$EPAM
EPAM Systems, Inc.

2012 Q3 Form 10-Q Financial Statement

#000119312512347935 Filed on August 09, 2012

View on sec.gov

Income Statement

Concept 2012 Q3 2012 Q2 2011 Q2
Revenue $110.1M $103.8M $80.18M
YoY Change 27.37% 29.47%
Cost Of Revenue $69.10M $63.80M $48.82M
YoY Change 33.84% 30.7%
Gross Profit $40.98M $40.00M $31.36M
YoY Change 17.77% 27.54%
Gross Profit Margin 37.23% 38.53% 39.11%
Selling, General & Admin $21.15M $20.71M $16.81M
YoY Change 33.69% 23.24%
% of Gross Profit 51.62% 51.78% 53.59%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $3.100M $2.400M $3.600M
YoY Change 47.62% -33.33%
% of Gross Profit 7.56% 6.0% 11.48%
Operating Expenses $21.15M $20.71M $16.81M
YoY Change 33.69% 23.24%
Operating Profit $16.74M $16.83M $10.88M
YoY Change -0.92% 54.72%
Interest Expense -$100.0K -$900.0K -$300.0K
YoY Change -94.74% 200.0%
% of Operating Profit -0.6% -5.35% -2.76%
Other Income/Expense, Net
YoY Change
Pretax Income $16.59M $15.90M $10.60M
YoY Change 10.76% 49.92%
Income Tax $2.522M $2.575M $2.326M
% Of Pretax Income 15.2% 16.2% 21.94%
Net Earnings $14.07M $13.32M $8.277M
YoY Change 0.82% 60.94%
Net Earnings / Revenue 12.78% 12.83% 10.32%
Basic Earnings Per Share $0.33 $0.31
Diluted Earnings Per Share $0.30 $0.29 $203.9K
COMMON SHARES
Basic Shares Outstanding 42.78M shares 42.30M shares
Diluted Shares Outstanding

Balance Sheet

Concept 2012 Q3 2012 Q2 2011 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $107.4M $104.9M
YoY Change 59.35%
Cash & Equivalents $105.9M $104.9M $63.33M
Short-Term Investments $1.500M
Other Short-Term Assets $18.10M $14.80M
YoY Change 135.06%
Inventory
Prepaid Expenses
Receivables $67.87M $68.19M
Other Receivables $0.00 $0.00
Total Short-Term Assets $237.7M $224.8M
YoY Change 49.1%
LONG-TERM ASSETS
Property, Plant & Equipment $52.95M $40.22M
YoY Change 55.27%
Goodwill $11.31M $12.44M
YoY Change
Intangibles $6.014M $6.227M
YoY Change
Long-Term Investments
YoY Change
Other Assets $578.0K $553.0K
YoY Change -90.68%
Total Long-Term Assets $75.05M $63.22M
YoY Change 48.9%
TOTAL ASSETS
Total Short-Term Assets $237.7M $224.8M
Total Long-Term Assets $75.05M $63.22M
Total Assets $312.7M $288.0M
YoY Change 49.06%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $2.558M $4.345M
YoY Change 34.63%
Accrued Expenses $13.49M $10.30M
YoY Change -14.65%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $46.07M $43.90M
YoY Change 15.76%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00
YoY Change
Other Long-Term Liabilities $1.200M $1.200M
YoY Change 20.0%
Total Long-Term Liabilities $1.200M $1.200M
YoY Change 20.0%
TOTAL LIABILITIES
Total Short-Term Liabilities $46.07M $43.90M
Total Long-Term Liabilities $1.200M $1.200M
Total Liabilities $47.57M $45.39M
YoY Change 16.02%
SHAREHOLDERS EQUITY
Retained Earnings
YoY Change
Common Stock $43.00K $43.00K
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost) $11.67M $11.67M
YoY Change
Treasury Stock Shares
Shareholders Equity $265.2M $242.6M
YoY Change
Total Liabilities & Shareholders Equity $312.7M $288.0M
YoY Change 49.06%

