IGate (IGTE) 10-Q 2013 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2013

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

For the transition period from                    to                    

Commission File Number 000-21755

iGATE CORPORATION

(Exact name of registrant as specified in its charter)

PENNSYLVANIA	25-1802235
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6528 Kaiser Drive Fremont, CA	94555
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (510) 896-3015

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  x    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  x    No  ¨

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 definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of the registrant’s Common Stock, par value $0.01 per share, outstanding as of October 14, 2013 was 58,311,538.

iGATE CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2013

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements:
	—Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2013 and 2012		3
	—Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2013 and 2012		4
	—Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012		5
	—Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September  30, 2013 and 2012		6
	—Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		41
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		57
Item 4.	Controls and Procedures		58
PART II.	OTHER INFORMATION		59
Item 1	Legal Proceedings		59
Item 1A	Risk Factors		59
Item 6.	Exhibits		60
SIGNATURES			62

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

iGATE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended September 30						Nine Months Ended September 30,
	2013			2012			2013			2012
Revenues	$	293,406		$	271,090		$	851,592		$	802,348
Cost of revenues (exclusive of depreciation and amortization)		172,063			163,269			518,073			488,380
Gross margin		121,343			107,821			333,519			313,968
Selling, general and administrative expense		46,862			44,064			139,004			127,348
Depreciation and amortization		8,439			10,027			26,305			36,757
Income from operations		66,042			53,730			168,210			149,863
Interest expense		(20,256	)		(21,994	)		(67,025	)		(62,149	)
Foreign exchange gain (loss), net		(4,372	)		(3,763	)		92			(18,198	)
Other income, net		5,213			8,815			39,910			23,975
Income before income taxes		46,627			36,788			141,187			93,491
Income tax expense		14,634			8,495			44,461			24,007
Net income		31,993			28,293			96,726			69,484
Non-controlling interest		97			0			97			4,476
Net income attributable to iGATE Corporation		31,896			28,293			96,629			65,008
Accretion to preferred stock		126			103			361			295
Preferred dividend		7,994			7,419			23,246			21,590
Net income attributable to iGATE common shareholders	$	23,776		$	20,771		$	73,022		$	43,123
Basic earnings per share:
Common Stock	$	0.30		$	0.27		$	0.94		$	0.57
Unvested restricted stock	$	0.30		$	0.27		$	0.93		$	0.57
Series B Preferred Stock	$	0.70		$	0.67		$	2.10		$	1.74
Diluted earnings per share	$	0.30		$	0.27		$	0.91		$	0.56

See accompanying notes.

3

iGATE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Net income (loss) attributable to iGATE common shareholders	$	23,776		$	20,771		$	73,022		$	43,123
Add: Non-controlling interest		97			0			97			4,476
Other comprehensive income:
Change in fair value of marketable securities, net of tax of $366 and $(599) for three months ended September 30, 2013 and 2012 and $3,341 and $(1,503) for nine months ended September 30, 2013 and 2012		(336	)		295			(7,086	)		1,761
Unrecognized actuarial gain (loss) on pension liability, net of tax of $(155) and $41 for three months ended September 30, 2013 and 2012 and $(450) and $106 for nine months ended September 30, 2013 and 2012		293			(24	)		863			(290	)
Change in fair value of cash flow hedges net of tax of $1,063 and $(5,131) for three months ended September 30, 2013 and 2012 and $2,744 and $(9,128) for nine months ended September 30, 2013 and 2012		(1,482	)		13,084			(5,417	)		22,438
Gain (loss) on foreign currency translation		(48,269	)		72,862			(120,276	)		11,395
Total comprehensive gain (loss)		(25,921	)		106,988			(58,797	)		82,903
Less: Total comprehensive income (loss) attributable to non-controlling interest, net of tax of $11 and $0 for three months ended September 30, 2013 and 2012 and $11 and $0 for nine months ended September 30, 2013 and 2012		(1,890	)		0			(1,890	)		4,476
Total comprehensive income (loss) attributable to iGATE common shareholders	$	(24,031	)	$	106,988		$	(56,907	)	$	78,427

See accompanying notes.

4

iGATE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

	September 30, 2013 (Unaudited)			December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	141,979		$	95,155
Restricted cash		0			3,072
Short-term investments		304,826			510,816
Accounts receivable, net		146,821			162,335
Unbilled revenues		83,836			72,901
Prepaid expenses and other current assets		37,557			31,710
Prepaid income taxes		8,330			8,541
Deferred tax assets		20,681			14,655
Foreign exchange derivative contracts		7,580			782
Total current assets		751,610			899,967
Deposits and other assets		21,094			25,372
Prepaid income taxes		28,856			28,351
Property and equipment, net		155,154			167,252
Leasehold land		75,809			86,933
Deferred tax assets		14,745			30,635
Goodwill		433,184			493,141
Intangible assets, net		120,202			144,428
Total assets	$	1,600,654		$	1,876,079
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,215		$	7,799
Line of credit		77,000			77,000
Term loans		52,500			35,000
Accrued payroll and related costs		53,822			54,802
Other accrued liabilities		104,284			79,008
Accrued income taxes		10,042			9,134
Foreign exchange derivative contracts		8,071			7,516
Deferred revenue		15,115			17,890
Total current liabilities		329,049			288,149
Other long-term liabilities		3,217			3,265
Senior notes		770,000			770,000
Term loans		0			263,500
Accrued income taxes		19,590			17,272
Deferred tax liabilities		48,299			55,494
Total liabilities		1,170,155			1,397,680
Commitments and contingencies (Note 19)
Redeemable non-controlling interest		0			32,422
Series B Preferred stock, without par value: 480,000 shares authorized; 330,000 shares issued and outstanding		402,081			378,474
iGATE Corporation shareholders’ equity:
Preferred shares, without par value: 19,520,000 shares authorized; 1 share held in treasury		0			0
Common shares, par value $0.01 per share:
700,000,000 shares authorized; 59,300,940 and 58,533,405 shares issued; 58,310,838 and 57,543,303 shares outstanding as of September 30, 2013 and December 31, 2012, respectively		593			585
Common shares held in treasury, at cost, 990,102 shares		(14,714	)		(14,714	)
Additional paid-in capital		198,484			185,340
Retained earnings		243,897			170,875
Accumulated other comprehensive loss		(404,512	)		(274,583	)
Total iGATE Corporation shareholders’ equity		23,748			67,503
Non-controlling interest		4,670			0
Total equity		28,418			67,503
Total liabilities, redeemable non-controlling interest, preferred stock and shareholders’ equity	$	1,600,654		$	1,876,079

See accompanying notes.

5

iGATE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Nine Months  ended September 30,
	2013			2012
Cash Flows From Operating Activities:
Net income	$	96,726		$	69,484
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		26,305			36,757
Stock-based compensation		7,238			9,270
Realized gain on investments		(30,057	)		(17,069	)
Loss on sale of investment in affiliate		0			551
Deferred gain (loss) on settled derivatives		(1,066	)		19,344
Provision for doubtful debts		154			680
Deferred income taxes		(467	)		(10,290	)
Amortization of debt issuance costs		9,209			4,810
Loss (gain) on sale of property and equipment		(2,248	)		32
Deferred rent		198			(88	)
Excess tax benefits related to stock option exercises		(463	)		(318	)
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenue		(4,164	)		(32,698	)
Prepaid expenses and other assets		(10,389	)		(19,746	)
Accounts payable		458			10,364
Accrued and other liabilities		39,270			(9,662	)
Deferred revenue		(2,411	)		(6,074	)
Net cash flows provided by operating activities		128,293			55,347
Cash Flows From Investing Activities:
Purchase of property and equipment		(24,230	)		(13,430	)
Proceeds from sale of property and equipment		2,574			27
Purchase of available-for-sale investments		(1,188,835	)		(1,528,008	)
Proceeds from maturities and sale of available-for-sale investments		1,372,990			1,438,195
Restricted cash		3,072			(11,400	)
Receipts from lease deposits		0			2,663
Purchase of non-controlling interests		(23,651	)		(224,009	)
Net cash flows provided by (used in) investing activities		141,920			(335,962	)
Cash Flows From Financing Activities:
Payments on capital lease obligations		(450	)		(415	)
Payment of line of credit and term loans		(287,000	)		0
Proceeds from line of credit and term loans		41,000			295,500
Payment of debt related costs		(2,394	)		(3,263	)
Proceeds from exercise of stock options		3,625			7,231
Excess tax benefits related to stock option exercises		463			318
Net cash flows (used in) provided by financing activities		(244,756	)		299,371
Effect of exchange rate changes		21,367			3,512
Net change in cash and cash equivalents		46,824			22,268
Cash and cash equivalents, beginning of period		95,155			75,440
Cash and cash equivalents, end of period	$	141,979		$	97,708

See accompanying notes.

6

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of iGATE Corporation (“iGATE” or the “Company”) have been prepared by management in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and disclosures required by GAAP. In the opinion of the management, all adjustments (consisting only of normally recurring adjustments) considered necessary for a fair presentation have been included.

The accompanying balance sheet and financial information as of December 31, 2012 is derived from audited financial statements but does not include all of the information and footnotes required by GAAP for complete financial statements. The results of operations for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2012.

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated.

Use of Estimates

Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Interim results are not necessarily indicative of results for a full year.

2. Non-controlling Interest

In 2012, the Company announced an exit offer to the shareholders of iGATE Computer Systems Limited (“iGATE Computer”) (formerly known as Patni Computer Systems Limited) to tender their shares to the Company at any time from May 28, 2012 until May 27, 2013.

On May 10, 2013, the High Court of Judicature at Mumbai, India, approved the merger of the Company’s Indian subsidiaries, iGATE Computer with iGATE Global Solutions Limited (“iGATE Global”). Pursuant to the merger, shareholders of iGATE Computer who did not tender their shares during the exit period were issued iGATE Global shares in the ratio of five equity shares of iGATE Global for twenty two equity shares of iGATE Computer.

Subsequent to the expiry of the exit offer period, the Company has no obligation to redeem the shares and accordingly the remaining redeemable non-controlling interest amounting $6.6 million has been reclassified to permanent equity. As of September 30, 2013, the Company recorded non-controlling interest amounting to $4.7 million (including $0.1 million of net income and $2.0 million of accumulated other comprehensive loss attributable to non-controlling interest for the reporting period) for 0.2 million shares of iGATE Global (including 0.02 million of vested options).

3. Goodwill and Intangible Assets

The changes in the carrying value of goodwill for the nine months ended September 30, 2013 (in thousands) are as follows:

	Amount
Goodwill as of December 31, 2012	$	493,141
Foreign currency translation effect		(59,957	)
Goodwill as of September 30, 2013	$	433,184

7

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

The following describes changes in the carrying value of intangibles for the nine months ended September 30, 2013 (in thousands):

	Amount
Intangible assets as of December 31, 2012	$	144,428
Foreign currency translation effect		(16,246	)
Amortization		(7,980	)
Intangible assets as of September 30, 2013	$	120,202

As of September 30, 2013, intangible assets were comprised of the following (in thousands):

	Amount
Customer relationships	$	189,844
Intellectual property rights		9,400
Foreign currency translation adjustments		(50,767	)
Accumulated Amortization		(28,275	)
Intangible assets as of September 30, 2013	$	120,202

Intangible assets are amortized over the remaining weighted average period of 12.2 years. Intellectual property rights are amortized over the remaining weighted average period of 3.7 years. Customer relationship is amortized over their remaining useful life of 12.6 years.

Amortization expenses related to identifiable intangible assets were $2.5 million and $2.9 million for the three months ended September 30, 2013 and 2012, respectively and $7.9 million and $8.8 million for the nine months ended September 30, 2013 and 2012, respectively. Future estimated annual amortization is as follows (in thousands):

	Amount
Remainder of 2013	$	2,538
2014	$	10,363
2015	$	10,806
2016	$	11,171
2017	$	10,750

4. Series B Preferred Stock

On January 10, 2011, the Company entered into a securities purchase agreement, with Viscaria Limited, to raise equity financing to pay a portion of the cash consideration for the acquisition of iGATE Computer. Under the securities purchase agreement, the Company agreed to sell, in a private placement, up to 480,000 shares of newly designated 8.00% Series B Convertible Participating Preferred Stock, no par value per share (the “Series B Preferred Stock”), for an aggregate purchase price of up to $480 million. On February 1, 2011 and May 9, 2011, the Company issued 210,000 shares and 120,000 shares, respectively, of the Series B Preferred Stock for a consideration of $330 million.

Significant economic terms of the Series B Preferred Stock include:

• accrues cumulative dividends at a rate of 8.00% per annum, which dividends will be added to the liquidation preference of the Series B Preferred Stock and compounded quarterly;

• is entitled to participate in dividends and other distributions payable on the Company’s common stock on an as-converted basis;

8

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

• provides for a holder option to convert the outstanding principal plus accrued and unpaid dividends into the Company’s common stock at any time and from time to time at an initial conversion price of $20.30 per share (which conversion price is subject to adjustment in certain circumstances such as the Company’s sale or issuance of shares of common stock is for a price per share less than the current market price of its common stock on the date of sale or issue (other than issuances under the stock option or stock ownership plans), subdivision or combination of the Company’s common stock (e.g. by stock split or stock dividend), wherein the conversion price in effect will be proportionately reduced or increased on or after such effective or record date and merger, reorganization, consolidation or sale of substantially all of the assets);

• is subject to a Company option to convert the Series B Preferred Stock into common stock of the Company after 18 months from the applicable closing date if, among other things, the volume weighted average price of the Company’s common stock exceeds 205% of the then applicable conversion price for a specified period of time;

• is redeemable for cash at an amount equal to the outstanding principal plus accrued and unpaid dividends upon the exercise of the holder’s put right at six years from the last occurring closing date;

• provides that, if the Series B Preferred Stock is not sooner converted, such preferred stock is subject to a mandatory conversion into shares of the Company’s common stock on the date that is six years from the applicable closing date (subject to extension in limited circumstances) unless the holder exercises the put right described in the immediately preceding bullet point; and

• provides the holder the right to receive, prior to any payment in respect of any junior equity securities, the greater of the outstanding principal plus accrued and unpaid dividends and the as-converted value upon liquidation of the Company or upon certain changes of control.

The Company incurred issuance costs amounting to $3.4 million 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 amount accreted totaled $0.1 million for each of the three months ended September 30, 2013 and 2012 and $0.4 million and $0.3 million for the nine months ended September 30, 2013 and 2012, respectively. As of September 30, 2013 and 2012, the remaining unamortized balance of issuance costs was $2.3 million and $2.8 million, respectively.

The Company is accruing for cumulative dividends at a rate of 8.00% per annum, compounded quarterly. The amount of such dividends accrued was $7.9 million and $7.4 million during the three months ended September 30, 2013 and 2012, respectively, and $23.2 million and $21.6 million during the nine months ended September 30, 2013 and 2012, respectively.

As of September 30, 2013 and 2012, the shares of Series B Preferred Stock are potentially convertible into 19.9 million and 18.4 million shares of common stock, respectively.

9

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

5. Borrowings

Line of Credit

On February 21, 2011, the Company entered into an arrangement with a bank for availing an unsecured revolving working credit facility of $70 million at an annual interest rate of LIBOR plus 195 basis points. The interest rate was initially renewed on an annual basis and is now renewed periodically. This facility was renewed and the interest rate was changed to LIBOR plus 115 basis points with effect from March 25, 2013. As of September 30, 2013, the Company had borrowed $52 million under this line of credit at a weighted average interest rate of 1.41%. Interest expense for the three months ended September 30, 2013 and 2012 was $0.2 million and $0.14 million, respectively and interest expense for nine months ended September 30, 2013 and 2012 was $0.6 million and $0.37 million, respectively.

On May 10, 2011, the Company entered into a credit agreement with a bank for revolving credit commitments in an aggregate principal U.S. Dollar equivalent of $50 million, maturing on May 10, 2016. The proceeds are to be used for working capital and other general corporate purposes. This facility carries an interest rate of LIBOR plus 280 basis points payable at the end of each month. As of September 30, 2013, the Company had borrowed $25 million under this revolving credit arrangement at an interest rate of 2.98%. Interest expense for the three months ended September 30, 2013 and 2012 was $0.3 million and $0.09 million, respectively and interest expense for nine months ended September 30, 2013 and 2012 was $0.6 million and $0.17 million, respectively.

The Company cancelled its non-fund based revolving credit facility of $10.3 million during the period.

Term Loans

On April 3, 2012, Pan-Asia iGATE Solutions (“Pan-Asia”) entered into an agreement for a secured term loan facility with DBS Bank Limited, Singapore, as an administrative agent, in an aggregate principal U.S. Dollar equivalent of $265 million maturing on June 8, 2014. This facility was guaranteed by the Company and several of its 100% owned subsidiaries and was undertaken to finance Pan-Asia’s purchase of the remaining publicly traded equity shares of iGATE Computer. During the second quarter of 2013, the Company repaid the term loan along with the bank guarantee and has no outstanding amount under this term loan facility and accordingly expensed all unamortized debt issue costs.

In connection with the above term loan, the Company recorded an interest expense of $0.0 million and $1.7 million for the three months ended September 30, 2013 and 2012, respectively and $2.5 million and $3.4 million for the nine months ended September 30, 2013 and 2012, respectively. The Company incurred debt issuance costs of $4.8 million of which the amount amortized was $0.0 million and $0.3 million for the three months ended September 30, 2013 and 2012, respectively and $4.0 million and $0.5 million for the nine months ended September 30, 2013 and 2012, respectively.

On August 29, 2012, iGATE Technologies Inc (“iTI”), borrowed $70 million from a bank to finance the purchase of iGATE Americas Inc (“iAI”). The loan matures on February 28, 2014, is repayable over a period of 18 months and carried an interest rate of LIBOR plus 280 basis points payable at the end of each month. As per the terms of the agreement, the spread increases on repayment of each tranche of loan balance. Accordingly, the interest rate was renewed to LIBOR plus 340 basis points after the first repayment of the loan was made. The loan documents contain customary representations and warranties, events of default and affirmative and negative covenants, and the loan is guaranteed by the Company and several of its 100% owned subsidiaries.

10

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

As of September 30, 2013, the amount outstanding under this term loan facility is $52.5 million. As of September 30, 2013, the interest rate was 3.58% and the Company recorded an interest expense for $0.5 million and $0.13 million for the three months ended September 30, 2013 and 2012, respectively and $1.5 million and $0.13 million for the nine months ended September 30, 2013 and 2012, respectively. In connection with this term loan, the Company incurred debt issuance costs of $0.8 million of which $0.1 million is accounted for as part of prepaid expenses and other current assets. These costs are being amortized to interest expense over the respective term of the loan using the effective interest method. The amount amortized was $0.1 million and $0.05 for the three months ended September 30, 2013 and 2012, respectively and $0.5 million and $0.05 million for the nine months ended September 30, 2013 and 2012, respectively.

