Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document Documentand Entity Information [Abstract] | ||
Entity Registrant Name | EPAM Systems, Inc. | |
Entity Central Index Key | 1,352,010 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 51,035,929 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Document Period End Date | Sep. 30, 2016 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Trading Symbol | EPAM |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 330,627 | $ 199,449 |
Time deposits | 0 | 30,181 |
Accounts receivable, net of allowance of $2,301 and $1,729, respectively | 187,833 | 174,617 |
Unbilled revenues | 82,360 | 95,808 |
Prepaid and other current assets | 32,205 | 14,344 |
Employee loans, net of allowance of $0 and $0, respectively | 2,698 | 2,689 |
Deferred tax assets | 0 | 11,847 |
Total current assets | 635,723 | 528,935 |
Property and equipment, net | 70,284 | 60,499 |
Restricted cash | 236 | 238 |
Employee loans, net of allowance of $0 and $0, respectively | 3,283 | 3,649 |
Intangible assets, net | 53,867 | 46,860 |
Goodwill | 111,722 | 115,930 |
Deferred tax assets | 26,598 | 18,312 |
Other long-term assets | 7,486 | 4,113 |
Total assets | 909,199 | 778,536 |
Current liabilities | ||
Accounts payable | 4,661 | 2,576 |
Accrued expenses and other liabilities | 34,856 | 60,749 |
Deferred revenue | 3,685 | 3,047 |
Due to employees | 34,894 | 26,703 |
Deferred compensation due to employees | 4,035 | 5,364 |
Contingent consideration (Note 4) | 800 | 0 |
Taxes payable | 39,499 | 29,472 |
Total current liabilities | 122,430 | 127,911 |
Long-term debt | 33,062 | 35,000 |
Deferred tax liabilities, long-term | 3,327 | 2,402 |
Other long-term liabilities | 268 | 0 |
Total liabilities | 159,087 | 165,313 |
Commitments and contingencies (Note 9) | ||
Stockholders’ equity | ||
Common stock, $0.001 par value; 160,000,000 authorized; 51,035,509 and 50,177,044 shares issued, 51,016,500 and 50,166,537 shares outstanding at September 30, 2016 and December 31, 2015, respectively | 50 | 49 |
Additional paid-in capital | 363,154 | 303,363 |
Retained earnings | 419,557 | 345,054 |
Treasury stock | (170) | (93) |
Accumulated other comprehensive loss | (32,479) | (35,150) |
Total stockholders’ equity | 750,112 | 613,223 |
Total liabilities and stockholders’ equity | $ 909,199 | $ 778,536 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Accounts receivable allowance | $ 2,301 | $ 1,729 |
Employee loans current allowance | 0 | 0 |
Noncurrent assets | ||
Employee loans long-term allowance | $ 0 | $ 0 |
Stockholders' equity | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 160,000,000 | 160,000,000 |
Common stock, shares issued (in shares ) | 51,035,509 | 50,177,044 |
Common stock, shares outstanding (in shares) | 51,016,500 | 50,166,537 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Revenues | $ 298,293 | $ 236,049 | $ 846,607 | $ 653,875 |
Operating expenses: | ||||
Cost of revenues (exclusive of depreciation and amortization) | 190,797 | 148,479 | 538,960 | 408,622 |
Selling, general and administrative expenses | 67,491 | 55,431 | 193,226 | 158,345 |
Depreciation and amortization expense | 5,925 | 4,393 | 17,150 | 12,496 |
Other operating expenses/(income), net | 178 | (30) | 958 | 210 |
Income from operations | 33,902 | 27,776 | 96,313 | 74,202 |
Interest and other income, net | 1,067 | 865 | 3,416 | 3,322 |
Foreign exchange (loss)/gain | (1,728) | 32 | (5,313) | (6,187) |
Income before provision for income taxes | 33,241 | 28,673 | 94,416 | 71,337 |
Provision for income taxes | 7,067 | 5,800 | 19,913 | 14,519 |
Net income | 26,174 | 22,873 | 74,503 | 56,818 |
Foreign currency translation adjustments | 358 | (8,341) | 2,671 | (7,397) |
Comprehensive income | $ 26,532 | $ 14,532 | $ 77,174 | $ 49,421 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.51 | $ 0.47 | $ 1.48 | $ 1.17 |
Diluted (in dollars per share) | $ 0.49 | $ 0.44 | $ 1.40 | $ 1.10 |
Shares used in calculation of net income per share: | ||||
Basic (in shares) | 51,131 | 49,043 | 50,172 | 48,506 |
Diluted (in shares) | 53,864 | 52,344 | 53,159 | 51,755 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 74,503 | $ 56,818 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 17,150 | 12,496 |
Bad debt expense | 1,690 | 910 |
Deferred taxes | (11) | 535 |
Stock-based compensation expense | 37,520 | 33,350 |
Excess tax benefit on stock-based compensation plans | (4,769) | (3,118) |
Other | 1,834 | 2,358 |
(Increase)/decrease in operating assets: | ||
Accounts receivable | (14,801) | (3,575) |
Unbilled revenues | 15,633 | (49,110) |
Prepaid expenses and other assets | (630) | 29 |
Increase/(decrease) in operating liabilities: | ||
Accounts payable | 2,011 | 8,128 |
Accrued expenses and other liabilities | (26,942) | 10,844 |
Deferred revenues | 540 | (607) |
Due to employees | 8,047 | 4,295 |
Taxes payable | (609) | (8,799) |
Net cash provided by operating activities | 111,166 | 64,554 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (19,981) | (9,533) |
Payment for construction of corporate facilities | 0 | (4,671) |
Employee housing loans issued | (1,361) | (1,993) |
Proceeds from repayments of employee housing loans | 1,597 | 1,611 |
Decrease/(increase) in restricted cash and time deposits, net | 30,001 | (29,947) |
Increase in other long-term assets, net | (2,660) | (988) |
Proceeds from foreign currency derivatives | 104 | 0 |
Payments for foreign currency derivatives | (91) | 0 |
Acquisition of businesses, net of cash acquired | (4,499) | (27,654) |
Net cash provided by/(used in) investing activities | 3,110 | (73,175) |
Cash flows from financing activities: | ||
Proceeds from stock option exercises | 15,850 | 17,607 |
Excess tax benefit on stock-based compensation plans | 4,769 | 3,118 |
Proceeds from debt (Note 5) | 20,000 | 15,000 |
Repayment of debt (Note 5) | (22,096) | 0 |
Proceeds from government grants | 135 | 0 |
Acquisition of business, deferred consideration | (2,260) | (30,274) |
Net cash provided by/(used in) financing activities | 16,398 | 5,451 |
Effect of exchange rate changes on cash and cash equivalents | 504 | (2,921) |
Net increase/(decrease) in cash and cash equivalents | 131,178 | (6,091) |
Cash and cash equivalents, beginning of period | 199,449 | 220,534 |
Cash and cash equivalents, end of period | $ 330,627 | $ 214,443 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES EPAM Systems, Inc. (the “Company” or “EPAM”) is a global provider of software product engineering, technology consulting and digital expertise to clients located around the world, primarily in North America, Europe, Asia and the CIS region. The Company has expertise in various industries, including software and hi-tech, financial services, media and entertainment, travel and hospitality, retail and distribution, and life sciences and healthcare. The Company is incorporated in Delaware with headquarters in Newtown, PA. EPAM serves clients worldwide utilizing an award-winning global delivery platform and its locations in over 25 countries across North America, Europe, Asia and Australia. Basis of Presentation —The accompanying unaudited condensed consolidated financial statements of EPAM have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. The condensed consolidated financial statements include the financial statements of EPAM Systems, Inc. and its subsidiaries with all intercompany balances and transactions eliminated. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2015 included in its Annual Report on Form 10-K. The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire year. In our opinion, all adjustments considered necessary for a fair presentation of the accompanying unaudited condensed consolidated financial statements have been included, and all adjustments are of a normal and recurring nature. Reclassification — During the first quarter of 2016, the Company revised the classification of certain health insurance premium and other employee fringe benefit expenses between the cost of revenues and selling, general and administrative expenses line items on the condensed consolidated statements of income and comprehensive income. The effect of this reclassification had no impact on total income from operations for the three and nine months ended September 30, 2016 . Revenue Recognition — The Company recognizes revenue when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the sales price is fixed or determinable; and (4) collectability is reasonably assured. Determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenue reported. The Company derives its revenues from a variety of service offerings, which represent specific competencies of its IT professionals. Contracts for these services have different terms and conditions based on the scope, deliverables, and complexity of the engagement, which require management to make judgments and estimates in determining the appropriate revenue recognition. Fees for these contracts may be in the form of time-and-materials or fixed-price arrangements. If there is an uncertainty about the project completion or receipt of payment for the services, revenue is deferred until the uncertainty is sufficiently resolved. At the time revenue is recognized, the Company provides for any contractual deductions and reduces the revenue accordingly. The Company reports gross reimbursable “out-of-pocket” expenses incurred as both revenues and cost of revenues in the condensed consolidated statements of income and comprehensive income. The Company defers amounts billed to its clients for revenues not yet earned. Such amounts are anticipated to be recorded as revenues when services are performed in subsequent periods. Unbilled revenue is recorded when services have been provided but billed subsequent to the period end in accordance with the contract terms. Fair Value of Financial Instruments — The Company makes assumptions about fair values of its financial assets and liabilities in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, “Fair Value Measurement”, and utilizes the following fair value hierarchy in determining inputs used for valuation: Level 1 — Quoted prices for identical assets or liabilities in active markets. Level 2 — Inputs other than quoted prices within Level 1 that are observable either directly or indirectly, including quoted prices in markets that are not active, quoted prices in active markets for similar assets or liabilities, and observable inputs other than quoted prices such as interest rates or yield curves. Level 3 — Unobservable inputs reflecting our view about the assumptions that market participants would use in pricing the asset or liability. Where the fair values of financial assets and liabilities recorded in the condensed consolidated balance sheets cannot be derived from an active market, they are determined using a variety of valuation techniques. These valuation techniques include a net present value technique, comparison to similar instruments with market observable inputs, option pricing models and other relevant valuation models. To the extent possible, observable market data is used as inputs into these models but when it is not feasible, a degree of judgment is required to establish fair values. The Company’s contingent liabilities measured at fair value on a recurring basis are comprised of performance-based awards issued to certain former owners of acquired businesses in exchange for future services and cash settled restricted stock units issued to employees. Performance-based awards issued to certain former owners of acquired businesses are valued using significant inputs that are not observable in the market, which are defined as Level 3 inputs according to fair value measurement accounting. The Company believes its estimates and assumptions are reasonable, however, there is significant judgment involved. Cash settled restricted stock units issued to employees are valued using the price of the Company's stock, a significant input that is observable in the market, which is defined as Level 1 input according to fair value measurement accounting. These changes in fair value could cause a material impact to, and volatility in the Company’s operating results. See Note 4 for disclosures related to fair value. Employee Loans — The Company issues employee housing loans in Belarus, relocation loans to assist employees with relocation needs in connection with intra-company transfers and loans for the purchase of automobiles in India. There are no loans issued to principal officers, directors, and their affiliates. The Company intends to hold all employee loans until their maturity. Interest income is reported using the effective interest method. Where applicable, loan origination fees, net of direct origination costs, are deferred and recognized in interest income over the life of the loan. On a quarterly basis, the Company reviews the aging of its loan portfolio and evaluates the ability of employees to repay their debt on schedule. Factors considered in the review include historical payment experience, reasons for payment delays and shortfalls, if any, as well as probability of collecting scheduled principal and interest payments. Since the initiation of the loan program there have not been material past due or non-accrual employee loans or write offs related to loan losses and, therefore, the Company