Cashflow Statement

Concept 2012 Q3 2012 Q2 2011 Q2
OPERATING ACTIVITIES
Net Income $14.07M $13.32M $8.277M
YoY Change 0.82% 60.94%
Depreciation, Depletion And Amortization $3.100M $2.400M $3.600M
YoY Change 47.62% -33.33%
Cash From Operating Activities $11.10M $6.300M $10.80M
YoY Change -36.21% -41.67%
INVESTING ACTIVITIES
Capital Expenditures -$14.10M -$5.700M -$7.000M
YoY Change 113.64% -18.57%
Acquisitions
YoY Change
Other Investing Activities -$700.0K -$7.100M -$100.0K
YoY Change -800.0% 7000.0%
Cash From Investing Activities -$14.90M -$12.80M -$7.200M
YoY Change 132.81% 77.78%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 3.600M -200.0K 4.800M
YoY Change -161.02% -104.17%
NET CHANGE
Cash From Operating Activities 11.10M 6.300M 10.80M
Cash From Investing Activities -14.90M -12.80M -7.200M
Cash From Financing Activities 3.600M -200.0K 4.800M
Net Change In Cash -200.0K -6.700M 8.400M
YoY Change -103.92% -179.76%
FREE CASH FLOW
Cash From Operating Activities $11.10M $6.300M $10.80M
Capital Expenditures -$14.10M -$5.700M -$7.000M
Free Cash Flow $25.20M $12.00M $17.80M
YoY Change 5.0% -32.58%

