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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended September 30, 2004

OR

Commission File Number 000-21755

iGATE CORPORATION

(Exact name of registrant as specified in its charter)

(412) 506-1131

(Registrant’s Telephone Number, Including Area Code)

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  ¨    No  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  x    No  ¨

The number of shares of the registrant’s Common Stock, par value $0.01 per share, outstanding as of October 29, 2004 was 52,505,888.

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iGATE CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2004

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PART I.    FINANCIAL INFORMATION

ITEM 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(a)

iGATE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(Unaudited)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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(b)

iGATE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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(c)

iGATE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)

(Dollars in thousands, except per share data)

(Unaudited)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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(d)

iGATE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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iGATE CORPORATION

(e)    NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    Basis of Presentation

The Unaudited Condensed Consolidated Financial Statements included herein have been prepared by iGATE Corporation (the “Company”) in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. Accordingly, the accompanying Unaudited Condensed Consolidated Financial Statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying Unaudited Condensed Consolidated Financial Statements as of and for the three and nine months ended September 30, 2004 and 2003 should be read in conjunction with the Company’s Consolidated Financial Statements (and notes thereto) included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2003. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation of the accompanying Unaudited Condensed Consolidated Financial Statements have been included, and all adjustments unless otherwise discussed in the Notes to the Unaudited Condensed Consolidated Financial Statements are of a normal and recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. Operating results for the three and nine months ended September 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004.

The use of accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently Adopted Accounting Pronouncements

Variable Interest Entities

In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities. FIN 46 requires unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse the risk and rewards of ownership among their owners and other parties involved. The provisions of FIN 46 are effective immediately to all variable entities created after January 1, 2003 and variable interest entities in which an enterprise obtains an interest after that date. For variable interest entities created before this date, the provisions were effective July 31, 2003. On October 8, 2003, the FASB issued FASB Staff Position No. 46, which allows public entities, who meet certain criteria, to defer the effective date for applying the provisions of FIN No. 46 to interests held by the public entity in certain variable interest entities or potential variable interest entities until the end of the first interim or annual period ending after December 15, 2003. On December 24, 2003, the FASB extended the effective date to periods ending after March 15, 2004. The adoption of this standard did not have a material impact on our Consolidated Financial Statements.

In December 2003, the FASB issued FASB Interpretation (“FIN”) No 46-R, Consolidation of Variable Interest Entities. FIN No. 46-R which modifies certain provisions and effective dates of FIN No. 46, sets forth criteria to be used in determining whether an investment in a variable interest entity should be consolidated, and is based on the general premise that companies that control another entity through interests other than voting interests should consolidate the controlled entity.

Earnings Per Share

The Emerging Issues Task Force (“EITF”) reached final consensuses on Issue 03-6, Participating Securities and the Two-Class Method Under FASB Statement No. 128, Earnings Per Share at its March 17-18, 2004

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iGATE CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

meeting. Issue 03-6 addresses a number of questions regarding the computation of earnings per share (“EPS”) by companies that have issued securities other than common stock that contractually entitle the holder to participate in dividends and earnings of the company when, and if, it declares dividends on its common stock. The issue also provides further guidance in applying the two-class method of calculating EPS. It clarifies what constitutes a participating security and how to apply the two-class method of computing EPS once it is determined that a security is participating, including how to allocate undistributed earnings to such a security. The Company adopted EITF 03-6 during the nine month period ended September 30, 2004. The adoption of EITF 03-6 had no impact on the Company’s results of operations.

Recently Issued Accounting Pronouncements

Financial Instruments

Effective May 1, 2003, the FASB issued SFAS No 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“SFAS 150”). This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. This statement was effective for the Company after May 31, 2003. On November 2003, the FASB issued FASB Staff Position No. 150-3 which deferred the effective dates for applying certain provisions of SFAS 150 related to mandatorily redeemable financial instruments of certain non-public entities and certain mandatorily redeemable non-controlling interests for public and non-public companies. For public entities SFAS 150 is effective for mandatorily redeemable financial instruments entered into or modified after May 31, 2003 and is effective for all other financial instruments as of the first interim period beginning after June 15, 2003. For mandatorily redeemable non-controller interest that would not have to be classified as liabilities by a subsidiary under the exception in paragraph 9 of SFAS 150, but would be classified as liabilities by the parent, the classification and measurement previsions of SFAS 150 are deferred indefinitely. The measurement provisions of SFAS 150 are also deferred indefinitely for other mandatorily redeemable non-controlling interests that were issued before November 4, 2003. For those instruments, the measurement guidance for redeemable shares and non-controlling interests in other literature shall apply during the deferral period. The Company adopted the provisions of SFAS 150 effective June 30, 2003, and such adoption had no impact on the Company’s consolidated financial statements.