determined that no allowance for loan losses is required. Employee Housing Loans — In 2012, the Board of Directors of the Company approved the Employee Housing Program (the “Housing Program”), which provides employees with loans to purchase housing in Belarus. The housing is sold directly to employees by independent third parties. The Housing Program was designed as a retention mechanism for the Company’s employees in Belarus and is available to full-time qualified employees who have been with the Company for at least three years . The aggregate maximum lending limit of the program is $10,000 , with individual loans not exceeding $50 . Loans issued under the Housing Program are denominated in U.S. dollars with a 5 -year term and an interest rate of 7.5% . The housing loans are measured using the Level 3 inputs within the fair value hierarchy because they are valued using significant unobservable inputs. These housing loans are measured at fair value upon initial recognition through the market approach under ASC Topic 820, “Fair Value Measurement” and subsequently carried at amortized cost less allowance for loan losses, if any. Any difference between the carrying value and the fair value of a loan upon initial recognition is charged to expense. Employee Loans, Other — The Company issues short-term, non-interest bearing relocation loans to employees who have relocated within the company. In addition, the Company has in the past issued and may issue in the future a small number of interest bearing loans to employees for the purchase of automobiles. Such loans are issued to qualified employees with certain conditions attached. Due to the short term duration of these employee loans and high certainty of repayment, their carrying amount is a reasonable estimate of their fair value. Business Combinations — The Company accounts for its business combinations using the acquisition accounting method, which requires it to determine the fair value of net assets acquired and the related goodwill and other intangible assets in accordance with the FASB ASC Topic 805, “Business Combinations.” The Company identifies and attributes fair values and estimated lives to the intangible assets acquired and allocates the total cost of an acquisition to the underlying net assets based on their respective estimated fair values. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and involves the use of significant estimates, including projections of future cash inflows and outflows, discount rates, asset lives and market multiples. There are different valuation models for each component, the selection of which requires considerable judgment. These determinations will affect the amount of amortization expense recognized in future periods. The Company bases its fair value estimates on assumptions it believes are reasonable, but recognizes that the assumptions are inherently uncertain. If initial accounting for the business combination has not been completed by the end of the reporting period in which the business combination occurs, provisional amounts are reported for which the accounting is incomplete, with retrospective adjustment made to such provisional amounts during the measurement period to present new information about facts and circumstances that existed as of the acquisition date. All acquisition-related costs, other than the costs to issue debt or equity securities, are accounted for as expenses in the period in which they are incurred. Changes in fair value of contingent consideration arrangements that are not measurement period adjustments are recognized in earnings. Payments to settle contingent consideration, if any, are reflected in cash flows from financing activities and the changes in fair value are reflected in cash flows from operating activities in the Company’s condensed consolidated statements of cash flows. The acquired assets typically consist of customer relationships, trade names, non-competition agreements, and workforce and as a result, a substantial portion of the purchase price is usually allocated to goodwill and other intangible assets. Goodwill and Other Intangible Assets — Goodwill and intangible assets that have indefinite useful lives are accounted for in accordance with FASB ASC 350, “Intangibles - Goodwill and Other.” The Company conducts its evaluation of goodwill impairment at the reporting unit level on an annual basis during its fourth quarter, and more frequently if events or circumstances indicate that the carrying value of a reporting unit exceeds its fair value. A reporting unit is an operating segment or one level below. The Company does not have intangible assets that have indefinite useful lives. Intangible assets that have finite useful lives are amortized over their estimated useful lives on a straight-line basis. When facts and circumstances indicate potential impairment of amortizable intangible assets, the Company evaluates the recoverability of the asset’s carrying value, using estimates of future cash flows over the remaining asset life. The estimates of future cash flows attributable to intangible assets require significant judgment based on the Company’s historical and anticipated results. Any impairment loss is measured by the excess of carrying value over fair value. Stock-Based Compensation — The Company recognizes the cost of its stock-based incentive awards based on the fair value of the award at the date of grant net of estimated forfeitures. The cost is expensed evenly over the service period. The service period is the period over which the employee performs the related services, which is normally the same as the vesting period. Over time, the forfeiture assumption is adjusted to the actual forfeiture rate and such change may affect the timing of the total amount of expense recognized over the vesting period. Equity-based awards that do not require future service are expensed immediately. Equity-based awards that do not meet the criteria for equity classification are recorded as liabilities and adjusted to fair value at the end of each reporting period. Off-Balance Sheet Financial Instruments — The Company uses FASB ASC Topic 825, “Financial Instruments” to identify and disclose off-balance sheet financial instruments, which include credit instruments, such as commitments to make employee loans and related guarantees, standby letters of credit and certain guarantees issued under customer contracts. The face amount for these items represents the exposure to loss, before considering available collateral or the borrower’s ability to repay. Loss contingencies arising from off-balance sheet financial instruments are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. The Company does not believe such matters exist that will have a material effect on the condensed consolidated financial statements. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS | Strategic acquisitions allowed the Company to expand into desirable geographic locations, complement the existing vertical markets, increase revenue and create new service offerings. NavigationArts — On July 10, 2015, the Company acquired all of the outstanding equity of NavigationArts, Inc. and its subsidiary, NavigationArts, LLC (collectively “NavigationArts”). The U.S.-based NavigationArts provides digital consulting, architecture and content solutions and is regarded as a leading user-experience agency. The acquisition of NavigationArts added approximately 90 design consultants to the Company’s headcount. In connection with the NavigationArts acquisition the Company paid $28,747 in cash consideration, of which $2,670 was placed in escrow for a period of 18 months as security for the indemnification obligations of the sellers under the terms of the stock purchase agreement. In the first quarter of 2016, the Company decided to make a 338(h)(10) election to treat the NavigationArts acquisition as an asset purchase for tax purposes. As a result, during the second quarter of 2016 the Company paid an additional $1,797 to the sellers of NavigationArts, as provided for in the stock purchase agreement. AGS — On November 16, 2015, the Company acquired all of the outstanding equity of Alliance Consulting Global Holdings, Inc., including its wholly-owned direct and indirect subsidiaries Alliance Global Services, Inc., and Alliance Global Services, LLC, companies organized under the laws of USA, and Alliance Global Services IT India, a company organized under the laws of India (collectively, “AGS”). AGS provides software product development services and test automation solutions and has multiple locations in the United States and India. The acquisition of AGS added 1,151 IT professionals to the Company’s headcount in the United States and India. In connection with the AGS acquisition, the Company paid $51,717 as cash consideration, of which $5,000 was placed in escrow for a period of 15 months as security for the indemnification obligations of the sellers under the terms of the stock purchase agreement. The following is a summary of the estimated fair values of the net assets acquired at the date of each respective acquisition as originally reported during the year 2015 and at September 30, 2016 : NavigationArts AGS Total As Originally Reported Final as of September 30, 2016 As Originally Reported As of As Originally Reported As of Cash and cash equivalents $ 1,317 $ 1,317 $ 1,727 $ 1,727 $ 3,044 $ 3,044 Accounts receivable and other current assets 3,920 3,920 10,600 10,539 14,520 14,459 Property and equipment and other long-term assets 230 230 1,665 1,665 1,895 1,895 Deferred tax assets — — 4,996 4,996 4,996 4,996 Acquired intangible assets 1,500 2,800 10,000 22,700 11,500 25,500 Goodwill 23,822 23,794 33,815 25,078 57,637 48,872 Total assets acquired 30,789 32,061 62,803 66,705 93,592 98,766 Accounts payable and accrued expenses 871 871 3,087 2,676 3,958 3,547 Bank loans and other long-term liabilities — — — 295 — 295 Deferred revenue 50 50 1,049 1,049 1,099 1,099 Due to employees 596 596 3,010 2,342 3,606 2,938 Deferred tax liabilities 525 — 3,800 8,626 4,325 8,626 Total liabilities assumed 2,042 1,517 10,946 14,988 12,988 16,505 Net assets acquired $ 28,747 $ 30,544 $ 51,857 $ 51,717 $ 80,604 $ 82,261 As of September 30, 2016 , the Company adjusted the preliminary purchase price allocations related to both NavigationArts and AGS. For NavigationArts, the adjustments reflect final balances related to the acquisition. Finalization of the purchase price allocation included adjustments to intangible assets to reflect the results of a final valuation report as well as certain adjustments made to goodwill and deferred tax liabilities as a result of the 338(h)(10) election to treat the NavigationArts acquisition as an asset purchase for tax purposes, increasing net assets acquired by $1,797 . For AGS, recorded purchase price allocation amounts remain provisional and are based on the information that was available as of the acquisition date, updated as applicable for any changes identified through September 30, 2016 , including adjustments based on a preliminary valuation analysis. As of September 30, 2016 , the Company made adjustments to goodwill, intangible assets, deferred taxes and working capital, and reclassified certain liabilities out of accrued expenses into a separate category, resulting in a decrease of $140 to the net assets acquired. The fair values reflected for AGS are subject to change and such changes could be significant. The Company continues to gather and assess additional information necessary to finalize the estimated fair values of the net assets acquired. The following table presents the estimated fair values and useful lives of intangible assets acquired from NavigationArts and AGS: NavigationArts AGS Weighted Average Useful Life (in years) Amount Weighted Average Useful Life (in years) Amount Customer relationships 10 $ 2,800 10 $ 22,700 Total $ 2,800 $ 22,700 As of September 30, 2016 , NavigationArts and AGS have been significantly integrated into the Company and as such, it is not possible to precisely report their individual post-acquisition results of operations. Pro forma results of operations of these acquisitions for the period in which they occurred have not been presented because the effects of the acquisitions are not material to the Company’s consolidated results of operations, individually or in the aggregate. |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL Goodwill by reportable segment was as follows: North America Europe Total Balance as of January 1, 2016 $ 81,464 $ 34,466 $ 115,930 NavigationArts purchase accounting adjustment (Note 2) 2,030 — 2,030 AGS purchase accounting adjustment (Note 2) (8,737 ) — (8,737 ) Other acquisitions 2,404 177 2,581 Other acquisitions purchase accounting adjustment 204 87 291 Effect of net foreign currency exchange rate changes 111 (484 ) (373 ) Balance as of September 30, 2016 $ 77,476 $ 34,246 $ 111,722 There were no accumulated impairments losses in the North America or Europe operating segments as of September 30, 2016 or December 31, 2015 . |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS As required by the guidance for fair value measurements, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels. The following tables show the fair values of the Company’s financial assets and liabilities measured at fair value