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us-gaap Basis Of Accounting
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<div> <p style="margin-top:12px;margin-bottom:0px"><font style="font-family:Times New Roman" size="2"><b>1. BASIS OF PRESENTATION</b></font></p> <p style="margin-top:6px;margin-bottom:0px; text-indent:4%"> <font style="font-family:Times New Roman" size="2">The accompanying unaudited interim consolidated financial statements of EPAM Systems, Inc. (the &#x201C;Company&#x201D; or &#x201C;EPAM&#x201D;) have been prepared in accordance with generally accepted accounting principles in the United States and Article 10 of Regulation S-X under the Securities and Exchange Act of 1934, as amended. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company&#x2019;s audited consolidated financial statements (and notes thereto) for the year ended December&#xA0;31, 2011. In the Company&#x2019;s opinion, all adjustments considered necessary for a fair presentation of the accompanying unaudited condensed consolidated financial statements have been included, and all adjustments are of a normal and recurring nature. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire year.</font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"> <font style="font-family:Times New Roman" size="2"><b>Use of Estimates</b> &#x2014; The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience, knowledge of current conditions and its beliefs of what could occur in the future, given available information. Actual results could differ from those estimates, and such differences may be material to the financial statements.</font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"> <font style="font-family:Times New Roman" size="2"><b>Emerging growth company status</b> &#x2014; In April 2012, several weeks after EPAM&#x2019;s initial public offering in February 2012, President Obama signed into law the Jumpstart Our Business Startups Act of 2012 (the &#x201C;JOBS Act&#x201D;). The JOBS Act contains provisions that relax certain requirements for &#x201C;emerging growth companies&#x201D; that otherwise apply to larger public companies. For as long as a company retains emerging growth company status, which may be until the fiscal year-end after the fifth anniversary of its initial public offering, it will not be required to (1)&#xA0;provide an auditor&#x2019;s attestation report on its management&#x2019;s assessment of the effectiveness of its internal control over financial reporting, otherwise required by Section&#xA0;404(b) of the Sarbanes-Oxley Act of 2002, (2)&#xA0;comply with any new or revised financial accounting standard applicable to public companies until such standard is also applicable to private companies, (3)&#xA0;comply with certain new requirements adopted by the Public Company Accounting Oversight Board, (4)&#xA0;provide certain disclosure regarding executive compensation required of larger public companies or (5)&#xA0;hold shareholder advisory votes on matters relating to executive compensation.</font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"> <font style="font-family:Times New Roman" size="2">EPAM is classified as an emerging growth company under the JOBS Act and is eligible to take advantage of the accommodations described above for as long as it retains this status. However, EPAM has elected not to take advantage of the transition period described in (2)&#xA0;above, which is the exemption provided in Section&#xA0;7(a)(2)(B) of the Securities Act of 1933 and Section&#xA0;13(a) of the Securities Exchange Act of 1934 (in each case as amended by the JOBS Act) for complying with new or revised financial accounting standards. EPAM will therefore comply with new or revised financial accounting standards to the same extent that a non-emerging growth company is required to comply with such standards.</font></p> </div>
us-gaap Payments For Repurchase Of Common Stock
PaymentsForRepurchaseOfCommonStock
50000
us-gaap Other Noncash Expense
OtherNoncashExpense
640000
us-gaap Depreciation And Amortization
DepreciationAndAmortization
4634000
us-gaap Net Cash Provided By Used In Operating Activities
NetCashProvidedByUsedInOperatingActivities
1629000
us-gaap Net Cash Provided By Used In Investing Activities
NetCashProvidedByUsedInInvestingActivities
-16538000
us-gaap Increase Decrease In Deferred Revenue
IncreaseDecreaseInDeferredRevenue
-2482000
us-gaap Share Based Compensation Arrangements By Share Based Payment Award Options Exercises In Period Weighted Average Exercise Price
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice
3.34
us-gaap Other Operating Income Expense Net
OtherOperatingIncomeExpenseNet
-619000
us-gaap Increase Decrease In Due To Employees Current
IncreaseDecreaseInDueToEmployeesCurrent
4982000
us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
6410000
us-gaap Cash And Cash Equivalents Period Increase Decrease
CashAndCashEquivalentsPeriodIncreaseDecrease
16134000
us-gaap Increase Decrease In Prepaid Deferred Expense And Other Assets
IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets
-955000
us-gaap Proceeds From Issuance Initial Public Offering
ProceedsFromIssuanceInitialPublicOffering
32364000
us-gaap Sales Revenue Net
SalesRevenueNet
198183000
us-gaap Increase Decrease In Accounts Receivable
IncreaseDecreaseInAccountsReceivable
6803000
us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Net Of Tax
OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentNetOfTax
-852000
us-gaap Income Loss From Continuing Operations Before Income Taxes Minority Interest And Income Loss From Equity Method Investments
IncomeLossFromContinuingOperationsBeforeIncomeTaxesMinorityInterestAndIncomeLossFromEquityMethodInvestments
30236000
us-gaap Net Cash Provided By Used In Financing Activities
NetCashProvidedByUsedInFinancingActivities
31097000
us-gaap Cost Of Revenue
CostOfRevenue
123978000
us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Forfeitures In Period
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresInPeriod
35295 shares
us-gaap Payments Of Stock Issuance Costs
PaymentsOfStockIssuanceCosts
1766000
us-gaap Increase Decrease In Accrued Liabilities And Other Operating Liabilities
IncreaseDecreaseInAccruedLiabilitiesAndOtherOperatingLiabilities
-14516000
