Smooth Integration Drives Margin to 2013 Goal Levels; Largest Single Phase Delivery Center Inaugurated in Bangalore
iGATE Corporation (iGATE or the Company) (Nasdaq:IGTE), the first integrated Technology and Operations (iTOPS) company providing Business Outcomes based solutions under the brand iGATE Patni, today announced its financial results for the fourth quarter and year ended December 31, 2011.
Fourth Quarter Highlights
-- Revenues for fourth quarter 2011 were $267.7 million.
-- Compared with $81.0 million in the fourth quarter 2010
-- Compared with $265.7 million in the third quarter 2011
-- Net Income for fourth quarter 2011 was $15.3 million.
-- Compared with $14.7 million in the fourth quarter 2010
-- Compared with $14.3 million in the third quarter 2011
-- Interest expense impacted net income by $17.8 million in the fourth
quarter 2011
-- Gross margin was 40.3 % for the fourth quarter 2011.
-- Compared with 42.7% in the fourth quarter 2010
-- Compared with 36.9 % in the third quarter 2011
-- Diluted earnings per share for the fourth quarter 2011 were $0.11 GAAP;
$0.27 non-GAAP.
-- Compared with $0.25 GAAP in fourth quarter 2010; $0.34 non-GAAP in
fourth quarter 2010
-- Compared with $0.10 GAAP in third quarter 2011; $0.26 non-GAAP in third
quarter 2011
-- Adjusted EBITDA was $68.1 million for the fourth quarter 2011.
-- Compared with $23.4 million in the fourth quarter 2010
-- Compared with $55.8 million in the third quarter 2011
-- 16 new customers were added during the fourth quarter, including three
Fortune 1000 companies.
-- Headcount was at 26,523 employees as of December 31, 2011.
Full Year Highlights
-- Revenues for the year ended December 31, 2011 were $779.6 million.
-- Compared with $280.6 million for the year ended December 31, 2010.
-- Net Income for the year ended December 31, 2011 was $51.5 million.
-- Compared with $51.8 million for the year ended December 31, 2010.
-- Interest expense impacted net income by $50.6 million.
-- Gross margin was 38.0% for the year ended December 31, 2011.
-- Compared with 40.2 % for the year ended December 31, 2010.
-- Diluted earnings per share were $0.38 GAAP; $0.90 non-GAAP.
-- Compared with $0.89 GAAP; $1.08 non-GAAP in the corresponding period in
2010.
-- Adjusted EBITDA was $173.5 million for the year ended December 31, 2011.
-- Compared with $72.4 million for the year ended December 31, 2010.
Expansion
-- iGATE Patni has invested $15 million into a new 260,000 sq. ft facility
in Bangalore. With a capacity of seating more than 2,500 people, this
building is the largest single phase delivery center equipped with state
of the art energy and green sustenance features.
-- A large Capital outlay of $120 million has been approved to build a
residential training facility in Pune along with a 5000 member capacity
delivery center, campus expansion in Mumbai, and another extra phase in
Bangalore.
On the performance of the Company in 2011, Phaneesh Murthy, Chief Executive Officer, iGATE Patni, said, "Fiscal year 2011 was a milestone year for iGATE Patni, with the combined entity ending the year with revenue run rate in excess of $1 billion. I am particularly happy with the way our integration with Patni has been going smoothly and at an accelerated pace ensuring value protection to all stakeholders."
On the outlook for 2012, Phaneesh Murthy said, "We are seeing that our differentiated outcomes-based business model is getting increased traction. I am also happy to report that it looks like almost all our top customers will be expanding work and programs with us."
Sujit Sircar, Chief Financial Officer, iGATE Patni, said, "With the integration in place and benefits of a single combined entity beginning to take shape, we have made significant savings in terms of costs during the year, to the extent of approximately $32 million. The depreciation of the rupee also had a positive impact of approximately a 3% on the Company's profitability in the fourth quarter. The rupee volatility is a concern in the longer run; however, in 2012 we will continue to sustain the benefits of our successful integration."
Fourth Quarter and Fiscal Year 2011 Operating Results
Results for the fourth quarter and full fiscal year of both 2011 and 2010, on both GAAP and non-GAAP basis, are provided in the table below.
