EPAM Systems, Inc. : EPAM Systems Reports Record Results for Fourth Quarter and Full Year 2012

 EPAM Systems, Inc. : EPAM Systems Reports Record Results for Fourth Quarter
                              and Full Year 2012

  *Fourth Quarter revenues up 14% sequentially and 32% year-over-year

  *Annual revenues of $433.8 million, up 30% year-over-year 

  *Double digit growth in profitability achieved in both fourth quarter and
    full year 2012

  *2013 revenues expected to increase by 23% to 25%

Newtown, PA - February 27, 2013 - EPAM Systems, Inc. (NYSE: EPAM), a leading
provider of complex software engineering solutions and a leader in Central and
Eastern European IT services delivery, today announced record results for its
fourth quarter and full year ended December 31, 2012.

Arkadiy Dobkin, CEO and President commented, "Our strong fourth quarter and
full year 2012 results demonstrate the competitiveness of our business
proposition. By combining our core strengths in software engineering with our
strong expertise in a number of emerging technologies and our fast developing
domain knowledge, EPAM is differentiated as a provider of high quality,
complex technology and business solutions to meet the rapidly-changing needs
of global clients. Consequently, we reported significant year-over-year
revenue growth across our three geographic regions and most of our key
vertical markets in both the fourth quarter and full year 2012.

Profitability was in line with our guidance, as we continued to post
double-digit year-on-year improvement in both the fourth quarter and full year
2012, while investing in people and infrastructure that will drive future
growth. At the end of the fourth quarter, we completed an important strategic
transaction with the acquisition of Empathy Lab, a digital strategy and
multi-channel experience design firm that significantly strengthens our
position as a global provider of end-to-end digital services and multi-channel
eCommerce solutions. The integration of Empathy Lab is currently underway, and
we are working together on business development initiatives to drive revenue
synergies."

Fourth Quarter 2012 Highlights

  *Revenues increased to a record $125.5 million, up 32.0% year-on-year and
    14.0% sequentially

  *GAAP income from operations was $18.7 million, an increase of 20.9%
    compared to $15.4 million in the fourth quarter of 2011

  *Non-GAAP income from operations was $20.6 million, an increase of $4.2
    million or 26.0%, from $16.3 million in the fourth quarter of 2011 

  *Quarterly diluted earnings per share (EPS) on a GAAP basis was $0.32, up
    from $0.29 in the year-ago quarter 

  *Non-GAAP quarterly diluted EPS was $0.37, up 23% from $0.30 in the
    year-ago quarter 

EPAM generated cash from operations of $35.8 million in the fourth quarter of
2012, an increase of $9.4 million generated over the fourth quarter of 2011.

Reconciliations of non-GAAP financial measures to operating results and
diluted EPS are included at the end of this release.

Full Year 2012 Highlights

  *Revenues increased 29.7% to a record $433.8 million, up from $334.5
    million reported in 2011

  *GAAP income from operations for 2012 was $66.0 million, an increase of
    20.0% over 2011 

  *Non-GAAP income from operations was $74.9 million compared to $60.9
    million in 2011

  *Diluted EPS on a GAAP basis was $1.17, compared to $0.63 in the previous
    year 

  *Non-GAAP diluted EPS was $1.42, compared to $1.19 in 2011

  *Net headcount for IT professionals increased 21.9% to 8,495 as of December
    31, 2012, from 6,968 as of December 31, 2011 

For full year 2012, EPAM generated operating cash flow of $48.5 million. As
of December 31, 2012 EPAM had cash and cash equivalents of $118.1 million.

Full Year and First Quarter 2013 Outlook

"Based on our visibility and the market conditions we see for our service
offerings, we are confident that our growth momentum will continue in 2013 and
beyond. To support this expansion, we will continue to invest in the
development of technical competencies that are critical to our success and to
build our on-site presence to better support complex solution delivery
requirements. Additionally, we will evaluate organic opportunities as well as
acquisitions to expand our scope of services, complement existing technical
expertise, and add new vertical markets," concluded Mr. Dobkin.