as of September 30, 2016 and December 31, 2015 : As of September 30, 2016 Balance Level 1 Level 2 Level 3 Cash and cash equivalents $ 330,627 $ 330,627 $ — $ — Time deposits and restricted cash 236 — 236 — Employee loans 5,981 — — 5,981 Total assets measured at fair value $ 336,844 $ 330,627 $ 236 $ 5,981 Contingent consideration $ 800 $ — $ — $ 800 Performance-based equity awards 2,359 — — 2,359 Cash-settled restricted stock units 1,676 1,676 — — Total liabilities measured at fair value $ 4,835 $ 1,676 $ — $ 3,159 As of December 31, 2015 Balance Level 1 Level 2 Level 3 Cash and cash equivalents $ 199,449 $ 199,449 $ — $ — Time deposits and restricted cash 30,419 — 30,419 — Employee loans 6,338 — — 6,338 Total assets measured at fair value $ 236,206 $ 199,449 $ 30,419 $ 6,338 Performance-based equity awards $ 5,364 $ — $ — $ 5,364 Total liabilities measured at fair value $ 5,364 $ — $ — $ 5,364 As of September 30, 2016 , the only financial liabilities related to acquisitions of businesses included performance-based equity awards and contingent consideration and as of December 31, 2015 , the only financial liabilities related to acquisitions of businesses included performance-based equity awards. A reconciliation of the beginning and ending balances of acquisition-related contractual contingent liabilities using significant unobservable inputs (Level 3) for the nine months ended September 30, 2016 , is as follows: Amount Contractual contingent liabilities at January 1, 2016 $ 5,364 Acquisition date fair value of contractual contingent liabilities - Other acquisitions 800 Liability-classified stock-based awards 3,861 Changes in fair value of contractual contingent liabilities included in earnings 1,089 Settlements of contractual contingent liabilities — stock (7,955 ) Contractual contingent liabilities at September 30, 2016 $ 3,159 There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during the three and nine months ended September 30, 2016 and 2015 . Changes in the values of these financial liabilities, if any, are typically included in selling, general and administrative expenses on the Company's unaudited condensed consolidated statements of income and comprehensive income. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT On September 12, 2014, the Company entered into a credit facility (the “2014 Credit Facility”) with PNC Bank, National Association; Santander Bank, N.A; and Silicon Valley Bank (collectively the “Lenders”) to replace its former revolving loan agreement. The 2014 Credit Facility provides for a borrowing capacity of $100,000 , with potential to increase the credit facility up to $200,000 if certain conditions are met. The 2014 Credit Facility matures on September 12, 2019 . Borrowings under the 2014 Credit Facility may be denominated in U.S. dollars or, up to a maximum of $50,000 in British pounds sterling, Canadian dollars, euros or Swiss francs (or other currencies as may be approved by the Lenders). Borrowings under the 2014 Credit Facility bear interest at either a base rate or Euro-rate plus a margin based on the Company’s leverage ratio. Base rate is equal to the highest of (a) the Federal Funds Open Rate, plus 0.5% , (b) the Prime Rate, and (c) the Daily LIBOR Rate, plus 1.0% . The 2014 Credit Facility is collateralized with: (a) all tangible and intangible assets of the Company, and its U.S.-based subsidiaries including all accounts, general intangibles, intellectual property rights and equipment; and (b) all of the outstanding shares of capital stock and other equity interests in U.S.-based subsidiaries of the Company, and 65.0% of the outstanding shares of capital stock and other equity interests in certain of the Company's foreign subsidiaries. The 2014 Credit Facility includes customary business and financial covenants and restricts the Company's ability to make or pay dividends (other than certain intercompany dividends) unless no potential or actual event of default has occurred or would be triggered. As of September 30, 2016 , the Company was in compliance with all covenants contained in the 2014 Credit Facility. As of September 30, 2016 , the outstanding debt of the Company under the 2014 Credit Facility was $33,076 , including accrued interest, and is subject to a LIBOR-based interest rate, which resets regularly at issuance, based on lending terms. In addition, the Company has a $942 unused irrevocable standby letter of credit associated with its insurance program that was issued under the 2014 Credit Facility. As of September 30, 2016 , the borrowing capacity of the Company under the 2014 Credit Facility was reduced to $66,058 . |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s worldwide effective tax rate for the three months ended September 30, 2016 and 2015 was 21.3% and 20.2% , respectively, and 21.1% and 20.4% during the nine months ended September 30, 2016 and 2015 , respectively. The slight change in the worldwide effective tax rate for three and nine months ended September 30, 2016 was primarily due to changes in the overall geographic mix of our estimated taxable income for the current year. Our Belarus subsidiary is eligible for certain income tax holiday benefits granted by the local government for its export activities conducted within the High Tech Park. Income tax holidays are effective for 15 years starting from 2006. Other subsidiaries of the Company are primarily taxed at the jurisdictions’ statutory rate some of which are lower than U.S. federal statutory rates. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The following costs related to the Company’s stock compensation plans were included in the condensed consolidated statements of income and comprehensive income: Three Months Ended Nine Months Ended 2016 2015 2016 2015 Cost of revenues $ 4,518 $ 3,622 $ 12,600 $ 9,871 Selling, general and administrative expenses - Acquisition related 3,890 4,542 9,870 13,985 Selling, general and administrative expenses - All other 5,418 3,799 15,050 9,494 Total $ 13,826 $ 11,963 $ 37,520 $ 33,350 Equity Plans 2012 Non-Employee Directors Compensation Plan — On January 11, 2012, the Company approved the 2012 Non-Employee Directors Compensation Plan (“2012 Directors Plan”) to be used to issue equity awards to its non-employee directors. The Company authorized 600,000 shares of common stock to be reserved for issuance under the plan. The 2012 Directors Plan will expire after 10 years and is administered by the Company’s Board of Directors. As of September 30, 2016 , 547,560 shares remained available for issuance under the 2012 Directors Plan. 2015 Long-Term Incentive Plan — On June 11, 2015, the Company's stockholders approved the 2015 Long Term Incentive Plan (“2015 Plan”) to be used to issue equity awards to company personnel. As of September 30, 2016 , 5,963,453 shares remained available for issuance under the 2015 Plan. All of the stock option awards issued pursuant to the 2015 Plan expire 10 years from the date of grant. 2012 Long-Term Incentive Plan — On January 11, 2012, the Company approved the 2012 Long-Term Incentive Plan (“2012 Plan”) to be used to issue equity grants to company personnel. In June 2015, the 2012 Plan was discontinued; however, outstanding awards remain subject to the terms of the 2012 Plan and any shares that are subject to an award that was previously granted under the 2012 Plan and that expire or terminate for any reason prior to exercise will become available for issuance under the 2015 Plan. All of the stock option awards issued pursuant to the 2012 Plan expire 10 years from the date of grant. 2006 Stock Option Plan — Effective May 31, 2006, the Board of Directors of the Company adopted the 2006 Stock Option Plan (the “2006 Plan”) to grant stock options to directors, employees, and certain independent contractors. In January 2012, the 2006 Plan was discontinued; however, outstanding awards remain subject to the terms of the 2006 Plan and any shares that are subject to an option award that was previously granted under the 2006 Plan and that expire or terminate for any reason prior to exercise will become available for issuance under the 2015 Plan. All of the awards issued pursuant to the 2006 Plan expire 10 years from the date of grant. Stock Options Stock option activity under the Company’s plans is set forth below: Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value Options outstanding at January 1, 2016 7,450,914 $ 34.07 $ 331,938 Options granted 296,692 70.56 (371 ) Options exercised (807,677 ) 19.93 (39,883 ) Options forfeited/cancelled (186,234 ) 47.04 (4,147 ) Options outstanding at September 30, 2016 6,753,695 $ 37.01 $ 218,144 Options vested and exercisable at September 30, 2016 3,428,390 $ 25.74 $ 149,375 Options expected to vest 3,149,286 $ 48.25 $ 66,324 As of September 30, 2016 , total remaining unrecognized compensation expense related to unvested stock options, net of forfeitures was approximately $50,882 . The expense is expected to be recognized over a weighted-average period of 1.7 years . As of September 30, 2016 , the weighted average remaining contractual term was 6.2 years for fully vested and exercisable outstanding options and 8.0 years for outstanding options expected to vest. As of September 30, 2016 , a total of 15,663 shares underlying options exercised through September 30, 2016 , were in transfer with the Company’s transfer agent. There were no material changes with respect to the assumptions used in the Black-Scholes option valuation model during the nine months ended September 30, 2016 , as compared with the assumptions disclosed in Note 13 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 . Restricted Stock and Restricted Stock Units The Company grants awards of restricted stock to non-employee directors under the Company’s 2012 Directors Plan and restricted stock units (“RSUs”) to Company personnel under the Company’s 2015 Plan (and prior to its approval, under the 2012 Plan). In addition, the Company has issued in the past, and may issue in the future its equity securities to compensate employees of acquired businesses for future services. Equity-based awards granted in connection with acquisitions of businesses are generally issued in the form of service-based awards (dependent on continuing employment only) and performance-based awards, which are granted and vest only if certain specified performance conditions are met. The awards issued in connection with acquisitions of businesses are subject to the terms and conditions contained in the applicable award agreement and acquisition documents with typical vesting period of three years , with 33.3% of the awards granted vesting in equal installments on the first, second and third anniversaries of the grant. Service-Based Awards The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the nine months ended September 30, 2016 . Equity-Classified Restricted Stock Equity-Classified Equity-Settled Restricted Stock Units Liability-Classified Cash-Settled Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Unvested service-based awards outstanding at January 1, 2016 306,839 $ 41.14 149,272 $ 57.55 — $ — Awards granted 6,510 73.00 403,580 70.46 207,586 70.53 Awards vested (128,180 ) 41.52 (39,612 ) 55.02 — — Awards forfeited/cancelled (2,035 ) 44.55 (20,753 ) 70.98 (2,287 ) 70.52 Unvested service-based awards outstanding at September 30, 2016 183,134 $ 41.97 492,487 $ 67.77 205,299 $ 70.53 As of September 30, 2016 , the aggregate unrecognized compensation expense for all outstanding service-based restricted stock was $5,184 . This expense is expected to be recognized over the next 1.1 years using the weighted average method. As of September 30, 2016 , the aggregate unrecognized compensation expense for all outstanding service-based equity-classified RSUs was $27,841 . This expense is expected to be recognized over the next 2.2 years using the weighted average method. As of September 30, 2016 , the aggregate unrecognized compensation expense for all outstanding service-based liability-classified RSUs was $11,205 . This expense is expected to be recognized over the next 2.3 years using the weighted average method. Performance -Based Awards Summarized activity related to the Company’s performance-based awards for the nine months ended September 30, 2016 , was as follows: Equity-Classified Restricted Stock Liability-Classified Restricted Stock Equity-Classified Equity-Settled Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Unvested performance-based awards outstanding at January 1, 2016 22,090 $ 37.52 211,206 $ 39.65 14,000 $ 70.22 Awards granted — — — — — — Awards vested (6,784 ) 36.57 (105,604 ) 40.44 (4,666 ) 70.22 Awards forfeited/cancelled (6,467 ) 36.85 — — (4,667 ) 70.22 Unvested performance-based awards outstanding at September 30, 2016 8,839 $ 38.74 105,602 $ 38.86 4,667 $ 70.22 As of September 30, 2016 , the aggregate unrecognized compensation expense for all outstanding performance-based equity-classified restricted stock was $214 . This expense is expected to be recognized over the next 1.1 years using the weighted average method. As of September 30, 2016 , the aggregate unrecognized compensation expense for all outstanding performance-based liability-classified restricted stock was $4,960 . This expense is expected to be recognized over the next 1.0 year using the weighted average method. As of September 30, 2016 , the aggregate unrecognized compensation expense for all outstanding performance-based equity-classified RSUs was $553 . This expense is expected to be recognized over the next 1.4 years using the weighted average method. