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0000950123-11-014774.txt : 20110216
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20110216171658
ACCESSION NUMBER: 0000950123-11-014774
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 13
CONFORMED PERIOD OF REPORT: 20110101
FILED AS OF DATE: 20110216
DATE AS OF CHANGE: 20110216
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CERNER CORP /MO/
CENTRAL INDEX KEY: 0000804753
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
IRS NUMBER: 431196944
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0102
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-15386
FILM NUMBER: 11618470
BUSINESS ADDRESS:
STREET 1: 2800 ROCKCREEK PKWY-STE 601
CITY: KANSAS CITY
STATE: MO
ZIP: 64117
BUSINESS PHONE: 8162211024
MAIL ADDRESS:
STREET 1: 2800 ROCKCREEK PKWY
STREET 2: DROP 1624
CITY: KANSAS CITY
STATE: MO
ZIP: 64117
10-K
1
c62126e10vk.htm
FORM 10-K
e10vk
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: January 1, 2011
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-15386
CERNER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
43-1196944
(State or other jurisdiction of
(I.R.S. Employer
Incorporation or organization)
Identification No.)
2800 Rockcreek Parkway
North Kansas City, MO
64117
(Address of principal executive offices)
(Zip Code)
(816) 221-1024
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: Common Stock, $.01 par value per share
(Title of Class)
NASDAQ Stock Market
(Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
Yes [X] No [ ]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.
Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(§229.405 of this chapter) is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer
[ ] Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes [ ] No [X]
As of July 3, 2010, the aggregate market value of the registrants common stock held by
non-affiliates of the registrant was $5,631,943,354 based on the closing sale price as reported on
the NASDAQ Global Select Market.
Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date.
Class
Outstanding at February 10, 2011
[Common Stock, $.01 par value per share]
83,380,384 shares
DOCUMENTS INCORPORATED BY REFERENCE
Parts Into Which
Document
Incorporated
Proxy Statement for the Annual Shareholders Meeting to be
held May 27, 2011 (Proxy Statement)
Cerner Corporation is a Delaware business corporation formed in 1980. Unless the context otherwise
requires, references in this report to Cerner, the Company, we, us or our mean Cerner
Corporation and its subsidiaries.
Our corporate headquarters are located at 2800 Rockcreek Parkway, North Kansas City, Missouri
64117. Our telephone number is 816.221.1024. Our Web site address, which we use to communicate
important business information, can be accessed at: www.cerner.com. We make our annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those
reports available free of charge on or through this Web site as soon as reasonably practicable
after such material is electronically filed with or furnished to the Securities and Exchange
Commission (SEC).
Cerners mission is to contribute to the systemic improvements of healthcare delivery and the
health of communities. We are a leading supplier of healthcare information technology (HIT)
solutions, healthcare devices and related services, and are transforming healthcare by eliminating
error, variance and waste for healthcare providers and consumers. Cerner® solutions optimize
processes for healthcare organizations ranging in size from single-doctor practices, to health
systems, to entire countries, for the pharmaceutical and medical device industries, for consumers
of healthcare and for the healthcare commerce system. These solutions are licensed by approximately
9,000 facilities around the world, including more than 2,600 hospitals; 3,500 physician practices
covering more than 30,000 physicians; 500 ambulatory facilities, such as laboratories, ambulatory
centers, cardiac facilities, radiology clinics and surgery centers; 800 home health facilities; and
1,600 retail pharmacies.
We design and develop most of our software solutions on the unified Cerner Millennium®
architecture, a person-centric computing framework, which combines clinical, financial and
management information systems. This architecture allows providers to securely access an
individuals electronic health record (EHR) at the point of care, and it organizes and proactively
delivers information to meet the specific needs of physicians, nurses, laboratory technicians,
pharmacists, front- and back-office professionals and consumers.
We also offer a broad range of services, including implementation and training, remote hosting,
operational management services, revenue cycle services, support and maintenance, healthcare data
analysis, clinical process optimization, transaction processing, employer health centers, employee
wellness programs and third party administrator (TPA) services for employer-based health plans.
The following table presents our consolidated revenues by major solutions and services and by
segment, as a percentage of total revenues:
We believe there are several factors that are favorable for the HIT industry over the next decade,
despite some lingering weakness in the global economy. Because HIT solutions play an important role
in healthcare by improving safety, efficiency and reducing cost, they are often viewed as more
strategic than other capital purchases. Most United States healthcare providers also recognize that
they must invest in HIT to meet regulatory, compliance and government reimbursement requirements
and incentive opportunities. In addition, with the Centers for Medicare and Medicaid Services
estimating United States healthcare spending at $2.6 trillion or 17.5 percent of 2010 Gross
Domestic Product, politicians and policymakers agree that the growing cost of our healthcare system
is unsustainable. Leaders of both political parties recognize that the intelligent use of
information systems will improve health outcomes and, correspondingly, drive down costs. This
belief is supported by a 2005 study by RAND Corp., which estimated that the widespread adoption of
HIT in the United States could cut healthcare costs by $162 billion annually.
The broad recognition that HIT is essential to helping control healthcare costs and improve quality
contributed to the inclusion of HIT incentives in the American Recovery and Reinvestment Act
(ARRA). The Health Information Technology for Economic and Clinical Health (HITECH) provisions
within ARRA include more than $35 billion in incentives for healthcare organizations to modernize
operations through meaningful use of HIT. These incentives are contributing to increased demand
for HIT solutions and services in the United States.
Another element in the United States marketplace is the recently passed healthcare reform
legislation. We believe the legislation, which promises to drive insurance coverage to an estimated
32 million additional consumers, could have many second order effects on our clients. For example,
healthcare providers may face increased volumes that could create capacity constraints, and they
may find it challenging to profitably provide care at the planned reimbursement rates under the
expanded coverage models. We also expect additional compliance and reporting challenges for our
clients in the areas of pay-for-quality, ICD-10 coding requirements, and waste, fraud and abuse
measures.
We believe the above factors create strong incentives for providers to maximize efficiency and
create the need for additional investments in HIT solutions and services. Cerner is well positioned
to benefit from this expected increase in demand due to our large footprint in United States
hospitals and physician practices and our proven ability to deliver value to our clients.
Outside the United States, the economic downturn of the last few years has impacted and could
continue to impact our results. However, we believe long-term revenue growth opportunities outside
the United States remain significant because other countries are also focused on controlling
healthcare spending while improving the efficiency and quality of care that is delivered, and many
of these countries recognize HIT as an important piece of the solution to these issues.
In summary, while the current economic environment has impacted our business, we believe the
fundamental value proposition of HIT remains strong. The HIT industry will likely benefit as
healthcare providers and governments continue to recognize that these solutions and services
contribute to safer, more efficient healthcare.
Cerner Vision
Cerners vision has evolved from a fundamental thought: Healthcare should revolve around the
individual, not the encounter. This concept led to Cerners vision of the unified Cerner Millennium
architecture and a Community Health Model, which encompasses four steps:
Automate the Care Process
We offer a longitudinal, person-centric EHR, which gives clinicians electronic access to the right
information at the right time and place to achieve optimal health outcomes.
We are dedicated to building a personal health system. Medical information and care regimens
accessible from home empower consumers to effectively manage their conditions and adhere to
treatment plans, creating a new medium between physicians and individuals.
Structure the Knowledge
We are dedicated to building systems that help bring the best science to every medical decision by
structuring, storing and studying the content surrounding each care episode to achieve optimal
clinical and financial outcomes.
Close the Loop
Incorporating a medical discovery into daily practice can take as long as 10 years. We are
dedicated to building systems that implement evidence-based medicine, reducing the average time
between discovery of an improved method to a change in the standard of care.
As our vision evolves, we expect medicine will become increasingly personalized and technology more
accessible. We are creating new solutions and collaborative, information-sharing networks for large
user communities, including strategies to:
Connect all stakeholders in the healthcare system, including payers (employers and
governments), providers and consumers
Remove clinical, financial and administrative friction
Create a secure, transparent and open network for data sharing to improve disease
management and facilitate personalized medicine
To achieve this vision, we are leveraging the Cerner Millennium architecture and expanding our
solutions and services, as discussed below.
Cerner Growth Strategy
Our business strategies are anchored by our industry-leading solution and device architectures, the
breadth and depth of our solutions and services, our proven ability to deliver value, and, most
importantly, the success of our clients. A core strength that has led to this strong market
position is our proven ability to innovate, which has driven consistent expansion of solutions and
services, entry into new markets and strong long-term growth.
We believe our strengths position us well to gain market share in the United States during a period
of expected strong demand driven by the HITECH provisions of ARRA and the nations focus on
improving the efficiency and quality of healthcare. We also have a strong global brand and a
presence in more than 25 countries and believe we have a good opportunity to gain market share
outside of the United States.
We also have a significant opportunity to grow revenues by expanding our solution footprint in
existing clients. In addition to the opportunity to expand penetration of our core solutions, such
as EHRs and computerized physician order entry, we have a broad range of complementary solutions
that can be offered into our existing client base. Examples include solutions and services for
womens health, anesthesiology, imaging, clinical process optimization, critical care, medical
device connectivity, emergency department, revenue cycle and surgery.
Additionally, we have introduced new services targeted at capturing a larger percent of our
clients existing IT spending. These services leverage our proven operational capabilities and the
success of our CernerWorksSM managed services business, where we have demonstrated the
ability to improve our clients service levels at a cost that is at or below amounts they were
previously spending. One of these new services is Cerner ITWorksSM, a suite of services
that improve the ability of hospital IT departments to meet their organizations needs while also
creating a closer alignment between Cerner and our clients. A second example is Cerner
RevWorksSM, which includes solutions and services to help healthcare organizations
improve their revenue cycle functions.
We have made good progress over the past several years at reducing the total cost of ownership of
our solutions, which expands our end market opportunities by allowing us to offer lower-cost,
higher-value solutions and services to smaller community hospitals, critical access hospitals and
physician practices. For example, our CommunityWorks offering leverages a shared instance of the
Cerner Millennium platform across multiple clients, which decreases the total cost of ownership for
these clients. Our ability to address these markets has also been
aided by our Bedrock® technology, which automates much
of the implementation and management of the
Cerner Millennium platform. We have also streamlined implementations and made them more
predictable through our MethodM® implementation methodology, which draws upon practices proven to
be effective during thousands of past implementations. Additionally, we are reducing up-front
hardware costs and ongoing technology obsolescence risks through our remote-hosted, managed
services offering, CernerWorks.
We also expect to drive growth over the course of the next decade through initiatives outside the
core HIT market. For example, we offer clinic, pharmacy and wellness services directly to
employers and we expanded our presence in the employer-sponsored health center market with the
acquisition of IMC Health Care, Inc. in January 2010. Additionally, as described below, we believe
being able to connect employers, governments and consumers directly with their healthcare providers
through a New Middle presents a substantial growth opportunity as we aim to help eliminate the
friction that consumes more than 30 percent of healthcare spending.
Creating the Cerner Network and The New Middle
Several years ago, we introduced a surveillance system called the LightsOn Network®, which
identifies performance problems in real time and has the ability to predict issues that could
create system vulnerability. With more than 300 participating clients, the LightsOn solution has
become an evidence-based network that enhances performance and allows our clients to maximize the
value they gain from our systems. Our LightsOn solution also shows our ability to create a
networka common platform of learning and improvements from which all our clients can benefit.
Along these lines, we have created the uCern platform, a collaboration and social networking
platform which gives clients a place where they can collaborate with peers or Cerner associates
about topics ranging from healthcare reform to solution enhancements to project status updates.
Approximately 95 percent of our core Cerner Millennium clients actively engage on this platform.
Additionally, we have created the uDevelop solution, a collaborative ecosystem that supports a
unique audience of engineers, including both our associates and external developers, who work to
improve our solutions; and the uCern Store, which offers our clients quick access to innovations
developed by Cerner, as well as outside organizations and individuals.
To highlight one area where coordinating information across the fragmented delivery system is
gaining traction, our Cerner Network and Health Information Exchange (HIE) offerings create better
clinical integration and coordination of care by facilitating secure electronic flow of data
between hospitals, physician practices, and other stakeholders, regardless of the EHR system being
used. We have had early success with our clients in building out HIEs and Cerner Network services
that are providing value, and nearly 50 million clinical and financial transactions go across the
network each month.
Another key element of our strategy for improving the coordination and quality of care is our
Healthe IntentTM platform, a cloud-based platform that we expect to be the basis for
many future offerings. In 2010, we launched Healthe Intent Chart Search, our first solution on
this platform. Healthe Intent Chart Search leverages knowledge of the clinical meanings of words
located within the EMR as well as the context in which those words occur to create algorithms that
identify and rank the most important information contextually. This capability allows the
physician to efficiently search through a patients health record and identify relevant information
in a matter of seconds. In the coming years, we believe the Healthe Intent platform will continue
to evolve in sophistication to the point where it can anticipate and determine the clinical intent
based on the behavior of the specific user, the history of the patient and the context of prior
actions.
The Healthe Intent platform also provides the ability to apply sophisticated, statistical
algorithms against contextual clinical activity to recommend clinical action. For example, our
first national Health Agent is an intelligent mechanism developed in collaboration with clients,
which can assist in detecting the conditions that indicate a patient may be developing Sepsis, a
potentially fatal condition in which the bloodstream is overwhelmed by bacteria. Nearly 750,000
Americans are affected by Sepsis each year. Early results based on initial client use of this
algorithm have reflected remarkable reductions in Sepsis mortality rates, and we believe that
moving this capability to a Health Agent in the cloud will allow us to demonstrate the speed at
which new capabilities and evidence can be deployed to our clients.
Through these connections and networks, we are creating the building blocks for an entirely new
healthcare system that will introduce much-needed competition for our current, insurance-based
infrastructure. In this new
system, a New Middle would enhance care and reduce friction by facilitating the sharing of relevant
clinical and financial information between payers, consumers and providers.
Furthermore, in the New Middle, consumers would have a personal health record, giving them ready
access to information on both the price and quality of the care they receive. This record would
have the consumers complete medical history and a predictive model of future needs based on his or
her unique genetic code. Armed with this information, consumers would have financial incentives to
focus on controlling chronic conditions and reducing the impact of future maladies.
With more complete patient information, providers could focus on preventive rather than reactive
medicine. Through this New Middle, providers could communicate instantly with the rest of the
patients care team, and they would receive immediate point-of-service payments for the delivery of
appropriate care rather than waiting weeks or months while claims work through the reimbursement
process.
Lastly, we believe the New Middle would provide the segments of our society that pay for
healthcareemployers or governmentsa health system with less variance, cost and waste while
maximizing the quality of care for all of us.
Software Development
We commit significant resources to developing new health information system solutions. As of the
end of 2010, approximately 2,400 associates were engaged in research and development activities.
Total expenditures for the development and enhancement of our software solutions were approximately
$284.8 million, $285.2 million and $291.4 million during the 2010, 2009 and 2008 fiscal years,
respectively. These figures include both capitalized and non-capitalized portions and exclude
amounts amortized for financial reporting purposes.
As discussed above, continued investment in research and development remains a core element of our
strategy. This will include ongoing enhancement of our core solutions and development of new
solutions and services.
Sales and Marketing
The markets for Cerner HIT solutions, healthcare devices and services include integrated delivery
networks, physician groups and networks, managed care organizations, hospitals, medical centers,
free-standing reference laboratories, home health agencies, blood banks, imaging centers,
pharmacies, pharmaceutical manufacturers, employers, governments and public health organizations.
The majority of our sales are sales of clinical solutions and services to hospital and health
systems, but the Cerner Millennium architecture is highly scalable and organizations ranging from
several-doctor physician practices, to community hospitals, to complex integrated delivery
networks, to local, regional and national government agencies use our Cerner Millennium solutions.
As previously discussed, we have focused on reducing the total cost of ownership of our systems,
which allows us to be price competitive across the full size and organizational structure range of
healthcare providers. Sales to large health systems typically take approximately nine to 18 months,
while the sales cycle is often shorter when selling to smaller hospitals and physician practices.
We have seen some indications that the HITECH provisions of ARRA may shorten the sales process due
to the timeline required for hospitals to earn stimulus incentives.
Our executive marketing management is located at our Innovation Campus in Kansas City, Missouri,
while our client representatives are deployed across the United States and globally. In addition to
the United States, through our subsidiaries, we have sales associates and/or offices in Australia,
Canada, Chile, England, France, Germany, India, Ireland, Malaysia, Saudi Arabia, Singapore, Spain
and the United Arab Emirates.
We support our sales force with technical personnel who perform demonstrations of Cerner solutions
and services and assist clients in determining the proper hardware and software configurations. Our
primary direct marketing strategy is to generate sales contacts from our existing client base and
through presentations at industry seminars and tradeshows. We market the PowerWorks®solutions,
offered on a subscription basis, directly to the physician practice market using telemarketing,
channel partners and through existing acute care clients that are looking to extend Cerner
solutions to affiliated physicians. We attend a number of major tradeshows each year and sponsor
executive user conferences, which feature industry experts who address the HIT needs of large
healthcare organizations.