Based on current conditions, EPAM expects year-over-year revenue growth in the
range of 23% to 25%. Non-GAAP net income growth for 2013 is expected to be in
the range of 12% to 15% year-over-year, with an increase in the effective tax
rate to approximately 20%.

For the first quarter of 2013, EPAM expects revenue between $122 million and
$125 million, representing a growth rate of 29% to 31% over first quarter 2012
revenue, which includes results from two acquisitions made in 2012 that were
not in the comparable period. First quarter 2013 non-GAAP diluted EPS is
expected to be in the range of $0.32 to $0.34 based on an estimated first
quarter 2013 weighted average of 47.6 million diluted shares.

Conference Call Information

EPAM will hold a conference call to discuss its fourth quarter and full year
2012 results at 8:00 a.m. Eastern time, on Thursday, February 28, 2013. A live
webcast of the call may be accessed over the Internet from EPAM's Investor
Relations website at investors.epam.com. Participants should follow the
instructions provided on the website to download and install the necessary
audio applications. The conference call also is available by dialing
1-877-407-0784 (domestic) or 1-201-689-8560 (international) and entering
passcode 409154. Participants should ask for the EPAM Systems fourth quarter
and full year 2012 conference call.

A replay of the live conference call will be available approximately one hour
after the call. The replay will be available on EPAM's website or by dialing
1-877-870-5176 (domestic) or 1-858-384-5517 (international) and entering the
replay passcode 409154. The telephonic replay will be available until March
10, 2013.

About EPAM Systems

Established in 1993, EPAM Systems, Inc. (NYSE:EPAM) provides software
engineering solutions through its leading Central and Eastern European service
delivery platform. Headquartered in the United States, EPAM employs
approximately 8,500 IT professionals and serves clients worldwide from its
locations in the United States, Canada, UK, Switzerland, Germany, Sweden,
Belarus, Hungary, Russia, Ukraine, Kazakhstan and Poland.

Non-GAAP Financial Measures

EPAM supplements results reported in accordance with principles generally
accepted in the United States, referred to as GAAP, with non-GAAP financial
measures. Management believes these measures help illustrate underlying trends
in EPAM's business and uses the measures to establish budgets and operational
goals, communicated internally and externally, for managing EPAM's business
and evaluating its performance. Management also believes these measures help
investors compare EPAM's operating performance with its results in prior
periods and compare EPAM and similar companies. EPAM anticipates that it will
continue to report both GAAP and certain non-GAAP financial measures in its
financial results, including non-GAAP results that exclude stock-based
compensation expense, write-off and recovery, amortization of purchased
intangible assets, goodwill impairment, legal settlement, foreign exchange
gains and losses, and M&A costs. However, because EPAM's reported non-GAAP
financial measures are not calculated according to GAAP, these measures are
not comparable to GAAP and may not necessarily be comparable to similarly
described non-GAAP measures reported by other companies within EPAM's
industry. Consequently, EPAM's non-GAAP financial measures should not be
evaluated in isolation or supplant comparable GAAP measures, but, rather,
should be considered together with its consolidated financial statements,
which are prepared according to GAAP.

Forward-Looking Statements

This press release includes statements which may constitute forward-looking
statements made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, the accuracy of which are
necessarily subject to risks, uncertainties, and assumptions as to future
events that may not prove to be accurate. Factors that could cause actual
results to differ materially from those expressed or implied include general
economic conditions and the factors discussed in our most recent Annual Report
on Form 10-K and other filings with the Securities and Exchange Commission.
EPAM undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events, or
otherwise, except as may be required under applicable securities law.

Contact:
EPAM Systems, Inc.
Ilya Cantor, Chief Financial Officer
Phone: +1-267-759-9000 x64588
Fax: +1-267-759-8989
investor_relations@epam.com

