UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to________

Commission file number: 001-35418

EPAM SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware		22-3536104
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
41 University Drive	Suite 202	18940
Newtown	Pennsylvania
(Address of principal executive offices)		(Zip code)

267-759-9000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on which Registered
Common Stock, par value $0.001 per share	EPAM	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒ No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒ No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No   ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Title of Each Class	Outstanding as of July 29, 2022
Common Stock, par value $0.001 per share	57,367,432 shares

EPAM SYSTEMS, INC.

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements (Unaudited)	3
Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	3
Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2022 and 2021	4
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021	5
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021	6
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	8
Notes to Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3. Quantitative and Qualitative Disclosures About Market Risk	47
Item 4. Controls and Procedures	48
PART II. OTHER INFORMATION	49
Item 1. Legal Proceedings	49
Item 1A. Risk Factors	49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3. Defaults Upon Senior Securities	50
Item 4. Mine Safety Disclosures	50
Item 5. Other Information	50
Item 6. Exhibits	51
SIGNATURES	52

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

EPAM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except par value)

	As of June 30, 2022		As of December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	1,293,518	$	1,446,625
Trade receivables and contract assets, net of allowance of $18,554 and $5,521, respectively	929,217		768,928
Short-term investments	60,098		—
Prepaid and other current assets	76,845		53,927
Total current assets	2,359,678		2,269,480
Property and equipment, net	211,119		236,214
Operating lease right-of-use assets, net	159,726		184,841
Intangible assets, net	89,032		101,143
Goodwill	521,267		530,723
Deferred tax assets	172,807		143,928
Other noncurrent assets	50,335		56,898
Total assets	$	3,563,964	$	3,523,227
Liabilities
Current liabilities
Accounts payable	$	22,488	$	24,847
Accrued compensation and benefits expenses	414,674		502,997
Accrued expenses and other current liabilities	181,525		142,014
Short-term debt	6,701		16,018
Income taxes payable, current	18,190		27,440
Operating lease liabilities, current	41,125		50,104
Total current liabilities	684,703		763,420
Long-term debt	30,221		30,234
Income taxes payable, noncurrent	45,441		42,454
Operating lease liabilities, noncurrent	130,891		142,802
Other noncurrent liabilities	48,702		48,480
Total liabilities	939,958		1,027,390
Commitments and contingencies (Note 13)
Stockholders’ equity
Common stock, $0.001 par value; 160,000 shares authorized; 57,373 and 56,868 shares issued, 57,353 and 56,849 shares outstanding at June 30, 2022 and December 31, 2021, respectively	57		57
Additional paid-in capital	760,975		711,912
Retained earnings	1,937,855		1,829,532
Treasury stock	(177)		(177)
Accumulated other comprehensive loss	(76,357)		(54,207)
Total EPAM Systems Inc. stockholders’ equity	2,622,353		2,487,117
Noncontrolling interest in consolidated subsidiaries	1,653		8,720
Total stockholders’ equity	2,624,006		2,495,837
Total liabilities and stockholders’ equity	$	3,563,964	$	3,523,227

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

3

EPAM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues	$	1,194,861	$	881,366	$	2,366,475	$	1,662,141
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization)	846,323		583,728		1,627,159		1,103,056
Selling, general and administrative expenses	232,527		151,910		469,804		288,299
Depreciation and amortization expense	22,991		20,454		47,250		38,261
Income from operations	93,020		125,274		222,262		232,525
Interest and other income, net	1,579		2,580		1,414		7,954
Foreign exchange loss	(85,941)		(4,693)		(108,726)		(2,394)
Income before provision for income taxes	8,658		123,161		114,950		238,085
(Benefit from)/ provision for income taxes	(9,946)		8,490		6,627		14,368
Net income	$	18,604	$	114,671	$	108,323	$	223,717
Net income per share:
Basic	$	0.33	$	2.03	$	1.90	$	3.97
Diluted	$	0.32	$	1.94	$	1.84	$	3.80
Shares used in calculation of net income per share:
Basic	57,240		56,463		57,078		56,317
Diluted	59,020		59,011		58,981		58,896

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

4

EPAM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	18,604	$	114,671	$	108,323	$	223,717
Other comprehensive income/(loss):
Change in foreign currency translation adjustments, net of tax	14,830		9,637		(15,722)		(894)
Change in unrealized (loss)/gain on hedging instruments, net of tax	(5,037)		2,040		(6,428)		(2,041)
Defined benefit pension plans - actuarial loss, net of tax	—		—		—		(626)
Other comprehensive income/(loss)	9,793		11,677		(22,150)		(3,561)
Comprehensive income	$	28,397	$	126,348	$	86,173	$	220,156