As of September 30, 2013, the Company was in compliance with all covenants associated with the aforementioned borrowings.

6. Senior notes

On April 29, 2011, the Company sold $770 million of 9.0% senior notes due May 1, 2016 (the “Notes”) through a private placement transaction exempt from the registration requirements of the Securities Act of 1933, pursuant to an Indenture (the “Indenture”) by and among the Company, iTI., and the trustee, as supplemented by the Supplemental Indenture dated as of May 12, 2011, by and among the Company, iTI., iGATE Holding Corporation, iGATE Inc. and the trustee. The interest is payable semiannually in cash in arrears on May 1 and November 1 of each year, beginning on November 1, 2011. The Notes are senior unsecured obligations of the Company, guaranteed by the Company’s domestic 100% owned subsidiaries, as identified in Note 18, with exceptions considered customary for such guarantees under which a subsidiary’s guarantee would terminate. In accordance with the terms of the second supplemental indenture dated September 30, 2012, iAI, a 100% owned domestic subsidiary of iTI, was included as a guarantor to the senior notes with effect from September 1, 2012. Subsequently on December 31, 2012, as part of an integration process, iAI along with Patni Telecom Inc. (“PTS”), were merged into iTI.

The terms of the Indenture governing the Notes, among other things, limits the ability of the Company and its restricted subsidiaries to (i) incur additional indebtedness or issue certain preferred stock; (ii) pay dividends on, or make distributions in respect of, their capital stock or repurchase their capital stock; (iii) make certain investments or other restricted payments; (iv) sell certain assets; (v) create liens or use assets as security in other transactions; (vi) merge, consolidate or transfer or dispose of substantially all of their assets; and (vii) engage in certain transactions with affiliates. These covenants are subject to a number of important limitations and exceptions that are described in the Indenture. The Indenture also contains certain financial covenants relating to Consolidated Priority Debt Leverage Ratio and a Fixed Charge Coverage Ratio that the Company must comply with, when any of the above events occur. As of September 30, 2013, no such events have occurred.

At any time prior to May 1, 2014, the Company may redeem the Notes in whole or in part, at its option, at a redemption price equal to 109% of the principal amount of such Notes and accrued and unpaid interest, if any, to the redemption date. At any time and from time to time on or after May 1, 2014, the Company may redeem the Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest to the redemption date:

12-Month period commencing	Percentage
On or after May 1, 2014		104.5	%
On or after May 1, 2015 and thereafter		100.0	%

Upon the occurrence of a change of control triggering event specified in the Indenture, the Company must offer to purchase the Notes at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase.

On December 13, 2011, the Company issued a prospectus made pursuant to a Registration Rights Agreement which granted the initial purchasers and any subsequent holders of the Notes certain exchange and registration rights. The exchange offer was completed and, as of February 14, 2012, all the Notes were tendered by the Note holders. These notes are now tradeable.

11

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

As of September 30, 2013, the amortizable debt issuance cost was $19.3 million, of which $6.9 million is accounted for as part of prepaid expenses and other current assets and $12.4 million as part of deposits and other assets. These costs are being amortized to interest expense over the balance period of approximately two and half years using the effective interest method. The amount amortized was $1.6 million and $1.5 million for the three months ended September 30, 2013 and 2012, respectively, and $4.7 million and $4.3 million for the nine months ended September 30, 2013 and 2012, respectively. Interest expense (including amortized debt issue costs) for the three months ended September 30, 2013 and 2012 was $18.9 million and $18.8 million, respectively, and interest expense for the nine months ended September 30, 2013 and 2012 was $56.7 million and $56.3 million, respectively.

7. Income tax

The provision for income taxes consists of provisions for federal, state and foreign income taxes. The Company operates in an international environment with significant operations in various locations outside the U.S. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable tax rates. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as India, Canada and the United States.

The Company uses the estimated annual effective tax rate method in computing its interim tax provision. Certain items, including those deemed to be unusual, infrequent or that cannot be reliably estimated, are excluded from the estimated annual effective tax rate. In these cases, the actual tax expense or benefit applicable to those items is treated discretely, and is reported in the same period as the related item. The Company’s effective tax rate (“ETR”) was 31.4% and 31.5% for the three and nine months ended September 30, 2013, respectively. For the three and nine months ended September 30, 2012, the Company’s ETR was 23.1% and 25.7%, respectively.

The difference in the ETR as compared to the U.S. statutory rate of 35.0% is primarily attributable to the tax holiday benefits enjoyed by the Company’s subsidiary in India, tax benefits arising from merger of Indian subsidiaries and effect of additional income tax expenses on account of true-up adjustments in our U.S jurisdiction.

Under the Indian Income-tax Act, 1961, iGATE Global is eligible to claim an income tax holiday on profits derived from the export of software services from divisions registered under Special Economic Zones (“SEZs”) arrangements. Profits derived from the export of software services from these divisions registered under the SEZ scheme are eligible for a 100% tax holiday during the initial five consecutive assessment years followed by 50% for the subsequent ten consecutive assessment years from the date of commencement of operations by the respective SEZ. Effective April 1, 2013, one of the divisions registered under SEZ scheme has completed its first five years of 100% tax holiday and would be claiming 50% of tax holiday for the next ten years.

For the three months ended September 30, 2013, and 2012 the tax holiday benefits were $1.3 million and $2.4 million, respectively, when calculated at the statutory U.S. rate. For the nine months ended September 30, 2013 and 2012, the tax holiday resulted in income tax benefits of $5.8 million and $5.9 million, respectively, when calculated at the statutory U.S. rate. This SEZ tax holiday will begin to expire from March 2023.

There has been no material movements in the ASC 740-10 reserves during the reporting period.

The Company recognizes interest and penalties related to uncertain tax positions in other income. As of September 30, 2013, the Company had $1.3 million of accrued interest related to uncertain tax positions.

As of September 30, 2013, the Company had $22.1 million of gross unrecognized tax benefits of which $17.6 million (net unrecognized tax benefits) would affect the ETR, if recognized. Although it is difficult to anticipate the final outcome on timing of resolution of any particular uncertain tax position, the Company believes that the total amount of unrecognized tax benefits will be decreased by approximately $7.2 million during the next twelve (12) months due to the expiration of the statute of limitations.

12

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

8. Earnings Per Share

The Company computes earnings per share in accordance with ASC Topic 260, “Earnings per share”and ASC Topic 260-10-45 “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities”. Basic earnings per share for different classes of stock (common stock, unvested restricted stock and the Series B Preferred Stock) is calculated by dividing net income available to each class by the weighted average number of shares of each class. Diluted earnings per share is computed using the weighted average number of common stock, unvested restricted stock plus the potentially dilutive effect of common stock and Series B Preferred Stock equivalents.

13

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

Earnings per share for the common stock, unvested restricted stock and Series B Preferred Stock under the two class method are presented below (dollars and shares in thousands, except per share data):

			Three Months Ended September 30,				Nine Months Ended September 30,
			2013		2012		2013		2012
Net income attributable to iGATE common shareholders			$	23,776	$	20,771	$	73,022	$	43,123
Add: Dividend on Series B Preferred Stock				7,994		7,419		23,246		21,590
				31,770		28,190		96,268		64,713
Less: Dividends on
Series B Preferred Stock	[A	]		7,994		7,419		23,246		21,590
Undistributed Income			$	23,776	$	20,771	$	73,022	$	43,123
Allocation of Undistributed Income:
Common stock	[B	]		17,716		15,712		54,411		32,619
Unvested restricted stock	[C	]		7		12		21		26
Series B Preferred Stock	[D	]		6,053		5,047		18,590		10,478
			$	23,776	$	20,771	$	73,022	$	43,123
Shares outstanding for allocation of undistributed income:
Common stock				58,311		57,318		58,311		57,318
Unvested restricted stock				23		45		23		45
Series B Preferred Stock				19,923		18,411		19,923		18,411
				78,257		75,774		78,257		75,774
Weighted average shares outstanding:
Common stock	[E	]		58,148		57,271		57,895		57,076
Unvested restricted stock	[F	]		23		45		23		45
Series B Preferred Stock	[G	]		19,923		18,411		19,923		18,411
				78,094		75,727		77,841		75,532
Weighted average common stock outstanding				58,148		57,271		57,895		57,076
Dilutive effect of stock options and restricted shares outstanding				1,688		1,622		1,669		1,638
Dilutive weighted average shares outstanding	[H	]		59,836		58,893		59,564		58,714
Distributed earnings per share:
Series B Preferred Stock	[I=A/G	]	$	0.40	$	0.40	$	1.17	$	1.17
Undistributed earnings per share:
Common stock	[J=B/E	]	$	0.30	$	0.27	$	0.94	$	0.57
Unvested restricted stock	[K=C/F	]	$	0.30	$	0.27	$	0.93	$	0.57
Series B Preferred Stock	[L=D/G	]	$	0.30	$	0.27	$	0.93	$	0.57
Basic earnings per share from operations:
Common stock	[J	]	$	0.30	$	0.27	$	0.94	$	0.57
Unvested restricted stock	[K	]	$	0.30	$	0.27	$	0.93	$	0.57
Series B Preferred Stock	[I+L	]	$	0.70	$	0.67	$	2.10	$	1.74
Diluted earnings per share from operations	[[B+C]/H	]	$	0.30	$	0.27	$	0.91	$	0.56

14

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

The number of outstanding options to purchase common shares for which the option exercise prices exceeded the average market price of the common shares aggregated 0.2 million and 0.8 million shares for the three months ended September 30, 2013 and 2012, respectively, and 0.8 million and 0.6 million shares for the nine months ended September 30, 2013 and 2012, respectively. These options were excluded from the computation of diluted earnings per share under the treasury stock method. The number of shares of outstanding Series B Preferred Stock for which the earnings per share exceeded the earnings per share of common stock aggregated to 19.9 million and 18.4 million for the three and nine months ended September 30, 2013 and 2012, respectively. These shares were excluded from the computation of diluted earnings per share as they were anti-dilutive.

9. Investments

Short term investments comprise the following (in thousands):

	As of September 30, 2013
	Carrying Value		Unrealized Gain		Unrealized Loss			Fair Value
Mutual Funds
Liquid mutual funds	$	210,458	$	1,284	$	(7,084	)*	$	204,658
Fixed maturity plan funds		0		0		0			0
Certificate of deposits with banks and others		0		0		0			0
Fixed deposits with banks		100,168		0		0			100,168
	$	310,626	$	1,284	$	(7,084	)	$	304,826

	As of December 31, 2012
	Carrying Value		Unrealized Gain		Unrealized Loss		Fair Value
Mutual Funds
Liquid mutual funds	$	458,310	$	8,158	$	0	$	466,468
Fixed maturity plan funds		3,637		315		0		3,952
Certificate of deposits with banks and others		37,158		3,238		0		40,396
Fixed deposits with banks		0		0		0		0
	$	499,105	$	11,711	$	0	$	510,816

* represents the changes in the fair value of foreign currency denominated securities. The Company entered into foreign exchange forward contracts to hedge the risk of changes in the foreign exchange rates on these securities. The Company has recognized the gain of $ 7.3 million on the foreign exchange forward contract are recognized as part of current asset while the loss of $ 7.1 million on the foreign currency denominated securities is adjusted to the investment value. However, the gain on foreign exchange forward contracts and the loss on securities relating to changes in the foreign exchange rates are recognized in the consolidated statements of income within foreign exchange gain (loss), net (also see note 11).

Contractual maturities of short-term and other investments in available-for-sale securities as of September 30, 2013, were as follows (in thousands):

	As of September 30, 2013
Due within one year	$	304,826

Realized gains and losses on the cost of securities sold or disposed is determined on First in First out (“FIFO”) method. The proceeds from maturities and sales of available-for-sale securities amounted to $1.4 billion for each of the nine months ended September 30, 2013 and 2012.

15

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

Dividends from available-for-sale securities and gross realized gains and losses on sale of available-for-sale securities are as follows (in thousands):

	Three Months  Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Dividends	$	0	$	0	$	0	$	5,378
Gross realized gains		4,088		8,572		30,057		17,743
Gross realized losses		0		0		0		(674	)
	$	4,088	$	8,572	$	30,057	$	22,447

The changes in the unrealized gain, net, on marketable securities carrying value for the three and nine months ended September 30, 2013 and 2012 are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Unrealized gain on marketable securities at the beginning of the period	$	1,986		$	5,296		$	11,711		$	2,926
Reclassification of gain into earnings on maturity		(4,088	)		(8,572	)		(30,057	)		(17,069	)
Net unrealized gain due to changes in the fair value		3,386			9,466			19,630			20,333
Unrealized gain on marketable securities at the end of the period	$	1,284		$	6,190		$	1,284		$	6,190

10. Accumulated Other Comprehensive Loss

The following table summarizes the allocation of total comprehensive income (loss) between iGATE common shareholders and non-controlling interest for the three and nine months ended September 30, 2013: (in thousands):

	Three months ended September 30, 2013									Nine months ended September 30, 2013
	iGATE common shareholders			Non- controlling interest			Total			iGATE common shareholders			Non- controlling interest			Total
Net income attributable to iGATE common shareholders	$	23,776		$	0		$	23,776		$	73,022		$	0		$	73,022
Non-controlling interest		0			97			97			0			97			97
Other comprehensive income:
Change in fair value of marketable securities		(337	)		1			(336	)		(7,087	)		1			(7,086	)
Unrecognized actuarial gain (loss) on pension liability		290			3			293			860			3			863
Change in fair value of cash flow hedges		(1,458	)		(24	)		(1,482	)		(5,393	)		(24	)		(5,417	)
Gain (loss) on foreign currency translation		(46,302	)		(1,967	)		(48,269	)		(118,309	)		(1,967	)		(120,276	)
Total comprehensive income (loss)	$	(24,031	)	$	(1,890	)	$	(25,921	)	$	(56,907	)	$	(1,890	)	$	(58,797	)

16

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

The changes in the balances of accumulated other comprehensive income (loss), by component, attributable to iGATE common shareholders, are summarized as follows for the three and nine months ended September 30, 2013 (in thousands):

	Three months ended September 30, 2013									Nine months ended September 30, 2013
	Before Tax Amount			Tax Effect			Net of Tax Amount			Before Tax Amount			Tax Effect			Net of Tax Amount
Unrealized gain on Marketable securities:
Beginning balance	$	1,986		$	(461	)	$	1,525		$	11,711		$	(3,436	)	$	8,275
Amount of gain (loss) recognized in other comprehensive income		3,375			(699	)		2,676			19,619			(5,320	)		14,299
Less: Amounts of gain (loss) reclassified from accumulated other comprehensive income		4,078			(1,065	)		3,013			30,047			(8,661	)		21,386
Current-period other comprehensive income (loss)		(703	)		366			(337	)		(10,428	)		3,341			(7,087	)
Ending balance	$	1,283		$	(95	)	$	1,188		$	1,283		$	(95	)	$	1,188
Unrealized gain (loss) on cash flow hedges
Beginning balance	$	(4,987	)	$	1,497		$	(3,490	)	$	629		$	(184	)	$	445
Amount of gain (loss) recognized in other comprehensive income		(8,432	)		2,804			(5,628	)		(11,498	)		3,738			(7,760	)
Less: Amounts of gain (loss) reclassified from accumulated other comprehensive income		(5,924	)		1,754			(4,170	)		(3,374	)		1,007			(2,367	)
Current-period other comprehensive income (loss)		(2,508	)		1,050			(1,458	)		(8,124	)		2,731			(5,393	)
Ending balance	$	(7,495	)	$	2,547		$	(4,948	)	$	(7,495	)	$	2,547		$	(4,948	)
Actuarial gain (loss) relating to defined benefit plan
Beginning balance	$	673		$	(226	)	$	447		$	(192	)	$	69		$	(123	)
Amount of gain (loss) recognized in other comprehensive income		444			(153	)		291			1,313			(449	)		864
Less: Amounts of gain (loss) reclassified from accumulated other comprehensive income		1			0			1			5			(1	)		4
Current-period other comprehensive income (loss)		443			(153	)		290			1,308			(448	)		860
Ending balance	$	1,116		$	(379	)	$	737		$	1,116		$	(379	)	$	737
Foreign currency translation
Beginning balance	$	(355,187	)	$	0		$	(355,187	)	$	(283,180	)	$	0		$	(283,180	)
Amount of gain (loss) recognized in other comprehensive income		(46,302	)		0			(46,302	)		(118,309	)		0			(118,309	)
Less: Amounts of gain (loss) reclassified from accumulated other comprehensive income		0			0			0			0			0			0
Current-period other comprehensive income (loss)		(46,302	)		0			(46,302	)		(118,309	)		0			(118,309	)
Ending balance	$	(401,489	)	$	0		$	(401,489	)	$	(401,489	)	$	0		$	(401,489	)

17

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

The changes in the balances of accumulated other comprehensive income (loss), by component, attributable to iGATE common stockholders, are summarized as follows for the three and nine months ended September 30, 2012 (in thousands):

	Three months ended September 30, 2012									Nine months ended September 30, 2012
	Before Tax Amount			Tax Effect			Net of Tax Amount			Before Tax Amount			Tax Effect			Net of Tax Amount
Unrealized gain on Marketable securities:
Beginning balance	$	5,296		$	(1,170	)	$	4,126		$	2,926		$	(266	)	$	2,660
Amount of gain (loss) recognized in other comprehensive income		9,466			(2,538	)		6,928			20,333			(5,363	)		14,970
Less: Amounts of gain (loss) reclassified from accumulated other comprehensive income		8,572			(1,939	)		6,633			17,069			(3,860	)		13,209
Current-period other comprehensive income (loss)		894			(599	)		295			3,264			(1,503	)		1,761
Ending balance	$	6,190		$	(1,769	)	$	4,421		$	6,190		$	(1,769	)	$	4,421
Unrealized gain (loss) on cash flow hedges
Beginning balance	$	(17,770	)	$	4,983		$	(12,787	)	$	(31,121	)	$	8,980		$	(22,141	)
Amount of gain (loss) recognized in other comprehensive income		7,570			(2,724	)		4,846			4,333			(2,988	)		1,345
Less: Amounts of gain (loss) reclassified from accumulated other comprehensive income		(10,645	)		2,407			(8,238	)		(27,233	)		6,140			(21,093	)
Current-period other comprehensive income (loss)		18,215			(5,131	)		13,084			31,566			(9,128	)		22,438
Ending balance	$	445		$	(148	)	$	297		$	445		$	(148	)	$	297
Actuarial gain (loss) relating to defined benefit plan
Beginning balance	$	(275	)	$	61		$	(214	)	$	56		$	(4	)	$	52
Amount of gain (loss) recognized in other comprehensive income		(65	)		41			(24	)		(400	)		107			(293	)
Less: Amounts of gain (loss) reclassified from accumulated other comprehensive income		0			0			0			(4	)		1			(3	)
Current-period other comprehensive income (loss)		(65	)		41			(24	)		(396	)		106			(290	)
Ending balance	$	(340	)	$	102		$	(238	)	$	(340	)	$	102		$	(238	)
Foreign currency translation
Beginning balance	$	(299,958	)	$	0		$	(299,958	)	$	(238,491	)	$	0		$	(238,491	)
Amount of gain (loss) recognized in other comprehensive income		72,862			0			72,862			11,395			0			11,395
Less: Amounts of gain (loss) reclassified from accumulated other comprehensive income		0			0			0			0			0			0
Current-period other comprehensive income (loss)		72,862			0			72,862			11,395			0			11,395
Ending balance	$	(227,096	)	$	0		$	(227,096	)	$	(227,096	)	$	0		$	(227,096	)