Q4 Q4
FY11 FY10 Y/Y FY11 FY10 Y/Y
----- ---- ----- ----- ----- -----
Net revenue ($Millions) 267.7 81.0 230% 779.6 280.6 178% --------------------------------- ----- ---- ----- ----- ----- ----- Operating margin ($Millions) 51.5 15.4 234% 105.9 53.0 100% --------------------------------- ----- ---- ----- ----- ----- ----- GAAP net income ($Millions) 15.3 14.7 4% 51.5 51.8 (1%) --------------------------------- ----- ---- ----- ----- ----- ----- GAAP diluted EPS ($) 0.11 0.25 (56%) 0.38 0.90 (57%) --------------------------------- ----- ---- ----- ----- ----- ----- Non-GAAP net income ($Millions) 20.1 19.9 (1%) 67.0 62.2 8% --------------------------------- ----- ---- ----- ----- ----- ----- Non-GAAP diluted EPS ($) 0.27 0.34 (21%) 0.89 1.08 (18%) --------------------------------- ----- ---- ----- ----- ----- ----- Key New Customers and Projects during the Fourth Quarter -- A North America-based Fortune 1000 communications company chose iGATE Patni improving and providing a unified customer experience across its business units while at the same time standardizing and optimizing workforce management practices to achieve best in industry cost and efficiency. iGATE Patni will leverage its experience in executive dashboards and data analytics to provide an enterprise-wide view of its customer service performance. -- A North America based financial services firm selected iGATE Patni to redesign its dealer portal thus impacting customer satisfaction and increase the ability to cross sell products. The firm's current portal has an Advisor Center that helps creation of new accounts, allows Financial Advisors to manage their Client's Portfolios and generate different Reports. iGATE Patni will develop a new intuitive and self service portal that will provide better user experience to Financial Advisors, Broker dealers and Investment advisors along with faster turnover on key functions. -- An Indian state-owned Fortune 1000 company that is in the oil and gas sector chose iGATE Patni for its software development needs as the first "Unique Identification Authority of India (UIDAI)" opportunity in India. -- A leading American Wealth Management firm chose iGATE Patni for a Process Consulting engagement. As part of the engagement, iGATE Patni, through a combination of Six Sigma and other proprietary methodologies, will identify opportunities to reduce the operating expenses of the client. -- One of the largest and most diversified groups in the Middle East region operating in various sectors that includes Automobiles, Industrial Trading, Media, Retail, engaged iGATE Patni in an enterprise cost optimization initiative and provide Business Intelligence solutions across the Gulf Conglomerate's breadth of businesses. As part of the deal, iGATE Patni will replace different bespoke systems that were developed originally to meet the needs of individual organizations and implement an Oracle ERP on a single platform. -- A North America-based Fortune 1000 company that conducts business in the areas of diversified industrial manufacturing has signed a product engineering deal with iGATE Patni pursuant to which the Company will be responsible for developing a new generation of residential locks for the client that will enable newer ways of ensuring security and safety to households. -- A major operator of marine ports in the Middle East has chosen iGATE Patni for its port function decentralization effort. The project involves providing documentation on current architecture of the system as well the proposed system design, to be followed for the de-centralization. Awards and Recognitions -- iGATE Corporation Wins "Golden Peacock" Global Award (Americas) for Excellence in Corporate Governance -- iGATE Patni's IT and Business Enabling functions in Bangalore were successfully appraised and rated at People CMM(R) maturity level 5. -- Phaneesh Murthy received Enterprise Asia's "Outstanding Entrepreneurship" Award for 2011. -- iGATE Patni's Employee Engagement initiative, "Thank God It's Monday," entered the Limca Book of Records for running a corporate music show every Monday for five consecutive years. Conference Call and Webcast The Company has scheduled its Earnings Conference Call on Wednesday, January 25, 2012 to discuss the results of its fourth quarter ended December 31, 2011. 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 a.m. Eastern Standard Time / 05:00-06:00 a.m. Pacific Standard Time Dial-in: 877-407-8037 (U.S.)
201-689-8037 (International)
The call will be webcast live on iGATE Patni's website (www.igatepatni.com) and can be accessed by going to the Investor Relations page and selecting "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 Company's website shortly after the call.
Investors, potential investors, shareholders and bond holders can access the telephonic replay by dialing 877-660-6853 (U.S.) or 201-612-7415 (international) and entering account number 293 and conference number 386227. The telephonic replay will be available until February 01, 2012.