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

5

EPAM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands) 

	Common Stock			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Non-controlling interest in consolidated subsidiaries		Total Stockholders’ Equity
	Shares	Amount						Shares	Amount
Balance, January 1, 2022	56,849	$	57	$	711,912	$	1,829,532	20	$	(177)	$	(54,207)	$	8,720	$	2,495,837
Restricted stock units vested	193	—		—		—		—	—		—		—		—
Equity withheld for employee taxes	(67)	—		(18,376)		—		—	—		—		—		(18,376)
Stock-based compensation expense	—	—		22,702		—		—	—		—		—		22,702
Exercise of stock options	158	—		2,884		—		—	—		—		—		2,884
Other comprehensive loss	—	—		—		—		—	—		(31,943)		—		(31,943)
Purchase of noncontrolling interest	—	—		—		—		—	—		—		(7,067)		(7,067)
Net income	—	—		—		89,719		—	—		—		—		89,719
Balance, March 31, 2022	57,133	$	57	$	719,122	$	1,919,251	20	$	(177)	$	(86,150)	$	1,653	$	2,553,756
Restricted stock units vested	24	—		—		—		—	—		—		—		—
Equity withheld for employee taxes	(6)	—		(1,843)		—		—	—		—		—		(1,843)
Stock-based compensation expense	—	—		24,902		—		—	—		—		—		24,902
Exercise of stock options	147	—		6,410		—		—	—		—		—		6,410
Issuance of common stock from employee stock purchase plan	55	—		12,384		—		—	—		—		—		12,384
Other comprehensive income	—	—				—		—	—		9,793		—		9,793
Net income	—	—		—		18,604		—	—		—		—		18,604
Balance, June 30, 2022	57,353	$	57	$	760,975	$	1,937,855	20	$	(177)	$	(76,357)	$	1,653	$	2,624,006

6

	Common Stock			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Non-controlling interest in consolidated subsidiaries		Total Stockholders’ Equity
	Shares	Amount						Shares	Amount
Balance, January 1, 2021	56,108	$	56	$	660,771	$	1,347,880	20	$	(177)	$	(25,512)	$	—	$	1,983,018
Restricted stock units vested	248	—		—		—		—	—		—		—		—
Equity withheld for employee taxes	(84)	—		(31,935)		—		—	—		—		—		(31,935)
Stock-based compensation expense	—	—		14,624		—		—	—		—		—		14,624
Exercise of stock options	109	—		4,424		—		—	—		—		—		4,424
Other comprehensive loss	—	—		—		—		—	—		(15,238)		—		(15,238)
Net income	—	—		—		109,046		—	—		—		—		109,046
Balance, March 31, 2021	56,381	$	56	$	647,884	$	1,456,926	20	$	(177)	$	(40,750)	$	—	$	2,063,939
Restricted stock units vested	19	—		—		—		—	—		—		—		—
Equity withheld for employee taxes	(6)	—		(2,631)		—		—	—		—		—		(2,631)
Stock-based compensation expense	—	—		13,792		—		—	—		—		—		13,792
Exercise of stock options	219	1		11,219		—		—	—		—		—		11,220
Other comprehensive income	—	—		—		—		—	—		11,677		—		11,677
Net income	—	—		—		114,671		—	—		—		—		114,671
Balance, June 30, 2021	56,613	$	57	$	670,264	$	1,571,597	20	$	(177)	$	(29,073)	$	—	$	2,212,668

