iGATE Corporation
Del
iGATE Reports Resilient 2012; Net Income Up 110% Year Over Year
Launched "Business Outcomes" Brand Campaign; Ranked "Best IT Employer" in India
and No.2 in Canada
FREMONT, Calif., 2013-01-17 13:31 CET (GLOBE NEWSWIRE) --
iGATE Corporation (iGATE or the Company) (Nasdaq:IGTE), the first integrated
Technology and Operations (iTOPS) company providing "Business Outcomes" based
solutions, today announced its financial results for the fourth quarter and
year ended December 31, 2012.
Fourth Quarter Highlights
-- Revenues for the fourth quarter of 2012 were $271.6 million
-- Compared with $267.7 million in the fourth quarter of 2011
-- Compared with $271.1 million in the third quarter of 2012
-- Net Income attributable to iGATE Corporation for the fourth quarter of 2012
was $32.2 million
-- Compared with $15.3 million in the fourth quarter of 2011
-- Compared with $28.3 million in the third quarter of 2012
-- Gross margin was 40.6% for the fourth quarter of 2012
-- Compared with 40.3% in the fourth quarter of 2011
-- Compared with 39.8% in the third quarter of 2012
-- Diluted earnings per share for the fourth quarter of 2012 were $0.31 GAAP
and $0.47 non-GAAP
-- Compared with $0.11 GAAP in the fourth quarter of 2011 and $0.27 non-GAAP
in the fourth quarter of 2011
-- Compared with $0.27 GAAP in the third quarter of 2012 and $0.46 non-GAAP in
the third quarter of 2012
-- Adjusted EBITDA was $71.9 million for the fourth quarter of 2012
-- Compared with $68.1 million in the fourth quarter of 2011
-- Compared with $68.6 million in the third quarter of 2012
-- The Company added 14 new customers during the fourth quarter, including
seven Fortune 1000 companies
-- As of December 31, 2012, the Company had 27,554 employees
Full Year Highlights
-- Revenues for the year ended December 31, 2012 were $1,073.9 million
-- Compared with $779.6 million for the year ended December 31, 2011
-- Net Income attributable to iGATE Corporation for the year ended December
31, 2012 was $97.2 million
-- Compared with $51.5 million for the year ended December 31, 2011
-- Gross margin was 39.5% for the year ended December 31, 2012
-- Compared with 38.0% for the year ended December 31, 2011
-- Diluted earnings per share were $0.87 GAAP and $1.58 non-GAAP
-- Compared with $0.38 GAAP and $0.89 non-GAAP for the year ended December 31,
2011
-- Adjusted EBITDA was $272.1 million for the year ended December 31, 2012
-- Compared with $173.5 million for the year ended December 31, 2011
On the performance of the Company in 2012, Phaneesh Murthy, Chief Executive
Officer, iGATE, said, "I am happy that we achieved high earnings growth in
2012. I am also pleased with the increased acceptance of our iTOPS model among
our customers and prospects with a large chunk of our customer pipeline and
recent wins coming from our outcomes-based proposition."
"I believe that our recently launched brand campaign will continue to improve
our customer pipeline in this area," he added.
Sujit Sircar, Chief Financial Officer, iGATE, said, "I am pleased with the
results of our corporate restructuring in 2012. We successfully carried out the
delisting process in India and further completed the consolidations of our U.S.
subsidiaries. I am happy with the operating cash flow generation of more than
$100 million in 2012 and our cash/investment exceeding $600 million as of Dec
31 of the year."
Srinivas Kandula, EVP and Global Head, HR, iGATE said, "We have been ranked the
Best IT Employer in the Dataquest-CMR Survey, reinstating our top position in
India. For the first time, we participated in the 'Best Employer Survey' in
Canada conducted by Aon Hewitt and Queen's University, and I am pleased that we
have been ranked No. 2 in that survey. This conforms to our stated mission of
being among the top three employers in the various talent markets in which we
operate."
Fourth Quarter and Fiscal Year 2012 Operating Results
Results of the fourth quarter and full fiscal year for 2012 and 2011, on GAAP
and non-GAAP basis, are provided in the table below.