Client Services
Substantially all of Cerners HIT software solutions clients enter into software maintenance
agreements with us for support of their Cerner systems. In addition to immediate software support
in the event of problems, these agreements allow clients to access new releases of the Cerner
solutions covered by maintenance agreements. Each client has 24-hour access to the
client support
team located at our world headquarters in North Kansas City, Missouri and our global support
organizations in England and Ireland.
Most clients who buy hardware through Cerner also enter into hardware maintenance agreements with
us. These arrangements normally provide for a fixed monthly fee for specified services. In the
majority of cases, we utilize subcontractors to meet our hardware maintenance obligations. We also
offer a set of managed services that include remote hosting, operational management services and
disaster recovery.
Backlog
At the end of 2010, we had a contract backlog of approximately $4.3 billion as compared to
approximately $3.6 billion at the end of 2009. Such backlog represents system sales and services
from signed contracts that have not yet been recognized as revenue. At the end of 2010, we had
approximately $140.0 million of contracts receivable compared to $135.3 million at the end of 2009,
which represents revenues recognized but not yet billable under the terms of the contract. At the
end of 2010, we had a software support and maintenance backlog of approximately $654.9 million as
compared to approximately $620.6 million at the end of 2009. Such backlog represents contracted
software support and hardware maintenance services for a period of 12 months. We estimate that
approximately 31 percent of the aggregate backlog at the end of 2010 of $4.9 billion will be
recognized as revenue during 2011.
Competition
The market for HIT solutions, devices and services is intensely competitive, rapidly evolving and
subject to rapid technological change. Our principal competitors in the healthcare solutions and
services market include: Allscripts Healthcare Solutions, Inc., Computer Programs and Systems,
Inc., Epic Systems Corporation, GE Healthcare Technologies, iSoft Group Limited, McKesson
Corporation, Medical Information Technology, Inc. (Meditech) and Siemens Medical Solutions Health
Services Corporation, each of which offers a suite of software solutions that compete with many of
our software solutions and services.
Other competitors focus on only a portion of the market that we address. For example, competitors
such as Accenture, Capgemini, Computer Sciences Corporation, Computer Task Group, Inc. (CTG), Dell,
Inc., Deloitte LLP, Hewlett-Packard Company and IBM Corporation offer HIT services that compete
directly with our consulting services. Athenahealth, Inc., eClinicalWorks LLC, e-MDs, Inc.,
Greenway Medical Technologies, Quality Systems, Inc. and Sage Software Healthcare LLC offer
solutions to the physician practice market but do not currently have a significant presence in the
health systems and independent hospital market.
Cerner partners with third parties as a reseller of devices and markets its own competing
proprietary healthcare devices; we view our principal competitors in the healthcare device market
to include: CapsuleTech, Inc., CareFusion Corporation, GE Healthcare Technologies, McKesson
Corporation, Omnicell, Inc. and Royal Philips Electronics; and we view our principal competitors in
the healthcare transactions market to include: Capario, Inc., Emdeon Corporation, Ingenix, Inc. (a
subsidiary of UnitedHealth Group, Inc.) and McKesson Corporation, with almost all of these
competitors being substantially larger or having more experience and market share than us in their
respective market.
In addition, we expect that major software information systems companies, large information
technology consulting service providers and system integrators, start-up companies, managed care
companies and others specializing in the healthcare industry may offer competitive software
solutions, devices or services. The pace of change in the HIT market is rapid and there are
frequent new software solutions, devices or service introductions, enhancements and evolving
industry standards and requirements. We believe that the principal competitive factors in this
market include the breadth and quality of solution and service offerings, the stability of the
solution provider, the features and capabilities of the information systems and devices, the
ongoing support for the systems and devices and the potential for enhancements and future
compatible software solutions and devices.
Number of Employees (Associates)
At the end of 2010, we employed approximately 8,200 associates worldwide.
Information about our operating segments, which are geographically based, may be found in Item 7
Managements Discussion and Analysis of Financial Condition and Results of Operations below and
in Note (18) to the financial statements.
Executive Officers of the Registrant
The following table sets forth the names, ages, positions and certain other information regarding
the Companys executive officers as of February 10, 2011. Officers are elected annually and serve
at the discretion of the Board of Directors.
Name
Age
Positions
Neal L. Patterson
61
Chairman of the Board of Directors, Chief Executive Officer
and President
Clifford W. Illig
60
Vice Chairman of the Board of Directors
Marc G. Naughton
55
Executive Vice President and Chief Financial Officer
Michael R. Nill
46
Executive Vice President and Chief Engineering Officer
Randy D. Sims
50
Vice President, Chief Legal Officer and Secretary
Jeffrey A. Townsend
47
Executive Vice President
Mike Valentine
42
Executive Vice President and Chief Operating Officer
Julia M. Wilson
48
Senior Vice President and Chief People Officer
Neal L. Patterson has been Chairman of the Board of Directors and Chief Executive Officer of the
Company for more than five years. Mr. Patterson has served as President of the Company since July
2010, which position he also held from March of 1999 until August of 1999.
Clifford W. Illig has been a Director of the Company for more than five years. He previously
served as Chief Operating Officer of the Company until October 1998 and as President of the Company
until March of 1999. Mr. Illig was appointed Vice Chairman of the Board of Directors in March of
1999.
Marc G. Naughton joined the Company in November 1992 as Manager of Taxes. In November 1995 he was
named Chief Financial Officer and in February 1996 he was promoted to Vice President. He was
promoted to Senior Vice President in March 2002 and promoted to Executive Vice President in March
2010.
Michael
R. Nill joined the Company in November 1996. Since that time he has held several positions
in the Technology, Intellectual Property and CernerWorks
client hosting organizations. He was
promoted to Vice President in January 2000, promoted to Senior Vice President in April 2006 and
promoted to Executive Vice President and named Chief Engineering Officer in February 2009.
Randy D. Sims joined the Company in March 1997 as Vice President and Chief Legal Officer. Prior to
joining the Company, Mr. Sims worked at Farmland Industries, Inc. for three years where he served
most recently as Associate General Counsel. Prior to Farmland, Mr. Sims was in-house legal counsel
at The Marley Company for seven years, holding the position of Assistant General Counsel when he
left to join Farmland.
Jeffrey A. Townsend joined the Company in June 1985. Since that time he has held several positions
in the Intellectual Property Organization and was promoted to Vice President in February 1997. He
was appointed Chief
Engineering Officer in March 1998, promoted to Senior Vice President in March
2001 and promoted to Executive Vice President in March 2005.
Mike Valentine joined the Company in December 1998 as Director of Technology. He was promoted to
Vice President in 2000 and to President of Cerner Mid America in January of 2003. In February
2005, he was named General Manager of the United States Client Organization and was promoted to
Senior Vice President in March 2005. He was promoted to Executive Vice President in March 2007 and
named Chief Operation Officer in January 2010. Prior to joining the Company, Mr. Valentine was
with Accenture Consulting.
Julia M. Wilson joined the Company in November 1995. Since that time, she has held several
positions in the Functional Group Organization. She was promoted to Vice President and Chief
People Officer in August 2003 and to Senior Vice President in March 2007.
We may incur substantial costs related to product-related liabilities. Many of our software
solutions, healthcare devices or services (including life sciences/research services) are intended
for use in collecting, storing and displaying clinical and healthcare-related information used in
the diagnosis and treatment of patients and in related healthcare settings such as admissions,
billing, etc. We attempt to limit by contract our liability; however, the limitations of liability
set forth in the contracts may not be enforceable or may not otherwise protect us from liability
for damages. We may also be subject to claims that are not covered by contract, such as a claim
directly by a patient. Although we maintain liability insurance coverage in an amount that we
believe is sufficient for our business, there can be no assurance that such coverage will cover any
particular claim that has been brought or that may be brought in the future, prove to be adequate
or that such coverage will continue to remain available on acceptable terms, if at all. A
successful material claim or series of claims brought against us, if uninsured or under-insured,
could materially harm our business, results of operations and financial condition. Product-related
claims, even if not successful, could damage our reputation, cause us to lose existing clients,
limit our ability to obtain new clients, divert managements attention from operations, result in
significant revenues loss, create potential liabilities for our clients and us and increase
insurance and other operational costs.
We may be subject to claims for system errors and warranties. Our software solutions and healthcare
devices are very complex and may contain design, coding or other errors, especially when first
introduced. It is not uncommon for HCIT providers to discover errors in software solutions and/or
healthcare devices after their introduction. Our software solutions and healthcare devices are
intended for use in collecting, storing, and displaying clinical and healthcare-related information
used in the diagnosis and treatment of patients and in related healthcare settings such as
admissions, billing, etc. Therefore, users of our software solutions and healthcare devices have a
greater sensitivity to errors than the market for software products and devices generally. Our
client agreements typically provide warranties concerning material errors and other matters.
Should a clients Cerner software solution and/or healthcare device fail to meet these warranties
or lead to faulty clinical decisions or injury to patients, it could i) constitute a material
breach under the client agreement, allowing the client to terminate the agreement and possibly
obtain a refund and/or damages, or might require us to incur additional expense in order to make
the software solution or healthcare device meet these criteria or ii) subject us to claims or
litigation by our clients or clinicians or directly by the patient. Our client agreements
generally limit our liability arising from such claims but such limits may not be enforceable in
certain jurisdictions or circumstances. Although we maintain liability insurance coverage in an
amount that we believe is sufficient for our business, there can be no assurance that such coverage
will cover any particular claim that has been brought or that may be brought in the future, prove
to be adequate or that such coverage will continue to remain available on acceptable terms, if at
all. A successful material claim or series of claims brought against us, if uninsured or
under-insured, could materially harm our business, results of operations and financial condition.
We may experience interruption at our data centers or client support facilities. We perform data
center and/or hosting services for certain clients, including the storage of critical patient and
administrative data. In addition, we provide support services to our clients through various
client support facilities. We have invested in reliability features such as multiple power feeds,
multiple backup generators and redundant telecommunications lines, as well as technical (such as
multiple overlapping security applications and countermeasures) and physical security
safeguards, and structured our operations to reduce the likelihood of disruptions. Periodic risk
assessments are conducted to ensure additional risks are identified and appropriately mitigated.
However, complete failure of all local public power and backup generators, impairment of all
telecommunications lines, a concerted denial of service cyber attack, damage (environmental,
accidental, intentional or pandemic) to the buildings, the equipment inside the buildings housing
our data centers, the client data contained therein and/or the personnel trained to operate such
facilities could cause a disruption in operations and negatively impact clients who depend on us
for data center and system support services. We offer our clients disaster recovery services for
additional fees to protect clients from isolated datacenter failures, leveraging our multiple data
center facilities, however only a small percentage of our hosted clients choose to contract for
these services. Any interruption in operations at our data centers and/or client support
facilities could
damage our reputation, cause us to lose existing clients, hurt
our ability to obtain new clients,
result in significant revenue loss, create potential liabilities for our clients and us and
increase insurance and other operating costs.
Our proprietary technology may be subject to claims for infringement or misappropriation of
intellectual property rights of others, or may be infringed or misappropriated by others. We rely
upon a combination of license agreements, confidentiality policies and procedures, employee
nondisclosure agreements, confidentiality agreements with third parties and technical security
measures to maintain the confidentiality, exclusivity and trade secrecy of our proprietary
information. We also rely on trademark and copyright laws to protect our intellectual property
rights in the United States and abroad. We continue to develop our patent portfolio of United
States and global patents, but these patents do not provide comprehensive protection for the wide
range of solutions and services offered by us. Despite our protective measures and intellectual
property rights, we may not be able to adequately protect against theft, copying,
reverse-engineering, misappropriation, infringement or unauthorized use or disclosure of our
intellectual property.
In addition, we are routinely involved in intellectual property infringement or misappropriation
claims and we expect this activity to continue or even increase as the number of competitors,
patents and patent enforcement organizations in the HIT market increases, the functionality of our
software solutions and services expands, the use of open-source software increases and we enter new
geographies and new markets such as healthcare device innovation, healthcare transactions and life
sciences. These claims, even if not meritorious, are expensive to defend and are oftentimes
incapable of prompt resolution. If we become liable to third parties for infringing or
misappropriating their intellectual property rights, we could be required to pay a substantial
damage award, develop alternative technology, obtain a license and/or cease using, selling,
offering for sale, licensing, importing, implementing and supporting the solutions, devices and
services that violate the intellectual property rights.
We are subject to risks associated with our non-U.S. operations. We market, sell and service our
solutions, devices and services globally. We have established offices around the world, including
in: the Americas, Europe, the Middle East and the Asia Pacific region. We will continue to expand
our non-U.S. operations and enter new global markets. This expansion will require significant
management attention and financial resources to develop successful direct and indirect non-U.S.
sales and support channels. Our business is generally transacted in the local functional currency.
In some countries, our success will depend in part on our ability to form relationships with local
partners. There is a risk that we may sometimes choose the wrong partner. For these reasons, we
may not be able to maintain or increase non-U.S. market demand for our solutions, devices and
services.
Non-U.S. operations are subject to inherent risks, and our future results could be adversely
affected by a variety of uncontrollable and changing factors. These include, but are not limited
to:
Greater difficulty in collecting accounts receivable and longer collection periods
Difficulties and costs of staffing and managing non-U.S. operations
The impact of global economic conditions
Unfavorable or changing foreign currency exchange rates
Legal compliance costs and/or business risks associated with our global operations
where: i) local laws and customs differ from those in the United States or ii) risk is
heightened with respect to laws prohibiting improper payments and bribery, including
without limitation the U.S. Foreign Corrupt Practices Act and similar regulations in
foreign jurisdictions
Certification, licensing or regulatory requirements
Unexpected changes in regulatory requirements
Changes to or reduced protection of intellectual property rights in some countries
Inability to obtain necessary financing on reasonable terms to adequately support
non-U.S. operations and expansion
Potentially adverse tax consequences and difficulties associated with repatriating cash
generated or held abroad in a tax-efficient manner
Different or additional functionality requirements or preferences
Political conditions which may impact sales or threaten the safety of associates or our
continued presence in these countries
Our failure to effectively hedge exposure to fluctuations in foreign currency exchange rates could
unfavorably affect our performance. We currently utilize a non-derivative instrument to hedge our
exposure to fluctuations in certain foreign currency exchange rates. This instrument may involve
elements of market risk in excess of the amounts recognized in the Consolidated Financial
Statements. For additional information about risk on financial instruments, see Item 7A
Quantitative and Qualitative Disclosures about Market Risk. Further, our financial results from
non-U.S. operations may be negatively affected if we fail to execute or improperly hedge our
exposure to currency fluctuations.
We are subject to tax legislation in several countries; tax legislation initiatives or challenges
to our tax positions could adversely affect our results of operations and financial condition. We
are a large corporation with operations in more than twenty countries. As such, we are, or in the
future could be, subject to tax laws and regulations of the United States federal, state and local
governments and of other country jurisdictions. From time to time, various legislative initiatives
may be proposed that could adversely affect our tax positions and/or our tax liabilities. There can
be no assurance that our effective tax rate or tax payments will not be adversely affected by these
initiatives. In addition, United States federal, state and local, as well as other countries tax
laws and regulations, are extremely complex and subject to varying interpretations. There can be no
assurance that our tax positions will not be challenged by relevant tax authorities or that we
would be successful in any such challenge, which could result in double taxation, penalties and
interest payments.
Our success depends upon the recruitment and retention of key personnel. To remain competitive in
our industries, we must attract, motivate and retain highly skilled managerial, sales, marketing,
consulting and technical personnel, including executives, consultants, programmers and systems
architects skilled in the HIT, healthcare devices, healthcare transactions and life sciences
industries and the technical environments in which our solutions, devices and services are needed.
Competition for such personnel in our industries is intense in both the United States and abroad.
Our failure to attract additional qualified personnel to meet our non-U.S. personnel needs could
have a material adverse effect on our prospects for long-term growth. Our success is dependent to
a significant degree on the continued contributions of key management, sales, marketing, consulting
and technical personnel. The unexpected loss of key personnel could have a material adverse impact
on our business and results of operations, and could potentially inhibit development and delivery
of our solutions, devices and services and market share advances.
We depend on third party suppliers and our revenue and gross margin could suffer if we fail to
manage suppliers properly. We license or purchase intellectual property and technology (such as
software, hardware and content) from third parties, including some competitors, and incorporate
such third party software, hardware and/or content into or sell or license it in conjunction with
our solutions, devices and services. We depend on some of the third party software, hardware and/or
content in the operation and delivery of our solutions, devices and services. For instance, we
currently depend on Microsoft and IBM Websphere technologies for portions of the operational
abilities of our Millennium solutions. Our remote hosting business also relies on a single or a
limited number of suppliers for certain functions of this business, such as Oracle database
technologies, CITRIX technologies and CISCO network technologies, and we rely on Hewlett Packard
and IBM for our hardware technology platforms.
Most of the third party software licenses we have expire within one to five years, can be renewed
only by mutual consent and may be terminated if we breach the terms of the license and fail to cure
the breach within a specified period of time. Most of these third party software licenses are
non-exclusive; therefore, our competitors may obtain the right to use any of the technology covered
by these licenses and use the technology to compete directly with us.