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

7

EPAM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	108,323	$	223,717
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	47,250		38,261
Operating lease right-of-use assets amortization expense	26,037		31,496
Bad debt expense	11,748		2,828
Deferred taxes	(29,405)		1,176
Stock-based compensation expense	35,005		48,451
Unrealized loss on derivative	32,013		—
Impairment charges	21,002		—
Other	75,433		(5,190)
Changes in assets and liabilities:
Trade receivables and contract assets	(183,143)		(168,038)
Prepaid and other assets	(3,350)		(7,795)
Accounts payable	725		(3,948)
Accrued expenses and other liabilities	(62,153)		(6,772)
Operating lease liabilities	(29,015)		(32,276)
Income taxes payable	(24,803)		(40,247)
Net cash provided by operating activities	25,667		81,663
Cash flows from investing activities:
Purchases of property and equipment	(41,426)		(33,773)
Purchases of short-term investments	(60,000)		—
Proceeds from short-term investments	—		60,000
Acquisition of business, net of cash acquired (Note 3)	(10,621)		(121,252)
Purchases of non-marketable securities	—		(2,544)
Other investing activities, net	(11,041)		179
Net cash used in investing activities	(123,088)		(97,390)
Cash flows from financing activities:
Proceeds from issuance of stock under the employee incentive programs	22,165		15,610
Payments of withholding taxes related to net share settlements of restricted stock units	(20,796)		(33,696)
Proceeds from debt	3,227		—
Repayment of debt	(10,756)		—
Payment of contingent consideration for previously acquired business	(207)		(1,047)
Purchase of noncontrolling interest	(2,146)		—
Other financing activities, net	(2,121)		137
Net cash used in financing activities	(10,634)		(18,996)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(45,661)		(3,761)
Net decrease in cash, cash equivalents and restricted cash	(153,716)		(38,484)
Cash, cash equivalents and restricted cash, beginning of period	1,449,347		1,323,533
Cash, cash equivalents and restricted cash, end of period	$	1,295,631	$	1,285,049

8

EPAM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

(Continued)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:

	As of June 30, 2022		As of December 31, 2021
Balance sheet classification
Cash and cash equivalents	$	1,293,518	$	1,446,625
Restricted cash in Prepaid and other current assets	202		495
Restricted cash in Other noncurrent assets	1,911		2,227
Total restricted cash	2,113		2,722
Total cash, cash equivalents and restricted cash	$	1,295,631	$	1,449,347

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share data and as otherwise disclosed) 

1.BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    

EPAM Systems, Inc. (the “Company” or “EPAM”) is a leading digital transformation services and product engineering company, providing digital platform engineering and software development services to customers located around the world, primarily in North America, Europe, and Asia. The Company’s industry expertise includes financial services, travel and consumer, software and hi-tech, business information and media, life sciences and healthcare, as well as several other industries. The Company is incorporated in Delaware with headquarters in Newtown, Pennsylvania.

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” or “U.S. GAAP”) and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. The unaudited 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, 2021 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 unaudited 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 management’s opinion, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position as of June 30, 2022 and the results of its operations and its cash flows for the periods presented.

Risks and Uncertainties — As a result of its global operations, the Company may be subject to certain inherent risks.

Concentration of Credit — Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, short-term investments and trade receivables. The Company maintains cash, cash equivalents and short-term investments with financial institutions. The Company believes its credit policies reflect normal industry terms and business risk and there is no expectation of non-performance by the counterparties.

The Company has cash in several countries, including Belarus, Ukraine and Russia, which have been impacted by the invasion of Ukraine (see Note 2, “Impact of the Invasion of Ukraine”) and where the banking sector remains subject to periodic instability, banking and other financial systems generally do not meet the banking standards of more developed markets, and bank deposits made by corporate entities are not insured. As of June 30, 2022, the Company had $40.4 million of cash and cash equivalents in banks in Belarus, $40.2 million of cash and cash equivalents in banks in Ukraine and $17.2 million of cash and cash equivalents in banks in Russia. The Company places its cash and cash equivalents with financial institutions considered stable in the region, limits the amount of credit exposure with any one financial institution and conducts ongoing evaluations of the credit worthiness of the financial institutions with which it does business. A banking crisis, bankruptcy or insolvency of banks that process or hold the Company’s funds, or sanctions may result in the loss of deposits or adversely affect the Company’s ability to complete banking transactions, which could adversely affect the Company’s business and financial condition. Cash in these countries is used for the operational needs of the local entities and cash balances change with the expected operating needs of these entities. The Company regularly monitors cash held in these countries and, to the extent the cash held exceeds amounts required to support its operations in these countries, the Company distributes the excess funds into markets with more developed banking sectors to the extent it is possible to do so.

Trade receivables are generally dispersed across many customers operating in different industries; therefore, concentration of credit risk is limited. Historically, credit losses and write-offs of trade receivables have not been material to the consolidated financial statements. If any of our customers enter bankruptcy protection or otherwise take steps to alleviate their financial distress, the Company’s credit losses and write-offs of trade receivables could increase, which would negatively impact its results of operations. See Note 2 “Impact of the Invasion of Ukraine” for further discussion regarding trade receivables and contract assets from customers located in Russia.

