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.
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