If any of the third party suppliers were to change product offerings, cease actively supporting the
technologies, fail to update and enhance the technologies to keep pace with changing industry
standards, encounter technical difficulties in the continuing development of these technologies,
significantly increase prices or terminate our licenses or supply contracts, we would need to seek
alternative suppliers and incur additional internal or external development costs to ensure
continued performance of our solutions, devices and services. Such alternatives may not be
available on attractive terms, or may not be as widely accepted or as effective as the intellectual
property or technology provided by our existing suppliers. If the cost of licensing, purchasing or
maintaining the third party intellectual property or technology significantly increases, our gross
margin levels could significantly decrease. In addition, interruption in functionality of our
solutions, devices and services as a result of changes in third party suppliers could adversely
affect future sales of solutions, devices and services, and negatively affect our revenue and gross
margins.
We intend to continue strategic business acquisitions, which are subject to inherent risks. In
order to expand our solutions, device offerings and services and grow our market and client base,
we may continue to seek and complete strategic business acquisitions that we believe are
complementary to our business. Acquisitions have inherent risks which may have a material adverse
effect on our business, financial condition, operating results or prospects, including, but not
limited to: 1) failure to successfully integrate the business and financial operations, services,
intellectual property, solutions or personnel of an acquired business and to maintain uniform
standard controls, policies and procedures; 2) diversion of managements attention from other
business concerns; 3) entry into markets in which we have little or no direct prior experience; 4)
failure to achieve projected synergies and performance targets; 5) loss of clients or key
personnel; 6) incurrence of debt and/or assumption of known and unknown liabilities; 7) write-off
of software development costs, goodwill, client lists and amortization of expenses related to
intangible assets; 8) dilutive issuances of equity securities; and, 9) accounting deficiencies that
could arise in connection with, or as a result of, the acquisition of an acquired company,
including issues related to internal control over financial reporting and the time and cost
associated with remedying such deficiencies. If we fail to successfully integrate acquired
businesses or fail to implement our business strategies with respect to these acquisitions, we may
not be able to achieve projected results or support the amount of consideration paid for such
acquired businesses.
We could suffer losses due to asset impairment charges. We test our goodwill for impairment during
the second quarter every year, and on an interim date should events or changes in circumstances
indicate the carrying value of goodwill may not be recoverable in accordance with provisions of ASC
350, Intangibles Goodwill and Other. Declines in business performance or other factors could
cause the fair value of a reporting unit to be revised downward and could result in a non-cash
impairment charge. This could materially affect our reported net earnings.
The ongoing uncertainty in global economic conditions could negatively affect our business, results
of operations and financial condition. Although in recent months, certain indices and economic
data have begun to show signs of stabilization in the United States and certain global markets,
there can be no assurance that these improvements will be broad-based or sustainable, nor is it
clear how, if at all, they will affect the markets relevant to us. As a result, our operating
results may be impacted by the health of the global economy. Continued adverse economic conditions
may lead to slowdowns or declines in client spending which could adversely affect our business and
financial performance. Our business and financial performance, including new business bookings and
collection of our accounts receivable, may be adversely affected by current and future economic
conditions (including a reduction in the availability of credit, higher energy costs, rising
interest rates, financial market volatility and lower than expected economic growth) that cause a
slowdown or decline in client spending. Reduced purchases by our clients or changes in payment
terms could adversely affect our revenue growth and cause a decrease in our cash flow from
operations. Bankruptcies or similar events affecting clients may cause us to incur bad debt
expense at levels higher than historically experienced. Further, an ongoing global financial
crisis may also limit our ability to access the capital markets at a time when we would like, or
need, to raise capital, which could have an impact on our ability to react to changing economic and
business conditions. Accordingly, if the global financial crisis and current economic downturn
continues or worsens, our business, results of operations and financial condition could be
materially and adversely affected.
Risks Related to the Healthcare Information Technology, Healthcare Device and Healthcare
Transaction Industry
The healthcare industry is subject to changing political, economic and regulatory influences. For
example, the Health Insurance Portability and Accountability Act of 1996 (as modified by The Health
Information Technology for Economic and Clinical Health Act (HITECH) provisions of the American
Recovery and Reinvestment Act of 2009) (HIPAA) continues to have a direct impact on the healthcare
industry by requiring national provider identifiers and standardized transactions/code sets and
necessary security and privacy measures in order to ensure the appropriate level of privacy of
protected health information. These regulatory factors affect the purchasing practices and
operation of healthcare organizations.
Many healthcare providers are consolidating to create integrated healthcare delivery systems with
greater market power. These providers may try to use their market power to negotiate price
reductions for our solutions and services. As the healthcare industry consolidates, our client
base could be eroded, competition for clients could become more intense and the importance of
landing new client relationships becomes greater.
In 2010, the Patient Protection and Affordable Care Act became law. This comprehensive healthcare
reform legislation included provisions to control healthcare costs, improve healthcare quality, and
expand access to affordable health insurance. This healthcare reform legislation could include
changes in Medicare and Medicaid payment policies and other healthcare delivery administrative
reforms that could potentially negatively impact our business and the business of our clients.
Because the administrative rules implementing healthcare reform under the legislation have not yet
been finalized, the impact of the healthcare reform legislation on our business is unknown, but
there can be no assurances that healthcare reform legislation will not adversely impact either our
operational results or the manner in which we operate our business. Healthcare industry
participants may respond by reducing their investments or postponing investment decisions,
including investments in our solutions and services.
The healthcare industry is highly regulated at the local, state and federal level. We are subject
to a significant and wide-ranging number of regulations both within the United States and
elsewhere, such as regulations in the areas of healthcare fraud, e-prescribing, claims processing
and transmission, medical devices, the security and privacy of patient data and interoperability
standards.
Healthcare Fraud. Federal and state governments continue to enhance regulation of and increase
their scrutiny over practices involving healthcare fraud affecting healthcare providers whose
services are reimbursed by Medicare, Medicaid and other government healthcare programs. Our
healthcare provider clients are subject to laws and regulations on fraud and abuse which, among
other things, prohibit the direct or indirect payment or receipt of any remuneration for patient
referrals, or arranging for or recommending referrals or other business paid for in whole or in
part by these federal or state healthcare programs. Federal enforcement personnel have substantial
funding, powers and remedies to pursue suspected or perceived fraud and abuse. The effect of this
government regulation on our clients is difficult to predict. Many of the regulations applicable
to our clients and that may be applicable to us, including those relating to marketing incentives
offered in connection with medical device sales, are vague or indefinite and have not been
interpreted by the courts. They may be interpreted or applied by a prosecutorial, regulatory or
judicial authority in a manner that could broaden their applicability to us or require our clients
to make changes in their operations or the way in which they deal with us. If such laws and
regulations are determined to be applicable to us and if we fail to comply with any applicable laws
and regulations, we could be subject to civil and criminal penalties, sanctions or other liability,
including exclusion from government health programs, which could have a material adverse effect on
our business, results of operations and financial condition.
E-Prescribing. The use of our solutions by physicians for electronic prescribing, electronic
routing of prescriptions to pharmacies and dispensing is governed by federal and state laws.
States have differing prescription format requirements, which we have programmed into our
solutions. In addition, in November 2005, the Department of Health and Human Services announced
regulations by Centers for Medicare and Medicaid Services (CMS) related to E-Prescribing and the
Prescription Drug Program (E-Prescribing Regulations). These E-Prescribing Regulations were
mandated by the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003. The E-Prescribing Regulations set forth
standards for the transmission of electronic prescriptions. These standards are
detailed and
significant, and cover not only transactions between prescribers and dispensers for prescriptions
but also electronic eligibility, benefits inquiries, drug formulary and benefit coverage
information. Our efforts to provide solutions that enable our clients to comply with these
regulations could be time-consuming and expensive.
Claims Transmissions. Our solutions are capable of electronically transmitting claims for services
and items rendered by a physician to many patients payers for approval and reimbursement, which
claims are governed by federal and state laws. Federal law provides civil liability to any person
that knowingly submits a claim to a payer, including Medicare, Medicaid and private health plans,
seeking payment for any services or items that have not been provided to the patient. Federal law
may also impose criminal penalties for intentionally submitting such false claims. We have
policies and procedures in place that we believe result in the accurate and complete transmission
of claims, provided that the information given to us by our clients is also accurate and complete.
The HIPAA security, privacy and transaction standards, as discussed below, also have a potentially
significant effect on our claims transmission services, since those services must be structured and
provided in a way that supports our clients HIPAA compliance obligations. In connection with these
laws, we may be subjected to federal or state government investigations and possible penalties may
be imposed upon us, false claims actions may have to be defended, private payers may file claims
against us and we may be excluded from Medicare, Medicaid or other government-funded healthcare
programs. Any investigation or proceeding related to these laws may have a material adverse impact
on our results of operations.
Regulation of Medical Devices. The United States Food and Drug Administration (the FDA) has
determined that certain of our solutions are medical devices that are actively regulated under the
Federal Food, Drug and Cosmetic Act (Act) and amendments to the Act. Other countries have similar
regulations in place related to medical devices, that now or may in the future apply to certain of
our solutions. If other of our solutions are deemed to be actively regulated medical devices by
the FDA or similar regulatory agencies in countries where we do business, we could be subject to
extensive requirements governing pre- and post-marketing requirements including pre-market
notification clearance. Complying with these medical device regulations on a global perspective is
time consuming and expensive, and could be subject to unanticipated and significant delays.
Further, it is possible that these regulatory agencies may become more active in regulating
software that is used in healthcare. If we are unable to obtain the required regulatory approvals
for any such solutions or medical devices, our short to long term business plans for these
solutions and/or medical devices could be delayed or canceled.
There have been ten FDA inspections at various Cerner sites since 1998. Inspections conducted at
our world headquarters in 1999 and 2010, and our prior Houston, Texas facility in 2002, each
resulted in the issuance of an FDA Form 483 observation to which we responded promptly. The FDA
has taken no further action with respect to the Form 483 observations that were issued in 1999,
2002 and 2010. The remaining seven FDA inspections, including inspections at our world
headquarters in 2006 and 2007, resulted in no issuance of a Form 483. We remain subject to
periodic FDA inspections and we could be required to undertake additional actions to comply with
the Act and any other applicable regulatory requirements. Our failure to comply with the Act and
any other applicable regulatory requirements could have a material adverse effect on our ability to
continue to manufacture and distribute our solutions. The FDA has many enforcement tools including
recalls, product corrections, seizures, injunctions, refusal to grant pre-market clearance of
products, civil fines and/or criminal prosecutions. Any of the foregoing could have a material
adverse effect on our business, results of operations and financial condition.
Security and Privacy of Patient Information. Federal, state and local laws regulate the
confidentiality of patient records and the circumstances under which those records may be released.
These regulations govern both the disclosure and use of confidential patient medical record
information and require the users of such information to implement specified security measures.
United States regulations currently in place governing electronic health data transmissions
continue to evolve and are often unclear and difficult to apply. Similarly, laws in non-U.S.
jurisdictions may have similar or even stricter requirements related to the treatment of patient
information.
In the United States, HIPAA regulations require national standards for some types of electronic
health information transactions and the data elements used in those transactions, security
standards to ensure
the integrity and confidentiality of health information and standards to protect the privacy of
individually identifiable health information. Covered entities under HIPAA, which include
healthcare organizations such as our clients, our employer clinic business model and our claims
transmission services, are required to comply with the privacy
standards, the transaction
regulations and the security regulations. Moreover, the recently enacted HITECH provisions of
ARRA, and associated regulatory requirements, extend many of the HIPAA obligations, formerly
imposed only upon covered entities, to business associates as well. As a business associate of our
clients who are covered entities, we were in most instances already contractually required to
ensure compliance with the HIPAA regulations as they pertain to handling of covered client data.
However, the extension of these HIPAA obligations to business associates by law has created
additional liability risks related to the privacy and security of individually identifiable health
information.
Evolving HIPAA and HITECH -related laws or regulations and regulations in non-U.S. jurisdictions
could restrict the ability of our clients to obtain, use or disseminate patient information. This
could adversely affect demand for our solutions if they are not re-designed in a timely manner in
order to meet the requirements of any new interpretations or regulations that seek to protect the
privacy and security of patient data or enable our clients to execute new or modified healthcare
transactions. We may need to expend additional capital, software development and other resources to
modify our solutions and devices to address these evolving data security and privacy issues.
Furthermore, our failure to maintain confidentiality of sensitive personal information in
accordance with the applicable regulatory requirements could damage our reputation and expose us to
breach of contract claims (although we contractually limit liability, when possible and where
permitted), fines and penalties.
Interoperability Standards. Our clients are concerned with and often require that our software
solutions and healthcare devices be interoperable with other third party HIT suppliers. Market
forces or governmental/regulatory authorities could create software interoperability standards that
would apply to our solutions, and if our software solutions and/or healthcare devices are not
consistent with those standards, we could be forced to incur substantial additional development
costs to conform. The Certification Commission for Healthcare Information Technology (CCHIT) has
developed a comprehensive set of criteria for the functionality, interoperability and security of
various software modules in the HIT industry. CCHIT, however, continues to modify and refine those
standards. Achieving CCHIT certification is becoming a competitive requirement, resulting in
increased software development and administrative expense to conform to these requirements.
Additionally, various federal, state and non-U.S. government agencies are also developing standards
that could become mandatory for systems purchased by these agencies. For example, ARRA requires
meaningful use of certified electronic health record technology by healthcare providers in order
to receive incentive payments. Regulations have been issued that identify initial standards and
implementation specifications and establish the certification standards for qualifying electronic
health record technology. Nevertheless, these standards and specifications are subject to
interpretation by the entities designated to certify such technology. While a combination of our
solutions have been certified as meeting the initial standards for certified health record
technology, the regulatory standards to achieve certification will continue to evolve over time.
We may incur increased development costs and delays in delivering solutions if we need to upgrade
our software and healthcare devices to be in compliance with these varying and evolving standards.
In addition, delays in interpreting these standards may result in postponement or cancellation of
our clients decisions to purchase our solutions. If our software solutions and healthcare devices
are not consistent with these evolving standards, our market position and sales could be impaired
and we may have to invest significantly in changes to our software solutions and healthcare
devices, although we do not expect such costs to be significant in relation to the overall
development costs for our solutions.
We operate in intensely competitive and dynamic industries, and our ability to successfully compete
and continue to grow our business depends on our ability to respond quickly to market changes and
changing technologies and to bring competitive new solutions, devices, features and services to
market in a timely fashion. The market for healthcare information systems, healthcare devices and
services to the healthcare industry is intensely competitive, dynamically evolving and subject to
rapid technological and innovative changes. Development of new proprietary technology or services
is complex, entails significant time and expense and may not be successful. We cannot guarantee
that we will be able to introduce new solutions, devices or services on schedule, or at all, nor
can we guarantee that errors will not be found in our new solution releases, devices or services
before or after commercial
release, which could result in solution, device or service delivery redevelopment costs and loss
of, or delay in, market acceptance.
Certain of our competitors have greater financial, technical, product development, marketing and
other resources than us and some of our competitors offer software solutions that we do not offer.
Our principal existing competitors are set forth above under Part I, Item 1 Competition.
In addition, we expect that major software information systems companies, large information
technology consulting service providers and system integrators, start-up companies and others
specializing in the healthcare industry may offer competitive software solutions, devices or
services. We face strong competitors and often face downward price pressure, which could adversely
affect our results of operations or liquidity. Additionally, the pace of change in the healthcare
information systems market is rapid and there are frequent new software solution introductions,
software solution enhancements, device introductions, device enhancements and evolving industry
standards and requirements. There are a limited number of hospitals and other healthcare providers
in the United States HIT market and in recent years, the healthcare industry has been subject to
increasing consolidation. As the industry consolidates, costs fall, technology improves, and
market factors continue to compel investment by healthcare organizations in solutions and services
like ours, market saturation in the United States may change the competitive landscape in favor of
larger, more diversified competitors with greater scale. If we are unable to recognize these
changes in a timely manner, or we are too inflexible to rapidly adjust our business models, growth
ambitions and financial results could be affected materially.
Risks Related to Our Stock
Our quarterly operating results may vary, which could adversely affect our stock price. Our
quarterly operating results have varied in the past and may continue to vary in future periods,
including: variations from guidance, expectations or historical results or trends. Quarterly
operating results may vary for a number of reasons including demand for our solutions, devices and
services, the financial condition of our current and potential clients, our long sales cycle,
potentially long installation and implementation cycles for larger, more complex and higher-priced
systems, accounting policy changes and other factors described in this section and elsewhere in
this report. As a result of healthcare industry trends and the market for our Cerner Millennium
solutions, a large percentage of our revenues are generated by the sale and installation of larger,
more complex and higher-priced systems. The sales process for these systems is lengthy and
involves a significant technical evaluation and commitment of capital and other resources by the
client. Sales may be subject to delays due to changes in clients internal budgets, procedures for
approving large capital expenditures, competing needs for other capital expenditures, additions or
amendments to governing federal, state or local regulations, availability of personnel resources
and by actions taken by competitors. Delays in the expected sale, installation or implementation
of these large systems may have a significant impact on our anticipated quarterly revenues and
consequently our earnings, since a significant percentage of our expenses are relatively fixed.
