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GENPACT LIMITED (Exact name of registrant as specified in its - PDF document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period ended June 30, 2017 Or


  1. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ☒ ☒ For the Quarterly Period ended June 30, 2017 Or 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: 001-33626 GENPACT LIMITED (Exact name of registrant as specified in its charter) Bermuda 98-0533350 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda (441) 295-2244 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive office) 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 ☐ 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 ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “accelerated filer”, “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section l3(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The number of the registrant’s common shares, par value $0.01 per share, outstanding as of July 28, 2017 was 192,903,452.

  2. TABLE OF CONTENTS Item No. Page No. PART I Financial Statements 1. Unaudited Consolidated Financial Statements Consolidated Balance Sheets as of December 31, 2016 and June 30, 2017 1 Consolidated Statements of Income for the three months and six months ended June 30, 2016 and 2017 2 Consolidated Statements of Comprehensive Income (Loss) for the three months and six months ended June 30, 2016 and 2017 3 Consolidated Statements of Equity and Redeemable Non-controlling Interest for the three months and six months ended June 30, 2016 and 2017 5 Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2017 6 Notes to the Consolidated Financial Statements 7 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 3. Quantitative and Qualitative Disclosures About Market Risk 50 4. Controls and Procedures 50 PART II Other Information 1. Legal Proceedings 51 1A. Risk Factors 51 2. Unregistered Sales of Equity Securities and Use of Proceeds 51 3. Defaults upon Senior Securities 51 5. Other Information 51 6. Exhibits 51 SIGNATURES 53

  3. GENPACT LIMITED AND ITS SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (In thousands, except per share data and share count) As of December 31, As of June 30, Notes 2016 2017 Assets Current assets Cash and cash equivalents 4 $ 422,623 $ 441,064 Accounts receivable, net 5 615,265 637,613 Prepaid expenses and other current assets 8 189,149 246,277 Total current assets $ 1,227,037 $ 1,324,954 Property, plant and equipment, net 9 193,218 208,658 Deferred tax assets 23 70,143 67,568 Investment in equity affiliates 24 4,800 809 Intangible assets, net 10 78,946 127,068 Goodwill 10 1,069,408 1,260,511 Other assets 242,328 249,866 Total assets $ 2,885,880 $ 3,239,434 Liabilities and equity Current liabilities Short-term borrowings 11 $ 160,000 $ 205,000 Current portion of long-term debt 12 39,181 39,213 Accounts payable 9,768 18,317 Income taxes payable 23 24,159 51,226 Accrued expenses and other current liabilities 13 498,247 452,364 Total current liabilities $ 731,355 $ 766,120 Long-term debt, less current portion 12 698,152 1,026,047 Deferred tax liabilities 23 2,415 6,621 Other liabilities 14 162,790 177,546 Total liabilities $ 1,594,712 $ 1,976,334 Redeemable non-controlling interest 4,520 4,680 Shareholders' equity Preferred shares, $0.01 par value, 250,000,000 authorized, none issued — — Common shares, $0.01 par value, 500,000,000 authorized, 198,794,052 and 192,868,427 issued and outstanding as of December 31, 2016 and June 30, 2017, respectively 1,984 1,924 Additional paid-in capital 1,384,468 1,356,936 Retained earnings 358,121 276,184 Accumulated other comprehensive income (loss) (457,925) (376,624) Total equity $ 1,286,648 $ 1,258,420 Commitments and contingencies 25 Total liabilities, redeemable non-controlling interest and equity $ 2,885,880 $ 3,239,434 See accompanying notes to the Consolidated Financial Statements. 1

  4. GENPACT LIMITED AND ITS SUBSIDIARIES Consolidated Statements of Income (Unaudited) (In thousands, except per share data and share count) Three months ended June 30, Six months ended June 30, Notes 2016 (1) 2017 2016 (1) 2017 Net revenues $ 630,523 $ 670,697 $ 1,240,226 $ 1,293,692 Cost of revenue 19, 24 383,755 415,293 756,603 798,630 Gross profit $ 246,768 $ 255,404 $ 483,623 $ 495,062 Operating expenses: Selling, general and administrative expenses 20, 24 165,197 167,901 325,346 328,759 Amortization of acquired intangible assets 10 6,493 8,387 12,638 15,629 Other operating (income) expense, net 21 (4,862) (915) (9,923) (8,453) Income from operations $ 79,940 $ 80,031 $ 155,562 $ 159,127 Foreign exchange gains (losses), net 4,808 1,913 3,810 (3,000) Interest income (expense), net 22 (3,433) (9,850) (6,271) (15,343) Other income (expense), net 503 12,488 1,381 13,041 Income before equity-method investment activity, net and income tax expense $ 81,818 $ 84,582 $ 154,482 $ 153,825 Equity-method investment activity, net (2,074) (9) (4,219) (4,567) Income before income tax expense $ 79,744 $ 84,573 $ 150,263 $ 149,258 Income tax expense 23 14,956 15,471 26,971 27,716 Net income $ 64,788 $ 69,102 $ 123,292 $ 121,542 Net loss (income) attributable to redeemable non-controlling interest 882 (156) 1,171 742 Net income attributable to Genpact Limited shareholders $ 65,670 $ 68,946 $ 124,463 $ 122,284 Net income available to Genpact Limited common shareholders 18 $ 65,670 $ 68,946 $ 124,463 $ 122,284 Earnings per common share attributable to Genpact Limited common shareholders 18 Basic $ 0.31 $ 0.36 $ 0.59 $ 0.63 Diluted $ 0.31 $ 0.36 $ 0.58 $ 0.62 Weighted average number of common shares used in computing earnings per common share attributable to Genpact Limited common shareholders Basic 210,178,050 191,469,593 210,479,108 195,269,561 Diluted 213,803,134 193,732,406 213,848,050 198,194,172 (1) Income taxes, net income and basic and diluted net income per common share for the three months and the six months ended June 30, 2016 have been restated due to the adoption of ASU No. 2016-09 in 2016 with effect from January 1, 2016. See accompanying notes to the Consolidated Financial Statements. 2

  5. GENPACT LIMITED AND ITS SUBSIDIARIES Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (In thousands, except per share data and share count) Three months ended June 30, Six months ended June 30, 2016 (1) 2017 2016 (1) 2017 Genpact Redeemable Genpact Redeemable Genpact Redeemable Genpact Redeemable Limited Non-controlling Limited Non- Limited Non- Limited Non- Shareholders interest Shareholders controlling Shareholders controlling Shareholders controlling interest interest interest Net Income (loss) $ 65,670 $ (882) $ 68,946 $ 156 $ 124,463 $ (1,171) $ 122,284 $ (742) Other comprehensive income: Currency translation adjustments (25,055) 39 20,085 (66) (19,838) 39 71,712 (78) Net income (loss) on cash flow hedging derivatives, net of taxes (Note 7) (3,555) — (9,611) — (1,585) — 9,247 — Retirement benefits, net of taxes (13) — 223 — 140 — 342 — Other comprehensive income (loss) $ (28,623) $ 39 $ 10,697 $ (66) $ (21,283) $ 39 $ 81,301 $ (78) Comprehensive income (loss) $ 37,047 $ (843) $ 79,643 $ 90 $ 103,180 $ (1,132) $ 203,585 $ (820) (1) Net income for the three months and six months ended June 30, 2016 has been restated due to the adoption of ASU No. 2016-09 in 2016 with effect from January 1, 2016. See accompanying notes to the Consolidated Financial Statements. 3

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