2.    Stock Based Compensation

On August 25, 2004, the Company issued 455,924 shares of common stock to two key employees of its subsidiary Quintant Inc. (“Quintant”) and cancelled 103,222 of stock options granted on August 21, 2003 that were issued at $0 exercise price in connection with modifications made to the terms of the Company’s acquisition of Quintant, which are more fully discussed below. The closing share price of the Company’s common stock at the date of issuance was $2.92. The unamortized portion of deferred compensation originally recorded upon the granting of the $0.00 exercise price options was $0.3 million. The Company recognized $1.6 million in additional compensation for the three and nine-month periods ended September 30, 2004, as a result of the issuance of this common stock and the cancellation of the stock options.

Stock options granted under the Company’s stock incentive plans are generally granted at market prices on the date of grant. Stock options granted have a maximum life of ten years from date of grant. Options granted generally vest ratably over a four year period.

The Company accounts for its stock-based compensation in accordance with Accounting Principles Based Opinion No. 25, Accounting for Stock Issued for Employees, and related interpretations using the intrinsic value method, which result in no compensation costs for options granted at fair market value.

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iGATE CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table illustrates the effect on net loss and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock based employee compensation.

Deferred Compensation

In August 2003, deferred compensation in the amount of $10.5 million was recorded in conjunction with the acquisition of Quintant, Inc. which is more fully described in Note 12 in our 2003 Form 10-K. The deferred compensation related to 2.1 million shares of Company restricted stock, 0.6 million Company options granted at a $0.00 exercise price, 0.1 million Company options granted at a $3.78 exercise price, and 0.8 million of iGATE Global Solutions Limited (“sometimes herein referred to as iGS”) options granted at a discount from market value to certain continuing Quintant employees. As discussed below the Quintant deal was modified.

The Company restricted stock, which was granted to key employees of Quintant, was valued based upon the closing price of the Company’s common stock at August 20, 2003, which was $4.89 per share. Since August 21, 2003 through this most recent quarter ended September 30, 2004, deferred compensation was being recognized over a weighted average vesting period of four years. Deferred compensation recognized for the three and nine months ended September 30, 2004 was approximately $0.3 million and $0.9 million, respectively, for the restricted stock. As discussed below, the restricted stock was repurchased by the Company in October 2004.

The Company options issued at $0.00 exercise price and $3.78 exercise price were valued based upon the closing price of the Company common stock at the date of grant. Since August 21, 2003 through this most recent quarter ended September 30, 2004, deferred compensation was being recognized ratably over a four year vesting period. Deferred compensation recognized for the three and nine months ended September 30, 2004 was approximately $0.2 million and $0.6 million, respectively, for these options. As discussed below, the options issued at $0.00 exercise price were cancelled.

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iGATE CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On August 20, 2003, 0.3 million of iGS options were issued at a $2.18 exercise price with a market value of $5.11 per share on the same date. On August 22, 2003, 0.5 million of iGS options were issued at a $2.53 exercise price with a market value of $5.39 on the same date. Deferred compensation is being recognized ratably over a four year vesting period. Deferred compensation recognized for the three and nine months ended September 30, 2004 was approximately $0.1 million and $0.5 million, respectively, for these options.

Modification of Quintant Deal

On August 10, 2004, the Company modified the terms of the August 21, 2003, Quintant acquisition agreement (“Old Deal”), and entered into a new agreement (“New Deal”). The accounting for each respective Quintant deal was pursuant to FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation (“FIN 44”), and Emerging Issues Task Force Issue No. 00-23, Exchange of Stock Options Issues Related to the Accounting for Stock Compensation under APB Opinion No. 25 and FASB Interpretation No. 44 (“EITF No. 00-23”).