Revenue recognized in any quarter may depend upon our and our clients abilities to meet project
milestones. Delays in meeting these milestone conditions or modification of the project plan could
result in a shift of revenue recognition from one quarter to another and could have a material
adverse effect on results of operations for a particular quarter.
Our revenues from system sales historically have been lower in the first quarter of the year and
greater in the fourth quarter of the year, primarily as a result of clients year-end efforts to
make all final capital expenditures for the then-current year.
Our sales forecasts may vary from actual sales in a particular quarter. We use a pipeline
system, a common industry practice, to forecast sales and trends in our business. Our sales
associates monitor the status of all sales opportunities, such as the date when they estimate that
a client will make a purchase decision and the potential dollar amount of the sale. These
estimates are aggregated periodically to generate a sales pipeline. We compare this pipeline at
various points in time to evaluate trends in our business. This analysis provides guidance in
business planning and forecasting, but these
pipeline estimates are by their nature speculative. Our pipeline estimates are not necessarily
reliable predictors of revenues in a particular quarter or over a longer period of time, partially
because of changes in the pipeline and in conversion rates of the pipeline into contracts that can
be very difficult to estimate. A negative variation in the expected conversion rate or timing of
the pipeline into contracts,
or in the pipeline itself, could cause our plan or forecast to be
inaccurate and thereby adversely affect business results. For example, a slowdown in information
technology spending, adverse economic conditions, new federal, state or local regulations directly
related to our industry or a variety of other factors can cause purchasing decisions to be delayed,
reduced in amount or cancelled, which would reduce the overall pipeline conversion rate in a
particular period of time. Because a substantial portion of our contracts are completed in the
latter part of a quarter, we may not be able to adjust our cost structure quickly enough in
response to a revenue shortfall resulting from a decrease in our pipeline conversion rate in any
given fiscal quarter.
The trading price of our common stock may be volatile. The market for our common stock may
experience significant price and volume fluctuations in response to a number of factors including
actual or anticipated variations in operating results, rumors about our performance or solutions,
devices and services, changes in expectations of future financial performance or estimates of
securities analysts, governmental regulatory action, healthcare reform measures, client
relationship developments, changes occurring in the securities markets in general and other
factors, many of which are beyond our control. As a matter of policy, we do not generally comment
on our stock price or rumors.
Furthermore, the stock market in general, and the markets for software, healthcare devices, other
healthcare solutions and services and information technology companies in particular, have
experienced extreme volatility that often has been unrelated to the operating performance of
particular companies. These broad market and industry fluctuations may adversely affect the
trading price of our common stock, regardless of actual operating performance.
Our Directors have authority to issue preferred stock and our corporate governance documents
contain anti-takeover provisions. Our Board of Directors has the authority to issue up to
1,000,000 shares of preferred stock and to determine the preferences, rights and privileges of
those shares without any further vote or action by the shareholders. The rights of the holders of
common stock may be harmed by rights granted to the holders of any preferred stock that may be
issued in the future.
In addition, some provisions of our Certificate of Incorporation and Bylaws could make it more
difficult for a potential acquirer to acquire a majority of our outstanding voting stock. These
include provisions that provide for a classified board of directors, prohibit shareholders from
taking action by written consent and restrict the ability of shareholders to call special meetings.
We are also subject to provisions of Delaware law that prohibit us from engaging in any business
combination with any interested shareholder for a period of three years from the date the person
became an interested shareholder, unless certain conditions are met, which could have the effect of
delaying or preventing a change of control.
Factors that May Affect Future Results of Operations, Financial Condition or Business
Statements made in this report, the Annual Report to Shareholders of which this report is made a
part, other reports and proxy statements filed with the Securities and Exchange Commission (SEC),
communications to shareholders, press releases and oral statements made by representatives of the
Company that are not historical in nature, or that state the Companys or managements intentions,
hopes, beliefs, expectations or predictions of the future, may constitute forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended
(the Exchange Act). Forward-looking statements can often be identified by the use of
forward-looking terminology, such as could, should, will, intended, continue, believe,
may, expect, hope, anticipate, goal, forecast, plan, guidance or estimate or the
negative of these words, variations thereof or similar expressions. Forward-looking statements are
not guarantees of future performance or results. They involve risks, uncertainties and
assumptions. It is important to note that any such performance and actual results, financial
condition or business, could differ materially from those expressed in such forward-looking
statements. Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this Item 1A. Risk Factors and elsewhere herein or in other reports
filed with the
SEC. Other unforeseen factors not identified herein could also have such an effect. We undertake
no obligation to update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes in future operating results, financial condition or
business over time.
Our properties consist mainly of owned and leased office and data center facilities.
Our United States corporate world headquarters operations are located in a Company-owned office
park (the Headquarters Campus) in North Kansas City, Missouri. The Headquarters Campus and two
other nearby locations, collectively contain approximately 1.43 million gross square feet of
useable space and land capable of housing approximately 300,000 square feet of future building
development. The Headquarters Campus primarily houses office space, but also includes space for
other business needs, such as our Healthe Clinic and our Headquarters Campus data center.
Other company owned office space, known as the Innovation Campus, houses associates from our
intellectual property organizations and consists of 790,000 gross square feet of useable space
located in Kansas City, Missouri.
Our Cerner-operated data center facilities, which are used to provide remote hosting, disaster
recovery and other services to our clients, are located at the Headquarters Campus and a leased
facility in Lees Summit, Missouri.
As of the end of 2010, we leased additional office space in Beverly Hills and Garden Grove,
California; Denver, Colorado; Jacksonville, Florida; Lenexa, Kansas; Waltham, Massachusetts;
Minneapolis and Rochester, Minnesota; Columbia, Missouri; N. Kansas City, Missouri; Kansas City,
Missouri; Blue Bell, Pennsylvania; and Vienna, Virginia. Globally, we also leased office space in:
Brisbane, Sydney and Melbourne, Australia; London-Ontario, Canada; Santiago, Chile; London,
England; Paris, France; Herzogenrath and Idstein, Germany; Bangalore, India; Dublin, Ireland; Kuala
Lumpur, Malaysia; Riyadh, Saudi Arabia; Singapore; Madrid, Spain; and, Abu Dhabi and Dubai, United
Arab Emirates.
Market for the Registrants Common Equity and Related Stockholder Matters and Issuer
Purchases of Equity Securities
Our common stock trades on The NASDAQ Global Select MarketSM under the symbol CERN. The
following table sets forth the high, low and last sales prices for the fiscal quarters of 2010 and
2009 as reported by The Nasdaq Stock Market®.
2010
2009
High
Low
Last
High
Low
Last
First Quarter
$
90.72
$
75.66
$
85.73
$
46.40
$
33.72
$
43.29
Second Quarter
91.58
75.00
76.10
63.82
41.88
60.05
Third Quarter
85.03
72.85
85.03
75.17
56.80
72.50
Fourth Quarter
96.16
84.72
94.74
85.51
73.53
82.44
At February 10, 2011, there were approximately 1,043 owners of record. To date, we have paid
no cash dividends and we do not intend to pay cash dividends in the foreseeable future. We believe
it is in the shareholders best interest for us to reinvest funds in the operation of the business.
In March 2008, our Board of Directors authorized a stock repurchase program for $45 million of our
Common Stock. There were no shares repurchased by us during the quarter or the year ended January
1, 2011.
Includes share-based compensation expense recognized. The impact of including this
expense is as follows:
(In thousands except share data)
2010
2009
2008
2007
2006
Total stock-based compensation expense
$
24,903
$
16,842
$
15,144
$
16,189
$
19,021
Amount of related income tax benefit
(9,329
)
(6,274
)
(5,641
)
(6,030
)
(7,275
)
Net impact on earnings
$
15,574
$
10,568
$
9,503
$
10,159
$
11,746
Decrease to diluted earnings per share
$
0.18
$
0.12
$
0.11
$
0.12
$
0.14
(2)
Includes expense related to a settlement with a third party provider of
software related to the use of the third partys software in our remote hosting
business. The settlement included compensation for the use of the software for periods
prior to 2008 as well as compensation for licenses of the software for future use for
existing and additional clients through January 2009. Of the total settlement amount,
we determined that $5.0 million should have been recorded in prior periods, primarily
2005 through 2007. Based on this valuation, 2008 results include an increase of $8.0
million to sales and client service expense, a decrease of $5.0 million to net
earnings, and a decrease of $0.06 to diluted earnings per share that are attributable
to prior periods.
(3)
Includes a research and development write-off related to the RxStation®
medication dispensing devices. In connection with production and delivery of the
RxStation medication dispensing devices, we reviewed the accounting treatment for the
RxStation line of devices and determined that $8.6 million of research and development
activities for the RxStation medication dispensing devices that should have been
expensed was incorrectly capitalized. The impact of this charge is a $5.4 million
decrease, net of $3.2 million tax benefit, in net earnings and a decrease to diluted
earnings per share of $0.06 in the year ended December 29, 2007. $2.1 million of this
$5.4 million after tax amount recorded in 2007 related to periods prior to 2007.
(4)
Includes a $3.1 million tax benefit recorded in 2007 related to periods prior
to 2007. The tax benefit relates to the over-expensing of state income taxes, which
resulted in an increase to diluted earnings per share of $0.04 in the year ended
December 29, 2007.
(5)
Includes an adjustment to correct the amounts previously reported for the
second quarter of 2007 for a previously disclosed out-of-period tax item relating to
foreign net operating losses. The effect of this adjustment increases tax expense for
the year ended December 29, 2007, by $4.2 million and increases January 1, 2005
retained earnings (Shareholders Equity) by the same amount.
(6)
Includes a tax benefit of $2.0 million for adjustments relating to prior
periods. This results in an increase to diluted earnings per share of $0.02.
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following Management Discussion and Analysis (MD&A) is intended to help the reader understand
our results of operations and financial condition. This MD&A is provided as a supplement to, and
should be read in conjunction with, our financial statements and the accompanying notes to the
financial statements (Notes).
Our fiscal year ends on the Saturday closest to December 31. Fiscal year 2010 consisted of 52
weeks and ended on January 1, 2011; fiscal year 2009 consisted of 52 weeks and ended on January 2,
2010; and fiscal year 2008 consisted of 53 weeks and ended on January 3, 2009. All references to
years in this MD&A represent fiscal years unless otherwise noted.
Management Overview
Our revenues are primarily derived by selling, implementing and supporting software solutions,
clinical content, hardware, healthcare devices and services that give healthcare providers secure
access to clinical, administrative and financial data in real time, allowing them to improve the
quality, safety and efficiency in the delivery of healthcare. We implement the healthcare solutions
as stand-alone, combined or enterprise-wide systems. Cerner Millennium®software solutions can be
managed by our clients or in our data centers via a managed services model.
Our fundamental strategy centers on creating organic growth by investing in research and
development (R&D) to create solutions and services for the healthcare industry. This strategy has
driven strong growth over the long-term, as reflected in five- and ten-year compound annual revenue
growth rates of 10% or more. This growth has also created an important strategic footprint in
healthcare, with Cerner®solutions licensed by approximately 9,000 facilities around the world,
including more than 2,600 hospitals; 3,500 physician practices covering more than 30,000
physicians; 500 ambulatory facilities, such as laboratories, ambulatory centers, cardiac
facilities, radiology clinics and surgery centers; 800 home health facilities; and 1,600 retail
pharmacies. Selling additional solutions back into this client base is an important element of our
future revenue growth. We are also focused on driving growth through market share expansion by
strategically aligning with healthcare providers who have not yet selected a supplier and by
displacing competitors in healthcare settings that are looking to replace their current healthcare
information technology (HIT) partners.
We expect to drive growth through new initiatives and services that reflect our ongoing ability to
innovate and expand our reach into healthcare. Examples of these include our CareAware®healthcare
device architecture and devices, Cerner Healthe employer services, Cerner ITWorksSM
services, Cerner RevWorksSM services, physician practice solutions and solutions and
services for the pharmaceutical market. Finally, we are focused on selling our solutions and
services outside the United States. Many non-U.S. markets have a low penetration of HIT solutions
and their governing bodies are in many cases focused on HIT as part of their strategy to improve
the quality and lower the cost of healthcare.
Beyond our strategy for driving revenue growth, we are also focused on earnings growth. Similar to
our history of growing revenue, our net earnings have increased at more than 20% compound annual
rates over the most recent five- and ten-year periods. We believe we can continue driving strong
levels of earnings growth and leverage key areas to create operating margin expansion. The primary
areas of opportunity for margin expansion include:
becoming more efficient at implementing our software by leveraging tools and
methodologies we have developed that can reduce the amount of effort required to implement
our software;
leveraging our investments in R&D by entering new markets that do not require
significant incremental R&D but can contribute significantly to revenue growth; and
leveraging our scalable business infrastructure to reduce the rate of increase in
general and administrative spending to below our revenue growth rate.
We are also focused on increasing cash flow by growing earnings, reducing the use of working
capital and controlling capital expenditures.
Results Overview
The Company delivered strong levels of bookings, revenues, earnings and cash flows in 2010.
New business bookings revenue in 2010, which reflects the value of executed contracts for software,
hardware, professional services and managed services, was $2.0 billion, which is an increase of 9%
compared to $1.8 billion in 2009. Our 2010 revenues increased 11% to $1.9 billion compared to $1.7
billion in 2009. The year-over-year increase in revenue reflects improved economic conditions and
demand driven by the stimulus incentives. As discussed in the Healthcare and Healthcare IT
Industry under Part 1, Item 1, we believe the HITECH incentives and the nations focus on
improving the efficiency and quality of healthcare will create a period of increased HIT demand in
the United States.
Our 2010 net earnings increased 23% to $237.3 million compared to $193.5 million in 2009. Diluted
earnings per share increased 20% to $2.78 compared to $2.31 in 2009. The 2010 and 2009 net
earnings and diluted earnings per share reflect the impact of accounting for stock-based
compensation using the fair value method to measure and record expense for stock options, pursuant
to Accounting Standards Codification (ASC), 718, Stock Compensation. The effect of these expenses
reduced the 2010 net earnings and diluted earnings per share by $15.6 million and $0.18, and the
2009 earnings and diluted earnings per share by $10.5 million and $0.12, respectively. The growth
in net earnings and diluted earnings per share was driven primarily by strong revenue growth and
continued progress with our margin expansion initiatives, particularly leveraging R&D investments
and controlling general and administrative expenses. Though our full-year 2010 operating margin was
19.4%, compared to 17.5% in 2009, we achieved our long term goal of 20% operating margins in the
third and fourth quarters of 2010. Over the next few years, we believe we can further expand our
operating margins by 100-200 basis points per year on average.
We had cash collections of receivables of $1.9 billion in 2010 compared to $1.8 billion in 2009.
Days sales outstanding decreased to 87 days for the 2010 fourth quarter compared to 91 days for
2010 third quarter and 90 days for the 2009 fourth quarter, reflecting our improved cash
collections. Operating cash flows for 2010 were strong at $456.4 million compared to $347.3
million in 2009, with the growth driven by cash collections from clients.
Healthcare Information Technology Market Outlook
We have provided a detailed assessment of the healthcare information technology market under Part
I, Item 1, The Healthcare and Healthcare IT Industry.
Revenues increased 11% to $1.9 billion in 2010, compared to $1.7 billion 2009.
System sales, which include revenues from the sale of software, technology resale
(hardware and sublicensed software), deployment period licensed software upgrade rights,
installation fees, transaction processing and subscriptions, increased 9% to $550.8 million
in 2010 from $504.6 million in 2009. The increase in system sales was driven by a strong
increase in licensed software and technology resale.
Support and maintenance revenues increased 5% to $517.5 million in 2010
compared to $493.2 million in 2009. This increase is attributable to continued success at
selling Cerner Millennium applications, implementing them at client sites and initiating
billing for support and maintenance fees. We expect support and maintenance revenues will
continue to grow as the base of installed Cerner Millennium systems grow.
Services revenue, which includes professional services excluding installation and
managed services increased 16% to $749.5 million in 2010 compared to $643.7 million in
2009. This increase is driven by growth in CernerWorksSM managed services as a
result of continued
demand for our hosting services and an increase in professional services due to increased
implementation activities.
Contract backlog, which reflects new business bookings that have not yet been recognized as
revenue, increased 19% in 2010 compared to 2009. This increase was driven by growth in new
business bookings
during the past four quarters, including continued strong levels of managed
services bookings that typically have longer contract terms.
A summary of our total backlog for 2010 and 2009 follows:
(In thousands)
2010
2009
Contract backlog
$
4,285,267
$
3,591,026
Support and maintenance backlog
654,913
620,616
Total backlog
$
4,940,180
$
4,211,642
Costs of Revenue
Cost of revenues remained flat at 17% of total revenues in 2010 and 2009. The cost of revenues
includes the cost of reimbursed travel expense, sales commissions, third party consulting services
and subscription content, computer hardware and sublicensed software purchased from hardware and
software manufacturers for delivery to clients. It also includes the cost of hardware maintenance
and sublicensed software support subcontracted to the manufacturers. Such costs, as a percent of
revenues, typically have varied as the mix of revenue (software, hardware, maintenance, support,
services and reimbursed travel) carrying different margin rates changes from period to period.