About iGATE Patni
'iGATE Patni' is the common brand identity of two organizations -- iGATE and Patni. With iGATE Corporation having acquired a majority stake in Patni Computer Systems Limited, the two companies, under the common brand iGATE Patni, provide full-spectrum consulting, technology and business process outsourcing, and product engineering services on a Business Outcomes-based model. Armed with over three decades of IT Services experience and powered by the iTOPS (Integrated Technology and Operations) platform, iGATE Patni's multi-location global organization with a talent pool of over 26,000 people, consistently delivers effective solutions to over 360 Fortune 1000 clients spanning across verticals like: banking and financial services; insurance and healthcare; life sciences; manufacturing, retail, distribution and logistics; media, entertainment leisure and travel; communication, energy and utilities; public sector; and independent software vendors. Visit www.igatepatni.com.
iGATE Corporation is listed on NASDAQ (IGTE), and Patni Computer Systems Limited is listed on the Bombay Stock Exchange (532517), the National Stock Exchange of India (PATNI) and the New York Stock Exchange (PTI).
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 Patni acquisition and the
previous 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 aspect of the 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 our control. Management believes it
is useful to exclude stock-based compensation in order to better
understand the long-term performance of our 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.
-- Forex 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. We also recognized favorable
foreign currency gain on re-measurement of escrow account balance
maintained for facilitating payments related to 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.
-- 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.
-- Delisting expenses: iGATE is voluntarily delisting 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 therein 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.
>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 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 our acquisition of Patni; and whether the companies 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 have 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, 2010, 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 in Form 20-F for the fiscal year ended December 31, 2010. 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,
2011 2010
(unaudited) (audited)
------------ ----------
ASSETS Current assets:
Cash and cash equivalents $ 75,440 $ 67,924
Short-term investments 354,528 71,915
Accounts receivable, net 172,711 37,946
Unbilled revenues 45,223 13,893
Prepaid expenses and other
current assets 18,752 5,380
Foreign exchange derivative
contracts -- 794
Deferred tax assets 20,574 5,422
Prepaid income taxes 8,341 --
Receivable from Mastech
Holdings Inc. 187 140------------ ----------
Total current assets 695,756 203,414 Investment in affiliate 584 -- Deposits and other assets 67,940 5,443 Property and equipment, net 175,672 52,950 Lease hold Land 53,917 -- Prepaid income taxes 18,481 -- Deferred tax assets 30,456 10,117 Goodwill 511,060 31,741 Intangible assets, net 160,706 1,378
------------ ----------
Total assets $ 1,714,572 $ 305,043
============ ==========
Accounts payable $ 7,857 $ 3,291
Accrued payroll and related
costs 71,913 19,709
Accrued income taxes 3,993 715
Line of credit 57,000 --
Other accrued liabilities 89,294 31,354
Foreign exchange derivative
contracts 1,669 --
Deferred revenue 21,631 667------------ ----------
Total current liabilities 253,357 55,736
Other long-term liabilities 4,610 1,251
Accrued income taxes 17,672 --
Foreign exchange derivative
contracts 6,739 --
Deferred tax liabilities 58,992 --
Senior Notes 770,000 -------------- ----------
Total liabilities 1,111,370 56,987
------------ ----------
without par value 349,023 --
------------ ----------
Shareholders' equity:
$0.01 per share 577 572
Additional paid-in capital 201,281 188,389
Retained earnings 104,493 75,474
Common stock in treasury, at
cost (14,714) (14,714)
Accumulated other
comprehensive loss (257,920) (1,665)------------ ---------- Total iGATE Corporation
shareholders' equity 33,717 248,056 Non controlling interest 220,462 --
------------ ----------
Total shareholders' equity 254,179 248,056
------------ ---------- Total liabilities and
shareholders' equity $ 1,714,572 $ 305,043
============ ==========
iGATE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands)
Three Months ended Year ended,
December 31, December 31,
2011 2010 2011* 2010
(unaudited) (unaudited) (unaudited) (audited)
----------- ----------- ----------- ----------
Revenues $ 267,707 $ 81,013 $ 779,646 $ 280,597 Cost of revenues (exclusive of depreciation and amortization) 159,941 46,460 483,504 167,906
----------- ----------- ----------- ----------
Gross margin 107,766 34,553 296,142 112,691 Selling, general and administrative expense 42,582 16,765 151,497 50,669 Depreciation and amortization 13,703 2,415 38,735 9,014
----------- ----------- ----------- ----------
Income from operations 51,481 15,373 105,910 53,008 Other (expenses) income, net (14,151) 1,917 (21,638) 4,686
----------- ----------- ----------- ----------
Income before income taxes 37,330 17,290 84,272 57,694 Income tax expense 16,904 2,568 24,218 5,939
----------- ----------- ----------- ----------
interest 20,426 14,722 60,054 51,755 Noncontrolling interest 5,149 -- 8,586 --
----------- ----------- ----------- ----------
Corporation 15,277 14,722 51,468 51,755 Accretion to Preferred Stock 88 -- 302 -- Preferred dividend 7,016 -- 22,147 --
----------- ----------- ----------- ---------- Net income attributable to iGATE
Corporation common shareholders $ 8,173 $ 14,722 $ 29,019 $ 51,755
=========== =========== =========== ==========
*Includes Patni revenues since
May 16, 2011.
