companies. 

Permissible Activities 

As long as we are deemed to be controlled by Popular for bank regulatory purposes, we may conduct only those activities that are 
authorized for a bank holding company or a financial holding company under the BHC Act, the Federal Reserve Board’s Regulation 
K and other relevant U.S. federal banking laws. These activities generally include activities that are related to banking, financial 
10

in nature or incidental to financial activities. In addition, restrictions placed on Popular as a result of supervisory or enforcement 
actions may restrict us or our activities in certain circumstances, even if these actions are unrelated to our conduct or business. As 
long as we are deemed to be a foreign subsidiary of a bank holding company under the Federal Reserve Board’s regulations, we 
will rely on the authority granted under the Federal Reserve Board’s Regulation K to conduct our data processing, management 
consulting and related activities outside the United States. The Federal Reserve Board’s Regulation K generally limits activities 
of a bank holding company outside the United States that are not banking or financial in nature, specifically permitted under 
Regulation  K  to  foreign  subsidiaries  or  necessary  to  carry  on  such  activities  that  are  not  otherwise  permissible  for  a  foreign 
subsidiary under the banking regulations. We continue to engage in certain activities outside the scope of such permissible activities 
pursuant to authority under the Federal Reserve Board’s Regulation K, which allows a bank holding company to retain, in the 
context of an acquisition of a going concern, such otherwise impermissible activities if they account for not more than 5% of either 
the consolidated assets or consolidated revenues of the acquired organization.

New lines of business, other new activities, divestitures or acquisitions that we may wish to commence in the future may not be 
permissible for us under the BHC Act, Regulation K or other relevant U.S. federal banking laws. Further, as a result of being 
subject to regulation and supervision by the Federal Reserve Board, we may be required to obtain the approval of the Federal 
Reserve Board before engaging in certain new activities or businesses, whether organically or by acquisition, unless such activities 
are considered financial in nature. More generally, the Federal Reserve Board has broad power to approve, deny or refuse to act 
upon  applications  or  notices  for  us  to  conduct  new  activities,  acquire  or  divest  businesses  or  assets,  or  reconfigure  existing 
operations. If we are unable to obtain any such approval on a timely basis, are delayed in receiving approval or do not receive 
approval, this may make transactions more expensive or may make us less attractive to potential sellers.

Examinations 

As a technology service provider to financial institutions, we are also subject to regulatory oversight and examination by the 
Federal Financial Institutions Examination Council (the “FFIEC”), an interagency body of federal financial regulators that includes 
the Federal Reserve Board. The office of the Commissioner of Financial Institutions of Puerto Rico also participates in such 
examinations by the FFIEC. In addition, independent auditors annually review several of our operations to provide reports on 
internal controls for our clients’ auditors and regulators. 

Regulatory Reform and Other Legislative Initiatives 

The payment card industry has come under increased scrutiny from lawmakers and regulators. The Dodd-Frank Wall Street 
Reform and Protection Act (the “Dodd-Frank Act”) set forth significant structural and other changes to the regulation of the 
financial services industry, including the establishment of the Consumer Financial Protection Bureau (the “CFPB”).  The CFPB 
has broad supervisory, enforcement and rulemaking authority over   consumer financial products and services (including many 
offered by us and by our clients) and certain bank and non-bank providers of such products and services. In addition, 
Section 1075 of the Dodd-Frank Act (commonly referred to as the “Durbin Amendment”) imposes new restrictions on card 
networks and debit card issuers. More specifically, the Durbin Amendment provides that the interchange transaction fees that a 
card issuer or payment network may receive or charge for an electronic debit transaction must be “reasonable and proportional” 
to the cost incurred by the card issuer in authorizing, clearing and settling the transaction.  The Board of Governors of the 
Federal Reserve System (the “Federal Reserve”) adopted final regulations implementing the Durbin Amendment on June 29, 
2011 and added a fraud-prevention adjustment on July 27, 2012.

The Federal Reserve’s regulations (a) limit debit transaction interchange fees to $.21 + (5 bps times the value of the 
transactions) + $.01 (as a fraud adjustment for issuers that have in place policies and measures to address fraud); (b) require 
that issuers must enable at least two unaffiliated payment card networks on their debit cards without regard to authentication 
method; and (c) prohibit card issuers and payment card networks from entering into exclusivity arrangements for debit card 
processing and restrict card issuers and payment networks from inhibiting the ability of merchants to direct the routing of debit 
card transactions over networks of their choice. The Dodd-Frank Act also allows merchants to set minimum dollar amounts 
(currently, not to exceed $10) for the acceptance of a credit card and provide discounts or incentives to entice consumers to pay 
with various payment methods, such as cash, checks, debit cards or credit cards, as the merchant prefers.

The CFPB is responsible for many of the regulatory functions previously performed by the federal banking and other agencies 
with respect to consumer financial products and services. In addition to rulemaking authority over several enumerated federal 
consumer financial protection laws, the CFPB is authorized to issue rules prohibiting unfair, deceptive or abusive acts or 
practices in connection with the offering of a consumer financial product or service or any transaction with a consumer for such 
product or service. The CFPB also has authority to examine supervised entities for compliance with, and to enforce violations 
of, consumer financial protection laws. 

11

As an affiliate of Banco Popular-an insured depository institution with greater than $10 billion in total consolidated assets-and 
as a service provider to other insured depository institutions with $10 billion or more in total consolidated assets, as well as 
larger participants in markets for consumer financial products and services, as determined by the CFPB, we are subject to the 
supervision, enforcement and rulemaking authority of the CFPB. CFPB rules, examinations and enforcement actions may 
require us to adjust our activities and may increase our compliance costs. 

In 2017, the former Director of the CFPB resigned and was replaced by an interim Director.  This change in leadership, 
although the subject of ongoing litigation, may result in certain changes to CFPB policies and supervision, enforcement and 
rulemaking priorities. In addition, various legislative proposals to restructure or limit the authority of the CFPB, or to modify 
certain consumer financial protection laws or CFPB regulations, have been considered by Congress.  It is unclear whether or to 
what extent any such change would affect the manner in which we engage in consumer product and service activities.  

In addition to the Dodd-Frank Act, from time to time, various legislative initiatives are introduced in Congress and state 
legislatures, and changes in regulations or agency policies, or in the interpretation of such regulations and policies, are 
proposed by regulatory agencies. Such initiatives may include proposals to modify the powers of bank holding companies and 
their affiliates. Such legislation or changes in regulation could affect our operating environment in substantial and unpredictable 
ways. If adopted, such legislation or changes in regulation could increase the cost of doing business or limit permissible 
activities. We cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any 
implementing regulations or related policies and guidance, would have on our financial condition or results of operations.

Other Government Regulations 

Our services are also subject to a broad range of complex federal, state, Puerto Rico and foreign regulation, including privacy 
laws, international trade regulations, the Bank Secrecy Act and other anti-money laundering laws, anti-trust and competition laws, 
the U.S. Internal Revenue Code, the PR Code, the Employee Retirement Income Security Act, the Health Insurance Portability 
and Accountability Act and other Puerto Rico laws and regulations. Failure of our services to comply with applicable laws and 
regulations could result in restrictions on our ability to provide such services, as well as the imposition of civil fines and/or criminal 
penalties. The principal areas of regulation (in addition to oversight by the Federal Reserve Board) that impact our business are 
described below. 

Privacy 

We and our financial institution clients are required  to  comply  with  various U.S. state,  federal  and  foreign privacy laws and 
regulations,  including  those  imposed  under  the  Gramm-Leach-Bliley Act  of  1999  which  applies  directly  to  a  broad  range  of 
financial institutions and to companies that provide services to financial institutions. These laws and regulations place restrictions 
on the collection, processing, storage, use and disclosure of certain personal information, require disclosure to individuals of 
detailed privacy practices and provide them with certain rights to prevent the use and disclosure of protected information. The 
regulations, however, permit financial institutions to share information with non-affiliated parties who perform services for the 
financial institutions. These laws also impose requirements for safeguarding personal information through the issuance of data 
security  standards  or  guidelines.  Certain  state  laws  impose  similar  privacy  obligations,  as  well  as,  in  certain  circumstances, 
obligations to provide notification to affected individuals, states officers and consumer reporting agencies, as well as businesses 
and governmental agencies that own data, of security breaches of computer databases that contain personal information. In addition, 
U.S.  state  and  federal  government  agencies  have  been  contemplating  or  developing  new  initiatives  to  safeguard  privacy  and 
enhance data security. Some foreign privacy laws are stricter than those applicable under U.S. federal, state or Puerto Rican law. 
As a provider of services to financial institutions, we are required to comply with the privacy regulations and are bound by the 
same limitations on disclosure of the information received from our customers as apply to the financial institutions themselves. 
See “Item 1A. Risk Factors-Risks Related to Our Business-Security breaches or our own failure to comply with privacy regulations 
and industry security requirements imposed on providers of services to financial institutions and card processing services could 
harm our business by disrupting our delivery of services and damaging our reputation.” 

Anti-Money Laundering and Office of Foreign Assets Control Regulation 

Since we provide data processing services to both foreign and domestic financial institutions, we are required to comply with 
certain  anti-money  laundering  and  terrorist  financing  laws  and  economic  sanctions  imposed  on  designated  foreign  countries, 
nationals and others. Specifically, we must adhere to the requirements of the Bank Secrecy Act, as amended by the USA PATRIOT 
Act of 2001 (collectively, the “BSA”) regarding processing and facilitation of financial transactions, as well as other state, local 
and foreign laws relating to money laundering. Furthermore, as a data processing company that provides services to foreign parties 
and facilitates financial transactions between foreign parties, we are obligated to screen transactions for compliance with the 
sanctions programs administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). These 
12

 
regulations  prohibit  us  from  entering  into  or  facilitating  a  transaction  to  or  from  or  dealings  with  specified  countries,  their 
governments  and,  in  certain  circumstances,  their  nationals  and  others,  such  as  narcotics  traffickers,  and  terrorists  or  terrorist 
organizations designated by the U.S. Government under one or more sanctions regimes. 

A major focus of governmental policy in recent years has been aimed at combating money laundering and terrorist financing. 
Preventing  and  detecting  money  laundering,  and  other  related  suspicious  activities  at  their  earliest  stages  warrants  careful 
monitoring. The BSA, along with a number of other anti-money laundering laws, imposes various reporting and record-keeping 
requirements  concerning  currency  and  other  types  of  monetary  instruments.  Similar  anti-money  laundering,  counter-terrorist 
financing and proceeds of crime laws apply to movements of currency and payments through electronic transactions and to dealings 
with persons specified on lists maintained by organizations similar to OFAC in several other countries and which may impose 
specific data retention obligations or prohibitions on intermediaries in the payment process.   These laws and regulations impose 
obligations to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist 
financing and to verify the identity of their customers.  Failure to maintain and implement adequate programs to combat money 
laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational 
consequences for us. 

Federal Trade Commission Act and Other Laws Impacting our Customers' Business

All persons engaged in commerce, including, but not limited to, us and our merchant and financial institution customers are subject 
to Section 5 of the Federal Trade Commission Act prohibiting Unfair or Deceptive Acts or Practices (“UDAP”).  In addition, there 
are other laws, rules and/or regulations, including the Telemarketing Sales Act, that may directly impact the activities of our 
merchant customers and in some cases may subject us, as the merchant's payment processor, to investigations, fees, fines and 
disgorgement of funds in the event we are deemed to have aided and abetted or otherwise provided the means and instrumentalities 
to facilitate the illegal activities of the merchant through our payment processing services.  Federal and state regulatory enforcement 
agencies including the Federal Trade Commission, or FTC, and the states' attorneys general have authority to take action against 
nonbanks that engage in UDAP or violate other laws, rules and regulations. To the extent we process payments for a merchant 
that may be in violation of these laws, rules and regulations, we may be subject to enforcement actions and as a result may incur 
losses and liabilities that may impact our business.  

Anti-trust and Competition Laws

We are required to comply with various federal, local and foreign competition and anti-trust laws, including the Sherman Act, 
Clayton Act, Hart-Scott-Rodino Antitrust Improvements Act, Robinson-Patman Act, Federal Trade Commission Act and Puerto 
Rico Anti-Monopoly Act. In general, competition laws are designed to protect businesses and consumers from anti-competitive 
behavior.  Competition and anti-trust law investigations can be lengthy and violations are subject to civil and/or criminal fines 
and other sanctions for both corporations and individuals that participate in the prohibited conduct. Class action civil anti-trust 
lawsuits can result in significant judgments, including in some cases, payment of treble damages and/or attorneys' fees to the 
successful plaintiff. See “Item 1A. Risk Factors-Risks Related to Our Business-Failure to comply with U.S. state and federal 
antitrust requirements, or the Puerto Rico Anti-Monopoly Act, and government investigations into our compliance, could adversely 
affect our business.”

Foreign Corrupt Practices Act (“FCPA”), Export Administration and Other 

As a data processing company that services both foreign and domestic clients, our business activities in foreign countries, and in 
particular our transactions with foreign governmental entities, subject us to the anti-bribery provisions of the FCPA, as well as the 
laws and regulations of the foreign jurisdiction where we operate. Pursuant to applicable anti-bribery laws, our transactions with 
foreign government officials and political candidates are subject to certain limitations. Finally, in the course of business with 
foreign clients and subsidiaries, we export certain software and hardware that is regulated by the Export Administration Regulations 
from the United States to the foreign parties. Together, these regulations place restrictions on who we can transact with, what 
transactions may be facilitated, how we may operate in foreign jurisdictions, and what we may export to foreign countries.

The preceding list of laws and regulations is not exhaustive, and the regulatory framework governing our operations changes 
continuously. The enactment of new laws and regulations may increasingly affect directly and indirectly the operation of our 
business, which could result in substantial regulatory compliance costs, litigation expense, loss of revenue, decreased profitability 
and/or adverse publicity.

13

 Association and Network Rules 

Several of our subsidiaries are registered with or certified by card associations and payment networks, including the ATH network, 
MasterCard, Visa, American Express, Discover and numerous debit and EBT networks as members or as service providers for 
member institutions in connection with the services we provide to our customers. As such, we are subject to applicable card 
association and network rules, which could subject us to a variety of fines or penalties that may be levied by the card associations 
or networks for certain acts and/or omissions by us, our acquirer customers, processing customers and/or merchants. For example, 
“EMV” is a credit and debit card authentication methodology that the card associations are mandating to processors, issuers and 
acquirers in the payment industry. Compliance deadlines for EMV mandates vary by country and by payment network. We have 
invested significant resources and man-hours to develop and implement this methodology in all our payment related platforms. 
However, we are not certain if or when our financial institution customers will use or accept the methodology and the time it will 
take for this technology to be rolled-out to all customer ATM and POS devices connected to our platforms or adopted by our card 
issuing clients. Non-compliance with EMV mandates could result in lost business or financial losses from fraud or fines from 
network  operators.  We  are  also  subject  to  network  operating  rules  promulgated  by  the  National Automated  Clearing  House 
Association  relating  to  payment  transactions  processed  by  us  using  the Automated  Clearing  House  Network  and  to  various 
government laws regarding such operations, including laws pertaining to EBT.

Geographic Concentration 

Our revenue composition by geographical area is based in Latin America and the Caribbean. Latin America includes, among 
others, Costa Rica, México, Guatemala, Colombia, Chile, Uruguay, Brazil and Panamá. The Caribbean primarily represents Puerto 
Rico, the Dominican Republic and the Virgin Islands. See Note 23 of Audited Consolidated Financial Statements included elsewhere 
in this Annual Report on Form 10-K for additional information related to geographic areas. 

Seasonality 

Our payment businesses generally experience increased activity during the traditional holiday shopping periods and around other 
nationally recognized holidays. 

Available Information 

EVERTEC’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments 
to such reports (if applicable) filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as 
amended (the “Exchange Act”) are available free of charge, through our website, http://www.evertecinc.com, as soon as reasonably 
practicable after such material is electronically filed with or furnished to the SEC. In addition, we make available on our website 
under the heading of “Corporate Information” our: (i) Code of Ethics; (ii) Code of Ethics for Service Providers; (iii) Corporate 
Governance Guidelines; (iv) the charters of the Audit, Compensation and Nominating and Corporate Governance committees, 
and also we intend to disclose any amendments to the Code of Ethics. The aforementioned reports and materials can also be 
obtained free of charge upon written request or telephoning to the following address or telephone number: 

EVERTEC, Inc. 
Cupey Center Building 
Road, 176, Kilometer 1.3 
San Juan, Puerto Rico 00926 
(787) 759-9999 

The public may read and copy any materials EVERTEC files with the SEC at the SEC’s Public Reference Room at 100 F 
Street, NE, Washington, D.C. 20549. In addition, the public may obtain information on the operation of the Public Reference 
Room by calling the SEC at 1-800-SEC-0330. Our filings with the SEC are also available to the public from commercial 
document retrieval services and at the web site maintained by the SEC at http://www.sec.gov.

Item 1A. Risk Factors 

Readers should carefully consider, in connection with other information disclosed in this Annual Report on Form 10-K, the 
risks and uncertainties described below. The following discussion sets forth some of the more important risk factors that could 
affect our business, financial condition, operating results or cash flow. However, other factors, besides those discussed below or 
elsewhere in this Report or other of our reports filed with or furnished to the Securities and Exchange Commission (“SEC”), 
also could adversely affect our business, financial condition, operating results or cash flow. We cannot assure you that the risk 
factors described below or elsewhere in this document are a complete set of all potential risks we may face; additional risks and 
14

 
 
uncertainties not presently known to us or not believed by us to be material may also negatively impact us. These risk factors 
also serve to describe factors which may cause our results to differ materially from those discussed in forward looking 
statements included herein or in other documents or statements that make reference to this Annual Report on Form 10-K. 
Please also refer to the section titled “Forward Looking Statements” in this Annual Report on Form 10-K. 

Risks Related to Our Business 

We expect to continue to derive a significant portion of our revenue from Popular. 

Our services to Popular account for a significant portion of our revenues, and we expect that our services to Popular will 
continue to represent a significant portion of our revenues for the foreseeable future. In 2017, products and services billed to 
Popular accounted for approximately 43% of our total revenues. The majority of Popular’s business is presented in the 
Business Solutions segment. If Popular were to terminate, fail to perform under, or fail to renew the Master Services Agreement 
(“MSA”), which currently expires in 2025, or our other material agreements with Popular, our revenues could be materially 
reduced and our profitability and cash flows could also be materially reduced which, in turn, could potentially limit our ability 
to renegotiate our debt. 

We depend, in part, on our merchant relationships and our alliance with Banco Popular, a wholly-owned subsidiary of 
Popular, to grow our merchant acquiring business. If we are unable to maintain these relationships and this alliance, our 
business may be adversely affected. 

Growth in our merchant acquiring business is derived primarily from acquiring new merchant relationships, new and enhanced 
product and service offerings, cross selling products and services into existing relationships, the shift of consumer spending to 
increased usage of electronic forms of payment, and the strength of our relationship with Banco Popular. A substantial portion 
of our business is generated from our Independent Sales Organization Sponsorship and Services Agreement (the “ISO 
Agreement”) with Banco Popular, which expires in 2025.

Banco Popular acts as a merchant referral source and provides sponsorship into the ATH, Visa, Discover and MasterCard 
networks for merchants, as well as card association sponsorship, clearing and settlement services. We provide transaction 
processing and related functions. Both alliance partners may provide management, sales, marketing, and other administrative 
services. We rely on the continuing growth of our merchant relationships, our alliance with Banco Popular and other 
distribution channels. There can be no guarantee that this growth will continue and the loss or deterioration of these 
relationships could negatively impact our business and result in a reduction of our revenue and profit. 

Our MSA with Popular, our ISO Agreement with Banco Popular and our ATH Network Participation Agreement and ATH 
Support Agreement with Banco Popular (the “BPPR ATH Agreements”) have initial terms ending in 2025. If Popular or 
Banco Popular decide not to renew one or more of these agreements, or if we are unable to negotiate extensions, or if we 
must provide significant concessions to Popular or Banco Popular to secure extensions, our results of operations, financial 
condition and trading price of our common stock may be materially adversely affected, and it could also potentially limit our 
ability to renegotiate our debt. 

Our MSA with Popular has an initial term that ends in 2025. For 2017, we derived approximately 43% of our revenue from 
such contract, which makes the MSA our most significant client contract. We expect that we will enter into a negotiation with 
Popular prior to the expiration of the initial term of the MSA. We cannot be certain that we will be able to negotiate an 
extension to the MSA. In addition, even if we are able to negotiate an extension of the MSA, any new master services 
agreement may be materially different from the existing MSA and may result in significant concessions to Popular. Any such 
events may materially negatively impact our financial condition, results of operations and trading price of our common stock, 
as well as potentially limit our ability to renegotiate our debt.

We are also a counterparty to Banco Popular under the ISO Agreement, which has an initial term ending on 2025. Pursuant to 
the ISO Agreement, Banco Popular sponsors us as an independent sales organization with respect to certain credit card 
associations and is required to exclusively refer to us any merchant that inquires about, requests or otherwise evidences interest 
in the merchant services, among other things. If the ISO Agreement is not renewed, we will have to seek other card association 
sponsors, we will not benefit from BPPR referral of merchants and we may experience the loss of some merchants if BPPR 
enters the merchant acquiring business or associates itself with another independent sales organization.  Any of these may 
negatively impact our financial condition and results of operations.

Similarly, the BPPR ATH Agreements have initial terms ending in 2025. Under such agreements, among other things, we 
provide Banco Popular certain ATM and POS services in connection with our ATH network; we grant a license to use the ATH 
15

logo, word mark and associated trademarks; and Banco Popular agrees to support, promote and market the ATH network and 
brand and to issue debit cards bearing the symbol of the ATH network. If one or both of the BPPR ATH Agreements are not 
extended, our ATH brand and network could be negatively impacted and our financial conditions and results of operations 
adversely affected.

If we are unable to renew other client contracts at favorable terms, we could lose clients and our results of operations and 
financial condition may be adversely affected.

Failure to achieve favorable renewals of client contracts could negatively impact our business. Our contracts with private 
clients generally run for a period of one to five years, except for the Master Services Agreement with Popular, described above. 
Our government contracts generally run for one year without automatic renewal periods due to requirements of the government 
procurement rules and related fiscal funding requirements. Our standard merchant contract has an initial term of one or three 
years, with automatic one-year renewal periods. At the end of the contract term, clients have the opportunity to renegotiate their 
contracts with us and to consider whether to engage one of our competitors to provide products and services. If we are not 
successful in achieving high renewal rates and contract terms that are favorable to us, our results of operations and financial 
condition may be adversely affected.

Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability 
to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and 
prevent us from meeting our obligations under our notes and senior secured credit facilities. 

We are highly leveraged. As of December 31, 2017, the total principal amount of our indebtedness was approximately $624.8 
million. Our high degree of leverage could have important consequences for you, including: 

• 
• 

• 

increasing our vulnerability to adverse economic, industry or competitive developments;
requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on 
our indebtedness, therefore reducing our ability to use our cash flow for other purposes, including for our operations, 
capital expenditures and future business opportunities;
exposing us to the risk of increased interest rates because our borrowings are predominantly at variable rates of 
interest;

• 
• 

•  making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply 
with the obligations of any of our other debt instruments, including restrictive covenants and borrowing conditions, 
could result in an event of default under the agreements governing such other indebtedness;
restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;
limiting our ability to obtain additional debt or equity financing for working capital, capital expenditures, business 
development, debt service requirements, acquisitions and general corporate or other purposes; and
limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a 
competitive disadvantage compared to our competitors who are less highly leveraged and who therefore, may be able 
to take advantage of opportunities that our leverage prevents us from exploiting.

• 

For the year ended December 31, 2017, our cash interest expense on the senior secured credit facilities amounted to $25.4 
million. Our interest expense could increase if interest rates increase because the entire amount of the indebtedness under the 
senior secured credit facilities bears interest at a variable rate. At December 31, 2017, we had approximately $611.7 million 
aggregate principal amount of variable rate indebtedness under the senior secured credit facilities of which $200 million is 
fixed with an interest rate swap. A 100 basis point increase in interest rates over our floor(s) on our debt balances outstanding as 
of December 31, 2017 under the senior secured credit facilities would increase our annual interest expense by approximately 
$4.1 million after taking into consideration the referenced fixed interest rate swap. 

We rely on our systems, employees and certain counterparties, and certain failures could materially adversely affect our 
operations. 

Our businesses are dependent on our ability to process, record and monitor a large number of transactions. If any of our 
financial, accounting, or other data processing systems or applications fail or have other significant shortcomings or limitations, 
we could be materially adversely affected. We are similarly dependent on our employees. We could be materially adversely 
affected if one of our employees causes a significant operational breakdown or failure, either as a result of human error or 
where an individual purposefully sabotages or fraudulently manipulates our operations or systems. Third parties with which we 
do business could also be sources of operational risk to us, including relating to breakdowns or failures of such parties’ own 
systems or employees. Any of these occurrences could diminish our ability to operate one or more of our businesses, or result 

16

 
in potential liability to clients, reputational damage and regulatory intervention, any of which could materially adversely affect 
us. 

We may be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control, 
which may include, for example, computer viruses or electrical or telecommunications outages, natural disasters, disease 
pandemics or other unanticipated damage to property or physical assets. Such an incident occurred as a result of the impact and 
aftermath of Hurricanes Irma and Maria in 2017, which affected the ability of the majority of the island's businesses to transact 
electronically in Puerto Rico and the Caribbean. Such disruptions may give rise to losses in service to customers and loss or 
liability to us. In addition, there is the risk that our controls and procedures as well as business continuity and data security 
systems prove to be inadequate. Any such failure could affect our operations, damage our reputation and materially adversely 
affect our results of operations by requiring us to expend significant resources to correct the defect, by causing a loss of 
confidence in our services that leads to a decrease in use of our services, and by exposing us to litigation, regulatory fines, 
penalties or other sanctions or losses not covered by insurance. 

If our amortizable intangible assets or goodwill become impaired, it may adversely affect our financial condition and 
operating results. 

If our amortizable intangible assets or goodwill were to become impaired, we may be required to record a significant charge to 
earnings. Under the generally accepted accounting principles in the United States of America (“GAAP”), definitive useful life 
intangibles are evaluated periodically for impairment when events or changes in circumstances indicate that the carrying 
amount may not be recoverable. Goodwill is tested for impairment at least annually. 

The goodwill impairment evaluation process requires us to make estimates and assumptions with regards to the fair value of 
our reporting units. Actual values may differ significantly from these estimates. Such differences could result in future 
impairment of goodwill that would, in turn, negatively impact our results of operations and the reporting unit where the 
goodwill is recorded. 

Our risk management procedures may not be fully effective in identifying or helping us mitigate our risk exposure against 
all types of risks. 

We operate in a rapidly changing industry, and we have experienced significant change in the past five years, including our 
separation from Popular following the Merger, our initial public offering in April 2013 and our listing on the New York Stock 
Exchange (“NYSE”). Accordingly, we may not be fully effective in identifying, monitoring and managing our risks. In some 
cases, the information we use to perform our risk assessments may not be accurate, complete or up-to-date. In other cases, our 
risk assessments may depend upon information that we may not have or cannot obtain. If we are not fully effective or we are 
not always successful in identifying all risks to which we are or may be exposed, we could be subject to losses, penalties, 
litigation or regulatory actions that could harm our reputation or have a material adverse effect on our business, financial 
conditions and results of operations. 

Security breaches or our own failure to comply with privacy regulations and industry security requirements imposed on 
providers of services to financial institutions and card processing services could harm our business by disrupting our 
delivery of services and damaging our reputation. 

As part of our business, we electronically receive, process, store and transmit sensitive business information of our customers. 
In addition, we collect personal consumer data, such as names and addresses, social security numbers, driver’s license numbers, 
cardholder data and payment history records. The uninterrupted operation of our information systems and the confidentiality of 
the customer/consumer information that resides on such systems are critical to the successful operations of our business. 
Despite the safeguards we have in place, unauthorized access to our computer systems or databases could result in the theft or 
publication of confidential information, the deletion or modification of records or could otherwise cause interruptions in our 
operations. These risks are increased when we transmit information over the Internet. Our visibility in the global payments 
industry may attract hackers to conduct attacks on our systems that could compromise the security of our data or could cause 
interruptions in the operations of our businesses and subject us to increased costs, litigation and other liabilities. There is also a 
possibility of mishandling or misuse, for example, if such information were erroneously provided to parties who are not 
permitted to have the information, either by fault of our systems, employees acting contrary to our policies, or where such 
information is intercepted or otherwise improperly taken by third parties. An information breach in the system and loss of 
confidential information such as credit card numbers and related information could have a longer and more significant impact 
on the business operations than a hardware failure and could result in claims against us for misuse of personal information, 
such as identity theft. 

17

Additionally, as a provider of services to financial institutions, such as card processing services, we are subject directly (or 
indirectly through our clients) to the same laws, regulations, industry standards and limitations on disclosure of the information 
we receive from our customers that apply to the customers themselves. If we fail to comply with these regulations, standards 
and limitations, we could be exposed to claims for breach of contract, fines, governmental proceedings, or prohibitions on card 
processing services. In addition, as more restrictive privacy laws, rules or industry security requirements are adopted in the 
future on the federal or local level or by a specific industry body, the change could have an adverse impact on us through 
increased costs or restrictions on business processes. We may be required to expend significant capital and other resources to 
comply with mandatory privacy and security standards required by law, industry standards or contracts. 

Any inability to prevent security or privacy breaches or failure to comply with privacy regulations and industry security 
requirements could cause our existing customers to lose confidence in our systems and terminate their agreements with us, and 
could inhibit our ability to attract new customers, damage our reputation and/or adversely impact our relationship with 
administrative agencies. 

We may experience breakdowns in our processing systems that could damage customer relations and expose us to liability.

We depend heavily on the reliability of our processing systems in our core businesses. A system outage or data loss, regardless 
of reason, could have a material adverse effect on our business, financial condition and results of operations. Not only would 
we suffer damage to our reputation in the event of a system outage or data loss, but we may also be liable to third parties. Some 
of our contractual agreements with financial institutions require the crediting of certain fees if our systems do not meet certain 
specified service levels. To successfully operate our business, we must be able to protect our processing and other systems from 
interruption, including from events that may be beyond our control. Events that could cause system interruptions include, but 
are not limited to, fire, natural disasters, telecommunications failure, computer viruses, terrorist acts and war. Although we have 
taken steps to protect against data loss and system failures, there is still risk that we may lose critical data or experience system 
failures. We perform the vast majority of disaster recovery operations ourselves, though we utilize select third parties for some 
aspects of recovery. To the extent we outsource our disaster recovery, we are at risk of the vendor’s unresponsiveness in the 
event of breakdowns in our systems. Furthermore, our property and business interruption insurance may not be adequate to 
compensate us for all losses or failures that may occur. 

Lack of system integrity, fraudulent payments or credit quality related to funds settlement could result in a financial loss. 

We settle funds on behalf of financial institutions, other businesses and consumers and process funds transactions from clients, 
card issuers, payment networks and consumers on a daily basis for a variety of transaction types. Transactions facilitated by us 
include debit card, credit card, electronic bill payment transactions, ACH payments, electronic benefits transfer transactions and 
check clearing that supports consumers, financial institutions and other businesses. These payment activities rely upon the 
technology infrastructure that facilitates the verification of activity with counterparties, the facilitation of the payment and, in 
some cases, the detection or prevention of fraudulent payments. If the continuity of operations, integrity of processing, or 
ability to detect or prevent fraudulent payments were compromised this could result in a financial loss to us. 

We may experience defects, development delays, installation difficulties, system failure, or other service disruptions with 
respect to our technology solutions, which would harm our business and reputation and expose us to potential liability. 

Many of our services are based on sophisticated software, technology and computing systems, and we may encounter delays 
when developing new technology solutions and services. Further, the technology solutions underlying our services have 
occasionally contained, and may in the future contain, undetected errors or defects when first introduced or when new versions 
are released. In addition, we may experience difficulties in installing or integrating our technologies on platforms used by our 
customers. Finally, our systems and operations could be exposed to damage or interruption from fire, natural disaster, power 
loss, telecommunications failure, unauthorized entry and computer viruses or other cyber-attacks. Attacks on information 
technology systems continue to grow in frequency, complexity and sophistication, a trend we expect will continue. Such attacks 
have become a point of focus for individuals, businesses and governmental entities. The objectives of these attacks include, 
among other things, gaining unauthorized access to systems to facilitate financial fraud, disrupt operations, cause denial of 
service events, corrupt data, and steal non-public information. 

As part of our business, we electronically receive, process, store and transmit a wide range of confidential information, 
including sensitive customer information and personal consumer data. We also operate payment, cash access and electronic 
card systems. A successful cyber-attack on our system could result in: (1) interruption of business operations; (2) delay in 
market acceptance; (3) additional development and remediation costs; (4) diversion of technical and other resources; (5) loss of 
customers; (6) negative publicity and loss of reputation; or (7) exposure to liability claims. 

18

 
 
Any one or more of the foregoing could have a material adverse effect on our business, financial condition and results of 
operations. 

The ability to adopt technology to changing industry and customer needs or trends may affect our competitiveness or 
demand for our products, which may adversely affect our operating results. 

Changes in technology may limit the competitiveness of and demand for our services. Our businesses operate in industries that 
are subject to technological advancements, developing industry standards and changing customer needs and preferences. Also, 
our customers continue to adopt new technology for business and personal uses. We must anticipate and respond to these 
industry and customer changes in order to remain competitive within our relative markets. Our inability to respond to new 
competitors and technological advancements could impact all of our businesses. For example, the ability to adopt technological 
advancements surrounding POS technology available to merchants could have an impact on our merchant acquiring business. 

Consolidations in the banking and financial services industry could adversely affect our revenues by eliminating existing or 
potential clients and making us more dependent on a more limited number of clients. 