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, unvested restricted stock and unvested equity-settled RSUs. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share of common stock as follows: Three Months Ended Nine Months Ended 2016 2015 2016 2015 Numerator for basic and diluted earnings per share: Net income $ 26,174 $ 22,873 $ 74,503 $ 56,818 Numerator for basic and diluted earnings per share $ 26,174 $ 22,873 $ 74,503 $ 56,818 Denominator for basic and diluted earnings per share: Weighted average basic common shares outstanding 51,131 49,043 50,172 48,506 Effect of dilutive securities: Stock options, RSUs and restricted stock awards 2,733 3,301 2,987 3,249 Denominator for diluted earnings per share 53,864 52,344 53,159 51,755 Net income per share: Basic $ 0.51 $ 0.47 $ 1.48 $ 1.17 Diluted $ 0.49 $ 0.44 $ 1.40 $ 1.10 During the three and nine months ended September 30, 2016 , a total of 2,357 and 2,324 shares underlying equity-based awards, respectively, were outstanding but were not included in the computation of diluted earnings per share because the effect was anti-dilutive. During the three and nine months ended September 30, 2015 , a total of 2,143 and 1,456 shares underlying equity-based awards, respectively, were outstanding but were not included in the computation of diluted earnings per share because the effect was anti-dilutive. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Indemnification Obligations — In the normal course of business, the Company is a party to a variety of agreements under which it may be obligated to indemnify the other party for certain matters. These obligations typically arise in contracts where the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations or covenants for certain matters such as title to assets and intellectual property rights associated with certain arrangements. The duration of these indemnifications varies, and in certain cases, is indefinite. The Company is unable to reasonably estimate the maximum potential amount of future payments under these or similar agreements due to the unique facts and circumstances of each agreement and the fact that certain indemnifications provide for no limitation to the maximum potential future payments under the indemnification. Management is not aware of any such matters that would have a material effect on the condensed consolidated financial statements of the Company. Litigation — From time to time, the Company is involved in litigation, claims or other contingencies. Management is not aware of any such matters that would have a material effect on the condensed consolidated financial statements of the Company. |
SEGMENTS INFORMATION
SEGMENTS INFORMATION | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company determines its reporting 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 2014 and 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 does not represent a change in the Company's existing segments but rather a movement in responsibility for several clients that represent 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 are not allocated to specific segments, as management does not believe these expenses are either directly attributable to any specific segment or controllable at the segment level. 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, Russia and Other reportable segments for the three and nine months ended September 30, 2016 and 2015 , were as follows: Three Months Ended Nine Months Ended 2016 2015 2016 2015 Segment revenues: North America $ 161,655 $ 121,746 $ 466,255 $ 330,228 Europe 126,265 103,514 349,834 292,826 Russia 10,434 9,707 31,056 27,432 Other — 1,207 — 3,951 Total segment revenues $ 298,354 $ 236,174 $ 847,145 $ 654,437 Segment operating profit/(loss): North America $ 34,699 $ 28,906 $ 103,693 $ 78,720 Europe 19,548 17,021 49,793 49,031 Russia 1,208 1,626 5,244 3,095 Other — 168 — (12 ) Total segment operating profit $ 55,455 $ 47,721 $ 158,730 $ 130,834 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 and nine months ended September 30, 2016 , revenues from one customer, UBS AG , were $35,142 and $107,381 , respectively, and accounted for more than 10% of total revenues. During the three and nine months ended September 30, 2015 , revenues from one customer, UBS AG , were $32,960 and $95,826 , respectively, and accounted for more than 10% of total revenues. Revenues from this customer included reimbursable expenses and were included in the Company’s Europe segment in the periods indicated. Trade accounts receivable and unbilled revenues are generally dispersed across our clients in proportion to their revenues. As of September 30, 2016 , billed and unbilled trade receivables from one customer, UBS AG, individually exceeded 10% and accounted for 10.3% and 10.7% of our total billed and unbilled trade receivables, respectively. 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 Nine Months Ended 2016 2015 2016 2015 Total segment revenues $ 298,354 $ 236,174 $ 847,145 $ 654,437 Less: Other income (61 ) (125 ) (538 ) (562 ) Revenues $ 298,293 $ 236,049 $ 846,607 $ 653,875 Total segment operating profit: $ 55,455 $ 47,721 $ 158,730 $ 130,834 Unallocated amounts: Other income (61 ) (125 ) (538 ) (562 ) Stock-based compensation expense (13,826 ) (11,963 ) (37,520 ) (33,350 ) Non-corporate taxes (1,588 ) (1,120 ) (4,105 ) (2,858 ) Professional fees (1,470 ) (1,572 ) (5,656 ) (5,423 ) Depreciation and amortization (2,027 ) (1,312 ) (6,294 ) (3,919 ) Bank charges (370 ) (340 ) (1,097 ) (1,021 ) One-time charges (7 ) — (314 ) — Other corporate expenses (2,204 ) (3,513 ) (6,893 ) (9,499 ) Income from operations 33,902 27,776 96,313 74,202 Interest and other income, net 1,067 865 3,416 3,322 Foreign exchange (loss)/gain (1,728 ) 32 (5,313 ) (6,187 ) Income before provision for income taxes $ 33,241 $ 28,673 $ 94,416 $ 71,337 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 As of Belarus $ 44,942 $ 44,879 Ukraine 5,735 4,487 Russia 4,851 2,084 Hungary 3,945 2,485 United States 2,685 1,969 Poland 2,135 1,088 China 1,715 514 India 1,594 1,099 Other 2,682 1,894 Total $ 70,284 $ 60,499 Information about the Company’s revenues by client location is as follows: Three Months Ended Nine Months Ended 2016 2015 2016 2015 United States $ 153,818 $ 110,191 $ 435,258 $ 299,606 United Kingdom 43,535 41,324 131,541 121,312 Switzerland 31,550 28,370 94,771 81,654 Canada 14,526 14,695 45,400 40,394 Germany 12,325 10,378 30,694 26,216 Russia 9,833 9,469 29,269 26,526 Sweden 6,256 3,020 16,204 7,479 Hong Kong 4,839 5,758 15,684 17,030 Netherlands 4,302 2,630 10,014 6,984 Belgium 2,676 2,154 7,329 5,307 China 2,050 276 2,757 411 Spain 1,821 334 2,635 513 Ireland 1,315 1,554 3,795 4,374 Italy 1,103 602 2,732 1,695 Other locations 5,185 2,417 9,793 7,398 Reimbursable expenses and other revenues 3,159 2,877 8,731 6,976 Revenues $ 298,293 $ 236,049 $ 846,607 $ 653,875 |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The amendment in this update allows recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when the transfer occurs, which was prohibited before and required recognition only when the asset was sold to an outside party. This amendment should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The amendment in this update is effective on a modified retrospective basis for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the impact this new standard will have on its condensed consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The amendments in this update reduces diversity in eight areas where the FASB does not provide clear or specific guidance in classifying certain cash receipts and payments. The ASU currently applies to our contingent consideration payments made after a business combination. It requires us to show payments made soon after the acquisition to settle the contingent liability under investing activities section, those payments not made soon after the acquisition under the financing activity section in the amount of a liability recognized at the acquisition date (including measurement-period adjustments) and any excess under operating activities section. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. As the Company reports its cash flow activity related to contingent consideration consistent with the new ASU, the adoption of this guidance will have no effect on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. The new standard will be effective on January 1, 2020. The adoption of this standard is not expected to have a material impact on the Company's financial position or results of operations. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which impacts virtually all aspects of an entity’s revenue recognition. The ASU introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. In July 2015, the FASB deferred the effective date until the annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. This standard will be effective beginning in the first quarter of 2018. In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which finalized proposed ASU 2015-290 of the same name and clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), which clarifies multiple aspects of identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides clarifying guidance in a few narrow areas and adds some practical expedients to the guidance. The Company is currently evaluating the impact this new standard will have on its condensed consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends Accounting Standards Codification (“ASC”) Topic 718, Compensation - Stock Compensation. The amendments in this update simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company is currently evaluating the impact this new standard will have on its condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for leases greater than 1 year, regardless of whether they were previously accounted for as capital or operating leases. This update is effective for public companies for fiscal years beginning after December 15, 2018 with early adoption permitted. The Company is currently evaluating the impact of adopting this standard as well as the timing of when it will adopt this ASU. In November 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendment requires deferred tax liabilities and assets, along with any related valuation allowance, be classified as noncurrent on the balance sheet. Effective April 1, 2016, the Company early adopted ASU No. 2015-17 on a prospective basis, which resulted in the reclassification of current deferred tax assets to non-current deferred income tax assets on its condensed consolidated balance sheet. No prior periods were retrospectively adjusted. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The amendments in this update require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The update eliminates the current requirement to retrospectively adjust provisional amounts recognized at the acquisition date. The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The implementation of this standard did not have a material effect on the Company’s condensed consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The update guides presentation of debt issuance costs and requires the related debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this ASU. The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The implementation of this standard did not have a material effect on the Company’s condensed consolidated financial statements. In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidations Analysis, which changes the guidance for evaluating whether to consolidate certain legal entities. Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities. The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The implementation of this standard did not have a material effect on the Company’s condensed consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Nature of Operations | EPAM Systems, Inc. (the “Company” or “EPAM”) is a global provider of software product engineering, technology consulting and digital expertise to clients located around the world, primarily in North America, Europe, Asia and the CIS region. The Company has expertise in various industries, including software and hi-tech, financial services, media and entertainment, travel and hospitality, retail and distribution, and life sciences and healthcare. The Company is incorporated in Delaware with headquarters in Newtown, PA. EPAM serves clients worldwide utilizing an award-winning global delivery platform and its locations in over 25 countries across North America, Europe, Asia and Australia. |
Basis of Presentation | Basis of Presentation —The accompanying unaudited condensed consolidated financial statements of EPAM have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. The condensed consolidated financial statements include the financial statements of EPAM Systems, Inc. and its subsidiaries with all intercompany balances and transactions eliminated. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2015 included in its Annual Report on Form 10-K. |