Q4 FY12 Q4 FY11 Y/Y FY12 FY11 Y/Y
--------------------------------------------
Net revenue ($Millions) 271.6 267.7 1% 1073.9 779.6 38%
----------------------------------------------------------------------------
Operating margin ($Millions) 57.1 51.5 11% 207.0 105.9 95%
----------------------------------------------------------------------------
GAAP net income ($Millions) 32.2 15.3 110% 97.2 51.5 89%
----------------------------------------------------------------------------
GAAP diluted EPS ($) 0.31 0.11 182% 0.87 0.38 129%
----------------------------------------------------------------------------
Non-GAAP net income ($Millions) 36.3 20.1 81% 122.4 67.0 83%
----------------------------------------------------------------------------
Non-GAAP diluted EPS ($) 0.47 0.27 74% 1.58 0.89 78%
----------------------------------------------------------------------------
Key New Customers during the Fourth Quarter
-- A Fortune 100 company, one of the largest supplemental insurance providers
in the U.S., engaged iGATE to launch a senior care insurance product in a
short timeframe. Through its state-of-the-art iTOPS TPA platform, iGATE
ensured that the cost of administration of the insurance product will be
variable with a low percentage of premiums, ensuring high margins and
profitability for the client.
-- The judiciary department of a U.S. state has engaged iGATE to improve the
timeliness and quality of its judicial services. As part of the engagement,
iGATE will provide technical consulting services to enhance the
functionalities of the state's judicial management system, improving the
system's development and implementation of case management requirements.
-- A Fortune 1000 U.S.-based company with a global presence in servicing
pharmaceutical and biotech companies, hospitals and clinical diagnostic
labs, hired iGATE to help it improve its operational efficiency through the
adoption of mobility practices. iGATE will formulate an enterprise-wide
mobility strategy and provide its expertise in mobile application
development enabling secure mobile commerce across the client's
applications, devices and platforms. These practices and strategies are
intended to improve the client's productivity, reduce its operational costs
and improve customer satisfaction.
-- The medical devices group of a worldwide designer and manufacturer of
precision motion control products engaged iGATE to help design and develop
its next generation "smart pumps." These pumps, which will be implemented
in infusion therapy, post-operative pain management and enteral nutrition,
may also be utilized in a wide spectrum of this market segment, including
the intensive care, ambulatory care and alternate care segments.
-- A Fortune 1000 company in the U.S. that works with agricultural products,
specialty chemicals and industrial chemicals engaged iGATE to facilitate
its "Business Transformation" program. As part of this engagement, iGATE
will implement SAP enterprise systems across the client's multiple
locations.
-- A global semiconductor-manufacturing firm contracted with iGATE to reduce
its manufacturing costs and improve its profitability. iGATE will deploy
its product and engineering skills to redesign and optimize the client's
manufacturing execution system. The redesigned system is expected to
enhance the client's production efficiency.
Awards and Highlights
-- iGATE was ranked India's Best Employer for the Year 2012 in the
Dataquest-CMR Best Employers' Survey and retains its position in the top
three employers for the sixth consecutive year.
-- iGATE was ranked No.2 in the 'Best Employer Survey in Greater Toronto Area'
conducted by Aon Hewitt in collaboration with Queen's University, Canada.
-- iGATE was awarded the prestigious Golden Peacock Innovation Management
Award for the year 2012 in the 'Information Technology' category.
-- iGATE received a 'Best In Class Global Excellence Award' from the Asia
Pacific Quality Organization.
-- iGATE won first prize for its paper on "Software Project Success Prediction
Model based on Binary Logistics Regression & Artificial Neural Network
(ANN)" which was presented at ICONQROR-2013 (International Conference on
Quality, Reliability and Operations Research).
-- iGATE reported a 22% reduction in its carbon footprint per employee per
year from 4.23 tons in 2008 to 3.29 tons in 2012.
Conference Call and Webcast
The Company has scheduled its Earnings Conference Call on Thursday, January 17,
2013 to discuss the results of its fourth quarter and full year ended December
31, 2012. Senior management of the Company will discuss the Company's financial
performance for the quarter and answer participants' questions during the call.
