Date of report (Date of earliest event reported): May 6, 2015 | ||
EPAM SYSTEMS, INC. | ||
(Exact name of registrant as specified in its charter) | ||
Delaware | 1-35418 | 223536104 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
41 University Drive, Suite 202 Newtown, Pennsylvania | 18940 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: 267-759-9000 | ||
Not Applicable | ||
(Former name or former address, if changed since last report) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
By: | /s/ Anthony J. Conte | |
Name: | Anthony J. Conte | |
Title: | Vice President, Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer) |
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
Revenues | $ | 200,045 | $ | 160,384 | |||
Operating expenses: | |||||||
Cost of revenues (exclusive of depreciation and amortization) | 125,887 | 102,454 | |||||
Selling, general and administrative expenses | 46,938 | 32,359 | |||||
Depreciation and amortization expense | 4,200 | 3,689 | |||||
Other operating expenses/(income), net | 200 | 25 | |||||
Income from operations | 22,820 | 21,857 | |||||
Interest and other income, net | 1,158 | 976 | |||||
Foreign exchange income/(loss) | (5,754 | ) | (1,241 | ) | |||
Income before provision for income taxes | 18,224 | 21,592 | |||||
Provision for income taxes | 3,510 | 4,228 | |||||
Net income | $ | 14,714 | $ | 17,364 | |||
Foreign currency translation adjustments | (2,730 | ) | (3,577 | ) | |||
Comprehensive income | $ | 11,984 | $ | 13,787 | |||
Net income per share: | |||||||
Basic | $ | 0.31 | $ | 0.37 | |||
Diluted | $ | 0.29 | $ | 0.35 | |||
Shares used in calculation of net income per share: | |||||||
Basic | 47,886 | 46,797 | |||||
Diluted | 51,000 | 49,207 |
As of March 31, 2015 | As of December 31, 2014 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 192,363 | $ | 220,534 | |||
Time deposits | 30,000 | — | |||||
Accounts receivable, net of allowance of $2,618 and $2,181, respectively | 104,714 | 124,483 | |||||
Unbilled revenues | 88,033 | 55,851 | |||||
Prepaid and other current assets | 14,390 | 9,289 | |||||
Employee loans, net of allowance of $0 and $0, respectively, current | 2,498 | 2,434 | |||||
Deferred tax assets, current | 1,817 | 2,496 | |||||
Total current assets | 433,815 | 415,087 | |||||
Property and equipment, net | 55,115 | 55,134 | |||||
Restricted cash, long-term | 114 | 156 | |||||
Employee loans, net of allowance of $0 and $0, respectively, long-term | 3,806 | 4,081 | |||||
Intangible assets, net | 45,091 | 47,689 | |||||
Goodwill | 56,346 | 57,417 | |||||
Deferred tax assets, long-term | 11,453 | 11,094 | |||||
Other long-term assets | 3,794 | 3,368 | |||||
Total assets | $ | 609,534 | $ | 594,026 | |||
Liabilities | |||||||
Current liabilities | |||||||
Accounts payable | $ | 13,366 | $ | 4,641 | |||
Accrued expenses and other liabilities | 20,579 | 32,203 | |||||
Deferred revenue, current | 3,061 | 3,220 | |||||
Due to employees | 29,870 | 24,518 | |||||
Taxes payable | 16,005 | 24,704 | |||||
Contingent consideration, current | 33,919 | 35,524 | |||||
Contingent liability | 92 | — | |||||
Deferred tax liabilities, current | 705 | 603 | |||||
Total current liabilities | 117,597 | 125,413 | |||||
Deferred tax liabilities, long-term | 4,106 | 4,563 | |||||
Total liabilities | 121,703 | 129,976 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity | |||||||
Common stock, $0.001 par value; 160,000,000 authorized; 49,111,297 and 48,748,298 shares issued, 48,692,313 and 48,303,811 shares outstanding at March 31, 2015 and December 31, 2014, respectively | 48 | 48 | |||||