Under the terms of the Old Deal, the Company issued 2.1 million shares of Company common stock, valued at $9.1 million to certain Co-Founders with vesting as follows: 25% of the common shares vest at February 1, 2004, and ratably on a quarterly basis thereafter. One Co-Founder was granted 0.5 million options that vested ratably on a quarterly basis commencing from the date of the Old Deal. Both the common stock and options granted had restrictions that were predicated on each of the Co-Founders continued employment through the vesting schedule. As discussed above, the Company originally recorded the value of the stock issued and options granted as deferred compensation to be amortized and recognized as compensation in accordance with vesting of the common stock and options, respectively.

Under the terms of the New Deal, Company common shares originally issued were repurchased by the Company and will be recorded as Treasury Stock in the fourth quarter of 2004, and all discounted options granted were cancelled. Under the New Deal, the Co-Founders received cash for their Company restricted common stock in two installments: a $4.0 million cash advance in August 2004 and $8.9 million in October 2004, which upon receipt by the Co-Founders, was used to acquire 1,526,210 shares of newly issued iGate Global Solutions (“iGS new shares”). The agreed upon purchase price of the iGS new shares was $5.83. The fair market value of the iGS new shares as of the closing date of the New Deal was $6.16. In accordance with FIN 44, these transactions and related compensation expense are recorded when the equity is received. Therefore, the Company is required to recognize compensation expense for the repurchase of the 2.1 million shares of Company restricted common stock in October 2004, in the amount of $4.3 million. Approximately, $3.8 million of compensation expense relates to the repurchase of the 2.1 million shares of Company restricted common stock and $0.5 million relates to the difference between the agreed upon purchase price and the closing fair market value of the iGS shares on October 25, 2004.

In addition, in October 2004 in connection with these transactions, the Company will accelerate the recognition of unamortized deferred compensation originally recorded in conjunction with the Old Deal, consisting of $3.1 million of unamortized deferred compensation related to the originally issued 2.1 million shares of Company common stock and $1.7 million of unamortized deferred compensation related to the cancelled stock options granted.

3.    Acquisitions and Divestitures

In February 2004, iGS acquired a 92% interest in Saint Life Pharmaceutical Research Laboratories Private Limited (“Saint Life”) for approximately $0.5 million. In July 2004, iGS acquired the remaining 8% in Saint Life Pharmaceutical Research Laboratories Private Limited (“Saint Life”) for approximately $0.2 million. iGS

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iGATE CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

purchased Saint Life to acquire the land that Saint Life owned which is located adjacent to the new iGS Whitefield Campus in Bangalore, India. The purchase price was allocated to Saint Life’s existing assets with no acquired intangibles. The purchase price allocation did not result in goodwill. Proforma disclosures regarding this acquisition have not been provided because they are not material to the operations of the Company.

In June 2004, the Company entered into a binding agreement with a third party to sell a tract of land located in Bangalore, India, for approximately $4.8 million. The Company received a deposit on the land in the amount of $2.4 million, and will receive the remaining portion of the proceeds upon the closing of the sale, which is expected to occur in the fourth quarter of 2004.

In June 2004, the Company sold its international professional services entity, iGATE Australia Pty. Ltd. (“Australia”) and in April 2004, the Company sold its international professional services entity. Scotland based Direct Resources Ltd. (“DRI”). Cash received for these transactions approximated $9.8 million. As required under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company has reported the sales as “discontinued operations”, net of applicable statutory tax rates, for all prior periods presented.

In May 2004, the Company through its majority-owned subsidiary, iGATE Global Solutions Ltd. (“iGS”) acquired an additional 5% ownership of the Concours Group (“Concours”), for approximately $1.25 million. iGS owns approximately 10% of Concours, and accounts for its investment on the cost method of accounting. Proforma disclosures regarding this acquisition have not been provided because they are not material to the operations of the Company.

4.    Goodwill and Other Intangible Assets

Changes in the carrying value of goodwill and intangible assets by reportable segment are as follows, (in thousands):

The gross amounts and accumulated amortization of intangibles assets are as follows, (in thousands):