SEGMENT INFORMATION

The Company determines its business segments and reports segment information in accordance with how the Company’s chief operating decision maker (“CODM”) organizes the segments to evaluate performance, allocate resources and make business decisions. Segment results are based on the segment’s revenues and operating profit, where segment operating profit is defined as income from operations before unallocated costs. 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 corporate expenses are not allocated to specific segments as these expenses are not controllable at the segment level. Such expenses include certain types of professional fees, non-corporate taxes, compensation to non-employee directors and certain other general and administrative expenses, including compensation of specific groups of non-production employees. In addition, the Company does not allocate amortization of acquisition-related intangible assets, goodwill and other asset impairment charges, stock-based compensation expenses, acquisition-related costs and certain other one-time charges. These unallocated amounts are combined with total segment operating profit to arrive at consolidated income from operations as reported below in the reconciliation of segment operating profit to consolidated income before provision for income taxes. Additionally, management has determined that it is not practical to allocate identifiable assets by segment since such assets are used interchangeably among the segments.

The Company manages its business primarily based on the managerial responsibility for its client base and market. As managerial responsibility for a particular customer relationship generally correlates with the customer’s geographic location, there is a high degree of similarity between customer locations and the geographic boundaries of the Company’s reportable segments. In some cases, managerial responsibility for a particular customer is assigned to a management team in another region and is usually based on the strength of the relationship between customer executives and particular members of EPAM’s senior management team. In such cases, the customer’s activity would be reported through the management team’s reportable segment.

Revenues from external customers and operating profit, before unallocated expenses, by reportable segments were as follows:



	For the years ended December 31,
	2018		2017		2016
Total segment revenues:
North America	$	1,077,094	$	796,126	$	642,216
Europe	693,867		593,167		474,988
Russia	73,148		62,994		43,611
Total segment revenues	$	1,844,109	$	1,452,287	$	1,160,815
Segment operating profit:
North America	$	221,846	$	169,340	$	143,021
Europe	115,876		92,080		67,545
Russia	11,377		13,906		7,555
Total segment operating profit	$	349,099	$	275,326	$	218,121

Intersegment transactions were excluded from the above on the basis that they are neither included in the measure of a segment’s profit and loss results, nor considered by the CODM during the review of segment results.

There were no customers individually exceeding 10% of our total segment revenues for the year ended December 31, 2018 and 2017. During the year ended December 31, 2016, revenues from one customer, UBS AG, were $138,124 and accounted for more than 10% of total revenues. Revenues from this customer are reported in the Company’s Europe segment.

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



	For the Years Ended December 31,
	2018			2017			2016
Total segment revenues	$	1,844,109		$	1,452,287		$	1,160,815
Other income included in segment revenues	(1,197		)	(1,839		)	(683		)
Revenues	$	1,842,912		$	1,450,448		$	1,160,132

Total segment operating profit:	$	349,099		$	275,326		$	218,121
Unallocated amounts:
Other income included in segment revenues	(1,197		)	(1,839		)	(683		)
Stock-based compensation expense	(59,188		)	(52,407		)	(49,244		)
Non-corporate taxes	(9,856		)	(9,659		)	(5,909		)
Professional fees	(6,188		)	(8,032		)	(8,265		)
Depreciation and amortization	(8,057		)	(7,632		)	(8,290		)
Bank charges	(2,358		)	(1,969		)	(1,515		)
One-time charges and other acquisition-related expenses	(2,055		)	(1,741		)	(706		)
Other operating expenses	(14,436		)	(19,101		)	(9,813		)
Income from operations	245,764			172,946			133,696
Interest and other income, net	3,522			4,601			4,848
Foreign exchange gain/(loss)	487			(3,242		)	(12,078		)
Income before provision for income taxes	$	249,773		$	174,305		$	126,466

During the year ended December 31, 2018, the Company began to allocate certain staff recruitment and development expenses into segment operating profit as these expenses became part of the evaluation of segment management’s performance. These costs were previously not allocated to segments and were included in unallocated amounts in the reconciliation of segment operating profit to consolidated income before provision for income taxes above. The effect of this reclassification was not material to segment operating profit and had no impact on total income from operations for the year end December 31, 2018.

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. Physical locations and values of the Company’s long-lived assets are presented below:



	As of December 31, 2018		As of December 31, 2017		As of December 31, 2016
Belarus	$	50,085	$	49,866	$	46,011
United States	13,101		3,371		2,618
Russia	9,902		9,617		7,203
Ukraine	8,433		6,995		5,610
India	7,019		2,698		1,650
Hungary	3,168		3,901		3,485
China	2,651		2,608		1,887
Poland	2,637		2,893		2,213
Other	5,650		4,470		2,939
Total	$	102,646	$	86,419	$	73,616

The table below presents the Company’s revenues by customer location for the years ended December 31, 2018, 2017 and 2016:



	For the Years Ended December 31,
	2018		2017		2016
United States	$	1,029,327	$	783,563	$	611,392
United Kingdom	200,918		188,995		177,194
Switzerland	144,398		123,281		122,919
Germany	80,787		60,158		43,621
Russia	71,181		61,222		40,944
Netherlands	70,274		51,556		17,521
Canada	69,836		57,129		59,189
Other	176,191		124,544		87,352
Revenues	$	1,842,912	$	1,450,448	$	1,160,132