Additional paid-in capital | 241,066 | 229,501 | |||||
Retained earnings | 275,312 | 260,598 | |||||
Treasury stock | (3,811 | ) | (4,043 | ) | |||
Accumulated other comprehensive loss | (24,784 | ) | (22,054 | ) | |||
Total stockholders’ equity | 487,831 | 464,050 | |||||
Total liabilities and stockholders’ equity | $ | 609,534 | $ | 594,026 |
Three Months Ended March 31, 2015 | |||||||||||
GAAP | Adjustments | Non-GAAP | |||||||||
Cost of revenues (exclusive of depreciation and amortization)(1) | $ | 125,887 | $ | (2,484 | ) | $ | 123,403 | ||||
Selling, general and administrative expenses(2) | $ | 46,938 | $ | (6,712 | ) | $ | 40,226 | ||||
Income from operations(3) | $ | 22,820 | $ | 10,614 | $ | 33,434 | |||||
Operating margin | 11.4 | % | 5.3 | % | 16.7 | % | |||||
Net income(4) | $ | 14,714 | $ | 16,368 | $ | 31,082 | |||||
Diluted earnings per share(5) | $ | 0.29 | $ | 0.61 |
Three Months Ended March 31, 2014 | |||||||||||
GAAP | Adjustments | Non-GAAP | |||||||||
Cost of revenues (exclusive of depreciation and amortization)(1) | $ | 102,454 | $ | (1,403 | ) | $ | 101,051 | ||||
Selling, general and administrative expenses(2) | $ | 32,359 | $ | (2,386 | ) | $ | 29,973 | ||||
Income from operations(3) | $ | 21,857 | $ | 4,439 | $ | 26,296 | |||||
Operating margin | 13.6 | % | 2.8 | % | 16.4 | % | |||||
Net income(4) | $ | 17,364 | $ | 5,680 | $ | 23,044 | |||||
Diluted earnings per share (5) | $ | 0.35 | $ | 0.47 |
(1) | Adjustments to GAAP cost of revenues (exclusive of depreciation and amortization) were comprised of stock-based compensation expense recorded in the periods presented. |
(2) | Adjustments to GAAP selling general and administrative expenses: |
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
Selling, general and administrative expenses - Acquisition related | $ | 4,492 | $ | 793 | |||
Selling, general and administrative expenses - All other | 2,158 | 1,012 | |||||
Acquisition-related costs | 62 | 581 | |||||
Total adjustments to GAAP selling, general and administrative expenses | $ | 6,712 | $ | 2,386 |
(3) | Adjustments to GAAP income from operations: |
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
Stock-based compensation expense | $ | 9,134 | $ | 3,208 | |||
reported within cost of revenues | 2,484 | 1,403 | |||||
reported within selling, general and administrative expenses- acquisition related | 4,492 | 793 | |||||
reported within selling, general and administrative expenses- all other | 2,158 | 1,012 | |||||
Acquisition-related costs | 62 | 581 | |||||
Amortization of purchased intangible assets | 1,418 | 650 | |||||
Total adjustments to GAAP income from operations | $ | 10,614 | $ | 4,439 |
(4) | Adjustments to GAAP net income: |
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
Stock-based compensation expense | $ | 9,134 | $ | 3,208 | |||
reported within cost of revenues | 2,484 | 1,403 | |||||
reported within selling, general and administrative expenses- acquisition related | 4,492 | 793 | |||||
reported within selling, general and administrative expenses- all other | 2,158 | 1,012 | |||||
Acquisition-related costs | 62 | 581 | |||||
Amortization of purchased intangible assets | 1,418 | 650 | |||||
Foreign exchange loss | 5,754 | 1,241 | |||||
Total adjustments to GAAP net income | $ | 16,368 | $ | 5,680 |
(5) | There were no adjustments to GAAP average diluted common shares outstanding during the three months ended March 31, 2015 and 2014. |
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