                      EPAM SYSTEMS INC. AND SUBSIDIARIES

     CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

                              Three Months Ended             Year Ended
                                 December 31,               December 31,
                              2012          2011         2012         2011
                            (in thousands, except share and per share data)
Revenues                      $125,538       $95,127     $433,799     $334,528
Operating expenses:
     Cost of revenues
     (exclusive of
     depreciation and                                             
     amortization)              77,284      59,388      270,361     205,336
     Selling, general and
     administrative                                               
     expenses                   26,377      18,510       85,868     64,930
     Depreciation and                                             
     amortization expense        3,208      1,806       10,882     7,538
     Goodwill impairment                       
     loss                              -              
                                   -                        -      1,697
     Other operating                                  
     expenses, net                                         
                                   13          (4)         682           19
   Income from operations       18,656        15,427       66,006       55,008
   Interest and other                                             
   income, net                     519       422        1,941     1,422
                                                     
   Foreign exchange loss                                    
                                 (135)     (500)     (2,084)    (3,638)
   Income before
   provision for income
   taxes                        19,040        15,349       65,863       52,792
   Provision for income
   taxes                         4,041         2,965       11,379        8,439
Net Income                     $14,999       $12,384      $54,484      $44,353
Comprehensive income           $15,640       $11,535      $56,977    $43,103 
                                               
Accretion of preferred        -        -        -    (17,563)
stock                                                           
Net income allocated to               (6,941)           (15,025)
participating securities      -                     (3,341)
Net income available for        14,999         5,443       51,143       11,765
common stockholders
Net income per share of
common stock:
     Basic (common)               0.35          0.32         1.27         0.69
                                                     
     Basic (puttable          -           0.32       -         1.42
     common)                                                    
                                  0.32          0.29                0.63
     Diluted (common)                                      1.17
                                                     
     Diluted (puttable        -           0.29       -         0.77
     common)                                                    
Shares used in
calculation of net income
per share of common
stock:
     Basic (common)             43,294        17,141       40,190       17,094
                                                     
     Basic (puttable          -             18       -           18
     common)                                                    
     Diluted (common)           46,604        20,520       43,821       20,473
                                                     
     Diluted (puttable        -             18       -           18
     common)                                                    

                      EPAM SYSTEMS INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS

                                                  As of             As of
                                               December 31,      December31,
                                                   2012              2011
                                               (in thousands, except share and
                                                       per share data)
Assets
Current assets
     Cash and cash equivalents                     $118,112            $88,796
     Accounts receivable, net of allowance of        78,906             59,472
     $2,203 and $2,250, respectively
     Unbilled revenues                               33,414             24,475
     Prepaid and other current assets                12,264              6,436
     Time deposits                                    1,006                - 
     Restricted cash, current                           660                - 
     Deferred tax assets, current                   6,593               4,384
                Total current assets                250,955            183,563
Property and equipment, net                          53,135             35,482
Restricted cash, long-term                              467              2,582
Intangible assets, net                               16,834              1,251
Goodwill                                             22,698              8,169
Deferred tax assets, long-term                      6,093               1,875
Other long-term assets                                  632              2,691
Total assets                                       $350,814           $235,613
Liabilities
Current liabilities
     Accounts payable                                $6,095             $2,714
     Accrued expenses                                19,814             24,782
     Deferred revenue                                 6,369              6,949
     Due to employees                                12,026              8,234
     Taxes payable                                   14,557              8,712
     Deferred tax liabilities, current                  491              1,736
                Total current liabilities            59,352             53,127
Deferred revenue, long-term                           1,263                  -
Taxes payable, long-term                              1,228              1,204
Deferred tax liabilities, long-term                   2,691                283
Total liabilities                                    64,534             54,614
Commitments and contingencies
Preferred stock, $.001 par value; 0 and
5,000,000 authorized at December 31, 2012 and
December 31, 2011; 0 and 2,054,935 Series A-1
convertible redeemable preferred stock issued
and outstanding at December 31, 2012 and
December 31, 2011; $.001 par value 0 and                -              85,940
945,114 authorized at December 31, 2012 and
December 31, 2011, 0 and 384,804 Series A-2
convertible redeemable preferred stock issued
and outstanding at December 31, 2012 and
December 31, 2011
Stockholders' equity
Common stock, $.001 par value; 160,000,000
authorized; 45,398,523 and 18,914,616 shares
issued, 44,442,494 and 17,158,904 shares                 44                 17
outstanding at December 31, 2012 and December
31, 2011, respectively
Preferred stock, $.001 par value; 0 and
290,277 authorized Series A-3 convertible
preferred stock issued and outstanding at               -                 - 
December 31, 2012 and December 31, 2011,
respectively
Additional paid-in capital                          166,962             40,020
Retained earnings                                   128,992             74,508
Treasury stock                                     (8,697)          (15,972)
Accumulated other comprehensive loss               (1,021)           (3,514)
Total stockholders' equity                          286,280             95,059
Total liabilities and stockholders' equity         $350,814           $235,613