In recent years, there have been a number of mergers and consolidations in the banking and financial services industry. Mergers 
and consolidations of financial institutions reduce the number of our clients and potential clients, which could adversely affect 
our revenues. Further, if our clients fail or merge with or are acquired by other entities that are not our clients, or that use fewer 
of our services, they may discontinue or reduce their use of our services. It is also possible that the larger banks or financial 
institutions resulting from mergers or consolidations would have greater leverage in negotiating terms with us or could decide 
to perform in-house some or all of the services which we currently provide or could provide. Any of these developments could 
have a material adverse effect on our business, financial condition and results of operations. 

We are subject to the credit risk that our merchants will be unable to satisfy obligations for which we may also be liable. 

We are subject to the credit risk of our merchants being unable to satisfy obligations for which we also may be liable. For 
example, as the merchant acquirer, we are contingently liable for transactions originally acquired by us that are disputed by the 
cardholder and charged back to the merchants. For certain merchants, if we are unable to collect this amount from the 
merchant, due to the merchant’s insolvency or other reasons, we will bear the loss for the amount of the refund or chargeback 
paid to the cardholder. Notwithstanding our adherence to industry standards with regards to the acceptance of new merchants 
and certain steps to screen for credit risk, it is possible that a default on such obligations by one or more of our merchants could 
have a material adverse effect on our business. 

Increased competition or changes in consumer spending or payment preferences could adversely affect our business. 

A decline in the market for our services, either as a result of increased competition, continued migration of Puerto Ricans to the 
U.S. mainland, a further deterioration in the Puerto Rico economy, a decrease in consumer spending or a shift in consumer 
payment preferences, could have a material adverse effect on our business. We may face increased competition in the future as 
new companies enter the market and existing competitors expand their services. Some of these competitors could have greater 
overall financial, technical and marketing resources than us, which could enhance their ability to finance acquisitions, fund 
internal growth and respond more quickly to professional and technological changes. Some competitors could have or may 
develop a lower cost structure. New competitors or alliances among competitors could emerge, resulting in a loss of business 
for us and a corresponding decline in revenues and profit margin. Further, if consumer confidence decreases in a way that 
adversely affects consumer spending, whether in conjunction with a global economic downturn or otherwise, we could 
experience a reduction in the volume of transactions we process. In addition, if we fail to respond to changes in technology or 
consumer payment preferences, we could lose business to competitors. 

Changes in credit card association or other network rules or standards could adversely affect our business. 

In order to provide our transaction processing services, several of our subsidiaries are registered with or certified by Visa, 
Discover and MasterCard and other networks as members or as service providers for member institutions. As such, we and 
many of our customers are subject to card association and network rules that could subject us or our customers to a variety of 
fines or penalties that may be levied by the card associations or networks for certain acts or omissions by us, acquirer 
customers, processing customers and merchants. Visa, Discover, MasterCard and other networks, some of which are our 
competitors, set the standards with respect to which we must comply. The termination of Banco Popular’s or our subsidiaries’ 
member registration or our subsidiaries’ status as a certified service provider, or any changes in card association or other 
network rules or standards, including interpretation and implementation of the rules or standards, that increase the cost of doing 

19

business or limit our ability to provide transaction processing services to or through our customers, could have an adverse effect 
on our business, operating results and financial condition. 

Changes in interchange fees or other fees charged by card associations and debit networks could increase our costs or 
otherwise adversely affect our business. 

From time to time, card associations and debit networks change interchange, processing and other fees, which could impact our 
merchant acquiring and payment services businesses. It is possible that competitive pressures will result in our merchant 
acquiring and payment services businesses absorbing a portion of such increases in the future, which would increase our 
operating costs, reduce our profit margin and adversely affect our business, operating results and financial condition. 

Our revenues from the sale of services to merchants that accept Visa, Discover and MasterCard cards are dependent upon 
our continued Visa, Discover and MasterCard registration and financial institution sponsorship. 

In order to provide our Visa, Discover and MasterCard transaction processing services, we must be registered as a merchant 
processor of Visa, Discover and MasterCard. These designations are dependent upon our being sponsored by member banks of 
those organizations. If our sponsor banks should stop providing sponsorship for us, we would need to find another financial 
institution to serve as a sponsor, which could prove to be difficult and/or more expensive. If we are unable to find a 
replacement financial institution to provide sponsorship we may no longer be able to provide processing services to the affected 
customers which would negatively impact our revenues and earnings. 

For purposes of the Bank Holding Company Act of 1956 (the “BHC Act”), for so long as we are deemed to be controlled by 
Popular, we will be subject to supervision and examination by U.S. federal banking regulators, and our activities will be 
limited to those permissible for Popular. Furthermore, as a technology service provider to regulated financial institutions, 
we are subject to additional regulatory oversight and examination. As a regulated institution, we may be required to obtain 
regulatory approval before engaging in certain new activities or businesses, whether organically or by acquisition.

For so long as we are deemed to be a “subsidiary” of Popular for purposes of the BHC Act, in other words deemed to be 
controlled by Popular, we will be subject to regulation and supervision by the Federal Reserve Board. The BHC Act defines 
“control” differently than GAAP. As a deemed “subsidiary”, we may conduct only those activities that are authorized for our 
deemed parent, which depend on whether it is treated as a bank holding company or a financial holding company. The activities 
that are permissible for subsidiaries of bank holding companies are those that are treated as closely related to banking; those 
that are permissible for subsidiaries of financial holding companies generally include activities that are financial in nature or 
complementary to financial activities. In addition, we are subject to regulatory oversight and examination by the Federal 
Financial Institution Examination Council because we are a technology service provider to regulated financial institutions, 
including Banco Popular. 

New lines of business, other new activities, acquisitions that we may wish to commence or undertake in the future and the 
manner in which we conduct our business may not be permissible for us under the BHC Act, Regulation K or other relevant 
U.S. federal banking laws or may require the approval of the Federal Reserve Board or any other applicable U.S. federal 
banking regulator. In addition, potential acquisitions or deals may take longer, be more costly, or make us less attractive as a 
buyer. Additional regulatory requirements may be imposed if Popular is subject to any enforcement action. More generally, the 
Federal Reserve Board has broad powers to approve, deny or refuse to act upon applications or notices submitted by Popular on 
our behalf with respect to new activities, the acquisition of businesses or assets, or the reconfiguration of existing operations. 
Any such action by the Federal Reserve Board may also depend on our ability to comply with the standards imposed by our 
regulators. There can be no assurance that any required regulatory approvals will be obtained. In addition, further restrictions 
placed on Popular as a result of supervisory or enforcement actions may restrict us or our activities in certain circumstances, 
even if these actions are unrelated to conduct our business. 

Changes in laws, regulations and enforcement activities may adversely affect the products and services we provide and 
markets in which we operate. 

We and our customers are subject to U.S. federal, Puerto Rico and other countries’ laws, rules and regulations that affect the 
electronic payments industry. Our customers are subject to numerous laws, rules and regulations applicable to banks, financial 
institutions, processors and card issuers in the United States and abroad. We are subject to regulation because of our activities 
in the countries where we carry them out and because of our relationship with Popular, and at times we are also affected by the 
laws, rules and regulations to which our customers are subject. Failure to comply with any of these laws, rules and regulations 
may result in the suspension or revocation of licenses or registrations, the limitation, suspension or termination of service, and/
or the imposition of civil and criminal penalties, including fines which could have an adverse effect on our financial condition. 
20

In addition, even an inadvertent failure by us to comply with laws, rules and regulations, as well as rapidly evolving social 
expectations of corporate fairness, could damage our reputation or brands. 

Regulation of the electronic payment card industry, including regulations applicable to us and our customers, has increased 
significantly in recent years. There is also continued scrutiny by the U.S. Congress of the manner in which payment card 
networks and card issuers set various fees, from which some of our customers derive significant revenue. For example, on 
July 21, 2010, the Dodd-Frank Act was signed into law in the United States. The Durbin Amendment contains requirements 
relating to payment card networks. To implement this provision, the Federal Reserve adopted rules which took effect on 
October 1, 2011 and April 1, 2012. These rules, among other things, place certain restrictions on the interchange transaction 
fees that a card issuer can receive for an electronic debit transaction originated at a merchant and also places various exclusivity 
prohibitions and routing requirements on such transactions. To date, the Durbin Amendment has had mixed implications for our 
business, but the overall net impact has been positive due to lower interchange costs improving the overall margins of the 
business. However, we cannot assure you that this trend will continue, and we believe that any future impact (positive or 
negative) resulting from the Durbin Amendment and subsequent developments is uncertain due to the competitive landscape in 
which we operate. Further, banking regulators have been strengthening their examination guidelines with respect to 
relationships between banks and their third-party service providers, such as EVERTEC. Any such heightened supervision of 
our relationship with Popular could have an effect on our contractual relationship with Popular as well as on the standards 
applied in the evaluation of our services. See “Item 1. Business-Government Regulation and Payment Network Rules-
Regulatory Reform and Other Legislative Initiatives.” 

Further changes to laws, rules and regulations, or interpretation or enforcement thereof, could have a negative financial effect 
on us. We have structured our business in accordance with existing tax laws and interpretations of such laws. Changes in tax 
laws or their interpretations could decrease the value of revenues we receive and the amount of our cash flow and have a 
material adverse impact on our business. 

Our business concentration in Puerto Rico and our business with the government of Puerto Rico expose us to significant 
risks. 

For the fiscal years ended December 31, 2017 and 2016, approximately 81% and 84%, respectively, of our total revenues were 
generated from our operations in Puerto Rico. In addition, some revenues that are generated from our operations outside Puerto 
Rico are dependent upon our operations in Puerto Rico. As a result, our financial condition and results of operations are highly 
dependent on the economic and political conditions in Puerto Rico, and could be significantly adversely impacted by adverse 
economic or political developments in Puerto Rico. 

In 2017, the government of Puerto Rico was our second largest customer representing approximately 7% of our total revenues. 
Revenues from the government of Puerto Rico come from numerous agencies and public corporations. We believe the 
significant majority of the services we provide to the government of Puerto Rico are mission-critical or essential. Some of the 
government-sponsored initiatives we provide are indirectly funded in part by U.S. federal government programs. The 
government of Puerto Rico is currently experiencing a fiscal crisis (as described further in the following risk factor). A federal 
law adopted in June 2016 created an Oversight Board with broad budgetary and financial powers over Puerto Rico’s budget, 
laws, financial plans and regulation, and imposes an automatic temporary stay on all litigation against Puerto Rico and its 
instrumentalities to enforce or collect claims against the Puerto Rico government. If the Puerto Rico government defaults in 
payment, delays or withholds payment to us, we may have limited options for recourse and may not be able to recover the full 
amount on the receivables due to us. In addition, the Puerto Rico government may elect not to renew contracts for our services, 
or the Oversight Board may decide not to approve the budget for them. While we believe that the government of Puerto Rico 
will continue to engage our services despite the challenging financial situation it is currently facing, a failure of the government 
to do so or the Oversight Board to approve the required budget could have a material adverse impact on our financial condition 
and results of operations. 

In addition, Puerto Rico’s location in the Caribbean exposes the island to increased risk of hurricanes and other severe tropical 
weather conditions and natural disasters. In 2017, Puerto Rico was hit by two powerful hurricanes, Irma and Maria, causing 
catastrophic damage across the island and affecting our business. We cannot predict if similarly powerful hurricanes will 
become more commonplace. Similarly, we cannot be certain of the effect that potential future hurricanes may have on Puerto 
Rico or our business.  Such hurricanes, tropical storms and other natural disasters could negatively affect, among other things, 
our ability to provide services, as well as our physical locations, property and equipment, and could have a material adverse 
effect on our financial condition and results of operations

The Government of Puerto Rico’s fiscal crisis continues. The expiration of the automatic stay on litigation to collect claims 
against the Government on May 1, 2017, the initiation of creditor litigation promptly thereafter and the Government’s filing 
21

for bankruptcy protection on May 3, 2017, are all expected to further slow the Puerto Rico economy, increase emigration 
from Puerto Rico, increase the risk of non-payment of Government obligations and negatively affect the economy and 
consumer spending, which could have a material adverse effect on our business and the trading price of our common stock.

The Commonwealth of Puerto Rico (the "Commonwealth") has been in economic recession since 2006. In August 2015, the 
Commonwealth defaulted for the first time on the Public Finance Corporation bonds. In April 2016, the Puerto Rico governor 
signed a debt moratorium law that gave the governor emergency powers to deal with the fiscal crisis, including the ability to 
declare a moratorium on any debt payment. On June 30, 2016, the U.S. President signed into law the Puerto Rico Oversight, 
Management and Economic Stability Act (PROMESA). PROMESA establishes a fiscal oversight and management board (the 
“Oversight Board”) comprised of seven voting members appointed by the President. PROMESA also imposed an automatic 
stay on all litigation against Puerto Rico and its instrumentalities, as well as any other judicial or administrative actions or 
proceedings to enforce or collect claims against the Puerto Rico government.

On May 1, 2017, the automatic stay expired. Promptly after the expiration of the stay, creditors of the Puerto Rico government 
filed various lawsuits involving defaults on more than $70 billion of bonds issued by Puerto Rico, having failed to reach a 
negotiated settlement on such defaults with the Puerto Rico government during the period of the automatic stay. On May 3, 
2017, the Oversight Board filed a voluntary petition of relief on behalf of the Commonwealth pursuant to Title III of 
PROMESA for the restructuring of the Commonwealth’s debt. Subsequently, the Oversight Board filed voluntary petitions of 
relief pursuant to Title III of PROMESA on behalf of certain public corporations and instrumentalities. Title III is an in-court 
debt restructuring proceeding similar to protections afforded debtors under Chapter 11 of the United States Code (the 
“Bankruptcy Code”); the Bankruptcy Code is not available to the Commonwealth or its instrumentalities.

The approximate aggregate amount of unfunded pension obligations of the Puerto Rico government and its instrumentalities 
plus the bonds in default, far exceed the approximately $20 billion of outstanding obligations involved when Detroit filed for 
bankruptcy protection in 2013, which was described as the largest municipal bankruptcy at that time. Moreover, there is no 
precedent for a Title III filing, and there may be uncertainties as to the processes to be followed.

While the Title III processes do not foreclose negotiations between creditors and the Puerto Rico government toward a 
consensual restructuring agreement, there can be no assurance that meaningful negotiations will occur or that any consensual 
agreement will be reached or by what date. Importantly, there also can be no assurance as to the financial outcome or timing of 
the completion of the Title III processes. There also can be no assurance as to any favorable intervention by the U.S. Congress 
or the U.S. President.

In all events, the invocation of Title III is expected to potentially deepen Puerto Rico’s economic recession, and to further 
curtail the ability of the Commonwealth and its instrumentalities, subject to the oversight of the Oversight Board (collectively, 
the “Government”), to access capital markets to place new debt or roll future maturities. Additionally, potential Government 
actions such as further reductions in spending or the imposition of new taxes may further deepen the current economic crisis, 
lead to an increase in unemployment rates, and result in a continued decline in population and in the economy.

Consequently, such recent events could potentially adversely impact the trading price of our common stock, adversely impact 
our customer base, depress general consumer spending and delay the Government’s payments thus increasing our Government 
accounts receivables, and potentially impair the collectability of those accounts receivable, all of which, individually or in the 
aggregate, could potentially have a material adverse effect on our business, financial condition and results of operations. As of 
December 31, 2017, we had no direct exposure to the Government’s debt obligations and had net receivables of $11.8 million 
with the Commonwealth and certain public corporations.

Hurricanes Irma and Maria and their aftermaths could have a prolonged negative impact on the Puerto Rican and Caribbean 
economies and a material adverse effect on our business and results of operations

Hurricanes Irma and Maria and their aftermaths, including the widespread power outage in Puerto Rico, the damage to infrastructure 
and communications networks, and the temporary cessation and slow pace of reestablishment of regular day-to-day commerce, 
have severely impacted the economies of Puerto Rico and the Caribbean. It is unknown how long it will take for the business 
communities, resident populations and the economies to recover. Puerto Rico’s current situation following Hurricane Maria could 
further accelerate the ongoing emigration trend of Puerto Rico residents to the United States. A prolonged delay in the repairs to 
the islands’ infrastructures, decline in business volume and any other economic declines due to Hurricanes Irma and Maria and 
their aftermaths may impact demand for our services and could have a material adverse effect on our business and results of 
operations.

There are risks associated with our presence in international markets, including political or economic instability. 

22

Our financial performance may be significantly affected by general economic, political and social conditions in the emerging 
markets where we operate. Many countries in Latin America have suffered significant economic, political and social crises in 
the past, and these events may occur again in the future. Instability in Latin America has been caused by many different factors, 
including: 

exposure to foreign exchange variation; 
significant governmental influence over local economies;
substantial fluctuations in economic growth;
high levels of inflation;
exchange controls or restrictions on expatriation of earnings;
high domestic interest rates;

• 
• 
• 
• 
• 
• 
•  wage and price controls;
• 
• 
• 

changes in governmental economic or tax policies;
imposition of trade barriers;
unexpected changes in regulation which may restrict the movement of funds or result in the deprivation of contract 
rights or the taking of property without fair compensation; and
overall political, social and economic instability.

• 

Adverse economic, political and social conditions in the Latin America markets where we operate may create uncertainty 
regarding our operating environment, which could have a material adverse effect on our company. 

Our business in countries outside the United States and transactions with foreign governments increase our compliance 
risks and exposes us to business risks. 

Our operations outside the United States could expose us to trade and economic sanctions or other restrictions imposed by the 
United States or other local governments or organizations. The U.S. Departments of the Treasury and Justice (the “Agencies”), 
the SEC and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose 
against corporations and individuals for violations of economic sanctions laws, the FCPA and other federal statutes. Under 
economic sanctions laws, the Agencies may seek to impose modifications to business practices, including cessation of business 
activities involving sanctioned countries, and modifications to compliance programs, which may increase compliance costs. In 
addition, we are also subject to compliance with local government regulations. If any of the risks described above materialize, 
it could adversely impact our business, operating results and financial condition. 

These regulations also prohibit improper payments or offers of payments to foreign governments and their officials and 
political parties by the United States and other business entities for the purpose of obtaining or retaining business. We have 
operations and deal with government entities and financial institutions in countries known to experience corruption, particularly 
certain emerging countries in Latin America, and further international expansion may involve more of these countries. Our 
activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees or 
consultants that could be in violation of various laws including the FCPA, even though these parties are not always subject to 
our control. Our existing safeguards and any future improvements may prove to be less than effective, and our employees or 
consultants may engage in conduct for which we may be held responsible. Violations of the FCPA may result in severe criminal 
or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and 
financial condition. 

We are also subject to the Export Administration Regulations (“EAR”) administered by the U.S. Department of Commerce’s 
Bureau of Industry and Security which regulates the export, re-export and re-transfer abroad of covered items made or 
originating in the United States as well as the transfer of covered U.S.-origin technology abroad. We have adopted an Export 
Management Compliance Policy, a comprehensive compliance program under which the goods and technologies that we export 
are identified and classified under the EAR to make sure they are being exported in compliance with the requirements of the 
EAR. However, there can be no assurance that we have not violated the EAR in past transactions or that our new policies and 
procedures will prevent us from violating the EAR in every transaction in which we engage. Any such violations of the EAR 
could result in fines, penalties or other sanctions being imposed on us, which could negatively affect our business, operating 
results and financial condition. 

Moreover, some financial institutions refuse, even in the absence of a regulatory requirement, to provide services to companies 
operating in certain countries or engaging in certain practices because of concerns that the compliance efforts perceived to be 
necessary may outweigh the usefulness of the service relationship. Our operations outside the United States make it more likely 

23

 
that financial institutions may refuse to conduct business with us for this type of reason. Any such refusal could negatively 
affect our business, operating results and financial condition. 

We and our subsidiaries conduct business with financial institutions and/or card payment networks operating in countries 
whose nationals, including some of our customers’ customers, engage in transactions in countries that are the targets of 
U.S. economic sanctions and embargoes. If we are found to have failed to comply with applicable U.S. sanctions laws and 
regulations in these instances, we and our subsidiaries could be exposed to fines, sanctions and other penalties or other 
governmental investigations. 

We and our subsidiaries conduct business with financial institutions and/or card payment networks operating in countries 
whose nationals, including some of our customers’ customers, engage in transactions in countries that are the target of U.S. 
economic sanctions and embargoes, including Cuba. As a U.S.-based entity, we and our subsidiaries are obligated to comply 
with the economic sanctions regulations administered by OFAC. These regulations prohibit U.S.-based entities from entering 
into or facilitating unlicensed transactions with, for the benefit of, or in some cases involving the property and property 
interests of, persons, governments, or countries designated by the U.S. government under one or more sanctions regimes. 
Failure to comply with these sanctions and embargoes may result in material fines, sanctions or other penalties being imposed 
on us or other governmental investigations. In addition, various state and municipal governments, universities and other 
investors maintain prohibitions or restrictions on investments in companies that do business involving sanctioned countries or 
entities. 

For these reasons, we have established risk-based policies and procedures designed to assist us and our personnel in complying 
with applicable U.S. laws and regulations. These policies and procedures include the use of software to screen transactions we 
process for evidence of sanctioned-country and persons involvement. Consistent with a risk-based approach and the difficulties 
of identifying all transactions of our customers’ customers that may involve a sanctioned country, there can be no assurance that 
our policies and procedures will prevent us from violating applicable U.S. laws and regulations in every transaction in which 
we engage, and such violations could adversely affect our reputation, business, financial condition and results of operations. 
Because we process transactions on behalf of the aforementioned financial institutions through the aforementioned payment 
networks, we have processed a limited number of transactions potentially involving sanctioned countries and there can be no 
assurances that, in the future, we will not inadvertently process such transactions. Due to a variety of factors, including 
technical failures and limitations of our transaction screening process, conflicts between U.S. and local laws, political or other 
concerns in certain countries in which we and our subsidiaries operate, and/or failures in our ability effectively to control 
employees operating in certain non-U.S. subsidiaries, we have not rejected every transaction originating from or otherwise 
involving sanctioned countries, or persons and there can be no assurances that, in the future, we will not inadvertently fail to 
reject such transactions. 

EVERTEC Group voluntarily submitted two disclosures to OFAC in 2010 (the "2010 Disclosures") regarding potential 
violations of the Cuban Assets Control Regulations (“CACR”) by EVERTEC Group, its subsidiary in Costa Rica, and a former 
subsidiary in Venezuela that involved processing Cuba-related credit and debit card transactions and shortcomings in sanctions 
screening processes.  In addition, Popular filed a voluntary disclosure with OFAC in 2013 (the "2013 Disclosure")  regarding 
potential violations of the CACR in connection with certain routed debit card transactions by Tranred that may have been 
representative of transactions that occurred prior to October 2010, when the entity was under the ownership and control of 
EVERTEC. 

To date, OFAC has not imposed any fines or penalties nor has the U.S. government taken other enforcement actions in 
connection with the 2010 Disclosures and 2013 Disclosure.  EVERTEC Group and its subsidiaries have implemented a number 
of corrective actions in order to address the sanctions issues that were the subject of these disclosures and reduce the risk of 
future violations of the CACR and other U.S. sanctions.  Should OFAC determine that certain activities identified in the 
voluntary self-disclosures described above constituted violations of the CACR, civil or criminal penalties could be assessed 
against EVERTEC Group and/or its subsidiary. 

Popular agreed to specific indemnification obligations with respect to the 2010 Disclosures, the 2013 Disclosure and certain 
other matters, in each case, subject to the terms and conditions contained in the Merger Agreement and/or contained in the 
Venezuela Transition Services Agreement, dated September 29, 2010, as amended. However, we cannot assure you that we will 
be able to fully collect any claims made with respect to such indemnities or that Popular and/or Tranred will satisfy its 
indemnification obligations to us.

Our expansion and selective acquisition strategy exposes us to risks, including the risk that we may not be able to 
successfully integrate acquired businesses. 

24

 
As part of our growth strategy, we evaluate opportunities for acquiring complementary businesses that may supplement our 
internal growth. However, there can be no assurance that we will be able to identify and purchase suitable operations. 
Furthermore, for as long as we are deemed a “subsidiary” of a bank holding company for purposes of the BHC Act, we may 
conduct only activities authorized under the BHC Act and the Federal Reserve Board’s Regulation K and other related 
regulations for a bank holding company or a financial holding company. These restrictions may limit our ability to acquire 
other businesses or enter into other strategic transactions. See “-For purposes of the BHC Act, for as long as we are deemed to 
be controlled by Popular, we will be subject to supervision and examination by U.S. federal banking regulators, and our 
activities are limited to those permissible for Popular. Furthermore, as a technology service provider to regulated financial 
institutions, we are subject to additional regulatory oversight and examination. As a regulated institution, we may be required to 
obtain regulatory approval before engaging in certain new activities or businesses, whether organically or by acquisition.” 

In addition, in connection with any acquisitions, we must comply with U.S. federal and other antitrust and/or competition law 
requirements. Further, the success of any acquisition depends in part on our ability to integrate the acquired company, which 
may involve unforeseen difficulties and may require a disproportionate amount of our management’s attention and our financial 
and other resources. Although we conduct due diligence investigations prior to each acquisition, there can be no assurance that 
we will discover all operational deficiencies or material liabilities of an acquired business for which we may be responsible as a 
successor owner or operator. The failure to successfully integrate these acquired businesses or to discover such liabilities could 
adversely affect our operating results. 

Failure to protect our intellectual property rights and defend ourselves from potential intellectual property infringement 
claims may diminish our competitive advantages or restrict us from delivering our services. 

Our trademarks, proprietary software, and other intellectual property, including technology/software licenses, are important to 
our future success. For example, the ATH trademark and trade name is recognized in Latin America and the Caribbean. 
Therefore, such marks represent substantial intangible assets and are important to our business. Limitations or restrictions on 
our ability to use such marks or a diminution in the perceived quality associated therewith could have an adverse impact on the 
growth of our businesses. We also rely on proprietary software and technology, including third party software that is used under 
licenses. It is possible that others will independently develop the same or similar software or technology, which would permit 
them to compete with us more efficiently. Furthermore, if any of the third party software or technology licenses are terminated 
or otherwise determined to be unenforceable, then we would have to obtain a comparable license, which may involve increased 
license fees and other costs. 

Despite our efforts to protect our proprietary or confidential business know-how and other intellectual property rights, 
unauthorized parties may attempt to copy or misappropriate certain aspects of our services, infringe upon our rights, or to 
obtain and use information that we regard as proprietary. Policing such unauthorized use of our proprietary rights is often very 
difficult, and therefore, we are unable to guarantee that the steps we have taken will prevent misappropriation of our proprietary 
software/technology or that the agreements entered into for that purpose will be effective or enforceable in all instances. 
Misappropriation of our intellectual property or potential litigation concerning such matters could have a material adverse 
effect on our results of operations or financial condition. Our registrations and/or applications for trademarks, copyrights, and 
patents could be challenged, invalidated or circumvented by others and may not be of sufficient scope or strength to provide us 
with maximum protection or meaningful advantage. If we are unable to maintain the proprietary nature of our software or 
technologies, we could lose competitive advantages and our businesses may be materially adversely affected. Furthermore, the 
laws of certain foreign countries in which we do business or contemplate doing business in the future may not protect 
intellectual property rights to the same extent as do the laws of the United States or Puerto Rico. Adverse determinations in 
judicial or administrative proceedings could prevent us from selling our services and products, or prevent us from preventing 
others from selling competing services, and may result in a material adverse effect on our business, financial condition and 
results of operations. 

If our applications or services or third party applications upon which we rely are found to infringe the proprietary rights of 
others, we may be required to change our business practices and may also become subject to significant costs and monetary 
penalties. 

As our IT applications and services develop, we are increasingly subject to potential claims for intellectual property 
infringement, for example, patent or copyright infringement. Any such claims, even if lacking merit, could: (i) be expensive 
and time-consuming to defend; (ii) cause us to cease making, licensing or using software or applications that incorporate the 
challenged intellectual property; (iii) require us to redesign our software or applications, if feasible; (iv) divert management’s 
attention and resources; and (v) require us to enter into royalty or licensing agreements in order to obtain the right to use 
necessary technologies. Unfavorable resolution of these claims could result in us being restricted from delivering the related 
service and products, liable for damages, or otherwise result in a settlement that could be material to us. 

25

The ability to recruit, retain and develop qualified personnel is critical to our success and growth.

All of our businesses function at the intersection of rapidly changing technological, social, economic and regulatory 
developments that requires a wide ranging set of expertise and intellectual capital. For us to successfully compete and grow, we 
must retain, recruit and develop the necessary personnel who can provide the needed expertise across the entire spectrum of our 
intellectual capital needs. In addition, we must develop our personnel to provide succession plans capable of maintaining 
continuity in the midst of the inevitable unpredictability of human capital. However, the market for qualified personnel is 
competitive and we may not succeed in recruiting additional personnel or may fail to effectively replace current personnel who 
depart with qualified or effective successors. Recruiting and retaining qualified personnel in Puerto Rico is particularly 
challenging, given the poor state of the Puerto Rican economy and the increased emigration of Puerto Ricans following 
Hurricanes Irma and Maria. Our effort to retain and develop personnel may also result in significant additional expenses, which 
could adversely affect our profitability. We cannot assure you that key personnel, including executive officers, will continue to 
be employed or that we will be able to attract and retain qualified personnel in the future. Failure to retain or attract key 
personnel could have a material adverse effect on us. 

Failure to comply with U.S. state and federal antitrust requirements, or the Puerto Rico Anti-Monopoly Act, and 
government investigations into our compliance, could adversely affect our business. 

Due to our ownership of the ATH network and our merchant acquiring and payment services business in Puerto Rico, we are 
involved in a significant percentage of the debit and credit card transactions conducted in Puerto Rico each day. Regulatory 
scrutiny of, or regulatory enforcement action in connection with, compliance with U.S. state and federal antitrust requirements 
could potentially have a material adverse effect on our reputation and business. 

In February 2016, the Department of Justice of the Commonwealth of Puerto Rico announced that it initiated a formal 
investigation into whether we had engaged in conduct that interferes with free competition with respect to the products and 
services we provide within the Commonwealth of Puerto Rico and which conduct could constitute a violation of the Puerto 
Rico Anti-Monopoly Act, Law 77 of June 25, 1964. In August 2016, we received official confirmation that the Puerto Rico 
Department of Justice had formally closed its investigation and concluded that we had not engaged in such conduct. However, 
there can be no assurance that another such investigation will not be initiated in the future. If there is another such 
investigation, an adverse finding could lead to restrictions on our business, or our being required to take action, that has a 
materially adverse effect on our financial condition and results of operations. Any such effect, or the perception by investors as 
to the likelihood of such an effect, could have a material adverse effect on our stock price. 

The market for our electronic commerce services is evolving and may not continue to develop or grow rapidly enough for us 
to maintain and increase our profitability. 

If the number of electronic commerce transactions does not continue to grow or if consumers or businesses do not continue to 
adopt our services, it could have a material adverse effect on the profitability of our business, financial condition and results of 
operations. We believe future growth in the electronic commerce market will be driven by the cost, ease-of-use, and quality of 
products and services offered to consumers and businesses. In order to consistently increase and maintain our profitability, 
consumers and businesses must continue to adopt our services. 

Our subsidiary, EVERTEC Group, benefits from a preferential tax exemption grant from the Puerto Rico Government 
under the Tax Incentive Act No. 73 of 2008 that imposes certain commitments, conditions and representations on 
EVERTEC Group. If EVERTEC Group does not comply with the terms of the grant, EVERTEC Group may be subject to 
reduction of the benefits of the grant, tax penalties, other payment obligations or full revocation of the grant, which could 
have a material adverse effect on our financial condition, results of operations and our stock price. 

EVERTEC Group has a tax exemption grant under the Tax Incentive Act No. 73 of 2008 from the Government of Puerto Rico. 
Under this grant, EVERTEC Group will benefit from a preferential income tax rate of 4% on industrial development income, as 
well as from tax exemptions with respect to its municipal and property tax obligations for certain activities derived from its 
data processing operations in Puerto Rico. The grant has a term of 15 years effective as of January 1, 2012 with respect to 
income tax obligations and July 1, 2013 and January 1, 2013 with respect to municipal and property tax obligations, 
respectively. 

The grant contains customary commitments, conditions and representations that EVERTEC Group will be required to comply 
with in order to maintain the grant. The more significant commitments include: (i) maintaining at least 750 employees in 
EVERTEC Group’s Puerto Rico data processing operations during 2012 and at least 700 employees for the remaining years of 

26

 
 
the grant, (ii) investing at least $200.0 million in building, machinery, equipment or computer programs to be used in Puerto 
Rico during the effective term of the grant (to be made over four year capital investment cycles in $50.0 million increments), 
(iii) an additional best efforts capital investments requirement of $75.0 million by December 31, 2026 (to be made over four 
year capital investment cycles in $20.0 million the first three increments and $15.0 million the last increment); and (iv) 80% of 
EVERTEC Group employees must be residents of Puerto Rico. Failure to meet the requirements could result, among other 
things, in reductions in the benefits of the grant, tax penalties, other payment obligations or revocation of the grant in its 
entirety, which could have a material adverse effect on our financial condition, results of operations and our stock price. 

Risks Related to Our Structure, Governance and Stock Exchange Listing 

We are a holding company and rely on dividends and other payments, advances and transfers of funds from our subsidiaries 
to meet our obligations and pay any dividends. 

We have no direct operations or significant assets other than the ownership of 100% of the membership interest of Holdings, 
which in turn has no significant assets other than ownership of 100% of the membership interest of EVERTEC Group. Because 
we conduct our operations through our subsidiaries, we depend on those entities for dividends and other payments to generate 
the funds necessary to meet our financial obligations, and to pay any dividends with respect to our common stock. Legal and 
contractual restrictions in the senior secured credit facilities and other agreements which may govern future indebtedness of our 
subsidiaries, as well as the financial condition and operating requirements of our subsidiaries, may limit our ability to obtain 
cash from our subsidiaries. The earnings from, or other available assets of, our subsidiaries may not be sufficient to pay 
dividends or make distributions or loans or enable us to pay any dividends on our common stock or other obligations.

Any declaration and payment of future dividends to holders of our common stock may be limited by restrictive covenants of 
our debt agreements, and will be at the sole discretion of our Board and will also depend on many factors. 