18

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

The following table summarizes the reclassifications out of accumulated other comprehensive income for the three and nine months ended September 30, 2013 and 2012 (in thousands):

Accumulated Other Comprehensive Income – Components	Line item in Statement of Income	Amount reclassified from Accumulated Other Comprehensive Income
		Three months ended September 30,						Nine months ended September 30,
		2013			2012			2013			2012
Available-for-sale securities:
Sale of Securities	Other Income, net	$	4,088		$	8,572		$	30,057		$	17,069
	Income tax expense		(1,067	)		(1,939	)		(8,663	)		(3,860	)
	Non-controlling interest, net of tax		(8	)		(0	)		(8	)		(0	)
	Reclassification to earnings	$	3,013		$	6,633		$	21,386		$	13,209
Cash flow hedges:
Foreign exchange derivative contracts	Foreign exchange gain (loss), net	$	(5,929	)	$	(10,645	)	$	(3,379	)	$	(27,233	)
	Income tax expense		1,755			2,407			1,008			6,140
	Non-controlling interest, net of tax		4			(0	)		4			(0	)
	Reclassification to earnings	$	(4,170	)	$	(8,238	)	$	(2,367	)	$	(21,093	)
Pension and other defined benefit liability:
Amortization of actuarial gain (loss)	Cost of revenues	$	1		$	0		$	5		$	(4	)
	Income tax expense		(0	)		(0	)		(1	)		1
	Non-controlling interest, net of tax		(0	)		(0	)		(0	)		(0	)
	Reclassification to earnings	$	1		$	0		$	4		$	(3	)

11. Derivative Instruments and Hedging Activities

The Company enters into foreign currency forward and option contracts (“foreign exchange derivative contracts”) to mitigate and manage the risk of changes in foreign exchange rates on inter-company and end customer accounts receivable and forecasted sales and inter-company transactions. The Company hedges anticipated sales transactions that are subject to foreign exchange exposure with foreign exchange derivative contracts that are designated effective and that qualify as cash flow hedges under ASC Topic 815, “Derivatives and Hedging” (ASC No. 815).

As part of its hedge strategy, the Company also enters into foreign exchange derivative contracts which are replaced with successive new contracts up to the period in which the forecasted transaction is expected to occur i.e. (roll-over hedges). In case of rollover hedges, the hedge effectiveness is assessed based on changes in fair value to the extent of changes in spot prices and recorded in accumulated other comprehensive income (loss) until the hedged transactions occur and at that time is recognized in the consolidated statements of income. Accordingly, the changes in the fair value of the contract related to the changes in the difference between the spot price and the forward price (i.e. forward premium/discount) are excluded from assessment of hedge effectiveness and are recognized in consolidated statements of income and are included in foreign exchange gain (loss).

In respect of foreign exchange derivative contracts which hedge the foreign currency risk associated with both the anticipated sales transaction and the collection thereof (dual purpose hedges), the hedge effectiveness is assessed based on overall changes in fair value with the effective portion of gains or losses included in accumulated other comprehensive income (loss). The effective portion of gain or loss attributable to forecasted sales are reclassified from accumulated other comprehensive income (loss) and recognized in consolidated statements of income when the sales transaction occurs.

19

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

Post the date of sales transaction, the Company reclassifies an amount from accumulated other comprehensive income (loss) to earnings to offset foreign currency translation gain (loss) recorded for the respective receivable during the period. In addition, the Company determines the amount of cost to be ascribed to each period of the hedging relationship based on the functional currency interest rate implicit in the hedging relationship and recognizes this cost by reclassifying it from accumulated other comprehensive income (loss) to consolidated statements of income for recognized receivables based on the pro rata method.

Changes in the fair value of cash flow hedges deemed ineffective are recognized in the consolidated statement of income and are included in foreign exchange gain (loss). The Company also uses foreign exchange derivatives contracts not designated as hedging instruments under ASC No. 815 to hedge inter-company and end customer accounts receivable and other monetary assets denominated in currencies other than the functional currency. Changes in the fair value of these foreign exchange derivative contracts are recognized in the consolidated statements of income and are included in foreign exchange gain (loss).

In respect of foreign exchange derivative contracts designated as hedges, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company evaluates hedge effectiveness at the time a contract is entered into as well as on an ongoing basis. If during this time, a contract is deemed ineffective, the change in the fair value is recorded in the consolidated statements of income and is included in foreign exchange gain (loss). In situations in which hedge accounting is discontinued and the foreign exchange derivative contract remains outstanding, the net derivative gain or loss continue to be reported in accumulated other comprehensive income unless it is probable that the forecasted transaction will not occur by the end of the originally specified time period (as documented at the inception of the hedging relationship) or within an additional two-month period of time thereafter.

The Company has also entered into foreign exchange forward contracts to hedge the risk of changes in the foreign exchange rates on its foreign currency denominated investments classified as available-for-sale securities. These forward contracts qualify as effective fair value hedges and the hedge effectiveness assessment is done on the basis of spot to spot changes in foreign exchange rates. Accordingly, as per ASC 320 and 815, the changes in the fair value of the available-for-sale security amounting to unrealized loss of $7.1 million attributable to the risk being hedged is recognized in the consolidated statements of income along with unrealized gain of $7.3 million on the above designated foreign exchange forward contract. The unrealized loss on the fair value investment and the gain on forward contract are recognized as part of foreign exchange gain or loss in the consolidated statements of income. Additionally, the gain on the foreign exchange forward contract are recognized as part of current asset and loss on the foreign currency denominated securities are adjusted to the investment value of the securities. Time value component of these forward contracts is excluded from the effectiveness assessment and changes in this component is recognized as part of foreign exchange gain/ (loss) in the condensed consolidated statements of income.

The following table presents the aggregate contracted principal amounts of the Company’s foreign exchange derivative contracts (in thousands):

OUTSTANDING CASH FLOW HEDGE TRANSACTIONS QUALIFYING FOR HEDGE ACCOUNTING (in thousands)

	As of
	September 30, 2013		December 31, 2012
Foreign Exchange Option Contracts USD	$	6,000	$	0
Foreign Exchange Forward Contracts USD	$	105,300	$	167,000
Foreign Exchange Forward Contracts CAD	$	9,704	$	30,663
Foreign Exchange Forward Contracts GBP	$	3,230	$	8,082

20

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

OUTSTANDING FAIR VALUE HEDGE TRANSACTIONS QUALIFYING FOR HEDGE ACCOUNTING (in thousands)

	As of
	September 30, 2013		December 31, 2012
Foreign Exchange Forward Contracts INR	$	60,955	$	0

OUTSTANDING HEDGE TRANSACTIONS NOT QUALIFYING FOR HEDGE ACCOUNTING (in thousands)

	As of
	September 30, 2013		December 31, 2012
Foreign Exchange Option Contracts USD	$	0	$	5,000
Foreign Exchange Forward Contracts USD	$	26,770	$	64,150
Foreign Exchange Forward Contracts JPY	$	0	$	3
Foreign Exchange Forward Contracts GBP	$	11,791	$	8,566
Foreign Exchange Forward Contracts CAD	$	1,941	$	0
Foreign Exchange Forward Contracts INR	$	2,307	$	0

The foreign exchange derivative contracts mature generally within twelve (12) months.

The effect of derivative instruments on the Condensed Consolidated Statements of Income for the three months ended September 30, 2013 (in thousands):

Derivatives in ASC Topic 815 Cash Flow Hedging Relationships	Amount of Gain (Loss) recognized in OCI on Derivative			Location of Gain (Loss) reclassified from Accumulated OCI into Income	Amount of Gain (Loss) reclassified from Accumulated OCI into Income			Location of Gain (Loss) recognized in Income on Derivative	Amount of Gain (Loss) recognized in Income on Derivative
	(Effective Portion)			(Effective Portion)				(Ineffective Portion and amount excluded from effectiveness testing)
	September 30, 2013			September 30, 2013				September 30, 2013
Foreign Exchange Contracts	$	(8,474	)	Foreign exchange gain (loss), net	$	(5,929	)	Foreign exchange gain (loss), net	$	0

21

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

The effect of derivative instruments on the Condensed Consolidated Statements of Income for the nine months ended September 30, 2013 (in thousands):

Derivatives in ASC Topic 815 Cash Flow Hedging Relationships	Amount of Gain (Loss) recognized in OCI on Derivative			Location of Gain (Loss) reclassified from Accumulated OCI into Income	Amount of Gain (Loss) reclassified from Accumulated OCI into Income			Location of Gain (Loss) recognized in Income on Derivative	Amount of Gain (Loss) recognized in Income on Derivative
	(Effective Portion)			(Effective Portion)				(Ineffective Portion and amount excluded from effectiveness testing)
	September 30, 2013			September 30, 2013				September 30, 2013
Foreign Exchange Contracts	$	(11,540	)	Foreign exchange gain (loss), net	$	(3,379	)	Foreign exchange gain (loss), net	$	837

The effect of derivative instruments on the Condensed Consolidated Statements of Income for the three months ended September 30, 2012 (in thousands):

Derivatives in ASC Topic 815 Cash Flow Hedging Relationships	Amount of Gain (Loss) recognized in OCI on Derivative			Location of Gain (Loss) reclassified from Accumulated OCI into Income	Amount of Gain (Loss) reclassified from Accumulated OCI into Income			Location of Gain (Loss) recognized in Income on Derivative	Amount of Gain (Loss) recognized in Income on Derivative
	(Effective Portion)			(Effective Portion)				(Ineffective Portion and amount excluded from effectiveness testing)
	September 30, 2012			September 30, 2012				September 30, 2012
Foreign Exchange Contracts	$	7,570	*	Foreign exchange gain (loss), net	$	(10,645	)	Foreign exchange gain (loss), net	$	(2,650	)

The effect of derivative instruments on the Condensed Consolidated Statements of Income for the nine months ended September 30, 2012 (in thousands):

Derivatives in ASC Topic 815 Cash Flow Hedging Relationships	Amount of Gain (Loss) recognized in OCI on Derivative			Location of Gain (Loss) reclassified from Accumulated OCI into Income	Amount of Gain (Loss) reclassified from Accumulated OCI into Income			Location of Gain (Loss) recognized in Income on Derivative	Amount of Gain (Loss) recognized in Income on Derivative
	(Effective Portion)			(Effective Portion)				(Ineffective Portion and amount excluded from effectiveness testing)
	September 30, 2012			September 30, 2012				September 30, 2012
Foreign Exchange Contracts	$	4,333	*	Foreign exchange gain (loss), net	$	(27,233	)	Foreign exchange gain (loss), net	$	(9,622	)

* Includes deferred loss on settled rollover derivatives amounting to $1.1 million and gain of $8.1 million for three months and nine months ended September 30, 2012 respectively.

22

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

Derivatives not designated as hedging instruments (dollars in thousands):

	Three months ended September 30,					Nine months ended September 30,
	2013			2012		2013			2012
Statement of Income
Foreign exchange gain (loss), net	$	(3,348	)	$	5,313	$	(6,666	)	$	132

These foreign exchange derivative contracts were entered into to hedge the fluctuations in foreign exchange rates for recognized balance sheet items such as inter-company and end customer receivables, and were not originally designated as hedges. Realized gains (losses) and changes in the fair value of these foreign exchange derivative contracts are recorded in foreign exchange gains (losses), net in the condensed consolidated statements of income.

Information on the location and amounts of derivative fair values in the Condensed Consolidated Balance Sheets (in thousands):

Derivative Instruments – Foreign Exchange Derivative Contracts		As of September 30, 2013		As of December 31, 2012
Balance Sheet Location	Designated/ Not Designated	Fair Value		Fair Value
Current Assets	Designated	$	7,479	$	780
	Not Designated	$	101	$	2
Current liabilities	Designated	$	7,751	$	607
	Not Designated	$	320	$	6,909

The estimated net amount of existing losses, net of taxes, as of September 30, 2013 that is expected to be reclassified from accumulated other comprehensive loss into earnings within the next 12 months is $4.97 million.

Certain foreign exchange derivative contracts of the Company are subject to master netting arrangements with its counterparties. However, the Company has elected to present the foreign exchange derivative assets and liabilities on a gross basis in its Condensed Consolidated Balance Sheets without offsetting its foreign exchange derivative assets and liabilities. As of September 30, 2013, the potential effect of rights of set off associated with the above foreign exchange derivative contracts would be an offset of net liabilities by $0.00 million, resulting in net foreign exchange derivative assets and foreign exchange derivative liabilities of $7.58 million and $8.07 million, respectively. As of December 31, 2012, the potential effect of rights of set off associated with the above foreign exchange derivative contracts would be an offset of net liabilities by $0.10 million, resulting in lower net foreign exchange derivative assets and foreign exchange derivative liabilities of $0.68 million and $7.41 million, respectively.

The Company mitigates the credit risk of these foreign exchange derivative contracts by transacting with highly rated counterparties in India which are major banks. As of September 30, 2013, the Company has evaluated the credit and non-performance risks associated with the counterparties and believes that the impact of the credit risk associated with the outstanding derivatives was insignificant.

23

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

12. Fair Value Measurements

FASB ASC Topic 820“Fair Value Measurements” establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Includes other inputs that are directly or indirectly observable in the marketplace.

Level 3 – Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

In accordance with ASC 820, assets and liabilities are to be measured based on the following valuation techniques:

Market approach – Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Income approach – Converting the future amounts based on the market expectations to its present value using the discounting methodology.

Cost approach – Replacement cost method.

24

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

Investments and Foreign exchange derivative contracts, as disclosed in Note 9 and 11, which are measured at fair value are summarized below (in thousands):

			Fair Value measurement at reporting date using
Description	As of September 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Current Assets:
Short term investments:
a) Liquid mutual fund units	$	204,658	$	204,658	$	0	$	0
b) Fixed maturity fund units		0		0		0		0
c) Certificate of Deposits with banks and others		0		0		0		0
d) Fixed deposits with banks		100,168		100,168		0		0
Foreign exchange derivative contracts		7,580		0		7,580		0
Total current assets	$	312,406	$	304,826	$	7,580	$	0
Liabilities
Current Liabilities:
Foreign exchange derivative contracts	$	8,071	$	0	$	8,071	$	0
Total current liabilities	$	8,071	$	0	$	8,071	$	0

			Fair Value measurement at reporting date using
Description	As of December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Current Assets:
Short term investments:
a) Liquid mutual fund units	$	466,468	$	466,468	$	0	$	0
b) Fixed maturity fund units		3,952		0		3,952		0
c) Certificate of Deposits with banks and others		40,396		0		40,396		0
d) Fixed deposits with banks		0		0		0		0
Foreign exchange derivative contracts		782		0		782		0
Total current assets	$	511,598	$	466,468	$	45,130	$	0
Liabilities
Current Liabilities:
Foreign exchange derivative contracts	$	7,516	$	0	$	7,516	$	0
Total current liabilities	$	7,516	$	0	$	7,516	$	0

25

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

13. Employee Benefits

Defined Contribution Plan

The Company’s eligible employees in India participate in the Employees’ Provident Fund (the “Provident Fund”), which is a defined contribution plan. The employee and the Company make monthly contributions of a specified percentage of salary to the Provident Fund, which is administered by the prescribed authority in India. The aggregate contributions along with interest thereon can be withdrawn on retirement, death, incapacitation or termination of employment. The Company’s contribution to the Provident Fund for the three months ended September 30, 2013 and 2012 was $2.0 million and $2.1 million, respectively. The Company’s contribution to the Provident Fund for each of the nine months ended September 30, 2013 and 2012 was $6.3 million.

401(k) Plan

Eligible United States employees of the Company participate in an employee retirement savings plan (the “Plan”) under Section 401(k) of the United States Internal Revenue Code. The Plan allows for employees to defer a portion of their annual earnings on a pre-tax basis through voluntary contributions to the Plan. The Company is not currently making any matching contributions.

Defined Benefit Plan

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees in India. The plan provides a lump sum payment to the vested employees at retirement, death, incapacitation or termination of employment, subject to a specified period of service based on the respective employee’s salary and tenure of service. Liabilities with regard to the plan are determined by actuarial valuation.

The following table sets forth the net periodic cost recognized by the Company in respect of the Plan (in thousands):

	Three Months  Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Net periodic plan cost
Service cost	$	603		$	1,215		$	1,895		$	2,709
Interest cost		300			271			976			827
Expected return on plan asset		(203	)		(195	)		(662	)		(596	)
Recognized net actuarial loss (gain)		(4	)		(4	)		(9	)		(1	)
Net periodic plan cost for the period	$	696		$	1,287		$	2,200		$	2,939

Other Pension Benefits

One of the former founder directors of iGATE Computer (currently merged with iGATE Global), is entitled to receive pension benefits upon retirement or on termination from employment at the rate of 50% of his last drawn monthly salary. The payment of pension will start when he reaches the age of 65. The Company has invested in a plan with Life insurance Corporation of India which will mature at the time this founder director reaches the age of 65. Since the Company is obligated to fund the shortfall, if any, between the annuity payable and the value of the plan asset, the pension liability is actuarially valued at each balance sheet date.

26

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

14. Stock-based compensation

During the three and nine months ended September 30, 2013, the Company granted 215,878 and 787,323 options, respectively, and 603,676 and 1,326,738 stock awards, respectively. During the three and nine months ended September 30, 2012, the Company granted 25,000 and 527,000 options, respectively, and 110,000 and 798,750 stock awards, respectively.

Stock-based compensation expense recorded in income from operations during the three and nine months ended September 30, 2013 and 2012 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Stock-based compensation recorded in
Cost of revenues	$	1,801	$	1,252	$	4,579	$	2,793
Selling, general and administrative expense		2,077		2,543		5,664		6,477
	$	3,878	$	3,795	$	10,243	$	9,270

During the three and nine months ended September 30, 2013, the Company issued 0.4 million and 0.7 million shares, respectively, upon exercise of stock options and awards. During the three and nine months ended September 30, 2012, the Company issued 0.1 million and 0.6 million shares, respectively, upon exercise of stock options and awards.