                     EPAM SYSTEMS, INC. AND SUBSIDIARIES
  Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Measures
                                 (Unaudited)
                   (In thousands, except per share amounts)

                 Three Months Ended                      Year Ended
                    December 31,                        December 31,
            2012       2012        2012         2012       2012        2012
            GAAP    Adjustments  Non-GAAP       GAAP    Adjustments  Non-GAAP
Income
from
operations $18,656       $1,896   $20,552 (a) $66,006       $8,934   $74,940 (a)
Operating
margin       14.9%        1.50%     16.4%        15.2%        2.10%     17.3%
Net income $14,999       $2,031   $17,030 (b) $54,484      $11,018   $65,502 (b)
  Diluted
  earnings
  per
  share      $0.32                  $0.37 (c)   $1.17                  $1.42 (c)

                 Three Months Ended                      Year Ended
                    December 31,                        December 31,
            2011       2011        2011         2011       2011        2011
            GAAP    Adjustments  Non-GAAP       GAAP    Adjustments  Non-GAAP
Income
from
operations $15,427         $887   $16,314 (a) $55,008       $5,869   $60,877 (a)
Operating
margin       16.2%         0.9%     17.1%        16.4%         1.8%     18.2%
Net income $12,384       $1,387   $13,771 (b) $44,353       $9,507   $53,860 (b)
  Diluted
  earnings
  per
  share      $0.29                  $0.30 (c)   $0.63                  $1.19 (c)

Notes:
                                  Three Months Ended          Year Ended
                                     December 31,            December 31,
                                   2012         2011       2012        2011
(a)
                                                  
       Adjustment to GAAP                                   
       Income from operations:       1,896        887      8,934      5,869
       Stock-based
       compensation, of which:        1,457         712      6,826       2,866
         reported in cost of                               
         revenues                     323     418     2,809      1,365
         reported in sales,
         general and
         administrative                                    
         expenses                    1,134     294     4,017      1,501
       Amortization of
       purchased intangible
       assets                           313         140      1,024         779
       M&A costs                        126          35        500         527
                                            
                                     -                         
       One-time charges                           -         584      - 
                                            
                                     -       
       Goodwill write-off                         -         -        1,697
(b)
       Adjustment to GAAP Net                               
       Income:                       2,031     1,387    11,018      9,507
       Stock-based
       compensation, of which:        1,457         712      6,826       2,866
         reported in cost of                               
         revenues                     323     418     2,809      1,365
         reported in sales,
         general and
         administrative                                    
         expenses                    1,134     294     4,017      1,501
       Amortization of
       purchased intangible
       assets                           313         140      1,024         779
       M&A costs                        126          35        500         527
                                            
                                     -                         
       One-time charges                           -         584      - 
                                            
                                     -       
       Goodwill write-off                         -         -        1,697
       Foreign exchange (gains)
       and losses                       135         500      2,084       3,638

(c)
    Non-GAAP diluted earnings per share presents non-GAAP net income
    divided by Non-GAAP weighted average diluted common shares
    outstanding. Non-GAAP weighted average diluted common shares
    outstanding assumes (i) the 2.9 million shares EPAM sold in its
    February 2012 initial public offering were outstanding as of January
    1, 2010, and (ii) the conversion of the outstanding preferred stock
    into common stock on an as-converted basis. The following table
    presents the non-GAAP weighted average diluted common shares
    outstanding for the periods presented:

                                            Three Months Ended    Year Ended
                                               December 31,      December 31,
                                              2012      2011     2012    2011
 Non-GAAP weighted average diluted common
 shares outstanding                          46,604    45,278   46,123  45,250

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Source: EPAM Systems, Inc. via Thomson Reuters ONE
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