10

Foreign currency risk — The Company’s global operations are conducted predominantly in U.S. dollars. Other than U.S. dollars, the Company generates revenues in various currencies, principally, euros, British pounds, Russian rubles, Swiss francs, and Canadian dollars and incurs expenditures principally in Russian rubles, Polish zlotys, euros, Swiss francs, Hungarian forints, British pounds, Indian rupees, Chinese yuan renminbi and Mexican pesos. The Company’s international operations expose it to risk of adverse fluctuations in foreign currency exchange rates through the remeasurement of foreign currency denominated assets and liabilities (both third-party and intercompany) and translation of earnings and cash flows into U.S. dollars. The Company has a hedging program whereby it enters into a series of foreign exchange forward contracts with durations of twelve months or less that are designated as cash flow hedges of forecasted Polish zloty, Indian rupee and Hungarian forint transactions. See Note 6, “Derivative Financial Instruments” for further discussion regarding the Company’s termination of the hedging program for the Russian ruble.

Interest rate risk — The Company’s exposure to interest rate risk is influenced by the changes in interest rates received on cash and cash equivalent deposits and short-term investments and paid on any outstanding balance on the Company’s borrowings, mainly under the 2021 Credit Agreement, which is subject to a variety of rates depending on the type and timing of funds borrowed (See Note 8 “Debt”). The Company does not believe it is exposed to material direct risks associated with changes in interest rates related to these deposits and borrowings.

Adoption of New Accounting Standards

There were no recently adopted accounting standards which had a material impact on the Company’s consolidated financial position, results of operations, changes in stockholders’ equity and cash flows.

Pending Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB or other standards-setting bodies that the Company will adopt according to the various timetables the FASB specifies. The Company believes the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position, results of operations and cash flows upon adoption.

2.     IMPACT OF THE INVASION OF UKRAINE

On February 24, 2022, Russian forces attacked Ukraine and its people and EPAM has called for an immediate end to this unlawful and unconscionable attack. As of June 30, 2022, the Company had $70.9 million of Property and equipment, net in Ukraine consisting of a building classified as construction-in-progress located in Kyiv with a net book value of $50.7 million, laptops with a net book value of $12.5 million, most of which are in the possession of employees, various office furniture, equipment and supplies with a net book value of $7.2 million, and leasehold improvements located throughout Ukraine with a net book value of $0.5 million. Additionally, the Company had Operating lease right-of-use assets located throughout Ukraine with a net book value of $14.4 million as of June 30, 2022. Through the issuance date of these interim financial statements, the Company is not aware of any damage to its long-lived assets in Ukraine and the Company expects to continue to use these assets as part of its global delivery model.

On March 4, 2022, in addition to the Company’s donations, and the work of EPAM volunteers on the ground, the Company announced a $100.0 million humanitarian commitment to support its employees and their families in and displaced from Ukraine. During the three and six months ended June 30, 2022, the Company expensed $8.4 million and $34.0 million, respectively, related to this commitment including special cash payments to support impacted employees, financial and medical support for impacted families, travel, meals and lodging expenses, and donations to third-party humanitarian organizations. Of the expensed amount for the three months ended June 30, 2022, $3.3 million is classified in Cost of revenues (exclusive of depreciation and amortization) and $5.1 million is classified in Selling, general and administrative expense on the condensed consolidated financial statements. Of the expensed amount for the six months ended June 30, 2022, $22.4 million is classified in Cost of revenues (exclusive of depreciation and amortization) and $11.6 million is classified in Selling, general and administrative expense on the condensed consolidated financial statements.

11

The Company continues to execute its business continuity plans to relocate employees residing in Ukraine, Belarus and Russia to other countries and continues to assign delivery personnel in locations outside of the region to serve in unbilled standby or backup capacity to ensure the continuity of delivery for its customers who have substantial delivery exposure to Ukraine or other delivery concerns resulting from the invasion. In addition to costs incurred as part of EPAM’s humanitarian commitment to Ukraine, during the three months ended June 30, 2022, the Company incurred expenses of $14.4 million related to its geographic repositioning efforts, classified as Selling, general and administrative expenses and $9.3 million related to these standby resources, classified as Cost of revenues (exclusive of depreciation and amortization). During the six months ended June 30, 2022, the Company incurred expenses of $33.1 million related to its geographic repositioning efforts, classified as Selling, general and administrative expenses and $11.8 million related to these standby resources, classified as Cost of revenues (exclusive of depreciation and amortization). During the six months ended June 30, 2022, the Company also recorded an impairment charge of $1.3 million classified as Other income/(expense) related to a financial asset in Ukraine which the Company believes to be unrealizable due to the events in Ukraine.

