Why does JSL calculate EBITDA and EBITDA-A?

EBITDA is a non-accounting measure. In accordance with Memo CVM No. 1/2005, EBITDA consists of earnings before financial revenues (expenses), net of income tax and social contribution, minority interests, and depreciation and amortization.

To better reflect its operating performance and avoid the distortions caused by using traditional EBITDA, the Company adds to EBITDA the residual accounting cost from the sale of assets, which is non-cash, since it represents merely an accounting entry at the time of demobilization of the assets. Thus, the Company‘s management believes that EBITDA-A is a better measure of the financial performance of the business.

EBITDA and EBITDA-A are not a measure recognized under Brazilian GAAP, don‘t have standardized meanings and the Company’s definitions of EBITDA and EBITDA-A may differ from those of other companies. EBITDA and EBITDA-A have limitations that may impair its use as a measure of profitability, since it does not reflect certain costs and expenses involved in doing business, such as financial expenses, taxes, depreciation, capital expenses and other related costs, any of which may have a significant effect on JSL’s net income. JSL uses EBITDA and EBITDA-A as measures of its operational performance.