15. Other Income, net

Components of other income for the three and nine months ended September 30, 2013 and 2012 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Investment income	$	4,088	$	8,572	$	30,057	$	22,447
Interest income		705		125		2,986		1,659
Gain (loss) on sale of fixed assets		8		13		2,248		(32	)
Forfeiture of vested stock options		0		0		3,005		0
Other		412		105		1,614		(99	)
Other income, net	$	5,213	$	8,815	$	39,910	$	23,975

Forfeiture of vested stock options represents the reversal of stock-based compensation expense pursuant to the claw back feature that was triggered during the second quarter of 2013, in connection with the termination of the Company’s former Chief Executive Officer.

16. Concentration of Revenues

The following is a concentration of revenues greater than 10% by customer for the periods shown:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
General Electric Company		13	%		13	%		13	%		13	%
Royal Bank of Canada		11	%		11	%		11	%		10	%

27

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

17. Segment Information

The Company’s Chief Executive Officer, who is the chief decision making officer, determined that the business will be operated and managed as a single segment. As a result, segment information is not presented.

18. Guarantor Subsidiaries – Supplemental condensed consolidating financial information

In connection with the acquisition of iGATE Computer, the Company issued the Notes which are the senior unsecured obligations of the Company. The Notes are guaranteed by the Company’s 100% owned domestic subsidiaries iTI, iGATE Inc., and iGATE Holding Corporation (collectively, the “Guarantors”). In accordance with the terms of the second supplemental indenture dated September 30, 2012, iAI was included as a guarantor to the Notes with effect from September 1, 2012. Subsequently on December 31, 2012, as part of an integration process, iAI along with PTS, were merged into iTI. The Company has not included separate financial statements of the Guarantors because they are 100% owned by the Company, the guarantees issued are full and unconditional, and the guarantees are joint and several. There are customary exceptions in the Indenture under which a subsidiary’s guarantee would terminate namely:

• a permitted sale or other disposition by a guarantor of all or substantially all of its assets.

• the designation or classification of a guarantor as an unrestricted subsidiary pursuant to the indenture governing the guarantees.

• defeasance or discharge of the Notes.

• the release of a guarantor due to the operation of the definition of “Immaterial Subsidiary” in the documents governing the guarantees; or

• the Notes’ achievement of investment grade status.

28

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

Condensed consolidating financial information for the Company and the Guarantors are as follows (in thousands):

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2013

(UNAUDITED)

	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	0		$	37,423		$	104,556		$	0		$	141,979
Restricted cash		0			0			0			0			0
Short-term investments		0			0			304,826			0			304,826
Accounts receivable, net		0			70,234			76,587			0			146,821
Unbilled revenues		0			41,787			42,049			0			83,836
Prepaid expenses and other current assets		6,909			5,026			25,622			0			37,557
Prepaid income taxes		0			7,204			1,126			0			8,330
Deferred tax assets		0			5,198			15,483			0			20,681
Foreign exchange derivative contracts		0			0			7,580			0			7,580
Receivable from group companies		32,775			0			30,460			(63,235	)		0
Total current assets		39,684			166,872			608,289			(63,235	)		751,610
Investment in subsidiaries		460,955			1,055,209			0			(1,516,164	)		0
Inter-corporate loan		770,000			2,471			0			(772,471	)		0
Deposits and other assets		12,373			1,087			7,634			0			21,094
Prepaid income taxes		0			793			28,063			0			28,856
Property and equipment, net		0			1,960			153,194			0			155,154
Leasehold land		0			0			75,809			0			75,809
Deferred tax assets		0			14,745			0			0			14,745
Goodwill		0			1,026			432,158			0			433,184
Intangible assets, net		0			147			120,055			0			120,202
Total assets	$	1,283,012		$	1,244,310		$	1,425,202		$	(2,351,870	)	$	1,600,654
LIABILITIES, REDEEMABLE NON- CONTROLLING INTEREST, PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	0		$	2,077		$	6,138		$	0		$	8,215
Line of credit		0			25,000			52,000			0			77,000
Term loans		0			52,500			0			0			52,500
Accrued payroll and related costs		0			18,244			35,578			0			53,822
Other accrued liabilities		28,875			24,110			51,299			0			104,284
Accrued income taxes		0			7,098			2,944			0			10,042
Foreign exchange derivative contracts		0			0			8,071			0			8,071
Deferred revenue		0			5,532			9,583			0			15,115
Payable to group companies		0			63,235			0			(63,235	)		0
Total current liabilities		28,875			197,796			165,613			(63,235	)		329,049
Other long-term liabilities		0			158			3,059			0			3,217
Senior notes		770,000			0			0			0			770,000
Term loans		0			0			0			0			0
Accrued income taxes		0			650			18,940			0			19,590
Intercompany loan		0			770,000			2,471			(772,471	)		0
Deferred tax liabilities		0			0			48,299			0			48,299
Total liabilities		798,875			968,604			238,382			(835,706	)		1,170,155
Redeemable non-controlling interest		0			0			0			0			0
Series B Preferred stock		402,081			0			0			0			402,081
iGATE Corporation shareholders’ equity:
Common shares		593			330,000			53,451			(383,451	)		593
Common shares held in treasury, at cost		(14,714	)		0			0			0			(14,714	)
Additional paid-in capital		210,228			6,209			1,114,760			(1,132,713	)		198,484
Retained earnings		(114,051	)		(60,600	)		418,548			0			243,897
Accumulated other comprehensive loss		0			97			(404,609	)		0			(404,512	)
Total iGATE Corporation shareholders’ equity		82,056			275,706			1,182,150			(1,516,164	)		23,748
Non-controlling interest		0			0			4,670			0			4,670
Total equity		82,056			275,706			1,186,820			(1,516,164	)		28,418
Total liabilities, redeemable non-controlling interest, preferred stock and shareholders’ equity	$	1,283,012		$	1,244,310		$	1,425,202		$	(2,351,870	)	$	1,600,654

29

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2012

	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	0		$	14,365		$	80,790		$	0		$	95,155
Restricted cash		0			0			3,072			0			3,072
Short-term investments		0			0			510,816			0			510,816
Accounts receivable, net		0			75,253			95,936			(8,854	)		162,335
Unbilled revenues		0			32,221			42,374			(1,694	)		72,901
Prepaid expenses and other current assets		6,418			3,958			21,334			0			31,710
Prepaid income taxes		0			7,228			1,313			0			8,541
Deferred tax assets		0			7,240			7,415			0			14,655
Foreign exchange derivative contracts		0			0			782			0			782
Receivable from group companies		26,802			2,303			0			(29,105	)		0
Total current assets		33,220			142,568			763,832			(39,653	)		899,967
Investment in subsidiaries		438,669			1,071,565			0			(1,510,234	)		0
Inter-corporate loan		770,000			0			0			(770,000	)		0
Deposits and other assets		17,594			1,064			6,714			0			25,372
Prepaid income taxes		0			794			27,557			0			28,351
Property and equipment, net		0			1,945			165,307			0			167,252
Leasehold land		0			0			86,933			0			86,933
Deferred tax assets		0			14,175			16,460			0			30,635
Goodwill		0			1,026			492,115			0			493,141
Intangible assets, net		0			225			144,203			0			144,428
Total assets	$	1,259,483		$	1,233,362		$	1,703,121		$	(2,319,887	)	$	1,876,079
LIABILITIES, REDEEMABLE NON- CONTROLLING INTEREST, PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	0		$	24,404		$	2,552		$	(19,157	)	$	7,799
Line of credit		0			25,000			52,000			0			77,000
Term loans		0			35,000			0			0			35,000
Accrued payroll and related costs		0			16,937			37,865			0			54,802
Other accrued liabilities		11,550			25,239			42,219			0			79,008
Accrued income taxes		0			5,509			3,625			0			9,134
Foreign exchange derivative contracts		0			0			7,516			0			7,516
Deferred revenue		0			5,809			12,081			0			17,890
Payable to group companies		0			18,193			0			(18,193	)		0
Total current liabilities		11,550			156,091			157,858			(37,350	)		288,149
Other long-term liabilities		0			0			5,568			(2,303	)		3,265
Senior notes		770,000			0			0			0			770,000
Term loans		0			35,000			228,500			0			263,500
Accrued income taxes		0			650			16,622			0			17,272
Intercompany loan		0			770,000			0			(770,000	)		0
Deferred tax liabilities		0			0			55,494			0			55,494
Total liabilities		781,550			961,741			464,042			(809,653	)		1,397,680
Redeemable non-controlling interest		0			0			32,422			0			32,422
Series B Preferred stock		378,474			0			0			0			378,474
iGATE Corporation shareholders’ equity:
Common shares		585			330,000			52,989			(382,989	)		585
Common shares held in treasury, at cost		(14,714	)		0			0			0			(14,714	)
Additional paid-in capital		199,302			794			1,112,489			(1,127,245	)		185,340
Retained earnings		(85,714	)		(59,270	)		315,859			0			170,875
Accumulated other comprehensive loss		0			97			(274,680	)		0			(274,583	)
Total iGATE Corporation shareholders’ equity		99,459			271,621			1,206,657			(1,510,234	)		67,503
Non-controlling interest		0			0			0			0			0
Total equity		99,459			271,621			1,206,657			(1,510,234	)		67,503
Total liabilities, redeemable non-controlling interest, preferred stock and shareholders’ equity	$	1,259,483		$	1,233,362		$	1,703,121		$	(2,319,887	)	$	1,876,079

30

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THREE MONTHS ENDED SEPTEMBER 30, 2013

	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenues	$	0		$	171,855		$	183,130		$	(61,579	)	$	293,406
Cost of revenues (exclusive of depreciation and amortization)		0			121,685			111,957			(61,579	)		172,063
Gross margin		0			50,170			71,173			0			121,343
Selling, general and administrative expense		0			18,151			28,711			0			46,862
Depreciation and amortization		0			295			8,144			0			8,439
Income from operations		0			31,724			34,318			0			66,042
Interest expense		(18,950	)		(982	)		(324	)		0			(20,256	)
Foreign exchange gain (loss), net		0			(109	)		(4,263	)		0			(4,372	)
Other income (expense), net		17,325			(17,086	)		4,974			0			5,213
Income before income taxes		(1,625	)		13,547			34,705			0			46,627
Income tax expense (benefit)		0			5,842			8,792			0			14,634
Net income (loss)		(1,625	)		7,705			25,913			0			31,993
Non-controlling interest		0			0			97			0			97
Net income (loss) attributable to iGATE Corporation		(1,625	)		7,705			25,816			0			31,896
Accretion to preferred stock		126			0			0			0			126
Preferred dividend		7,994			0			0			0			7,994
Net income (loss) attributable to iGATE common shareholders	$	(9,745	)	$	7,705		$	25,816		$	0		$	23,776

31

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THREE MONTHS ENDED SEPTEMBER 30, 2012

	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenues	$	0		$	93,739		$	207,427		$	(30,076	)	$	271,090
Cost of revenues (exclusive of depreciation and amortization)		0			68,549			124,796			(30,076	)		163,269
Gross margin		0			25,190			82,631			0			107,821
Selling, general and administrative expense		0			5,646			38,418			0			44,064
Depreciation and amortization		0			100			9,927			0			10,027
Income from operations		0			19,444			34,286			0			53,730
Interest expense		(18,795	)		(177	)		(3,022	)		0			(21,994	)
Foreign exchange gain (loss), net		0			121			(3,884	)		0			(3,763	)
Other income (expense), net		17,325			(17,323	)		8,813			0			8,815
Income before income taxes		(1,470	)		2,065			36,193			0			36,788
Income tax expense (benefit)		0			(978	)		9,473			0			8,495
Net income (loss)		(1,470	)		3,043			26,720			0			28,293
Non-controlling interest		0			0			0			0			0
Net income (loss) attributable to iGATE Corporation		(1,470	)		3,043			26,720			0			28,293
Accretion to preferred stock		103			0			0			0			103
Preferred dividend		7,419			0			0			0			7,419
Net income (loss) attributable to iGATE common shareholders	$	(8,992	)	$	3,043		$	26,720		$	0		$	20,771

32

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR NINE MONTHS ENDED SEPTEMBER 30, 2013

	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenues	$	0		$	499,954		$	542,746		$	(191,108	)	$	851,592
Cost of revenues (exclusive of depreciation and amortization)		0			366,782			342,399			(191,108	)		518,073
Gross margin		0			133,172			200,347			0			333,519
Selling, general and administrative expense		0			50,291			88,713			0			139,004
Depreciation and amortization		0			929			25,376			0			26,305
Income from operations		0			81,952			86,258			0			168,210
Interest expense		(56,705	)		(2,674	)		(7,646	)		0			(67,025	)
Foreign exchange gain (loss), net		0			(298	)		390			0			92
Other income (expense), net		51,975			(48,831	)		36,766			0			39,910
Income before income taxes		(4,730	)		30,149			115,768			0			141,187
Income tax expense (benefit)		0			9,455			35,006			0			44,461
Net income (loss)		(4,730	)		20,694			80,762			0			96,726
Non-controlling interest		0			0			97			0			97
Net income (loss) attributable to iGATE Corporation		(4,730	)		20,694			80,665			0			96,629
Accretion to preferred stock		361			0			0			0			361
Preferred dividend		23,246			0			0			0			23,246
Net income (loss) attributable to iGATE common shareholders	$	(28,337	)	$	20,694		$	80,665		$	0		$	73,022

33

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR NINE MONTHS ENDED SEPTEMBER 30, 2012

	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenues	$	0		$	196,451		$	700,736		$	(94,839	)	$	802,348
Cost of revenues (exclusive of depreciation and amortization)		0			136,796			446,423			(94,839	)		488,380
Gross margin		0			59,655			254,313			0			313,968
Selling, general and administrative expense		0			4,117			123,231			0			127,348
Depreciation and amortization		0			187			36,570			0			36,757
Income from operations		0			55,351			94,512			0			149,863
Interest expense		(56,235	)		(260	)		(5,654	)		0			(62,149	)
Foreign exchange gain (loss), net		0			105			(18,303	)		0			(18,198	)
Other income (expense), net		51,975			(51,973	)		23,973			0			23,975
Income before income taxes		(4,260	)		3,223			94,528			0			93,491
Income tax expense (benefit)		0			(1,700	)		25,707			0			24,007
Net income (loss)		(4,260	)		4,923			68,821			0			69,484
Non-controlling interest		0			0			4,476			0			4,476
Net income (loss) attributable to iGATE Corporation		(4,260	)		4,923			64,345			0			65,008
Accretion to preferred stock		295			0			0			0			295
Preferred dividend		21,590			0			0			0			21,590
Net income (loss) attributable to iGATE common shareholders	$	(26,145	)	$	4,923		$	64,345		$	0		$	43,123

34

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THREE MONTHS ENDED SEPTEMBER 30, 2013

	Issuer			Guarantors		Non- Guarantors			Eliminations		Consolidated
Net Income (loss) attributable to iGATE common shareholders	$	(9,745	)	$	7,705	$	25,816		$	0	$	23,776
Add: Non-controlling interest		0			0		97			0		97
Other comprehensive income:
Change in fair value on marketable securities		0			0		(336	)		0		(336	)
Unrecognized actuarial gain (loss) on pension liability		0			0		293			0		293
Change in fair value of cash flow hedges		0			0		(1,482	)		0		(1,482	)
Gain (loss) on foreign currency translation		0			0		(48,269	)		0		(48,269	)
Total comprehensive income (loss)		(9,745	)		7,705		(23,881	)		0		(25,921	)
Less: Total comprehensive income (loss) attributable to non-controlling interest		0			0		(1,890	)		0		(1,890	)
Total comprehensive income (loss) attributable to iGATE common shareholders	$	(9,745	)	$	7,705	$	(21,991	)	$	0	$	(24,031	)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THREE MONTHS ENDED SEPTEMBER 30, 2012

	Issuer			Guarantors		Non- Guarantors			Eliminations		Consolidated
Net Income (loss) attributable to iGATE common shareholders	$	(8,992	)	$	3,043	$	26,720		$	0	$	20,771
Add: Non-controlling interest		0			0		0			0		0
Other comprehensive income:
Change in fair value on marketable securities		0			0		295			0		295
Unrecognized actuarial gain (loss) on pension liability		0			0		(24	)		0		(24	)
Change in fair value of cash flow hedges		0			0		13,084			0		13,084
Gain (loss) on foreign currency translation		0			0		72,862			0		72,862
Total comprehensive income (loss)		(8,992	)		3,043		112,937			0		106,988
Less: Total comprehensive income (loss) attributable to non-controlling interest		0			0		0			0		0
Total comprehensive income (loss) attributable to iGATE common shareholders	$	(8,992	)	$	3,043	$	112,937		$	0	$	106,988

35

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR NINE MONTHS ENDED SEPTEMBER 30, 2013

	Issuer			Guarantors		Non- Guarantors			Eliminations		Consolidated
Net Income (loss) attributable to iGATE common shareholders	$	(28,337	)	$	20,694	$	80,665		$	0	$	73,022
Add: Non-controlling interest		0			0		97			0		97
Other comprehensive income:
Change in fair value on marketable securities		0			0		(7,086	)		0		(7,086	)
Unrecognized actuarial gain (loss) on pension liability		0			0		863			0		863
Change in fair value of cash flow hedges		0			0		(5,417	)		0		(5,417	)
Gain (loss) on foreign currency translation		0			0		(120,276	)		0		(120,276	)
Total comprehensive income (loss)		(28,337	)		20,694		(51,154	)		0		(58,797	)
Less: Total comprehensive income (loss) attributable to non-controlling interest		0			0		(1,890	)		0		(1,890	)
Total comprehensive income (loss) attributable to iGATE common shareholders	$	(28,337	)	$	20,694	$	(49,264	)	$	0	$	(56,907	)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR NINE MONTHS ENDED SEPTEMBER 30, 2012

	Issuer			Guarantors		Non- Guarantors			Eliminations		Consolidated
Net Income (loss) attributable to iGATE common shareholders	$	(26,145	)	$	4,923	$	64,345		$	0	$	43,123
Add: Non-controlling interest		0			0		4,476			0		4,476
Other comprehensive income:
Change in fair value on marketable securities		0			0		1,761			0		1,761
Unrecognized actuarial gain (loss) on pension liability		0			0		(290	)		0		(290	)
Change in fair value of cash flow hedges		0			0		22,438			0		22,438
Gain (loss) on foreign currency translation		0			0		11,395			0		11,395
Total comprehensive income (loss)		(26,145	)		4,923		104,125			0		82,903
Less: Total comprehensive income (loss) attributable to non-controlling interest		0			0		4,476			0		4,476
Total comprehensive income (loss) attributable to iGATE common shareholders	$	(26,145	)	$	4,923	$	99,649		$	0	$	78,427