Costs of revenues does not include the costs of our client service personnel who are responsible
for delivering our service offerings, such costs are included in sales and client service expense.
Operating Expenses
Total operating expenses increased 7% in 2010 to $1.2 billion as compared to $1.1 billion in 2009.
Sales and client service expenses as a percent of total revenues were 42% in 2010 and
2009. These expenses increased 9% to $767.2 million in 2010, from $700.6 million in 2009.
Sales and client service expenses include salaries of sales and client service personnel,
depreciation and other expenses associated with our CernerWorks managed service business,
communications expenses, unreimbursed travel expenses, expense for share-based payments,
sales and marketing salaries and trade show and advertising costs. The increase was
primarily attributable to growth in the managed services business, a higher level of
professional services expenses and an increase in bad debt expense.
Software development expenses as a percent of revenue were 15% in 2010, as compared to
16% in 2009. These expenses increased 1% in 2010 to $272.9 million, from $271.1 million in
2009. Expenditures for software development in 2010 reflect continued development and
enhancement of the Cerner Millennium platform and software solutions and investments in new
growth initiatives. Although these expenses increased in 2010, the reduction as a percent
of revenue reflects our ongoing efforts to control spending relative to revenue growth.
Because of the strong platform we have built, we are able to continue advancing our
solutions and investing in new solutions without large increases in spending. A summary of
our total software development expense in 2010 and 2009 is as follows:
General and administrative expenses as a percent of total revenues were 7% in 2010, as
compared to 8% in 2009. These expenses increased 3% to $130.5 million in 2010 from $127.0
million in 2009. General and administrative expenses include salaries for corporate,
financial and administrative staff, utilities, communications expenses, professional fees,
the transaction gains or losses on foreign currency and expense for share-based payments.
The overall increase in general and administrative expenses was driven by a net transaction
loss on foreign currency of $0.9 million in 2010 compared to a gain of $4.0 million in 2009.
Additionally, increased corporate personnel costs were offset by a decrease in amortization
expense driven by certain intangible assets being fully amortized at the end of 2009.
Non-Operating Items
Net interest income was $3.4 million in 2010, compared with net interest income of $0.3
million in 2009. Interest income increased to $10.3 million in 2010 from $8.8 million in
2009, due primarily to growth in investments and an increase in investment returns.
Interest expense decreased to $6.9 million in 2010 from $8.5 million in 2009, due to
payments on our long-term debt.
Other expense was $0.6 million in 2010, compared to other income of $0.4 million in
2009. Other income and expense in 2010 and 2009 includes offsetting unrealized gains and
losses included in earnings related to our auction rate securities and put-like settlement
feature in the amounts of $9.3 million and $10.5 million, respectively. Refer to Liquidity
and Capital Resources within this MD&A and Notes (3) and (4) of the notes to consolidated
financial statements for additional information on our auction rate securities.
Our effective tax rate was 34% in 2010 and 2009. There were no material changes
impacting the effective tax rate between 2010 and 2009.
Operations by Segment
We have two operating segments, Domestic and Global. The Domestic segment includes
revenue contributions and expenditures associated with business activity in the United States. The
Global segment includes revenue contributions and expenditures linked to business activity in
Aruba, Australia, Austria, Belgium, Canada, Cayman Islands, Chile, China (Hong Kong), Egypt,
England, France, Germany, India, Ireland, Malaysia, Puerto Rico, Saudi Arabia, Singapore, Spain,
Sweden, Switzerland and the United Arab Emirates.
The following table presents a summary of our operating segment information for the years ended
2010 and 2009:
% of
% of
(in thousands)
2010
Revenue
2009
Revenue
% Change
Domestic Segment
Revenues
$
1,562,563
100
%
$
1,398,715
100
%
12
%
Costs of revenue
272,385
17
%
240,847
17
%
13
%
Operating expenses
417,181
27
%
372,370
27
%
12
%
Total costs and expenses
689,566
44
%
613,217
44
%
12
%
Domestic operating earnings
872,997
56
%
785,498
56
%
11
%
Global Segment
Revenues
287,659
100
%
273,149
100
%
5
%
Costs of revenue
47,971
17
%
40,351
15
%
19
%
Operating expenses
124,546
43
%
130,256
48
%
-4
%
Total costs and expenses
172,517
60
%
170,607
62
%
1
%
Global operating earnings
115,142
40
%
102,542
38
%
12
%
Other, net
(628,806
)
(596,034
)
5
%
Consolidated operating earnings
$
359,333
$
292,006
23
%
Domestic Segment
Revenues increased 12% to $1.6 billion in 2010 from $1.4 billion in 2009. This increase
was driven by growth across all lines of business with the strongest growth in licensed
software, managed services and professional services.
Cost of revenues remained flat at 17% of revenues in both 2010 and 2009.
Operating expenses increased 12% to $417.2 million in 2010, from $372.4 million in 2009,
due primarily to growth in managed services expense, professional services expense and bad
debt expense.
Global Segment
Revenues increased 5% to $287.7 million in 2010 from $273.1 million in 2009. This
increase was driven by improved licensed software, technology resale and support revenue,
mostly from United Kingdom and the Middle East region, slightly offset by a decline from
France. A change in estimates for certain contracts that rely on estimates as part of
contract accounting also contributed to the increase.
Cost of revenues was 17% and 15% of revenues in 2010 and 2009, respectively. The higher
cost of revenues in 2010 was driven by the increase in technology resale, which carries a
higher cost of revenue.
Operating expenses decreased 4% to $124.5 million in 2010, from $130.3 million in 2009,
primarily due to a decrease in personnel-related professional services expense, partially
offset by an increase in bad debt expense.
Other, net
Operating results not attributed to an operating segment include expenses, such as software
development, marketing, general and administrative, stock-based compensation and depreciation.
These expenses increased 5% to $628.8 million in 2010 from $596.0 million in 2009. This increase
was primarily due to growth in corporate and development personnel costs, stock compensation cost
and the previously discussed impact of foreign currency transaction gains and losses.
Our 2008 consolidated and global segment revenues and margin included a cumulative catch-up
adjustment recognized in the fourth quarter, in the amount of $28.6 million, resulting from a
significant change in accounting estimate related to our contract in London. The majority of the
catch-up adjustment revenue was included in support, maintenance and services.
Revenues & Backlog
Revenues were $1.7 billion in 2009, which was flat compared to 2008.
System sales decreased 3% to $504.6 million in 2009 from $522.4 million in 2008. The
decrease in system sales was driven by a decline in technology resale, with licensed
software basically flat and subscriptions increasing slightly.
Support and maintenance revenues increased 4% to $493.2 million in 2009 compared to
$472.6 million in 2008. This increase was attributable to continued success at selling
Cerner Millennium applications, implementing them at client sites and initiating billing
for support and maintenance fees. The growth rate of support and maintenance revenue was
negatively impacted by the extra week in 2008 (53) compared to 2009 (52) and the catch-up
adjustment in 2008.
Services revenue remained flat, with growth in CernerWorksSM managed services
being offset by declines in professional services. The decline in professional services
reflected the impact of the economy and lower billable headcount in 2009 compared to 2008.
Contract backlog increased 23% in 2009 compared to 2008. This increase was driven by growth in new
business bookings during the past four quarters, including continued strong levels of managed
services bookings that typically have longer contract terms. In the second quarter of 2008,
contract backlog was reduced by approximately $178.0 million as a result of the contract withdrawal
by Fujitsu Limited as the prime contractor in the southern region of England. A summary of our
total backlog for 2009 and 2008 follows:
(In thousands)
2009
2008
Contract backlog
$
3,591,026
$
2,907,762
Support and maintenance backlog
620,616
580,915
Total backlog
$
4,211,642
$
3,488,677
Costs of Revenue
Cost of revenues was 17% of total revenues in 2009, as compared to 18% in 2008, with the slightly
lower level reflective of the decline in technology resale, which includes higher third party
costs.
Operating Expenses
Total operating expenses remained flat in 2009 at $1.1 billion as compared to 2008.
Sales and client service expenses as a percent of total revenues were 42% in 2009, as
compared to 43% in 2008. These expenses decreased 2% to $700.6 million in 2009, from $715.5
million in 2008. The decrease was primarily attributable to lower professional services
expense, partially offset by growth in the managed services business.
Software development expense decreased 1% in 2009 to $271.1 million, from $272.5 million
in 2008. Expenditures for software development in 2009 reflected continued development and
enhancement of the Cerner Millennium platform and software solutions and investments in new
growth initiatives. A summary of our total software development expense in 2009 and 2008 is
as follows:
For the Years Ended
(In thousands)
2009
2008
Software development costs
$
285,187
$
291,368
Capitalized software costs
(76,876
)
(69,039
)
Capitalized costs related to share-based payments
(871
)
(942
)
Amortization of capitalized software costs
63,611
51,132
Total software development expense
$
271,051
$
272,519
General and administrative expenses as a percent of total revenues were 8% in 2009,
as compared to 7% in 2008. These expenses increased 12% to $127.0 million in 2009 from
$113.0 million in 2008. We recorded a net transaction gain on foreign currency of $4.0
million and $9.9 million in 2009 and 2008, respectively. The lower gain in 2009 compared
to 2008 was the
primary reason for the increase in general and administrative expenses, with the balance
driven by legal fees and other corporate expenses.
Non-Operating Items
Net interest income was $0.3 million in 2009, compared with net interest income of $3.1
million in 2008. Interest income decreased to $8.8 million in 2009 from $13.6 million in
2008, due primarily to a decline in investment returns. Interest expense decreased to $8.5
million in 2009 from $10.5 million in 2008, due primarily to a reduction in long-term debt.
Other income was $0.4 million in 2009, compared to other expense of $0.5 million in
2008. Other income and expense in 2009 and 2008 included offsetting unrealized gains and
losses included in earnings related to our auction rate securities and put-like settlement
feature in the amounts of $10.5 million and $19.9 million, respectively. Refer to Liquidity
and Capital Resources within this MD&A and Notes (3) and (4) of the notes to consolidated
financial statements for additional information on our auction rate securities.
Our effective tax rate was 34% and 33% in 2009 and 2008, respectively. This net increase
was primarily due to higher tax expense recorded at the statutory rates of approximately
$5.0 million and prior period tax expense of $2.3 million, offset by a decrease in our
unrecognized tax benefits of $5.6 million. The tax rate for 2008 was slightly lower than
normal due to strong income levels from global regions that have lower tax rates. Tax
expense for 2009 included expense of approximately $2.3 million and 2008 included benefits
of approximately $2.9 million for corrections relating to prior periods.
Operations by Segment
The following table presents a summary of our operating segment information for the years ended
2009 and 2008:
% of
% of
(in thousands)
2009
Revenue
2008
Revenue
% Change
Domestic Segment
Revenues
$
1,398,715
100
%
$
1,307,510
100
%
7
%
Costs of revenue
240,847
17
%
225,955
17
%
7
%
Operating expenses
372,370
27
%
361,213
28
%
3
%
Total costs and expenses
613,217
44
%
587,168
45
%
4
%
Domestic operating earnings
785,498
56
%
720,342
55
%
9
%
Global Segment
Revenues
273,149
100
%
368,518
100
%
-26
%
Costs of revenue
40,351
15
%
70,108
19
%
-42
%
Operating expenses
130,256
48
%
150,729
41
%
-14
%
Total costs and expenses
170,607
62
%
220,837
60
%
-23
%
Global operating earnings
102,542
38
%
147,681
40
%
-31
%
Other, net
(596,034
)
(589,138
)
1
%
Consolidated operating earnings
$
292,006
$
278,885
5
%
Domestic Segment
Revenues increased 7% to $1.4 billion in 2009 from $1.3 billion in 2008. This increase
was driven by growth in managed services, licensed software, technology resale, and support
and maintenance, partially offset by a decline in professional services.
Cost of revenues was 17% of revenues in both 2009 and 2008.
Operating expenses increased 3% to $372.4 million in 2009, from $361.2 million in 2008,
due primarily to growth in managed services.
Operating earnings of the Domestic segment increased 9% to $785.5 million in 2009 from
$720.3 million in 2008.
Global Segment
Revenues decreased 26% to $273.1 million in 2009 from $368.5 million in 2008. This
decrease was driven by the previously discussed cumulative catch-up adjustment in 2008 and
a decline in revenue from Middle Eastern and European countries resulting from the
challenging global economic conditions.
Cost of revenues was 15% and 19% of revenues in 2009 and 2008, respectively. The lower
cost of revenues was driven by a lower mix of hardware revenues in 2009.
Operating expenses decreased 14% to $130.3 million in 2009, from $150.7 million in 2008,
primarily due to a decrease in professional services expense.
Operating earnings of the Global segment decreased 31% to $102.5 million in 2009 from
$147.7 million in 2008. This decline was driven by the catch-up adjustment in 2008 and the
lower level of revenues in 2009.
Other, net
Operating results not attributed to an operating segment include expenses, such as software
development, marketing, general and administrative, stock-based compensation and depreciation.
These expenses increased 1% to $596.0 million in 2009 from $589.1 million in 2008.
Our liquidity is influenced by many factors, including the amount and timing of our revenues, our
cash collections from our clients, and the amount we invest in software development, acquisitions
and capital expenditures.
Our principal sources of liquidity are our cash, cash equivalents, which consist of money market
funds, time deposits and bonds with original maturities of less than 90 days and short-term
investments. At the end of 2010, we had cash of $170.3 million, cash equivalents of $44.2 million
and short-term investments of $356.5 million, as compared to cash of $144.8 million, cash
equivalents of $97.0 million and short-term investments of $317.1 million at the end of 2009.
Additionally, we maintain a $90 million, multi-year revolving credit facility, which provides an
unsecured revolving line of credit for working capital purposes. Interest is payable at a rate
based on prime or LIBOR plus a spread that varies depending on the net worth ratios maintained. The
agreement provides certain restrictions on our ability to borrow, incur liens, sell assets and pay
dividends and contains certain net worth, current ratio and fixed charge coverage covenants, which
as of the end of 2010, we were in compliance with. The current agreement expires on May 31, 2013.
As of the end of 2010, we had no outstanding borrowings under this agreement; however, we have
$13.6 million of outstanding letters of credit, which reduced our available borrowing capacity to
$76.4 million.
We believe that our present cash position, together with cash generated from operations, short-term
investments and, if necessary, our available lines of credit, will be sufficient to meet
anticipated cash requirements during 2011.
During the second quarter of 2008, Fujitsu Services Limiteds (Fujitsu) contract as the prime
contractor in the National Health Service (NHS) initiative to automate clinical processes and
digitize medical records in the Southern region of England was terminated by the NHS. This had the
effect of automatically terminating our subcontract for the project. We are in dispute with
Fujitsu regarding Fujitsus obligation to pay the amounts comprised of accounts receivable and
contracts receivable related to that subcontract, and we are working with Fujitsu to resolve these
issues based on processes provided for in the contract. Part of that process requires resolution
of disputes between Fujitsu and the NHS regarding the contract termination. During the 2009 fourth
quarter certain events occurred in the resolution process between Fujitsu and the NHS which reduced
the likelihood the matter will be resolved in the next 12 months. Therefore we reclassified the
receivables, which represented more than 10% of our net receivables, from current assets to other
long term assets during the 2009 fourth quarter. The circumstances surrounding these receivables
remained unchanged at the end of 2010 and represent the significant majority of other long-term
assets at the end of 2010 and 2009. While the ultimate collectability of the receivables pursuant
to this process is uncertain, management believes that it has valid and equitable grounds for
recovery of such amounts and that collection of recorded amounts is probable.
In February and March 2008, liquidity issues in the global credit markets resulted in the
progressive failure of auctions representing all the auction rate securities held by us. These
conditions persisted through the remainder of 2008 and into 2009. During the fourth quarter of
2008, we entered into a settlement agreement with the investment firm that sold us the auction rate
securities. Under the terms of the settlement agreement, we received the right to redeem the
securities at par value during a period from mid-2010 through mid-2012. The settlement was in
effect a put-like instrument with a fair value generally equal to the difference between the
auction rate securities fair value and par value. At the end of 2010, we held auction rate
securities with a par value of $18.5 million, which approximated fair value, as all outstanding
auction rate securities were subsequently called at par value by the issuer in January 2011. For a
more detailed discussion of the auction rate securities, please refer to Note (3), Cash and
Investments, in the Consolidated Financial Statements.