Any declaration and payment of future dividends to holders of our common stock may be limited by restrictive covenants of 
our debt agreements, and will be at the sole discretion of our Board and will depend on many factors, including our financial 
condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment 
of dividends and other considerations that our Board deems relevant. The terms of our senior secured credit facilities may 
restrict our ability to pay cash dividends on our common stock. We are prohibited from paying any cash dividend on our 
common stock unless we satisfy certain conditions. The senior secured credit facilities also include limitations on the ability of 
our subsidiaries to pay dividends to us. Furthermore, we will be permitted under the terms of our debt agreements to incur 
additional indebtedness that may severely restrict or prohibit the payment of dividends. The agreements governing our current 
and future indebtedness may not permit us to pay dividends on our common stock. 

The requirements of having a class of publicly traded equity securities may strain our resources and distract management. 

Upon completion of our initial public offering in April 2013, we became subject to additional reporting requirements of the 
Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act of 2002, (the “Sarbanes-Oxley 
Act”), and the Dodd-Frank Act. The Dodd-Frank Act effects comprehensive changes to public company governance and 
disclosures in the United States and subjects us to additional federal regulation. Some of the regulation mandated under the 
Dodd-Frank Act has yet to be adopted or implemented. We cannot predict with any certainty the requirements of the regulations 
ultimately adopted or how such regulations will impact the cost of compliance for a company with publicly traded common 
stock. We are currently evaluating and monitoring developments with respect to the Dodd-Frank Act and other new and 
proposed rules and cannot predict or estimate the amount of the additional costs we may incur or the timing of such costs. 
These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, 
as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. 
This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to 
disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, 
and this investment may result in increased general and administrative expenses and a diversion of management’s time and 
attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and 
standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory 
authorities may initiate legal proceedings against us and our business may be harmed. These new rules and regulations may 
make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced 
coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract 
and retain qualified members of our Board, particularly to serve on our audit committee, and qualified executive officers. 

27

 
We are required to maintain effective internal controls over financial reporting, which could place a strain on our 
resources, and our failure to do so could require a restatement of our financials and lead to a potential default under our 
credit facility or a delisting from NYSE. 

The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over 
financial reporting. These requirements may place a strain on our systems and resources. Under Section 404 of the Sarbanes-
Oxley Act, we are required to include a report of management on our internal control over financial reporting in this Annual 
Report on Form 10-K for the year ended December 31, 2017. In order to maintain and improve the effectiveness of our 
disclosure controls and procedures and internal control over financial reporting, significant resources and management 
oversight is required. This may divert management’s attention from other business concerns, which could have a material 
adverse effect on our business, financial condition, results of operations and cash flows. If we are unable to conclude that our 
disclosure controls and procedures and internal control over financial reporting are effective, or if our independent public 
accounting firm is unable to provide us with an unqualified report on our internal control over financial reporting in future 
years, investors may lose confidence in our financial reports and our stock price may decline. In addition, a material weakness 
in our internal controls over financial reporting could lead to the occurrence of material misstatements in our financial 
statements and we could be required to restate our financial results. Our failure to file timely and file materially complete and 
accurate financial information in our reports with the SEC could lead to a number of adverse consequences, including a loss of 
confidence by our investors, a default under our credit facility, or a violation of NYSE’s listing rules that could lead to our 
delisting. Any of these results could have a material adverse effect on our business and results of operations and on the trading 
price of our common stock. 

The price of our common stock may fluctuate significantly and you could lose all or part of your investment. 

Volatility in the market price of our common stock may prevent you from being able to sell your common stock at or above the 
price you paid for your common stock. The market price for our common stock could fluctuate significantly for various 
reasons, including: 

our operating and financial performance and prospects;
changes in earnings estimates or recommendations by securities analysts who track our common stock or industry;

• 
• 
•  market perception of our success, or lack thereof, in pursuing our growth strategy;
•  market perception of the challenges of operating a company in Puerto Rico; and
• 

sales of common stock by us, our stockholders, Popular or members of our management team.

In addition, the stock market has experienced significant price and volume fluctuations historically. This volatility has had a 
significant impact on the market price of securities issued by many companies, including companies in our industries. The 
changes frequently appear to occur without regard to the operating performance of the affected companies. Hence, the price of 
our common stock could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could 
materially reduce our share price. 

Future sales or the possibility of future sales of a substantial amount of our common stock may depress the price of shares 
of our common stock. 

We may sell additional shares of common stock in subsequent public offerings or otherwise, including financing acquisitions. 
Our amended and restated certificate of incorporation authorizes us to issue 206,000,000 shares of common stock, of which 
72,394,043 are outstanding as of January 31, 2018. All of these shares, other than the 11,654,803 shares held by Popular and 
the shares held by our officers and directors, are freely transferable without restriction or further registration under the 
Securities Act. 

In addition, we have filed a Form S-8 under the Securities Act covering 12,089,382 shares of our common stock reserved for 
issuance under our Carib Holdings, Inc. 2010 Equity Incentive Plan (or the 2010 Plan), and our EVERTEC, Inc. 2013 Equity 
Incentive plan (or the 2013 Plan) and certain options and restricted stock granted outside of these plans (which we refer to as 
the Equity Plans), but subject to the terms and conditions of the 2010 Plan. Accordingly, shares of our common stock registered 
under such registration statement may become available for sale in the open market upon grants under the Equity Incentive 
Plans, subject to vesting restrictions and Rule 144 limitations applicable to our affiliates. 

We cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of our 
common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock 
(including any shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely 
affect prevailing market prices for our common stock. 

28

 
If securities analysts stop publishing research or reports about our company, or if they issue unfavorable commentary about 
us or our industry or downgrade our common stock, the price of our common stock could decline. 

The trading market for our common stock will depend in part on the research and reports that third party securities analysts 
publish about our company and our industry. One or more analysts could downgrade our common stock or issue other negative 
commentary about our company or our industry. In addition, we may be unable or slow to attract research coverage. 
Alternatively, if one or more of these analysts cease coverage of our company, we could lose visibility in the market. As a result 
of one or more of these factors, the trading price of our common stock could decline. 

The interests of Popular may conflict with or differ from your interests as a stockholder. 

Popular has the right to nominate two members of our Board and, therefore, may be able to influence our decisions. The 
interests of Popular could conflict with your interests as a holder of our common stock. For example, the concentration of 
ownership held by Popular, the terms of the Stockholder Agreement and our organizational documents (including Popular’s 
quorum rights and consent rights over amendments to our bylaws) and Popular’s right to terminate certain of its agreements 
with us in certain situations upon a change of control of EVERTEC Group, could delay, defer or prevent certain significant 
corporate actions that you as a stockholder may otherwise view favorably, including a change of control of us (whether by 
merger, takeover or other business combination). See “Certain Relationships and Related Party Transactions” in EVERTEC's 
proxy statement for a description of the circumstances under which Popular may terminate certain of its agreements with us. A 
sale of a substantial number of shares of stock in the future by Popular could cause our stock price to decline. 

Our organizational documents and Stockholder Agreement may impede or discourage a takeover, which could deprive our 
investors of the opportunity to receive a premium for their shares. 

Provisions of our amended and restated certificate of incorporation, amended and restated bylaws and the Stockholder 
Agreement may make it more difficult for, or prevent a third party from, acquiring control of us without the approval of our 
Board and/or Popular. These provisions include: 

• 

• 

• 
• 

• 
• 

a voting agreement pursuant to which Popular agreed to vote its shares in favor of the Popular director nominees 
(which, constitute the right to appoint two of our nine directors), directors nominated by a committee of our Board in 
accordance with the Stockholder Agreement and the management director and to remove and replace any such 
directors in accordance with the terms of the Stockholder Agreement and applicable law and an agreement by us to 
take all actions within our control necessary and desirable to cause the election, removal and replacement of such 
directors in accordance with the Stockholder Agreement and applicable law;
requiring that a quorum for the transaction of business at any meeting of the Board (other than a reconvened meeting 
with the same agenda as the originally adjourned meeting) consist of (1) a majority of the total number of directors 
then serving on the Board and (2) at least one director nominated by Popular, for so long as it owns, together with its 
affiliates, 5% or more of our outstanding common stock;
prohibiting cumulative voting in the election of directors;
authorizing the issuance of “blank check” preferred stock without any need for action by stockholders other than 
Popular (as further described below);
prohibiting stockholders from acting by written consent unless the action is taken by unanimous written consent;
establishing advance notice requirements for nominations for election to our Board or for proposing matters that can 
be acted on by stockholders at stockholder meetings, which advance notice requirements are not applicable to any 
directors nominated in accordance with the terms of the Stockholder Agreement.

Our issuance of shares of preferred stock could delay or prevent a change in control of us. Our Board has authority to issue 
shares of preferred stock, subject to the approval of at least one director nominated by Popular for so long as it, together with its 
respective affiliates, owns at least 10% of our outstanding common stock. Our Board may issue preferred stock in one or more 
series, designate the number of shares constituting any series, and fix the rights, preferences, privileges and restrictions thereof, 
including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences 
of such series. The issuance of shares of our preferred stock may have the effect of delaying, deferring or preventing a change 
in control without further action by the stockholders, even where stockholders are offered a premium for their shares. In 
addition, Popular, under and subject to the Stockholder Agreement and our organizational documents, will retain significant 
influence over matters requiring board or stockholder approval, including the election of directors. See “Certain Relationships 
and Related Party Transactions-Related Party Transactions”. Together, our amended and restated certificate of incorporation, 
bylaws and Stockholder Agreement could make the removal of management more difficult and may discourage transactions 
that otherwise could involve payment of a premium over prevailing market prices for our common stock. Furthermore, the 

29

 
 
existence of the foregoing provisions, as well as the significant common stock owned by Popular and its individual right to 
nominate a specified number of directors in certain circumstances, could limit the price that investors might be willing to pay in 
the future for shares of our common stock. They could also deter potential acquirers of us, thereby reducing the likelihood that 
you could receive a premium for your common stock in an acquisition. 

Risks Related to Our Indebtedness 

Despite our high indebtedness level, we and our subsidiaries still may be able to incur significant additional amounts of 
debt, which could further exacerbate the risks associated with our substantial indebtedness. 

We and our subsidiaries may be able to incur substantial additional indebtedness in the future, some of which may be secured. 
Although the agreement governing our senior secured credit facilities contain restrictions on the incurrence of additional 
indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and under certain 
circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. 
In addition to the $88.0 million which was available for borrowing under our revolving credit facility as of December 31, 2017, 
the terms of the senior secured credit facilities enable us to increase the amount available under the term loan and/or revolving 
credit facilities if we are able to obtain loan commitments from banks and satisfy certain other conditions. If new debt is added 
to our and our subsidiaries’ existing debt levels, the related risks that we face would increase. 

If we are unable to comply with covenants in our debt instruments that limit our flexibility in operating our business, or 
obligate us to take action such as deliver financial reports, we may default under our debt instruments and our indebtedness 
may become due. 

The agreement governing the senior secured credit facilities contain, and any future indebtedness we incur may contain, various 
covenants that limit our ability to engage in specified types of transactions. These covenants limit our and our restricted 
subsidiaries’ ability to, among other things: 

incur additional indebtedness or issue certain preferred shares; 
pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments;

• 
• 
•  make certain investments;
• 
• 
• 
• 
• 

sell certain assets;
create liens;
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
enter into certain transactions with our affiliates; and
designate our subsidiaries as unrestricted subsidiaries.

As a result of these covenants, we are limited in the manner in which we conduct our business and we may be unable to engage 
in favorable business activities or finance future operations or capital needs. In addition, the covenants in the senior secured 
credit facilities require us to maintain a maximum senior secured leverage ratio and also limit our capital expenditures. In 
addition, we are required to comply with certain non-monetary covenants, including the timely delivery of financial statements 
that fairly present, in all material respects in accordance with GAAP, our financial condition and results of operations. 
A breach of any of these covenants could result in a default under one or more of these agreements, including as a result of 
cross default provisions and, in the case of our revolving credit facility, permit the lenders to cease making loans to us. Upon 
the occurrence of an event of default under the senior secured credit facilities, the lenders could elect to declare all amounts 
outstanding under the senior secured credit facilities to be immediately due and payable and terminate all commitments to 
extend further credit. Such actions by those lenders could cause cross defaults under our other indebtedness. If we were unable 
to repay those amounts, the lenders under our senior secured credit facilities could proceed against the collateral granted to 
them to secure that indebtedness. We have pledged a significant portion of our assets as collateral under the senior secured 
credit facilities. If the lenders under the senior secured credit facilities accelerate the repayment of borrowings, the proceeds 
from the sale or foreclosure upon such assets will first be used to repay debt under our senior secured credit facilities and we 
may not have sufficient assets to repay our unsecured indebtedness thereafter. As a result, our common stock could become 
worthless. 

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to 
satisfy our obligations under our indebtedness, which may not be successful. 

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and 
operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business 

30

 
and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient 
to permit us to pay the principal, premium, if any, and interest on our indebtedness. 

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay 
investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. Our 
ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at 
such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous 
covenants, which could further restrict our business operations. The terms of existing or future debt instruments may restrict us 
from adopting some of these alternatives. In addition, any failure to make payments of interest and principal on our outstanding 
indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur 
additional indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt 
service obligations. 

The risks referenced above are not the only risks facing us. Additional risks and uncertainties not currently known to us or that 
we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of 
operations.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our principal operations are conducted in Puerto Rico. Our principal executive offices are located at Cupey Center Building, 
Road 176, Kilometer 1.3, San Juan, Puerto Rico 00926.

We own one property in Costa Rica, in the province of San Jose, which is used by our Costa Rican subsidiary for its payment 
services business. We also lease space in 12 other locations across Latin America and the Caribbean, including our headquarters 
in San Juan, Puerto Rico and various data centers and office facilities to meet our sales and operating needs. We believe that our 
properties are in good operating condition and adequately serve our current business operations. We also anticipate that suitable 
additional or alternative space, including those under lease options, will be available at commercially reasonable terms for 
future expansion.

Item 3. Legal Proceedings

We are defendants in various lawsuits or arbitration proceedings arising in the ordinary course of business. Management 
believes, based on the opinion of legal counsel and other factors, that the aggregated liabilities, if any, arising from such actions 
will not have a material adverse effect on the financial condition, results of operations and the cash flows of the Company.

Item 4. Mine Safety Disclosures

Not applicable.

31

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 
Securities

Our common stock trades on the NYSE under the symbol “EVTC”. The following table sets forth the high and low sales prices 
of our common stock as reported by the NYSE, for each full quarterly period within the two most recent fiscal years. As of 
January 31, 2018, the approximate number of record holders of our common stock was 247. The closing price as reported on 
the NYSE of our common stock on such date was $15.65 per share.

2017

First Quarter

Second Quarter

Third Quarter

Fourth Quarter
2016

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Dividends

Price Range

High

Low

$

18.15

$

17.30

19.10

16.20

16.63

16.32

17.62

18.60

15.55

14.85

14.95

13.00

11.27

12.98

15.13

14.15

Historically, we have paid a regular quarterly dividend on our common stock, subject to the declaration thereof by our Board 
each quarter. The following table provides a detail of dividend information for 2017 and 2016:

Declaration Date
February 17, 2016

May 11, 2016

July 28, 2016

October 27, 2016

February 17, 2017

April 27, 2017

July 25, 2017

Payment Date

   Dividend per share

Record Date
  February 29, 2016

  May 23, 2016

  August 9, 2016

  March 17, 2016

  June 10, 2016

  September 2, 2016

  November 14, 2016

  December 2, 2016

  March 1, 2017

  May 8, 2017

  August 7, 2017

  March 20, 2017

  June 9, 2017

  September 8, 2017

0.10

0.10

0.10

0.10

0.10

0.10

0.10

On November 2, 2017, the Board voted to temporarily suspend the quarterly dividend on the Company's common stock due to 
the difficult operating environment in Puerto Rico in the aftermath of Hurricane Maria. The Board anticipates reviewing the 
dividend policy as conditions stabilize in Puerto Rico. Any declaration and payment of future dividends to holders of our 
common stock will be at the discretion of our Board and will depend on many factors, including our financial condition, 
earnings, available cash, business opportunities, legal requirements, restrictions in our debt agreements and other contracts, 
capital requirements, level of indebtedness and other factors that our Board deems relevant. The covenants of our senior 
secured credit facilities may limit our ability to pay dividends on our common stock and limit the ability of our subsidiaries to 
pay dividends to us if we do not meet required performance metrics contained in our debt agreements. See “Management’s 
Discussion and Analysis of Financial Condition and Results of Operations—Financial Obligations.”

We are a holding company and have no direct operations. We will only be able to pay dividends from our available cash on 
hand and funds received from our subsidiaries, Holdings and EVERTEC Group, whose ability to make any payments to us will 
depend upon many factors, including their operating results and cash flows. In addition, the senior secured credit facilities limit 
EVERTEC Group’s ability to pay distributions on its equity interests. See “Management’s Discussion and Analysis of Financial 
Condition and Results of Operations—Financial Obligations.”

32

 
 
 
  
  
  
  
  
  
  
  
  
Issuer Purchases of Equity Securities

Period
3/1/2017-3/31/2017

5/1/2017-5/31/2017

6/1/2017-6/30/2017

Total

Total number of
shares

Average price paid

purchased

per share

228,289

$

77,257

159,694

465,240

$

16.480

16.592

16.423

16.479

Total number of 
shares
purchased as part of a 
publicly

Approximate dollar 
value of
shares that may yet be 
purchased

announced program
(1)

under the program

228,289

77,257

159,694

465,240

$

72,345,478

(1)  On February 17, 2016, the Company announced that its Board of Directors approved an increase and extension to the 

current stock repurchase program, authorizing the purchase of up to $120 million of the Company’s common stock and 
extended the expiration to December 31, 2017. On November 2, 2017 the Company's Board of Directors approved an 
extension to the expiration date of the current stock repurchase program to December 31, 2020.

Securities Authorized for Issuance under Equity Compensation Plans

On September 30, 2010, the board of directors of Holdings adopted the 2010 Plan. Holdings reserved 5,843,208 shares of its 
Class B Non-Voting Common Stock for issuance upon exercise and grants of stock options, restricted stock and other equity 
awards under the Plan. On April 17, 2012, in connection with the Reorganization, the Company assumed the 2010 Plan and all 
of the outstanding equity awards issued thereunder or subject thereto. As a result, each of the then outstanding stock options to 
purchase shares of Holdings’ Class B Non-Voting Common Stock became a stock option to purchase the same number and 
class of shares of the Company’s Class B Non-Voting Common Stock, in each case on the same terms (including exercise 
price) as the original stock option. In connection with our initial public offering in April 2013, all of the outstanding shares of 
the Company’s Class B Non-Voting Common Stock and stock options to purchase shares of the Company’s Class B Non-
Voting Common Stock were converted into and deemed exercisable for, respectively, shares of our common stock on a one-to-
one basis. Similarly, each of the then outstanding shares of restricted stock of Holdings was converted into the same number of 
shares of restricted stock of the Company.

In connection with our initial public offering, we adopted the 2013 Plan and reserved 5,956,882 shares of our Common Stock 
for issuance upon exercise and grants of stock options, restricted stock and other equity awards. We have filed a Form S-8 
under the Securities Act covering 12,089,382 shares of our common stock reserved for issuance under the Equity Plans and 
certain options and restricted stock granted outside of the Equity Plans but subject to the terms and conditions of the 2010 Plan.

The following table summarizes equity compensation plans approved by security holders and equity compensation plans that 
were not approved by security holders as of December 31, 2017:

Plan Category
Equity compensation plans 
approved by security holders (1)
Equity compensation plans not
approved by security holders

Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(A)

Weighted-average
exercise price of
outstanding options,
warrants and rights
(B)

Number of securities remaining 
available for future issuance
 under equity compensation plans  
(excluding securities reflected
 in column (A))
(C)

2,340,892

N/A

$15.08

N/A

6,372,420

N/A

(1) 

The Company's equity plans were approved by the two sole stockholder's prior to the Company's initial public offering, 
Apollo and Popular.

33

 
 
 
Stock Performance Graph

The following Performance Graph shall not be deemed incorporated by reference and shall not constitute soliciting material or 
otherwise considered filed under the Securities Act of 1933 or the Exchange Act.

The following graph shows a comparison from April 12, 2013 (the date our common stock commenced trading on the NYSE)
through December 31, 2017 of the cumulative total return for our common stock, the S&P 500 Index and the S&P Technology
Index. The graph assumes that $100 was invested on April 12, 2013 in our common stock and each index and that all dividends
were reinvested.

Note that historical stock price performance is not necessarily indicative of future stock price performance.

Comparison of fifty seven months cumulative total return of EVERTEC Inc.

$245

$220

$195

$170

$145

$120

 $95

 $70

EVERTEC, Inc.

S&P 500

S&P Information Technology

Item 6. Selected Financial Data

The following table sets forth our selected historical consolidated financial data as of the dates and for the periods indicated. 
The selected consolidated financial data as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 have 
been derived from the audited consolidated financial statements of EVERTEC, included in our Annual Reports on Form 10-K. 

The results of operations for any period are not necessarily indicative of the results to be expected for any future period. The 
selected historical consolidated financial data set forth below should be read in conjunction with, and are qualified by reference 
to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial 
statements and related notes thereto appearing elsewhere in this Annual Report on Form 10-K.

34

(Dollar amounts in thousands, except per share data)

2017

2016

2015

2014

2013

Year ended December 31,

Statements of Income Data:

Revenues

Operating costs and expenses

Cost of revenues, exclusive of depreciation and
amortization shown below

Selling, general and administrative expenses

Depreciation and amortization

Total operating costs and expenses

Income from operations

Interest income

Interest expense

Earnings (losses) of equity method investment

Other income (expenses), net

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Less: Net income attributable to non-controlling
interest

Net income (loss) attributable to EVERTEC, Inc.’s
common stockholders

Net income (loss) per common share—basic

Net income (loss) per common share—diluted
Cash dividends declared per common share (1)

$

407,144

$

389,507

$

373,528

$

361,788

$

358,402

200,650

175,809

167,916

157,537

162,980

56,161

64,250

321,061

86,083

716
(29,861)
604

2,657

60,199

4,780

55,419

46,986

59,567

282,362

107,145

377
(24,617)
(52)
544

83,397

8,271

75,126

37,278

64,974

270,168

103,360

495
(24,266)
147

2,306

82,042
(3,335)
85,377

41,276

65,988

264,801

96,987

328
(25,772)
1,140

2,375

75,058

8,901

66,157

38,810

70,366

272,156

86,246

236
(37,417)
935
(75,682)
(25,682)
1,435
(27,117)

365

90

—

—

—

$

$

$

$

55,054

0.76

0.76

0.30

$

$

$

$

75,036

1.01

1.01

0.40

$

$

$

$

85,377

1.11

1.11

0.40

$

$

$

$

66,157

0.84

0.84

0.40

$

$

$

$

(27,117)
(0.34)
(0.34)
0.20

(1)  Adjusted to reflect the two for one stock split effective April 1, 2013.

Balance Sheet Data:

Cash and cash equivalents
Total assets
Total long-term liabilities
Total debt

Total equity

2017

2016

2015

2014

2013

December 31,

$50,423
902,788
607,596
616,740

147,976

$51,920
885,662
648,324
650,759

108,175

$28,747
863,654
662,939
662,699

98,214

$32,114
885,321
691,085
681,240

94,840

$22,275
918,863
705,872
725,648

87,972

35

 
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) covers: 
(i) the results of operations for the years ended December 31, 2017, 2016 and 2015; and (ii) the financial condition as of 
December 31, 2017 and 2016. See Note 1 of the Notes to Audited Consolidated Financial Statements for additional information 
about the Company and the basis of presentation of our financial statements. You should read the following discussion and 
analysis in conjunction with the financial statements and related notes appearing elsewhere herein. This MD&A contains 
forward-looking statements that involve risks and uncertainties. Our actual results may differ from those indicated in the 
forward-looking statements. See “Forward-Looking Statements” for a discussion of the risks, uncertainties and assumptions 
associated with these statements.

Overview

EVERTEC is a leading full-service transaction processing business in Latin America, providing a broad range of merchant 
acquiring, payment services and business process management services. According to the August 2017 Nilson Report, we are 
one of the largest merchant acquirers in Latin America based on total number of transactions and we believe we are the largest 
merchant acquirer in the Caribbean and Central America. We serve 26 countries in the region from our base in Puerto Rico. We 
manage a system of electronic payment networks that process more than two billion transactions annually, and offer a 
comprehensive suite of services for core bank processing, cash processing and technology outsourcing. In addition, we own 
and operate the ATH network, one of the leading personal identification number (“PIN”) debit networks in Latin America. We 
serve a diversified customer base of leading financial institutions, merchants, corporations and government agencies with 
“mission-critical” technology solutions that enable them to issue, process and accept transactions securely. We believe our 
business is well-positioned to continue to expand across the fast-growing Latin American region. 

We are differentiated, in part, by our diversified business model, which enables us to provide our varied customer base with a 
broad range of transaction-processing services from a single source across numerous channels and geographic markets. We 
believe this single-source capability provides several competitive advantages that will enable us to continue to penetrate our 
existing customer base with complementary new services, win new customers, develop new sales channels and enter new 
markets. We believe these competitive advantages include: 

•  Our ability to provide in one package a range of services that traditionally had to be sourced from different vendors;
•  Our ability to serve customers with disparate operations in several geographies with integrated technology solutions 

that enable them to manage their business as one enterprise; and 

•  Our ability to capture and analyze data across the transaction processing value chain and use that data to provide 

value-added services that are differentiated from those offered by pure-play vendors that serve only one portion of the 
transaction processing value chain (such as only merchant acquiring or payment services). 

Our broad suite of services spans the transaction processing value chain and includes a range of front-end customer-facing 
solutions such as the electronic capture and authorization of transactions at the point-of-sale, as well as back-end support 
services such as the clearing and settlement of transactions and account reconciliation for card issuers. These include: (i) 
merchant acquiring services, which enable point of sales (“POS”) and e-commerce merchants to accept and process electronic 
methods of payment such as debit, credit, prepaid and electronic benefit transfer (“EBT”) cards; (ii) payment services, which 
enable financial institutions and other issuers to manage, support and facilitate the processing for credit, debit, prepaid, 
automated teller machines (“ATM”) and EBT card programs; and (iii) business process management solutions, which provide 
“mission-critical” technology solutions such as core bank processing, as well as IT outsourcing and cash management services 
to financial institutions, corporations and governments. We provide these services through a highly scalable, end-to-end 
technology platform that we manage and operate in-house and that generates significant operating efficiencies that enable us to 
maximize profitability.

We sell and distribute our services primarily through a proprietary direct sales force with established customer relationships. 
We are also building a variety of indirect sales channels that enable us to leverage the distribution capabilities of partners in 
adjacent markets, including value-added resellers. We continue to pursue joint ventures and merchant acquiring alliances. 

We benefit from an attractive business model, the hallmarks of which are recurring revenue, scalability, significant operating 
margins and low capital expenditure requirements. Our revenue is predominantly recurring in nature because of the mission-
critical and embedded nature of the services we provide. In addition, we generally negotiate multi-year contracts with our 
customers. Our business model enables us to continue to grow our business organically without significant incremental capital 
expenditures. 

36

Separation from and Key Relationship with Popular

Prior to the Merger on September 30, 2010, EVERTEC Group was 100% owned by Popular, the largest financial institution in 
the Caribbean, and operated substantially as an independent entity within Popular. After the consummation of the Merger, 
Popular retained an approximately 49% indirect ownership interest in EVERTEC Group and is our largest customer. In 
connection with, and upon consummation of, the Merger, EVERTEC Group entered into a 15-year Master Services Agreement, 
and several related agreements with Popular. Under the terms of the Master Services Agreement, Popular agreed to continue to 
use EVERTEC services on an ongoing exclusive basis, for the duration of the agreement, on commercial terms consistent with 
those of our historical relationship. Additionally, Popular granted us a right of first refusal on the development of certain new 
financial technology products and services for the duration of the Master Services Agreement. As of December 31, 2017, 
Popular retained a 16.1% interest in EVERTEC.

2017 Developments

The Company’s Board of Directors approved regular quarterly dividends of $0.10 per common share in February, April, and 
July of 2017. On November 2, 2017, the Board voted to temporarily suspend the quarterly dividend on the Company's common 
stock due to the difficult operating environment in Puerto Rico. The Board anticipates reviewing the dividend policy as 
conditions stabilize in Puerto Rico.

On July 3, 2017, EVERTEC’s main operating subsidiary, EVERTEC Group, and EVERTEC Panama, S.A. ("EVERTEC 
Panama") closed on the direct and indirect acquisition of 100% of the share capital of EFT Group S.A., a Chilean-based 
payment processing and software solutions company known commercially as “PayGroup”, by entering into a share purchase 
agreement (Contrato de Compraventa de Acciones), by and among EVERTEC Group, EVERTEC Panama, Fondo de Inversión 
Privado Mater, Inversiones San Bernardo SpA, Asesorías e Inversiones Supernova SpA, Inversiones y Asesorías Bayona 
Limitada, Inversiones Hagerdorn y Morales Limitada, Christian Hagedorn Hitschfeld and Inversiones Vaimaca Limitada. The 
PayGroup acquisition expands the Company's presence in Latin America to eight new countries and increases the Company's 
payment solutions offerings. During the third quarter of 2017 Evertec Panama ceased being a shareholder in PayGroup and 
Evertec Group became the 100% owner of PayGroup.

In September 2017, Puerto Rico and the Caribbean, two of our principal markets, were severely impacted by Hurricane Irma 
and Hurricane Maria.

On November 2, 2017 the Company's Board of Directors approved an extension to the expiration date of the current stock 
repurchase program to December 31, 2020. In addition, on this same date the Board voted to temporarily suspend the quarterly 
dividend on the Company's common stock due to the difficult operating environment in Puerto Rico in the aftermath of 
Hurricane Maria. The Board anticipates reviewing the dividend policy as conditions stabilize in Puerto Rico.

Factors and Trends Affecting the Results of Our Operations

The ongoing migration from cash and paper methods of payment to electronic payments continues to benefit the transaction- 
processing industry globally. We believe that the penetration of electronic payments in the markets in which we operate is 
significantly lower relative to the U.S. market, and that this ongoing shift will continue to generate substantial growth 
opportunities for our business. For example, currently the adoption of banking products, including electronic payments, in the 
Latin American and Caribbean region is lower relative to the mature U.S. and European markets. We believe that the unbanked 
and underbanked population in our markets will continue to shrink, and therefore drive incremental penetration and growth of 
electronic payments in Puerto Rico and other Latin American regions. We also benefit from the trend for financial institutions 
and government agencies to outsource technology systems and processes. Many medium- and small-size institutions in the 
Latin American markets in which we operate have outdated computer systems and updating these IT legacy systems is 
financially and logistically challenging, which presents a business opportunity for us. 

Finally, our financial condition and results of operations are, in part, dependent on the economic and general conditions of the 
geographies in which we operate. 

On June 30, 2016, the U.S. President signed into law PROMESA. PROMESA establishes a fiscal oversight and the Oversight 
Board comprised of seven voting members appointed by the President. The Oversight Board has broad budgetary and financial 
powers over Puerto Rico’s budget, laws, financial plans and regulations, including the power to approve restructuring 
agreements with creditors, file petitions for restructuring and reform the electronic system for the tax collection. The Oversight 
Board will have ultimate authority in preparing the Puerto Rico government’s budget and any issuance of future debt by the 
government and its instrumentalities. In addition, PROMESA imposes an automatic stay on all litigation against Puerto Rico 

37

and its instrumentalities, as well as any other judicial or administrative actions or proceedings to enforce or collect claims 
against the Puerto Rico government. On May 1, 2017, the automatic stay expired. Promptly after the expiration of the stay, 
creditors of the Puerto Rico government filed various lawsuits involving defaults on more than $70 billion of bonds issued by 
Puerto Rico, having failed to reach a negotiated settlement on such defaults with the Puerto Rico government during the period 
of the automatic stay. On May 3, 2017, the Oversight Board filed a voluntary petition of relief on behalf of the Commonwealth 
pursuant to Title III of PROMESA for the restructuring of the Commonwealth’s debt. Subsequently, the Oversight Board filed 
voluntary petitions of relief pursuant to Title III of PROMESA on behalf certain public corporations and instrumentalities. Title 
III is an in-court debt restructuring proceeding similar to protections afforded debtors under Chapter 11 of the United States 
Code (the “Bankruptcy Code”); the Bankruptcy Code is not available to the Commonwealth or its instrumentalities.

As the solution to the Puerto Rican government’s debt crisis remains unclear, we continue to carefully monitor our receivables 
with the government as well as monitor general economic trends to understand the impact the crisis has on the economy of 
Puerto Rico and our card payment volumes. To date our receivables with the Puerto Rican government and overall payment 
transaction volumes have not been significantly affected by the debt crisis, however we remain cautious. 

In September 2017, Puerto Rico and the Caribbean, two of our principal markets, were severely impacted by Hurricane Irma 
and Hurricane Maria. As a result of these hurricanes, the islands' economies have been adversely affected. The destruction 
brought on by these hurricanes affected infrastructure and telecommunication services, necessary elements for electronic 
transacting. Electronic transacting primarily affects our Merchant Acquiring segment and Payments Services segments, 
including our ATH network in Puerto Rico. While our ATH network remained operational continuously, the lack of power, 
water and telecommunications limited merchants' ability to either open for business or transact electronically and, as a result, 
our revenue has decreased. Since the hurricanes, merchants have gradually reopened their businesses as power distribution has 
been restored, however it is unclear how many merchants will fail to repoen. Currently, our merchant mix reflects a greater 
percent of large merchants as compared to prior to the hurricanes.  Consumer spending patterns have been erratic in the 
aftermath of the hurricanes. We earn less revenue per transaction from these merchants and this mix of merchants has 
negatively impacted our net revenue yield and margins. Businesses have gradually reopened and accepted payments and we 
have experienced an increase in transaction and sales volume, approaching prior year volumes, but there is uncertainty as to 
when or whether or not volumes will sustain pre-hurricane levels of growth. Cash use has also risen significantly due to the 
lack of ability to accept electronic payments and merchant steering. Additionally, it has been reported that a large number of 
residents have left Puerto Rico for the United States and that more residents may leave in the continuing aftermath of the 
hurricanes.