36

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR NINE MONTHS ENDED SEPTEMBER 30, 2013

	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash Flows From Operating Activities:
Net income (loss)	$	(4,730	)	$	20,694		$	80,762		$	0		$	96,726
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		0			929			25,376			0			26,305
Stock-based compensation		0			208			7,030			0			7,238
Realized gain on investments		0			0			(30,057	)		0			(30,057	)
Loss on sale of investment in affiliate		0			0			0			0			0
Deferred gain (loss) on settled derivatives		0			0			(1,066	)		0			(1,066	)
Provision (recovery) for doubtful debts		0			362			(208	)		0			154
Deferred income taxes		0			277			(744	)		0			(467	)
Amortization of debt issuance costs		4,730			460			4,019			0			9,209
Loss (gain) on sale of property and equipment		0			0			(2,248	)		0			(2,248	)
Deferred rent		0			104			94			0			198
Excess tax benefits related to stock option exercises.		0			(463	)		0			0			(463	)
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenues		0			12,509			(16,673	)		0			(4,164	)
Inter-corporate current account		(28,259	)		7,539			20,720			0			0
Prepaid expenses and other assets		17,325			(1,528	)		(26,186	)		0			(10,389	)
Accounts payable		0			(1,945	)		2,403			0			458
Accrued and other liabilities		0			3,073			36,197			0			39,270
Deferred revenue		0			(276	)		(2,135	)		0			(2,411	)
Net cash flows (used in) provided by operating activities		(10,934	)		41,943			97,284			0			128,293
Cash Flows From Investing Activities:
Purchase of property and equipment		0			(921	)		(23,309	)		0			(24,230	)
Proceeds from sale of property and equipment		0			0			2,574			0			2,574
Purchase of available-for-sale investments		0			0			(1,188,835	)		0			(1,188,835	)
Proceeds from maturities and sale of available-for-sale investments		0			0			1,372,990			0			1,372,990
Restricted cash		0			0			3,072			0			3,072
Receipts from (payments for) lease deposits		0			0			0			0			0
Investment in group companies		0			(255	)		0			255			0
Purchase of non-controlling interests		0			0			(23,651	)		0			(23,651	)
Net cash flows provided by (used in) investing activities		0			(1,176	)		142,841			255			141,920
Cash Flows From Financing Activities:
Payments on capital lease obligations		0			0			(450	)		0			(450	)
Payment of line of credit and term loans		0			(47,500	)		(239,500	)		0			(287,000	)
Proceeds from line of credit and term loans		0			30,000			11,000			0			41,000
Payment of debt related costs		0			0			(2,394	)		0			(2,394	)
Proceeds from exercise of stock options		10,471			(209	)		(6,637	)		0			3,625
Excess tax benefits related to stock option exercises		463			0			0			0			463
Proceeds from equity issue to group companies		0			0			255			(255	)		0
Net cash flows provided by ( used in) financing activities		10,934			(17,709	)		(237,726	)		(255	)		(244,756	)
Effect of exchange rate changes		0			0			21,367			0			21,367
Net change in cash and cash equivalents		0			23,058			23,766			0			46,824
Cash and cash equivalents, beginning of period		0			14,365			80,790			0			95,155
Cash and cash equivalents, end of period	$	0		$	37,423		$	104,556		$	0		$	141,979

37

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR NINE MONTHS ENDED SEPTEMBER 30, 2012

	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash Flows From Operating Activities:
Net income (loss)	$	(4,260	)	$	4,923		$	68,821		$	0		$	69,484
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		0			187			36,570			0			36,757
Stock-based compensation		0			3,284			5,986			0			9,270
Realized gain on investments		0			0			(17,069	)		0			(17,069	)
Loss on sale of investment in affiliate		0			0			551			0			551
Deferred gain on settled derivatives		0			0			19,344			0			19,344
Provision (recovery) for doubtful debts		0			101			579			0			680
Deferred income taxes		0			(1,715	)		(8,575	)		0			(10,290	)
Amortization of debt issuance costs		4,260			0			550			0			4,810
Loss (gain) on sale of property and equipment		0			0			32			0			32
Deferred rent		0			0			(88	)		0			(88	)
Excess tax benefits related to stock option exercises		0			(318	)		0			0			(318	)
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenues		0			(55,154	)		22,456			0			(32,698	)
Inter-corporate current account		(29,107	)		75,556			(46,449	)		0			0
Prepaid expenses and other assets		0			(1,981	)		(17,765	)		0			(19,746	)
Accounts payable		0			6,714			3,650			0			10,364
Accrued and other liabilities		17,325			(7,910	)		(19,077	)		0			(9,662	)
Deferred revenue		0			380			(6,454	)		0			(6,074	)
Net cash flows (used in) provided by operating activities		(11,782	)		24,067			43,062			0			55,347
Cash Flows From Investing Activities:
Purchase of property and equipment		0			(367	)		(13,063	)		0			(13,430	)
Proceeds from sale of property and equipment		0			0			27			0			27
Purchase of available-for-sale investments		0			0			(1,528,008	)		0			(1,528,008	)
Proceeds from maturities and sale of available-for-sale investments		0			0			1,438,195			0			1,438,195
Restricted cash		0			0			(11,400	)		0			(11,400	)
Receipts from (payments for) lease deposits		0			0			2,663			0			2,663
Investment in group companies		0			(76,365	)		0			76,365			0
Purchase of non-controlling interests		0			0			(224,009	)		0			(224,009	)
Net cash flows provided by (used in) investing activities		0			(76,732	)		(335,595	)		76,365			(335,962	)
Cash Flows From Financing Activities:
Payments on capital lease obligations		0			(831	)		416			0			(415	)
Payment of line of credit and term loans		0			0			0			0			0
Proceeds from line of credit and term loans		0			70,000			225,500			0			295,500
Payment of debt related costs		0			0			(3,263	)		0			(3,263	)
Proceeds from exercise of stock options		11,464			0			(4,233	)		0			7,231
Excess tax benefits related to stock option exercises		318			0			0			0			318
Proceeds from equity issue to group companies		0			0			76,365			(76,365	)		0
Net cash flows provided by ( used in) financing activities		11,782			69,169			294,785			(76,365	)		299,371
Effect of exchange rates changes		0			0			3,512			0			3,512
Net change in cash and cash equivalents		0			16,504			5,764			0			22,268
Cash and cash equivalents, beginning of period		0			7,384			68,056			0			75,440
Cash and cash equivalents, end of period	$	0		$	23,888		$	73,820		$	0		$	97,708

38

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

19. Commitments and contingencies

Capital commitments

As of September 30, 2013, the Company has open purchase orders totaling $50.2 million towards construction of new facilities and purchase of property and equipment.

Bank guarantees

As of September 30, 2013, guarantees and letters of credit provided by banks on behalf of the Company’s subsidiaries, to customs authorities and vendors for capital procurements amounted to $2.8 million. These guarantees and letters of credit have a remaining term of approximately one to five years.

Other commitments

The Company’s business process delivery centers in India are 100% Export Oriented units or Software Technology Parks (“STP”) and SEZs under the STP and SEZ guidelines issued by the Government of India. These units are exempted from customs, central excise duties, and levies on imported and indigenous capital goods, stores, and spares. The Company has executed legal undertakings to pay custom duties, central excise duties, levies, and liquidated damages payable, if any, in respect of imported and indigenous capital goods, stores, and spares consumed duty free, in the event that certain terms and conditions are not fulfilled.

The Company has entered into a service agreement with a customer that provides such customer the option, exercisable at any time by providing 60 days’ notice to the Company to acquire an equity stake of up to 7.00% of the Company’s outstanding voting shares at fair market value. The fair market value is the volume weighted average trading price of the Company’s shares on the NASDAQ Market for five consecutive trading days immediately before the date on which the customer delivers its notice under the option. The option does not restrict the customer in any way from buying the Company’s shares in the open market. The service agreement also requires the Company to register the shares upon exercise of the option by the customer and there are no events or circumstances that would require the Company to transfer consideration under the agreement.

Contingencies

The Company has been advised that an employee intends to bring a claim alleging sexual harassment against the Company and its former Chief Executive Officer and President. An arbitration has been scheduled with respect to this matter. The Company believes that it has valid defenses against this claim. Based upon this belief and the inherent difficulties in evaluating the employee’s potential claim at this early stage in the proceedings, the Company cannot reasonably estimate the potential loss. Accordingly, no accrual for loss contingency has been recorded for this matter.

The securities class action filed on June 14, 2013, by “Ashish Kumar Jain, Individually and On Behalf of All Others Similarly Situated” was voluntarily withdrawn on August 22, 2013 and no monetary damages were paid by the Company. Hence the event is no longer contingent to the Company. The Company is involved in lawsuits and claims which arise in the ordinary course of business. Management believes that the ultimate outcome of these matters will not have a material adverse impact on its financial position, results of operations or cash flows.

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iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

20. Recently Issued Accounting Pronouncements

In July 2013, the FASB issued an ASU No. 2013-11 – “Income Taxes – Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forwards Exists” which provides that a liability related to an unrecognized tax benefit would be offset against a deferred tax asset for a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward if such settlement is required or expected in the event, the uncertain tax position is disallowed, which would require an entity to present the liability associated with an unrecognized tax benefit or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward. The ASU also mentions that, to the extent a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The ASU is effective for annual and interim period for fiscal years beginning on or after December 15, 2013. The Company is currently evaluating its impact on the financial statements and disclosures.

21. Recently Adopted Accounting Pronouncements

In December 2011, the FASB issued an ASU No. 2011-11 – “Disclosure about Offsetting Assets and Liabilities”, which was further amended as ASU No. 2013-01 – “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities”, which further clarified the scope of the offsetting disclosures. The ASU requires entities to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of GAAP and those entities that prepare their financial statements on the basis of IFRS. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. The ASU is effective for annual and interim period for fiscal years beginning on or after January 1, 2013. Although the Company’s foreign exchange derivative contracts are subject to master netting arrangement, the Company’s management has adopted gross presentation of financial assets and liabilities on the face of the financial statements, hence other than the additional disclosure requirements, the adoption of these changes have no impact on the Consolidated Financial Statements.

In February 2013, the FASB issued an ASU No. 2013-02 – “Comprehensive Income – Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”, which requires entities to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account instead of directly to income or expense in the same reporting period. The ASU is effective for annual and interim period for fiscal years beginning on or after December 15, 2012. In 2013, the Company has disclosed tables summarizing reclassifications out of accumulated other comprehensive income and balances of accumulated other comprehensive income, by component. The adoption of the standard affects financial statement presentation only and has no effect on our financial condition or consolidated results of operations.

22. Subsequent Events

The Company has evaluated subsequent events through the date of filing the financial statements and no events have occurred from the balance sheet date that would impact the Consolidated Financial Statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Some of the statements in this Form 10-Q are not historical facts and constitute “forward-looking statements” within the meaning of such term under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include our financial growth and liquidity projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our business, cash flows, costs and the markets in which we operate. Without limiting the foregoing, the words “believe,” “anticipate,” “plan,” “expect,” “estimate” and similar expressions are intended to identify these forward-looking statements. These forward-looking statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. While we cannot predict all of the risks and uncertainties, they include, but are not limited to, our ability to predict our financial performance, the level of market demand for our services, the highly-competitive market for the types of services that we offer, the impact of competitive factors on profit margins, market conditions that could cause our customers to reduce their spending for our services, our ability to create, acquire and build new businesses and grow our existing businesses, our ability to attract and retain qualified personnel, our ability to reduce costs and conserve cash, currency fluctuations and market conditions in India and elsewhere around the world, changes in generally accepted accounting principles and/or their interpretation and other risks that are described in more detail elsewhere in this Form 10-Q and in our filings with the SEC, including our Form 10-K for the year ended December 31, 2012 (“Form 10-K”).

Unless otherwise indicated or the context otherwise requires, all references in this report to “iGATE,” the “Company,” “us,” “our,” or “we” are to iGATE Corporation, a Pennsylvania corporation, and its consolidated subsidiaries. iGATE Corporation, through its operating subsidiaries, is a worldwide provider of Information Technology (“IT”) and IT-enabled operations, and provides offshore outsourcing services to large and medium-sized organizations. These services include application management and development, verification and validation, enterprise application solutions like enterprise resource planning package implementation and integration services, business intelligence and data warehousing, technology consulting, infrastructure management and cloud computing services, IT consulting and governance, customized learning solutions, embedded systems development and engineering design services.

Website Access to SEC Reports

Our website is http://www.igate.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports are available free of charge on the Investors page of our website as soon as reasonably practicable after the reports are filed electronically with the SEC.

Business Overview

We are a worldwide outsourcing provider of integrated end-to-end offshore centric IT and IT-enabled operations solutions and services. We deliver a comprehensive range of IT services through globally integrated onsite and offshore delivery locations primarily in India. We offer our services to customers through industry focused practices, including insurance, healthcare and life sciences, manufacturing, retail and logistics, banking and financial services, communications, energy and utilities, product and engineering solutions, government solutions and media and entertainment and through technology focused practices. Our IT services include application development, application management, verification and validation, enterprise application solutions, business intelligence and data warehousing, packaged software implementation, infrastructure management services, cloud computing services, embedded systems development, engineering design services, IT consulting, IT governance and customized learning solutions. Our IT-enabled services include business process outsourcing (“BPO”) transaction processing services and customer interaction services.

We provide full-spectrum consulting, technology and BPO, and product engineering services. We also offer Integrated Technology and Operations (“iTOPS”) solutions that integrate IT outsourcing and IT-enabled operations, and provide offshore outsourcing solutions and services seamlessly. In an increasingly fragmented and intensely competitive marketplace, we look to disrupt traditional billing models,like the existing “time-and-material” model used by a majority of our competitors in favor of a more “client-friendly business outcome” model. The business outcome model is a non-linear model that we believe diminishes risk for a client, as they only pay for services actually used on a per-transaction basis. In addition to cost savings, our iTOPS model provides clients with innovative ways to enhance the quality and performance of their operations through better alignment of business processes to IT infrastructure.

We believe our innovative approach of integrating IT and IT-enabled operations and our ability to leverage a global delivery model provides our clients with clearly differentiated and demonstrated value. We have adopted a global delivery model for providing varied and complex IT-enabled services to our global customers spread across multiple locations. With a global presence and world class delivery centers spanning across the Americas, Europe-Middle East-Africa and Asia-Pacific with 23 offices worldwide, as of September 30, 2013, our global delivery model includes a well defined, single business management system with best industry practices, models and standards. Our global delivery model leverages both onsite delivery and comprehensive offshore services, depending upon a client’s location and preferences.

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We were founded in 1986. We are incorporated in Pennsylvania and our principal executive office is located in Fremont, California. We have operations in India, Canada, the United States, Belgium, Denmark, France, Finland, Germany, Ireland, Netherlands, Sweden, Switzerland, Luxemburg, Mexico, Singapore, Malaysia, Japan, Australia, the United Arab Emirates, South Africa, China, Mauritius and the United Kingdom.

We target large and medium-sized organizations across a diverse set of industries, including financial services, insurance, manufacturing, retail, healthcare and media and entertainment. A majority of our clients have headquarters in North America and operate internationally. iGATE has 28,283 employees as of September 30, 2013.

Certain contracts are based upon a fixed-price with payment based upon deliverables and/or project milestones reached. Certain contracts are time-and-material based and are billed at an agreed upon hourly or daily rate. Certain contracts with no stated deliverables have a designated workforce and are based on fixed periodic payments. Some process outsourcing contracts provide pricing per transaction. Customers typically have the right to cancel contracts with minimal notice. Contracts with deliverables or project milestones can provide for certain penalties if the deliverables or project milestones are not met within contract timelines.

We service customers in a wide range of industries. Our largest customer is General Electric Company (“GE”), which accounted for approximately 13% of revenues for each of the nine months ended September 30, 2013 and 2012. Our second largest customer, Royal Bank of Canada (“RBC”), accounted for approximately 11% and 10% of revenues for each of the nine months ended September 30, 2013 and 2012, respectively. iGATE is a Global Preferred Partner of RBC.

Reportable Financial Segments

The Chief Executive Officer, who is our chief decision making officer, determined that our business will be operated and managed as a single segment. Therefore, no segment information is provided.

Critical Accounting Policies

Our critical accounting policies are described in the summary of significant accounting policies as discussed in Note 1 of our Form 10-K.

Recently Issued Accounting Pronouncements

In July 2013, the FASB issued an ASU No. 2013-11 – “Income Taxes – Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forwards Exists” which provides that a liability related to an unrecognized tax benefit would be offset against a deferred tax asset for a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward if such settlement is required or expected in the event the uncertain tax position is disallowed, which would require an entity to present the liability associated with an unrecognized tax benefit or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward. The ASU also mentions that, to the extent a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The ASU is effective for annual and interim period for fiscal years beginning on or after December 15, 2013. The Company is currently evaluating its impact on the financial statements and disclosures.

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Results of Operations for the Three Months Ended September 30, 2013 as Compared to the Three Months Ended September 30, 2012 (in thousands):

	Three Months Ended September 30,
	2013						2012						% change of Amount from comparable period
	Amount			% of Revenues			Amount			% of Revenues
Revenues	$	293,406			100.0	%	$	271,090			100.0	%		8.2	%
Cost of revenues (a)		172,063			58.6			163,269			60.2			5.4
Gross margin		121,343			41.4			107,821			39.8			12.5
Selling, general and administrative		46,862			16.0			44,064			16.3			6.3
Depreciation and amortization		8,439			2.9			10,027			3.7			(15.8	)
Income from operations		66,042			22.5			53,730			19.8			22.9
Interest expense		(20,256	)		(6.9	)		(21,994	)		(8.1	)		(7.9	)
Foreign exchange gain (loss), net		(4,372	)		(1.5	)		(3,763	)		(1.4	)		16.2
Other income, net		5,213			1.8			8,815			3.3			(40.9	)
Income before income taxes		46,627			15.9			36,788			13.6			26.7
Income tax expense (b)		14,634			5.0			8,495			3.1			—
Net income		31,993			10.9			28,293			10.4			13.1
Non-controlling interest (c)		97			0.0			—			—			—
Net income attributable to iGATE		31,896			10.9			28,293			10.4			12.7
Accretion to preferred stock		126			0.0			103			0.0			22.3
Preferred dividend		7,994			2.7			7,419			2.7			7.8
Net income attributable to common stockholders	$	23,776			8.1	%	$	20,771			7.7	%		14.5	%

(a) Cost of revenues is exclusive of depreciation and amortization.

(b) As the effective tax rate is a better comparable measure, the percent change from comparable period is not computed.

(c) As there is no comparative in the previous reporting period, the percent change from current reporting period is not computed.