Use of Estimates | The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire year. |
Reclassification | Reclassification — During the first quarter of 2016, the Company revised the classification of certain health insurance premium and other employee fringe benefit expenses between the cost of revenues and selling, general and administrative expenses line items on the condensed consolidated statements of income and comprehensive income. The effect of this reclassification had no impact on total income from operations for the three and nine months ended September 30, 2016 . |
Revenue Recognition | Revenue Recognition — The Company recognizes revenue when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the sales price is fixed or determinable; and (4) collectability is reasonably assured. Determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenue reported. The Company derives its revenues from a variety of service offerings, which represent specific competencies of its IT professionals. Contracts for these services have different terms and conditions based on the scope, deliverables, and complexity of the engagement, which require management to make judgments and estimates in determining the appropriate revenue recognition. Fees for these contracts may be in the form of time-and-materials or fixed-price arrangements. If there is an uncertainty about the project completion or receipt of payment for the services, revenue is deferred until the uncertainty is sufficiently resolved. At the time revenue is recognized, the Company provides for any contractual deductions and reduces the revenue accordingly. The Company reports gross reimbursable “out-of-pocket” expenses incurred as both revenues and cost of revenues in the condensed consolidated statements of income and comprehensive income. The Company defers amounts billed to its clients for revenues not yet earned. Such amounts are anticipated to be recorded as revenues when services are performed in subsequent periods. Unbilled revenue is recorded when services have been provided but billed subsequent to the period end in accordance with the contract terms. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments — The Company makes assumptions about fair values of its financial assets and liabilities in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, “Fair Value Measurement”, and utilizes the following fair value hierarchy in determining inputs used for valuation: Level 1 — Quoted prices for identical assets or liabilities in active markets. Level 2 — Inputs other than quoted prices within Level 1 that are observable either directly or indirectly, including quoted prices in markets that are not active, quoted prices in active markets for similar assets or liabilities, and observable inputs other than quoted prices such as interest rates or yield curves. Level 3 — Unobservable inputs reflecting our view about the assumptions that market participants would use in pricing the asset or liability. Where the fair values of financial assets and liabilities recorded in the condensed consolidated balance sheets cannot be derived from an active market, they are determined using a variety of valuation techniques. These valuation techniques include a net present value technique, comparison to similar instruments with market observable inputs, option pricing models and other relevant valuation models. To the extent possible, observable market data is used as inputs into these models but when it is not feasible, a degree of judgment is required to establish fair values. The Company’s contingent liabilities measured at fair value on a recurring basis are comprised of performance-based awards issued to certain former owners of acquired businesses in exchange for future services and cash settled restricted stock units issued to employees. Performance-based awards issued to certain former owners of acquired businesses are valued using significant inputs that are not observable in the market, which are defined as Level 3 inputs according to fair value measurement accounting. The Company believes its estimates and assumptions are reasonable, however, there is significant judgment involved. Cash settled restricted stock units issued to employees are valued using the price of the Company's stock, a significant input that is observable in the market, which is defined as Level 1 input according to fair value measurement accounting. These changes in fair value could cause a material impact to, and volatility in the Company’s operating results. See Note 4 for disclosures related to fair value. |
Employee Loans | Employee Loans — The Company issues employee housing loans in Belarus, relocation loans to assist employees with relocation needs in connection with intra-company transfers and loans for the purchase of automobiles in India. There are no loans issued to principal officers, directors, and their affiliates. The Company intends to hold all employee loans until their maturity. Interest income is reported using the effective interest method. Where applicable, loan origination fees, net of direct origination costs, are deferred and recognized in interest income over the life of the loan. On a quarterly basis, the Company reviews the aging of its loan portfolio and evaluates the ability of employees to repay their debt on schedule. Factors considered in the review include historical payment experience, reasons for payment delays and shortfalls, if any, as well as probability of collecting scheduled principal and interest payments. Since the initiation of the loan program there have not been material past due or non-accrual employee loans or write offs related to loan losses and, therefore, the Company determined that no allowance for loan losses is required. Employee Housing Loans — In 2012, the Board of Directors of the Company approved the Employee Housing Program (the “Housing Program”), which provides employees with loans to purchase housing in Belarus. The housing is sold directly to employees by independent third parties. The Housing Program was designed as a retention mechanism for the Company’s employees in Belarus and is available to full-time qualified employees who have been with the Company for at least three years . The aggregate maximum lending limit of the program is $10,000 , with individual loans not exceeding $50 . Loans issued under the Housing Program are denominated in U.S. dollars with a 5 -year term and an interest rate of 7.5% . The housing loans are measured using the Level 3 inputs within the fair value hierarchy because they are valued using significant unobservable inputs. These housing loans are measured at fair value upon initial recognition through the market approach under ASC Topic 820, “Fair Value Measurement” and subsequently carried at amortized cost less allowance for loan losses, if any. Any difference between the carrying value and the fair value of a loan upon initial recognition is charged to expense. Employee Loans, Other — The Company issues short-term, non-interest bearing relocation loans to employees who have relocated within the company. In addition, the Company has in the past issued and may issue in the future a small number of interest bearing loans to employees for the purchase of automobiles. Such loans are issued to qualified employees with certain conditions attached. Due to the short term duration of these employee loans and high certainty of repayment, their carrying amount is a reasonable estimate of their fair value. |
Business Combinations | Business Combinations — The Company accounts for its business combinations using the acquisition accounting method, which requires it to determine the fair value of net assets acquired and the related goodwill and other intangible assets in accordance with the FASB ASC Topic 805, “Business Combinations.” The Company identifies and attributes fair values and estimated lives to the intangible assets acquired and allocates the total cost of an acquisition to the underlying net assets based on their respective estimated fair values. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and involves the use of significant estimates, including projections of future cash inflows and outflows, discount rates, asset lives and market multiples. There are different valuation models for each component, the selection of which requires considerable judgment. These determinations will affect the amount of amortization expense recognized in future periods. The Company bases its fair value estimates on assumptions it believes are reasonable, but recognizes that the assumptions are inherently uncertain. If initial accounting for the business combination has not been completed by the end of the reporting period in which the business combination occurs, provisional amounts are reported for which the accounting is incomplete, with retrospective adjustment made to such provisional amounts during the measurement period to present new information about facts and circumstances that existed as of the acquisition date. All acquisition-related costs, other than the costs to issue debt or equity securities, are accounted for as expenses in the period in which they are incurred. Changes in fair value of contingent consideration arrangements that are not measurement period adjustments are recognized in earnings. Payments to settle contingent consideration, if any, are reflected in cash flows from financing activities and the changes in fair value are reflected in cash flows from operating activities in the Company’s condensed consolidated statements of cash flows. The acquired assets typically consist of customer relationships, trade names, non-competition agreements, and workforce and as a result, a substantial portion of the purchase price is usually allocated to goodwill and other intangible assets. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets — Goodwill and intangible assets that have indefinite useful lives are accounted for in accordance with FASB ASC 350, “Intangibles - Goodwill and Other.” The Company conducts its evaluation of goodwill impairment at the reporting unit level on an annual basis during its fourth quarter, and more frequently if events or circumstances indicate that the carrying value of a reporting unit exceeds its fair value. A reporting unit is an operating segment or one level below. The Company does not have intangible assets that have indefinite useful lives. Intangible assets that have finite useful lives are amortized over their estimated useful lives on a straight-line basis. When facts and circumstances indicate potential impairment of amortizable intangible assets, the Company evaluates the recoverability of the asset’s carrying value, using estimates of future cash flows over the remaining asset life. The estimates of future cash flows attributable to intangible assets require significant judgment based on the Company’s historical and anticipated results. Any impairment loss is measured by the excess of carrying value over fair value. |
Stock-based Compensation | Stock-Based Compensation — The Company recognizes the cost of its stock-based incentive awards based on the fair value of the award at the date of grant net of estimated forfeitures. The cost is expensed evenly over the service period. The service period is the period over which the employee performs the related services, which is normally the same as the vesting period. Over time, the forfeiture assumption is adjusted to the actual forfeiture rate and such change may affect the timing of the total amount of expense recognized over the vesting period. Equity-based awards that do not require future service are expensed immediately. Equity-based awards that do not meet the criteria for equity classification are recorded as liabilities and adjusted to fair value at the end of each reporting period. |
Off-Balance Sheet Financial Instruments | Off-Balance Sheet Financial Instruments — The Company uses FASB ASC Topic 825, “Financial Instruments” to identify and disclose off-balance sheet financial instruments, which include credit instruments, such as commitments to make employee loans and related guarantees, standby letters of credit and certain guarantees issued under customer contracts. The face amount for these items represents the exposure to loss, before considering available collateral or the borrower’s ability to repay. Loss contingencies arising from off-balance sheet financial instruments are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. The Company does not believe such matters exist that will have a material effect on the condensed consolidated financial statements. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following is a summary of the estimated fair values of the net assets acquired at the date of each respective acquisition as originally reported during the year 2015 and at September 30, 2016 : NavigationArts AGS Total As Originally Reported Final as of September 30, 2016 As Originally Reported As of As Originally Reported As of Cash and cash equivalents $ 1,317 $ 1,317 $ 1,727 $ 1,727 $ 3,044 $ 3,044 Accounts receivable and other current assets 3,920 3,920 10,600 10,539 14,520 14,459 Property and equipment and other long-term assets 230 230 1,665 1,665 1,895 1,895 Deferred tax assets — — 4,996 4,996 4,996 4,996 Acquired intangible assets 1,500 2,800 10,000 22,700 11,500 25,500 Goodwill 23,822 23,794 33,815 25,078 57,637 48,872 Total assets acquired 30,789 32,061 62,803 66,705 93,592 98,766 Accounts payable and accrued expenses 871 871 3,087 2,676 3,958 3,547 Bank loans and other long-term liabilities — — — 295 — 295 Deferred revenue 50 50 1,049 1,049 1,099 1,099 Due to employees 596 596 3,010 2,342 3,606 2,938 Deferred tax liabilities 525 — 3,800 8,626 4,325 8,626 Total liabilities assumed 2,042 1,517 10,946 14,988 12,988 16,505 Net assets acquired $ 28,747 $ 30,544 $ 51,857 $ 51,717 $ 80,604 $ 82,261 |
