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SEGMENTS INFORMATION | 3 Months Ended
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Mar. 31, 2017
Segment Reporting [Abstract] |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company determines its business segments and reports segment information in accordance with the management approach, which designates internal reporting used by management to make operating decisions and assess performance as the source of the Company’s reportable segments. The Company manages its business primarily based on the geographic managerial responsibility for its client base. As managerial responsibility for a particular client relationship generally correlates with the client’s geographic location, there is a high degree of similarity between client locations and the geographic boundaries of the Company’s reportable segments. In some cases, managerial responsibility for a particular client is assigned to a management team in another region and is usually based on the strength of the relationship between client executives and particular members of EPAM’s senior management team. In such cases, the client’s activity would be reported through the management team’s reportable segment. The Company’s reportable segments are North America, Europe, Russia and Other. The revenues in the Other segment represented less than 1% of total segment revenues in 2015 due to the ending of certain customer relationships and contractual changes with other clients. As no substantial clients remained in the segment, during the first quarter of 2016, the Company shifted managerial responsibility for the remaining clients to the Russia segment. This change did not represent a change in the Company’s segments but rather a movement in responsibility for several clients that represented less than 1% of total segment revenue. The Company’s Chief Operating Decision Maker (“CODM”) evaluates performance and allocates resources based on the segment’s revenues and operating profit. Segment operating profit is defined as income from operations before unallocated costs. Generally, operating expenses for each reportable segment have similar characteristics and are subject to similar factors, pressures and challenges. Expenses included in segment operating profit consist principally of direct selling and delivery costs as well as an allocation of certain shared services expenses. Certain expenses that are not controllable at the segment level are not allocated to specific segments. Such “unallocated” expenses are deducted against the Company’s total income from operations and are not allocated to individual segments in internal management reports used by the CODM. Revenues from external customers and operating profit/(loss), before unallocated expenses, for the North America, Europe, and Russia reportable segments for the three months ended March 31, 2017 and 2016, were as follows:
| Three Months Ended March 31,
| 2017 |  | 2016
Segment revenues: |  |  |
North America | $ | 178,303 |  |  | $ | 147,490 |
Europe | 132,707 |  |  | 107,843 |
Russia | 13,693 |  |  | 9,481 |
Total segment revenues | $ | 324,703 |  |  | $ | 264,814 |
Segment operating profit: |  |  |  |  |
North America | $ | 37,092 |  |  | $ | 30,655 |
Europe | 19,811 |  |  | 16,832 |
Russia | 3,549 |  |  | 1,160 |
Total segment operating profit | $ | 60,452 |  |  | $ | 48,647 |
Intersegment transactions were excluded from the above on the basis that they are neither included into the measure of a segment’s profit and loss by the CODM, nor provided to the CODM on a regular basis. During the three months ended March 31, 2016, revenues from one customer, UBS AG, were $35,669 and accounted for more than 10% of total revenues. Revenues from this customer were included in the Company’s Europe segment in the periods indicated. There were no customers that accounted for more than 10% of total revenues during the three months ended March 31, 2017. Accounts receivable and unbilled revenues are generally dispersed across our clients in proportion to their revenues. As of March 31, 2017, accounts receivable from one customer, UBS AG, individually exceeded 10% and accounted for 11.9% of our total accounts receivable. As of March 31, 2017, unbilled revenues from one customer, Expedia, individually exceeded 10% and accounted for 10.3% of our unbilled revenues. Reconciliation of segment revenues to consolidated revenues and segment operating profit to consolidated income before provision for income taxes is presented below:
| Three Months Ended March 31,
| 2017 |  | 2016
Total segment revenues | $ | 324,703 |  |  | $ | 264,814 |
Other revenues | (52 | ) |  | (332 | )
Revenues | $ | 324,651 |  |  | $ | 264,482 |
Total segment operating profit: | $ | 60,452 |  |  | $ | 48,647 |
Unallocated amounts: |  |  |
Other revenues | (52 | ) |  | (332 | )
Stock-based compensation expense | (15,776 | ) |  | (10,964 | )
Non-corporate taxes | (3,451 | ) |  | (1,080 | )
Professional fees | (2,344 | ) |  | (1,726 | )
Depreciation and amortization | (1,975 | ) |  | (1,691 | )
Bank charges | (397 | ) |  | (341 | )
One-time charges | (568 | ) |  | — |
Other corporate expenses | (4,923 | ) |  | (2,182 | )
Income from operations | 30,966 |  |  | 30,331 |
Interest and other income, net | 584 |  |  | 1,211 |
Foreign exchange loss | (2,955 | ) |  | (1,290 | )
Income before provision for income taxes | $ | 28,595 |  |  | $ | 30,252 |
Geographic Area Information Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and management has determined that it is not practical to allocate these assets by segment since such assets are used interchangeably among the segments. Geographical information about the Company’s long-lived assets based on physical location of the assets was as follows:
| As of March 31, 2017 |  | As of December 31, 2016
Belarus | $ | 47,124 |  |  | $ | 46,011 |
Russia | 7,853 |  |  | 7,203 |
Ukraine | 5,847 |  |  | 5,610 |
Hungary | 3,384 |  |  | 3,485 |
United States | 3,013 |  |  | 2,618 |
Poland | 2,498 |  |  | 2,213 |
China | 1,785 |  |  | 1,887 |
India | 1,530 |  |  | 1,650 |
Other | 2,928 |  |  | 2,939 |
Total | $ | 75,962 |  |  | $ | 73,616 |
Information about the Company’s revenues by client location, including reimbursable expenses of $3,925 and $2,446 for the three months ended March 31, 2017 and 2016, respectively, is as follows:
| Three Months Ended March 31,
| 2017 |  | 2016
United States | $ | 176,830 |  |  | $ | 136,639 |
United Kingdom | 46,594 |  |  | 43,560 |
Switzerland | 29,096 |  |  | 30,852 |
Russia | 13,209 |  |  | 8,965 |
Canada | 12,494 |  |  | 15,846 |
Germany | 12,094 |  |  | 8,739 |
Netherlands | 8,671 |  |  | 2,647 |
Sweden | 7,466 |  |  | 4,128 |
Hong Kong | 4,777 |  |  | 5,944 |
United Arab Emirates | 2,048 |  |  | — |
China | 1,584 |  |  | 294 |
Ireland | 1,389 |  |  | 1,186 |
Italy | 1,280 |  |  | 668 |
Denmark | 1,253 |  |  | 410 |
Other locations | 5,866 |  |  | 4,604 |
Revenues | $ | 324,651 |  |  | $ | 264,482 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599 + Details
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