Revenues

Revenues for the three months ended September 30, 2013 increased by 8.2%, as compared to the three months ended September 30, 2012. The increase is directly attributable to the combination of increased business with our recurring customers by 7.2% and business with new customers by 3.2%, which was partly offset by the cessation of business resulting from streamlining our customer list to focus on long-term strategic customers by 1.1%. In addition, the strengthening of the U.S. dollar (“USD”) during the three months ended September 30, 2013 as compared to the corresponding period in the previous year against the Canadian Dollar, Australian Dollar, Japanese Yen, Great British Pound, and Indian Rupee (“INR”) adversely impacted our revenues by 1.1%.

Our top five customers accounted for 40% and 38% of the revenues for the three months ended September 30, 2013 and 2012, respectively. We continue to derive a significant portion of our revenues from our customers located in the United States and Canada, which constitutes about 80% of revenue for the three months ended September 30, 2013.

Gross margin

Our gross margin percentage (gross margin as percentage of revenues) was 41.4% for the three months ended September 30, 2013 as compared to 39.8% for the three months ended September 30, 2012. As we conduct business through our globally integrated onsite and offshore delivery locations, primarily in India, the strengthening or weakening of the USD against other currencies, has a direct effect on our costs by reducing or increasing the cost of our services in offshore delivery centers which impacts our profitability. During the current

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quarter, the increase in gross margin was primarily attributable to the favorable currency movement of the USD against the INR by 2.3%, reduction of travel expenses by 0.8% and better utilization of resources by 0.7%, which were partially offset by increase in costs directly associated with billable professionals, including salary increments by 2.0% and license fee by 0.2%.

Selling, general and administrative expenses

Selling, general and administrative expenses include all costs that are not directly associated with revenue-generating activities. These include employee costs, corporate costs and facilities costs. Employee costs include selling, marketing and administrative salaries and related employee benefits, travel, recruiting and training costs. Corporate costs include costs such as delisting and reorganization costs, legal, accounting and outside consulting fees. Facilities costs primarily include rent and communications costs.

Selling, general and administrative expenses for the three months ended September 30, 2013 increased by $2.8 million as compared to the three months ended September 30, 2012.

Net employee costs increased by $2.6 million for the three months ended September 30, 2013, as compared to the three months ended September 30, 2012, resulting from an increase of $1.7 million due to higher salary increments, overhead expenses and benefits, $1.0 million higher travel expenses, $0.8 million higher bonus provision, $0.5 million lower staff welfare expenses and $0.4 million of lower stock-based compensation.

Our net corporate costs increased by $0.2 million for the three months ended September 30, 2013 mainly due to higher legal fees of $1.0 million, higher bank charges, subscriptions and other costs of $0.5 million, higher professional and accounting fees of $0.2 million. These increases were offset by decreases in merger and reorganization expenses by $0.7 million which were incurred during the third quarter of 2012, in connection with the implementation of structural changes to simplify our corporate structure, lower marketing and recruitment expenses of $0.5 million and decreases in delisting expenses of $0.3 million incurred during the third quarter of 2012, relating to the delisting of the former, iGATE Computer from the records of Indian Stock Exchanges.

Net facilities costs had no overall impact for the three months ended September 30, 2013, due to an increase in repairs and maintenance, house-keeping and security charges by $1.1 million, which were completely offset by decreases in communication related expenses by $1.0 million and rent and electricity by $0.1 million.

Currency movements in the foreign exchange market favorably impacted our employee, corporate and facility costs included in selling, general and administrative expenses by $2.5 million for the three months ended September 30, 2013, as compared to the three months ended September 30, 2012.

Depreciation and amortization costs

Depreciation and amortization costs for the three months ended September 30, 2013 were 2.9% of revenue, as compared to 3.7% of revenue for the three months ended September 30, 2012, representing a decrease of $1.6 million. Depreciation and amortization costs decreased mainly due to the expiration of the useful life of certain assets and the favorable impact of the strengthening of the USD against the INR.

Operating income

Our operating margin (operating income as a percentage of revenue) was 22.5% for the three months ended September 30, 2013, as compared to 19.8% for the three months ended September 30, 2012. This increase was mainly due to a higher gross margin and lower selling, general and administrative expense and depreciation.

Interest expense

Interest expenses were 6.9% of revenues for the three months ended September 30, 2013, as compared to 8.1% for the three months ended September 30, 2012. Lower debt balances resulted in lower interest expense during the current reporting period as compared to the comparative reporting period. The decrease of $1.7 million during the current reporting period was primarily due to the repayment of the term loan facility during the second quarter of 2013, that was undertaken to finance delisting related expenses and the partial repayment of another term loan facility during the three months ended September 30, 2013, which was initially undertaken to finance the purchase of a subsidiary.

We issued 9% senior notes amounting to $770 million, on April 29, 2011 and recorded interest expense of $17.3 million for each of the three months ended September 30, 2013 and 2012. We amortized the debt issuance costs of $1.6 million for the three months ended September 30, 2013 as compared to $1.5 million for the three months ended September 30, 2012.

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The interest expense recorded on our $129.5 million line of credit and term loan, amounted to $1.0 million for the three months ended September 30, 2013, as compared to $2.2 million on our line of credit and term loan of $352.5 million for the three months ended September 30, 2012. We amortized debt issuance cost of $0.1 million on our term loan for the three months ended September 30, 2013, as compared to $0.05 million for the three months ended September 30, 2012. During the three months ended September 30, 2013, we also incurred $0.1 million of interest expense on leased vehicles which has remained constant as compared to the previous comparative reporting period.

Foreign exchange gain (loss), net

Foreign exchange loss was $4.4 million for the three months ended September 30, 2013, as compared to loss of $3.8 million for the three months ended September 30, 2012.

We recognized foreign currency loss of $9.4 million on all foreign exchange derivative contracts for the three months ended September 30, 2013, as compared to a gain of $2.2 million for the three months ended September 30, 2012.

During the three months ended September 30, 2013, we recognized net unrealized gain of $0.3 million on a foreign exchange forward contract that was entered to hedge the risk of changes in the foreign exchange rates on our foreign currency denominated investments classified as available-for-sale securities.

We also recognized a foreign currency loss of $2.5 million on the re-measurement of the packing credit facility borrowed under our line of credit and gain of $7.2 million related to other monetary assets and liabilities for the three months ended September 30, 2013, as compared to a gain of $3.5 million on the re-measurement of the packing credit facility borrowed under our line of credit, gain of $0.1 million on the re-measurement of escrow account balance, loss of $7.5 million related to other monetary assets and liabilities and loss of $2.1 million on re-measurement of redeemable non-controlling interest for the three months ended September 30, 2012.

Other income, net

Our investment income for the three months ended September 30, 2013 totaled $4.1 million as compared to $8.6 million for the three months ended September 30, 2012. Our investment base as of July 01, 2013 and 2012 was $275.2 million and $344.9 million, respectively. The lower level of investment base and a lower realization of unrealized/ accumulated gain during the third quarter of 2013 as compared to the third quarter of 2012, contributed to the lower investment income during the three months ended September 30, 2013.

Interest refund from tax authorities amounted to $0.3 million for the three months ended September 30, 2013 as compared to $0.1 million for the three months ended September 30, 2012. Interest received on term and other bank deposits amounted to $0.4 million for the three months ended September 30, 2013 as compared to $0.1 million for the three months ended September 30, 2012. During the three months ended September 30, 2013, $0.3 million of liability which was no longer required is written back.

Income taxes

Our effective tax rate (“ETR”) was 31.4% and 23.1% during the three months ended September 30, 2013 and 2012, respectively.

During the three months ended September 30, 2013, the Company has made true-up adjustments for its U.S. jurisdiction, which resulted in discrete tax expense of $1.9 million.

The estimated annual ETR for the three months ended September 30, 2012 took into account the tax of approximately $7.4 million due to the deemed repatriation of profits of iGATE Computer Systems Limited (“iGATE Computer”). Further, during the three months ended September 30, 2012, the Company has made true-up adjustments for its U.S. jurisdiction, which resulted in discrete tax benefit of $ 0.9 million. Also, as a result of the acquisition of iGATE Americas Inc. (“iAI”) by iGATE Technologies Inc. (“iTI”), in August 2012, we released $4.0 million of valuation allowance relating to temporary differences of iTI, which was existing as of December 31, 2011, resulting in lower ETR for the three months ended September 30, 2012.

Preferred dividend

We have accrued for cumulative dividends of $7.9 million at a rate of 8.00% per annum, compounded quarterly, for the three months ended September 30, 2013 as compared to $7.4 million for the three months ended September 30, 2012.

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Non-controlling interest

In 2012, we delisted the fully paid-up equity shares of iGATE Computer Systems Limited (“iGATE Computer”) and recorded a redeemable non-controlling interest liability for the balance of shares, which was valued at an exit price of INR 520 per share. The redeemable non-controlling interest holders were not entitled to any share of profits.

On May 10, 2013, the High Court of Judicature at Mumbai, India, approved the merger of iGATE Computer with iGATE Global Solutions Limited (“iGATE Global). Pursuant to the merger, shareholders of iGATE Computer who did not tender their shares during the exit period were issued iGATE Global shares in the ratio of five equity shares of iGATE Global for twenty two equity shares of iGATE Computer. Subsequent to the expiry of the exit offer period, the Company has no obligation to redeem the shares and accordingly the remaining redeemable non-controlling interest amounting $6.6 million had been reclassified to permanent equity.

For the three months ended September 30, 2013, we recorded $0.1 million share of profits and $2.0 million of share of accumulated other comprehensive loss attributable to non-controlling interest in iGATE Global representing 0.50% share of net income of iGATE Global. As of September 30, 2013, the non-controlling interest was $4.7 million.

Results of Operations for the Nine Months Ended September 30, 2013 as Compared to the Nine Months Ended September 30, 2012 (in thousands):

	Nine Months Ended September 30,2013
	2013						2012						% change of Amount from comparable period
	Amount			% of Revenues			Amount			% of Revenues
Revenues	$	851,592			100.0	%	$	802,348			100.0	%		6.1	%
Cost of revenues (a)		518,073			60.8			488,380			60.9			6.1
Gross margin		333,519			39.2			313,968			39.1			6.2
Selling, general and administrative		139,004			16.3			127,348			15.9			9.2
Depreciation and amortization		26,305			3.1			36,757			4.6			(28.4	)
Income from operations		168,210			19.8			149,863			18.7			12.2
Interest expense		(67,025	)		(7.9	)		(62,149	)		(7.7	)		7.8
Foreign exchange (loss) gain, net		92			(0.0	)		(18,198	)		(2.3	)		(100.5	)
Other income		39,910			4.7			23,975			3.0			66.5
Income before income taxes		141,187			16.6			93,491			11.7			51.0
Income tax expense (b)		44,461			5.2			24,007			3.0			—
Net income		96,726			11.4			69,484			8.7			39.2
Non-controlling interest		97			0.0			4,476			0.6			(97.8	)
Net income attributable to iGATE Corporation		96,629			11.3			65,008			8.1			48.6
Accretion to preferred stock		361			0.0			295			0.0			22.4
Preferred dividend		23,246			2.7			21,590			2.7			7.7
Net income attributable to common stockholders	$	73,022			8.6	%	$	43,123			5.4	%		69.3	%

(a) Cost of revenues is exclusive of depreciation and amortization.

(b) As the effective tax rate is a better comparable measure, the percent change from comparable period is not computed.

Revenues

Revenues for the nine months ended September 30, 2013 increased by 6.1%, as compared to the nine months ended September 30, 2012. Our revenue increase for the period presented is directly attributable to the combination of increased business with our recurring customers by 5.8% and business with new customers by 2.2%, which was partly offset by the cessation of business

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resulting from streamlining our customer list to focus on long-term strategic customers by 1.1%. In addition, the strengthening of the USD during the nine months ended September 30, 2013 as compared to the corresponding period in the previous year, against the Canadian Dollar, Japanese Yen, Great British Pound, Australian Dollar and INR adversely impacted our revenues by 0.8%.

Our top five customers accounted for 40% and 37% of the revenues for the nine months ended September 30, 2013 and 2012, respectively. We continue to derive a significant portion of our revenues from our customers located in the United States and Canada, which constitutes about 81% of revenue for the nine months ended September 30, 2013.

Gross margin

Our gross margin percentage was 39.2% for the nine months ended September 30, 2013 as compared to 39.1% for the nine months ended September 30, 2012. As we conduct business through our globally integrated onsite and offshore delivery locations, primarily in India, the strengthening or weakening of the USD against other currencies, has a direct effect on our costs by reducing or increasing the cost of our services in offshore delivery centers which impacts our profitability. During the nine months ended September 30, 2013, the increase in gross margin was directly attributable to the favorable currency movement of the USD against the INR by 1.5% and better utilization of resources by 0.5% which were offset by increase in costs directly associated with billable professionals, including salary increments by 1.8% and license fee by 0.1%.

Selling, general and administrative expenses

Selling, general and administrative expenses include all costs that are not directly associated with revenue-generating activities. These include employee costs, corporate costs and facilities costs. Employee costs include selling, marketing and administrative salaries and related employee benefits, travel, recruiting and training costs. Corporate costs include costs such as delisting and reorganization costs, legal, accounting and outside consulting fees. Facilities costs primarily include rent and communications costs. Selling, general and administrative expenses for the nine months ended September 30, 2013 increased by $11.7 million as compared to the nine months ended September 30, 2012.

Net employee costs increased by $7.1 million for the nine months ended September 30, 2013, as compared to the nine months ended September 30, 2012, resulting from $3.6 million higher travel expense, $3.0 million higher bonus provision, $2.9 million higher salary increments, overhead expenses and benefits, $1.6 million lower staff welfare expenses and a $0.8 million lower employee stock-based compensation expense.

Our net corporate costs increased by $4.0 million for the nine months ended September 30, 2013 mainly due to higher merger and reorganization expenses of $4.5 million incurred during the nine months ended September 30, 2013, which were incurred in connection with implementation of structural changes to simplify our corporate structure, higher legal fees of $2.2 million, higher marketing and recruitment expenses of $1.5 million, higher bank charges, subscriptions and other costs of $1.0 million and higher professional and accounting fees of $0.7 million. These increases were offset by a decrease in delisting expenses of $3.5 million which were incurred during the nine months ended September 30, 2012, due to the delisting of the former, iGATE Computer from the records of Indian Stock Exchanges, lower director fees and taxes of $1.7 million, lower bad debts of $0.5 million and lower integration expenses of $0.2 million.

Net facilities costs increased by $0.6 million for the nine months ended September 30, 2013, due to an increase in repairs and maintenance, house-keeping and security charges by $2.4 million, which were partly offset by decreases in communication related expenses by $1.5 million and rent and electricity by $0.3 million.

Currency movements in the foreign exchange market favorably impacted our employee, corporate and facility costs included in selling, general and administrative expenses $5.9 million for the nine months ended September 30, 2013, as compared to the nine months ended September 30, 2012.

Depreciation and amortization costs

Depreciation and amortization costs for the nine months ended September 30, 2013 were 3.1% of revenue, as compared to 4.6% of revenue for the nine months ended September 30, 2012, representing a decrease of $10.5 million. Depreciation and amortization costs decreased mainly due to the full depreciation in the second quarter of 2012 of certain depreciable assets attributable to the acquisition of the former, iGATE Computer with a one year useful life, the expiration of the useful life of certain assets and the favorable impact of the strengthening of the USD against the INR.

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Operating income

Our operating margin (operating income as a percentage of revenue) was 19.8% for the nine months ended September 30, 2013, as compared to 18.7% for the nine months ended September 30, 2012. This increase was mainly due to lower depreciation which was offset by our increased selling, general and administrative expense.

Interest expense

Interest expenses were 7.9% of revenues for the nine months ended September 30, 2013, as compared to 7.7% for the nine months ended September 30, 2012. The increase of $4.9 million was driven by a higher interest expense resulting from higher debt balances incurred during most of the nine months and write off of unamortized debt costs during the nine months as compared to the period during the previous year.

We issued 9% senior notes amounting to $770 million on April 29, 2011 and recorded interest expense of $52.0 million for each of the nine months ended September 30, 2013 and 2012. We amortized the debt issuance costs of $4.7 million for the nine months ended September 30, 2013 as compared to $4.3 million for the nine months ended September 30, 2012.

The interest expense on our line of credit and term loan amounted to $5.7 million for the nine months ended September 30, 2013, as compared to $4.2 million for the nine months ended September 30, 2012, resulting from higher debt balances incurred during most part of the reporting period. We amortized debt issuance cost of $0.5 million on our term loan for the nine months ended September 30, 2013, as compared to $0.05 million for the nine months ended September 30, 2012. During the nine months ended September 30, 2013, we recorded amortization of debt issuance cost of $4.0 million on a term loan that was repaid during the second quarter of 2013. During the nine months ended September 30, 2013, we incurred interest expense on leased vehicles amounting to $0.1 million which has remained constant as compared to the previous comparative reporting period.

Foreign exchange gain (loss), net

Foreign exchange gain was $0.1 million for the nine months ended September 30, 2013 as compared to a loss of $18.2 million for the nine months ended September 30, 2012.

We recognized foreign currency loss of $9.3 million on all foreign exchange derivative contracts for the nine months ended September 30, 2013, as compared to a loss of $14.0 million for the nine months ended September 30, 2012.

During the nine months ended September 30, 2013, we recognized net unrealized gain of $0.2 million on a foreign exchange forward contract that was entered to hedge the risk of changes in the foreign exchange rates on our foreign currency denominated investments classified as available-for-sale securities.

We also recognized a foreign currency loss of $0.9 million on the re-measurement of our escrow account balance, loss of $6.4 million on the re-measurement of the packing credit facility borrowed under our line of credit facility, gain of $16.1 million related to other monetary assets and liabilities and gain of $0.4 million on the re-measurement of redeemable non-controlling interest for the nine months ended September 30, 2013, as compared to a loss of $4.1 million on the re-measurement of escrow account balance, a foreign currency loss of $1.5 million related to other monetary assets and liabilities, a loss of $2.1 million on the re-measurement of redeemable non-controlling interest and a gain of $3.5 million on the re-measurement of the packing credit facility for the nine months ended September 30, 2012.

Other income, net

Our investment income for the nine months ended September 30, 2013 totaled $30.1 million as compared to $22.4 million for the nine months ended September 30, 2012.Our investment base as of January 01, 2013 and 2012 was $510.8 million and $354.5 million, respectively. The higher level of our investment base, switch from dividend yielding funds to growth plans of mutual funds and investments in high yield fixed maturity plans primarily contributed to the increase in investment income during the nine months ended September 30, 2013. In addition, we also had higher realization of unrealized/ accumulated gain during the first quarter of 2013, contributing to the increased investment income during the nine months ended September 30, 2013.