iGATE CORPORATION
Earnings Per Share
(Amounts in thousands, except per share data)
Three Months Ended December 31 Year ended December 31
--------------------------------------------------------------------------------------------------------------------------------
PARTICULARS 2011 2010 2011** 2010
(unaudited) (unaudited) (unaudited) (audited)
--------------------------------------------------------------------------------------------------------------------------------
Net income attributable to iGATE
common shareholders $ 8,173 $ 14,722 $ 29,019 $ 51,755
Add: Dividends on Series B
Preferred Stock 7,016 -- 22,147 --
------------- ------------- ------------- -----------
15,189 14,722 51,166 51,755
Less: Dividends paid on
Common Stock [A] $ -- $ 8,433 $ -- $ 14,509
Unvested restricted stock [B] -- 43 -- 103
Participating preferred
stock [C] 7,016 7,016 -- 8,476 22,147 22,147 -- 14,612----------------------------------------------------------------------------------------
Undistributed Income $ 8,173 $ 6,246 $ 29,019 $ 37,143
============= ============= ============= ===========
Allocation of Undistributed
Income
Common stock [D] 6,240 6,215 22,157 36,878
Unvested restricted stock [E] 24 31 84 265
Participating preferred
stock [F] 1,909 -- 6,778 --
------------- ------------- ------------- -----------
$ 8,173 $ 6,246 $ 29,019 $ 37,143
============= ============= ============= ===========
Shares outstanding for
allocation of undistributed
income:
Common stock 56,706 56,227 56,706 56,227
Unvested restricted stock 214 280 214 280
Participating preferred
stock 17,347 -- 17,347 --
------------- ------------- ------------- -----------
74,267 56,507 74,267 56,507
============= ============= ============= ===========
Weighted average shares
outstanding:
Common stock [G] 56,671 56,141 56,523 55,656
Unvested restricted stock [H] 213 294 217 399
Participating preferred
stock [I] 17,347 -- 17,347 --
------------- ------------- ------------- -----------
74,231 56,435 74,087 56,055
============= ============= ============= ===========
Weighted average common stock
outstanding 56,671 56,141 56,523 55,656
Dilutive effect of stock options
and restricted shares
outstanding 1,390 1,716 1,420 1,738
------------- ------------- ------------- -----------
Dilutive weighted average shares
outstanding [J] 58,061 57,857 57,943 57,394
============= ============= ============= ===========
Distributed earnings per share:
Common stock [K=A/G] $ -- $ 0.15 $ -- $ 0.26
Unvested restricted stock [L=B/H] $ -- $ 0.15 $ -- $ 0.26
Participating preferred
stock [M=C/I] $ 0.40 $ -- $ 1.28 $ --
Undistributed earnings per
share:
Common stock [N=D/G] $ 0.11 $ 0.11 $ 0.39 $ 0.66
Unvested restricted stock [O=E/H] $ 0.11 $ 0.11 $ 0.39 $ 0.66
Participating preferred
stock [P=F/I] $ 0.11 $ -- $ 0.39 $ --
Basic earnings per share from
operations
Common Stock [K+N] $ 0.11 $ 0.26 $ 0.39 $ 0.92
Unvested restricted stock [L+O] $ 0.11 $ 0.26 $ 0.39 $ 0.92
Participating preferred
stock [M+P] $ 0.51 $ -- $ 1.67 $ --
Diluted earnings per share from [[A+B+D+
operations E]/J] $ 0.11 $ 0.25 $ 0.38 $ 0.90
**Includes Patni balances since May 16, 2011
The number of outstanding participative convertible preferred stock for which the earnings per share exceeded the earnings per
share of common stock aggregated to 17.3 million shares for the three and twelve months ended Dec 31, 2011. These shares were
excluded from the computation of diluted earnings per share as they were anti-dilutive.