Time: 08.00-9.00 am Eastern Time / 05.00-06.00 am Pacific Time
Toll Free: 877-407-8037
Toll: 201-689-8037
The call will be webcast live on iGATE's website (www.igate.com) on the
Investor Relations page under the section titled "Events." Participants are
requested to log in 10 minutes prior to the start of the webcast. The on-demand
version of the webcast will be available on the iGATE website shortly after the
call.
Investors, potential investors, shareholders and bond holders can access the
telephonic replay by dialing 877-660-6853 (toll free) or 201-612-7415 (toll)
and entering conference number 406952. The telephonic replay will be available
until January 24, 2013.
About Business Outcomes
iGATE's industry-first Business Outcomes-based approach focuses on the
realization of tangible and measurable results, unlike traditional models which
are driven by work, effort, time and manpower. By integrating technology and
processes in a proprietary way and pricing services on results, iGATE exchanges
fixed costs for a variable cost structure in an attempt to get clients to
pay-for-results-only while enabling them to adjust to the peaks and valleys of
their demand.
About iGATE
iGATE Corporation is the first integrated technology and operations (iTOPS)
company providing full-spectrum consulting, technology and business process
outsourcing, and product and engineering solutions on a Business Outcomes-based
model. Armed with over three decades of IT Services experience and powered by
the iTOPS platform, iGATE's multi-location global organization has a talent
pool of more than 27,500 employees and consistently delivers effective
solutions to over 300 companies including Fortune 1000 clients spanning
verticals such as: banking and financial services; insurance and healthcare;
life sciences; manufacturing, retail, distribution and logistics; media,
entertainment, leisure and travel; energy and utilities; public sector; and
independent software vendors. Please visit (www.igate.com) for more
information.
iGATE Corporation is listed on NASDAQ under the symbol "IGTE."
The iGATE Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5150
Use of non-GAAP Financial Measures
This press release contains non-GAAP financial measures as defined by the
Securities and Exchange Commission. These non-GAAP measures are not in
accordance with, or an alternative for measures prepared in accordance with,
generally accepted accounting principles in the United States and may be
different from non-GAAP measures used by other companies. In addition, these
non-GAAP measures are not based on any comprehensive set of accounting rules or
principles. Reconciliations of these non-GAAP measures to their comparable GAAP
measures are included in the attached financial tables.
iGATE believes that non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with iGATE's results of operations as
determined in accordance with GAAP and that these measures should only be used
to evaluate iGATE's results of operations in conjunction with the corresponding
GAAP measures. These non-GAAP measures should be considered supplemental in
nature and should not be considered in isolation or be construed as being more
important than comparable GAAP measures.
iGATE believes that providing Adjusted EBITDA and non-GAAP net income and
non-GAAP diluted earnings per share in addition to the related GAAP measures
provides investors with greater transparency to the information used by iGATE's
management in its financial and operational decision-making. These non-GAAP
measures are also used by management in connection with iGATE's performance
compensation programs.
More specifically, the non-GAAP financial measures contained herein exclude the
following items:
-- Amortization of intangible assets: Intangible assets comprise value of
customer relationships from the recent acquisition of iGATE Computer
Systems Limited (formerly known as Patni Computer Systems Limited and
referred to herein as "Patni") and the recent delisting of iGATE's Indian
subsidiary. iGATE incurs charges relating to the amortization of these
intangibles. These charges are included in iGATE's GAAP presentation of
earnings from operations, operating margin, net income and diluted earnings
per share. iGATE excludes these charges for purposes of calculating these
non-GAAP measures.
-- Stock-based compensation: Although stock-based compensation is an important
component of compensation of iGATE's employees and executives, determining
the fair value of the stock-based instruments involves a high degree of
judgment and estimation and the expense recorded may not reflect the actual
value realized upon the future exercise or termination of the related
stock-based awards. Furthermore, unlike cash compensation, the value of
stock-based compensation is determined using a complex formula that
incorporates factors, such as market volatility, that are beyond the
Company's control. Management believes it is useful to exclude stock-based
compensation in order to better understand the long-term performance of
iGATE's core business.