Interest refund from tax authorities amounted to $2.3 million for the nine months ended September 30, 2013 as compared to $1.6 million for the nine months ended September 30, 2012. Interest received on term and other bank deposits amounted to $0.7 million for the nine months ended September 30, 2013 as compared $0.1 million for the nine months ended September 30, 2012. We also earned a gain on our sale of fixed assets amounting to $2.2 million for the nine months ended September 30, 2013 as compared to a loss of $0.01 million for the nine months ended September 30, 2012. During the nine months ended September 30, 2013, $0.9 million of liability which was no longer required was written back.

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Additionally, other income for the nine months ended September 30, 2013, includes approximately $3.0 million attributable to the forfeiture of vested stock options in connection with the termination of our former Chief Executive Officer, during the second quarter of 2013.

Income taxes

Our effective tax rate (“ETR”) was 31.5% and 25.7% during the nine months ended September 30, 2013 and 2012, respectively.

During the third quarter of 2013, the Company has made true-up adjustments for its U.S. jurisdiction, which resulted in discrete tax expense of $1.9 million.

On May 10, 2013, the High Court of Judicature at Mumbai approved the Scheme of Arrangement for the merger of iGATE Computer with our Indian subsidiary, iGATE Global. The appointed date of the merger was April 01, 2012, which is the effective date of the merger for legal and income tax purposes in India. The Company recomputed the taxes payable under Sec. 956 on account of the merger to give effect to the reorganization which resulted in a discrete benefit of $4.7 million. Further, the Company also recorded a discrete tax expense of $0.6 million on account of merger in the Indian jurisdiction resulting in a net benefit of $4.1 million during the nine months ended September 30, 2013. In addition, one of the divisions registered under SEZ scheme of the Indian entity has completed its first five years of 100% tax holiday and would be claiming 50% of tax holiday for the next ten years effective April 1, 2013.

During the nine months ended September 30, 2013, our discrete tax expense increased by $3.0 million as a result of the increase in Indian statutory tax rate on our deferred tax liability as per the new legislation.

The impact of above items resulted in higher ETR during the nine months ended September 30, 2013.

The estimated annual ETR for the nine months ended September 30, 2012 took into account the tax of approximately $7.4 million due to the deemed repatriation of profits of iGATE Computer. Further, during the nine months ended September 30, 2012, the Company has made true-up adjustments for its US jurisdiction, which resulted in discrete tax benefit of $0.9 million. Also, as a result of acquisition of iAI by iTI in August 2012, we had released $4.0 million of valuation allowance relating to temporary differences of iTI, which was existing as of December 31, 2011, resulting in lower ETR during the nine months ended September 30, 2012.

Non-controlling interest

In 2012, we delisted the fully paid-up equity shares of iGATE Computer and recorded a redeemable non-controlling interest liability for the balance of shares, which was valued at an exit price of INR 520 per share. The redeemable non-controlling interest holders were not entitled to any share of profits.

On May 10, 2013, the High Court of Judicature at Mumbai, India, approved the merger of iGATE Computer with iGATE Global. Pursuant to the merger, shareholders of iGATE Computer who did not tender their shares during the exit period were issued iGATE Global shares in the ratio of five equity shares of iGATE Global for twenty two equity shares of iGATE Computer. Subsequent to the expiry of the exit offer period, the Company has no obligation to redeem the shares and accordingly the remaining redeemable non-controlling interest amounting $6.6 million had been reclassified to permanent equity.

For the nine months ended September 30, 2013, we recorded $0.1 million share of profits and $2.0 million of accumulated other comprehensive loss attributable to non-controlling interest in iGATE Global representing 0.50% share of net income of iGATE Global. For the nine months ended September 30, 2012, prior to the delisting of iGATE Computer’s shares, we had recorded $4.5 million from our share of profits attributable to the non-controlling interest in iGATE Computer, representing 18.9% share of the net income of $23.7 million of iGATE Computer for the quarter ended March 31, 2012.

Preferred dividend

We have accrued for cumulative dividends of $23.2 million at a rate of 8.00% per annum, compounded quarterly, for the nine months ended September 30, 2013 as compared to $21.6 million for the nine months ended September 30, 2012.

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Use of non-GAAP Financial Measures

Effective from the fourth quarter of fiscal 2010, we decided to use non-GAAP net income data and non-GAAP basic and diluted earnings per share. These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, U.S GAAP 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 financial tables below.

We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our 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.

We believe that providing Adjusted EBITDA and non-GAAP net income and non-GAAP basic and diluted earnings per share in addition to the related GAAP measures provides investors with greater transparency to the information used by our management in our financial and operational decision-making. These non-GAAP measures are also used by management in connection with our performance compensation programs.

The non-GAAP financial measures contained herein exclude the following items:

• Amortization of intangible assets: Intangible assets comprise value of our customer relationships from the acquisition of iGATE Computer and the previous delisting of our Indian subsidiary, iGATE Computer. We incur charges relating to the amortization of these intangibles. These charges are included in our GAAP presentation of earnings from operations, operating margin, net income and earnings per share. We exclude 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 our employees and executives, determining the fair value of the stock-based instruments involves a high degree of judgment and the use of estimates 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.

• Foreign exchange (gain)/loss: In March 2012, we entered into a forward foreign exchange contract to mitigate the risk of changes in foreign exchange rates on payments related to the delisting of iGATE Computer. During the year 2013 and 2012, we recognized foreign currency loss on re-measurement of the escrow account balance and foreign exchange gain on re-measurement of the redeemable non-controlling interest liability. We believe that eliminating the non-capitalized items for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of our current performance and comparisons to our past performance.

• Delisting expenses: We voluntarily delisted the equity shares of our majority owned subsidiary, iGATE Computer 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. We believe that eliminating these expenses for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of our current operating performance and comparisons to our past operating performance.

• Merger and reorganization expenses: We are in the process of merging and reorganizing our overseas subsidiaries and branches to simplify the corporate structure, and have incurred legal and professional expenses in connection with these actions. 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. We believe that eliminating these expenses for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of our current operating performance and comparisons to our past operating performance.

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• Preferred dividend and accretion to preferred stock: We have issued 8.00% Series B Preferred Stock. We also incurred issuance costs that have been netted against the proceeds received from the issuance of the Series B Preferred Stock. The Series B Preferred Stock is being accreted over a period of six years. Although, the effect of inclusion of equivalent units of common stock towards convertible participating preferred stock is anti-dilutive for GAAP purposes, the non-GAAP diluted earnings per share has been calculated assuming the conversion of all outstanding shares of preferred stock into equivalent units of common stock. We believe that eliminating these expenses as well as inclusion of equivalent units of common stock towards the preference shares to compute diluted earnings per share for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of our current operating performance and comparisons to our past operating performance.

From time to time in the future, there may be other items that we may exclude in presenting our financial results.

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The table below presents a reconciliation of our non-GAAP financial measures to the most comparable GAAP measures for each of the three and nine months ended September 30, 2013 and 2012, respectively (in thousands, except for per share data):

	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
GAAP Net income attributable to iGATE common shareholders	$	23,776		$	20,771		$	73,022		$	43,123
Adjustments:
Preferred dividend and accretion to preferred stock		8,120			7,522			23,607			21,885
Amortization of intangible assets		2,540			2,886			7,980			8,806
Stock-based compensation		3,878			3,795			10,243			9,270
Delisting expenses		—			328			93			3,532
Merger and reorganization expenses		—			764			5,264			764
Foreign exchange loss on acquisition hedging and other re-measurement		—			2,105			489			5,259
Forfeiture of vested stock options		—			—			(3,005	)		—
Income tax adjustments		(2,020	)		(2,588	)		(7,028	)		(6,595	)
Non-GAAP Net income attributable to iGATE common shareholders	$	36,294		$	35,583		$	110,665		$	86,044
Basic EPS (GAAP) to Basic EPS (Non-GAAP):
BASIC EPS (GAAP)	$	0.30		$	0.27		$	0.94		$	0.57
Preferred dividend and accretion to preferred stock		0.11			0.10			0.31			0.29
Amortization of intangible assets		0.03			0.04			0.10			0.12
Stock-based compensation		0.05			0.05			0.13			0.12
Delisting expenses		—			0.01			0.00			0.05
Merger and reorganization expenses		—			0.01			0.07			0.01
Foreign exchange loss on acquisition hedging and other re-measurement		—			0.03			0.01			0.07
Forfeiture of vested stock options		—			—			(0.04	)		—
Income tax adjustments		(0.03	)		(0.04	)		(0.09	)		(0.09	)
BASIC EPS (Non-GAAP)	$	0.46		$	0.47		$	1.43		$	1.14
Diluted EPS (GAAP) to Diluted EPS (Non-GAAP):
Diluted EPS (GAAP)	$	0.30		$	0.27		$	0.91		$	0.56
Preferred dividend and accretion to preferred stock		0.11			0.10			0.30			0.29
Amortization of intangible assets		0.03			0.04			0.10			0.11
Stock-based compensation		0.05			0.05			0.13			0.12
Delisting expenses		—			0.00			0.00			0.05
Merger and reorganization expenses		—			0.00			0.07			0.01
Foreign exchange loss on acquisition hedging and other re-measurement		—			0.03			0.01			0.07
Forfeiture of vested stock options		—			—			(0.04	)		—
Income tax adjustments		(0.03	)		(0.03	)		(0.09	)		(0.09	)
Diluted EPS (Non-GAAP)	$	0.46		$	0.46		$	1.39		$	1.12
Weighted average shares outstanding, Basic		58,171			57,316			57,918			57,121
Add: Assumed preferred stock conversion		19,923			18,411			19,923			18,411
Non-GAAP weighted average shares outstanding, Basic		78,094			75,727			77,841			75,532
Weighted average dilutive common shares outstanding		59,836			58,893			59,564			58,714
Add: Assumed preferred stock conversion		19,923			18,411			19,923			18,411
Weighted average dilutive common equivalent shares outstanding		79,759			77,304			79,487			77,125

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Non-GAAP Disclosure of Adjusted EBITDA

We present Adjusted EBITDA as a supplemental measure of our performance. We define 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 (gain)/loss, (vi) stock-based compensation (vii) delisting expenses and (viii) merger and reorganization 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; and

• 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.

The table below presents Adjusted EBITDA for each of the three and nine months ended September 30, 2013 and 2012, respectively (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Net income	$	31,993		$	28,293		$	96,726		$	69,484
Adjustments:
Depreciation and amortization		8,439			10,027			26,305			36,757
Interest expenses		20,256			21,994			67,025			62,149
Income tax expense		14,634			8,495			44,461			24,007
Other income, net		(5,213	)		(8,815	)		(39,910	)		(23,975	)
Foreign exchange loss (gain)		4,372			3,763			(92	)		18,198
Stock-based compensation		3,878			3,795			10,243			9,270
Delisting expenses		—			328			93			3,532
Merger and reorganization expenses		—			764			5,264			764
Adjusted EBITDA (a non-GAAP measure)	$	78,359		$	68,644		$	210,115		$	200,186

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We present 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 our underlying performance relative to other companies in the industry.

Liquidity and Capital Resources

Our cash balances are held in numerous locations throughout the world, of which we hold approximately $397.7 million of cash, cash equivalents and short-term investments in our foreign subsidiaries as of September 30, 2013. Amounts held outside of the United States are utilized to support non-U.S. liquidity needs. Our ongoing cash flows and external borrowings in the United States are expected to be sufficient to meet our primary operating liquidity needs, in the United States, for at least twelve (12) months following this report.

We have provided for the United States federal tax liability on the post-acquisition and pre-merger earnings and profits of the former iGATE Computer (currently merged with iGATE Global), India. The Company intends to use the remaining accumulated and future earnings of merged entities as well as other foreign subsidiaries to expand operations outside the United States and accordingly, undistributed earnings and profits are deemed permanently reinvested. However, repatriation could result in additional income tax payments in future years, if our intent were to change and we elected to repatriate such undistributed foreign earnings back to United Sates. We estimate the potential tax liability relating to the repatriation of such undistributed foreign earnings to be approximately $172.0 million as of September 30, 2013.

Cash from Operations

Our largest source of operating cash flows is cash collections from our customers for different information technology services we render under various Statements of Work (SOWs). Our primary uses of cash from operating activities are for personnel related expenditures, leased facilities and taxes.

Net cash provided by operating activities increased by $72.9 million for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012, primarily due to higher net income adjusted for lower depreciation, amortization of intangible assets, deferred loss on derivatives, lower stock-based compensation and higher amortization of debt issuance costs during the nine months ended September 30, 2013. During the current reporting period, our cash flow from operating activities increased due to favorable changes in working capital, primarily decreases in accounts receivable and unbilled revenues on account of higher collections during the current reporting period and reduction in prepaid expenses and increase in accrued and other liabilities which was partially offset by decrease in accounts payable. Our working capital may be impacted by some of the aforementioned factors in future periods, certain amounts and timing of which are variable.

Investing Activities

Cash provided by investing activities for the nine months ended September 30, 2013 was $141.9 million as compared to cash used in investing activities for the nine months ended September 30, 2012 was $336 million.

Our investment portfolio and other investments decreased by $184.2 million for the nine months ended September 30, 2013 as compared to an increase of $89.8 million for the nine months ended September 30, 2012. Our investment portfolio decreased during the current reporting period as we redeemed investments to repay DBS Bank Limited, term loan facility and partially repay another term loan facility.

We purchased 2.5 million shares of iGATE Computer (currently merged with iGATE Global) paying $23.7 million during the nine months ended September 30, 2013. Our deposits in escrow account which were made to facilitate the purchase of remaining shares in the former, iGATE Computer were completely utilized as of September 30, 2013.

Capital expenditures were $24.2 million and $13.4 million for the nine months ended September 30, 2013 and 2012, respectively. Significant portions of the capital expenditures were due to the expansion of our campus facilities located in our Indian centers.

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Financing Activities

Cash used in financing activities was $244.8 million for the nine months ended September 30, 2013 as compared to cash provided by financing activities of $299.4 million for the nine months ended September 30, 2012.

The cash used in during the nine months ended September 30, 2013, was primarily due to the net repayment of outstanding term loan amounting to $228.5 million, which was undertaken to finance delisting related expenses and partial repayment of another term loan amounting to $17.5 million, which was undertaken to finance the purchase of a subsidiary. We also incurred a payment of debt related cost of $2.4 million.

During the nine months ended September 30, 2012, we borrowed $222.5 million from DBS Bank Limited, to fund the purchase of the former iGATE Computer’s remaining shares and pay delisting related expenses, term loan of $70 million to finance the purchase of a subsidiary.

We received net proceeds from the exercise of employee stock options of $3.6 million for the nine months ended September 30, 2013, as compared to proceeds from the exercise of employee stock options of $7.2 million for the nine months ended September 30, 2012, which was partially offset by the payment of debt cost of $3.3 million.

The proceeds from and payments towards our line of credit and term loan facilities for the nine months ended September 30, 2013 are summarized in the table below (in thousands):

For the nine months ended September 30, 2013
Description	Beginning balance		Proceeds during the period		Payments during the period			Ending balance
Line of credit:
Unsecured revolving working credit facility	$	52, 000	$	5,000	$	(5,000	)	$	52, 000
Revolving credit facility	$	25,000		30,000		(30,000	)	$	25,000
Term Loan:
DBS Bank Ltd—Term Loan	$	228,500		6,000		(234,500	)		—
Term Loan	$	70,000		—		(17,500	)	$	52, 500
Total	$	375,500	$	41,000	$	(287,000	)	$	129,500

Our primary future cash requirements will be to fund working capital, debt service, capital expenditures, and benefit obligations. In addition to our working capital requirements, we expect our primary cash requirements for 2013 to be as follows:

• Debt service – We expect to make payments of approximately $18.1 million during the remainder of 2013 for interest associated with senior notes and bank borrowings.

• Capital expenditures – We expect to spend approximately $55.9 million for new and existing facility expansion and new hardware and software during the remainder of 2013. Of this we have open purchase obligations of $50.2 million towards construction of new facilities and purchase of property and equipment. We will fund all capital expenditures through a combination of available cash reserves and short term investments and expect to fund the costs of future expansion through our net cash flows provided by operations.

We and our subsidiaries may from time to time seek to retire or purchase our outstanding debt (including publicly issued debt) through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions, by tender offer or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Future Sources of Liquidity

We expect our primary source of cash to be positive net cash flows provided by operating activities. Further, we continue to focus on cost reductions and have initiated steps to reduce overheads and provide cash savings. In 2012, we initiated the simplification of our corporate structure by completing the merger of our subsidiaries in the United States. We completed the court approved merger of two of our Indian subsidiaries in May 2013. We expect to save significant costs due to these internal mergers.

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We currently have two revolving credit facilities providing for borrowings of up to an aggregate of $120 million subject to certain contractual limitations. As of September 30, 2013, we had borrowed $77 million under the revolving credit facilities. Both revolving credit facilities include other conditions that, if not complied with, could restrict our availability to borrow.

Our senior notes and credit agreements contain various covenants that are subject to a number of limitations and exceptions. The indenture governing the Notes requires us to comply with Consolidated Priority Debt Leverage Ratio and a Fixed Charge Coverage Ratio when certain events occur. These ratios are based on what we refer to as “Adjusted EBITDA”, which is defined above under “Use of non-GAAP Financial Measures” in this Form 10 Q. Non-compliance with such covenants could affect our liquidity. We are currently in compliance with all covenants associated with our borrowings. The specific covenants and related definitions can be found in the applicable indenture and credit agreements, each of which we have previously filed with the SEC.

For more information on the revolving credit facilities and the restrictions on borrowing there under, including information on the covenants, please refer to Note 5, Borrowings, and Note 6, Senior Notes to our unaudited condensed consolidated financial statements included in this Form 10-Q.

In order to meet our cash needs we may, from time to time, repatriate, borrow under our credit facilities or issue long term or short-term debt or equity, if the market and our credit facilities and the indentures governing our notes permit us to do so. For more information on the income tax consequences of the repatriation of the earnings of our foreign subsidiaries, please refer to the disclosure provided in the “Liquidity and Capital Resources” section included in this Form 10 Q. We regularly evaluate market conditions, our liquidity profile, and various financing alternatives for opportunities to enhance our capital structure. If market conditions are favorable, we may refinance our existing debt or issue additional securities.

On November 29, 2010, iGATE filed with the SEC the second amendment to a registration statement on Form S-3 relating to a proposed follow-on public offering of 10 million shares of its common stock, 6 million shares offered by its selling shareholders and $100 million of debt securities. If we do not generate sufficient cash from operations, face unanticipated cash needs such as the need to fund significant strategic acquisitions or do not otherwise have sufficient cash and cash equivalents, we may need to incur additional debt or issue additional equity.