iGATE CORPORATION Reconciliation of Net income, net of tax, to Adjusted EBITDA
(Amounts in thousands)
(Unaudited)
Three Months ended Year ended
December 31 December 31
2011 2010 2011* 2010--------- --------- ---------- ---------
iGATE Corporation $ 15,277 $ 14,722 $ 51,468 $ 51,755 Adjustments Depreciation and amortization 13,703 2,415 38,735 9,014 Interest expenses 17,774 28 50,608 108 Income tax expense 16,904 2,568 24,218 5,939 Noncontrolling interest 5,149 -- 8,586 -- Other income, net (7,393) (1,169) (15,894) (5,171) Foreign exchange (gain)/loss 3,770 (776) (13,076) 377 Stock Based Compensation 1,869 1,829 10,737 6,651 Acquisition expenses -- 3,749 10,914 3,749 Delisting expenses 997 -- 997 -- Severance expenses -- -- 6,164 --
--------- --------- ---------- --------- Adjusted EBITDA (a non-GAAP
measure) $ 68,050 $ 23,366 $ 173,457 $ 72,422
========= ========= ========== =========
*Includes Patni Balances
since May 16, 2011
The company presents the non-GAAP financial measure adjusted EBITDA
because, management uses this measure to monitor
and evaluate the performance of the business and believes the presentation
of this measure will enhance the investors' ability
to analyze trends in the business and evaluate the Company's underlying
performance relative to other companies in the industry.
Non-GAAP Disclosure of Adjusted EBITDA
We present Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as net income attributable to iGATE Corporation plus (i) depreciation and amortization, (ii) interest expense, (iii) income tax expense, minus (iv) other income, net plus (v) foreign exchange loss, (v) stock based compensation (vi) acquisition expenses (vii) severance expenses and (viii) delisting expenses. We eliminated the impact of the above as we do not consider them as indicative of our ongoing operating performance. These adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA: [(i) as a factor in evaluating management's performance when determining incentive compensation, (ii) to evaluate the effectiveness of our business strategies and (iii) because our credit agreement and our indenture use measures similar to Adjusted EBITDA to measure our compliance with certain covenants.
Adjusted EBITDA has limitations as an analytical tool. Some of these limitations are:
-- Adjusted EBITDA does not reflect our cash expenditures, or future
requirements, for capital expenditures or contractual commitments;
-- Adjusted EBITDA does not reflect changes in, or cash requirements for,
our working capital needs;
-- Adjusted EBITDA does not reflect the significant interest expense, or
the cash requirements necessary to service interest or principal
payments, on our debts; although depreciation and amortization are
non-cash charges, the assets being depreciated and amortized will often
have 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 our overall long-term incentive
compensation package, although we exclude it as an expense when
evaluating our ongoing operating performance for a particular period;
Adjusted EBITDA does not reflect the impact of certain cash charges
resulting from matters we consider not to be indicative of our ongoing
operations; and other companies in our industry may calculate adjusted
EBITDA differently than we do, 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. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally.
iGATE CORPORATION
Reconciliation of Selected GAAP measures to Non-GAAP measures
(Amounts in thousands, except per share data)
(Unaudited)
Three Months ended Year ended,
December 31 December 31
2011 2010 2011** 2010--------- --------- --------- ---------
Net income attributable to iGATE Corporation $ 15,277 $ 14,722 $ 51,468 $ 51,755
Adjustments
taxes 2,551 197 6,191 774 Share Based Compensation, net of taxes 1,804 1,720 8,530 6,437 Acquisition expenses -- 3,213 10,914 3,213 Delisting expenses 997 -- 997 -- Forex gain on acquisition hedging and other remeasurement, net of taxes (724) -- (15,975) -- Severance cost, net of taxes 222 -- 4,897 --
--------- --------- --------- ---------
Non-GAAP Net income $ 20,127 $ 19,852 $ 67,022 $ 62,179
========= ========= ========= =========
GAAP $ 0.11 $ 0.26 $ 0.39 $ 0.92 Non-GAAP $ 0.27 $ 0.35 $ 0.90 $ 1.11 Diluted earnings per share from operations GAAP $ 0.11 $ 0.25 $ 0.38 $ 0.90 Non-GAAP $ 0.27 $ 0.34 $ 0.89 $ 1.08 Weighted average shares outstanding, Basic 74,231* 56,439 74,087* 56,055
========= ========= ========= ========= Weighted average dilutive common equivalent
shares outstanding 75,408* 57,857 75,290* 57,394
========= ========= ========= =========
*Includes assumed conversion of 17.3 million shares of Series B Preferred
Stock as of January 1, 2011.
**Includes Patni balances since May 16, 2011
CONTACT: Media Contact
Prabhanjan Deshpande "PD"
+91 80 4104 5006
PD@igatepatni.com