In addition to the macroeconomic trends described above, Management currently estimates that we will continue to experience 
a revenue attrition in Latin America of approximately $5 million to $8 million for previously disclosed migrations anticipated 
in 2018. The clients decisions, which were made prior to 2015, for these anticipated migrations were driven by a variety of 
historical factors, most importantly customer service experience. Management believes that these customer decisions are 
unlikely to change, however timing is subject to change based on customer's conversion schedules. 

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our 
financial statements, we are required to make estimates and assumptions about future events, and apply judgments that affect 
the reported amounts of certain assets and liabilities, and in some instances, the reported amounts of revenues and expenses 
during the period.

We base our assumptions, estimates, and judgments on historical experience, current events and other factors that management 
believes to be relevant at the time our consolidated financial statements are prepared. However, because future events are 
inherently uncertain and their effects cannot be determined with certainty, actual results could differ from our assumptions and 
estimates, and such differences could be material. A summary of significant accounting policies is included in Note 1 of the 
Notes to Audited Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K. We believe that 
the following accounting estimates are the most critical; require the most difficult, subjective or complex judgments; and thus 
result in estimates that are inherently uncertain.

Revenue recognition

The Company’s revenue recognition policy follows the guidance from Accounting Standards Codification (“ASC”) 605 
Revenue Recognition; ASC 605-25, Revenue Recognition—Multiple Element Arrangements; and; ASC 985, Software, which 
provide guidance on the recognition, presentation, and disclosure of revenue in consolidated financial statements. 

38

The Company recognizes revenue when the following four criteria are met: (i) persuasive evidence of an agreement exists, (ii) 
delivery and acceptance has occurred or services have been rendered, (iii) the selling price is fixed or determinable, and (iv) 
collection is reasonably assured. For multiple deliverable arrangements, EVERTEC evaluates each arrangement to determine if 
the elements or deliverables within the arrangement represent separate units of accounting pursuant to ASC 605-25. If the 
deliverables are determined to be separate units of accounting, revenues are recognized as units of accounting are delivered and 
the revenue recognition criteria are met. If the deliverables are not determined to be separate units of accounting, revenues for 
the delivered services are combined into one unit of accounting and recognized (i) over the life of the arrangement if all 
services are consistently delivered over such term, or if otherwise, (ii) at the time that all services and deliverables have been 
delivered. The selling price for each deliverable is based on vendor specific objective evidence (“VSOE”) if available, third 
party evidence (“TPE”) if VSOE is not available, or management best estimate of selling price (“BESP”) if neither VSOE nor 
TPE is available. EVERTEC establishes VSOE of selling price using the price charged when the same element is sold 
separately. EVERTEC bifurcates or allocates the arrangement consideration to each of the deliverables based on the relative 
selling price of each unit of accounting. 

The Company has two main categories of revenues according to the type of transactions EVERTEC enters into with the 
Company’s customers: (a) transaction-based fees and (b) fixed fees and time and material. 

Transaction-based fees 

The Company provides services that generate transaction-based fees. Typically transaction-based fees depend on factors such 
as number of accounts or transactions processed. These factors typically consist of a fee per transaction or item processed, a 
percentage of dollar volume processed or a fee per account on file, or some combination thereof. Revenue derived from the 
transaction-based fee contracts are recognized when the underlying transaction is processed, which constitutes delivery of 
service. 

Revenues from business contracts in the Company’s Merchant Acquiring segment are primarily comprised of discount fees 
charged to the merchants based on the sales amount of transactions processed. Revenues include a discount fee and 
membership fees charged to merchants and debit network fees as well as point-of-sale (“POS”) rental fees. Pursuant to the 
guidance from ASC 605-45-45, Revenue Recognition—Principal Agent Considerations, EVERTEC records Merchant 
Acquiring revenues net of interchange and assessments charged by the credit and debit card network associations and 
recognizes such revenues at the time of the sale (when a transaction is processed). 

Payment services revenues are comprised of revenues related to providing access to the ATH network and other card networks 
to financial institutions, and related services. Payment services revenues also include revenues from card issuer processing 
services (such as credit and debit card processing, authorization and settlement, and fraud monitoring and control to debit or 
credit card issuers), payment processing services (such as payment and billing products for merchants, businesses and financial 
institutions) and electronic benefit transfer (“EBT”) (which principally consists of services to the Puerto Rico government for 
the delivery of government benefits to participants). Revenues in EVERTEC’s Payment Services segments are primarily 
comprised of fees per transaction processed or per account on file, or a combination of both, and are recognized at the time 
transactions are processed or on a monthly basis for accounts on file. 

Transaction-based fees within EVERTEC’s Business Solutions segment consist of revenues from business process management 
solutions including core bank processing, business process outsourcing, item and cash processing, and fulfillment. Transaction-
based fee revenues generated by the Company’s core bank processing services are derived from fees based on various factors 
such as the number of accounts on file (e.g. savings or checking accounts, loans, etc.), and the number of transactions 
processed or registered users (e.g. for online banking services). For services dependent on the number of transactions 
processed, revenues are recognized as the underlying transactions are processed. For services dependent on the number of users 
or accounts on file, revenues are recognized on a monthly basis based on the number of accounts on file each month. Item and 
cash processing revenues are based upon the number of items (e.g. checks) processed and revenues are recognized when the 
underlying item is processed. Fulfillment services include technical and operational resources for producing and distributing 
variable print documents such as statements, bills, checks and benefits summaries. Fulfillment revenues are based upon the 
number pages for printing services and the number of envelopes processed for mailing services. Revenues are recognized as 
services are delivered based on a fee per page printed or envelope mailed, as applicable. 

Fixed fees and time and material 

The Company also provides services that generate a fixed fee per month or fees based on time and expenses incurred. These 
services are mostly provided in EVERTEC’s Business Solutions segment. Revenues are generated from EVERTEC’s core bank 
solutions, network hosting and management and IT consulting services. 

39

In core bank solutions, the Company mostly provides access to applications and services such as back-up or recovery, hosting 
and maintenance that enable a bank to operate the related hosted services accessing the Company’s IT infrastructure. These 
contracts generally contain multiple elements or deliverables which are evaluated by EVERTEC and revenues are recognized 
according to the applicable guidance. Revenue is derived from fixed fees charged for the use of hosted services and are 
recognized on a monthly basis as delivered. Set-up fees are billed to the customer when the service is rendered; however, they 
are deferred and recognized as revenues over the term of the arrangement or the expected period of the customer 
relationship,whichever is longer, as set-up services rarely provide value to the customer on a stand-alone basis and are 
interrelated with the service to be provided under the contract. 

In network hosting and management, EVERTEC provides hosting services for network infrastructure at EVERTEC’s facilities; 
automated monitoring services; maintenance of call centers; interactive voice response solutions, among other related services. 
Revenues are primarily derived from monthly fees as services are delivered. Set-up fees are billed up-front to the customer 
when the set-up service is rendered; however, they are deferred and recognized as revenues over the term of the arrangement or 
the expected period of the customer relationship, whichever is longer, as set-up services rarely provide value to the customer on 
a stand-alone basis and are interrelated with the service under the contract. There are some arrangements under this line of 
service category that may contain undelivered elements. In such cases, the undelivered elements are evaluated and recognized 
when the services are delivered or at the time that all deliverables under the contract have been delivered. 

IT consulting services revenue primarily consists of time billings based upon the number of hours dedicated to each client. 
Revenue from time billings are recognized as services are delivered. 

EVERTEC also charges members of the ATH network an annual membership fee; however, these fees are deferred and 
recognized as revenues on a straight-line basis over the year and recorded in the Company’s Payment Services segments. In 
addition, occasionally EVERTEC is a reseller of hardware and software products and revenues from these resale transactions 
are recognized when such product is delivered and accepted by the client. 

Service level arrangements 

The Company’s service contracts may include service level arrangements (“SLA”) generally allowing the customer to receive a 
credit for part of the service fee when the Company has not provided the agreed level of services. The SLA performance 
obligation is committed on a monthly basis, thus SLA performance is monitored and assessed for compliance with 
arrangements on a monthly basis, including determination and accounting for its economic impact, if any.

Goodwill and other intangible assets

Goodwill represents the excess of the purchase price and related costs over the value assigned to net assets acquired. Goodwill 
is not amortized, but is tested for impairment at least annually, or more often if events or circumstances indicate there may be 
impairment.

The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative impairment test. 
If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the 
amount of a goodwill impairment loss to be recognized (if any). The Company may assess qualitative factors to determine 
whether it is more likely than not, that is, a likelihood of more than 50 percent that the fair value of the reporting unit is less 
than its carrying amount, including goodwill. The Company has an unconditional option to bypass the qualitative assessment 
for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The 
Company may resume performing the qualitative assessment in any subsequent period. With the early adoption in December 
2017 of the accounting standards update that simplifies the goodwill impairment test, the quantitative goodwill impairment test, 
used to identify both the existence of impairment and the amount of impairment loss, compares the fair value of a reporting unit 
with its carrying amount, including goodwill. If the Company determines to perform a quantitative impairment test, a third-
party valuator may be engaged to prepare an independent valuation of each reporting unit. If the fair value of a reporting unit 
exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting 
unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount 
of goodwill allocated to that reporting unit. Additionally, the Company shall consider the income tax effect from any tax-
deductible goodwill on the carrying amount of the reporting unit, if applicable, when measuring the goodwill impairment loss. 
For the years ended December 31, 2017, 2016 and 2015, no impairment losses associated with goodwill were recognized.

40

Other identifiable intangible assets with a definitive useful lives are amortized using the straight-line method or accelerated 
methods. These intangibles are evaluated periodically for impairment when events or changes in circumstances indicate that the 
carrying amounts may not be recoverable.

Other identifiable intangible assets with a definitive useful lives include customer relationships, trademarks, software packages 
and a non-compete agreement. Customer relationships were valued using the excess earnings method under the income 
approach. Trademark assets were valued using the relief-from-royalty method under the income approach. Internally developed 
software packages, which include capitalized software development costs, are recorded at cost, while software packages 
acquired as part of a business combination were valued using the relief-from-royalty method under the income approach. The 
non-compete agreement was valued based on the estimated impact that theoretical competition would have on revenues and 
expenses.

Share-based compensation

The Company estimates the fair value of stock-based awards, on a contemporaneous basis, at the date they are granted using 
the Black-Scholes-Merton option pricing model for Tranche A options and the Monte Carlo simulation analysis for Tranche B 
and Tranche C options and market based restricted stock units (“RSUs”) using the following assumptions: (1) stock price; (2) 
risk-free rate; (3) expected volatility; (4) expected annual dividend yield and (5) expected term. The risk-free rate is based on 
the U.S. Constant Maturities Treasury Interest Rate as of the grant date or the yield of a 2-year or 3-year Treasury bond, as 
applicable. The expected volatility is based on a combination of historical volatility and implied volatility from publicly traded 
companies in the Company’s industry. The expected annual dividend yield is based on management’s expectations of future 
dividends as of the grant date and, in certain cases, assumes that those dividends will be reinvested over the performance 
period. The expected term for stock options granted under the 2010 Plan was based on the vesting time of the options. For the 
stock options granted under the 2013 Plan, the simplified method was used to estimate the expected term, given that the 
Company did not have appropriate exercise data on which to base the estimate nor is exercise data relating to employees of 
comparable companies easily obtainable. Performance and time based RSUs and restricted stock are valued based on the 
market price of the Company’s stock at the grant date. 

Upon option exercise or restricted stock or RSUs release, participants may elect to “net share settle”. Rather than requiring the 
participant to deliver cash to satisfy the exercise price, for options exercise, and tax withholdings, the Company withholds a 
sufficient number of shares to cover these amounts and delivers the net shares to the participant.

Income Tax

Income taxes are accounted for under the asset and liability method. A temporary difference refers to a difference between the 
tax basis of an asset or liability, determined based on recognition and measurement requirements for tax positions, and its 
reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported 
amount of the asset or liability is recovered or settled, respectively. Deferred tax assets and liabilities represent the future 
effects on income taxes that result from temporary differences and carryforwards that exist at the end of a period. Deferred tax 
assets and liabilities are measured using enacted tax rates and provisions of the enacted tax law and are not discounted to reflect 
the time-value of money. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the 
consolidated statements of income and comprehensive income in the period that includes the enactment date. A deferred tax 
valuation allowance is established if it is considered more likely than not that all or a portion of the deferred tax asset will not 
be realized. 

The Company recognizes the benefit of uncertain tax positions only if it is more likely than not that the tax position will be 
sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the 
financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent 
likelihood of being realized upon ultimate settlement or disposition of the underlying issue with the taxing authority. 
Accordingly, the amount of benefit recognized in the consolidated financial statements may differ from the amount taken or 
expected to be taken in the tax return resulting in unrecognized tax benefits (“UTBs”). The Company recognizes the interest 
and penalties associated with UTBs as part of the provision for income taxes on its consolidated statements of income and 
comprehensive income. Accrued interest and penalties are included on the related tax liability line in the consolidated balance 
sheets. 

All companies within EVERTEC are legal entities which file separate income tax returns.

Recent Accounting Pronouncements

41

For a description of recent accounting standards, see Note 2 of the Notes to Audited Consolidated Financial Statements 
included in this Annual Report on Form 10-K.

Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, as presented in this Annual 
Report on Form 10-K, are supplemental measures of our performance that are not required by, or presented in accordance with 
GAAP. They are not measurements of our financial performance under GAAP and should not be considered as alternatives to 
total revenues, net income or any other performance measures derived in accordance with GAAP or as alternatives to cash 
flows from operating activities as measures of our liquidity. Adjusted EBITDA at the segment level is reported to the chief 
operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their 
performance. For this reason Adjusted EBITDA, as it relates to our segments, is presented in conformity with Accounting 
Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under 
the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. 

For more information regarding EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, 
including a quantitative reconciliation of EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per 
common share to the most directly comparable GAAP financial performance measure, which is net income, see “—Net Income 
Reconciliation to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share” and “—
Covenant Compliance” below. 

Results of Operations

Dollar amounts in thousands

2017

2016

2015

Variance 2017 vs. 2016 Variance 2016 vs. 2015

Year ended December 31,

Revenues

$407,144

$389,507

$373,528

$

17,637

5 % $

15,979

4 %

Operating costs and expenses

Cost of revenues, exclusive of
depreciation and amortization shown
below

Selling, general and administrative
expenses

Depreciation and amortization

200,650

175,809

167,916

24,841

14 %

7,893

5 %

56,161

64,250

46,986

59,567

37,278

64,974

9,175

4,683

Total operating costs and expenses

321,061

282,362

270,168

Income from operations

$ 86,083

$107,145

$103,360

38,699
$ (21,062)

Revenues

20 %

8 %

14 %

9,708
(5,407)
12,194

(20)% $

3,785

26 %

(8)%

5 %

4 %

Total revenues in 2017 increased by $17.6 million or 5% when compared with the prior year. The increase in revenues was 
driven by increases in ATH debit network transaction volumes and card processing volumes, revenue generated from the 
PayGroup acquisition, increased revenue from our Accuprint acquisition in the fourth quarter of 2016 and an increase in core 
banking revenue. Revenues in 2017 were negatively impacted by the two hurricanes that made landfall in Puerto Rico and the 
Caribbean in September of 2017. We estimate the hurricanes reduced revenues by approximately $13 to $14 million.

Revenues in 2016 increased by $16.0 million or 4% when compared with 2015. The increase in revenue in 2016 was driven by 
the addition of the FirstBank of Puerto Rico (“FirstBank”) merchant portfolio in the fourth quarter of 2015, an increase in 
transactions processed over the ATH debit network and revenue related to the Processa acquisition and an increase in revenue 
from core banking activities related to an increase in volume and new services provided. These increases were partially offset 
by a decrease in revenues due to a delayed project amounting to approximately $4.5 million and lower revenues from the 
Puerto Rico government lottery tax contract terminated in the fourth quarter of 2015.

Cost of revenues 

Cost of revenues in 2017 increased $24.8 million or 14% when compared with the prior year. The increase in cost of revenue is 
primarily related to $12.8 million in charges taken in connection with an exit activity for a third party software solution that is 

42

no longer commercially viable and a $5.0 million impairment loss related to a software asset under development. The 
remaining increase was primarily attributable to the PayGroup acquisition.

Cost of revenues in 2016 increased 5% to $175.8 million when compared with 2015 and was primarily driven by a $4.9 million 
increase in expenses for revenue sharing referral agreements with certain banks in Puerto Rico and increases in equipment 
expenses, professional fees and other operating taxes. These increases were partially offset by a $4.5 million decrease in 
compensation expense as the prior year period included severance payments as part of voluntary termination offers extended to 
certain employees which included special termination benefits. 

Selling, general and administrative

Selling, general and administrative expenses in 2017 increased $9.2 million when compared with 2016. The increase is 
primarily related to an increase in share based compensation, expenses related to the PayGroup acquisition and an increase in 
payroll and other taxes in our Latin America operations.

Selling, general and administrative expenses increased by $9.7 million in 2016 compared with 2015 primarily driven by a $4.5 
million increase in salaries and benefits including higher share based compensation, coupled with a $3.0 million increase in 
professional fees mostly due to costs incurred in connection with the restatement of our 2015 financial results during 2016. 

Depreciation and amortization

Depreciation and amortization expense increased by $4.7 million in 2017 compared to 2016 mainly related to an increase in 
amortization expense related to intangible assets acquired as part of business combinations completed in the prior and current 
year.

Depreciation and amortization expense decreased by $5.4 million or 8% in 2016 compared with 2015. The decrease resulted 
primarily from lower amortization of software packages related to software acquired as part of the Merger that became fully 
amortized during the third quarter of 2015.

Non-operating income (expenses)

Year ended December 31,

Dollar amounts in thousands

2017

2016

2015

Variance 2017 vs. 2016 Variance 2016 vs. 2015

Interest income

Interest expense

$

716

$

377

$

(29,861)

(24,617)

$

495
(24,266)

339
(5,244)

90 % $

21 %

(118)
(351)

Earnings (losses) of equity method
investment

Other income, net

Total non-operating expenses

604

(52)

147

656

(1,262)%

2,657

2,306
$ (25,884) $ (23,748) $ (21,318)

544

2,113
(2,136)

388 %

9 %

(199)
(1,762)
(2,430)

(24)%

1 %

(135)%

(76)%

11 %

Total non-operating expenses in 2017 increased $2.1 million or 9% when compared to 2016 . Interest expense increased by 
$5.2 million primarily as a result of the Third Amendment (defined below) completed in the fourth quarter of 2016 coupled 
with an increased LIBOR and increased interest expense from the commencement of the fixed interest rate swap. This increase 
was partially offset by an increase in foreign exchange gains and an increase in earnings from our equity method investment.

Total non-operating expenses in 2016 increased $2.4 million when compared with the prior year. The increase is driven by the 
$1.5 million loss on extinguishment recorded as part of the debt refinancing transaction completed in the fourth quarter of 
2016, which is included in Other income, net, coupled with a $0.4 million increase in interest expense and a $0.2 million 
decrease in earnings from our equity method investment in the Dominican Republic, Consorcio de Tarjetas Dominicanas, S.A. 
(“CONTADO”). 

43

Income tax expense (benefit)

Dollar amounts in thousands
Income tax expense (benefit)

Year ended December 31,

2017

2016

$

4,780

$

8,271

2015
$ (3,335)

Variance 2017 vs. 2016 Variance 2016 vs. 2015

(3,491)

(42)%

11,606

(348)%

Income tax expense in 2017 decreased by $3.5 million to $4.8 million. The effective tax rate in 2017 was approximately 8%. 
The decrease in income tax expense was mainly due to the reversal of a tax liability related to an uncertain tax position for 
which the statute of limitations expired during the third quarter of 2017.

Income tax expense for the year ended December 31, 2016 amounted to approximately $8.3 million compared with an income 
tax benefit of $3.3 million in 2015. The effective tax rate in 2016 was approximately 10%. The prior year tax benefit reflects 
the reversal of tax liability related to an uncertain tax position for which the statute of limitations expired during the third 
quarter of 2015. 

Segment Results of Operations

In December of 2017, as a result of the PayGroup acquisition, the Chief Operating Decision Maker ("CODM") completed an 
evaluation of the current Company structure and the information regularly reviewed for purposes of allocating resources and 
assessing performance. As a result of this evaluation, Management concluded that the operating segments are determined by the 
products and services the Company provides and the geographic regions in which the Company operates, resulting in four 
business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America (collectively "Payment 
Services segments"), Merchant Acquiring, and Business Solutions. 

The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to 
the ATH debit network and other card networks to financial institutions, including related services such as authorization, 
processing, management and recording of ATM and POS transactions, and ATM management and monitoring. The segment 
revenues also include revenues from card processing services (such as credit and debit card processing, authorization and 
settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and 
billing products for merchants, businesses and financial institutions) and electronic benefit transfer (“EBT”) (which principally 
consist of services to the government of Puerto Rico for the delivery of benefits to participants).For ATH debit network and 
processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily 
from network fees, transaction switching and processing fees, and the leasing POS devices. For card issuer processing, 
revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, 
the number of cards embossed and other processing services. For EBT services, revenues are primarily derived from the 
number of beneficiaries on file.

The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH debit 
network and other card networks to financial institutions, including related services such as authorization, processing, 
management and recording of ATM and POS transactions, and ATM management and monitoring. The segment revenues also 
include revenues from card processing services (such as credit and debit card processing, authorization and settlement and 
fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for 
merchants, businesses and financial institutions), as well as, licensed software solutions for risk and fraud management and 
card payment processing. For ATH debit network and processing services, revenues are primarily driven by the number of 
transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the 
leasing POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on 
file, transactions and authorizations processed, the number of cards embossed and other processing services. 

The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of 
payment. In the Merchant Acquiring segment, revenues include a discount fee and membership fees charged to merchants, 
debit network fees and rental fees from POS devices and other equipment, net of credit card interchange and assessment fees 
charged by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee is generally a 
percentage of the transaction value. EVERTEC also charges merchants for other services that are unrelated to the number of 
transactions or the transaction value.

The Business Solutions segment consists of revenues from a full suite of business process management solutions in various 
product areas such as core bank processing, network hosting and management, IT professional services, business process 
outsourcing, item processing, cash processing, and fulfillment. Core bank processing and network services revenues are derived 

44

in part from a recurrent fee and from fees based on the number of accounts on file (i.e. savings or checking accounts, loans, 
etc.) or computer resources utilized. Revenues from other processing services within the Business Solutions segment are 
generally volume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller 
of hardware and software products and these resale transactions are generally one-time transactions.

In addition to the four operating segments described above, Management identified certain functional cost areas that operate 
independently and do not constitute businesses in themselves. These units could neither be concluded as operating segments 
nor could they be combined with any other operating segments. Therefore, these units are aggregated and presented as 
“Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and other category 
consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and 
miscellaneous expenses that are not included in the operating segments. The overhead and leveraged costs relate to activities 
such as:

•  marketing, 
• 
• 
• 
• 
• 
• 
• 
• 
• 

corporate finance and accounting, 
human resources, 
legal, 
risk management functions, 
internal audit, 
corporate debt related costs, 
non-operating depreciation and amortization expenses generated as a result of the Merger, 
intersegment revenues and expenses, and 
other non-recurring fees and expenses that are not considered when management evaluates financial performance at a 
segment level

The CODM reviews the operating segments separate financial information to assess performance and to allocate resources. 
Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted EBITDA. 
Adjusted EBITDA, as it relates to operating segments, is presented in conformity with Accounting Standards Codification 
Topic 280, "Segment Reporting" given that it is reported to the CODM for purposes of allocating resources. Segment asset 
disclosure is not used by the CODM as a measure of segment performance since the segment evaluation is driven by revenues 
and adjusted EBITDA performance. As such, segment assets are not disclosed in the notes to the accompanying consolidated 
financial statements.

The following tables set forth information about the Company’s operations by its four business segments for the periods 
indicated below. 

Payment Services - Puerto Rico & Caribbean

Dollar amounts in thousands
Revenues

Adjusted EBITDA

Year ended December 31,

2017

$101,687

58,534

2016

$99,680

63,086

2015

$99,311

62,297

Payment Services - Puerto Rico & Caribbean revenues in 2017 increased $2.0 million when compared with 2016. Revenue 
growth reflected increases in ATH debit network transaction volumes and card processing volumes. Adjusted EBITDA 
decreased $4.6 million, mainly a result of the impairment charge taken related to a software asset under development and 
reduced revenues related to the hurricanes.

Payment Services - Puerto Rico & Caribbean revenues remained relatively flat in 2016 when compared to the prior year. 
Revenues in 2016 were impacted by an increase in transactions processed over the ATH debit network, partially offset by the 
shift in revenue for a customer contract change from payment services to merchant acquiring in the fourth quarter of 2015, a 
decrease in revenues due to a delayed project amounting to approximately $4.5 million and lower revenues from the 
government lottery tax contract terminated in the fourth quarter of 2015. Adjusted EBITDA was impacted by the same factors 
described for revenues.

45

Payment Services - Latin America

Dollar amounts in thousands
Revenues

Adjusted EBITDA

Year ended December 31,

2017

$62,702

17,558

2016

$47,162

15,354

2015

$37,523

11,800

Payment Services - Latin America 2017 revenues increased $15.5 million driven mainly by added revenues from the PayGroup 
acquisition. Adjusted EBITDA increased $2.2 million mainly driven by increased transaction growth as well as contribution 
from our PayGroup acquisition at a lower margin, both of which were partially offset by customer attrition.

Payment Services - Latin America revenues in 2016 increased by $9.6 million driven primarily by revenue from the Processa 
acquisition, and transaction and terminal rental growth while Adjusted EBITDA increased approximately $3.5 million 
reflecting operating leverage on incremental revenues and the Processa contribution.

Merchant Acquiring

Dollar amounts in thousands
Revenues

Adjusted EBITDA

Year ended December 31,

2017

$85,778

37,497

2016

$91,248

41,629

2015

$85,411

45,447

Merchant acquiring segment revenue in 2017 decreased $5.5 million. Merchant sales volume and revenue were negatively 
impacted by Hurricanes Irma and Maria in September 2017. The decrease was also impacted by the shift of revenue from 
Merchant Acquiring related to a client contract change in the second quarter of 2016. Adjusted EBITDA decreased by $4.1 
million mainly due to the factors above described for revenues coupled with a less favorable merchant mix and a lower average 
ticket, both of which reduced margins.

Merchant acquiring segment revenue in 2016 amounted to $91.2 million, an increase when compared to the prior year, driven 
by the addition of the FirstBank merchant portfolio in the fourth quarter of 2015. Merchant acquiring segment Adjusted 
EBITDA decreased from $45.4 million to $41.6 million in 2016 primarily due to revenues at a lower margin from our 
FirstBank merchant portfolio, reduced margin contribution due to increased transactions at a lower ticket price and merchant 
mix shifts that reduced net revenue. 

Business Solutions

Dollar amounts in thousands
Revenues

Adjusted EBITDA

Year ended December 31,
2016

2015

2017

$189,077

$184,276

$179,532

86,790

89,239

83,192

Business solutions revenue in 2017 increased to $189.1 million primarily reflecting increased revenue from our Accuprint 
printing business acquisition and an increase in core banking revenue. Adjusted EBITDA decreased to $86.8 million mainly as 
a result of higher internal charges related to higher support and maintenance hours for Business Solution applications, primarily 
for Banco Popular coupled with higher expenses related to infrastructure supporting the Business Solutions segment as we 
replaced obsolete assets.

Business solutions revenue in 2016 increased to $184.3 million. The increase is primarily driven by revenues from core 
banking activities related to an increase in volume and new services provided. In addition, revenues grew modestly in network 
services, business process outsourcing and IT Consulting. This growth was partially offset by a decrease in revenue from cash 
and item processing services. Adjusted EBITDA increased primarily driven by the same factors explained for the increase in 
revenues.

46

Liquidity and Capital Resources

Liquidity

Our principal source of liquidity is cash generated from operations, and our primary liquidity requirements are the funding of 
capital expenditures and working capital needs. We also have a $100.0 million revolving credit facility, of which $88.0 million 
was available as of December 31, 2017.

At December 31, 2017, we had cash of $50.4 million, of which $30.0 million resides in our subsidiaries located outside of 
Puerto Rico for purposes of (i) funding the respective subsidiary’s current business operations and (ii) funding potential future 
investment outside of Puerto Rico. During the second quarter of 2017, the Company repatriated capital and earnings from 
foreign subsidiaries in order to partially fund the acquisition of PayGroup. This acquisition expands our Latin American 
operations and increases the Company's foreign operations. This transaction resulted in a one-time tax on dividends from 
foreign operations of approximately $1.3 million. This repatriation of earnings and capital is considered a one-time transaction 
specifically for the acquisition, and based on our liquidity forecast, we do not believe we will need to repatriate cash to fund the 
Puerto Rico operations or to meet debt-service obligations. However, if in the future we determine that we no longer need to 
maintain cash balances within our foreign subsidiaries, we may elect to distribute such cash to the Company in Puerto Rico. 
Distributions from the foreign subsidiaries to Puerto Rico may be subject to tax withholding and other tax consequences.

Our primary use of cash is for operating expenses, working capital requirements, capital expenditures, dividend payments, 
share repurchases, debt service, acquisitions and other transactions as opportunities present themselves.

Based on our current level of operations, we believe our cash flows from operations and the available senior secured Revolving 
Credit Facility will be adequate to meet our liquidity needs for the next twelve months. However, our ability to fund future 
operating expenses, dividend payments, capital expenditures, mergers and acquisitions, and our ability to make scheduled 
payments of interest, to pay principal on or refinance our indebtedness and to satisfy any other of our present or future debt 
obligations will depend on our future operating performance, which will be affected by general economic, financial and other 
factors beyond our control.

Comparison of the years ended December 31, 2017 and 2016 

The following table presents our cash flows from operations for the years ended December 31, 2017 and 2016: 

(Dollar amounts in thousands)
Cash provided by operating activities
Cash used in investing activities

Cash used in financing activities

(Decrease) increase in cash

Years ended December 31,

2017

2016

$

$

$

145,786
(78,100)
(69,183)
(1,497) $

168,054
(54,083)
(90,798)
23,173

Net cash provided by operating activities for the year ended December 31, 2017 was $145.8 million, a decrease of $22.3 
million compared with 2016. The decrease in cash provided by operating activities was primarily driven by a decrease in net 
income.

Net cash used in investing activities increased by $24.0 million to $78.1 million. The increase was mainly attributable to the 
completion of the purchase of PayGroup during the third quarter of 2017.

Net cash used in financing activities for the year ended December 31, 2017 amounted to $69.2 million, a decrease of $21.6 
million when compared with the prior year. The decrease is driven by less cash used for stock repurchases and dividend 
payments.

47

 
 
Comparison of the years ended December 31, 2016 and 2015 

The following table presents our cash flows from operations for the years ended December 31, 2016 and 2015:

(Dollar amounts in thousands)

Cash provided by operating activities

Cash used in investing activities

Cash used in financing activities

Increase (decrease) in cash

Years ended December 31,

2016

2015

$

$

168,054
(54,083)
(90,798)
23,173

$

$

162,419
(53,068)
(112,718)
(3,367)

Net cash provided by operating activities for the year ended December 31, 2016 was $168.1 million, an increase of $5.6 million 
compared with 2015. The increase was driven by less cash used to pay accounts payable and accrued liabilities and an increase 
in unearned income.

Net cash used in investing activities amounted to $54.1 million, primarily driven by additions to software amounting to $23.8 
million, acquisitions of property and equipment of $18.5 million and the completion of the Processa and the Accuprint purchase 
transactions for $15.6 million in cash. 

Net cash used in financing activities for the year ended December 31, 2016 amounted to $90.8 million, a decrease of $21.9 
million when compared with the prior year. The decrease is driven by less cash used in the repurchase of common stock, 
coupled with an increase in cash provided by short-term borrowings partially offset by cash paid during the year for 
amendments made to the Company’s debt agreement, credit amendment fees of $3.6 million and debt issue costs of $4.8 
million. 

Capital Resources

Our principal capital expenditures are for hardware and computer software (purchased and internally developed), additions to 
property and equipment and acquisitions. We invested approximately $33.5 million, $42.3 million, and $47.0 million on capital 
expenditures for hardware and computer software and property and equipment for the years ended December 31, 2017, 2016 
and 2015, respectively. In terms of acquisitions, in 2017, we completed the purchase of PayGroup for $42.8 million, while in 
the 2016, we completed the purchase of Processa for $5.9 million and Accuprint for $9.7 million. Capital expenditures are 
expected to be funded by cash flow from operations and, if necessary, borrowings under our Revolving Facility.

Dividend Payments

Historically, we have paid a regular quarterly dividend on our common stock, subject to the declaration thereof by our Board 
each quarter. On November 2, 2017, the Board voted to temporarily suspend the quarterly dividend on the Company's common 
stock due to the difficult operating environment in Puerto Rico in the aftermath of Hurricane Maria. The Board anticipates 
reviewing the dividend policy as conditions stabilize in Puerto Rico. Any declaration and payment of future dividends to 
holders of our common stock will be at the discretion of our Board and will depend on many factors, including our financial 
condition, earnings, available cash, business opportunities, legal requirements, restrictions in our debt agreements and other 
contracts, capital requirements, level of indebtedness and other factors that our Board deems relevant. Refer to the table below 
for details regarding our dividends in 2017 and 2016:

Declaration Date
February 17, 2016
May 11, 2016
July 28, 2016
October 27, 2016
February 17, 2017
April 27, 2017
July 25, 2017

Record Date

February 29, 2016
May 23, 2016
August 9, 2016
November 14, 2016
March 1, 2017
May 8, 2017
August 7, 2017

Payment Date
March 17, 2016
June 10, 2016
September 2, 2016
December 2, 2016
March 20, 2017
June 9, 2017
September 8, 2017

Dividend per share

0.10
0.10
0.10
0.10
0.10
0.10
0.10

48

 
 
 
 
Stock Repurchase

During 2017, the Company repurchased 465,240 shares of the Company’s common stock at a cost of $7.7 million. The 
Company funded such repurchase with cash on hand and borrowings under the existing revolving credit facility.