Schedule of Finite-Lived Intangible Assets | The following table presents the estimated fair values and useful lives of intangible assets acquired from NavigationArts and AGS: NavigationArts AGS Weighted Average Useful Life (in years) Amount Weighted Average Useful Life (in years) Amount Customer relationships 10 $ 2,800 10 $ 22,700 Total $ 2,800 $ 22,700 |
GOODWILL (Tables)
GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill By Reportable Segment | Goodwill by reportable segment was as follows: North America Europe Total Balance as of January 1, 2016 $ 81,464 $ 34,466 $ 115,930 NavigationArts purchase accounting adjustment (Note 2) 2,030 — 2,030 AGS purchase accounting adjustment (Note 2) (8,737 ) — (8,737 ) Other acquisitions 2,404 177 2,581 Other acquisitions purchase accounting adjustment 204 87 291 Effect of net foreign currency exchange rate changes 111 (484 ) (373 ) Balance as of September 30, 2016 $ 77,476 $ 34,246 $ 111,722 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Measured at Fair Value | The following tables show the fair values of the Company’s financial assets and liabilities measured at fair value as of September 30, 2016 and December 31, 2015 : As of September 30, 2016 Balance Level 1 Level 2 Level 3 Cash and cash equivalents $ 330,627 $ 330,627 $ — $ — Time deposits and restricted cash 236 — 236 — Employee loans 5,981 — — 5,981 Total assets measured at fair value $ 336,844 $ 330,627 $ 236 $ 5,981 Contingent consideration $ 800 $ — $ — $ 800 Performance-based equity awards 2,359 — — 2,359 Cash-settled restricted stock units 1,676 1,676 — — Total liabilities measured at fair value $ 4,835 $ 1,676 $ — $ 3,159 As of December 31, 2015 Balance Level 1 Level 2 Level 3 Cash and cash equivalents $ 199,449 $ 199,449 $ — $ — Time deposits and restricted cash 30,419 — 30,419 — Employee loans 6,338 — — 6,338 Total assets measured at fair value $ 236,206 $ 199,449 $ 30,419 $ 6,338 Performance-based equity awards $ 5,364 $ — $ — $ 5,364 Total liabilities measured at fair value $ 5,364 $ — $ — $ 5,364 |
Reconciliation of Liabilities Measured on Recurring Basis, Unobservable Input | A reconciliation of the beginning and ending balances of acquisition-related contractual contingent liabilities using significant unobservable inputs (Level 3) for the nine months ended September 30, 2016 , is as follows: Amount Contractual contingent liabilities at January 1, 2016 $ 5,364 Acquisition date fair value of contractual contingent liabilities - Other acquisitions 800 Liability-classified stock-based awards 3,861 Changes in fair value of contractual contingent liabilities included in earnings 1,089 Settlements of contractual contingent liabilities — stock (7,955 ) Contractual contingent liabilities at September 30, 2016 $ 3,159 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Costs Related to Stock Compensation Plans | The following costs related to the Company’s stock compensation plans were included in the condensed consolidated statements of income and comprehensive income: Three Months Ended Nine Months Ended 2016 2015 2016 2015 Cost of revenues $ 4,518 $ 3,622 $ 12,600 $ 9,871 Selling, general and administrative expenses - Acquisition related 3,890 4,542 9,870 13,985 Selling, general and administrative expenses - All other 5,418 3,799 15,050 9,494 Total $ 13,826 $ 11,963 $ 37,520 $ 33,350 |
Stock Option Activity | Stock option activity under the Company’s plans is set forth below: Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value Options outstanding at January 1, 2016 7,450,914 $ 34.07 $ 331,938 Options granted 296,692 70.56 (371 ) Options exercised (807,677 ) 19.93 (39,883 ) Options forfeited/cancelled (186,234 ) 47.04 (4,147 ) Options outstanding at September 30, 2016 6,753,695 $ 37.01 $ 218,144 Options vested and exercisable at September 30, 2016 3,428,390 $ 25.74 $ 149,375 Options expected to vest 3,149,286 $ 48.25 $ 66,324 |
Service-based Awards Activity | The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the nine months ended September 30, 2016 . Equity-Classified Restricted Stock Equity-Classified Equity-Settled Restricted Stock Units Liability-Classified Cash-Settled Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Unvested service-based awards outstanding at January 1, 2016 306,839 $ 41.14 149,272 $ 57.55 — $ — Awards granted 6,510 73.00 403,580 70.46 207,586 70.53 Awards vested (128,180 ) 41.52 (39,612 ) 55.02 — — Awards forfeited/cancelled (2,035 ) 44.55 (20,753 ) 70.98 (2,287 ) 70.52 Unvested service-based awards outstanding at September 30, 2016 183,134 $ 41.97 492,487 $ 67.77 205,299 $ 70.53 |
Performance-based Awards Activity | Summarized activity related to the Company’s performance-based awards for the nine months ended September 30, 2016 , was as follows: Equity-Classified Restricted Stock Liability-Classified Restricted Stock Equity-Classified Equity-Settled Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Unvested performance-based awards outstanding at January 1, 2016 22,090 $ 37.52 211,206 $ 39.65 14,000 $ 70.22 Awards granted — — — — — — Awards vested (6,784 ) 36.57 (105,604 ) 40.44 (4,666 ) 70.22 Awards forfeited/cancelled (6,467 ) 36.85 — — (4,667 ) 70.22 Unvested performance-based awards outstanding at September 30, 2016 8,839 $ 38.74 105,602 $ 38.86 4,667 $ 70.22 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share of common stock as follows: Three Months Ended Nine Months Ended 2016 2015 2016 2015 Numerator for basic and diluted earnings per share: Net income $ 26,174 $ 22,873 $ 74,503 $ 56,818 Numerator for basic and diluted earnings per share $ 26,174 $ 22,873 $ 74,503 $ 56,818 Denominator for basic and diluted earnings per share: Weighted average basic common shares outstanding 51,131 49,043 50,172 48,506 Effect of dilutive securities: Stock options, RSUs and restricted stock awards 2,733 3,301 2,987 3,249 Denominator for diluted earnings per share 53,864 52,344 53,159 51,755 Net income per share: Basic $ 0.51 $ 0.47 $ 1.48 $ 1.17 Diluted $ 0.49 $ 0.44 $ 1.40 $ 1.10 |
SEGMENTS INFORMATION (Tables)
SEGMENTS INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Revenues from External Customers and Segment Operating Profit Before Unallocated Expenses | Revenues from external customers and operating profit/(loss), before unallocated expenses, for the North America, Europe, Russia and Other reportable segments for the three and nine months ended September 30, 2016 and 2015 , were as follows: Three Months Ended Nine Months Ended 2016 2015 2016 2015 Segment revenues: North America $ 161,655 $ 121,746 $ 466,255 $ 330,228 Europe 126,265 103,514 349,834 292,826 Russia 10,434 9,707 31,056 27,432 Other — 1,207 — 3,951 Total segment revenues $ 298,354 $ 236,174 $ 847,145 $ 654,437 Segment operating profit/(loss): North America $ 34,699 $ 28,906 $ 103,693 $ 78,720 Europe 19,548 17,021 49,793 49,031 Russia 1,208 1,626 5,244 3,095 Other — 168 — (12 ) Total segment operating profit $ 55,455 $ 47,721 $ 158,730 $ 130,834 |
Reconciliation of Segment Revenues and Operating Profit to Consolidated Income Before Provision for Income Taxes | 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 Nine Months Ended 2016 2015 2016 2015 Total segment revenues $ 298,354 $ 236,174 $ 847,145 $ 654,437 Less: Other income (61 ) (125 ) (538 ) (562 ) Revenues $ 298,293 $ 236,049 $ 846,607 $ 653,875 Total segment operating profit: $ 55,455 $ 47,721 $ 158,730 $ 130,834 Unallocated amounts: Other income (61 ) (125 ) (538 ) (562 ) Stock-based compensation expense (13,826 ) (11,963 ) (37,520 ) (33,350 ) Non-corporate taxes (1,588 ) (1,120 ) (4,105 ) (2,858 ) Professional fees (1,470 ) (1,572 ) (5,656 ) (5,423 ) Depreciation and amortization (2,027 ) (1,312 ) (6,294 ) (3,919 ) Bank charges (370 ) (340 ) (1,097 ) (1,021 ) One-time charges (7 ) — (314 ) — Other corporate expenses (2,204 ) (3,513 ) (6,893 ) (9,499 ) Income from operations 33,902 27,776 96,313 74,202 Interest and other income, net 1,067 865 3,416 3,322 Foreign exchange (loss)/gain (1,728 ) 32 (5,313 ) (6,187 ) Income before provision for income taxes $ 33,241 $ 28,673 $ 94,416 $ 71,337 |
Geographical Information of Long-Lived Assets Based on Physical Location | Geographical information about the Company’s long-lived assets based on physical location of the assets was as follows: As of As of Belarus $ 44,942 $ 44,879 Ukraine 5,735 4,487 Russia 4,851 2,084 Hungary 3,945 2,485 United States 2,685 1,969 Poland 2,135 1,088 China 1,715 514 India 1,594 1,099 Other 2,682 1,894 Total $ 70,284 $ 60,499 |
Revenues by Client Location | Information about the Company’s revenues by client location is as follows: Three Months Ended Nine Months Ended 2016 2015 2016 2015 United States $ 153,818 $ 110,191 $ 435,258 $ 299,606 United Kingdom 43,535 41,324 131,541 121,312 Switzerland 31,550 28,370 94,771 81,654 Canada 14,526 14,695 45,400 40,394 Germany 12,325 10,378 30,694 26,216 Russia 9,833 9,469 29,269 26,526 Sweden 6,256 3,020 16,204 7,479 Hong Kong 4,839 5,758 15,684 17,030 Netherlands 4,302 2,630 10,014 6,984 Belgium 2,676 2,154 7,329 5,307 China 2,050 276 2,757 411 Spain 1,821 334 2,635 513 Ireland 1,315 1,554 3,795 4,374 Italy 1,103 602 2,732 1,695 Other locations 5,185 2,417 9,793 7,398 Reimbursable expenses and other revenues 3,159 2,877 8,731 6,976 Revenues $ 298,293 $ 236,049 $ 846,607 $ 653,875 |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reclassification (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Income from operations | |
Effect of Reclassification Adjustments [Line Items] | |
Impact of reclassification | $ 0 |
After reclassification adjustment | |
Effect of Reclassification Adjustments [Line Items] | |
Impact of reclassification | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Employee Loans (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Allowance for employee loans | $ 0 |
Non-accrual employee loans | 0 |
Material loans past due | 0 |
Loans issued to principal officers, directors, or their affiliates | $ 0 |
Loans Under Employee Housing Program | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Minimum service period (in years) | 3 years |
Loan term (in years) | 5 years |
Interest rate on loan (as a percent) | 7.50% |
Loans Under Employee Housing Program | Maximum | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Authorized loan program amount | $ 10,000 |
Individual loan original amount limit | $ 50 |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) $ in Thousands | Nov. 16, 2015USD ($) | Jul. 10, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) |
Business Acquisition [Line Items] | ||||
Cash consideration, Deferred | $ 2,260 | $ 30,274 | ||
NavigationArts | ||||
Business Acquisition [Line Items] | ||||
Cash consideration, Paid | $ 28,747 | |||
Cash Consideration Placed In Escrow | $ 2,670 | |||
Consideration Placed In Escrow, Period | 18 months | |||
Cash consideration, Deferred | $ 1,797 | |||
NavigationArts | Design Consultant | ||||
Business Acquisition [Line Items] | ||||
Number of professionals | 90 | |||
AGS | ||||
Business Acquisition [Line Items] | ||||
Cash consideration, Paid | $ 51,717 | |||
Cash Consideration Placed In Escrow | $ 5,000 | |||
Consideration Placed In Escrow, Period | 15 months | |||
AGS | IT professionals | ||||
Business Acquisition [Line Items] | ||||
Number of professionals | 1,151 |
ACQUISITIONS - Estimated Fair V
ACQUISITIONS - Estimated Fair Values (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2016 | Dec. 31, 2015 | Nov. 16, 2015 | Jul. 10, 2015 | |
Business Acquisition [Line Items] | ||||
Goodwill | $ 111,722 | $ 115,930 | ||
NavigationArts | ||||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustments [Abstract] | ||||
Adjustment to net assets acquired | 1,797 | |||
NavigationArts | As Originally Reported | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 1,317 | |||
Accounts receivable and other current assets | 3,920 | |||
Property and equipment and other long-term assets | 230 | |||
Deferred tax assets | 0 | |||
Acquired intangible assets | 1,500 | |||
Goodwill | 23,822 | |||
Total assets acquired | 30,789 | |||
Accounts payable and accrued expenses | 871 | |||
Bank loans and other long-term liabilities | 0 | |||
Deferred revenue | 50 | |||
Due to employees | 596 | |||
Deferred tax liabilities | 525 | |||
Total liabilities assumed | 2,042 | |||
Net assets acquired | $ 28,747 | |||
NavigationArts | Final | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | 1,317 | |||
Accounts receivable and other current assets | 3,920 | |||
Property and equipment and other long-term assets | 230 | |||
Deferred tax assets | 0 | |||
Acquired intangible assets | 2,800 | |||
Goodwill | 23,794 | |||
Total assets acquired | 32,061 | |||
Accounts payable and accrued expenses | 871 | |||
Bank loans and other long-term liabilities | 0 | |||
Deferred revenue | 50 | |||