us-gaap Loss Contingency Loss In Period
LossContingencyLossInPeriod
0
us-gaap Deferred Income Tax Expense Benefit
DeferredIncomeTaxExpenseBenefit
39000
us-gaap Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount
AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount
1396000 shares
us-gaap Net Income Loss
NetIncomeLoss
25420000
us-gaap Excess Tax Benefit From Share Based Compensation Financing Activities
ExcessTaxBenefitFromShareBasedCompensationFinancingActivities
301000
us-gaap Foreign Currency Transaction Gain Loss Before Tax
ForeignCurrencyTransactionGainLossBeforeTax
-1314000
us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
38338000
us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Grants In Period
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod
1424645 shares
us-gaap Goodwill Acquired During Period
GoodwillAcquiredDuringPeriod
4383000
us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
4816000
us-gaap Effect Of Exchange Rate On Cash And Cash Equivalents
EffectOfExchangeRateOnCashAndCashEquivalents
-54000
us-gaap Increase Decrease In Accrued Taxes Payable
IncreaseDecreaseInAccruedTaxesPayable
-2524000
us-gaap Net Income Loss Available To Common Stockholders Basic
NetIncomeLossAvailableToCommonStockholdersBasic
22244000
us-gaap Liabilities Assumed1
LiabilitiesAssumed1
0
epam Accretion Of Redeemable Convertible Preferred Stock
AccretionOfRedeemableConvertiblePreferredStock
0
epam Share Based Compensation Arrangement By Share Based Payment Award Options Forfeitures In Period Total Intrinsic Value
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresInPeriodTotalIntrinsicValue
52000
epam Interest And Other Income Nonoperating
InterestAndOtherIncomeNonoperating
936000
epam Provision And Recovery For Doubtful Accounts
ProvisionAndRecoveryForDoubtfulAccounts
-7000
epam Share Based Compensation Arrangement By Share Based Payment Award Options Grants In Period Intrinsic Value
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodIntrinsicValue
271000
epam Effective Income Tax Rate
EffectiveIncomeTaxRate
0.159 pure
epam Percentage Of Tax Basis Of Acquired Goodwill Amortized
PercentageOfTaxBasisOfAcquiredGoodwillAmortized
0.75 pure
epam Annual Amortization Rate For Acquired Goodwill
AnnualAmortizationRateForAcquiredGoodwill
0.07 pure
CY2012Q1 us-gaap Stockholders Equity Note Stock Split Conversion Ratio
StockholdersEquityNoteStockSplitConversionRatio
8 pure
CY2012Q1 us-gaap Stockholders Equity Note Stock Split
StockholdersEquityNoteStockSplit
The ratio by which the then outstanding shares of Series A-1 Preferred, Series A-2 Preferred and Series A-3 Preferred Stock were convertible into shares of common stock had been adjusted to reflect the effects of the common stock split, such that each share of preferred stock was convertible into eight shares of common stock.
CY2011Q2 us-gaap Operating Income Loss
OperatingIncomeLoss
10878000
CY2011Q2 us-gaap Comprehensive Income Net Of Tax
ComprehensiveIncomeNetOfTax
8445000
CY2011Q2 us-gaap Share Based Compensation
ShareBasedCompensation
655000
CY2011Q2 us-gaap Depreciation And Amortization
DepreciationAndAmortization
1959000
CY2011Q2 us-gaap Preferred Stock Dividends And Other Adjustments
PreferredStockDividendsAndOtherAdjustments
-15271000
CY2011Q2 us-gaap Other Operating Income Expense Net
OtherOperatingIncomeExpenseNet
-21000
CY2011Q2 us-gaap Sales Revenue Net
SalesRevenueNet
80176000
CY2011Q2 us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Net Of Tax
OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentNetOfTax
168000
CY2011Q2 us-gaap Income Loss From Continuing Operations Before Income Taxes Minority Interest And Income Loss From Equity Method Investments
IncomeLossFromContinuingOperationsBeforeIncomeTaxesMinorityInterestAndIncomeLossFromEquityMethodInvestments
10603000
CY2011Q2 us-gaap Cost Of Revenue
CostOfRevenue
48816000
CY2011Q2 us-gaap Net Income Loss
NetIncomeLoss
8277000
CY2011Q2 us-gaap Foreign Currency Transaction Gain Loss Before Tax
ForeignCurrencyTransactionGainLossBeforeTax
-703000
CY2011Q2 us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
16805000
CY2011Q2 us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
2326000
CY2011Q2 us-gaap Goodwill Impairment Loss
GoodwillImpairmentLoss
1697000
CY2011Q2 us-gaap Net Income Loss Available To Common Stockholders Basic
NetIncomeLossAvailableToCommonStockholdersBasic
-6994000
CY2011Q2 epam Interest And Other Income Nonoperating
InterestAndOtherIncomeNonoperating
428000
CY2011Q2 epam Effective Income Tax Rate
EffectiveIncomeTaxRate
0.219 pure
CY2012Q2 us-gaap Operating Income Loss
OperatingIncomeLoss
16830000
CY2012Q2 us-gaap Comprehensive Income Net Of Tax
ComprehensiveIncomeNetOfTax
10857000
CY2012Q2 us-gaap Share Based Compensation
ShareBasedCompensation
1773000
CY2012Q2 us-gaap Depreciation And Amortization
DepreciationAndAmortization
2423000
CY2012Q2 us-gaap Other Operating Income Expense Net
OtherOperatingIncomeExpenseNet
-33000
CY2012Q2 us-gaap Sales Revenue Net
SalesRevenueNet
103800000
CY2012Q2 us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Net Of Tax
OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentNetOfTax
-2464000
CY2012Q2 us-gaap Income Loss From Continuing Operations Before Income Taxes Minority Interest And Income Loss From Equity Method Investments
IncomeLossFromContinuingOperationsBeforeIncomeTaxesMinorityInterestAndIncomeLossFromEquityMethodInvestments
15896000
CY2012Q2 us-gaap Cost Of Revenue
CostOfRevenue
63803000
CY2012Q2 us-gaap Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount
AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount
1393000 shares
CY2012Q2 us-gaap Net Income Loss
NetIncomeLoss
13321000
CY2012Q2 us-gaap Foreign Currency Transaction Gain Loss Before Tax
ForeignCurrencyTransactionGainLossBeforeTax
-1394000
CY2012Q2 us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
20711000
CY2012Q2 us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
2575000
CY2012Q2 us-gaap Net Income Loss Available To Common Stockholders Basic
NetIncomeLossAvailableToCommonStockholdersBasic
13321000
CY2012Q2 epam Interest And Other Income Nonoperating
InterestAndOtherIncomeNonoperating
460000
CY2012Q2 epam Effective Income Tax Rate
EffectiveIncomeTaxRate
0.162 pure

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