-- Acquisition expenses: iGATE incurs costs related to its acquisitions, which
are inconsistent in amount and frequency and are significantly impacted by
the timing and nature of iGATE's acquisitions. iGATE believes that
eliminating these expenses for purposes of calculating these non-GAAP
measures facilitates a more meaningful evaluation of iGATE's current
operating performance and comparisons to its past operating performance.
-- Foreign Exchange gain: The Company entered into forward foreign exchange
contracts to mitigate the risk of changes in foreign exchange rates on
payments related to the acquisition of Patni. The Company also recognized
favorable foreign currency gain on re-measurement of escrow account balance
maintained for facilitating payments related to the Patni acquisition.
iGATE believes that eliminating the non-capitalized items for purposes of
calculating these non-GAAP measures facilitates a more meaningful
evaluation of iGATE's current performance and comparisons to its past
performance.
In March 2012, the Company entered into a forward foreign exchange contract to
mitigate the risk of changes in foreign exchange rates on payments related to
the delisting of Patni. During the year 2012, the Company recognized foreign
currency loss on re-measurement of escrow account balance and foreign exchange
gain on re-measurement of redeemable non-controlling interest liability. iGATE
believes that eliminating the non-capitalized items for purposes of calculating
these non-GAAP measures facilitates a more meaningful evaluation of iGATE's
current performance and comparisons to its past performance.
-- Severance Cost: As a result of the acquisition of Patni, iGATE incurred
severance costs in connection with the termination of the services of some
of Patni's employees. iGATE believes that eliminating these severance costs
for purposes of calculating these non-GAAP measures facilitates a more
meaningful evaluation of iGATE's current operating performance and
comparisons to its past operating performance.
-- Delisting expenses: iGATE voluntarily delisted the equity shares of its
majority owned subsidiary, Patni, from the National Stock Exchange of India
Limited and the Bombay Stock Exchange Limited and the American Depository
Shares from the New York Stock Exchange. Delisting is an infrequent
activity and expenses incurred in connection with the delisting are
inconsistent in amount and are significantly impacted by the timing and
nature of the delisting. iGATE believes that eliminating these expenses for
purposes of calculating these non-GAAP measures facilitates a more
meaningful evaluation of iGATE's current operating performance and
comparisons to its past operating performance.
-- Merger and reorganization expenses: iGATE is merging and reorganizing its
overseas subsidiaries and branches with a view to simplifying the corporate
structure and has incurred legal and professional expenses in this
connection. Merger and reorganization is an infrequent activity and
expenses incurred in connection therein are inconsistent in amount and
significantly impacted by the timing and nature of the reorganization.
iGATE believes that eliminating these expenses for purposes of calculating
these non-GAAP measures facilitates a more meaningful evaluation of iGATE's
current operating performance and comparisons to its past operating
performance.
-- Preferred dividend and accretion to preferred stock: The Company has issued
8.00% Series B Preferred Stock. The Company also incurred issuance costs
which have been netted against the proceeds received from the issuance of
Series B Preferred Stock. The Series B Preferred Stock is being accreted
over a period of six years. The Company believes that eliminating these
expenses for purposes of calculating these non-GAAP measures facilitates a
more meaningful evaluation of iGATE's current operating performance and
comparisons to its past operating performance.
From time to time in the future, there may be other items that iGATE may
exclude in presenting its financial results.
Forward-Looking Statements
Statements contained in this press release regarding the benefits of the Patni
acquisition, the business outlook, the demand for the products and services,
and all other statements in this release other than recitation of historical
facts are forward-looking statements. Words such as "expect", "potential",
"believes", "anticipates", "plans", "intends" and other similar expressions are
intended to identify such forward-looking statements. Forward-looking
statements in the press release include, without limitation, forecasts of
market growth, future revenues, future expectations concerning growth of
business, cost competitiveness and expansion of global reach following the
acquisition, and other matters that involve known and unknown risks,
uncertainties and other factors that may cause results, levels of activity,
performance or achievements to differ materially from results expressed or
implied by this press release. Such risk factors include, among others:
difficulties encountered in integrating business; whether certain market
segments grow as anticipated; the competitive environment in the information
technology services industry and competitive responses to the Company's
acquisition of Patni; and whether iGATE can successfully provide
services/products and the degree to which these gain market acceptance.