Due to employees | 596 | |||
Deferred tax liabilities | 0 | |||
Total liabilities assumed | 1,517 | |||
Net assets acquired | 30,544 | |||
AGS | ||||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustments [Abstract] | ||||
Adjustment to net assets acquired | (140) | |||
AGS | As Originally Reported | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 1,727 | |||
Accounts receivable and other current assets | 10,600 | |||
Property and equipment and other long-term assets | 1,665 | |||
Deferred tax assets | 4,996 | |||
Acquired intangible assets | 10,000 | |||
Goodwill | 33,815 | |||
Total assets acquired | 62,803 | |||
Accounts payable and accrued expenses | 3,087 | |||
Bank loans and other long-term liabilities | 0 | |||
Deferred revenue | 1,049 | |||
Due to employees | 3,010 | |||
Deferred tax liabilities | 3,800 | |||
Total liabilities assumed | 10,946 | |||
Net assets acquired | $ 51,857 | |||
AGS | Current | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | 1,727 | |||
Accounts receivable and other current assets | 10,539 | |||
Property and equipment and other long-term assets | 1,665 | |||
Deferred tax assets | 4,996 | |||
Acquired intangible assets | 22,700 | |||
Goodwill | 25,078 | |||
Total assets acquired | 66,705 | |||
Accounts payable and accrued expenses | 2,676 | |||
Bank loans and other long-term liabilities | 295 | |||
Deferred revenue | 1,049 | |||
Due to employees | 2,342 | |||
Deferred tax liabilities | 8,626 | |||
Total liabilities assumed | 14,988 | |||
Net assets acquired | 51,717 | |||
Total | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | 3,044 | |||
Accounts receivable and other current assets | 14,459 | |||
Property and equipment and other long-term assets | 1,895 | |||
Deferred tax assets | 4,996 | |||
Acquired intangible assets | 25,500 | |||
Goodwill | 48,872 | |||
Total assets acquired | 98,766 | |||
Accounts payable and accrued expenses | 3,547 | |||
Bank loans and other long-term liabilities | 295 | |||
Deferred revenue | 1,099 | |||
Due to employees | 2,938 | |||
Deferred tax liabilities | 8,626 | |||
Total liabilities assumed | 16,505 | |||
Net assets acquired | 82,261 | |||
Total | As Originally Reported | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | 3,044 | |||
Accounts receivable and other current assets | 14,520 | |||
Property and equipment and other long-term assets | 1,895 | |||
Deferred tax assets | 4,996 | |||
Acquired intangible assets | 11,500 | |||
Goodwill | 57,637 | |||
Total assets acquired | 93,592 | |||
Accounts payable and accrued expenses | 3,958 | |||
Bank loans and other long-term liabilities | 0 | |||
Deferred revenue | 1,099 | |||
Due to employees | 3,606 | |||
Deferred tax liabilities | 4,325 | |||
Total liabilities assumed | 12,988 | |||
Net assets acquired | $ 80,604 |
ACQUISITIONS - Intangible Asset
ACQUISITIONS - Intangible Assets (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
NavigationArts | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Amount | $ 2,800 |
NavigationArts | Customer Relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted Average Useful Life (in years) | 10 years |
Amount | $ 2,800 |
AGS | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Amount | $ 22,700 |
AGS | Customer Relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted Average Useful Life (in years) | 10 years |
Amount | $ 22,700 |
GOODWILL - Roll Forward (Detail
GOODWILL - Roll Forward (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Goodwill [Roll Forward] | |
Balance as of January 1, 2016 | $ 115,930 |
Effect of net foreign currency exchange rate changes | (373) |
Balance as of September 30, 2016 | 111,722 |
North America | |
Goodwill [Roll Forward] | |
Balance as of January 1, 2016 | 81,464 |
Effect of net foreign currency exchange rate changes | 111 |
Balance as of September 30, 2016 | 77,476 |
Europe | |
Goodwill [Roll Forward] | |
Balance as of January 1, 2016 | 34,466 |
Effect of net foreign currency exchange rate changes | (484) |
Balance as of September 30, 2016 | 34,246 |
NavigationArts | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | 2,030 |
NavigationArts | North America | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | 2,030 |
NavigationArts | Europe | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | 0 |
AGS | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | (8,737) |
AGS | North America | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | (8,737) |
AGS | Europe | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | 0 |
Other Acquisitions | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | 291 |
Acquisition | 2,581 |
Other Acquisitions | North America | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | 204 |
Acquisition | 2,404 |
Other Acquisitions | Europe | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | 87 |
Acquisition | $ 177 |
GOODWILL - Narrative (Details)
GOODWILL - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
North America | ||
Goodwill [Line Items] | ||
Accumulated impairment loss | $ 0 | $ 0 |
Europe | ||
Goodwill [Line Items] | ||
Accumulated impairment loss | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | $ 330,627 | $ 199,449 |
Time deposits and restricted cash | 236 | 30,419 |
Employee loans | 5,981 | 6,338 |
Total assets measured at fair value | 336,844 | 236,206 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Contingent Consideration Classified As Liability, Fair Value Disclosure | 800 | |
Total liabilities measured at fair value on a recurring basis | 4,835 | 5,364 |
Restricted Stock | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Performance-based equity awards | 2,359 | 5,364 |
Cash-Settled Award | Restricted Stock Units | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Cash-settled restricted stock units | 1,676 | |
Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 330,627 | 199,449 |
Time deposits and restricted cash | 0 | 0 |
Employee loans | 0 | 0 |
Total assets measured at fair value | 330,627 | 199,449 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Contingent Consideration Classified As Liability, Fair Value Disclosure | 0 | |
Total liabilities measured at fair value on a recurring basis | 1,676 | 0 |
Level 1 | Restricted Stock | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Performance-based equity awards | 0 | 0 |
Level 1 | Cash-Settled Award | Restricted Stock Units | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Cash-settled restricted stock units | 1,676 | |
Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Time deposits and restricted cash | 236 | 30,419 |
Employee loans | 0 | 0 |
Total assets measured at fair value | 236 | 30,419 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Contingent Consideration Classified As Liability, Fair Value Disclosure | 0 | |
Total liabilities measured at fair value on a recurring basis | 0 | 0 |
Level 2 | Restricted Stock | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Performance-based equity awards | 0 | 0 |
Level 2 | Cash-Settled Award | Restricted Stock Units | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Cash-settled restricted stock units | 0 | |
Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Time deposits and restricted cash | 0 | 0 |
Employee loans | 5,981 | 6,338 |
Total assets measured at fair value | 5,981 | 6,338 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Contingent Consideration Classified As Liability, Fair Value Disclosure | 800 | |
Total liabilities measured at fair value on a recurring basis | 3,159 | 5,364 |
Level 3 | Restricted Stock | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Performance-based equity awards | 2,359 | $ 5,364 |
Level 3 | Cash-Settled Award | Restricted Stock Units | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Cash-settled restricted stock units | $ 0 |
FAIR VALUE MEASUREMENTS - Conti
FAIR VALUE MEASUREMENTS - Contingent Consideration Roll Forward (Details) - Level 3 $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Contractual contingent liabilities at January 1, 2016 | $ 5,364 |
Liability-classified stock-based awards | 3,861 |
Changes in fair value of contractual contingent liabilities included in earnings | 1,089 |
Settlements of contractual contingent liabilities — stock | (7,955) |
Contractual contingent liabilities at September 30, 2016 | 3,159 |
Other Acquisitions | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Acquisition date fair value of contractual contingent liabilities - Other acquisitions | $ 800 |
FAIR VALUE MEASUREMENTS FAIR VA
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS - Transfer in out of Level 3 (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | ||||
Transfers Into Level 3 | $ 0 | $ 0 | $ 0 | $ 0 |
Transfers out of Level 3 | $ 0 | $ 0 | $ 0 | $ 0 |
DEBT (Details)
DEBT (Details) - Credit Facility 2014 - USD ($) $ in Thousands | Sep. 12, 2014 | Sep. 30, 2016 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Maturity date | Sep. 12, 2019 | |
Percentage of foreign subsidiaries outstanding shares of capital stock serves as collateral | 65.00% | |
Line of credit, outstanding | $ 33,076 | |
Revolving Credit Facility | Federal Funds Open Rate | ||
Debt Instrument [Line Items] | ||
Variable interest rate spread | 0.50% | |
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Variable interest rate spread | 1.00% | |
Revolving Credit Facility | U.S. dollars | ||
Debt Instrument [Line Items] | ||
Line of credit, collateralized borrowing capacity | $ 100,000 | |
Line of credit, maximum borrowing capacity | 200,000 | |
Line of credit, remaining borrowing capacity | 66,058 | |
Revolving Credit Facility | Other currencies, excluding U.S. dollars | ||
Debt Instrument [Line Items] | ||
Line of credit, maximum borrowing capacity | $ 50,000 | |
Standby Letters of Credit | ||
Debt Instrument [Line Items] | ||
Unused letter of credit outstanding amount | $ 942 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 21.30% | 20.20% | 21.10% | 20.40% |
Income tax holiday period | 15 years |
STOCK-BASED COMPENSATION - Cost
STOCK-BASED COMPENSATION - Costs Related To Stock Compensation Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 13,826 | $ 11,963 | $ 37,520 | $ 33,350 |
Cost of revenues | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 4,518 | 3,622 | 12,600 | 9,871 |
Selling, general and administrative expenses | Business acquisitions | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 3,890 | 4,542 | 9,870 | 13,985 |
Selling, general and administrative expenses | Organic growth | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 5,418 | $ 3,799 | $ 15,050 | $ 9,494 |
STOCK-BASED COMPENSATION - Equi
STOCK-BASED COMPENSATION - Equity Plans Additional Information (Details) - shares | Jun. 11, 2015 | Jan. 11, 2012 | May 31, 2006 | Sep. 30, 2016 |
2012 Directors Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized for issuance (in shares) | 600,000 | |||
Expiration period of awards issued (in years) | 10 years | |||
Number of shares available for issuance (in shares) | 547,560 | |||
2015 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period of awards issued (in years) | 10 years | |||
Number of shares available for issuance (in shares) | 5,963,453 | |||
2012 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period of awards issued (in years) | 10 years | |||
2006 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period of awards issued (in years) | 10 years |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Option Activity (Details) - Employee Stock Option $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
Number of Options | |
Options outstanding at January 1, 2016 | shares | 7,450,914 |
Options granted | shares | 296,692 |
Options exercised | shares | (807,677) |
Options forfeited/cancelled | shares | (186,234) |
Options outstanding at September 30, 2016 | shares | 6,753,695 |
Options vested and exercisable at September 30, 2016 | shares | 3,428,390 |
Options expected to vest | shares | 3,149,286 |
Weighted Average Exercise Price | |
Options outstanding at January 1, 2016 | $ / shares | $ 34.07 |
Options granted | $ / shares | 70.56 |
Options exercised | $ / shares | 19.93 |
Options forfeited/cancelled | $ / shares | 47.04 |
Options outstanding at September 30, 2016 | $ / shares | 37.01 |
Options vested and exercisable at September 30, 2016 | $ / shares | 25.74 |
Options expected to vest | $ / shares | $ 48.25 |
Aggregate Intrinsic Value | |
Options outstanding at January 1, 2016 | $ | $ 331,938 |
Options granted | $ | (371) |
Options exercised | $ | (39,883) |
Options forfeited/cancelled | $ | (4,147) |
Options outstanding at September 30, 2016 | $ | 218,144 |
Options vested and exercisable at September 30, 2016 | $ | 149,375 |
Options expected to vest | $ | $ 66,324 |
STOCK-BASED COMPENSATION - St39
STOCK-BASED COMPENSATION - Stock Option Additional Information (Details) - Employee Stock Option $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of options exercised in transfer (in shares) | shares | 15,663 |
2015 Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ | $ 50,882 |
Weighted average period for recognition of unrecognized compensation expense (in years) | 1 year 8 months 12 days |
Weighted average remaining contractual term for fully vested and exercisable options (in years) | 6 years 2 months 8 days |
