ACQUISITIONS

6 Months Ended

Jun. 30, 2019

Continuum — On March 15, 2018, the Company acquired all of the outstanding equity of Continuum Innovation LLC together with its subsidiaries (“Continuum”) to enhance the Company’s consulting capabilities as well as its digital and service design practices. Continuum, headquartered in Boston with offices located in Milan, Seoul, and Shanghai, focuses on four practices including strategy, physical and digital design, technology and its Made Real Lab. The acquisition of Continuum added approximately 125 design consultants to the Company’s headcount. In connection with the Continuum acquisition, the Company paid $52,515 of cash and committed to making a cash earnout payment with a maximum amount payable of $3,135, subject to attainment of specified performance targets in the 12 months after the acquisition date.

Think — On November 1, 2018, the Company acquired all of the equity interests of Think Limited (“Think”), a digital transformation agency headquartered in London, UK. This acquisition was intended to strengthen EPAM’s digital and organizational consulting capabilities in the UK and Western European markets and enhance the Company’s global product and design offerings. In connection with the Think acquisition, the Company paid $26,254 of cash and committed to making a cash earnout payment with a maximum amount payable of $8,156, subject to attainment of specified performance targets in the 12 months after the acquisition date.

test IO — On April 30, 2019, the Company acquired 100% of the equity interests of a crowdtesting company, test IO GmbH, and its subsidiary (“test IO”). In connection with the test IO acquisition, the Company paid $17,204 of cash.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition and updated for any changes as of June 30, 2019 for each respective acquisition:



	Continuum		Think		test IO
	As of March 15, 2018		As of November 1, 2018		As of April 30, 2019
Cash and cash equivalents	$	2,251	$	2,344	$	968
Accounts receivable	6,676		2,259		727
Unbilled revenues	2,463		284		—
Prepaid expenses and other current assets	936		609		96
Goodwill	26,617		22,482		11,883
Intangible assets	14,450		6,882		6,364
Property and equipment and other noncurrent assets	8,902		642		154
Total assets acquired	$	62,295	$	35,502	$	20,192
Accounts payable, accrued expenses and other current liabilities	$	2,745	$	2,205	$	1,251
Due to employees	1,001		13		7
Long-term debt	3,220		—		—
Other noncurrent liabilities	490		1,040		1,730
Total liabilities assumed	$	7,456	$	3,258	$	2,988
Net assets acquired	$	54,839	$	32,244	$	17,204

During 2018, the Company adjusted initially recognized intangible assets acquired with Continuum and their useful lives as well as recognized an additional intangible asset in the form of a favorable lease, removed a noncurrent liability associated with an initially recognized unfavorable lease and revised the initial fair value of contingent consideration. The Company also finalized a working capital adjustment that resulted in cash collection in the amount of $76 reducing the original amount of the net assets acquired. These adjustments resulted in a corresponding decrease to the originally recognized value of acquired goodwill. During the first quarter of 2019, the Company finalized the fair value of the assets acquired and liabilities assumed in the acquisition of Continuum and no additional adjustments were recorded.

For the acquisitions of Think and test IO, estimated fair values of the assets acquired and liabilities assumed remain provisional and based on the information that was available as of the acquisition dates. The Company expects to complete the purchase price allocations as soon as practicable but no later than one year from the acquisition dates. During the six months ended June 30, 2019, there were no adjustments recorded related to the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition of Think.

As of June 30, 2019, the following table presents the estimated fair values and useful lives of intangible assets acquired from Continuum, Think and test IO:



	Continuum			Think			test IO
	Weighted Average Useful Life (in years)	Amount		Weighted Average Useful Life (in years)	Amount		Weighted Average Useful Life (in years)	Amount
Customer relationships	6.5	$	5,800	7	$	6,117	3	$	2,121
Favorable lease	11.2	5,500		—	—		—	—
Software	—	—		—	—		5	4,243
Contract royalties	8	1,900		—	—		—	—
Trade names	5	1,250		5	765		—	—
Total		$	14,450		$	6,882		$	6,364

In connection with the adoption of Topic 842, effective January 1, 2019, the Company reclassified the favorable lease intangible asset to Operating lease right-of-use assets.

The goodwill recognized as a result of the acquisitions is attributable primarily to strategic and synergistic opportunities related to the consulting and design businesses, the assembled workforces acquired and other factors. The goodwill acquired as a result of the Continuum acquisition is expected to be deductible for income tax purposes while the goodwill acquired as a result of the Think and test IO acquisitions is not expected to be deductible for income tax purposes.

Revenues generated by test IO, acquired on April 30, 2019, totaled $914 during both the three and six months ended June 30, 2019.

Pro forma results of operations have not been presented because the effect of the acquisitions on the Company’s condensed consolidated financial statements was not material individually or in the aggregate.