During 2016, the Company repurchased 2,504,427 shares of the Company’s common stock at a cost of $39.9 million. The 
Company funded such repurchase with cash on hand and borrowings under the existing revolving credit facility. 

During 2015, the Company repurchased 3,012,826 shares of the Company’s common stock at a cost of $54.9 million. The 
Company funded such repurchase with cash on hand and borrowings under the existing revolving credit facility.

Repurchases may be accomplished through open market transactions, privately negotiated transactions, accelerated share 
repurchase programs and other means.

Financial Obligations

Senior Secured Credit Facilities

On April 17, 2013, EVERTEC Group entered into a credit agreement (the “2013 Credit Agreement”) governing the senior 
secured credit facilities, consisting of a $300.0 million term loan A facility (the “Term A Loan”), a $400.0 million term loan B 
facility (the “Term B Loan”, together with the Term A Loan, the “Senior Secured term loans”) and a $100.0 million revolving 
credit facility (the "Revolving Facility"). 

During 2016, the Company entered into two separate amendments to the 2013 Credit Agreement. In the second quarter of 2016, 
EVERTEC Group, together with certain other direct and indirect subsidiaries of the Company, entered into a second 
amendment and waiver to the outstanding Credit Agreement (the “Second Amendment”). The Company paid each lender that 
consented to the amendment a fee equal to 0.50% of the aggregate principal amount of outstanding term loans and revolving 
commitments held by such lender. The credit amendment fees paid during the second quarter of 2016 amounted to $3.6 million. 
In the fourth quarter of 2016, EVERTEC Group, together with certain other direct and indirect subsidiaries of the Company, 
entered into a third amendment (the “Third Amendment”) to the 2013 Credit Agreement. The Third Amendment extends the 
maturity of (a) approximately $219 million of EVERTEC Group’s existing approximately $250 million of Term A loan facility 
to January 17, 2020 (the “2020 Term A loan”) and (b) $65 million of EVERTEC Group’s existing $100 million of revolving 
credit facility to January 17, 2020. The remaining approximately $30 million of Term A loan (the “2018 Term A loan”) and the 
$35 million of revolving credit facility that were not extended will remain in place and mature as originally scheduled on 
April 17, 2018. The Term B loan facility will remain in place and mature as originally scheduled on April 17, 2020.

Under the terms of the Third Amendment, the 2018 Term A Loan amortizes on a basis of 1.875% of the original principal 
amount beginning in the third quarter of 2016 and during each of the next three quarters, and 2.50% of the original principal 
amount during each of the final three quarters, with the balance payable on the final maturity date. The 2020 Term A Loan 
amortizes on a basis of 1.50% of the original principal amount beginning in the fourth quarter of 2016 and during each of the 
next five quarters, 1.875% of the original principal amount during each of the four subsequent quarters, and 2.50% of the 
original principal amount during each of the final three quarters, with the balance payable on the final maturity date. Principal 
payments for the Term B Loan were not changed by the Third Amendment and continues to require payments on the last 
business day of each quarter equal to 0.250% of the original principal amount and the remaining outstanding principal amount 
on the maturity of the Term B Loan.

The applicable margin under the 2013 Credit Agreement is based on, at EVERTEC Group’s option, (i) with respect to any 2018 
Term A Loan, 2.50% per annum in the case of any LIBOR Loan and 1.50% per annum in the case of any Alternate Base Rate 
(“ABR”), as defined in the 2013 Credit Agreement, subject to reduction based on achievement of specific first lien secured 
leverage ratios, (ii) with respect to any 2020 Term A Loan, 2.50% per annum in the case of any LIBOR Loan and 1.50% per 
annum in the case of any ABR Loan, (iii) with respect to any Term B Loan, 2.75% per annum in the case of any LIBOR Loan 
and 1.75% per annum in the case of any ABR Loan subject to reduction based on achievement of specific first lien secured 
leverage ratios, and (iv) with respect to any revolving credit facility, (A) 2.50% per annum in the case of any LIBOR Loan and 
(B) 1.50% per annum in the case of any ABR Loan.

The revolving credit facility interest rate is calculated the same as the 2020 Term A Loan rate and has a “commitment fee” 
payable one business day after the last business day of each quarter calculated based on the daily unused commitment during 
the preceding quarter. The commitment fee for the unused portion of this facility ranges from 0.125% to 0.375% and is based 
on EVERTEC Group’s first lien secured net leverage ratio.

49

All loans may be prepaid without premium or penalty.

The unpaid principal balance at December 31, 2017 of the 2018 Term A Loan, the 2020 Term A Loan and the Term B Loan was 
$26.9 million, $202.9 million and $382.0 million, respectively. The additional borrowing capacity for the Revolving Facility 
loan at December 31, 2017 was $88.0 million.

Notes payable

In December 2014, June 2015 and May 2016, EVERTEC Group entered into non-interest bearing financing agreements 
amounting to $4.6 million, $1.1 million, and $0.7 million, respectively, and in October 2016 entered into an interest bearing 
agreement of $1.1 million, to purchase software. As of December 31, 2017 and December 31, 2016, the outstanding principal 
balance of the notes payable is $1.0 million and $3.4 million, respectively. The current portion of these notes is recorded as part 
of accounts payable and the long-term portion is included in other long-term liabilities.

Interest Rate Swap

As of December 31, 2017, the Company has the following interest rate swap agreement converting a portion of the interest rate 
exposure on the Company's Term B Loan from variable to fixed: 

Effective date
January 2017

Maturity Date
April 2020

Notional Amount
$200 million

Variable Rate

1-month LIBOR   

Fixed Rate
1.9225%

The Company has accounted for this transaction as a cash flow hedge. The fair value of the Company’s derivative instrument is 
determined using a standard valuation model. The significant inputs used in this model are readily available in public markets, 
or can be derived from observable market transactions, and therefore have been classified as Level 2 within the fair value 
hierarchy. Inputs used in this standard valuation model for derivative instruments include the applicable forward rates and 
discount rates. The discount rates are based on the historical LIBOR Swap rates. 

As of December 31, 2017 and December 31, 2016, the carrying amount of the derivative on the Company’s balance sheets is as 
follows:

(Dollar amounts in thousands)
Other long-term assets

Other long-term liabilities

December 31, 2017

December 31, 2016

$

214

$

—

—

1,964

During the year ended December 31, 2017, the Company reclassified losses of $1.6 million from accumulated other 
comprehensive loss into income through interest expense. Based on current LIBOR rates, the Company expects to reclassify 
$0.9 million from accumulated other comprehensive loss into income through interest expense over the next 12 months.

The cash flow hedge is considered highly effective and no impact on earnings is expected due to hedge ineffectiveness.

Covenant Compliance

The credit facilities contain various restrictive covenants. The Term A Loan and the revolving facility (subject to certain 
exceptions) require EVERTEC Group to maintain on a quarterly basis a specified maximum senior secured leverage ratio of up 
to 4.75 to 1.00 as defined in the third amendment to the 2013 Credit Agreement (total first lien senior secured debt to Adjusted 
EBITDA) until September 30, 2018 and 4.25 to 1.00 for any fiscal quarter ending thereafter. In addition, the 2013 Credit 
Agreement, among other things: (a) limits EVERTEC Group’s ability and the ability of its subsidiaries to incur additional 
indebtedness, incur liens, pay dividends or make certain other restricted payments and enter into certain transactions with 
affiliates; (b) restricts EVERTEC Group’s ability to enter into agreements that would restrict the ability of its subsidiaries to 
pay dividends or make certain payments to its parent company; and (c) places restrictions on EVERTEC Group’s ability and the 
ability of its subsidiaries to merge or consolidate with any other person or sell, assign, transfer, convey or otherwise dispose of 
all or substantially all of their assets. However, all of the covenants in these agreements are subject to significant exceptions. As 
of December 31, 2017, the senior secured leverage ratio was 3.34 to 1.00. As of the date of filing of this Form 10-K no event 
has occurred that constitutes an Event of Default or Default. 

50

  
  
  
  
  
  
  
In this Annual Report on Form 10-K, we refer to the term “Adjusted EBITDA” to mean EBITDA as so defined and calculated 
for purposes of determining compliance with the senior secured leverage ratio based on the financial information for the last 
twelve months at the end of each quarter. 

Net Income Reconciliation to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share 
(Non-GAAP Measures) 

We define “EBITDA” as earnings before interest, taxes, depreciation and amortization. We define “Adjusted EBITDA” as 
EBITDA further adjusted to exclude unusual items and other adjustments described below. Adjusted EBITDA by segment is 
reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and 
assessing their performance. For this reason Adjusted EBITDA, as it relates to our segments, is presented in conformity with 
Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial 
measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. We define 
“Adjusted Net Income” as net income adjusted to exclude unusual items and other adjustments described below. We define 
“Adjusted Earnings per common share” as Adjusted Net Income divided by diluted shares outstanding. 

We present EBITDA and Adjusted EBITDA because we consider them important supplemental measures of our performance 
and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of ourselves 
and other companies in our industry. In addition, our presentation of Adjusted EBITDA is substantially consistent with the 
equivalent measurements that are contained in the senior secured credit facilities in testing EVERTEC Group’s compliance 
with covenants therein such as the senior secured leverage ratio. We use Adjusted Net Income to measure our overall 
profitability because we believe better reflects our comparable operating performance by excluding the impact of the non-cash 
amortization and depreciation that was created as a result of the Merger. In addition, in evaluating EBITDA, Adjusted 
EBITDA, Adjusted Net Income and Adjusted Earnings per common share, you should be aware that in the future we may incur 
expenses such as those excluded in calculating them. Further, our presentation of these measures should not be construed as an 
inference that our future operating results will not be affected by unusual or nonrecurring items. 

Some of the limitations of EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted earnings per common share are as 
follows: 

• 
• 
• 

• 

• 

• 

they do not reflect cash outlays for capital expenditures or future contractual commitments;
they do not reflect changes in, or cash requirements for, working capital;
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often 
have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such 
replacements;
in the case of EBITDA and Adjusted EBITDA, they do not reflect interest expense, or the cash requirements necessary 
to service interest, or principal payments, on indebtedness;
in the case of EBITDA and Adjusted EBITDA, they do not reflect income tax expense or the cash necessary to pay 
income taxes; and
other companies, including other companies in our industry, may not use EBITDA, Adjusted EBITDA, Adjusted Net 
Income, and Adjusted Earnings per common share or may calculate EBITDA, Adjusted EBITDA, Adjusted Net 
Income and Adjusted Earnings per common share differently than as presented in this Report, limiting their usefulness 
as a comparative measure.

EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share are not measurements of 
liquidity or financial performance under GAAP. You should not consider EBITDA, Adjusted EBITDA, Adjusted Net Income 
and Adjusted Earnings per common share as alternatives to cash flows from operating activities or any other performance 
measures determined in accordance with GAAP, as an indicator of cash flows, as a measure of liquidity or as an alternative to 
operating or net income determined in accordance with GAAP. 

A reconciliation of net income to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share 
is provided below:

51

(Dollar amounts in thousands)

Net income

Income tax expense

Interest expense, net

Depreciation and amortization

EBITDA
Equity income (1)
Compensation and benefits (2)
Transaction, refinancing and other fees (3)
Exit activity (4)

Adjusted EBITDA

Operating depreciation and amortization (5)
Cash interest expense, net (6)
Income tax expense (7)
Non-controlling interest (8)
Adjusted net income

Net income per common share (GAAP):

Diluted

Adjusted Earnings per common share (Non-GAAP):

Diluted

Shares used in computing adjusted earnings per common share:

Diluted

Year Ended December 31, 2017

$

$

$

$

55,419

4,780

29,145

64,250
153,594
(604)
9,755

2,500

12,783

178,028
(30,585)
(24,660)
(15,100)
(581)
107,102

0.76

1.47

72,872,188

1)  Represents the elimination of non-cash equity earnings from our 19.99% equity investment in Dominican Republic, 

Consorcio de Tarjetas Dominicanas, S.A. (“CONTADO”). 

2)  Primarily represents share-based compensation and other compensation expense.
3)  Represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, recorded as 
part of selling, general and administrative expense and cost of revenues, as well as relief contributions related to the 
Hurricanes.
Impairment charge and contractual fee accrual for a third party software solution that was determined to be 
commercially unviable.

4) 

5)  Represents operating depreciation and amortization expense, which excludes amounts generated as a result of the 

Merger and other from purchase accounting intangibles generated from acquisitions.

6)  Represents interest expense, less interest income, as they appear on our consolidated statements of income and 

comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of 
discount.

7)  Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate.
8)  Represents the 35% non-controlling equity interest in Processa, net of amortization for intangibles created as part of 

the purchase.

52

 
Contractual Obligations

The Company’s contractual obligations as of December 31, 2017 are as follows:

(Dollar amounts in thousands)
Long-term debt (1)
Operating leases (2)
Short-term borrowings (3)
Other long-term liabilities

Total

Payment due by periods

Less than
1 year

1-3 years

3-5 years

After 5 years

Total
662,480

$

17,872

12,180

1,374

$

70,039

$

592,441

$

— $

7,482

12,180

631

10,390

—

743

—

—

—

$

693,906

$

90,332

$

603,574

$

— $

—

—

—

—

—

(1)  Long-term debt includes principal balance of $624.8 million and the payments of cash interest (based on interest rates 
as of December 31, 2017 for variable rate debt) and aggregate principal amount of the senior secured term loan 
facilities, as well as commitments fees related to the unused portion of our senior secured revolving credit facility, as 
required under the terms of the long-term debt agreements.

(2)  Includes certain facilities and equipment under operating leases. See Note 22 of the Notes to Audited Consolidated 

Financial Statements for additional information regarding operating lease obligations.

(3)  Excludes the payments of cash interest related to the outstanding portion of the senior secured revolving credit facility 

as of December 31, 2017.

Off Balance Sheet Arrangements

In the ordinary course of business the Company may enter into commercial commitments. As of December 31, 2017, the 
Company did not have any off balance sheet items.

Seasonality

Our payment businesses generally experience moderate increased activity during the traditional holiday shopping periods and 
around other nationally recognized holidays, which follow consumer spending patterns.

Effect of Inflation

While inflationary increases in certain inputs costs, such as occupancy, labor and benefits, and general administrative costs, 
have an impact on our operating results, inflation has had minimal net impact on our operating results during the last three 
years as overall inflation has been partially offset by increased margins on incremental revenue and cost reduction actions. We 
cannot assure you, however, that we will not be affected by general inflation in the future.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks arising from our normal business activities. These market risks principally involve the 
possibility of change in interest rates that will adversely affect the value of our financial assets and liabilities or future cash 
flows and earnings. Market risk is the potential loss arising from adverse changes in market rates and prices.

Interest rate risks

We issued floating-rate debt which is subject to fluctuations in interest rates. Our senior secured credit facilities accrue interest 
at variable rates and only the Term B Loan is subject to floors or minimum rates. A 100 basis point increase in interest rates 
over our floor(s) on our debt balances outstanding as of December 31, 2017, under the senior secured credit facilities would 
increase our annual interest expense by approximately $4.1 million. The impact on future interest expense as a result of future 
changes in interest rates will depend largely on the gross amount of our borrowings at that time.

In December 2015, we entered into an interest rate swap agreement with a notional amount of $200 million, which represents 
approximately 32% of our outstanding debt. Under this agreement, that began on January 1, 2017, we will receive a rate equal 

53

 
 
 
to the LIBOR rate applicable to our Term B loan, and pay a fixed rate equal to 1.9225%. The net effect of the swap agreement 
is to fix the interest rate on $200 million of our Term B loan at approximately 4.5%, which began on January 1, 2017 and will 
end when the Term B loan matures, in April 2020.

The interest rate swap exposes us to credit risk in the event that the counterparty to the swap agreement does not or cannot meet 
its obligations. The notional amount is used to measure interest to be paid or received and does not represent the amount of 
exposure to credit loss. The loss would be limited to the amount that would have been received, if any, over the remaining life 
of the swap. The counterparty to the swap is a major US based financial institution and we expect the counterparty to be able to 
perform its obligations under the swap. We use derivative financial instruments for hedging purposes only and not for trading 
or speculative purposes

See Note 12 of the Notes to Audited Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-
K for additional information related to the senior secured credit facilities.

Foreign exchange risk

We conduct business in certain countries in Latin America. Some of this business is conducted in the countries’ local 
currencies. The resulting foreign currency translation adjustments, from operations for which the functional currency is other 
than the U.S. dollar, are reported in accumulated other comprehensive loss in the audited consolidated balance sheet, except for 
highly inflationary environments in which the effects would be included in other operating income in the consolidated 
statements of income and comprehensive income. At December 31, 2017, the Company had $11.1 million in an unfavorable 
foreign currency translation adjustment as part of accumulated other comprehensive loss compared to an unfavorable foreign 
currency translation adjustment of $10.4 million at December 31, 2016.

54

Item 8. Financial Statements and Supplementary Data

The Audited Consolidated Financial Statements, together with EVERTEC’s independent registered public accounting firms 
reports, are included herein beginning on page F-1 of this Annual Report on Form 10-K.

Selected Quarterly Financial Data

Quarters ended,

(Dollar amounts in thousands, except per share data)
Revenues

March 31, 2017

June 30, 2017

$

101,280

$

103,511

September 30, 2017
102,725
$

December 31, 2017
99,628
$

Operating costs and expenses

Income from operations

Non-operating expenses

Income before income taxes

Income tax expense (benefit)

Net income

Net income attributable to EVERTEC, Inc.’s
common stockholders

Net income per common share - basic

Net income per common share - diluted

(Dollar amounts in thousands, except per share data)
Revenues

Operating costs and expenses

Income from operations

Non-operating expenses

Income before income taxes

Income tax expense

Net income

Net income attributable to EVERTEC, Inc.’s
common stockholders

Net income per common share - basic
Net income per common share - diluted

$

$

$

$

$

$

$

$

$

70,688

30,592
(5,434)
25,158

2,020

23,138

23,029

0.32

0.31

$

$

$

$

93,917

8,808
(7,506)
1,302
(4,840)
6,142

6,102

0.08

0.08

$

$

$

$

73,517

29,994
(5,712)
24,282

4,068

20,214

20,089

0.28

0.27

$

$

$

$

Quarters ended,

82,939

16,689
(7,232)
9,457

3,532

5,925

5,834

0.08

0.08

March 31, 2016

June 30, 2016

95,479

$

68,913

26,566
(5,523)
21,043

1,876

19,167

19,148

0.26

0.26

$

$

$

$

97,672

69,480

28,192
(5,157)
23,035

2,801

20,234

20,235

0.27

0.27

September 30, 2016
94,467
$

December 31, 2016
101,889
$

67,460

27,007
(5,657)
21,350

1,639

19,711

19,680

0.27

0.26

$

$

$

$

76,509

25,380
(7,411)
17,969

1,955

16,014

15,972

0.22

0.22

$

$

$

$

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures 

Evaluation of Disclosure Controls and Procedures 

The Company, under the direction of the Chief Executive Officer and the Chief Financial Officer, has established disclosure 
controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange 
Act”).  Based upon their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of 
December 31, 2017, the Company’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting 

55

 
 
 
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2017 that have 
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting 

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 
13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of 
our Chief Executive Officer and Chief Financial Officer and effected by the Company’s board of directors, management, and other 
personnel 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. Because of its inherent limitations, internal 
control over financial reporting may not prevent or detect misstatements.  

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in 
reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions 
are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting 
principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the 
directors of the firm; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use 
or disposition of the firm’s assets that could have a material effect on our financial statements.

The Company’s management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017. 
In making this assessment, management used the criteria established in the Internal Control-Integrated Framework (2013) issued 
by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). Based on this assessment, 
management has determined that the Company’s internal control over financial reporting as of December 31, 2017 was effective.
As  permitted  by  the  SEC  staff’s  Frequently Asked  Question  3  on  Management’s  Report  on  Internal  Control  Over  Financial 
Reporting  and  Certification  of  Disclosure  in  Exchange Act  Periodic  Reports  (revised  September  24,  2007),  our  management 
excluded  PayGroup,  which  was  acquired  on  July  3,  2017,  from  our  assessment  of  internal  control  over  financial  reporting 
effectiveness as of December 31, 2017. PayGroup represented approximately 6% of consolidated total assets and approximately 
3% of consolidated total revenues, included in our Consolidated Financial Statements as of and for the year ended December 31, 
2017. 

Deloitte & Touche, LLP, an independent registered public accounting firm, has audited the consolidated financial statements as 
of and for the year ended December 31, 2017, included in this Form 10-K and, as part of the audit, has issued a report, included 
as part of Item 8 of this Form 10-K, on the effectiveness of our internal control over financial reporting as of December 31, 
2017.

Item 9B. Other Information

None.

56

Item 10. Directors, Executive Officers and Corporate Governance

Part III

The information required by Item 10 will be included in EVERTEC's proxy statement, to be filed pursuant to Regulation 14 A 
within 120 days after the end of the 2017 fiscal year, and is incorporated herein by reference.

Item 11. Executive Compensation

The information required by Item 11 will be included in EVERTEC's proxy statement, to be filed pursuant to Regulation 14 A 
within 120 days after the end of the 2017 fiscal year, and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 will be included in EVERTEC's proxy statement, to be filed pursuant to Regulation 14 A 
within 120 days after the end of the 2017 fiscal year, and is incorporated herein by reference.

Item 13. Certain Relationships and Related Party Transactions and Director Independence

The information required by Item 13 will be included in EVERTEC's proxy statement, to be filed pursuant to Regulation 14 A 
within 120 days after the end of the 2017 fiscal year, and is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

The information required by Item 14 will be included in EVERTEC's proxy statement, to be filed pursuant to Regulation 14 A 
within 120 days after the end of the 2017 fiscal year, and is incorporated herein by reference.

Part IV

57

Pursuant to the requirements of Section 13 or 15(d) 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,

SIGNATURES

Date: February 28, 2018

EVERTEC, Inc.

By:

/s/ Morgan M. Schuessler, Jr.
Morgan M. Schuessler, Jr.
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following 

persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Morgan M. Schuessler, Jr.
Morgan M. Schuessler, Jr.

     Chief Executive Officer (Principal Executive
     Officer)

February 28, 2018

/s/ Peter J.S. Smith

Peter J.S. Smith

/s/ Frank G. D’Angelo

Frank G. D’Angelo

/s/ Teresita Loubriel

Teresita Loubriel

     Chief Financial Officer (Principal Financial and

February 28, 2018

     Accounting Officer)

     Chairman of the Board

February 28, 2018

     Director

February 28, 2018

/s/ Alan H. Schumacher

     Director

February 28, 2018

Alan H. Schumacher

/s/ Thomas W. Swidarski

     Director

February 28, 2018

Thomas W. Swidarski

/s/ Jorge A. Junquera

Jorge A. Junquera

/s/ Nestor O. Rivera

Nestor O. Rivera

/s/ Olga M. Botero

Olga M. Botero

/s/ Brian J. Smith

Brian J. Smith

     Director

     Director

     Director

     Director

58

February 28, 2018

February 28, 2018

February 28, 2018

February 28, 2018

 
 
 
 
 
 
    
 
 
 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Audited Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December  31, 2017 and 2016

Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2017, 2016 and 
2015

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2017, 2016 and 
2015

Consolidated Statements of Cash Flows for the years ended December  31, 2017, 2016 and 2015

Notes to Audited Consolidated Financial Statements

Schedule I

F - 2

F - 4

F - 5

F - 6

F - 7

F - 8

F - 40

F - 1

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of EVERTEC, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of EVERTEC, Inc. and subsidiaries (the “Company”) as of 
December 31, 2017 and 2016, the related consolidated statements of income and comprehensive income, shareholders’ equity, 
and cash flows, for each of the three years in the period ended December 31, 2017, and the related notes and the schedules 
listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements 
present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results 
of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with 
accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) 
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in 
Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway 
Commission, and our report dated February 28, 2018, expressed an unqualified opinion on the Company’s internal control over 
financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on 
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are 
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable 
rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the 
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to 
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial 
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included 
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included 
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall 
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

San Juan, Puerto Rico
February 28, 2018 
Stamp No. E308482
affixed to original

We have served as the Company’s auditor since 2015.

F - 2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of EVERTEC, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of EVERTEC, Inc. and subsidiaries (the “Company”) as of 
December 31, 2017, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of 
Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material 
respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal 
Control-Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) 
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2017, of the Company and our 
report dated February 28, 2018, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment 
the internal control over financial reporting at PayGroup, which was acquired on July 3, 2017, and whose financial statements 
constitute 6% of consolidated total assets and 3% of consolidated total revenues as of and for the year ended December 31, 
2017. Accordingly, our audit did not include the internal control over financial reporting at PayGroup.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its 
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report 
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control 
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be 
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and 
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the 
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all 
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk 
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the 
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit 
provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures 
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and 
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit 
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and 
expenditures of the company are being made only in accordance with authorizations of management and directors of the 
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or 
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate 
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP
San Juan, Puerto Rico
February 28, 2018 
Stamp No. E308483
affixed to original

F - 3

EVERTEC, Inc. Consolidated Balance Sheets
(Dollar amounts in thousands, except share data)

Assets
Current Assets:

Cash and cash equivalents

Restricted cash

Accounts receivable, net

Prepaid expenses and other assets

Total current assets

Investment in equity investee

Property and equipment, net

Goodwill

Other intangible assets, net

Other long-term assets

Total assets

Liabilities and stockholders’ equity

Current Liabilities:

Accrued liabilities

Accounts payable

Unearned income

Income tax payable

Current portion of long-term debt

Short-term borrowings

Total current liabilities

Long-term debt

Deferred tax liability

Unearned income—long-term

Other long-term liabilities

Total liabilities

Commitments and contingencies (Note 22)

Stockholders’ equity

Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued

—

Common stock, par value $0.01; 206,000,000 shares authorized;
72,393,933 shares issued and outstanding at December 31, 2017
(December 31, 2016 - 72,635,032)

Additional paid-in capital

Accumulated earnings

Accumulated other comprehensive loss, net of tax

Total EVERTEC, Inc. stockholders’ equity

Non-controlling interest

Total equity

Total liabilities and equity

723

5,350

148,887
(10,848)
144,112

3,864

147,976

$

902,788

$

The accompanying notes are an integral part of these audited consolidated financial statements.

F - 4

December 31,
2017

December 31,
2016

$

50,423

$

$

$

9,944

83,328

25,011

168,706

13,073

37,924

398,575

279,961

4,549
902,788

$

38,451

$

41,135

7,737

1,406

46,487

12,000

147,216

557,251

13,820

23,486

13,039

754,812

51,920

8,112

77,803

20,430

158,265

12,252

38,930

370,986

299,119

6,110
885,662

34,243

40,845

4,531

1,755

19,789

28,000

129,163

599,667

14,978

17,303

16,376

777,487

—

726

—

116,341
(12,391)
104,676

3,499

108,175

885,662

EVERTEC, Inc. Consolidated Statements of Income and Comprehensive Income
(Dollar amounts in thousands, except per share data)

Revenues (affiliates Note 21)

$

407,144

$

389,507

$

373,528

Years ended December 31,

2017

2016

2015

Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization shown
below

Selling, general and administrative expenses

Depreciation and amortization

Total operating costs and expenses

Income from operations
Non-operating income (expenses)
Interest income

Interest expense

Earnings (losses) of equity method investment

Other income, net

Total non-operating expenses

Income before income taxes

Income tax expense (benefit)

Net income

Less: Net income attributable to non-controlling interest

Net income attributable to EVERTEC, Inc.’s common
stockholders

Other comprehensive income (loss), net of tax of $122, $176 and $8

Foreign currency translation adjustments

Gain (loss) on cash flow hedge
Total comprehensive income attributable to EVERTEC, Inc.’s 
common stockholders

Net income per common share - basic attributable to EVERTEC, 
Inc.’s common stockholders

Net income per common share - diluted attributable to 
EVERTEC, Inc.’s common stockholders

Cash dividends declared per share

$

$

$

$

200,650

56,161

64,250

321,061

86,083

716
(29,861)
604
2,657
(25,884)
60,199

4,780

55,419

365

55,054

(635)
2,178

56,597

0.76

0.76

0.30

$

$

$

$

175,809

46,986

59,567

282,362

107,145

377
(24,617)
(52)
544
(23,748)
83,397

8,271

75,126

90

75,036

(3,360)
(1,449)

70,227

1.01

1.01

0.40

$

$

$

$

167,916

37,278

64,974

270,168

103,360

495
(24,266)
147
2,306
(21,318)
82,042
(3,335)
85,377

—

85,377

(545)
(515)

84,317

1.11

1.11

0.40

The accompanying notes are an integral part of these audited consolidated financial statements.

F - 5

 
 
 
 
EVERTEC, Inc. Consolidated Statements of Changes in Stockholders’ Equity
(Dollar amounts in thousands, except share data)

Number of
Shares of
Common Stock

Common
Stock

Additional
Paid-in
Capital

Accumulated
Earnings

Accumulated
Other
Comprehensive
Loss

Non-
Controlling 
Interest

Total
Stockholders’
Equity

77,893,144

$

779

$

59,740

$

40,843

$

(6,522) $

— $

94,840

Balance at December 31,
2014

Share-based 
compensation recognized
Restricted stock grants 
and units delivered, net of 
cashless exercise

Repurchase of common 
stock
Net income

Cash dividends declared 
on common stock
Other comprehensive loss

Balance at December 31,
2015

Share-based 
compensation recognized
Repurchase of common 
stock
Stock options exercised, 
net of cashless exercise
Restricted stock grants 
and units delivered, net of 
cashless exercise

Net income 

Non-controlling interest 
on acquisition
Cash dividend declared on 
common stock
Dividend reversal for 
forfeited options
Other comprehensive loss

Cumulative adjustment 
from implementation of 
ASU 2016-09
Share-based 
compensation recognized

Repurchase of common 
stock
Restricted stock grants 
and units delivered, net of 
cashless exercise

Stock options exercised, 
net of cashless exercise
Net income

Cash dividends declared 
on common stock

Other comprehensive 
income

Balance at December 31,
2017

—

107,892

—

1

5,204

(307)

(3,012,826)

(30)

(54,919)

—

—

—

74,988,210

—

—

—

—

750

—

—

—

—

9,718

6,408

—

—

—

85,377

(30,892)

—

95,328

—

(2,504,427)

(25)

(15,594)

(24,327)

8,393

142,856

—

—

—

—

—

—

1

—

—

—

—

—

—

—

—

(79)

(471)

—

—

—

18

—

—

—

9,642

215,343

8,798

—

—

—

2

—

—

—

—

(1,499)

(91)

—

—

—

—

—

75,036

—

(29,696)

—

—

4,203

—

—

—

55,054

(21,747)

(465,240)

(5)

(2,702)

(4,964)

—

—

—

—

—

(1,060)

(7,582)

—

—

—

—

—

—

—

—

(4,809)

—

—

—

—

—

—

—

—

—

—

90

5,204

(306)

(54,949)

85,377

(30,892)

(1,060)

98,214

6,408

(39,946)

(79)

(470)

75,126

3,409

3,409

—

—

—

(29,696)

18

(4,809)

—

—

—

—

—

—

—

—

—

—

—

—

365

—

—

4,203

9,642

(7,671)

(1,497)

(91)

55,419

(21,747)

1,543

Balance at December 31,
2016

72,635,032

726

116,341

(12,391)

3,499

108,175

72,393,933

$

723

$

5,350

$

148,887

$

(10,848) $

3,864

$

147,976   

—

1,543

The accompanying notes are an integral part of these audited consolidated financial statements.

F - 6

EVERTEC, Inc. Consolidated Statements of Cash Flows
(Dollar amounts in thousands)

Cash flows from operating activities

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Amortization of debt issue costs and accretion of discount

Loss on extinguishment of debt
Provision for doubtful accounts and sundry losses
Deferred tax benefit
Share-based compensation
Loss on impairment of software
Loss on disposition of property and equipment and other intangibles
(Earnings) losses of equity method investment
(Increase) decrease in assets:

Accounts receivable
Prepaid expenses and other assets
Other long-term assets
Increase (decrease) in liabilities:

Accounts payable and accrued liabilities
Income tax payable
Unearned income
Other long-term liabilities
Total adjustments

Net cash provided by operating activities

Cash flows from investing activities
Net (increase) decrease in restricted cash
Additions to software and purchase of customer relationship
Acquisitions, net of cash acquired
Property and equipment acquired
Proceeds from sales of property and equipment

Net cash used in investing activities

Cash flows from financing activities
Proceeds from issuance of long-term debt
Debt issuance costs
Net (decrease) increase in short-term borrowings
Repayments of borrowings for purchase of equipment and software
Dividends paid
Withholding taxes paid on share-based compensation
Repurchase of common stock
Repayment of long-term debt
Credit amendment fees

Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
Supplemental disclosure of cash flow information:

Cash paid for interest
Cash paid for income taxes
Supplemental disclosure of non-cash activities:

Years ended December 31,

2017

2016

2015

$

55,419

$

75,126

$

85,377

64,250

5,128

—
843
(4,306)
9,642
11,441
430
(604)

(2,099)
(4,048)
1,654

(870)
(349)
8,444
811
90,367
145,786

(1,832)
(22,174)
(42,836)
(11,290)
32
(78,100)

—
—
(16,000)
(2,373)
(21,762)
(1,588)
(7,671)
(19,789)
—
(69,183)
(1,497)
51,920
50,423

25,379
9,930

$

$

59,567

4,334

1,476
1,990
(4,594)
6,408
2,277
453
52

(2,583)
(1,426)
(1,790)

14,594
405
8,018
3,747
92,928
168,054

3,705
(23,819)
(15,600)
(18,450)
81
(54,083)

75,763
(4,830)
11,000
(2,213)
(29,696)
(548)
(39,946)
(96,741)
(3,587)
(90,798)
23,173
28,747
51,920

22,535
8,697

$

$

64,974

3,329

—
2,130
(3,090)
5,204
—
143
(147)

(4,482)
(146)
(70)

15,947
(606)
2,207
(8,351)
77,042
162,419

(6,100)
(25,960)
—
(21,022)
14
(53,068)

—
—
(6,000)
(1,542)
(30,921)
(306)
(54,949)
(19,000)
—
(112,718)
(3,367)
32,114
28,747

21,497
5,682

$

$

Payable due to vendor related to property and equipment and software
acquired

1,037

3,302

3,638

The accompanying notes are an integral part of these audited consolidated financial statements.