Furthermore, in connection with the Patni acquisition, the Company has borrowed
significant amounts, including through the issuance of high yield notes, and
will need to use a significant portion of its cash flows to service such
indebtedness, as a result of which the Company might not have sufficient funds
to operate its businesses in the manner it intends or has operated in the past.
Additional risks relating to the Company are set forth in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2011, as well as the
Company's other reports filed with the Securities and Exchange Commission and
risks related to the business of Patni as set forth in Patni's Annual Report on
Form 20-F for the fiscal year ended December 31, 2011. Actual results may
differ materially from those contained in the forward-looking statements in
this press release. Any forward-looking statements are based on information
currently available to the Company and it assumes no obligation to update these
statements as circumstances change. This document does not constitute an offer
to purchase or to sell securities in any jurisdiction.
iGATE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
December December
31, 31,
2012 2011
(unaudited) (audited)
-------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 95,155 $ 75,440
Restricted cash 3,072 --
Short-term investments 510,816 354,528
Accounts receivable, net 163,027 172,711
Unbilled revenues 72,901 45,223
Prepaid expenses and other current assets 31,710 18,752
Prepaid income taxes 8,541 8,341
Deferred tax assets 16,447 20,574
Foreign exchange derivative contracts 782 277
Receivable from Mastech Holdings Inc. -- 187
-------------------------
Total current assets 902,451 696,033
Deposits and other assets 25,372 32,102
Prepaid income taxes 26,072 18,481
Property and equipment, net 167,252 175,672
Leasehold land 86,933 90,339
Deferred tax assets 31,024 30,456
Goodwill 493,141 511,060
Intangible assets, net 144,428 160,706
-------------------------
Total assets $ 1,876,673 $ 1,714,849
=========================
LIABILITIES, REDEEMABLE NON CONTROLLING INTEREST,
PREFERRED STOCK AND EQUITY
Current liabilities:
Accounts payable $ 7,799 $ 7,857
Line of credit 77,000 57,000
Term loans 35,000 --
Accrued payroll and related costs 54,802 71,913
Other accrued liabilities 78,351 77,988
Accrued income taxes 6,855 3,993
Foreign exchange derivative contracts 7,516 12,471
Deferred revenue 17,890 22,412
-------------------------
Total current liabilities 285,213 253,634
Other long-term liabilities 3,265 4,610
Senior notes 770,000 770,000
Term Loans 263,500 --
Foreign exchange derivative contracts -- 6,739
Accrued income taxes 17,272 17,672
Deferred tax liabilities 57,675 58,992
-------------------------
Total liabilities 1,396,925 1,111,647
-------------------------
Redeemable non controlling interest 32,422 --
-------------------------
Series B Preferred stock 378,474 349,023
-------------------------
Shareholders' equity:
Common Stock, par value $0.01 per share 585 577
Common stock in treasury, at cost (14,714) (14,714)
Additional paid-in capital 185,340 201,281
Retained earnings 172,224 104,493
Accumulated other comprehensive loss (274,583) (214,641)
-------------------------
Total iGATE Corporation shareholders' equity 68,852 76,996
Non controlling interest -- 177,183
-------------------------
Total equity 68,852 254,179
-------------------------
Total liabilities, redeemable non controlling $ 1,876,673 $ 1,714,849
interest, preferred stock and equity
=========================
iGATE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands)
Three Months ended Year ended
December 31, December 31,
2012 2011 2012 2011
(unaudite (unaudite (unaudited) (audited)
d) d)
---------------------------------------------
Revenues $ 271,582 $ 267,707 $ 1,073,930 $ 779,646
Cost of revenues (exclusive of 161,430 159,941 649,810 483,504
