Share-Based Compensation

9 Months Ended

Sep. 29, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

Stock Options

Options activity for the nine months ended September 29, 2012 was as follows:

(In thousands, except per share data)	Number of Shares		Weighted-Average Exercise Price		Aggregate Intrinsic  Value		Weighted-Average Remaining Contractual Term (Yrs)
Options
Outstanding at beginning of year	12,909		$	23.78
Granted	1,751		81.32
Exercised	(1,911	)	16.68
Forfeited and expired	(228	)	48.23
Outstanding as of September 29, 2012	12,521		$	32.47	$	569,674	6.36
Exercisable as of September 29, 2012	7,613		$	16.86	$	460,814	5.10

We valued options granted in 2012 under the Cerner Corporation 2011 Omnibus Equity Incentive Plan using the following weighted average assumptions:

Expected volatility (%)	34.8
Expected term (yrs)	9.1
Risk-free rate (%)	2.1
Fair value per option	$	37.3

As of September 29, 2012, there was $102.0 million of total unrecognized compensation cost related to stock options granted under all plans. That cost is expected to be recognized over a weighted-average period of 3.30 years.

Non-vested Shares

Non-vested share activity for the nine months ended September 29, 2012 was as follows:

(In thousands, except per share data)	Number of Shares		Weighted-Average Grant Date Fair Value
Restricted Stock
Outstanding at beginning of year	254		$	47.75
Granted	78		76.30
Vested	(48	)	50.85
Forfeited	—		—
Outstanding as of September 29, 2012	284		$	55.14

As of September 29, 2012, there was $8.6 million of total unrecognized compensation cost related to non-vested share awards granted under all plans. That cost is expected to be recognized over a weighted-average period of 1.36 years.

The following table presents the total compensation expense recognized in the Condensed Consolidated Statements of Operations with respect to stock options, non-vested shares and our Associate Stock Purchase Plan:

	Three Months Ended						Nine Months Ended
(In thousands)	2012			2011			2012			2011
Stock option and non-vested share compensation expense	$	9,721		$	7,232		$	26,304		$	20,363
Associate stock purchase plan expense	719			458			2,064			1,506
Amounts capitalized in software development costs, net of amortization	(218		)	(175		)	(600		)	(425		)
Amounts charged against earnings, before income tax benefit	$	10,222		$	7,515		$	27,768		$	21,444
Amount of related income tax benefit recognized in earnings	$	3,910		$	2,875		$	10,621		$	8,182