The following table provides details about our cash flows in 2010, 2009 and 2008:
For the Years Ended
(In thousands)
2010
2009
2008
Cash flows from operating activities
$
456,444
$
347,291
$
281,802
Cash flows from investing activities
(520,896
)
(394,321
)
(170,607
)
Cash flows from financing activities
34,841
16,770
(11,654
)
Effect of exchange rate changes on cash
2,399
1,489
(11,961
)
Total change in cash and cash equivalents
(27,212
)
(28,771
)
87,580
Cash and cash equivalents at beginning of period
241,723
270,494
182,914
Cash and cash equivalents at end of period
$
214,511
$
241,723
$
270,494
Free cash flow (non-GAAP)
$
273,154
$
138,279
$
103,605
Cash Flows from Operating Activities
For the Years Ended
(In thousands)
2010
2009
2008
Cash collections from clients
$
1,900,145
$
1,780,127
$
1,729,526
Cash paid to employees and suppliers and other
(1,315,077
)
(1,377,139
)
(1,381,146
)
Cash paid for interest
(6,887
)
(8,583
)
(10,512
)
Cash paid for taxes, net of refund
(121,737
)
(47,114
)
(56,066
)
Total cash from operations
$
456,444
$
347,291
$
281,802
Cash flows from operations increased $109.2 million in 2010 compared to 2009 and $65.5 million in
2009 compared to 2008 primarily due to increased cash collections from clients. During 2010, 2009
and 2008, we received total client cash collections of $1.90 billion, $1.78 billion and $1.73
billion, respectively, of which approximately 4%, 3% and 5% were received from third party client
financing arrangements and non-recourse payment assignments, respectively. Days sales outstanding
decreased to 87 days for the 2010 fourth quarter compared to 91 days for 2010 third quarter and 90
days for the 2009 fourth quarter, reflecting our improved cash collections. Revenues provided
under support and maintenance agreements represent recurring cash flows. Support and maintenance
revenues increased 5% in 2010 and 4% in 2009, and we expect these revenues to continue to grow as
the base of installed Cerner Millennium systems grows.
Cash Flows from Investing Activities
For the Years Ended
(In thousands)
2010
2009
2008
Capital purchases
$
(102,311
)
$
(131,265
)
$
(108,099
)
Capitalized software development costs
(80,979
)
(77,747
)
(70,098
)
Purchases of investments, net of maturities
(312,340
)
(169,295
)
17,510
Other, net
(25,266
)
(16,014
)
(9,920
)
Total cash flows from investing activities
$
(520,896
)
$
(394,321
)
$
(170,607
)
Cash flows from investing activities consists primarily of capital spending and our short-term
investment activities. Capital spending consists of capitalized equipment purchases primarily to
support growth in our CernerWorks managed services business, capitalized land, building and
improvement purchases to support our facilities requirements and capitalized spending to support
our ongoing software development initiatives. Capital spending in 2011 is expected to increase from
our 2010 levels, however we also expect strong levels of free cash flow.
In addition, during the first quarter 2010, we completed our acquisition of IMC Health Care, Inc.
for approximately $14.5 million, net of the cash acquired.
Cash Flows from Financing Activities
For the Years Ended
(In thousands)
2010
2009
2008
Line of credit and long-term debt borrowings and repayments, net
$
(27,625
)
$
(32,352
)
$
(15,317
)
Cash from option exercises (incl. excess tax benefits)
60,950
47,234
24,530
Purchase of treasury stock
-
-
(28,002
)
Other, net
1,516
1,888
7,135
Total cash flows from financing activities
$
34,841
$
16,770
$
(11,654
)
Our primary financing obligations are long-term debt repayments. In the fourth quarter of 2009, we
commenced payment on the first of seven equal annual installments on our 5.54% Great Britain Pound
denominated Note Agreement as well as on the first of four equal annual installments on our 6.42%
Series B Senior Notes. Based on debts currently outstanding and current exchange rates, we expect
our debt repayments to approximate $25 million per year through 2012 and approximately $15 million
per year from 2013 through 2015.
Free Cash Flow
For the Years Ended
(In thousands)
2010
2009
2008
Cash flows from operating activities
$
456,444
$
347,291
$
281,802
Capital purchases
(102,311
)
(131,265
)
(108,099
)
Capitalized software development costs
(80,979
)
(77,747
)
(70,098
)
Free cash flow (non-GAAP)
$
273,154
$
138,279
$
103,605
Free Cash Flow increased $134.9 million in 2010 as compared to 2009, which we believe reflects
continued strengthening of our earnings quality. Free Cash Flow is a non-GAAP financial measure
used by management along with GAAP results to analyze our earnings quality and overall cash
generation of the business. The presentation of Free Cash Flow is not meant to be considered in
isolation, as a substitute for, or superior to, GAAP results and investors should be aware that
non-GAAP measures have inherent limitations and should be read only in conjunction with our
consolidated financial statements prepared in accordance with GAAP. Free Cash Flow may also be
different from similar non-GAAP financial measures used by other companies and may not be
comparable to similarly titled captions of other companies due to potential inconsistencies in the
method of calculation. We believe Free Cash
Flow is important to enable investors to better understand and evaluate our ongoing operating
results and allows for greater transparency in the review of our overall financial, operational and
economic performance.
Contractual Obligations, Commitments and Off Balance Sheet Arrangements
The following table represents a summary of our contractual obligations and commercial commitments,
excluding interest, at the end of 2010, except short-term purchase order commitments arising in the
ordinary course of business.
We have no off-balance sheet arrangements. The effects of inflation on our business during 2010,
2009 and 2008 were not significant.
Recent Accounting Pronouncements
During 2009, the Financial Accounting Standards Board (FASB) issued guidance on revenue recognition
for non-software elements that became effective for us beginning on January 2, 2011. Under the new
guidance an entity is required to apply the relative selling price allocation method in order to
estimate selling price for all units of accounting, including delivered items, when vendor-specific
objective evidence (VSOE) or acceptable third party evidence (TPE) does not exist. In addition,
expanded disclosures are required to provide both qualitative and quantitative information about
the significant judgments made in applying the guidance and subsequent changes in those judgments
that may significantly affect the timing or amount of revenue recognition. Further, for
arrangements that include software elements, tangible products that have software components that
are essential to the functionality of the tangible product will no longer be within the scope of
the software revenue recognition guidance, and software-enabled products will now be subject to
other relevant revenue recognition guidance. The guidance is effective for revenue arrangements
entered into or materially modified in fiscal years beginning on or after June 15, 2010. We are
assessing the adoption of the new guidance and do not believe it will have a material impact on our
financial position and results of operations.
Critical Accounting Policies
We believe that there are several accounting policies that are critical to understanding our
historical and future performance, as these policies affect the reported amount of revenue and
other significant areas involving our judgments and estimates. These significant accounting
policies relate to revenue recognition, software development, potential impairments of goodwill and
income taxes. These policies and our procedures related to these policies are described in detail
below and under specific areas within this MD&A. In addition, Note (1) to the consolidated
financial statements expands upon discussion of our accounting policies.
Revenue Recognition
We recognize revenue within our multiple element arrangements, including software and
software-related services, using the residual method. Key factors in our revenue recognition model
are our assessments that installation services are essential to the functionality of our software
whereas implementation services are not; and the length of time it takes for us to achieve the
delivery and installation milestones for our licensed software. If our business model were to
change such that implementation services are deemed to be essential to the functionality of our
software, the period of time over which our licensed software revenue would be recognized would
lengthen. We generally recognize revenue from the sale of our licensed software over two key
milestones, delivery and installation, based on percentages that reflect the underlying effort from
planning to installation. Generally, both milestones are achieved in the quarter the contracts are
executed. If the period of time to achieve our delivery and installation milestones for our
licensed software were to lengthen, our milestones would be adjusted and the timing of revenue
recognition for our licensed software could materially change.
We also recognize revenue for certain projects using the percentage of completion method. Our
revenue recognition is dependent upon our ability to reliably estimate the direct labor hours to
complete a project which generally can span several years. We utilize our historical project
experience and detailed planning process as a basis for our future estimates to complete current
projects. Significant delays in completion of the projects, unforeseen cost increases or penalties
could result in significant reductions to revenue and margins on these contracts. The actual
project results can be significantly different from the estimated results. When adjustments are
indentified near or at the end of a project, the full impact of the change in estimate is
recognized in that period. This can result in a material impact on our results for a single
reporting period.
Software Development Costs
Costs incurred internally in creating computer software solutions and enhancements to those
solutions are expensed until completion of a detailed program design, which is when we determine
that technological feasibility has been established. Thereafter, all software development costs are
capitalized until such time as the software solutions and enhancements are available for general
release, and the capitalized costs subsequently are reported at the lower of amortized cost or net
realizable value.
Net realizable value is computed as the estimated gross future revenues from each software solution
less the amount of estimated future costs of completing and disposing of that product. Because the
development of projected net future revenues related to our software solutions used in our net
realizable value computation is based on estimates, a significant reduction in our future revenues
could impact the recovery of our capitalized software development costs. We historically have not
experienced significant inaccuracies in computing the net realizable value of our software
solutions and the difference between the net realizable value and the unamortized cost has grown
over the past three years. We expect that trend to continue in the future. If we missed our
estimates of net future revenues by up to 10%, the amount of our capitalized software development
costs would not be impaired.
Capitalized costs are amortized based on current and expected net future revenue for each software
solution with minimum annual amortization equal to the straight-line amortization over the
estimated economic life of the software solution. We are amortizing capitalized costs over five
years. The five-year period over which capitalized software development costs are amortized is an
estimate based upon our forecast of a reasonable useful life for the capitalized costs.
Historically, use of our software programs by our clients has exceeded five years and is capable of
being used a decade or more.
We expect that major software information systems companies, large information technology
consulting service providers and systems integrators and others specializing in the healthcare
industry may offer competitive products or services. The pace of change in the HIT market is rapid
and there are frequent new product introductions, product enhancements and evolving industry
standards and requirements. As a result, the capitalized software solutions may become less
valuable or obsolete and could be subject to impairment.
Fair Value Measurements
We determine fair value measurements used in our consolidated financial statements based upon the
price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value hierarchy
distinguishes between (1) market participant assumptions developed based on market data obtained
from independent sources (observable inputs) and (2) an entitys own assumptions about market
participant assumptions developed based on the best information available in the circumstances
(unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair
value hierarchy are described below:
Level 1 Valuations based on quoted prices in active markets for identical assets or
liabilities that the entity has the ability to access.
Level 2 Valuations based on quoted prices for similar assets or liabilities, quoted
prices in markets that are not active, or other inputs that are observable or can be
corroborated by observable data for substantially the full term of the assets or
liabilities.
Level 3 Valuations based on inputs that are supported by little or no market activity
and that are significant to the fair value of the assets or liabilities.
As of the end of 2010, we held investments in money market funds, time deposits, commercial paper
and government and corporate bonds. Auction rate securities are debt instruments with long-term
nominal maturities, for which the interest rates regularly reset every 7-35 days under an auction
system. Due to the lack of availability of observable market quotes on our investment portfolio of
auction rate securities, we historically utilized valuation models that were based on discounted
cash flow streams, including assessments of counterparty credit quality, default risk underlying
the security, discount rates and overall capital market liquidity. The valuation was subject to
uncertainties that were difficult to predict. If different assumptions were used for the various
inputs to the valuation, including, but not limited to, assumptions involving the estimated holding
periods for the auction rate securities, the estimated cash flows over those estimated lives, and
the estimated discount rates, including the liquidity discount rate, applied to those cash flows,
the estimated fair value of these investments could have been significantly higher or lower than
the fair value we determined. At the end of 2010, we transferred our auction rate securities
classified as Level 3 to Level 2 as all outstanding auction rate securities were subsequently
called at par value by the issuer in January 2011.
A considerable amount of judgment and estimation was applied in the valuation of auction rate
securities. In addition, we also apply judgment in determining whether the marketable securities
are other-than-temporarily impaired. We typically consider the severity and duration of the
decline, future prospects of the issuer and our ability and intent to hold the security to
recovery.
Goodwill
Goodwill and intangible assets with indefinite lives are not amortized but are evaluated for
impairment annually or whenever there is an impairment indicator. All goodwill is assigned to a
reporting unit, where it is subject to an annual impairment test based on fair value. We assess
goodwill for impairment in the second quarter of each fiscal year and evaluate impairment
indicators at each quarter end. We assessed our goodwill for impairment in the second quarters of
2010 and 2009 and concluded that goodwill was not impaired. In each respective year, the fair
values of each of our reporting units exceeded their carrying amounts by a significant margin. We
used a discounted cash flow analysis utilizing Level 3 inputs, to determine the fair value of the
reporting units for all periods. Goodwill amounted to $161.4 million and $151.5 million at the end
of 2010 and 2009, respectively. If future, anticipated cash flows from our reporting units that
recognized goodwill do not materialize as expected, our goodwill could be impaired, which could
result in significant charges to earnings.
Income Taxes
We make a number of assumptions and estimates in determining the appropriate amount of expense to
record for income taxes. These assumptions and estimates consider the taxing jurisdictions in
which we operate as well as current tax regulations. Accruals are established for estimates of tax
effects for certain transactions, business structures and future projected profitability of our
businesses based on our
interpretation of existing facts and circumstances. If these assumptions and estimates were to
change as a result of new evidence or changes in circumstances, the change in estimate could result
in a material adjustment to the consolidated financial statements.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled.
We have discussed the development and selection of these critical accounting estimates with the
Audit Committee of our Board of Directors and the Audit Committee has reviewed our disclosure
contained herein.
Quantitative and Qualitative Disclosures about Market Risk
We use a foreign-currency denominated debt instrument to reduce our foreign currency exposure in
the U.K. As of the end of 2010, we designated all of our Great Britain Pound (GBP) denominated
long-term debt (46.4 million GBP) as a net investment hedge of our U.K. operations. Because the
borrowing is denominated in pounds, we are exposed to movements in the foreign currency exchange
rate between the U.S. dollar (USD) and the GPB. We estimate that a hypothetical 10% change in the
foreign currency exchange rate between the USD and GBP would have impacted the unrealized loss, net
of related income tax effects, of the net investment hedge recognized in other comprehensive income
by approximately $5.5 million. Please refer to Notes (9) and (10) to the Consolidated Financial
Statements for a more detailed discussion of the foreign-currency denominated debt instrument.
Item 8.
Financial Statements and Supplementary Data
The Financial Statements and Notes required by this Item are submitted as a separate part of this
report.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
N/A
Item 9.A.
Controls and Procedures
a)
Evaluation of disclosure controls and procedures. The Companys Chief Executive
Officer (CEO) and Chief Financial Officer (CFO) have evaluated the effectiveness of the
Companys disclosure controls and procedures (as defined in the Exchange Act Rules
13a-15(e) and 15d-15(e)) as of the end of the period covered by the Annual Report (the
Evaluation Date). They have concluded that, as of the Evaluation Date and based on the
evaluation of these controls and procedures required by paragraph (b) of Exchange Act Rule
13a-15 or 15d-15, these disclosure controls and procedures were effective to ensure that
material information relating to the Company and its consolidated subsidiaries would be
made known to them by others within those entities and would be disclosed on a timely
basis. The CEO and CFO have concluded that the Companys disclosure controls and
procedures are designed, and are effective, to give reasonable assurance that the
information required to be disclosed by the Company in reports that it files under the
Exchange Act is recorded, processed, summarized and reported within the time period
specified in the rules and forms of the SEC. They have also concluded that the Companys
disclosure controls and procedures are effective to ensure that information required to be
disclosed in the reports that are filed or submitted under the Exchange Act are accumulated
and communicated to the Companys management, including the CEO and CFO, to allow timely
decisions regarding required disclosure.
b)
There were no changes in the Companys internal controls over financial reporting
during the three months ended January 1, 2011, that have materially affected, or are
reasonably likely to materially affect, its internal controls over financial reporting.
c)
The Companys management, including its Chief Executive Officer and Chief Financial
Officer, have concluded that our disclosure controls and procedures and internal control
over financial reporting are designed to provide reasonable assurance of achieving their
objectives and are effective at that reasonable assurance level. However, the Companys
management can provide no assurance that our disclosure controls and procedures or our
internal control over financial reporting can prevent all errors and all fraud under all
circumstances. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, within
the Company have been or will be detected. The design of any system of
controls also is
based in part upon certain assumptions about the likelihood of future events, and there can
be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with policies or procedures may deteriorate.
Because of the inherent limitations in a cost-effective control system, misstatements due
to error or fraud may occur and not be detected.
Managements Report on Internal Control over Financial Reporting
The Companys management is responsible for establishing and maintaining adequate internal control
over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934,
as amended). The Companys management assessed the effectiveness of the Companys internal control
over financial reporting as of January 1, 2011. In making this assessment, the Companys
management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in its Internal Control-Integrated Framework. The Companys management has
concluded that, as of January 1, 2011, the Companys internal control over financial reporting is
effective based on these criteria. The Companys independent registered public accounting firm
that audited the consolidated financial statements included in the annual report has issued an
audit report on the effectiveness of the Companys internal control over financial reporting, which
is included herein under Report of Independent Registered Public Accounting Firm.
Item 9.B.
Other Information
N/A
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
The information required by this Item 10 regarding our Directors will be set forth under the
caption Election of Directors in our Proxy Statement in connection with the 2011 Annual
Shareholders Meeting scheduled to be held May 27, 2011, and is incorporated in this Item 10 by
reference. The information required by this Item 10 concerning compliance with Section 16(a) of
the Securities Exchange Act of 1934 will be set forth under the caption Section 16(a) Beneficial
Ownership Reporting Compliance in our Proxy Statement in connection with the 2011 Annual
Shareholders Meeting scheduled to be held May 27, 2011, and is incorporated in this Item 10 by
reference.