depreciation and amortization)
---------------------------------------------
Gross margin 110,152 107,766 424,120 296,142
Selling, general and 43,431 42,582 170,779 151,497
administrative expense
Depreciation and amortization 9,625 13,703 46,382 38,735
---------------------------------------------
Income from operations 57,096 51,481 206,959 105,910
Other income (loss), net (18,330) (14,151) (74,702) (21,638)
---------------------------------------------
Income before income taxes 38,766 37,330 132,257 84,272
Income tax expense 6,592 16,904 30,599 24,218
---------------------------------------------
Net income 32,174 20,426 101,658 60,054
Noncontrolling interest -- 5,149 4,476 8,586
---------------------------------------------
Net income attributable to iGATE 32,174 15,277 97,182 51,468
Corporation
Accretion to Preferred Stock 109 88 404 302
Preferred dividend 7,457 7,016 29,047 22,147
Net income attributable to iGATE $ 24,608 $ 8,173 $ 67,731 $ 29,019
common shareholders
=============================================
iGATE CORPORATION
Earnings Per Share
(Amounts in thousands, except per share data)
Three Months Year Ended
Ended December December 31,
31,
--------------------------------------
2012 2011 2012 2011
(unaudit (unaudi (unaudit (audited
ed) ted) ed) )
--------------------------------------
Net income attributable to iGATE $ 24,608 $ 8,173 $ 67,731 $ 29,019
common shareholders
Add: Dividends on Series B 7,457 7,016 29,047 22,147
Preferred Stock
--------------------------------------
32,065 15,189 96,778 51,166
Less: Dividends paid on
Series B Preferred Stock [A] 7,457 7,016 29,047 22,147
--------------------------------------
Undistributed Income $ 24,608 $ 8,173 $ 67,731 $ 29,019
======================================
Basic and Diluted allocation of
Undistributed Income
Common stock [B] 18,542 6,240 51,036 22,157
Unvested restricted stock [C] 15 24 40 84
Series B Preferred Stock [D] 6,051 1,909 16,655 6,778
--------------------------------------
$ 24,608 $ 8,173 $ 67,731 $ 29,019
======================================
Shares outstanding:
Common stock 57,543 56,706 57,543 56,706
Unvested restricted stock 45 214 45 214
Series B Preferred Stock 18,778 17,347 18,778 17,347
--------------------------------------
76,366 74,267 76,366 74,267
======================================
Weighted average shares
outstanding:
Common stock [E] 57,499 56,671 57,183 56,523
Unvested restricted stock [F] 45 213 45 217
Participating preferred stock [G] 18,778 17,347 18,778 17,347
--------------------------------------
76,322 74,231 76,006 74,087
======================================
Weighted average common stock 57,499 56,671 57,183 56,523
outstanding
Dilutive effect of stock options 1,614 1,390 1,638 1,420
and restricted shares outstanding
--------------------------------------
Dilutive weighted average shares [H] 59,113 58,061 58,821 57,943
outstanding
======================================
Distributed earnings per share:
Participating preferred stock [I=A/G $ 0.40 $ 0.40 $ 1.55 $ 1.28
]
Undistributed earnings per share:
Common stock [J=B/E $ 0.32 $ 0.11 $ 0.89 $ 0.39
]
Unvested restricted stock [K=C/F $ 0.32 $ 0.11 $ 0.89 $ 0.39
]
Participating preferred stock [L=D/G $ 0.32 $ 0.11 $ 0.89 $ 0.39
]
Basic earnings per share from
operations
Common Stock [J] $ 0.32 $ 0.11 $ 0.89 $ 0.39
Unvested restricted stock [K] $ 0.32 $ 0.11 $ 0.89 $ 0.39
Participating preferred stock [I+L] $ 0.72 $ 0.51 $ 2.44 $ 1.67
Diluted earnings per share from [[B+C] $ 0.31 $ 0.11 $ 0.87 $ 0.38
operations /H]
The number of outstanding participative convertible preferred stock for which
the earnings per share exceeded the earnings per share of common stock
aggregated to 18.8 million and 17.3 million for the three and twelve months
ended December 31,2012 and 2011, respectively.These shares were excluded from
the computation of diluted earnings per share because they were anti-dilutive.