F - 7

 
 
Notes to Audited Consolidated Financial Statements

Note 1 – The Company and Summary of Significant Accounting Policies

Note 2 – Recent Accounting Pronouncements

Note 3 – Business Combination

Note 4 – Cash and cash equivalents

Note 5 – Accounts Receivable, Net

Note 6 – Prepaid Expenses and Other Assets

Note 7 – Investment in Equity Investee

Note 8 – Property and Equipment, net

Note 9 – Goodwill

Note 10 – Other Intangible Assets, net

Note 11 – Other Long-Term Assets

Note 12 – Debt and Short-Term Borrowings

Note 13 – Financial Instruments and Fair Value Measurements

Note 14 – Other Long Term Liabilities

Note 15 – Equity

Note 16 – Share-based Compensation

Note 17 – Employee Benefit Plan

Note 18 – Total Other Income, net

Note 19 – Income Tax

Note 20 – Net Income Per Common Share

Note 21 – Related Party Transactions

Note 22 – Commitments and Contingencies

Note 23 – Segment Information

Note 24 – Subsequent Events

F - 9

F - 15

F - 17

F - 18

F - 18

F - 18

F - 19

F - 19

F - 21

F - 21

F - 21

F - 23

F - 25

F - 26

F - 27

F - 27

F - 29

F - 30

F - 30

F - 34

F - 34

F - 35

F - 36

F - 39

F - 8

 
 
EVERTEC, Inc. Notes to Consolidated Financial Statements

Note 1—The Company and Summary of Significant Accounting Policies

The Company

EVERTEC, Inc. (formerly known as Carib Latam Holdings, Inc.) and its subsidiaries (collectively the “Company,” or 
“EVERTEC”) is a leading full-service transaction processing business in Latin America and the Caribbean. The Company is 
based in Puerto Rico and provides a broad range of merchant acquiring, payment services and business process management 
services across 26 countries in the region. EVERTEC owns and operates the ATH network, one of the leading automated teller 
machine (“ATM”) and personal identification number (“PIN”) debit networks in Latin America. In addition, EVERTEC 
provides a comprehensive suite of services for core bank processing, cash processing and technology outsourcing in the regions 
the Company serves. EVERTEC serves a broad and diversified customer base of leading financial institutions, merchants, 
corporations and government agencies with solutions that are essential to their operations, enabling them to issue, process and 
accept transactions securely.

Initial Public Offering and Other Public Offerings

On April 17, 2013, the Company completed its initial public offering of 28,789,943 shares of common stock at a price to the 
public of $20.00 per share. On September 18, 2013 and December 13, 2013 the Company completed a public offerings of 
23,000,000 and  15,233,273 shares, respectively, of the Company’s common stock by Apollo Global Management, LLC 
("Apollo") and Popular, Inc. ("Popular"), and current and former employees. After the completion of the offerings, Popular 
owned approximately 11.7 million shares of EVERTEC's common stock, or 16.1% as of December 31, 2017, and Apollo no 
longer owns any of the Company’s common stock.

Basis of Presentation 

The consolidated financial statements of EVERTEC have been prepared in accordance with accounting principles generally 
accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying consolidated financial 
statements, prepared in accordance with GAAP, contain all adjustments, all of which are normal and recurring in nature, 
necessary for a fair presentation. 

A summary of the most significant accounting policies used in preparing the accompanying consolidated financial statements is 
as follows: 

Principles of Consolidation 

The accompanying consolidated financial statements include the accounts and operations of the Company, which are presented 
in accordance with GAAP. The Company consolidates all entities that are controlled by ownership of a majority voting interest. 
Intercompany accounts and transactions are eliminated in the consolidated financial statements. 

Use of Estimates 

The preparation of the accompanying consolidated financial statements requires management to make estimates and 
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the 
date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. 

Revenue Recognition 

The Company’s revenue recognition policy follows the guidance from Accounting Standards Codification (“ASC”) 605 
Revenue Recognition; ASC 605-25, Revenue Recognition—Multiple Element Arrangements; and; ASC 985, Software, which 
provide guidance on the recognition, presentation, and disclosure of revenue in consolidated financial statements. 
The Company recognizes revenue when the following four criteria are met: (i) persuasive evidence of an agreement exists, (ii) 
delivery and acceptance has occurred or services have been rendered, (iii) the selling price is fixed or determinable, and (iv) 
collection is reasonably assured. For multiple deliverable arrangements, EVERTEC evaluates each arrangement to determine if 
the elements or deliverables within the arrangement represent separate units of accounting pursuant to ASC 605-25. If the 
deliverables are determined to be separate units of accounting, revenues are recognized as units of accounting are delivered and 
the revenue recognition criteria are met. If the deliverables are not determined to be separate units of accounting, revenues for 
the delivered services are combined into one unit of accounting and recognized (i) over the life of the arrangement if all 

F - 9

EVERTEC, Inc. Notes to Consolidated Financial Statements

services are consistently delivered over such term, or if otherwise, (ii) at the time that all services and deliverables have been 
delivered. The selling price for each deliverable is based on vendor specific objective evidence (“VSOE”) if available, third 
party evidence (“TPE”) if VSOE is not available, or management best estimate of selling price (“BESP”) if neither VSOE nor 
TPE is available. EVERTEC establishes VSOE of selling price using the price charged when the same element is sold 
separately. EVERTEC bifurcates or allocates the arrangement consideration to each of the deliverables based on the relative 
selling price of each unit of accounting. 

The Company has two main categories of revenues according to the type of transactions EVERTEC enters into with the 
Company’s customers: (a) transaction-based fees and (b) fixed fees and time and material. 

Transaction-based fees 

The Company provides services that generate transaction-based fees. Typically transaction-based fees depend on factors such as 
number of accounts or transactions processed. These factors typically consist of a fee per transaction or item processed, a 
percentage of dollar volume processed or a fee per account on file, or some combination thereof. Revenue derived from the 
transaction-based fee contracts are recognized when the underlying transaction is processed, which constitutes delivery of 
service. 

Revenues from business contracts in the Company’s Merchant Acquiring segment are primarily comprised of discount fees 
charged to the merchants based on the sales amount of transactions processed. Revenues include a discount fee and membership 
fees charged to merchants and debit network fees as well as point-of-sale (“POS”) rental fees. Pursuant to the guidance from 
ASC 605-45-45, Revenue Recognition—Principal Agent Considerations, EVERTEC records Merchant Acquiring revenues net 
of interchange and assessments charged by the credit and debit card network associations and recognizes such revenues at the 
time of the sale (when a transaction is processed). 

Payment services revenues are comprised of revenues related to providing access to the ATH network and other card networks 
to financial institutions, and related services. Payment services revenues also include revenues from card issuer processing 
services (such as credit and debit card processing, authorization and settlement, and fraud monitoring and control to debit or 
credit card issuers), payment processing services (such as payment and billing products for merchants, businesses and financial 
institutions) and electronic benefit transfer (“EBT”) (which principally consists of services to the Puerto Rico government for 
the delivery of government benefits to participants). Revenues in EVERTEC’s Payment Services segments are primarily 
comprised of fees per transaction processed or per account on file, or a combination of both, and are recognized at the time 
transactions are processed or on a monthly basis for accounts on file. 

Transaction-based fees within EVERTEC’s Business Solutions segment consist of revenues from business process management 
solutions including core bank processing, business process outsourcing, item and cash processing, and fulfillment. Transaction-
based fee revenues generated by the Company’s core bank processing services are derived from fees based on various factors 
such as the number of accounts on file (e.g. savings or checking accounts, loans, etc.), and the number of transactions processed 
or registered users (e.g. for online banking services). For services dependent on the number of transactions processed, revenues 
are recognized as the underlying transactions are processed. For services dependent on the number of users or accounts on file, 
revenues are recognized on a monthly basis based on the number of accounts on file each month. Item and cash processing 
revenues are based upon the number of items (e.g. checks) processed and revenues are recognized when the underlying item is 
processed. Fulfillment services include technical and operational resources for producing and distributing variable print 
documents such as statements, bills, checks and benefits summaries. Fulfillment revenues are based upon the number pages for 
printing services and the number of envelopes processed for mailing services. Revenues are recognized as services are 
delivered based on a fee per page printed or envelope mailed, as applicable. 

Fixed fees and time and material 

The Company also provides services that generate a fixed fee per month or fees based on time and expenses incurred. These 
services are mostly provided in EVERTEC’s Business Solutions segment. Revenues are generated from EVERTEC’s core bank 
solutions, network hosting and management and IT consulting services. 

In core bank solutions, the Company mostly provides access to applications and services such as back-up or recovery, hosting 
and maintenance that enable a bank to operate the related hosted services accessing the Company’s IT infrastructure. These 
contracts generally contain multiple elements or deliverables which are evaluated by EVERTEC and revenues are recognized 
according to the applicable guidance. Revenue is derived from fixed fees charged for the use of hosted services and are 

F - 10

EVERTEC, Inc. Notes to Consolidated Financial Statements

recognized on a monthly basis as delivered. Set-up fees are billed to the customer when the service is rendered; however, they 
are deferred and recognized as revenues over the term of the arrangement or the expected period of the customer relationship, 
whichever is longer, as set-up services rarely provide value to the customer on a stand-alone basis and are interrelated with the 
service to be provided under the contract. 

In network hosting and management, EVERTEC provides hosting services for network infrastructure at EVERTEC’s facilities; 
automated monitoring services; maintenance of call centers; interactive voice response solutions, among other related services. 
Revenues are primarily derived from monthly fees as services are delivered. Set-up fees are billed up-front to the customer 
when the set-up service is rendered; however, they are deferred and recognized as revenues over the term of the arrangement or 
the expected period of the customer relationship, whichever is longer, as set-up services rarely provide value to the customer on 
a stand-alone basis and are interrelated with the service under the contract. There are some arrangements under this line of 
service category that may contain undelivered elements. In such cases, the undelivered elements are evaluated and recognized 
when the services are delivered or at the time that all deliverables under the contract have been delivered. 

IT consulting services revenue primarily consists of time billings based upon the number of hours dedicated to each client. 
Revenue from time billings are recognized as services are delivered. 

EVERTEC also charges members of the ATH network an annual membership fee; however, these fees are deferred and 
recognized as revenues on a straight-line basis over the year and recorded in the Company’s Payment Services segments. In 
addition, occasionally EVERTEC is a reseller of hardware and software products and revenues from these resale transactions 
are recognized when such product is delivered and accepted by the client. 

Service level arrangements 

The Company’s service contracts may include service level arrangements (“SLA”) generally allowing the customer to receive a 
credit for part of the service fee when the Company has not provided the agreed level of services. The SLA performance 
obligation is committed on a monthly basis, thus SLA performance is monitored and assessed for compliance with 
arrangements on a monthly basis, including determination and accounting for its economic impact, if any.

Investment in Equity Investee

The Company accounts for investments using the equity method of accounting if the investment provides the Company the 
ability to exercise significant influence, but not control, over an investee. Significant influence is generally deemed to exist if 
the Company has an ownership interest in the voting stock of an investor of between 20 percent and 50 percent, although other 
factors are considered in determining whether the equity method of accounting is appropriate. Under this method, the 
investment, originally recorded at cost, is adjusted to recognize the Company’s share of net income or losses as they occur. The 
Company’s share of investee earnings or losses is recorded, net of taxes, within earnings of equity method investment caption in 
the consolidated statements of income and comprehensive income. The Company’s consolidated revenues include fees for 
services provided to an investee accounted for under the equity method. Additionally, the Company’s interest in the net assets of 
its equity method investee is reflected in the consolidated balance sheets. On the acquisition of the investment any difference 
between the cost of the investment and the amount of the underlying equity in net assets of an investee is required to be 
accounted as if the investee were a consolidated subsidiary. If the difference is assigned to depreciable or amortizable assets or 
liabilities, then the difference should be amortized or accreted in connection with the equity earnings based on the Company’s 
proportionate share of the investee’s net income or loss. If the investor is unable to relate the difference to specific accounts of 
the investee, the difference should be considered to be goodwill. 

The Company considers whether the fair value of its equity method investment has declined below its carrying value whenever 
adverse events or changes in circumstances indicate that recorded values may not be recoverable. If the Company considered 
any such decline to be other than temporary (based on various factors, including historical financial results, product 
development activities and the overall health of the investee’s industry), then the Company would record a write-down to 
estimated fair value.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation of property and 
equipment is computed using the straight-line method and expensed over their estimated useful lives. Amortization of leasehold 
improvements is computed over the terms of the respective leases, including renewal options considered by management to be 

F - 11

EVERTEC, Inc. Notes to Consolidated Financial Statements

reasonably assured of being exercised, or the estimated useful lives of the improvements, whichever is shorter. Costs of 
maintenance and repairs which do not improve or extend the life of the respective assets are expensed as incurred.

Impairment on Long-lived Assets

Long-lived assets to be held and used, and long-lived assets to be disposed of, are evaluated for impairment whenever events or 
changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Capitalization of Software

EVERTEC Group LLC (“EVERTEC Group”), EVERTEC’s main operating subsidiary, develops software that is used in 
providing processing services to customers. Capitalized software includes purchased software and internally-developed 
software and is recognized as software packages within the other intangible assets line item in the consolidated balance sheets. 
Capitalization of internally developed software occurs only after the preliminary project stage is complete and technological 
feasibility has been achieved, and management’s estimation that the likelihood of successful development and implementation 
reaches a provable level. Tasks that are generally capitalized are as follows: (a) system design of a chosen path including 
software configuration and software interfaces; (b) employee costs directly associated with the internal-use computer software 
project; (c) software development (coding) and software and system testing and verification; (d) system installation; and 
(e) enhancements that add function and are considered permanent. These tasks are capitalized and amortized using the straight 
line method over its estimated useful life, which range from three to ten years and is included in depreciation and amortization 
in the consolidated statements of income and comprehensive income.

The Company capitalizes interest costs incurred in the development of software. The amount of interest capitalized is an 
allocation of the interest cost incurred during the period required to substantially complete the asset. The interest rate for 
capitalization purposes is based on a weighted average rate on the Company’s outstanding borrowing. For the years ended 
December 31, 2017, 2016 and 2015, interest cost capitalized amounted to approximately $0.8 million, $0.4 million and $0.3 
million, respectively.

Software and Maintenance Contracts

Software and maintenance contracts are recorded at cost. Amortization of software and maintenance contracts is computed 
using the straight-line method and expensed over their estimated useful lives which range from one to five years and are 
recognized in cost of revenues in the consolidated statements of income and comprehensive income.

Software and maintenance contracts are recognized as prepaid expenses and other assets or within other long-term assets 
depending on their remaining useful lives.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price and related costs over the value assigned to net assets acquired. Goodwill 
is not amortized, but is tested for impairment at least annually, or more often if events or circumstances indicate there may be 
impairment.

The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative impairment test. 
If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the 
amount of a goodwill impairment loss to be recognized (if any). The Company may assess qualitative factors to determine 
whether it is more likely than not, that is, a likelihood of more than 50 percent that the fair value of the reporting unit is less 
than its carrying amount, including goodwill. The Company has an unconditional option to bypass the qualitative assessment 
for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The Company 
may resume performing the qualitative assessment in any subsequent period. With the early adoption in December 2017 of the 
accounting standards update that simplifies the goodwill impairment test, the quantitative goodwill impairment test, used to 
identify both the existence of impairment and the amount of impairment loss, compares the fair value of a reporting unit with its 
carrying amount, including goodwill. If the Company determines to perform a quantitative impairment test, a third-party 
valuator may be engaged to prepare an independent valuation of each reporting unit. If the fair value of a reporting unit exceeds 
its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit 
exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of 
goodwill allocated to that reporting unit. Additionally, the Company shall consider the income tax effect from any tax-

F - 12

EVERTEC, Inc. Notes to Consolidated Financial Statements

deductible goodwill on the carrying amount of the reporting unit, if applicable, when measuring the goodwill impairment loss. 
For the years ended December 31, 2017, 2016 and 2015, no impairment losses associated with goodwill were recognized.

Other identifiable intangible assets with a definitive useful lives are amortized using the straight-line method or accelerated 
methods. These intangibles are evaluated periodically for impairment when events or changes in circumstances indicate that the 
carrying amounts may not be recoverable.

Other identifiable intangible assets with a definitive useful lives include customer relationships, trademarks, software packages 
and a non-compete agreement. Customer relationships were valued using the excess earnings method under the income 
approach. Trademark assets were valued using the relief-from-royalty method under the income approach. Internally developed 
software packages, which include capitalized software development costs, are recorded at cost, while software packages 
acquired as part of a business combination were valued using the relief-from-royalty method under the income approach. The 
non-compete agreement was valued based on the estimated impact that theoretical competition would have on revenues and 
expenses.

Derivative Instruments and Hedging Activities

The Company uses derivative financial instruments to enhance its ability to manage its exposure to certain financial and market 
risks. On the date the derivative instrument contract is entered into, the Company may designate the derivative as (1) a hedge of 
the fair value of a recognized asset or liability or an unrecognized firm commitment (“fair value” hedge), (2) a hedge of a 
forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash 
flow” hedge), or (3) as a “standalone” derivative instrument, including economic hedges that the Company has not formally 
documented as a fair value or cash flow hedge. Changes in the fair value of a derivative that qualifies for cash flow hedge 
accounting are recognized in Other Comprehensive Income. Amounts accumulated in other comprehensive income are 
reclassified to earnings when the related cash outflow affects earnings. Changes in the fair value of a derivative instrument that 
is highly effective and that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged 
asset or liability that is attributable to the hedged risk (including gains or losses on firm commitments), are recorded in current-
period earnings. Similarly, the changes in the fair value of stand-alone derivative instruments or derivatives not qualifying or 
designated for hedge accounting are reported in current-period earnings. The Company recognizes all derivative financial 
instruments in the Consolidated Balance Sheets as assets or liabilities at fair value. The Company does not enter into derivative 
financial instruments for speculative purposes. 

Income Tax

Income taxes are accounted for under the asset and liability method. A temporary difference refers to a difference between the 
tax basis of an asset or liability, determined based on recognition and measurement requirements for tax positions, and its 
reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported 
amount of the asset or liability is recovered or settled, respectively. Deferred tax assets and liabilities represent the future effects 
on income taxes that result from temporary differences and carryforwards that exist at the end of a period. Deferred tax assets 
and liabilities are measured using enacted tax rates and provisions of the enacted tax law and are not discounted to reflect the 
time-value of money. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated 
statements of income and comprehensive income in the period that includes the enactment date. A deferred tax valuation 
allowance is established if it is considered more likely than not that all or a portion of the deferred tax asset will not be realized. 

The Company recognizes the benefit of uncertain tax positions only if it is more likely than not that the tax position will be 
sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the 
financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent 
likelihood of being realized upon ultimate settlement or disposition of the underlying issue with the taxing authority. 
Accordingly, the amount of benefit recognized in the consolidated financial statements may differ from the amount taken or 
expected to be taken in the tax return resulting in unrecognized tax benefits (“UTBs”). The Company recognizes the interest 
and penalties associated with UTBs as part of the provision for income taxes on its consolidated statements of income and 
comprehensive income. Accrued interest and penalties are included on the related tax liability line in the consolidated balance 
sheets. 

All companies within EVERTEC are legal entities which file separate income tax returns.

F - 13

EVERTEC, Inc. Notes to Consolidated Financial Statements

Cash and cash equivalents

Cash includes cash on hand and in banks and certificates of deposits with original maturities of three months or less.

Restricted Cash

Restricted cash represents cash received on deposits from participating institutions of the ATH network that has been segregated 
for the development of the ATH brand and cash maintained as collateral for a credit facility with Popular. Also, restricted cash 
includes certain cash collected from the Ticketpop business and a reserve account for payment and transaction processing 
services to merchants. The restrictions of these accounts are based on contractual provisions entered into with third parties. This 
cash is maintained in separate accounts at a financial institution in Puerto Rico. 

Allowance for Doubtful Accounts

An allowance for doubtful accounts is provided for based on the estimated uncollectible amounts of the related receivables. The 
estimate is primarily based on a review of the current status of specific accounts receivable. Receivables are considered past 
due if full payment is not received by the contractual date. Past due accounts are generally written off against the allowance for 
doubtful accounts only after all collection attempts have been exhausted. 

Foreign Currency Translation

Assets and liabilities denominated in foreign currencies are translated to U.S. dollars using prevailing rates of exchange at the 
end of the period. Revenues, expenses, gains and losses are translated using weighted average rates for the period. The resulting 
foreign currency translation adjustment from operations for which the functional currency is other than the U.S. dollar is 
reported in accumulated other comprehensive loss. Gains and losses on transactions denominated in currencies other than the 
functional currencies are included in determining net income for the period in which exchange rates change.

Share-based Compensation

The Company estimates the fair value of stock-based awards, on a contemporaneous basis, at the date they are granted using the 
Black-Scholes-Merton option pricing model for Tranche A options and the Monte Carlo simulation analysis for Tranche B and 
Tranche C options and market based restricted stock units (“RSUs”) using the following assumptions: (1) stock price; (2) risk-
free rate; (3) expected volatility; (4) expected annual dividend yield and (5) expected term. The risk-free rate is based on the 
U.S. Constant Maturities Treasury Interest Rate as of the grant date or the yield of a 2-year or 3-year Treasury bond, as 
applicable. The expected volatility is based on a combination of historical volatility and implied volatility from publicly traded 
companies in the Company’s industry. The expected annual dividend yield is based on management’s expectations of future 
dividends as of the grant date and, in certain cases, assumes that those dividends will be reinvested over the performance 
period. The expected term for stock options granted under the 2010 Plan was based on the vesting time of the options. For the 
stock options granted under the 2013 Plan, the simplified method was used to estimate the expected term, given that the 
Company did not have appropriate exercise data on which to base the estimate nor is exercise data relating to employees of 
comparable companies easily obtainable. Performance and time based RSUs and restricted stock are valued based on the 
market price of the Company’s stock at the grant date. 

Upon option exercise or restricted stock or RSUs release, participants may elect to “net share settle”. Rather than requiring the 
participant to deliver cash to satisfy the exercise price, for options exercise, and tax withholdings, the Company withholds a 
sufficient number of shares to cover these amounts and delivers the net shares to the participant.

Net Income Per Common Share

Basic net income per common share is determined by dividing net income by the weighted-average number of common shares 
outstanding during the period.

Diluted net income per common share assumes the issuance of all potentially dilutive share equivalents using the treasury stock 
method. For stock options and RSUs it is assumed that the proceeds will be used to buy back shares. For stock options, such 
proceeds equal the average unrecognized compensation plus exercise price. For unvested restricted share units, the proceeds 
equal the average unrecognized compensation. 

F - 14

EVERTEC, Inc. Notes to Consolidated Financial Statements

Note 2—Recent Accounting Pronouncements

Recently adopted accounting pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance for accounting for employee 
share based payments. The areas for simplification in this Update involve several aspects of the accounting for share-based 
payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and 
classification on the statement of cash flows. The Company has adopted this guidance with the following effects on its 
Consolidated Financial Statements:

- All excess tax benefits and tax deficiencies should be recognized as income tax expense. This guidance was adopted 
on a modified retrospective basis with a $4.2 million cumulative impact on retained earnings and will be applied 
prospectively to all excess tax benefits and tax deficiencies resulting from settlements after the date of adoption. 
Additionally, for purposes of the diluted share count calculation for the Company's earnings per share, which is 
performed under the treasury stock method, the Company is no longer including excess tax benefits.
- Excess tax benefits should be classified along with other income tax cash flows as an operating activity. This 
guidance was adopted with no impact on the Consolidated Statement of Cash Flows and will be applied prospectively  
to all excess tax benefits resulting from settlements after the date of adoption.
- An entity can make an entity-wide accounting policy election to either estimate the number of awards that are 
expected to vest (current GAAP) or account for forfeitures when they occur. The Company has elected to account for 
forfeitures when they occur. 
- The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the 
applicable jurisdictions. The Company has adopted this guidance with no impact on its Consolidated Financial 
Statements given that withholdings are calculated using actual statutory withholding tables.
- Cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a 
financing activity. The Company adopted this guidance with no impact on its Consolidated Statement of Cash Flows as 
the Company currently classifies statutory withholding taxes paid on share-based compensation as a financing activity.

In January 2017, the FASB issued updated guidance to simplify the test for goodwill impairment. The amendments in this 
Update modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its 
implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no 
longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a 
reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The 
Company selected to early adopt this guidance for the goodwill impairment test performed as part of the reallocation of 
goodwill in connection with the Company's change in operating segments.

Recently issued accounting pronouncements

The FASB has issued the following accounting pronouncements and guidance relevant to the Company’s operations:

In February 2017, the FASB issued updated guidance clarifying the scope of asset derecognition guidance and accounting for 
partial sales of nonfinancial assets. The amendments in this Update clarify the scope of the FASB’s recently established 
guidance on nonfinancial asset derecognition (ASC 610-20) as well as the accounting for partial sales of nonfinancial assets. 
This Update conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue 
standard. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2017, 
including interim reporting periods within that reporting period. The Company is currently evaluating the impact of the 
adoption of this guidance on its consolidated financial statements, if any.

In May 2017, the FASB issued updated guidance to clarify the scope of modifications under share based compensation 
accounting. The amendments in this update provide guidance about which changes to the terms or conditions of a share-based 
payment award require an entity to apply modification accounting. The amendments in this update are effective for all entities 
for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The amendments in 
this update should be applied prospectively to an award modified on or after the adoption date. The Company will apply this 
guidance to future changes in terms and conditions of share-based payment awards.

In August 2017, the FASB issued updated guidance to improve accounting for hedging activities. The amendments in this 
update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to 

F - 15

EVERTEC, Inc. Notes to Consolidated Financial Statements

both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To 
meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components 
and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial 
statements. The amendments in this update require an entity to present the earnings effect of the hedging instrument in the same 
income statement line item in which the earnings effect of the hedged item is reported and also include certain targeted 
improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The amendments in 
this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early 
application is permitted in any interim period after issuance of the update. All transition requirements and elections should be 
applied to hedging relationships existing (that is, hedging relationships in which the hedging instrument has not expired, been 
sold, terminated, or exercised or the entity has not removed the designation of the hedging relationship) on the date of adoption. 
The effect of adoption should be reflected as of the beginning of the fiscal year of adoption (that is, the initial application date). 
The Company is currently evaluating the impact the adoption of this guidance will have on its financial statements.

Accounting pronouncements issued prior to 2017 and not yet adopted

During 2014, the FASB issued new guidance for revenue from contracts with customers, which requires an entity to recognize 
the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and also 
includes changes in the accounting for customer contract acquisition costs and fulfillment costs. During 2016, the FASB issued 
several additional updates that amended the proposed guidance. These new standards will replace most existing revenue 
recognition guidance in GAAP, and are effective for public reporting companies for interim and annual periods beginning after 
December 15, 2017. The standards permit two methods of adoption: retrospectively to each prior reporting period presented 
(the full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the 
date of initial application (the modified retrospective transition method). Management has determined to apply the new 
standards retrospectively with the cumulative effect recognized at the date of initial application, January 1, 2018. Management 
has completed its quantitative impact analysis and detailed contract reviews in order to determine the new standards impact on 
the Company’s consolidated results of operations and financial condition. Based on work performed, Management believes the 
new standards will have an impact in the following areas:

- Where the Company charges upfront fees for implementation or set-up activities, including fees charged in 
preproduction periods, the period over which these fees will be recognized may in some cases be shorter than our 
current practice.
- The Company may have certain contracts with an implicit price concession. The Company may enter into  such 
implicit price concessions subsequent to the contract inception with the expectation of accepting less than the 
contractual amount of consideration in exchange for goods or services. Price concessions reduce the transaction price 
to reflect the consideration that the Company expects to be entitled to after the concession is provided. 
- Revenue for certain professional services that are recognized upon completion of the services were evaluated under 
the new standards and determined that the revenue should be recognized over time.
- Required enhancements to current disclosures around revenue recognition.

Based on the quantitative impact analysis, the transition adjustment calculation upon adoption of the standards was not material 
to retained earnings. The Company has implemented appropriate changes to its business processes, systems and controls to 
support recognition and disclosures under the new standards.

During 2016, the FASB issued updated guidance for financial reporting about leasing transactions. The amendments in this 
Update require a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months. The recognition, 
measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its 
classification as a finance or operating lease. In addition, the Update requires that both financing and operating leases be 
recognized on the balance sheet. The guidance also requires disclosures to help investors and other financial statement users 
better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative 
and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The 
Company expects to adopt this guidance in the period required by the Update and continues to evaluate the impact that this 
Update will have on its consolidated financial statements.

During 2016, the FASB issued updated guidance for the measurement of credit losses on financial instruments. The 
amendments in this Update require a financial asset (or a group of financial assets) measured at amortized cost basis to be 
presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted 
from the amortized cost basis of the financial asset or assets to present the net carrying value at the amount expected to be 

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EVERTEC, Inc. Notes to Consolidated Financial Statements

collected on the financial asset. The measurement of expected credit losses is based on relevant information about past events, 
including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the 
reported amount. An entity must use judgment in determining the relevant information and estimation methods that are 
appropriate in its circumstances. The Company expects to adopt this guidance in the fiscal period required by this Update and 
continues to evaluate if the adoption will have an impact on the consolidated financial statements.

Note 3 – Business Combination

On July 3, 2017, EVERTEC’s main operating subsidiary, EVERTEC Group, and EVERTEC Panama, S.A. ("EVERTEC Panama") 
closed on the direct and indirect acquisition of 100% of the share capital of PayGroup, by entering into a share purchase agreement 
(Contrato de Compraventa de Acciones), by and among EVERTEC Group, EVERTEC Panama, Fondo de Inversión Privado 
Mater,  Inversiones  San  Bernardo  SpA, Asesorías  e  Inversiones  Supernova  SpA,  Inversiones  y Asesorías  Bayona  Limitada, 
Inversiones Hagerdorn y Morales Limitada, Christian Hagedorn Hitschfeld and Inversiones Vaimaca Limitada. The PayGroup 
acquisition  expands  the  Company's  presence  in  Latin America  to  eight  new  countries  and  increases  the  Company's  payment 
solutions offerings. During the third quarter of 2017, EVERTEC Panama ceased being a shareholder in PayGroup and EVERTEC 
Group became 100% owner of PayGroup.

The Company accounted for this transaction as a business combination. The following table details the fair value of assets acquired 
and liabilities assumed from the PayGroup acquisition:

(In thousands)

Cash and cash equivalents

Accounts Receivable

Prepaid expenses and other assets

Property and equipment

Long-term deferred tax asset

Goodwill

Other intangible assets

Other long-term assets

Total assets acquired

Accrued liabilities

Accounts payable

Unearned income

Long-term debt

Long-term deferred tax liability
Other long-term liabilities

Total liabilities assumed

Assets/Liabilities
(at fair value)

1,834

3,778

535

1,082

834

26,931

19,340

499

54,833

2,092

1,965

946

1,141

2,904
1,115

10,163

$

$

The following table details the major groups of intangible assets acquired and the weighted average amortization period for 
these assets:

(Dollar amounts in thousands)

Customer Relationships

Trademark or tradenames

Software packages

Total

Amount

Weighted Average Life

$

$

9,440

1,760

8,140

19,340

12

14

10

15

F - 17

EVERTEC, Inc. Notes to Consolidated Financial Statements

Refer to Note 9 Goodwill for detail of goodwill allocated by operating segments. The goodwill is primarily attributed to 
increased synergies. None of the goodwill is deductible for income tax purposes.

Revenues and earnings from the PayGroup acquisition were insignificant for the year ended December 31, 2017. Pro forma 
results of operations have not been presented because the effect of this business combination is not material to the consolidated 
financial condition and results of operations.

The Company completed two acquisitions in 2016 that were not significant, individually or in the aggregate, a 65% equity 
interest in Processa, S.A.S, a Colombian payment processing company for $6.4 million, including a customer relationship of 
$3.1 million, and Accuprint, Inc, a data management and printing services company for $9.7 million, including a customer 
relationship of $9.1 million. In connection with the Accurpint, Inc purchase, the Company recorded a contingent liability of 
$1.1 million. The results of operations and financial position of these entities are included in the Consolidated Financial 
Statements from and after the date of acquisition. 

Note 4—Cash and cash equivalents

At December 31, 2017 and 2016, the Company’s cash and cash equivalents amounted to $50.4 million and $51.9 million, 
respectively, which are deposited in deposit accounts within financial institutions. Of the total cash balance at December 31, 
2017 and 2016, $30.0 million and $35.5 million, respectively, resides in subsidiaries located outside of Puerto Rico. Cash 
deposited in an affiliate financial institution amounted to $19.6 million and $7.8 million as of December 31, 2017 and 2016, 
respectively.

Note 5—Accounts Receivable, Net

Accounts receivable, net consisted of the following:

(Dollar amounts in thousands)
Trade
Due from affiliates, net
Settlement assets
Other

Less: allowance for doubtful accounts
Accounts receivable, net

December 31,

2017

2016

$

$

57,740
18,089
8,949
321
(1,771)
83,328

$

$

52,663
20,971
5,938
144
(1,913)
77,803

The Company records settlement assets that result from timing differences in the Company’s settlement processes with 
merchants, financial institutions, and credit card associations related to merchant and card transaction processing. The amounts 
are generally collected or paid the following business day.