The information required by this Item 10 concerning our Code of Business Conduct and Ethics will be
set forth under the caption Code of Business Conduct and Ethics in our Proxy Statement in
connection with the 2011 Annual Shareholders Meeting scheduled to be held May 27, 2011, and is
incorporated in this Item 10 by reference. The information required by this Item 10 concerning our
Audit Committee and our Audit Committee financial expert will be set forth under the caption Audit
Committee in our Proxy Statement in connection with the 2011 Annual Shareholders Meeting
scheduled to be held May 27, 2011, and is incorporated in this Item 10 by reference.
There have been no material changes to the procedures by which security holders may recommend
nominees to our Board of Directors since our last disclosure thereof. The names of our executive
officers and their ages, titles and biographies are incorporated by reference under the caption
Executive Officers of the Registrant under Part I, above.
Item 11.
Executive Compensation
The information required by this Item 11 concerning our executive compensation will be set forth
under the caption Compensation Discussion and Analysis in our Proxy Statement in connection with
the 2011 Annual Shareholders Meeting scheduled to be held May 27, 2011, and is incorporated in
this Item 11 by reference. The information required by this Item 11 concerning Compensation
Committee interlocks and insider participation will be set forth under the caption Compensation
Committee Interlocks and Insider Participation in our Proxy Statement in connection with the 2011
Annual Shareholders Meeting scheduled to be held May 27, 2011, and is incorporated in this Item 11
by reference. The information required by this Item 11 concerning Compensation Committee report
will be set forth under the caption Compensation Committee Report in our Proxy Statement in
connection with the 2011 Annual Shareholders Meeting scheduled to be held May 27, 2011 and is
incorporated in this Item 11 by reference.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item 12 will be set forth under the caption Voting Securities and
Principal Holders Thereof in our Proxy Statement in connection with the 2011 Annual Shareholders
Meeting scheduled to be held May 27, 2011, and is incorporated in this Item 12 by reference.
The following table provides information about our common stock that may be issued under our equity
compensation plans as of January 1, 2011.
Securities to be issued
Weighted
upon exercise of
average exercise
Securities
outstanding options
price per share
available for
Plan Category
and rights(1)
(2)
future issuance
Equity compensation plans approved by security holders (3)
7,487,305
$
37.73
1,419,585
Equity compensation plans not approved by security holders
-
-
-
Total
7,487,305
1,419,585
(1) Includes grants of stock options, time-based and performance-based restricted stock.
(2) Includes weighted-average exercise price of outstanding stock options only.
(3) Includes the Stock Option Plan D, Stock Option Plan E, 2001 Long-Term Incentive
Plan F and 2004 Long-Term Incentive Plan G. No new grants were permitted to be issued
after January 1, 2005 for Stock Option Plans D and E , but some awards remain
outstanding.
All other information required by this Item is incorporated by reference from the Proxy
Statement under the section entitled Principal Security Ownership and Certain Beneficial Owners.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 concerning our transactions with related parties will be
set forth under the caption Certain Transactions in our Proxy Statement in connection with the
2011 Annual Shareholders Meeting scheduled to be held May 27, 2011, and is incorporated in this
Item 13 by reference. The information required by this Item 13 concerning director independence
will be set forth under the caption Director Independence in our Proxy Statement in connection
with the 2011 Annual Shareholders Meeting scheduled to be held May 27, 2011, and is incorporated
in this Item 13 by reference.
Item 14.
Principal Accountant Fees and Services
The information required by this Item 14 will be set forth under the caption Relationship with
Independent Registered Public Accounting Firm in our Proxy Statement in connection with the 2011
Annual Shareholders Meeting scheduled to be held May 27, 2011, and is incorporated in this Item 14
by reference.
PART IV
Item 15.
Exhibits and Financial Statement Schedules
(a) Financial Statements and Exhibits.
(1)
Consolidated Financial Statements:
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Operations -
Years Ended January 1, 2011, January 2, 2010, and January 3, 2009
Consolidated Statements of Changes in Equity -
Years Ended January 1, 2011, January 2, 2010, and January 3, 2009
Consolidated Statements of Cash Flows -
Years Ended January 1, 2011, January 2, 2010, and January 3, 2009
Notes to Consolidated Financial Statements
(2)
The following financial statement schedule and Report of Independent Registered Public
Accounting
Firm of the Registrant for the three-year period ended January 1, 2011 are included herein:
Schedule II - Valuation and Qualifying Accounts, Report of Independent Registered
Public Accounting Firm
All other schedules are omitted, as the required information is inapplicable or the
information is presented in the consolidated financial statements or related notes.
(3)
See the Exhibit Index immediately following the signature page of this Annual Report on
Form 10-K.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
CERNER CORPORATION
Date: February 16, 2011
By:
/s/Neal L. Patterson
Neal L. Patterson
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated:
Second Restated
Certificate of
Incorporation of the
Registrant, dated
December 5, 2003
10-K
3(a)
1/3/2004
3(b)
Amended & Restated
Bylaws, as amended March
31, 2010
8-K
3.2
4/6/2010
4(a)
Specimen stock certificate
10-K
4(a)
2/28/2007
4(b)
Amended and Restated
Credit Agreement, dated
November 30, 2006, among
Cerner Corporation and
U.S. Bank N.A., Bank of
America, N.A. (successor
in interest to LaSalle
Bank National
Association), Commerce
Bank, N.A. and UMB Bank,
N.A.
8-K
99.1
12/6/2006
4(c)
First Amendment to
Amended and Restated
Credit Agreement, dated
November 12, 2009, among
Cerner Corporation, U.S.
Bank National
Association, Bank of
America, N.A., Commerce
Bank, N.A. and UMB Bank,
N.A.
8-K
99.1
11/18/2009
4(d)
Cerner Corporation Note
Agreement, dated April 1,
1999, among Cerner
Corporation, Principal
Life Insurance Company,
Principal Life Insurance
Company, on behalf of one
or more separate
accounts, Commercial
Union Life Insurance
Company of America,
Nippon Life Insurance
Company of America, John
Hancock Mutual Life
Insurance Company, John
Hancock Variable Life
Insurance Company, and
Investors Partner Life
Insurance Company
8-K
4(e)
4/23/1999
4(e)
Note Purchase Agreement,
dated December 15, 2002,
among Cerner Corporation
and the purchasers
therein
10-K
10(x)
3/12/2003
4(f)
Cerner Corporation Note
Purchase Agreement, dated
November 1, 2005, among
Cerner Corporation, as
issuer, and AIG Annuity
Insurance Company,
American General Life
Insurance
Cerner Corporation 2001
Long-Term Incentive Plan
F Nonqualified Stock
Option Director Agreement
10-K
10(x)
3/17/2005
10(p)*
Cerner Corporation 2001
Long-Term Incentive Plan
F Director Restricted
Stock Agreement
10-K
10(w)
3/17/2005
10(q)*
Cerner Corporation 2001
Long-Term Incentive Plan
F Restricted
Performance-Based Stock
Agreement for Section 16
Officers
8-K
99.1
6/4/2010
10(r)*
Cerner Corporation 2004
Long-Term Incentive Plan
G Nonqualified Stock
Option Grant Certificate
10-K
10(q)
2/27/2008
10(s)*
Time Sharing Agreements
between the Registrant
and Neal L. Patterson and
Clifford W. Illig both
dated February 7, 2007
8-K
10.2 & 10.3
2/9/2007
10(t)*
Notice of Change of
Aircraft Provided Under
Time Sharing Agreements
from Registrant to Neal
L. Patterson and Clifford
W. Illig, both notices
dated December 28, 2009
10-K
10(t)
2/22/2010
10(u)
Interparty Agreement,
dated January 19, 2010,
among Kansas Unified
Development, LLC, OnGoal,
LLC and Cerner
Corporation,
8-K
99.1
1/22/2010
11
Computation of
Registrants Earnings Per
Share. (Exhibit omitted.
Information contained in
notes to consolidated
financial statements.)
21
Subsidiaries of Registrant
X
23
Consent of Independent
Registered Public
Accounting Firm
X
31.1
Certification of Neal L.
Patterson pursuant to
Section 302 of
Sarbanes-Oxley Act of
2002
X
31.2
Certification of Marc G.
Naughton pursuant to
Section 302 of
Sarbanes-Oxley Act of
2002
X
32.1
Certification pursuant to
18 U.S.C. Section 1350,
as adopted pursuant to
Section 906 of
Sarbanes-Oxley Act of
2002
Indicates a management contract or compensatory plan or arrangement required to be identified by item 15(a)(3).
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a
part of a registration statement or prospectus for purposes of Sections 11 or 12 of the
Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities
Exchange Act of 1934, and otherwise is not subject to liability under these sections.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Cerner Corporation:
We have audited Cerner Corporations (the Corporation) internal control over financial reporting as
of January 1, 2011, based on criteria established in Internal Control Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The
Corporations management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Managements Report on Internal Control over Financial Reporting,
appearing in Item 9A. Our responsibility is to express an opinion on the Corporations internal
control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Cerner Corporation maintained, in all material respects, effective internal control
over financial reporting as of January 1, 2011, based on criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of Cerner Corporation and subsidiaries as of
January 1, 2011 and January 2, 2010, and the related consolidated statements of operations, changes
in stockholders equity, and cash flows for each of the years in the three-year period ended
January 1, 2011, and our report dated February 16, 2011 expressed an unqualified opinion on those
consolidated financial statements.
/s/KPMG LLP
Kansas City, Missouri
February 16, 2011
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Cerner Corporation:
We have audited the accompanying consolidated balance sheets of Cerner Corporation and subsidiaries
(collectively, the Corporation) as of January 1, 2011 and January 2, 2010, and the related
consolidated statements of operations, changes in stockholders equity, and cash flows for each of
the years in the three-year period ended January 1, 2011. These consolidated financial statements
are the responsibility of the Corporations management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Cerner Corporation and subsidiaries as of January 1,
2011 and January 2, 2010, and the results of their operations and their cash flows for each of the
years in the three-year period ended January 1, 2011, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), Cerner Corporations internal control over financial reporting as of January
1, 2011, based on criteria established in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated
February 16, 2011 expressed an unqualified opinion on the effectiveness of Cerner Corporations
internal control over financial reporting.
/s/KPMG LLP
Kansas City, Missouri
February 16, 2011
Managements Report
The management of Cerner Corporation is responsible for the consolidated financial statements and
all other information presented in this report. The financial statements have been prepared in
conformity with U.S. generally accepted accounting principles appropriate to the circumstances,
and, therefore, included in the financial statements are certain amounts based on managements
informed estimates and judgments. Other financial information in this report is consistent with
that in the consolidated financial statements. The consolidated financial statements have been
audited by Cerner Corporations independent registered public accountants and have been reviewed by
the Audit Committee of the Board of Directors.
(1) Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include all the accounts of Cerner Corporation and its
subsidiaries. All significant intercompany transactions have been eliminated in consolidation.
The consolidated financial statements were prepared using accounting principles generally accepted
in the United States. These principles require us to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and
the reported amounts of revenues and expenses. Actual results could differ from those estimates.
Certain prior year amounts in the consolidated financial statements have been reclassified to
conform to the current year presentation. These reclassifications had no effect on the results of
operations or stockholders equity as previously reported.
Our fiscal year ends on the Saturday closest to December 31. Fiscal year 2010 consisted of 52
weeks and ended on January 1, 2011; fiscal year 2009 consisted of 52 weeks and ended on January 2,
2010; and fiscal year 2008 consisted of 53 weeks and ended on January 3, 2009. All references to
years in these notes to consolidated financial statements represent fiscal years unless otherwise
noted.
Nature of Operations
We design, develop, market, install, host and support healthcare information technology, healthcare
devices and content solutions for healthcare organizations and consumers. We also provide a wide
range of value-added services, including implementing solutions as individual, combined or
enterprise-wide systems; hosting solutions in our data center; and clinical process optimization
services. Furthermore, we provide fullyautomated on-site employer health clinics and third party
administrator health plan services for employers.
Summary of Significant Accounting Policies
(a)
Revenue Recognition We recognize software related revenue in accordance with the
provisions of ASC 985-605, Software Revenue Recognition and non-software related revenue in
accordance with ASC 605, Revenue Recognition. In general, revenue is recognized when all of
the following criteria have been met:
Pervasive evidence of an arrangement exists;
Delivery has occurred and been accepted by the client;
Our fee is fixed, determinable and,
Collection of the revenue is probable
The following are our major components of revenue:
System sales includes the licensing of computer software, deployment period
upgrades, installation, content subscriptions, transaction processing and the sale of
computer hardware and sublicensed software;
Support, Maintenance and Service includes software support and hardware
maintenance, remote hosting and managed services, training, consulting and
implementation services;
Reimbursed Travel includes reimbursable out-of-pocket expenses (primarily travel)
incurred in connection with our client service activities.
We provide for several models of procurement of our information systems and related services. The
predominant model involves multiple deliverables and includes a perpetual software license
agreement, project-related installation services, implementation and consulting services, software
support and either
hosting services or computer hardware and sublicensed software, which requires that we allocate
revenue to each of these elements.
Allocation of Revenue to Multiple Element Arrangements
Revenue earned on software arrangements involving multiple-elements is generally required to be
allocated to each element based on the relative fair values of those elements if fair values exist
for all elements of the arrangement. Since we do not have vendor specific objective evidence
(VSOE) of fair values on all the elements within our multiple element arrangements, we recognize
revenue using the residual method.
Under the residual method, revenue is recognized in a multiple-element arrangement when
vendor-specific objective evidence of fair value exists for all of the undelivered elements in the
arrangement (i.e. professional services, software support, hardware maintenance, remote hosting
services, hardware and sublicensed software), but does not exist for one or more of the delivered
elements in the arrangement (i.e. licenses for software solutions including project-related
installation services). We allocate revenue to each undelivered element in a multiple-element
arrangement based on the elements respective fair value, with the fair value determined by the
price charged when that element is sold separately. Specifically, we determine the fair value of
the software support, hardware maintenance, sublicensed software support, remote hosting,
subscriptions and application service provider (ASP) portions of the arrangement based on the
substantive renewal price for these services charged to clients; professional services (including
training and consulting) portion of the arrangement, other than installation services, based on
hourly rates which we charge for these services when sold apart from a software license; and, the
hardware and sublicensed software, based on the prices for these elements when they are sold
separately from the software. The residual amount of the fee after allocating revenue to the fair
value of the undelivered elements is attributed to the licenses for software solutions, including
project-related installation services. If evidence of the fair value cannot be established for the
undelivered elements of a license agreement, the entire amount of revenue under the arrangement is
deferred until these elements have been delivered or objective evidence can be established.
For certain arrangements, revenue for software, implementation services and, in certain cases,
support services for which VSOE fair value cannot be established are accounted for as a single unit
of accounting. The revenue recognized from these single units of accounting are typically allocated
and classified as system sales and support, maintenance and services. If available, the VSOE fair
value of the services provides the basis for support, maintenance and services allocation and the
remaining residual consideration provides the basis for system sales revenue allocations. In cases
where VSOE fair value of the services cannot be established, revenue is classified based on the
nature of related costs incurred. The following table details these revenue classification
allocations for these single units of accounting arrangements:
(In millions)
2010
2009
2008
System Sales
$
17.5
$
18.1
$
26.7
Support, maintenance and services
$
88.1
$
60.4
$
86.6
Revenue Recognition Models for Each Element
We provide project-related installation services when licensing our software solutions, which
include project-scoping services, conducting pre-installation audits and creating initial
environments. We have deemed installation services to be essential to the functionality of the
software, and therefore recognize the software license over the software installation period using
the percentage of completion method. We measure the percentage of completion based on output
measures which reflect direct labor hours incurred, beginning at software delivery and culminating
at completion of installation. The installation services process length is dependent upon client
specific factors and generally occurs in the same period the contracts are executed but can extend
up to one year.
We provide implementation and consulting services. These services vary depending on the scope and
complexity requested by the client. Examples of such services may include database consulting,
system configuration, project management, testing assistance, network consulting, post conversion
review and application management services. Except for limited arrangements where our software
requires significant modifications or customization, implementation and consulting services
generally are not deemed to be essential to the functionality of the software, and thus do not
impact the timing of the software license recognition. However, if software license fees are tied
to implementation milestones, then portion of the software license fee tied to implementation
milestones is deferred until the related milestone is accomplished and related fees become billable
and non-forfeitable. Implementation fees are recognized over the service period, which may extend
from nine months to three years for multi-phased projects.
Remote hosting and managed services are marketed under long-term arrangements generally over
periods of five to 10 years. These services are typically provided to clients that have acquired a
perpetual license for licensed software and have contracted with us to host the software in our
data center. Under these arrangements, the client generally has the contractual right to take
possession of the licensed software at any time during the hosting period without significant
penalty and it is feasible for the client to either run the software on its own equipment or
contract with another party unrelated to us to host the software. Additionally, these services are
not deemed to be essential to the functionality of the licensed software or other elements of the
arrangement and as such, we allocate a portion of the services fee to the software and recognize it
once the client has the ability to take possession of the software. The remaining services fee in
these arrangements, as well as the services fees for arrangements where the client does not have
the contractual right or the ability to take possession of the software at any time, are generally
recognized ratably over the hosting service period.