iGATE CORPORATION
Reconciliation of Net Income, Net of Tax, to Adjusted EBITDA
(Amounts in thousands)
Three Months ended Year ended
December 31, December 31,
2012 2011 2012 2011
(unaudited) (unaudited) (unaudited (audited)
)
------------------------------------------------
Net income $ 32,174 $ 20,426 $ 101,658 $ 60,054
Adjustments
Depreciation and amortization 9,625 13,703 46,382 38,735
Interest expenses 21,267 17,774 83,416 50,608
Income tax expense 6,592 16,904 30,599 24,218
Other income, net (4,823) (7,393) (28,798) (15,894)
Foreign exchange loss/(gain) 1,886 3,770 20,084 (13,076)
Stock Based Compensation 3,004 1,869 12,274 10,737
Acquisition expenses -- -- -- 10,914
Severance expenses -- -- -- 6,164
Delisting expenses 1,497 997 5,029 997
Merger and reorganization 708 -- 1,472 --
expenses
------------------------------------------------
Adjusted EBITDA (a non-GAAP $ 71,930 $ 68,050 $ 272,116 $ 173,457
measure)
================================================
The Company presents the non-GAAP financial measures EBITDA and adjusted EBITDA
because management uses these measures to monitor and evaluate the performance
of the business and believes that the presentation of these measures will
enhance investors' ability to analyze trends in the business and evaluate the
Company's underlying performance relative to other companies in the industry.
iGATE CORPORATION
Reconciliation of Selected GAAP Measures to Non-GAAP Measures
(Amounts in thousands, except per share data)
Three Months ended Year ended
December 31, December 31,
2012 2011 2012 2011
(unaudit (unaudit (unaudite (audited
ed) ed) d) )
----------------------------------------
GAAP Net income attributable to iGATE $ 24,608 $ 8,173 $ 67,731 $ 29,019
common shareholders
Adjustments
Preferred dividend and accretion to 7,566 7,104 29,451 22,449
preferred stock
Amortization of Intangible assets, net 1,870 2,551 7,988 6,191
of taxes
Stock Based Compensation, net of taxes 2,044 1,804 8,485 8,530
Acquisition expenses, net of taxes -- -- -- 10,914
Delisting expenses, net of taxes 1,023 997 3,477 997
Merger and reorganization expenses 708 -- 1,472 --
Forex (gain) / loss on acquisition (1,504) (724) 3,755 (15,975)
hedging and remeasurement, net of
taxes
Severance cost, net of taxes -- 222 -- 4,897
----------------------------------------
Non-GAAP Net income attributable to $ 36,315 $ 20,127 $ 122,359 $ 67,022
iGATE common shareholders
========================================
Weighted average shares outstanding, 57,544 56,884 57,228 56,740
Basic
Add back: assumed preferred stock 18,778 17,347 18,778 17,347
conversion
----------------------------------------
Non-GAAP shares outstanding , Basic 76,322 74,231 76,006 74,087
========================================
Weighted average dilutive common shares 59,113 58,061 58,821 57,943
outstanding
Add back: assumed preferred stock 18,778 17,347 18,778 17,347
conversion
----------------------------------------
Weighted average dilutive common 77,891 75,408 77,599 75,290
equivalent shares outstanding
========================================
Basic EPS (GAAP) to Basic EPS
(Non-GAAP):
Basic EPS (GAAP) $ 0.32 $ 0.11 $ 0.89 $ 0.39
Preferred dividend and accretion to 0.10 0.10 0.39 0.30
preferred stock
Amortization of Intangible assets, net 0.03 0.04 0.10 0.08
of taxes
Stock Based Compensation, net of taxes 0.03 0.02 0.11 0.12
Acquisition expenses, net of taxes 0.00 0.00 0.00 0.15
Delisting expenses, net of taxes 0.01 0.01 0.05 0.01
Merger and reorganization expenses 0.01 0.00 0.02 0.00
Forex (gain) / loss on acquisition (0.02) (0.01) 0.05 (0.22)
hedging and remeasurement, net of
taxes
Severance cost, net of taxes 0.00 0.00 0.00 0.07
----------------------------------------
Basic EPS (Non-GAAP) $ 0.48 $ 0.27 $ 1.61 $ 0.90
========================================
Diluted EPS (GAAP) to Diluted EPS
(Non-GAAP):
Diluted EPS (GAAP) $ 0.31 $ 0.11 $ 0.87 $ 0.38
Preferred dividend and accretion to 0.10 0.10 0.38 0.30
