OPERATING SEGMENTS

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

OPERATING SEGMENTS

OPERATING SEGMENTS

The Company determines its operating 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 a case, 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 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 operating 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, such as stock-based compensation are not allocated to specific segments, as management does not believe it is practical as these expenses are not directly attributable to any specific segment and consequently are not allocated to individual segments in internal management reports used by the CODM. Such expenses are separately disclosed as “unallocated” and adjusted only against the Company’s total income from operations.

Revenues from external customers and segment operating profit, before unallocated expenses, for the North America, Europe, Russia and Other reportable segments were as follows:

	For the years ended December 31,
	2014			2013		2012
Total segment revenues:
North America	$	374,509		$	284,636	$	197,271
Europe	299,279			204,150		168,913
Russia	50,663			55,764		50,552
Other	5,552			10,493		16,986
Total segment revenues	$	730,003		$	555,043	$	433,722
Segment operating profit:
North America	$	90,616		$	66,814	$	38,671
Europe	50,189			34,573		32,750
Russia	7,034			7,077		9,049
Other	(3,220		)	844		6,985
Total segment operating profit	$	144,619		$	109,308	$	87,455

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 year endedDecember 31, 2014, revenues from one customer, UBS AG, were $97,872 and accounted for more than 10% of total revenues. Revenue from this customer is reported in the Company’s Europe segment and includes reimbursable expenses.

Trade accounts receivable and unbilled revenues are generally dispersed across our clients in proportion to their revenues. There were no customers individually exceeding 10% of our trade receivables billed as of December 31, 2014. As of December 31, 2014, unbilled trade receivables from one customer, UBS AG, individually exceeded 10% and accounted for 16.5% of our total unbilled trade receivables as of that date.

Reconciliation of segment revenues and operating profit to consolidated income before provision for income taxes is presented below:

	For the Years Ended December 31,
	2014			2013			2012
Total segment revenues	$	730,003		$	555,043		$	433,722
Unallocated revenue	24			74			77
Revenues	$	730,027		$	555,117		$	433,799
Total segment operating profit:	$	144,619		$	109,308		$	87,455
Unallocated amounts:
Other revenues	24			74			77
Stock-based compensation expense	(24,620		)	(13,150		)	(6,826		)
Non-corporate taxes	(6,882		)	(3,201		)	(2,346		)
Professional fees	(5,312		)	(3,651		)	(2,850		)
Depreciation and amortization	(7,988		)	(2,829		)	(1,100		)
Bank charges	(1,049		)	(1,194		)	(1,136		)
Asset impairment	(5,983		)	—			—
Stock charge	—			—			(640		)
Provision for bad debts	—			(36		)	—
Other corporate expenses	(6,626		)	(8,828		)	(6,628		)
Income from operations	86,183			76,493			66,006
Interest and other income, net	4,769			3,077			1,941
Change in fair value of contingent consideration	(1,924		)	—			—
Foreign exchange loss	(2,075		)	(2,800		)	(2,084		)
Income before provision for income taxes	$	86,953		$	76,770		$	65,863

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:

	December 31, 2014		December 31, 2013
Belarus	$	41,652	$	38,697
Ukraine	4,392		5,525
Hungary	2,773		2,644
Russia	2,196		3,414
United States	2,001		2,217
Other	2,120		818
Total	$	55,134	$	53,315

Information about the Company’s revenues by client location is as follows:

	For the Years Ended December 31,
	2014		2013		2012
United States	$	318,304	$	247,979	$	197,593
United Kingdom	141,366		108,892		98,346
Switzerland	87,111		51,941		30,120
Russia	48,945		53,328		47,507
Canada	49,193		33,759		9,256
Germany	25,740		20,261		16,391
China	13,445		—		—
Netherlands	8,838		7,719		3,127
Sweden	7,892		5,742		4,913
Kazakhstan	5,238		9,886		11,352
Other locations	15,545		7,984		8,777
Reimbursable expenses and other revenues	8,410		7,626		6,417
Revenues	$	730,027	$	555,117	$	433,799

Service Offering Information

Information about the Company’s revenues by service offering is as follows:

	For the Years Ended December 31,
	2014		2013		2012
Software development	$	504,590	$	374,426	$	290,139
Application testing services	140,363		109,222		85,849
Application maintenance and support	58,840		45,971		36,056
Infrastructure services	14,198		14,433		12,424
Licensing	3,626		3,439		2,914
Reimbursable expenses and other revenues	8,410		7,626		6,417
Revenues	$	730,027	$	555,117	$	433,799