Note 6—Prepaid Expenses and Other Assets

Prepaid expenses and other assets consisted of the following:

(Dollar amounts in thousands)
Software licenses and maintenance contracts
Deferred project costs

$

Guarantee deposits

Insurance

Prepaid income taxes

Taxes other than income

Postage

Other

December 31,

2017

2016

$

7,008
3,223

4,870

1,244

1,875

1,551

3,068

2,172

8,302
3,113

3,396

1,272

1,362

1,358

296

1,331

Prepaid expenses and other assets

$

25,011

$

20,430

F - 18

 
 
EVERTEC, Inc. Notes to Consolidated Financial Statements

Note 7—Investment in Equity Investee

Consorcio de Tarjetas Dominicanas, S.A. (“CONTADO”) is the largest merchant acquirer and ATM network in the Dominican 
Republic. The Company uses the equity method of accounting to account for its equity interest in CONTADO. As a result of the 
acquisition in 2011 of CONTADO’s 19.99% equity interest, the Company calculated an excess cost of the investment in 
CONTADO over the amount of underlying equity in net assets of approximately $9.0 million, which was mainly attributed to 
customer relationships, trademark and goodwill intangibles. The Company’s excess basis allocated to amortizable assets is 
recognized on a straight-line basis over the lives of the appropriate intangibles. Amortization expense for each of the years 
ended December 31, 2017, 2016 and 2015 amounted to approximately $0.2 million, $0.3 million and $0.3 million, respectively, 
and was recorded within earnings of equity method investment in the consolidated statements of income and comprehensive 
income. The Company recognized $0.6 million, $(0.1) million and $0.1 million as equity in CONTADO’s net income, net of 
amortization, in the consolidated statements of income and comprehensive income for the years ended December 31, 2017, 
2016 and 2015, respectively. No dividends were received during 2017, 2016 or 2015.
CONTADO fiscal year ends December 31 and is reported in the consolidated statements of income and comprehensive income 
for the period subsequent to the acquisition date on a one month lag. No significant events occurred in CONTADO’s operations 
subsequent to November 30, 2017 that would have materially affected the Company’s reported results.

Note 8—Property and Equipment, Net

Property and equipment, net consisted of the following:

(Dollar amounts in thousands)

Buildings

Data processing equipment

Furniture and equipment

Leasehold improvements

Less—accumulated depreciation and amortization

Depreciable assets, net

Land

Property and equipment, net

Useful life
in years
30

3 - 5

3 - 20

5 -10

December 31,

2017

2016

$

1,531

$

103,426

232

2,190

107,379
(70,793)
36,586

1,338

$

37,924

$

1,559

105,052

7,311

3,057

116,979
(79,431)
37,548

1,382

38,930

Depreciation and amortization expense related to property and equipment was $14.7 million, $14.2 million and $15.1 million 
for the years ended December 31, 2017, 2016 and 2015, respectively.

F - 19

 
EVERTEC, Inc. Notes to Consolidated Financial Statements

Note 9—Goodwill

In connection with the change in operating segments in December 2017, the Company reallocated goodwill associated with the 
operating segments based on their relative fair value. The changes in the carrying amount of goodwill, allocated by operating 
segments, were as follows (See Note 23):

(Dollar amounts in thousands)
Balance at December 31, 2015

Goodwill attributable to acquisition

Foreign currency translation adjustments

Balance at December 31, 2016

Goodwill attributable to acquisition

Adjustment to goodwill from prior year
acquisition

Foreign currency translation adjustments

Payment
Services - 
Puerto Rico & 
Caribbean

$

160,972

—

—

160,972

—

—

—

Balance at December 31, 2017

$

160,972

$

Payment
Services - 
Latin America
22,524
$

Merchant
Acquiring, net
138,121
$

Business
Solutions

$

46,516

$

4,991
(1,799)
25,716

26,931

1,099
(87)
53,659

—

—

138,121

—

—

—

$

138,121

$

Total
368,133

4,991
(2,138)
370,986

26,931

—
(339)
46,177

—

—
(354)
45,823

$

1,099
(441)
398,575

Goodwill is tested for impairment on an annual basis, or more often if events or changes in circumstances indicate there may be 
impairment. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative 
impairment test. If determined to be necessary, the quantitative impairment test is used to identify goodwill impairment and 
measure the amount of a goodwill impairment loss to be recognized (if any).

In August of 2017, the Company used the qualitative assessment option. Using this process, the Company first assessed whether 
it was “more likely than not” that the fair value of a reporting unit was less than its carrying amount. The Company conducted a 
qualitative assessment of each reporting unit’s fair value as of August 31, 2017. As part of the Company’s qualitative 
assessment, Management considered the results of the Company’s 2015 quantitative impairment test as well as current market 
conditions and changes in the carrying amount of the Company’s reporting units that occurred subsequent to the 2015 
impairment test. Based on the results of this qualitative assessment, the Company concluded that the fair value of each of the 
Company’s reporting units continued to exceed their respective carrying amounts and concluded that it was not necessary to 
conduct the quantitative goodwill impairment test. In September 2017, subsequent to the annual impairment test, Puerto Rico 
and the Caribbean were hit by hurricanes Irma and Maria, significantly damaging the islands’ infrastructure and 
communications networks, affecting the ability to transact electronically. As a result, revenues from the Company’s Merchant 
Acquiring segment and Payment Services - Puerto Rico & Caribbean segment (previously Payment Processing segment) were 
impacted. Given the severity of the hurricanes, Management analyzed the effects of the event subsequent to its August 31, 2017 
analysis. Based on this analysis Management concluded that it was not more likely than not that the fair value of the reporting 
units was reduced below its carrying amount and that the fair value of each of the Company’s reporting units continued to 
exceed their respective carrying amounts. 

In connection with the goodwill reallocation described above, the Company reperformed its qualitative analysis at November 
30, 2017, and concluded that it was not more likely than not that the fair value of the reporting units affected by the reallocation 
was less than its carrying amount. Subsequent to the change in operating segments, the Company performed a quantitative 
analysis for the reporting units affected by the reallocation that indicated that the estimated fair value of the reporting units 
exceeded their carrying value. Accordingly, no impairment losses for the period were recognized. The annual impairment test 
will continue to be in August.

For 2016, the Company used a qualitative assessment for the goodwill impairment test and concluded that it was more likely 
than not that the fair value of the reporting units continued to exceed their carrying value.

F - 20

 
EVERTEC, Inc. Notes to Consolidated Financial Statements

Note 10—Other Intangible Assets, Net

The carrying amount of other intangible assets consisted of the following:

(Dollar amounts in thousands)

December 31, 2017

Customer relationships

Trademark

Software packages

Non-compete agreement

Other intangible assets, net

(Dollar amounts in thousands)

Customer relationships

Trademark

Software packages

Non-compete agreement

Other intangible assets, net

Useful life in years
8 - 14

2 - 15

3 -10

15

Useful life in years

8 - 14

10 - 15

3 -10

15

$

$

$

$

Gross
amount

Accumulated
amortization

Net carrying
amount

344,175

$

41,594

195,262

56,539

637,570

$

(168,134) $
(25,241)
(136,907)
(27,327)
(357,609) $

176,041

16,353

58,355

29,212

279,961

December 31, 2016

Gross
amount

Accumulated
amortization

Net carrying
amount

334,455

$

39,950

176,267

56,539

607,211

$

(141,829) $
(21,650)
(121,055)
(23,558)
(308,092) $

192,626

18,300

55,212

32,981

299,119

Amortization expense related to intangibles, including software packages, was $49.5 million, $45.4 million and $49.9 million 
for the years ended December 31, 2017, 2016 and 2015, respectively. Amortization expense related to software packages was  
$15.9 million, $14.3 million and  $20.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. The 
estimated amortization expenses of balances outstanding at December 31, 2017 for the next five years are as follows:

(Dollar amounts in thousands)
2018

2019

2020

2021

2022

$

46,204

42,334

37,180

33,393

31,823

During the third quarter of 2017, the Company recognized an impairment charge of $6.5 million through cost of revenues for a 
third party software solution that is no longer commercially viable. In connection with this exit activity, the Company accrued 
$5.3 million for ongoing contractual fees, also through cost of revenues and recognized maintenance expense of $1.0 million. 
Both the liability and the impairment charge affected the Company's Merchant Acquiring segment and Payment Services 
segments. In the fourth quarter of 2017, the Company recognized an impairment loss related to a multi-year software 
development project that was impacted by delays caused by the hurricane and projected increased costs with a third party 
vendor, amounting to $5.0 million through cost of revenues and is in the Company's Payment Services - Puerto Rico & 
Caribbean segment. The fair value of the impaired assets was determined using discounted cash flow models.

Note 11—Other Long-Term Assets

As of December 31, 2017, other long-term assets included $1.0 million related to deferred debt-issuance costs related to the 
revolving credit facility, $1.6 million related to the long-term portion of certain software and maintenance contracts, $0.7 
million relating to the long-term portion of certain lease receivables, deferred tax asset of $1.0 million and a derivative asset of 
$0.2 million.

F - 21

 
 
 
 
EVERTEC, Inc. Notes to Consolidated Financial Statements

As of December 31, 2016, other long-term assets included $1.9 million related to deferred debt-issuance costs related to the 
revolving credit facility, $2.3 million related to the long-term portion of certain software and maintenance contracts, deferred 
tax asset of $0.8 million and $1.1 million relating to the long-term portion of certain lease receivables.

F - 22

EVERTEC, Inc. Notes to Consolidated Financial Statements

Note 12—Debt and Short-Term Borrowings

Total debt was as follows: 

(Dollar amounts in thousands)

Senior Secured Credit Facility (2018 Term A) due on April 17, 2018 paying interest 

at a variable interest rate (London InterBank Offered Rate (“LIBOR”) plus 
applicable margin(1)(3))

Senior Secured Credit Facility (2020 Term A) due on January 17, 2020 paying 

interest at a variable interest rate (LIBOR plus applicable margin(3)(4))

Senior Secured Credit Facility (Term B) due on April 17, 2020 paying interest at a 

variable interest rate (LIBOR plus applicable margin(2)(3))

Senior Secured Revolving Credit Facility(6)
Note Payable due on October 1, 2017(3)
Note Payable due on July 31, 2017(3)
Note Payable due on August 31, 2019(5)
Note Payable due on April 30, 2021(3)

Total debt

December 31,

2017

2016

$

26,690

$

28,721

200,653

376,395

12,000

—

—

584

418

212,661

378,074

28,000

1,524

357

890

532

$

616,740

$

650,759

(1)  Applicable margin of 2.25% at December 31, 2017 and December 31, 2016.
(2)  Subject to a minimum rate (“LIBOR floor”) of 0.75% plus applicable margin of 2.50% at December 31, 2017 and 

December 31, 2016.

(3)  Net of unaccreted discount and unamortized debt issue costs, as applicable.
(4)  Applicable margin of 2.50% at December 31, 2017 and December 31, 2016.
(5)  Fixed interest rate of 7.50%.
(6)  Applicable margin of 2.50% at December 31, 2017 and December 31, 2016.

The following table presents contractual principal payments for the next five years:

(Dollar amounts in thousands)
2018
2019
2020
2021
2022

Senior Secured Credit Facilities

$

58,950
24,952
540,820
45
—

On April 17, 2013, EVERTEC Group entered into a credit agreement (the “2013 Credit Agreement”) governing the senior 
secured credit facilities, consisting of a $300.0 million term loan A facility (the “Term A Loan”), a $400.0 million term loan B 
facility (the “Term B Loan”, together with the Term A Loan, the “Senior Secured term loans”) and a $100.0 million revolving 
credit facility (the "Revolving Facility"). 

During 2016, the Company entered into two separate amendments to the 2013 Credit Agreement. In the second quarter of 2016, 
EVERTEC Group, together with certain other direct and indirect subsidiaries of the Company, entered into a second 
amendment and waiver to the outstanding Credit Agreement (the “Second Amendment”). The Company paid each lender that 
consented to the amendment a fee equal to 0.50% of the aggregate principal amount of outstanding term loans and revolving 
commitments held by such lender. The credit amendment fees paid during the second quarter of 2016 amounted to $3.6 million. 

In the fourth quarter of 2016, EVERTEC Group, together with certain other direct and indirect subsidiaries of the Company, 
entered into a third amendment (the “Third Amendment”) to the 2013 Credit Agreement. The Third Amendment extends the 
maturity of (a) approximately $219 million of EVERTEC Group’s existing approximately $250 million of Term A loan facility 
to January 17, 2020 (the “2020 Term A loan”) and (b) $65 million of EVERTEC Group’s existing $100 million of revolving 
credit facility to January 17, 2020. The remaining approximately $30 million of Term A loan (the “2018 Term A loan”) and the 

F - 23

 
 
  
EVERTEC, Inc. Notes to Consolidated Financial Statements

$35 million of revolving credit facility that were not extended will remain in place and mature as originally scheduled on 
April 17, 2018. The Term B loan facility will remain in place and mature as originally scheduled on April 17, 2020.

Under the terms of the Third Amendment, the 2018 Term A Loan amortizes on a basis of 1.875% of the original principal 
amount beginning in the third quarter of 2016 and during each of the next three quarters, and 2.50% of the original principal 
amount during each of the final three quarters, with the balance payable on the final maturity date. The 2020 Term A Loan 
amortizes on a basis of 1.50% of the original principal amount beginning in the fourth quarter of 2016 and during each of the 
next five quarters, 1.875% of the original principal amount during each of the four subsequent quarters, and 2.50% of the 
original principal amount during each of the final three quarters, with the balance payable on the final maturity date. Principal 
payments for the Term B Loan were not changed by the Third Amendment and continues to require payments on the last 
business day of each quarter equal to 0.250% of the original principal amount and the remaining outstanding principal amount 
on the maturity of the Term B Loan.

The applicable margin under the 2013 Credit Agreement is based on, at EVERTEC Group’s option, (i) with respect to any 2018 
Term A Loan, 2.50% per annum in the case of any LIBOR Loan and 1.50% per annum in the case of any Alternate Base Rate 
(“ABR”), as defined in the 2013 Credit Agreement, subject to reduction based on achievement of specific first lien secured 
leverage ratios, (ii) with respect to any 2020 Term A Loan, 2.50% per annum in the case of any LIBOR Loan and 1.50% per 
annum in the case of any ABR Loan, (iii) with respect to any Term B Loan, 2.75% per annum in the case of any LIBOR Loan 
and 1.75% per annum in the case of any ABR Loan subject to reduction based on achievement of specific first lien secured 
leverage ratios, and (iv) with respect to any revolving credit facility, (A) 2.50% per annum in the case of any LIBOR Loan and 
(B) 1.50% per annum in the case of any ABR Loan.

The revolving credit facility interest rate is calculated the same as the 2020 Term A Loan rate and has a “commitment fee” 
payable one business day after the last business day of each quarter calculated based on the daily unused commitment during 
the preceding quarter. The commitment fee for the unused portion of this facility ranges from 0.125% to 0.375% and is based 
on EVERTEC Group’s first lien secured net leverage ratio.

All loans may be prepaid without premium or penalty.

The senior secured credit facilities contain various restrictive covenants. As a result of the Third Amendment, the Term A Loan 
and the revolving credit facility (subject to certain exceptions) require the Company to maintain on a quarterly basis a specified 
maximum senior secured leverage ratio of up to 4.75 to 1.00 as defined in the 2013 Credit Agreement (total first lien secured 
debt to adjusted EBITDA per the 2013 Credit Agreement) until September 30, 2018 and 4.25 to 1.00 for any fiscal quarter 
ending thereafter. In addition, substantially all of the Company’s assets are pledged to secure the Company’s obligations under 
the 2013 Credit Agreement and, among other things, the 2013 Credit Agreement: (a) limits the Company’s ability and the 
ability of the Company’s subsidiaries to incur additional indebtedness, incur liens, pay dividends or make certain other 
restricted payments, as all net assets are restricted, and enter into certain transactions with affiliates; (b) restricts the Company’s 
ability to enter into agreements that would restrict the ability of the Company’s subsidiaries to pay dividends or make certain 
payments to EVERTEC; and (c) places restrictions on the Company’s ability and the ability of the Company’s subsidiaries to 
merge or consolidate with any other person or sell, assign, transfer, convey or otherwise dispose of all or substantially all of the 
Company’s assets.

The unpaid principal balance at December 31, 2017 of the 2018 Term A Loan, the 2020 Term A Loan and the Term B Loan was 
$26.9 million, $202.9 million and $382.0 million, respectively. The additional borrowing capacity for the Revolving Facility 
loan at December 31, 2017 was $88.0 million.

Notes payable

In December 2014, June 2015 and May 2016, EVERTEC Group entered into non-interest bearing financing agreements 
amounting to $4.6 million, $1.1 million, and $0.7 million, respectively, and in October 2016 entered into an interest bearing 
agreement of $1.1 million, to purchase software. As of December 31, 2017 and December 31, 2016, the outstanding principal 
balance of the notes payable is $1.0 million and $3.4 million, respectively. The current portion of these notes is recorded as part 
of accounts payable and the long-term portion is included in other long-term liabilities.

F - 24

EVERTEC, Inc. Notes to Consolidated Financial Statements

Interest Rate Swap

At December 31, 2017 and 2016, the Company has the following interest rate swap agreement converting a portion of the 
interest rate exposure on the Company's Term B Loan from variable to fixed: 

Effective date
January 2017

Maturity Date
April 2020

Notional Amount
$200 million

Variable Rate

1-month LIBOR   

Fixed Rate
1.9225%

The Company has accounted for this transaction as a cash flow hedge. The fair value of the Company’s derivative instrument is 
determined using a standard valuation model. The significant inputs used in this model are readily available in public markets, 
or can be derived from observable market transactions, and therefore have been classified as Level 2 within the fair value 
hierarchy. Inputs used in this standard valuation model for derivative instruments include the applicable forward rates and 
discount rates. The discount rates are based on the historical LIBOR Swap rates. 

As of December 31, 2017 and December 31, 2016, the carrying amount of the derivative on the Company’s balance sheets is as 
follows:

(Dollar amounts in thousands)
Other long-term assets

Other long-term liabilities

December 31, 2017

December 31, 2016

$

214

$

—

—

1,964

During the year ended December 31, 2017, the Company reclassified losses of $1.6 million from accumulated other 
comprehensive loss into income through interest expense. Based on current LIBOR rates, the Company expects to reclassify 
$0.9 million from accumulated other comprehensive loss into income through interest expense over the next 12 months. Refer 
to Note 13 for tabular disclosure of the fair value of the derivative and to Note 15 for tabular disclosure of gains recorded on 
cash flow hedging activities.

The cash flow hedge is considered highly effective and no impact on earnings is expected due to hedge ineffectiveness.

Note 13—Financial Instruments and Fair Value Measurements

Recurring Fair Value Measurements 

Fair value measurement provisions establish a fair value hierarchy that requires an entity to maximize the use of observable 
inputs and minimize the use of unobservable inputs when measuring fair value. These provisions describe three levels of input 
that may be used to measure fair value: 

Level 1: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. 
Level 2: Inputs, other than quoted prices included in Level 1, which are observable for the asset or liability through 
corroboration with market data at the measurement date. 
Level 3: Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset 
or liability at the measurement date. 

The Company uses observable inputs when available. Fair value is based upon quoted market prices when available. If market 
prices are not available, the Company may employ models that mostly use market-based inputs including yield curves, interest 
rates, volatilities, and credit curves, among others. The Company limits valuation adjustments to those deemed necessary to 
ensure that the financial instrument’s fair value adequately represents the price that would be received or paid in the 
marketplace. Valuation adjustments may include consideration of counterparty credit quality and liquidity as well as other 
criteria. The estimated fair value amounts are subjective in nature and may involve uncertainties and matters of significant 
judgment for certain financial instruments. Changes in the underlying assumptions used in estimating fair value could affect the 
results. The fair value measurement levels are not indicative of risk of investment. 

The fair value of financial instruments is 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. Fair value estimates are made at a specific point in 

F - 25

  
  
  
  
  
  
  
EVERTEC, Inc. Notes to Consolidated Financial Statements

time based on the type of financial instrument and relevant market information. Many of these estimates involve various 
assumptions and may vary significantly from amounts that could be realized in actual transactions.

The following table summarizes fair value measurements by level at December 31, 2017 and 2016, for assets and liabilities 
measured at fair value on a recurring basis:

(Dollar amounts in thousands)
December 31, 2017
Financial asset:

Interest rate swap

December 31, 2016

Financial liability:

Interest rate swap

Derivative Instruments

Level 1

Level 2

Level 3

Total

$

$

— $

214

$

— $

214

— $

1,964

$

— $

1,964

The fair value of the Company’s derivative instrument is determined using a standard valuation model. The significant inputs 
used in these models are readily available in public markets, or can be derived from observable market transactions, and 
therefore have been classified as Level 2. Inputs used in these standard valuation models for derivative instruments include the 
applicable forward rates and discount rates. The discount rates are based on the historical LIBOR Swap rates. 

The following table presents the carrying value, as applicable, and estimated fair values for financial instruments at 
December 31, 2017 and 2016:

(Dollar amounts in thousands)

Financial assets:

Interest rate swap

Financial liabilities:

Interest rate swap

Senior Secured Term B Loan

2018 Term A Loan

2020 Term A Loan

December 31,

2017

2016

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

$

214

$

214

$

— $

—

—

376,395

26,690

200,653

—

370,540

26,027

196,584

1,964

378,074

28,721

212,661

1,964

383,491

29,268

213,872

The fair value of the senior secured term loans at December 31, 2017 and 2016 was obtained using the prices provided by third 
party service providers. Their pricing is based on various inputs such as: market quotes, recent trading activity in a non-active 
market or imputed prices. Also, the pricing may include the use of an algorithm that could take into account movement in the 
general high yield market, among other variants. 

The senior secured term loans, which are not measured at fair value in the balance sheets, if measured, would be categorized as 
Level 3 in the fair value hierarchy.

There were no transfers in or out of Level 3 during the years ended December 31, 2017, 2016 and 2015.

Note 14—Other Long Term Liabilities 

As of December 31, 2017, other long-term liabilities mainly consists of unrecognized tax benefit liabilities and the long-term 
portion of notes payables of $13.0 million. 

As of December 31, 2016, other long-term liabilities mainly consists of unrecognized tax benefit liabilities and the long-term 
portion of notes payables of $14.4 million and derivative liability of $2.0 million. 

F - 26

 
 
 
EVERTEC, Inc. Notes to Consolidated Financial Statements

Note 15—Equity

The Company is authorized to issue up to 206,000,000 shares of common stock of $0.01 par value. At December 31, 2017 and 
2016, the Company had 72,393,933 and 72,635,032 shares outstanding, respectively. The Company is also authorized to issue 
2,000,000 shares of $0.01 par value preferred stock. As of December 31, 2017, no shares of preferred stock have been issued. 

Stock Repurchase
In 2017, 2016 and 2015, the Company repurchased a total of 0.5 million, 2.5 million and 3.0 million shares, respectively, at a 
cost of $7.7 million, $39.9 million and $54.9 million. The Company funded such repurchases with cash on hand and 
borrowings to the existing revolving credit facility. As of December 31, 2017, 2016 and 2015, the repurchased shares were 
permanently retired.

Dividends

Historically, the Company paid a regular quarterly dividend on the Company’s common stock, subject to the declaration thereof 
each quarter by the Company’s Board of Directors (the "Board"). On November 2, 2017, the Board voted to temporarily 
suspend the quarterly dividend on the Company's common stock due to the difficult operating environment in Puerto Rico. The 
Board anticipates reviewing the dividend policy as conditions stabilize in Puerto Rico. Future dividend declarations are subject 
to Board of Directors' approval and may be adjusted based on business needs or as market conditions change.

The Company’s dividend activity in 2017 and 2016 was as follows:

Declaration Date
February 17, 2016

May 11, 2016

July 28, 2016

October 27, 2016

February 17, 2017

April 27, 2017

July 25, 2017

Record Date

Payment Date

Dividend per share

February 29, 2016

May 23, 2016

August 9, 2016

November 14, 2016

March 1, 2017

May 8, 2017

August 7, 2017

March 17, 2016

June 10, 2016

September 2, 2016

December 2, 2016

March 20, 2017

June 9, 2017

September 8, 2017

0.10

0.10

0.10

0.10

0.10

0.10

0.10

Accumulated Other Comprehensive income

The following table provides a summary of the changes in the balances comprising accumulated other comprehensive loss for 
the years ended December 31, 2017 and 2016:

Foreign Currency
Translation
Adjustments

Cash Flow Hedge

Total

Balance—December 31, 2015

Other comprehensive loss before reclassifications

Balance—December 31, 2016

Other comprehensive (loss) income before
reclassifications

Effective portion reclassified to Net Income

Balance—December 31, 2017

$

$

$

(7,067) $
(3,360)
(10,427)

(635)

— $
(11,062) $

(515) $

(1,449)
(1,964)

580

1,598

214

$

(7,582)
(4,809)
(12,391)

(55)
1,598
(10,848)

Note 16—Share-based Compensation

Long-term Incentive Plan ("LTIP")

In the first quarter of 2015, 2016 and 2017, the Compensation Committee of the Board of Directors approved grants of 
restricted stock units (“RSUs”) to executives and certain employees pursuant to the 2015 LTIP, 2016 LTIP and 2017 LTIP, 
respectively, all under the terms of our 2013 Equity Incentive Plan. Additionally, in the fourth quarter of 2017, a special 

F - 27

 
EVERTEC, Inc. Notes to Consolidated Financial Statements

retention grant to certain executives and employees of the Company was approved. Under the LTIPs, the Company granted 
restricted stock units to eligible participants as time-based awards and/or performance-based awards.

The vesting of the RSUs is dependent upon service, market, and/or performance conditions as defined in the grants. Employees 
that received time-based awards with service conditions are entitled to receive a specific number of shares of the Company’s 
common stock on the vesting date if the employee is providing services to the Company on the vesting date. Time-based awards 
granted in the first quarter of each year vest over a period of three years in substantially equal installments commencing on the 
start of the fiscal year during which the RSUs were granted or on the grant date and ending on January 1 of each year for the 
2015 LTIP, on February 19 of each year for the 2016 LTIP and on February 24 of each year for the 2017 LTIP. The award 
granted in the fourth quarter of 2017 vests 40% in the second year and 60% in the third year.

Employees that received awards with market conditions under the 2015 and 2016 LTIPs are entitled to receive a specific 
number of shares of the Company’s common stock on the vesting date if the Company’s total shareholder return (“TSR”) target 
relative to a specified group of industry peer companies is achieved. Employees that received awards with performance 
conditions are entitled to receive a specific number of shares of the Company’s common stock on the vesting date if the 
Cumulative Annual Growth Rate (“CAGR”) of Diluted EPS target over three years is achieved for the 2015 LTIP. For the 2016 
LTIP, the CAGR EPS RSUs was based on the Company’s actual one-year diluted EPS measured over the period commencing 
on January 1, 2016 and ending on December 31, 2016, relative to the goals set by the Compensation Committee. The shares 
earned according to the plan are further subject to a two-year service vesting period. For the performance-based awards under 
the 2017 LTIP, the Compensation Committee established Adjusted EBITDA as the primary performance measure while 
maintaining focus on total shareholder return through the use of a market-based TSR performance modifier. The TSR modifier 
adjusts the shares earned based on the core Adjusted EBITDA performance upwards or downwards (+/- 25%) based on the 
Company’s relative TSR at the end of the three-year performance period as compared to the companies in the Russell 2000 
Index. The Adjusted EBITDA performance measure will be calculated for the one-year period commencing on January 1, 2017 
and ending on December 31, 2017, relative to the goals set by the Compensation Committee for this same period. The shares 
earned will be subject to a further two-year service vesting period.

Performance and market-based awards vest at the end of the performance period that commenced on January 1, 2015 for the 
2015 LTIP, February 19, 2016 for the 2016 LTIP and February 24, 2017 for the 2017 LTIP. The periods end respectively on 
January 1, 2018 for the 2015 LTIP, February 19, 2019 for the 2016 LTIP and February 24, 2020 for the 2017 LTIP. Awards are 
forfeited if the employee voluntarily ceases to be employed by the Company prior to vesting.

The following table summarizes the stock options activity for the years ended December 31, 2017, 2016 and 2015: 

Outstanding at December 31, 2014

Expired

Forfeitures

Outstanding at December 31, 2015

Forfeitures

Exercised
Expired

Outstanding at December 31, 2016

Exercised (1)

Outstanding at December 31, 2017

Exercisable at December 31, 2017

Shares

Weighted-average
exercise prices

$

316,000
(50,000)
(126,000)
140,000
(33,333)
(20,000)
(66,667)
20,000
(20,000)
—

— $

19.56

23.36

18.81

18.88

24.01

6.04

21.01

6.04
6.04

—

—

(1) 

The total intrinsic value of options exercised during the year amounted to $0.2 million.

F - 28

 
EVERTEC, Inc. Notes to Consolidated Financial Statements

The following table presents information about fully vested stock options that were outstanding for the years ended 
December 31, 2017, 2016 and 2015: 

2017

Weighted
average
exercise price
—

— $

Shares

Years ended December 31,

2016

Weighted
average
exercise price
—

— $

Shares

2015

Weighted
average
exercise price
24.01
$

Shares

33,333

Vested stock options (1)(2)(3)

(1) 
(2) 
(3) 

For December 31, 2015 there is no intrinsic value for vested stock options as the options are out-of-the-money.
The weighted average contractual term of fully vested options is 8.16 years as of December 31, 2015.
The fair value of vested stock options at December 31, 2015 amounted to $1.4 million.

The following table summarizes the nonvested restricted shares and RSUs activity for the years ended December 31, 2017, 
2016 and 2015:

Nonvested restricted shares and RSUs
Nonvested at December 31, 2014

Granted

Vested

Forfeited

Nonvested at December 31, 2015

Granted

Vested

Forfeited

Nonvested at December 31, 2016

Granted

Vested

Forfeited

Nonvested at December 31, 2017

Shares

23,252

596,238
(94,550)
(33,214)
491,726

907,320
(154,820)
(31,862)
1,212,364

1,584,241
(315,953)
(139,760)
2,340,892

Weighted-average
grant date fair value
22.04
$

22.24

21.33

23.61

22.32

12.02

20.97

18.61

14.88

15.37

15.30

16.06

15.08

$

Share-based compensation recognized was as follows:

(Dollar amounts in thousands)
Share-based compensation recognized, net

Stock options

Restricted shares and RSUs

Years ended December 31,

2017

2016

2015

$

6

$

9,636

60

$

6,355

192

5,010

The maximum unrecognized cost for restricted stock units was $23.0 million as of December 31, 2017. The cost is expected to 
be recognized over a weighted average period of 2.26 years.

Note 17—Employee Benefit Plan

EVERTEC, Inc. Puerto Rico Savings and Investment plan (“the EVERTEC Savings Plan”) was established in 2010, as a 
defined contribution savings plan qualified under section 1165(e) of the Puerto Rico Internal Revenue Code. Investments in the 
plan are participant directed, and employer matching contributions are determined based on specific provisions of the 
EVERTEC Savings Plan. Employees are fully vested in the employer’s contributions after five years of service. For the years 
ended December 31, 2017, 2016 and 2015, the costs incurred under the plan amounted to approximately $0.7 million, $0.7 
million and $0.8 million, respectively.

F - 29

 
 
 
  
 
EVERTEC, Inc. Notes to Consolidated Financial Statements

Note 18—Total Other Income, net

For the year ended December 31, 2017, other income, net is primarily comprised of $2.6 million in foreign currency transaction 
gains.

For the year ended December 31, 2016, other income, net is primarily comprised of $1.9 million in foreign currency transaction 
gains and a $1.5 million loss on extinguishment of debt.

For the year ended December 31, 2015, other income, net is primarily comprised of $1.2 million in foreign currency transaction 
gains, $0.2 million in gains related to adjustments made to software indemnification assets during the year, $0.4 million in sales 
rebates granted to EVERTEC and a $0.2 million gain related to certain refurbished POS machines.

Note 19—Income Tax

On April 17, 2012, EVERTEC Group and Holdings were converted from a Puerto Rico corporation into Puerto Rico limited 
liability companies to benefit from changes to the Puerto Rico Income Tax Code allowing limited liability companies to be 
treated as partnerships that are pass-through entities for Puerto Rico tax purposes. As a result of these conversions and 
subsequent elections to be treated as partnerships, EVERTEC Group’s and Holding’s taxable income flows through to 
EVERTEC, Inc. 

EVERTEC Group, Holdings and EVERTEC, Inc. entered into a Tax Payment Agreement pursuant to which EVERTEC Group 
is obligated to make certain payments to Holdings or EVERTEC, Inc. for taxable periods or portions thereof occurring on or 
after April 17, 2012 (the “Effective Date”). Under the Tax Payment Agreement, EVERTEC Group will make payments with 
respect to any and all taxes (including estimated taxes) imposed under the laws of Puerto Rico, the United States of America 
and any other jurisdiction or any political (including municipal) subdivision or authority or agency in Puerto Rico, the United 
States of America or such other jurisdiction, that would have been imposed on EVERTEC Group if EVERTEC Group had been 
a corporation for tax purposes of that jurisdiction, together with all interest and penalties with respect thereto (“Taxes”), 
reduced by taking into account any applicable net operating losses or other tax attributes of Holdings or EVERTEC, Inc. that 
reduce Holdings’ or EVERTEC, Inc.’s taxes in such period. The Tax Payment Agreement provides that the payments thereunder 
shall not exceed the net amount of Taxes that Holdings and EVERTEC, Inc. actually owe to the appropriate taxing authority for 
a taxable period. Further, the Tax Payment Agreement provides that if Holdings or EVERTEC, Inc. receives a tax refund 
attributable to any taxable period or portion thereof occurring on or after the Effective Date, EVERTEC, Inc. shall be required 
to recalculate the payment for such period required to be made by EVERTEC Group to Holdings or EVERTEC, Inc. If the 
payment, as recalculated, is less than the amount of the payment EVERTEC Group already made to Holdings or EVERTEC, 
Inc. in respect of such period, Holdings or EVERTEC, Inc. shall promptly make a payment to EVERTEC Group in the amount 
of such difference. 