preferred stock
Amortization of Intangible assets, net 0.03 0.04 0.10 0.08
of taxes
Stock Based Compensation, net of taxes 0.03 0.02 0.11 0.11
Acquisition expenses, net of taxes 0.00 0.00 0.00 0.15
Delisting expenses, net of taxes 0.01 0.01 0.05 0.01
Merger and reorganization expenses 0.01 0.00 0.02 0.00
Forex (gain) / loss on acquisition (0.02) (0.01) 0.05 (0.21)
hedging and remeasurement, net of
taxes
Severance cost, net of taxes 0.00 0.00 0.00 0.07
----------------------------------------
Diluted EPS (Non-GAAP) $ 0.47 $ 0.27 $ 1.58 $ 0.89
========================================
Non-GAAP Disclosure of Adjusted EBITDA
iGATE presents Adjusted EBITDA as a supplemental measure of its performance.
iGATE defines Adjusted EBITDA as net income plus (i) depreciation and
amortization, (ii) interest expense, (iii) income tax expense, minus (iv) other
income, net plus (v) foreign exchange loss, (vi) stock based compensation (vii)
acquisition expenses (viii) severance expenses, (ix) delisting expenses and (x)
merger and reorganization expenses. iGATE eliminated the impact of the above
because it does not consider them as indicative of its ongoing operating
performance. These adjustments are itemized below. You are encouraged to
evaluate these adjustments and the reasons iGATE considers them appropriate for
supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that
in the future iGATE may incur expenses that are the same as or similar to some
of the adjustments in this presentation. iGATE's presentation of Adjusted
EBITDA should not be construed as an inference that its future results will be
unaffected by unusual or non-recurring items.
iGATE presents Adjusted EBITDA because iGATE believes it assists investors and
analysts in comparing iGATE's performance across reporting periods on a
consistent basis by excluding items that it does not believe are indicative of
iGATE's core operating performance. In addition, iGATE uses Adjusted EBITDA:
(i) as a factor in evaluating management's performance when determining
incentive compensation, (ii) to evaluate the effectiveness of its business
strategies and (iii) to measure iGATE's compliance with certain covenants of
its credit agreement and indenture.
Adjusted EBITDA has limitations as an analytical tool. Some of these
limitations are:
-- Adjusted EBITDA does not reflect iGATE's cash expenditures or future
requirements of cash for capital expenditures or contractual commitments;
-- Adjusted EBITDA does not reflect changes in, or cash requirements for,
iGATE's working capital needs; and
-- Adjusted EBITDA does not reflect the significant interest expense, or the
cash requirements necessary to service interest or principal payments, on
iGATE's debts; although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often need to be replaced
in the future, and adjusted EBITDA does not reflect any cash requirements
for such replacements; non-cash compensation is and will remain a key
element of iGATE's overall long-term incentive compensation package,
although iGATE excludes it as an expense when evaluating its ongoing
operating performance for a particular period; Adjusted EBITDA does not
reflect the impact of certain cash charges resulting from matters iGATE
considers not to be indicative of its ongoing operations; and other
companies in iGATE's industry may calculate adjusted EBITDA differently
than iGATE does, limiting its usefulness as a comparative measure.
Because of these limitations, adjusted EBITDA should not be considered in
isolation or as a substitute for performance measures calculated in accordance
with GAAP. iGATE compensates for these limitations by relying primarily on its
GAAP results and using Adjusted EBITDA only supplementally.
CONTACT: Media Contact
Prabhanjan Deshpande "PD"
+91 80 4104 5006
PD@igate.com
Investor Contact
Araceli Roiz
+1 510 896 3007
araceli.roiz@igate.comInformation om Globenewswire
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