Based on past performance and current expectations, we expect our existing cash, cash equivalents and short-term investments of $446.8 million as of September 30, 2013, and our ongoing cash flows and external borrowings to be sufficient to meet our operating liquidity requirements described above for at least the twelve (12) months following this report.

Debt Service Obligations

As a result of the acquisition of iGATE Computer, our level of indebtedness increased. As of September, 30, 2013, principal payments due under our indebtedness were $899.5 million, excluding capital lease obligations of $1.3 million. Our interest expense for the three and nine months ended September 30, 2013 were $20.3 million and $67.0 million, respectively, which includes $28.9 million of accrued interest expense.

Our leverage requires that a substantial portion of our cash flows from operations be dedicated to the payment of principal and interest on our indebtedness. We continually monitor our exposure to the risk of increased interest rates as portions of our borrowings under our credit facilities are at variable rates of interest.

We have made all scheduled payments timely under the indenture governing its senior notes and the revolving credit facilities.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Factors

Market risk factors associated with our business are discussed in Item 7A in our Form 10-K for the year ended December 31, 2012. There have been no material changes from the market risk factors previously disclosed in our Form 10-K.

Effect of Hypothetical Currency Rate Fluctuations

Our primary net foreign currency exposure is the Indian Rupee. The fair value of foreign exchange contracts is subject to changes in foreign currency exchange rates.

As of September 30, 2013, the potential gain or loss in the fair value of our outstanding foreign exchange derivative contracts assuming hypothetical 10%, 5%, 2% and 1% fluctuations in currency rates would be approximately:

	Valuation given X% decrease In Rupee / USD rate								Fair Value as of September 30, 2013			Valuation given X% increase in Rupee / USD rate
	(10%)		(5%)		(2%)		(1%)					1%			2%			5%			10%
Rupee to U.S. Rate		56.35		59.48		61.36		61.98		62.61			63.24			63.86			65.74			68.87
Derivative Instruments	$	24.8	$	11.5	$	4.2	$	1.8	$	(0.5	)	$	(2.7	)	$	(5.0	)	$	(11.3	)	$	(21.2	)

Seasonality

Our operations are generally not affected by seasonal fluctuations. However, our consultants’ billable hours are affected by national holidays and vacation policies, which vary by country and by operating company.

Economic Trends and Outlook

According to Gartner Inc.(Source: Gartner Forecast Alert: IT Spending, Worldwide, 3Q13 Update, ID Number: G00255533), an IT research and advisory company, the IT Services industry worldwide IT spending is forecasted to total $923 billion in 2013, a 2.0 % increase from 2012 revenue of nearly $906 billion.

(Disclaimer: The Gartner Report described herein, represent(s) data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this Report) and the opinions expressed in the Gartner Report(s) are subject to change without notice.)

The global economic recovery continues and modest growth in IT spending is expected. However, uncertainties surrounding the prospects for an upturn in global economic growth remain major hindrances to IT spending growth. This uncertainty has caused pessimistic business and consumer sentiment throughout the world. The industry is aggressively pursuing innovations that it expects to stimulate demand beyond such modest growth. Besides organic growth, industry players are also aggressively pursuing mergers and acquisitions to stimulate growth. We believe that our business model is somewhat diversified, both geographically and operationally as we serve both IT and IT-enabled solutions. We believe our strategy of a global delivery model positions us well to provide a greater breadth of services, expertise and solutions in catering to market needs and opportunities.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to the Securities Exchange Act of 1934 Rules 13a-15(b) and 15d-15(b). Based upon, and as of the date of this evaluation, our Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is involved in lawsuits, claims, investigations, and proceedings, including the matter identified below, that arise in the ordinary course of business. The securities class action filed on June 14, 2013 by Ashish Kumar Jain, Individually and On Behalf of All Others Similarly Situated was voluntarily withdrawn on August 22, 2013 and no monetary damages were paid by the Company.

ITEM 1A. RISK FACTORS

Except for the following, there are no material changes from the risk factors previously disclosed in Item 1A “Risk Factors” in Part I of the Company’s Form 10-K and in subsequent periodic reports filed pursuant to the Securities Exchange Act of 1934 (collectively, the “2013 Periodic Reports”). The information below updates, and should be read in conjunction with, the risk factors and information disclosed in the 2013 Periodic Reports.

The loss of the services of key members of our Senior Leadership Team could have an adverse impact on our business.

Our success is highly dependent on the efforts and abilities of our senior management team, including our Chief Executive Officer, Ashok Vemuri who joined the Company on September 16, 2013. These personnel possess business and technical capabilities that are difficult to replace. Although each executive has entered into an employment agreement containing non-competition, non-disclosure and non-solicitation covenants, these contracts do not guarantee that they will continue their employment with us or that such covenants will be enforceable. Notably, in the second quarter of 2013, Phaneesh Murthy, was terminated as our Chief Executive Officer and President. Mr. Murthy provided significant contributions over the past ten years in helping to establish our company as a leader in the IT industry and improving the value of our company. If we lose the service of any of our key executives, we may not be able to effectively manage our current operations and meet our ongoing and future business challenges and this may have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our common stock has experienced, and may continue to experience, significant market price and volume fluctuations, which may prevent our shareholders from selling our common stock at a profit and could lead to costly litigation against us that could divert our management’s attention.

The market price of our common stock has historically experienced volatility and may continue to experience such volatility in the future. Factors such as our financial performance, technological achievements by us and our competitors, the establishment of development or strategic relationships with other companies, strategic acquisitions, new customer orders and contracts, may have a significant effect on the market price of our common stock. In addition, the stock market in general, and the stock of IT companies, in particular, have, in recent years, experienced extreme price and volume fluctuations, which are often unrelated to the performance or condition of particular companies. Such broad market fluctuations could adversely affect the market price of our common stock. Due to these factors, the price of our common stock may decline and investors may be unable to resell their shares of our common stock for a profit. Following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. If we become subject to any such litigation of this kind in the future, it could result in substantial litigation costs, a damages award against us and the further diversion of our management’s attention.

Employment litigation could result in significant financial or reputational harm to us.

We are subject to possible claims by our employees alleging discrimination, sexual harassment, negligence and other similar activities by our employees and to possible claims alleging wrongful termination. In this regard, we have been advised that a current employee intends to bring a claim alleging sexual harassment against us and our former Chief Executive Officer and President. We have also been advised that our former Chief Executive Officer and President may bring a claim challenging the basis for his termination. In the event that these or similar cases are decided against us, we could not only incur substantial liability but also experience an increase in similar suits and suffer reputational harm. We are unable to predict the financial outcome that could result from these matters at this time, and any views we form as to the viability of these claims or the financial exposure in which they could result, could change from time to time as the matters proceed through their course, as facts are established, and various judicial determinations are made. No assurance can be made that these matters will not result in significant financial or reputational harm to us. Further, the litigation process may utilize our cash resources and divert management’s attention from the day-to-day operations of our company, all of which could harm our business.

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International immigration and work permit laws may adversely affect our ability to deploy our workforce and provide services to clients in the United States, Europe and other jurisdictions, which could hamper our growth or cause our orders and margins to decline.

We have international operations in twenty three countries and recruit professionals on a global basis and, therefore, must comply with the immigration and work permit/visa laws and regulations of the countries in which we operate or plan to operate. Most of our projects require a portion of the work to be completed at the client’s location. Understanding changes and issues of immigration laws are critical as it impacts our ability to staff personnel for various projects with certainty and frequency. Immigration laws in the United States and in other countries are subject to legislative change, as well as to variations in standards of application and enforcement due to political forces and economic conditions. In addition, the U.S. Congress is considering extensive changes to U.S. immigration laws regarding the admission of high-skilled temporary and permanent workers. Legislation recently passed by the U.S. Senate would, among other things, increase the annual H-1B numerical cap from 65,000 to at least 110,000 and would reduce the existing green card backlog for professional workers. However, all employers would be required to pay higher wages to H-1B workers and conduct additional U.S. worker recruitment. Furthermore, the proposed Senate legislation includes several provisions intended to limit the number of H-1B and L-1 workers in a company’s U.S. workforce and the ability of a company to place H-1B and L-1B workers at third party worksites. For example, the Senate legislation would prohibit a company from having more than fifty percent of its U.S. workforce in H-1B or L-1 status and a company with more than thirty percent of its U.S. workforce in H-1B or L-1 status would be required to pay an additional $5000 fee per foreign temporary worker. A company with more than fifteen percent of its workforce in H-1B status would be prohibited from placing H-1B workers at third party worksites. If those provisions are signed into law, our cost of doing business in the United States would increase, and this could have a material and adverse effect on our business, revenues and operating results.

It is difficult to predict the political and economic events that could affect immigration laws, or the restrictive impact they could have on obtaining or monitoring work visas for our technology professionals in the countries in which we conduct business. Our reliance on work visas for a significant number of technology professionals makes us particularly vulnerable to such changes and variations as it affects our ability to staff projects with technology professionals who are not citizens of the country where the work is to be performed. Recently, there has been an increase in the number of rejections of visa applications. This may affect our ability to get timely visas and accordingly staff projects. As a result, we may not be able to obtain a sufficient number of visas for our technology professionals or may encounter delays or additional costs in obtaining or maintaining the conditions of such visas. Additionally, we may have to apply in advance for visas and this could result in additional expenses during certain quarters of the fiscal year.

ITEM 6. EXHIBITS

(a) Exhibits

2.1	Share Purchase Agreement, dated as of January 10, 2011, by and among Pan-Asia iGATE Solutions, iGATE Global Solutions Limited and the sellers party thereto, is incorporated by reference to Exhibit 2.1 to iGATE Corporation’s (“iGATE”) Form 8-K, filed on January 12, 2011.
2.2	Share Purchase Agreement, dated as of January 10, 2011, by and among Pan-Asia iGATE Solutions and General Atlantic Mauritius Limited, is incorporated by reference to Exhibit 2.2 to iGATE’s Form 8-K, filed on January 12, 2011.
2.3	Securities Purchase Agreement, dated as of January 10, 2011, by and among Pan-Asia iGATE Solutions and General Atlantic Mauritius Limited, is incorporated by reference to Exhibit 2.3 to iGATE’s Form 8-K, filed on January 12, 2011.
2.4	Separation and Distribution Agreement by and between iGATE and Mastech Holdings, Inc., dated September 30, 2008, is incorporated by reference to Exhibit 2.1 to iGATE’s Form 8-K, filed on October 1, 2008.
3.1	Third Amended and Restated Articles of Incorporation of iGATE Corporation, dated May 5, 2011, is incorporated by reference to Exhibit 3.1 to iGATE’s Form 8-K, filed on May 11, 2011.
3.2	Amended and Restated Bylaws of iGATE Corporation are incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q, filed on August 14, 2000.
3.3	Statement with Respect to Shares – 8% Series B Convertible Participating Preferred Stock, no par value per share, is incorporated by reference to Exhibit 3.1 to iGATE’s Form 8-K, filed on February 4, 2011.
4.1	Registration Rights Agreement, between iGATE Corporation and the Selling Shareholders named therein, dated as of August 17, 2010 is incorporated by reference to Exhibit 4.2 to iGATE Corporation’s Registration Statement on Form S-3, Commission File No. 333-170042, filed on October 20, 2010.
4.2	Form of certificate representing the Common Stock of the Company is incorporated by reference to Exhibit 4.1 to iGATE Corporation’s Registration Statement on Form S-1, Commission File No. 333-14169, filed on November 19, 1996.

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4.3	Indenture, dated April 29, 2011, by and among iGATE Corporation, iGATE Technologies, Inc., and Wilmington Trust, National Association (successor by merger to Wilmington Trust FSB), as trustee, is incorporated by reference to Exhibit 4.1 to iGATE Corporation’s Form 8-K, filed on May 5, 2011.
4.4	Supplemental Indenture, dated May 12, 2011, among iGATE Corporation, the guarantors named therein, and Wilmington Trust, National Association (successor by merger to Wilmington Trust FSB), as trustee, is incorporated by reference to Exhibit 4.4 to iGATE’s Registration Statement on Form S-4, filed on September 30, 2011.
4.5	Registration Rights Agreement, dated April 29, 2011, by and among iGATE Corporation, iGATE Technologies, Inc. and the initial purchasers named therein is incorporated by reference to Exhibit 4.2 to iGATE Corporation’s Form 8-K, filed on May 5, 2011.
4.6	Escrow Agreement, by and among iGATE Corporation, as Grantor, Wilmington Trust, National Association (successor by merger to Wilmington Trust FSB), as Trustee, and Standard Chartered Bank, as Escrow Agent, is incorporated by reference to Exhibit 10.1 to iGATE Corporation’s Form 8-K, filed on May 5, 2011.
4.7	Account Security Deed, dated as of May 3, 2011, by and among iGATE Corporation, as charger, and Wilmington Trust, National Association (successor by merger to Wilmington Trust FSB), as charge, is incorporated by reference to Exhibit 10.2 to iGATE Corporation’s Form 8-K, filed on May 5, 2011.
10.1	Retention Bonus Agreement, by and between iGATE Corporation and certain executive officers, dated July 22, 2013, is incorporated by reference to iGATE Corporation’s Form 8-K, filed on July 23, 2013. *
10.2	Restricted Stock Agreement, by and between iGATE Corporation and certain named executive officers, dated July 17, 2013, is incorporated by reference to iGATE Corporation’s Form 8-K, filed on July 23, 2013. *
10.3	Senior Executive Employment Agreement, effective September 16, 2013, between iGATE Technologies, Inc. and Ashok Vemuri, is incorporated by reference to iGATE Corporation’s Form 8-K, filed on September 16, 2013. *
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer is filed herewith.
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer is filed herewith.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer.†
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Chief Financial Officer.†
101.INS	XBRL Instance Document.†
101.SCH	XBRL Taxonomy Extension Schema Document.† **
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.† **
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.† **
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.† **
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.† **

† Furnished herewith.

* Indicates management contract or compensatory plan, contract or arrangement.

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements 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, on this 18th day of October 2013.

	iGATE CORPORATION
October 18, 2013	/S/    ASHOKVEMURI
	Ashok Vemuri
	Chief Executive Officer and Director
	/S/    SUJIT SIRCAR
	Sujit Sircar Chief Financial Officer

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EXHIBIT INDEX

2.1	Share Purchase Agreement, dated as of January 10, 2011, by and among Pan-Asia iGATE Solutions, iGATE Global Solutions Limited and the sellers party thereto, is incorporated by reference to Exhibit 2.1 to iGATE Corporation’s (“iGATE”) Form 8-K, filed on January 12, 2011.
2.2	Share Purchase Agreement, dated as of January 10, 2011, by and among Pan-Asia iGATE Solutions and General Atlantic Mauritius Limited, is incorporated by reference to Exhibit 2.2 to iGATE’s Form 8-K, filed on January 12, 2011.
2.3	Securities Purchase Agreement, dated as of January 10, 2011, by and among Pan-Asia iGATE Solutions and General Atlantic Mauritius Limited, is incorporated by reference to Exhibit 2.3 to iGATE’s Form 8-K, filed on January 12, 2011.
2.4	Separation and Distribution Agreement by and between iGATE and Mastech Holdings, Inc., dated September 30, 2008, is incorporated by reference to Exhibit 2.1 to iGATE’s Form 8-K, filed on October 1, 2008.
3.1	Third Amended and Restated Articles of Incorporation of iGATE Corporation, dated May 5, 2011, is incorporated by reference to Exhibit 3.1 to iGATE’s Form 8-K, filed on May 11, 2011.
3.2	Amended and Restated Bylaws of iGATE Corporation are incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q, filed on August 14, 2000.
3.3	Statement with Respect to Shares – 8% Series B Convertible Participating Preferred Stock, no par value per share, is incorporated by reference to Exhibit 3.1 to iGATE’s Form 8-K, filed on February 4, 2011.
4.1	Registration Rights Agreement, between iGATE Corporation and the Selling Shareholders named therein, dated as of August 17, 2010 is incorporated by reference to Exhibit 4.2 to iGATE Corporation’s Registration Statement on Form S-3, Commission File No. 333-170042, filed on October 20, 2010.
4.2	Form of certificate representing the Common Stock of the Company is incorporated by reference to Exhibit 4.1 to iGATE Corporation’s Registration Statement on Form S-1, Commission File No. 333-14169, filed on November 19, 1996.
4.3	Indenture, dated April 29, 2011, by and among iGATE Corporation, iGATE Technologies, Inc., and Wilmington Trust, National Association (successor by merger to Wilmington Trust FSB), as trustee, is incorporated by reference to Exhibit 4.1 to iGATE Corporation’s Form 8-K, filed on May 5, 2011.
4.4	Supplemental Indenture, dated May 12, 2011, among iGATE Corporation, the guarantors named therein, and Wilmington Trust, National Association (successor by merger to Wilmington Trust FSB), as trustee, is incorporated by reference to Exhibit 4.4 to iGATE’s Registration Statement on Form S-4, filed on September 30, 2011.
4.5	Registration Rights Agreement, dated April 29, 2011, by and among iGATE Corporation, iGATE Technologies, Inc. and the initial purchasers named therein is incorporated by reference to Exhibit 4.2 to iGATE Corporation’s Form 8-K, filed on May 5, 2011.
4.6	Escrow Agreement, by and among iGATE Corporation, as Grantor, Wilmington Trust, National Association (successor by merger to Wilmington Trust FSB), as Trustee, and Standard Chartered Bank, as Escrow Agent, is incorporated by reference to Exhibit 10.1 to iGATE Corporation’s Form 8-K, filed on May 5, 2011.
4.7	Account Security Deed, dated as of May 3, 2011, by and among iGATE Corporation, as charger, and Wilmington Trust, National Association (successor by merger to Wilmington Trust FSB), as charge, is incorporated by reference to Exhibit 10.2 to iGATE Corporation’s Form 8-K, filed on May 5, 2011.
10.1	Retention Bonus Agreement, by and between iGATE Corporation and certain executive officers, dated July 22, 2013, is incorporated by reference to iGATE Corporation’s Form 8-K, filed on July 23, 2013. *
10.2	Restricted Stock Agreement, by and between iGATE Corporation and certain named executive officers, dated July 17, 2013, is incorporated by reference to iGATE Corporation’s Form 8-K, filed on July 23, 2013. *
10.3	Senior Executive Employment Agreement, effective September 16, 2013, between iGATE Technologies, Inc. and Ashok Vemuri, is incorporated by reference to iGATE Corporation’s Form 8-K, filed on September 16, 2013. *
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer is filed herewith.

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31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer is filed herewith.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer. †
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Chief Financial Officer. †
101.INS	XBRL Instance Document.†
101.SCH	XBRL Taxonomy Extension Schema Document.† **
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.† **
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.† **
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.† **
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.† **

† Furnished herewith.

* Indicates management contract or compensatory plan, contract or arrangement.

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

64