The components of income tax expense (benefit) consisted of the following:

(Dollar amounts in thousands)
Current tax provision (benefit)

Deferred tax benefit

Income tax expense (benefit)

Years ended December 31,

2017

2016

2015

$

$

9,086
(4,306)
4,780

$

$

12,865
(4,594)
8,271

$

$

(245)
(3,090)
(3,335)

F - 30

 
  
EVERTEC, Inc. Notes to Consolidated Financial Statements

The Company conducts operations in Puerto Rico and certain countries throughout the Caribbean and Latin America. As a 
result, the income tax expense (benefit) includes the effect of taxes paid to the Puerto Rico government as well as foreign 
jurisdictions. The following table presents the segregation of income tax expense (benefit) based on location of operations:

(Dollar amounts in thousands)

Income before income tax provision

Puerto Rico
United States
Foreign countries

Total income before income tax provision
Current tax provision (benefit)

Puerto Rico
United States
Foreign countries

Total current tax provision  (benefit)
Deferred tax benefit

Puerto Rico
United States
Foreign countries

Total deferred tax benefit

Years ended December 31,

2017

2016

2015

47,347
3,089
9,763
60,199

1,892
292
6,902
9,086

$

$

$

$

(3,176) $
(184)
(946)
(4,306) $

70,899
2,670
9,828
83,397

7,072
567
5,226
12,865

$

$

$

$

(2,874) $
(259)
(1,461)
(4,594) $

73,327
1,879
6,836
82,042

(3,500)
413
2,842
(245)

(2,169)
(114)
(807)
(3,090)

$

$

$

$

$

$

Taxes payable to foreign countries by EVERTEC’s subsidiaries will be paid by such subsidiary and the corresponding liability 
and expense will be presented in EVERTEC’s consolidated financial statements.

As of December 31, 2017, the Company has $35.3 million of unremitted earnings from foreign subsidiaries. The Company has 
not recognized a deferred tax liability on undistributed earnings for the Company’s foreign subsidiaries because these earnings 
are intended to be indefinitely reinvested. The amount of the unrecognized deferred tax liability depends on judgment required 
to analyze the withholding tax due, the applicable tax law and factual circumstances in effect at the time of any such 
distributions, therefore, EVERTEC believes it is not practicable at this time to reliably determine the amount of unrecognized 
deferred tax liability related to the Company’s undistributed earnings. If circumstances change and it becomes apparent that 
some or all of the undistributed earnings of a subsidiary will be remitted and income taxes have not been recognized by the 
parent entity, the parent entity shall accrue as an expense of the current period income taxes attributable to that remittance.

On June 27, 2017 the Company received a one-time repatriation of cash from a foreign subsidiary of $8.9 million to partially 
fund the acquisition of PayGroup. This distribution was subject to withholding at source of 15% in the country of origin and 
accordingly the Company recognized current foreign income tax expense of $1.3 million. No Puerto Rico income tax expense 
was recorded in connection with this distribution because of the availability to credit foreign taxes paid. The Company believes 
that this one time repatriation of existing funds from a foreign subsidiary does not prohibit applying the indefinite reinvestment 
exception to the remaining undistributed earnings because Management has sufficient evidence of specific plans to continue 
reinvesting the foreign subsidiary’s undistributed earnings.

On October 19, 2012, EVERTEC Group was granted an additional tax exemption under the Tax Incentive Act No. 73 of 2008. 
Under this grant, EVERTEC Group will benefit from a preferential income tax rate on industrial development income, as well 
as from tax exemptions with respect to its municipal and property tax obligations for certain activities derived from its data 
processing operations in Puerto Rico. The grant has a term of 15 years effective as of January 1, 2012 with respect to income 
tax obligations and January 1, 2013 with respect to municipal and property tax obligations.

The grant establishes a base taxable income amount with respect to EVERTEC Group’s industrial development income, which 
amount will continue to be subject to the ordinary income tax rate under existing law. Applicable taxable income in excess of 
the established base taxable income amount will be subject to a preferential rate of 4%. The base taxable income amount will be 
ratably reduced to zero by the fourth taxable year at which point all of EVERTEC Group’s applicable industrial development 
income will be taxed at the preferential rate of 4% for the remaining period of the grant.

F - 31

 
EVERTEC, Inc. Notes to Consolidated Financial Statements

The grant contains customary commitments, conditions and representations that EVERTEC Group will be required to comply 
with in order to maintain the grant. The more significant commitments include: (i) maintaining at least 750 employees in 
EVERTEC Group’s Puerto Rico data processing operations during 2012 and at least 700 employees for the remaining years of 
the grant, (ii) investing at least $200.0 million in building, machinery, equipment or computer programs to be used in Puerto 
Rico during the effective term of the grant (to be made over four year capital investment cycles in $50.0 million increments); 
and (iii) 80% of EVERTEC Group employees must be residents of Puerto Rico. Failure to meet the requirements could result, 
among other things, in reductions in the benefits of the grant or revocation of the grant in its entirety, which could result in 
EVERTEC, Inc. paying additional taxes or other payments relative to what such parties would be required to pay if the full 
benefits of the grant are available.

On October 11, 2011, the Puerto Rico Government approved a grant under Tax Incentive Law No. 73 of 2008, retroactively to 
December 1, 2009. Under this grant, activities derived from consulting and data processing services provided outside Puerto 
Rico are subject to a preferred rate that declines gradually from 7% to 4% by December 1, 2013. After this date, the rate 
remains at 4% until its expiration in November 1, 2024.

In addition, EVERTEC Group has a base tax rate of 7% on income derived from certain development and installation service in 
excess of a determined income for a 10-year period from January 1, 2008. The Company filed an application for extension of 
the grant together with the required supplementary documentation with the Puerto Rico Industrial Development Company in 
November of 2017.

The following table presents the components of the Company’s deferred tax assets and liabilities:

(Dollar amounts in thousands)
Deferred tax assets (“DTA”)

Allowance for doubtful accounts

Unearned income

Investment in equity subsidiary

Alternative minimum tax

Share-based compensation

Debt Issuance Costs

General Reserves

Derivative Liability

Accrual of contract maintenance cost

Impairment of asset
Other temporary assets

Total gross deferred tax assets
Deferred tax liabilities (“DTL”)

Deferred compensation
Difference between the assigned values and the tax basis of assets and liabilities
recognized in purchase

Other temporary liabilities

Total gross deferred tax liabilities

Deferred tax liability, net

December 31,

2017

2016

$

195

$

3,136

447

51

1,208

69

505

—

472
425
1,754

8,262

1,617

19,124

353

21,094
(12,832) $

$

265

2,023

385

176

697

127

474

172

—
—
704

5,023

1,458

17,738

—

19,196
(14,173)

Pursuant to the provision of the PR Code, net operating losses (“NOL”) can be carried forward for a period of seven, ten or 
twelve taxable years, depending on the taxable year generated. Act 72 of May 29, 2015, limited the amount of NOLs deduction 
to 80% for regular tax and 70% for AMT for the taxable year ended December 31, 2017. At December 31, 2017, the Company  
no longer has NOL carryforwards for tax purposes. 

The Company recognizes the benefit of uncertain tax positions ("UTPs") only if it is more likely than not that the tax position 
will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits 
recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty 

F - 32

 
EVERTEC, Inc. Notes to Consolidated Financial Statements

percent likelihood of being realized upon ultimate settlement. During the third quarter of 2017, the Company decreased a 
previously recorded potential liability for uncertain tax positions by $4.5 million, as a result of the expiration of the statute of 
limitations.

The following is a tabular reconciliation of the total amounts of UTPs:

(Dollar amounts in thousands)
Balance, beginning of year

Gross increases—tax positions in prior period

Gross decreases—tax positions in prior period

Lapse of statute of limitations

Balance, end of year

Years ended December 31,

2017

2016

2015

12,219

$

12,847

$

—

—
(3,071)
9,148

$

—
(345)
(283)
12,219

$

19,859

53

—
(7,065)
12,847

$

$

As of December 31, 2017, 2016 and 2015, approximately $9.1 million, $12.2 million and $12.2 million, respectively, would 
affect the Company’s effective income tax rate, if recognized.

The Company recognizes interest and penalties related to UTB as part of income tax expense. During the years ended 
December 31, 2017, 2016 and 2015, the Company recognized an income tax benefit of $0.8 million, an income tax expense of 
$0.7 million and an income tax benefit of $2.0 million, respectively, related to interest and penalties. The amount accrued for 
interest and penalties at December 31, 2017 and 2016 was $1.2 million, and $2.0 million, respectively. The Company 
anticipates changes to the UTBs within the next 12 months to be primarily related to interest. The Company believes it has 
sufficient accruals for contingent tax liabilities.

In connection with tax return examinations, contingencies can arise that generally result from different interpretations of tax 
laws and regulations as they pertain to the amount, timing or inclusion of revenues and expenses in taxable income, or the 
ability to utilize tax credits to reduce income taxes payable. While it is probable, based on the potential outcome of the 
Company’s Puerto Rico and foreign tax examinations or the expiration of the statute of limitations for specific jurisdictions, that 
the liability for UTBs may increase or decrease within the next twelve months, the Company does not expect any such change 
would have a material effect on our financial condition, results of operations or cash flow.

The Company and its subsidiaries are subject to Puerto Rico income tax as well as income tax of multiple foreign jurisdictions. 
A significant majority of the income tax is from Puerto Rico with a statute of limitations of four years after filing the income tax 
returns; therefore, the income tax returns for 2013, 2014, 2015, and 2016 are currently open for examination.

The income tax expense differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income 
(loss) before income taxes as a result of the following:

(Dollar amounts in thousands)
Computed income tax at statutory rates

Benefit of net tax-exempt interest income

Differences in tax rates due to multiple jurisdictions

Tax (benefit) expense due to a change in estimate

Effect of income subject to tax-exemption grant

Unrecognized tax (benefit) expense

Effect of disallowed operating losses in foreign entities

Other

Years ended December 31,

2017

2016

2015

$

$

23,477
(56)
2,353
(334)
(16,832)
(3,828)
—

—

$

32,525
(52)
32

258
(24,866)
373

—

1

31,996
(284)
37
(201)
(23,375)
(11,626)
103

15
(3,335)

Income tax expense (benefit)

$

4,780

$

8,271

$

F - 33

 
 
 
EVERTEC, Inc. Notes to Consolidated Financial Statements

Note 20—Net Income Per Common Share

The reconciliation of the numerator and the denominator of the earnings per common share is as follows:

(Dollar amounts in thousands, except share and per share data)
Net income

Less: non-forfeitable dividends on restricted stock

Net income available to common shareholders

Weighted average common shares outstanding
Weighted average potential dilutive common shares (1)
Weighted average common shares outstanding—assuming
dilution

Net income per common share—basic

Net income per common share—diluted

$

$

$

$

Years ended December 31,

2017

2016

2015

55,054

10

55,044

$

$

75,036

12

75,024

$

$

72,479,807
392,381

74,132,863
340,506

85,377

9

85,368

77,066,459
114,664

72,872,188

74,473,369

77,181,123

0.76

0.76

$

$

1.01

1.01

$

$

1.11

1.11

(1) 

Potential common shares consist of common stock issuable under the assumed exercise of stock options and RSUs 
awards using the treasury stock method.

Refer to Note 15 for a detail of dividends declared and paid during 2017 and 2016.

Note 21—Related Party Transactions

The following table presents the Company’s transactions with related parties for each of the periods presented below:

(Dollar amounts in thousands)
Total revenues (1)(2)
Cost of revenues

Rent and other fees
Interest earned from and charged by affiliate

Interest income

Years ended December 31,

2017

2016

2015

177,213

2,929

7,803

154

$

$

$

$

176,473

2,180

8,110

211

$

$

$

$

169,433

1,701

7,880

206

$

$

$

$

(1) 

(2) 

Total revenues from Popular as a percentage of revenues were 43%, 45% and 45% for each of the periods presented 
above.
Includes revenues generated from investee accounted for under the equity method of $1.8 million, $2.1 million and $2.1 
million for the years ended December 31, 2017, 2016 and 2015, respectively.

F - 34

 
 
EVERTEC, Inc. Notes to Consolidated Financial Statements

At December 31, 2017 and 2016, the Company had the following balances arising from transactions with related parties:

(Dollar amounts in thousands)

Cash and restricted cash deposits in affiliated bank

Other due/to from affiliate

Accounts receivable

Prepaid expenses and other assets

Other long-term assets

Accounts payable
Unearned income

December 31,

2017

2016

$

$

$

$

$

$

23,227

18,073

1,216

288

5,827

19,768

$

$

$

$

$

$

15,918

21,461

699

554

6,300

14,383

The balance of cash and restricted cash deposits in an affiliated bank was included within the cash and restricted cash line items 
in the accompanying consolidated balance sheets. Due from affiliates mainly included the amounts outstanding related to 
processing and information technology services billed to Popular subsidiaries according to the terms of the Master Services 
Agreement (“MSA”) under which EVERTEC Group has a contract to provide such services for at least 15 years on an 
exclusive basis for the duration of the agreement on commercial terms consistent with historical pricing practices among the 
parties. This amount was included in the accounts receivable, net in the consolidated balance sheets.

Note 22—Commitments and Contingencies

The Company leases certain facilities and equipment under operating leases. Most leases contain renewal options for varying 
periods. Future minimum rental payments on such operating leases at December 31, 2017 are as follows:

(Dollar amounts in thousands)
2018

2019

2020

2021

2022 and thereafter

Unrelated
parties

Related
party

Minimum future
rentals to related
parties

478

139

21

—

—

$

7,004

$

7,228

2,397

605

—

7,482

7,367

2,418

605

—

638

$

17,234

$

17,872

$

$

Certain lease agreements contain provisions for future rent increases. The total amount of rental payments due over the lease 
term is being charged to rent expense on the straight-line method over the term of the lease. The difference between rent 
expense recorded and the amount paid is recorded as a deferred rent obligation.

Rent expense of office facilities and real estate for the years ended December 31, 2017, 2016 and 2015 amounted to $8.3 
million, $8.2 million and $8.1 million, respectively. Also, rent expense for telecommunications and other equipment for the 
years ended December 31, 2017, 2016 and 2015 amounted to $6.0 million, $6.2 million and $5.4 million, respectively.

EVERTEC is a defendant in a number of legal proceedings arising in the ordinary course of business. Based on the opinion of 
legal counsel, management believes that the final disposition of these matters will not have a material adverse effect on the 
business, results of operations or financial condition of the Company. The Company has identified certain claims in which a 
loss may be incurred, but in the aggregate the loss would be minimal. For other claims, where the proceedings are in an initial 
phase, the Company is unable to estimate the range of possible loss for such legal proceedings. However, the Company at this 
time believes that any loss related to these latter claims will not be material.

F - 35

 
 
 
EVERTEC, Inc. Notes to Consolidated Financial Statements

Note 23—Segment Information

In December of 2017, as a result of the PayGroup acquisition, the Chief Operating Decision Maker ("CODM") completed an 
evaluation of the current Company structure and the information regularly reviewed for purposes of allocating resources and 
assessing performance. As a result of this evaluation, Management concluded that the operating segments are determined by the 
products and services the Company provides and the geographic regions in which the Company operates, resulting in four 
business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America (collectively "Payment 
Services segments"), Merchant Acquiring, and Business Solutions. 

The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to 
the ATH debit network and other card networks to financial institutions, including related services such as authorization, 
processing, management and recording of ATM and POS transactions, and ATM management and monitoring. The segment 
revenues also include revenues from card processing services (such as credit and debit card processing, authorization and 
settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and 
billing products for merchants, businesses and financial institutions) and electronic benefit transfer (“EBT”) (which principally 
consist of services to the government of Puerto Rico for the delivery of benefits to participants).For ATH debit network and 
processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily 
from network fees, transaction switching and processing fees, and the leasing POS devices. For card issuer processing, revenues 
are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number 
of cards embossed and other processing services. For EBT services, revenues are primarily derived from the number of 
beneficiaries on file.

The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH debit 
network and other card networks to financial institutions, including related services such as authorization, processing, 
management and recording of ATM and POS transactions, and ATM management and monitoring. The segment revenues also 
include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud 
monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for 
merchants, businesses and financial institutions), as well as, licensed software solutions for risk and fraud management and card 
payment processing. For ATH debit network and processing services, revenues are primarily driven by the number of 
transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the 
leasing POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on 
file, transactions and authorizations processed, the number of cards embossed and other processing services. 

The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of 
payment. In the Merchant Acquiring segment, revenues include a discount fee and membership fees charged to merchants, debit 
network fees and rental fees from POS devices and other equipment, net of credit card interchange and assessment fees charged 
by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee is generally a percentage of 
the transaction value. EVERTEC also charge merchants for other services that are unrelated to the number of transactions or the 
transaction value.

The Business Solutions segment consists of revenues from a full suite of business process management solutions in various 
product areas such as core bank processing, network hosting and management, IT professional services, business process 
outsourcing, item processing, cash processing, and fulfillment. Core bank processing and network services revenues are derived 
in part from a recurrent fee and from fees based on the number of accounts on file (i.e. savings or checking accounts, loans, 
etc.) or computer resources utilized. Revenues from other processing services within the Business Solutions segment are 
generally volume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller of 
hardware and software products and these resale transactions are generally one-time transactions.

In addition to the four operating segments described above, Management identified certain functional cost areas that operate 
independently and do not constitute businesses in themselves. These units could neither be concluded as operating segments nor 
could they be combined with any other operating segments. Therefore, these units are aggregated and presented as “Corporate 
and Other” category in the financial statements alongside the operating segments. The Corporate and other category consists of 
corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous 
expenses that are not included in the operating segments. The overhead and leveraged costs relate to activities such as:

•  marketing, 
• 
• 

corporate finance and accounting, 
human resources, 

F - 36

EVERTEC, Inc. Notes to Consolidated Financial Statements

• 
• 
• 
• 
• 
• 
• 

legal, 
risk management functions, 
internal audit, 
corporate debt related costs, 
non-operating depreciation and amortization expenses generated as a result of the Merger, 
intersegment revenues and expenses, and 
other non-recurring fees and expenses that are not considered when management evaluates financial performance at a 
segment level

The CODM reviews the operating segments separate financial information to assess performance and to allocate resources. 
Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted Earnings 
before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"). Adjusted EBITDA is defined as EBITDA further 
adjusted to exclude unusual items and other adjustments. Adjusted EBITDA, as it relates to operating segments, is presented in 
conformity with Accounting Standards Codification Topic 280, "Segment Reporting" given that it is reported to the CODM for 
purposes of allocating resources. Segment asset disclosure is not used by the CODM as a measure of segment performance 
since the segment evaluation is driven by revenues and adjusted EBITDA performance. As such, segment assets are not 
disclosed in the notes to the accompanying consolidated financial statements.

The following tables set forth information about the Company’s operations by its four business segments for the periods 
indicated below. Historical information has been conformed to the updated presentation.

(Dollar amounts in thousands)

Payment
Services - 
Puerto Rico & 
Caribbean

Payment
Services - 
Latin America

Merchant
Acquiring, net

Business
Solutions

Corporate and 
Other (1)

Total

December 31, 2017

Revenues

$

101,687

$

62,702

$

85,778

$

189,077

$

Operating costs and expenses

Depreciation and amortization

Non-operating income (expenses)

EBITDA

Compensation and benefits (2)

Transaction, refinancing, exit 
activity and other fees (3)

57,463

8,993

2,229

55,446

589

66,786

8,880

8,726

13,522

816

57,574

2,254

1

30,459

573

119,761

15,774

13

85,103

1,687

2,499

3,220

6,465

—

Adjusted EBITDA

$

58,534

$

17,558

$

37,497

$

86,790

$

(32,100) $
19,477

28,349
(7,708)
(30,936)
6,090

407,144

321,061

64,250

3,261

153,594

9,755

2,495
(22,351) $

14,679

178,028

(1) 

(2) 
(3) 

Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and 
intersegment eliminations. Intersegment eliminations predominantly reflect the $32.1 million processing fee from 
Payments Services - Puerto Rico and Caribbean to Merchant Acquiring and cost transfer fees from Corporate and Other 
to Payment Services Latin America for leveraged services and management fees.
Primarily represents share-based compensation and other compensation expense and severance payments.
Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement and an 
impairment charge and contractual fee accrual for a third party software solution that was determined to be 
commercially unviable.

F - 37

EVERTEC, Inc. Notes to Consolidated Financial Statements

December 31, 2016

(Dollar amounts in thousands)

Payment
Services - 
Puerto Rico & 
Caribbean

Payment
Services - 
Latin America

Merchant
Acquiring, net

Business
Solutions

Corporate and 
Other (1)

Total

Revenues

$

99,680

$

47,162

$

91,248

$

184,276

$

Operating costs and expenses

Depreciation and amortization

Non-operating income (expenses)

EBITDA

Compensation and benefits (2)
Transaction, refinancing, exit 
activity and other fees (3)

49,128

7,597

2,238

60,387
637

2,062

45,304

7,285

5,584

14,727
627

52,771

2,672

—

41,149
480

113,082

13,783

24

85,001
1,961

—

—

2,277

Adjusted EBITDA

$

63,086

$

15,354

$

41,629

$

89,239

$

(32,859) $
22,077

28,230
(7,354)
(34,060)
6,777

389,507

282,362

59,567

492

167,204
10,482

5,650
(21,633) $

9,989

187,675

(1) 

(2) 
(3) 

Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and 
intersegment eliminations. Intersegment eliminations predominantly reflect the $32.9 million processing fee from 
Payments Services - Puerto Rico and Caribbean to Merchant Acquiring and cost transfer fees from Corporate and Other 
to Payment Services Latin America for leveraged services and management fees.
Primarily represents share-based compensation and other compensation expense and severance payments.
Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement and 
consulting, audit and legal expenses incurred as part of the prior year restatement of financial results, certain fees paid to 
resolve a software maintenance contract mater, fees paid in connection with the debt refinancing and a software 
impairment charge.

December 31, 2015

(Dollar amounts in thousands)

Payment
Services - 
Puerto Rico & 
Caribbean

Payment
Services - 
Latin America

Merchant
Acquiring, net

Business
Solutions

Corporate and 
Other (1)

Total

Revenues

$

99,311

$

37,523

$

85,411

$

179,532

$

Operating costs and expenses

Depreciation and amortization
Non-operating income (expenses)

EBITDA

Compensation and benefits (2)
Transaction, refinancing, exit 
activity and other fees (3)

48,853

7,488

2,909

60,855

1,420

35,790

5,766

4,147

11,646

132

42,804

1,438

—

44,045

1,361

117,079

16,128

428

79,009

4,044

22

22

41

139

Adjusted EBITDA

$

62,297

$

11,800

$

45,447

$

83,192

$

(28,249) $
25,642

34,154
(5,031)
(24,768)
5,280

373,528

270,168

64,974

2,453

170,787

12,237

2,928
(16,560) $

3,152

186,176

(1) 

(2) 
(3) 

Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and 
intersegment eliminations. Intersegment eliminations predominantly reflect the $28.2 million processing fee from 
Payments Services - Puerto Rico and Caribbean to Merchant Acquiring and cost transfer fees from Corporate and Other 
to Payment Services Latin America for leveraged services and management fees.
Primarily represents share-based compensation and other compensation expense and severance payments. 
Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement and 
reimbursements received for certain software maintenance expenses as part of the Merger.

F - 38

EVERTEC, Inc. Notes to Consolidated Financial Statements

The reconciliation of EBITDA to consolidated net income is as follows:

(Dollar amounts in thousands)
Total EBITDA

Less:

Income tax expense (benefit)

Interest expense, net

Depreciation and amortization

Net Income

Years ended December 31,

2017

2016

2015

$

153,594

$

167,204

$

170,787

4,780

29,145

64,250

8,271

24,240

59,567

$

55,419

$

75,126

$

(3,335)
23,771

64,974

85,377

The geographic segment information below is classified based on the geographic location of the Company’s subsidiaries:

(Dollar amounts in thousands)
Revenues (1)

Puerto Rico

Caribbean
Latin America

Total revenues

Years ended December 31,

2017

2016

2015

$

$

329,533

$

326,073

$

14,909
62,702

16,272
47,162

407,144

$

389,507

$

322,457

13,551
37,520

373,528

(1) 

Revenues are based on subsidiaries’ country of domicile.

Major customers

For the years ended December 31, 2017, 2016 and 2015, the Company had one major customer which accounted for 
approximately $175.4 million or 43%, $174.4 million or 45%, and $167.3 million or 45%, respectively, of total revenues. See 
Note 21.

The Company’s next largest customer, the Government of Puerto Rico, consolidating all individual agencies and public 
corporations, represented 7%, 7% and 9% of the Company’s total revenues for the years ended December 31, 2017, 2016 and 
2015, respectively.

Note 24—Subsequent Events

The Company has performed an evaluation of all events occurring subsequent to December 31, 2017; Management has 
determined that there are no events occurring in this period that require disclosure in or adjustment to the accompanying 
financial statements. 

F - 39

 
 
 
Schedule I

EVERTEC, Inc. Condensed Financial Statements
Parent Company Only

Condensed Balance Sheets

(Dollar amounts in thousands)
Assets
Current assets:
Cash
Prepaid expenses and other assets
Prepaid income tax

Total current assets

Investment in subsidiaries, at equity

Total assets

Liabilities and stockholders’ equity
Current liabilities:

Accrued liabilities
Accounts payable

Total current liabilities

Deferred tax liability, net
Other long-term liabilities

Total liabilities

Stockholders’ equity:
Common stock
Additional paid-in capital
Accumulated earnings
Accumulated other comprehensive loss, net of tax

Total stockholders’ equity

Total liabilities and stockholders’ equity

Condensed Statements of Income and Comprehensive Income

(Dollar amounts in thousands)
Non-operating income (expenses)
Equity in earnings of subsidiaries
Interest income
Other expenses

Income before income taxes

Income tax benefit
Net income

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments
Gain (loss) on cash flow hedge
Total comprehensive income

F - 40

December 31,

2017

2016

$

$

$

$

1,679
24
1,594
3,297
155,666
158,963

224
359
583
8,660
5,608
14,851

723
5,350
148,887
(10,848)
144,112
158,963

$

$

$

$

3,278
377
21
3,676
126,227
129,903

1,697
79
1,776
11,641
11,810
25,227

726
—
116,341
(12,391)
104,676
129,903

Years ended December 31,

2017

2016

2015

$

$

$

49,162
301
(1,428)
48,035
(7,019)
55,054

(635)
2,178
56,597

$

$

75,373
244
(1,351)
74,266
(770)
75,036

(3,360)
(1,449)
70,227

$

81,161
232
(1,686)
79,707
(5,670)
85,377

(545)
(515)
84,317

 
 
Schedule I

Condensed Statements of Cash Flows

(Dollar amounts in thousands)
Cash flows from operating activities

Cash flows from financing activities
Dividends paid
Repurchase of common stock
Withholding taxes paid on share-based compensation

Net cash used in financing activities

Net increase in cash
Cash at beginning of the period

Cash at end of the period

Years ended December 31,

2017

2016

2015

$

29,422

$

71,795

$

86,237

(21,762)
(7,671)
(1,588)
(31,021)
(1,599)
3,278
1,679

$

(29,696)
(39,946)
(548)
(70,190)
1,605
1,673
3,278

$

(30,921)
(54,949)
(306)
(86,176)
61
1,612
1,673

$

F - 41

 
shareholder information
Corporate Headquarters - Puerto Rico
Road #176 km 1.3 Cupey Bajo 
Río Piedras, Puerto Rico 00926

PO Box 364527
San Juan, Puerto Rico 00936-4527
t. 787.759.9999  f. 787.250.7356
www.evertecinc.com

form 10-k
(cid:40)(cid:89)(cid:72)(cid:85)(cid:87)(cid:72)(cid:70)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:192)(cid:79)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)
and Exchange Commission (SEC) an Annual 
Report on Form 10-K for the year ended 
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:26)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:183)(cid:86)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)
(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:54)(cid:40)(cid:38)(cid:3)(cid:192)(cid:79)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:80)(cid:68)(cid:92)(cid:3)(cid:69)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:72)(cid:71)(cid:3)(cid:68)(cid:87)(cid:3)
www.sec.gov or at www.evertecinc.com, Investor 
Relations section, SEC Filings link.

investor relations
Kay Sharpton,
Vice President of Investor Relations
t. 787.773.5442
ksharpton@evertecinc.com

annual meeting of stockholders
The Annual Meeting of Stockholders will be held 
on May 24, 2018 at 9:00 a.m. AST at the
Condado Vanderbilt Hotel, Dorado Room
1055 Ashford Ave. San Juan, Puerto Rico, 00907

independent registered public
accounting firm
Deloitte & Touche LLP
350 Chardón Ave., Ste 700
San Juan, Puerto Rico 00918-2140
t. 787.282.5300 - www.deloitte.com

transfer agent and registrar
Computershare 
PO Box 43078 - Providence, RI 02940-3078
t. 800.568.3476 - www.computershare.com

common stock listing
(cid:55)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:183)(cid:86)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:76)(cid:86)(cid:3)(cid:79)(cid:76)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
New York Stock Exchange (NYSE) under the 
symbol EVTC.

board of directors and board committees
(cid:41)(cid:85)(cid:68)(cid:81)(cid:78)(cid:3)(cid:42)(cid:17)(cid:3)(cid:39)(cid:183)(cid:36)(cid:81)(cid:74)(cid:72)(cid:79)(cid:82)(cid:15)(cid:3)
Chairman of the Board
(cid:48)(cid:82)(cid:85)(cid:74)(cid:68)(cid:81)(cid:3)(cid:48)(cid:17)(cid:3)(cid:54)(cid:70)(cid:75)(cid:88)(cid:72)(cid:86)(cid:86)(cid:79)(cid:72)(cid:85)(cid:15)(cid:3)(cid:45)(cid:85)(cid:17)(cid:15)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85)
(cid:50)(cid:79)(cid:74)(cid:68)(cid:3)(cid:37)(cid:82)(cid:87)(cid:72)(cid:85)(cid:82)(cid:15)
Director 
(cid:45)(cid:82)(cid:85)(cid:74)(cid:72)(cid:3)(cid:36)(cid:17)(cid:3)(cid:45)(cid:88)(cid:81)(cid:84)(cid:88)(cid:72)(cid:85)(cid:68)(cid:15)
Director 
(cid:55)(cid:72)(cid:85)(cid:72)(cid:86)(cid:76)(cid:87)(cid:68)(cid:3)(cid:47)(cid:82)(cid:88)(cid:69)(cid:85)(cid:76)(cid:72)(cid:79)(cid:15)
Director 
(cid:49)(cid:112)(cid:86)(cid:87)(cid:82)(cid:85)(cid:3)(cid:50)(cid:17)(cid:3)(cid:53)(cid:76)(cid:89)(cid:72)(cid:85)(cid:68)(cid:15)
Director 
(cid:36)(cid:79)(cid:68)(cid:81)(cid:3)(cid:43)(cid:17)(cid:3)(cid:54)(cid:70)(cid:75)(cid:88)(cid:80)(cid:68)(cid:70)(cid:75)(cid:72)(cid:85)(cid:15)
Director 
(cid:37)(cid:85)(cid:76)(cid:68)(cid:81)(cid:3)(cid:45)(cid:17)(cid:3)(cid:54)(cid:80)(cid:76)(cid:87)(cid:75)(cid:15)
Director
(cid:55)(cid:75)(cid:82)(cid:80)(cid:68)(cid:86)(cid:3)(cid:58)(cid:17)(cid:3)(cid:54)(cid:90)(cid:76)(cid:71)(cid:68)(cid:85)(cid:86)(cid:78)(cid:76)(cid:15)
Director

executive officers

(cid:48)(cid:82)(cid:85)(cid:74)(cid:68)(cid:81)(cid:3)(cid:48)(cid:17)(cid:3)(cid:54)(cid:70)(cid:75)(cid:88)(cid:72)(cid:86)(cid:86)(cid:79)(cid:72)(cid:85)(cid:15)(cid:3)(cid:45)(cid:85)(cid:17)(cid:15)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85)
(cid:51)(cid:72)(cid:87)(cid:72)(cid:85)(cid:3)(cid:45)(cid:17)(cid:3)(cid:54)(cid:17)(cid:3)(cid:54)(cid:80)(cid:76)(cid:87)(cid:75)(cid:15)
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:55)(cid:85)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:85)
(cid:51)(cid:68)(cid:82)(cid:79)(cid:68)(cid:3)(cid:51)(cid:112)(cid:85)(cid:72)(cid:93)(cid:15)
Executive Vice President - Human Resources 
(cid:38)(cid:68)(cid:85)(cid:79)(cid:82)(cid:86)(cid:3)(cid:45)(cid:17)(cid:3)(cid:53)(cid:68)(cid:80)(cid:116)(cid:85)(cid:72)(cid:93)(cid:15)
Executive Vice President -  Puerto Rico Sales
(cid:47)(cid:88)(cid:76)(cid:86)(cid:3)(cid:36)(cid:17)(cid:3)(cid:53)(cid:82)(cid:71)(cid:85)(cid:116)(cid:74)(cid:88)(cid:72)(cid:93)(cid:15)
General Counsel and Executive Vice President
Corporate Development 
(cid:42)(cid:88)(cid:76)(cid:79)(cid:79)(cid:79)(cid:72)(cid:85)(cid:80)(cid:82)(cid:3)(cid:53)(cid:82)(cid:86)(cid:83)(cid:76)(cid:74)(cid:79)(cid:76)(cid:82)(cid:86)(cid:76)(cid:15)
Executive Vice President,
Product, Marketing and Innovation
(cid:51)(cid:75)(cid:76)(cid:79)(cid:76)(cid:83)(cid:3)(cid:40)(cid:17)(cid:3)(cid:54)(cid:87)(cid:72)(cid:88)(cid:85)(cid:72)(cid:85)(cid:15)
Executive Vice President,
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85)
(cid:48)(cid:76)(cid:74)(cid:88)(cid:72)(cid:79)(cid:3)(cid:57)(cid:76)(cid:93)(cid:70)(cid:68)(cid:85)(cid:85)(cid:82)(cid:81)(cid:71)(cid:82)(cid:15)
Executive Vice President, Payment Processing 
Puerto Rico and Caribbean, Business Solutions and
Merchant Acquiring

Committee key:

Information 
Audit              Compensation                                 
Technology

Nominating
and Corporate
Governance

Denote
Committee Chair

 
a n n u a l   r e p o r t   2 0 1 7