Weighted average contractual term for options expected to vest (in years) | 8 years 10 days |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock and Restricted Stock units Activity (Details) | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock | |
Number of Shares | |
Unvested awards outstanding at January 1, 2016 | shares | 306,839 |
Awards granted | shares | 6,510 |
Awards vested | shares | (128,180) |
Awards forfeited/cancelled | shares | (2,035) |
Unvested awards outstanding at September 30, 2016 | shares | 183,134 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested awards outstanding at January 1, 2016 | $ / shares | $ 41.14 |
Awards granted | $ / shares | 73 |
Awards vested | $ / shares | 41.52 |
Awards forfeited/cancelled | $ / shares | 44.55 |
Unvested awards outstanding at September 30, 2016 | $ / shares | $ 41.97 |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | |
Number of Shares | |
Unvested awards outstanding at January 1, 2016 | shares | 149,272 |
Awards granted | shares | 403,580 |
Awards vested | shares | (39,612) |
Awards forfeited/cancelled | shares | (20,753) |
Unvested awards outstanding at September 30, 2016 | shares | 492,487 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested awards outstanding at January 1, 2016 | $ / shares | $ 57.55 |
Awards granted | $ / shares | 70.46 |
Awards vested | $ / shares | 55.02 |
Awards forfeited/cancelled | $ / shares | 70.98 |
Unvested awards outstanding at September 30, 2016 | $ / shares | $ 67.77 |
Service Period | Liability Classified Award | Cash-Settled Award | Restricted Stock Units | |
Number of Shares | |
Unvested awards outstanding at January 1, 2016 | shares | 0 |
Awards granted | shares | 207,586 |
Awards vested | shares | 0 |
Awards forfeited/cancelled | shares | (2,287) |
Unvested awards outstanding at September 30, 2016 | shares | 205,299 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested awards outstanding at January 1, 2016 | $ / shares | $ 0 |
Awards granted | $ / shares | 70.53 |
Awards vested | $ / shares | 0 |
Awards forfeited/cancelled | $ / shares | 70.52 |
Unvested awards outstanding at September 30, 2016 | $ / shares | $ 70.53 |
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock | |
Number of Shares | |
Unvested awards outstanding at January 1, 2016 | shares | 22,090 |
Awards granted | shares | 0 |
Awards vested | shares | (6,784) |
Awards forfeited/cancelled | shares | (6,467) |
Unvested awards outstanding at September 30, 2016 | shares | 8,839 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested awards outstanding at January 1, 2016 | $ / shares | $ 37.52 |
Awards granted | $ / shares | 0 |
Awards vested | $ / shares | 36.57 |
Awards forfeited/cancelled | $ / shares | 36.85 |
Unvested awards outstanding at September 30, 2016 | $ / shares | $ 38.74 |
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | |
Number of Shares | |
Unvested awards outstanding at January 1, 2016 | shares | 14,000 |
Awards granted | shares | 0 |
Awards vested | shares | (4,666) |
Awards forfeited/cancelled | shares | (4,667) |
Unvested awards outstanding at September 30, 2016 | shares | 4,667 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested awards outstanding at January 1, 2016 | $ / shares | $ 70.22 |
Awards granted | $ / shares | 0 |
Awards vested | $ / shares | 70.22 |
Awards forfeited/cancelled | $ / shares | 70.22 |
Unvested awards outstanding at September 30, 2016 | $ / shares | $ 70.22 |
Performance Target | Liability Classified Award | Equity-Settled Award | Restricted Stock | |
Number of Shares | |
Unvested awards outstanding at January 1, 2016 | shares | 211,206 |
Awards granted | shares | 0 |
Awards vested | shares | (105,604) |
Awards forfeited/cancelled | shares | 0 |
Unvested awards outstanding at September 30, 2016 | shares | 105,602 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested awards outstanding at January 1, 2016 | $ / shares | $ 39.65 |
Awards granted | $ / shares | 0 |
Awards vested | $ / shares | 40.44 |
Awards forfeited/cancelled | $ / shares | 0 |
Unvested awards outstanding at September 30, 2016 | $ / shares | $ 38.86 |
STOCK-BASED COMPENSATION - Re41
STOCK-BASED COMPENSATION - Restricted Stock and Restricted Stock Units Additional Information (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Acquisition-related Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period (in years) | 3 years |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ 5,184 |
Weighted average period for recognition of unrecognized compensation expense (in years) | 1 year 19 days |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ 27,841 |
Weighted average period for recognition of unrecognized compensation expense (in years) | 2 years 1 month 28 days |
Service Period | Liability Classified Award | Cash-Settled Award | Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ 11,205 |
Weighted average period for recognition of unrecognized compensation expense (in years) | 2 years 3 months 8 days |
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ 214 |
Weighted average period for recognition of unrecognized compensation expense (in years) | 1 year 23 days |
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ 553 |
Weighted average period for recognition of unrecognized compensation expense (in years) | 1 year 4 months 26 days |
Performance Target | Liability Classified Award | Equity-Settled Award | Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ 4,960 |
Weighted average period for recognition of unrecognized compensation expense (in years) | 1 year |
Year One | Acquisition-related Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage | 33.30% |
Year Two | Acquisition-related Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage | 33.30% |
Year Three | Acquisition-related Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage | 33.30% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Numerator for basic and diluted earnings per share: | ||||
Net income | $ 26,174 | $ 22,873 | $ 74,503 | $ 56,818 |
Numerator for basic and diluted earnings per share | $ 26,174 | $ 22,873 | $ 74,503 | $ 56,818 |
Denominator for basic and diluted earnings per share: | ||||
Weighted average common shares outstanding (in shares) | 51,131 | 49,043 | 50,172 | 48,506 |
Effect of dilutive securities (in shares): | ||||
Stock options, RSUs and restricted stock awards (in shares) | 2,733 | 3,301 | 2,987 | 3,249 |
Denominator for diluted earnings per share (in shares) | 53,864 | 52,344 | 53,159 | 51,755 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.51 | $ 0.47 | $ 1.48 | $ 1.17 |
Diluted (in dollars per share) | $ 0.49 | $ 0.44 | $ 1.40 | $ 1.10 |
Anti-dilutive options not included in the calculation (in shares) | 2,357 | 2,143 | 2,324 | 1,456 |
SEGMENTS INFORMATION - Revenues
SEGMENTS INFORMATION - Revenues from External Customers and Segment Operating Profit Before Unallocated Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 298,293 | $ 236,049 | $ 846,607 | $ 653,875 |
Operating profit | 33,902 | 27,776 | 96,313 | 74,202 |
Russia | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 9,833 | 9,469 | 29,269 | 26,526 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 298,354 | 236,174 | 847,145 | 654,437 |
Operating profit | 55,455 | 47,721 | 158,730 | 130,834 |
Operating Segments | North America | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 161,655 | 121,746 | 466,255 | 330,228 |
Operating profit | 34,699 | 28,906 | 103,693 | 78,720 |
Operating Segments | Europe | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 126,265 | 103,514 | 349,834 | 292,826 |
Operating profit | 19,548 | 17,021 | 49,793 | 49,031 |
Operating Segments | Russia | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 10,434 | 9,707 | 31,056 | 27,432 |
Operating profit | 1,208 | 1,626 | 5,244 | 3,095 |
Operating Segments | Other | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 1,207 | 0 | 3,951 |
Operating profit | $ 0 | $ 168 | $ 0 | $ (12) |
SEGMENTS INFORMATION - Major Cu
SEGMENTS INFORMATION - Major Customers (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | |
Revenue, Major Customer [Line Items] | ||||
Revenues | $ 298,293 | $ 236,049 | $ 846,607 | $ 653,875 |
Operating Segments | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues | 298,354 | 236,174 | 847,145 | 654,437 |
Operating Segments | Europe | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues | $ 126,265 | $ 103,514 | $ 349,834 | $ 292,826 |
Sales Revenue, Net | Customer Concentration Risk | Operating Segments | Europe | UBS AG | ||||
Revenue, Major Customer [Line Items] | ||||
Number of customers | 1 | 1 | 1 | 1 |
Revenues | $ 35,142 | $ 32,960 | $ 107,381 | $ 95,826 |
Accounts Receivable | Customer Concentration Risk | Unbilled Revenues | ||||
Revenue, Major Customer [Line Items] | ||||
Number of customers | 1 | |||
Accounts Receivable | Customer Concentration Risk | UBS AG | Billed Revenues | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration percentage | 10.30% | |||
Accounts Receivable | Customer Concentration Risk | UBS AG | Unbilled Revenues | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration percentage | 10.70% |
SEGMENTS INFORMATION - Reconcil
SEGMENTS INFORMATION - Reconciliation of Segment Revenues and Operating Profit to Consolidated Income From Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | $ 298,293 | $ 236,049 | $ 846,607 | $ 653,875 |
Segment Reporting Information [Line Items] | ||||
Income from operations | 33,902 | 27,776 | 96,313 | 74,202 |
Stock-based compensation expense | (37,520) | (33,350) | ||
Depreciation and amortization | (5,925) | (4,393) | (17,150) | (12,496) |
Interest and other income, net | 1,067 | 865 | 3,416 | 3,322 |
Foreign exchange (loss)/gain | (1,728) | 32 | (5,313) | (6,187) |
Income before provision for income taxes | 33,241 | 28,673 | 94,416 | 71,337 |
Operating Segments | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 298,354 | 236,174 | 847,145 | 654,437 |
Segment Reporting Information [Line Items] | ||||
Income from operations | 55,455 | 47,721 | 158,730 | 130,834 |
Unallocated Amounts | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | (61) | (125) | (538) | (562) |
Segment Reporting Information [Line Items] | ||||
Other income | (61) | (125) | (538) | (562) |
Stock-based compensation expense | (13,826) | (11,963) | (37,520) | (33,350) |
Non-corporate taxes | (1,588) | (1,120) | (4,105) | (2,858) |
Professional fees | (1,470) | (1,572) | (5,656) | (5,423) |
Depreciation and amortization | (2,027) | (1,312) | (6,294) | (3,919) |
Bank charges | (370) | (340) | (1,097) | (1,021) |
One time charges | (7) | 0 | (314) | 0 |
Other corporate expenses | $ (2,204) | $ (3,513) | $ (6,893) | $ (9,499) |
SEGMENTS INFORMATION - Geograph
SEGMENTS INFORMATION - Geographical Information of Long-Lived Assets Based on Physical Location (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | $ 70,284 | $ 60,499 |
Belarus | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 44,942 | 44,879 |
Ukraine | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 5,735 | 4,487 |
Russia | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 4,851 | 2,084 |
Hungary | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 3,945 | 2,485 |
United States | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 2,685 | 1,969 |
Poland | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 2,135 | 1,088 |
China | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 1,715 | 514 |
India | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 1,594 | 1,099 |
Other | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | $ 2,682 | $ 1,894 |
SEGMENTS INFORMATION - Revenu47
SEGMENTS INFORMATION - Revenues by Client Location (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | $ 298,293 | $ 236,049 | $ 846,607 | $ 653,875 |
Reimbursable expenses and other revenues | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 3,159 | 2,877 | 8,731 | 6,976 |
United States | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 153,818 | 110,191 | 435,258 | 299,606 |
United Kingdom | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 43,535 | 41,324 | 131,541 | 121,312 |
Switzerland | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 31,550 | 28,370 | 94,771 | 81,654 |
Canada | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 14,526 | 14,695 | 45,400 | 40,394 |
Germany | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 12,325 | 10,378 | 30,694 | 26,216 |
Russia | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 9,833 | 9,469 | 29,269 | 26,526 |
Sweden | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 6,256 | 3,020 | 16,204 | 7,479 |
Hong Kong | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 4,839 | 5,758 | 15,684 | 17,030 |
Netherlands | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 4,302 | 2,630 | 10,014 | 6,984 |
Belgium | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 2,676 | 2,154 | 7,329 | 5,307 |
China | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 2,050 | 276 | 2,757 | 411 |
Spain | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 1,821 | 334 | 2,635 | 513 |
Ireland | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 1,315 | 1,554 | 3,795 | 4,374 |
Italy | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 1,103 | 602 | 2,732 | 1,695 |
Other locations | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | $ 5,185 | $ 2,417 | $ 9,793 | $ 7,398 |