In response to the attacks on Ukraine, EPAM announced on March 4, 2022, it would discontinue services to customers located in Russia. Based on this change in facts and circumstances, the long-term cash flow forecast for the Company’s operations in Russia and its Russia reporting unit were significantly reduced. The reduction in the long-term cash flow forecasts indicated that the carrying amounts of goodwill and long-lived assets associated with the Company’s Russia reporting unit and operations in Russia may not be recoverable, and the carrying value of these assets was tested for impairment. The Company relied on the income approach to estimate the fair values of the Russia reporting unit and long-lived assets and considered multiple scenarios including the continuing operation and exit of operations in Russia. Reflecting the negative long-term cash flow forecasts that each of these scenarios produced for these assets, during the three months ended March 31, 2022, the Company recorded impairments of Property and equipment, net of $15.1 million, Operating lease right-of-use assets, net of $3.8 million, and Goodwill of $0.7 million. These asset impairment charges are included in Selling, general and administrative expenses in the interim condensed consolidated financial statements for the six months ended June 30, 2022. Additionally, the Company evaluated trade receivables and contract assets for estimated future credit losses from customers located in Russia and recorded bad debt expense of $8.2 million during the six months ended June 30, 2022, reflecting the deterioration of creditworthiness of its customers in Russia. This expense is included in Selling, general and administrative expenses in the condensed consolidated financial statements.

On April 7, 2022, the Company announced that it would begin the process of a phased exit of its operations in Russia, to be completed in the months following the announcement and in close collaboration with the Company’s employees, contractors, and customers. Through the date of issuance of these condensed consolidated financial statements, the Company continues to explore strategic alternatives for its operations in Russia, including the potential sale or liquidation of its holdings while executing its phased exit. In connection with the exit of its operations in Russia, the Company incurred employee separation costs of $16.2 million during the three and six months ended June 30, 2022, of which $7.4 million is included in Accrued compensation expenses in the condensed consolidated balance sheet as of June 30, 2022. The Company could incur additional significant charges in the future related to the exit of its operations in Russia including, but not limited to, additional restructuring costs and loss on sale, which could be impacted by amounts transferred to settle intercompany receivables and payables and the recognition of the Accumulated currency translation adjustment currently included in Accumulated other comprehensive income/(loss). The timing of completing the exit is subject to completion of regulatory requirements in the country and the Company expects to complete its exit as soon as feasible.

As of June 30, 2022, the Company had the following assets and liabilities in Russia:

Cash and cash equivalents	$	17,160
Trade receivables and contract assets, net of allowance of $10.2 million	18,757
Prepaid and other current assets	5,381
Total assets in Russia	$	41,298
Accounts payable	$	1,201
Accrued compensation and benefits expenses	32,896
Accrued expenses and other liabilities	7,278
Operating lease liabilities	1,309
Other noncurrent liabilities	876
Total liabilities in Russia	$	43,560

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3.ACQUISITIONS

PolSource — On April 2, 2021, the Company acquired 100% of PolSource S.A. and its subsidiaries (“PolSource”), a Salesforce Platinum Consulting Partner with more than 350 experienced Salesforce specialists for a purchase price of $148.2 million including contingent consideration with an acquisition-date fair value of $35.4 million. At the time of the acquisition, the Company committed to paying up to $45.0 million in contingent consideration, subject to attainment of certain revenue, earnings and operational targets.

CORE — On July 23, 2021, the Company acquired 100% of CORE SE and its subsidiaries (“CORE”), a professional service provider specializing in IT strategy and technology-driven transformations with office locations in Europe and the Middle East for a purchase price of $50.2 million including contingent consideration with an acquisition-date fair value of $4.0 million and deferred consideration of $7.8 million. The Company could pay up to $8.1 million in contingent consideration and the actual future payout is subject to attainment of certain revenue, earnings and operational targets.

Emakina — On November 3, 2021, the Company completed the acquisition of 98.69% of Emakina Group SA and its subsidiaries (“Emakina”), a group of independent digital agencies, for a purchase price of $143.4 million in cash. On November 30, 2021, the Company completed the acquisition of the remaining 1.31% of Emakina Group SA’s outstanding shares for a purchase price of $1.7 million in cash.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of each respective acquisition and updated for any changes as of June 30, 2022:

	PolSource		CORE		Emakina
Cash and cash equivalents	$	2,565	$	11,283	$	5,142
Trade receivables and contract assets	12,734		10,266		34,389
Prepaid and other current assets	814		5,490		3,109
Goodwill	125,265		23,237		137,037
Intangible assets	15,790		8,368		30,488
Property and equipment and other noncurrent assets	461		4,585