We also offer our solutions on an ASP service model, making available time based licenses for our
software functionality and providing the software solutions on a remote processing basis from our
data centers. The data centers provide system and administrative support as well as processing
services. Revenue on software and services provided on an ASP or term license basis is combined
and recognized on a monthly basis over the term of the contract. We capitalize related direct
costs consisting of third party costs and direct software installation and implementation costs
associated with the initial set up of the client on the ASP service. These costs are amortized
over the term of the arrangement.
Software support fees are marketed under annual and multi-year arrangements and are recognized as
revenue ratably over the contracted support term. Hardware and sublicensed software maintenance
revenues are recognized ratably over the contracted maintenance term.
Subscription and content fees are generally marketed under annual and multi-year agreements and are
recognized ratably over the contracted terms.
Hardware and sublicensed software sales are generally recognized when delivered to the client,
assuming title and risk of loss have transferred to the client.
Where we have contractually agreed to develop new or customized software code for a client as a
single element arrangement, we utilize percentage of completion accounting, labor-hours method.
Payment Arrangements
Our payment arrangements with clients typically include an initial payment due upon contract
signing and date-based licensed software payment terms and payments based upon delivery for
services, hardware and sublicensed software. Revenue recognition on support payments received in
advance of the services being performed are deferred and classified as either current or long term
deferred revenue depending on whether the revenue will be earned within one year.
We have periodically provided long-term financing options to creditworthy clients through third
party financing institutions and have directly provided extended payment terms to clients from
contract date. These extended payment term arrangements typically provide for date based payments
over periods ranging from 12 months up to seven years. As a significant portion of the fee is due
beyond one year, we have analyzed our history with these types of arrangements and have concluded
that we have a standard business practice of using extended payment term arrangements and a long
history of successfully collecting under the original payment terms for arrangements with similar
clients, product offerings, and
economics without granting concessions. Accordingly, we consider the fee to be fixed and
determinable in these extended payment term arrangements and, thus, the timing of revenue is not
impacted by the existence of extended payments.
Some of these payment streams have been assigned on a non-recourse basis to third party financing
institutions. We account for the assignment of these receivables as sales. Provided all revenue
recognition criteria have been met, we recognize revenue for these arrangements under our normal
revenue recognition criteria, and if appropriate, net of any payment discounts from financing
transactions.
NHS Initiative
In England, we have contracted with third parties to customize software and provide implementation
and support services under long term arrangements (nine years). Prior to 2008 we accounted for the
arrangements as single units of accounting because the arrangements require customization and
development of software, and fair value for the support services had not been established. Also
prior to 2008 we believed it was reasonably assured that no loss would be incurred under these
arrangements and therefore we utilized the zero margin approach of applying
percentage-of-completion accounting.
During 2008 we established fair value of the undelivered elements of the arrangement that are not
subject to percentage of completion accounting. Also, during the fourth quarter of 2008 we
realized a significant milestone in London which significantly enhances our ability to reliably
estimate work effort for the remainder of the contract and estimate a minimum level of profit on
the arrangement. These events, combined with our experience since the contract signed in 2006 and
the experience gained in the South, allowed us to conclude that reasonably dependable work effort
estimates could be produced and allow for margin recognition.
As a result, our 2008 revenues included a cumulative catch-up adjustment, resulting from the
significant change in accounting estimate, in the amount of $28.6 million which represents the
margin on the contract which had been previously deferred as a result of the zero margin approach
of applying percentage of completion accounting. Greater than a majority of the catch-up
adjustment revenue was included in support, maintenance and services. The remaining margin
attributed to the services subject to percentage completion accounting will be recognized over the
remaining service period until the services are complete and amounts allocated to the other support
services not subject to percentage completion accounting will be recognized over the relevant
support periods. The contract expires in 2014.
(b) Cash Equivalents Cash equivalents consist of short-term marketable securities with original
maturities less than 90 days.
(c) Investments Investment securities which we have the ability and intent to hold until
maturity are classified as held-to-maturity investments and are stated at amortized cost.
Investment securities which are bought and held principally for the purpose of selling them in the
near term are classified as trading securities and are stated at fair market value with changes
recorded through earnings.
Our short-term investments are primarily invested in time deposits, commercial paper, government
and corporate bonds. Our long-term investments are primarily invested in government and corporate
bonds. All of our short-term and long-term investments are classified as held-to-maturity
securities and stated at their amortized cost which approximates fair value.
Premiums are amortized and discounts are accreted over the life of the security as adjustments to
interest income using the effective interest method. Interest income is recognized when earned.
Refer to Note (3) and Note (4) for a comprehensive description of these assets and their value.
(d) Concentrations Substantially all of our cash and cash equivalents and short-term
investments are held at four major financial institutions. The majority of our cash equivalents
consist of money market funds. Deposits held with banks may exceed the amount of insurance
provided on such deposits. Generally these deposits may be redeemed upon demand and, therefore,
bear minimal risk.
Substantially all of our clients are integrated delivery networks, physicians, hospitals and other
healthcare related organizations. If significant adverse macro-economic factors were to impact
these organizations it
could materially adversely affect us. Our access to certain software and hardware components is
dependent upon single and sole source suppliers. The inability of any supplier to fulfill our
supply requirements could affect future results.
As of the end of 2010, we had significant concentration of receivables owed to us by Fujitsu
Services Limited, which are currently in dispute. Refer to Note (5) for additional information.
(e) Inventory - Inventory consists primarily of computer hardware, sublicensed software held for
resale and RxStation medication dispensing units. Inventory is recorded at the lower of cost
(first-in, first-out) or market.
(f) Property and Equipment - Property, equipment and leasehold improvements are stated at cost.
Depreciation of property and equipment is computed using the straight-line method over periods of
two to 50 years. Amortization of leasehold improvements is computed using a straight-line method
over the shorter of the lease terms or the useful lives, which range from periods of two to 15
years.
(g) Software Development Costs Software development costs are accounted for in accordance with
ASC 985-20, Costs of Software to be Sold, Leased or Marketed. Software development costs incurred
internally in creating computer software products are expensed until technological feasibility has
been established upon completion of a detailed program design. Thereafter, all software
development costs incurred through the softwares general release date are capitalized and
subsequently reported at the lower of amortized cost or net realizable value. Capitalized costs
are amortized based on current and expected future revenue for each software solution with minimum
annual amortization equal to the straight-line amortization over the estimated economic life of the
solution.
(h) Goodwill and Other Intangible Assets We account for goodwill under the provisions of ASC
350, Intangibles Goodwill and Other. Goodwill and intangible assets with indefinite lives are
not amortized but are evaluated for impairment annually or whenever there is an impairment
indicator. Based on these evaluations, there was no impairment of goodwill in 2010, 2009 or 2008.
Refer to Note (7) for more information of Goodwill and other intangible assets.
(i) Contingencies We accrue estimates for resolution of any legal and other contingencies when
losses are probable and estimable, in accordance with ASC 450, Contingencies. We currently have no
material pending litigation.
The terms of our software license agreements with our clients generally provide for a limited
indemnification of such intellectual property against losses, expenses and liabilities arising from
third party claims based on alleged infringement by our solutions of an intellectual property right
of such third party. The terms of such indemnification often limit the scope of and remedies for
such indemnification obligations and generally include a right to replace or modify an infringing
solution. To date, we have not had to reimburse any of our clients for any losses related to these
indemnification provisions pertaining to third party intellectual property infringement claims. For
several reasons, including the lack of prior indemnification claims and the lack of a monetary
liability limit for certain infringement cases under the terms of the corresponding agreements with
our clients, we cannot determine the maximum amount of potential future payments, if any, related
to such indemnification provisions.
From time to time we are involved in routine litigation incidental to the conduct of our business,
including for example, employment disputes and litigation alleging solution defects, intellectual
property infringement, violations of law and breaches of contract and warranties. We believe that
no such routine litigation currently pending against us, if adversely determined, would have a
material adverse effect on our consolidated financial position, results of operations or cash
flows.
(j) Derivative Instruments and Hedging Activities - Historically, our use of hedging instruments
has primarily been to hedge foreign currency denominated assets and liabilities. We record all
hedging instruments on our Consolidated Balance Sheet at fair value. For hedging instruments that
are designated and qualify as a net investment hedge, the effective portion of the gain or loss on
the hedging instrument is reported in the foreign currency translation component of other
comprehensive income (loss). Any ineffective portion of the gain or loss on the hedging instrument
for a cash flow hedge or net investment hedge is recorded in the results of operations immediately.
Refer to Note (10) for more information on our hedging activities.
(k) Income Taxes - Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. Refer to Note (12)
for additional information regarding income taxes.
(l) Earnings per Common Share Basic earnings per share (EPS) excludes dilution and is computed, in
accordance with ASC 260, Earnings Per Share, by dividing income available to common shareholders
by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution that could occur if securities or other contracts to issue stock were
exercised or converted into common stock or resulted in the issuance of common stock that then
shared in our earnings. Refer to Note (13) for additional details of our earnings per share
computations.
(m) Accounting for Share-based payments - We recognize all share-based payments to associates,
directors and consultants, including grants of stock options, restricted stock and performance
shares, in the financial statements as compensation cost based on their fair value on the date of
grant, in accordance with ASC 718, Stock Compensation. This compensation cost is recognized over
the vesting period on a straight-line basis for the fair value of awards that actually vest. Refer
to Note (14) for a detailed discussion of share-based payments.
(n) Foreign Currency - Assets and liabilities of non-U.S. subsidiaries whose functional currency is
the local currency are translated into U.S. dollars at exchange rates prevailing at the balance
sheet date. Revenues and expenses are translated at average exchange rates during the year. The
net exchange differences resulting from these translations are reported in accumulated other
comprehensive income. Gains and losses resulting from foreign currency transactions are included
in the consolidated statements of operations. Refer to Note (10) for additional details of our
foreign currency transactions.
(o) Collaborative Arrangements - In accordance with ASC 808, Collaborative Arrangements, third
party costs incurred and revenues generated by arrangements involving joint operating activities of
two or more parties that are each actively involved and exposed to risks and rewards of the
activities are classified in the consolidated statements of operations on a gross basis only if we
are determined to be the principal participant in the arrangement. Otherwise, third party revenues
and costs generated by collaborative arrangements are presented on a net basis. Payments between
participants are recorded and classified based on the nature of the payments.
In January 2010 we adopted guidance issued by the FASB on transfers of financial assets, which
among other things, created more stringent conditions for reporting a transfer of a portion of a
financial asset as a sale. The adoption did not have a material impact on our consolidated
financial statements.
In January 2010, we adopted guidance issued by the FASB improving disclosures about fair value
measurements, which requires disclosures of transfers into and out of Levels 1 and 2, more detailed
roll forward reconciliations of Level 3 recurring fair value measurements on a gross basis, fair
value information by class of assets and liabilities, and descriptions of valuation techniques and
inputs for Level 2 and 3 measurements. We adopted the guidance during the first quarter 2010,
which did not have a material impact on our consolidated financial statements.
On February 24, 2010, FASB issued guidance to eliminate contradictions between the requirements of
U.S. GAAP and the Securities and Exchange Commissions (SEC) filing rules. The amendments also
discharge the requirement that public companies disclose the date of their financial statements in
both issued and revised financial statements. The guidance was effective upon issuance and did not
have a material impact on our consolidated financial statements.
In July 2010, the FASB issued guidance to require increased disclosures about the credit quality of
financing receivables and allowances for credit losses, including disclosure about credit quality
indicators, past due information and modifications of financing receivables. Trade accounts receivable with
maturities of one year or less are excluded from the disclosure requirements. We adopted the
guidance for the period ended 2010, which did not have a material impact on our consolidated
financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
During 2009, the FASB issued guidance on revenue recognition for non-software elements that became
effective for us beginning on January 2, 2011. Under the new guidance an entity is required to
apply the relative selling price allocation method in order to estimate selling price for all units
of accounting, including delivered items, when vendor-specific objective evidence (VSOE) or
acceptable third party evidence (TPE) does not exist. In addition, expanded disclosures are
required to provide both qualitative and quantitative information about the significant judgments
made in applying the guidance and subsequent changes in those judgments that may significantly
affect the timing or amount of revenue recognition. Further, for arrangements that include software
elements, tangible products that have software components that are essential to the functionality
of the tangible product will no longer be within the scope of the software revenue recognition
guidance, and software-enabled products will now be subject to other relevant revenue recognition
guidance. The guidance is effective for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010 and shall be applied on a prospective basis. We do
not believe the adoption of the new guidance will have a material impact on our financial position
and results of operations.
(2) Business Acquisitions
IMC Health Care, Inc.
On January 4, 2010, we completed the purchase of 100% of the outstanding common shares of IMC
Health Care, Inc. (IMC), a provider of employer sponsored on-site health centers. The acquisition
of IMC expanded our employer health initiatives, such as on-site employer health centers,
occupational health services and wellness programs. Consideration for this transaction was $15.7
million in cash plus additional contingent consideration. We initially valued the contingent
consideration at $1.7 million based on a probability-weighted assessment of potential contingent
consideration payment scenarios ranging up to $2.5 million. Based on a final assessment of the
contingent liability at the end of 2010, we reduced the contingent consideration liability to $0.9
million and recognized a gain of $0.8 million within the Consolidated Statements of Operations as a
component of general and administrative expenses. The allocation of the purchase price to the
estimated fair values of the identified tangible and intangible assets acquired, net of liabilities
assumed, is summarized below:
The fair values of the acquired intangible assets and the contingent consideration were
estimated by applying the income approach. Such estimations required the use of inputs that were
unobservable in the market place (Level 3), including a discount rate that we estimated would be
used by a market participant in valuing these assets, projections of revenues and cash flows,
probability weighting factors and client attrition rates. See Note (4) for further information
about the fair value level hierarchy.
The goodwill was allocated to our Domestic operating segment and is expected to be deductible for
tax purposes. The other identifiable intangible assets are being amortized over five years. The
operating results of IMC were combined with our operating results subsequent to the purchase date
of January 4, 2010. Pro-forma results of operations have not been presented because the effect of this
acquisition was not material to our results.
LingoLogix, Inc
On August 1, 2008, we completed the purchase of LingoLogix, Inc. (LingoLogix), for $4.0 million in
cash. LingoLogix was a provider of software used for computer automated coding technology. The
acquisition of LingoLogix enhanced our revenue cycling offerings as the solutions can be used in
both inpatient and outpatient environments to improve physician workflow and drive more accurate
and efficient reimbursement through automated coding. The operating results of LingoLogix were
combined with our operating results subsequent to the purchase date of August 1, 2008. The
allocation of the purchase price to the estimated fair values of the identified tangible and
intangible assets acquired and liabilities assumed resulted in goodwill of $1.3 million and $4.1
million in intangible assets, which consisted of $3.6 million in developed technology. Total assets
and liabilities at the date of acquisition were $5.3 million and $1.3 million, respectively.
The goodwill was allocated to our Domestic operating segment. The intangible assets are being
amortized over 5 years. Pro-forma results of operations have not been presented because the effect
of this acquisition was not material to our results.
(3) Cash and Investments
Our cash, cash equivalents and investment securities consisted of the following:
All of our short-term and long-term investments are classified as held-to-maturity securities
and stated at their amortized cost which approximates fair value, except for our auction rate
securities, which are classified as trading and stated at fair value. Subsequent to the year-ended
2010, in January 2011, all outstanding auction rate securities were called by the issuer at par
value. Refer to Note (4) for details of the fair value measurements within the fair value hierarchy
of these financial assets.
Auction rate securities are debt instruments with long-term nominal maturities, for which the
interest rates regularly reset every 7-35 days under an auction system. Because auction rate
securities historically re-priced frequently, they traded in the market on a par-in, par-out basis.
In periods prior to 2008, we regularly liquidated our investments in these securities for reasons
including, among others, changes in the market interest rates and changes in the availability of,
and the yield on, alternative investments. Beginning in February 2008, liquidity issues in the
global credit markets resulted in the progressive failure of auctions representing all of the
auction rate securities we hold, because the amount of securities submitted for sale in those
auctions exceeded the amount of bids. However, we continued to collect all interest receivable on
our auction rate securities when due.
In August 2008, our broker agreed to a settlement in principle with the SEC, the New York Attorney
General and other regulatory agencies to restore liquidity to clients who hold auction rate
securities. During the fourth quarter of 2008, we entered into a settlement agreement (the
Settlement Agreement)
with the investment firm that sold us the auction rate securities. Under the terms of the
Settlement Agreement, we received the right to redeem the securities at par during a period from
mid-2010 through mid-2012.
In conjunction with the execution of the Settlement Agreement, we transferred the auction rate
securities from available-for-sale to trading securities. At the end of 2010, we held auction rate
securities with a par value of $18.5 million, which approximated fair value, as all outstanding
auction rate securities were subsequently called at par value by the issuer in January 2011.
The Settlement Agreement had been accounted for as a put-like feature and was carried at fair value
with changes recorded through earnings. We valued the put-like feature as the difference between
the par value of the auction rate securities and the fair value of the securities, discounted by
the credit risk of the broker. The loan option was also valued taking into account the settlement
discount and credit risk during the time necessary to administer the loan. Based on the fair value
assessment of the auction rate securities at the end of 2010, we valued the put-like feature at
zero.
The changes in fair value of the auction rate securities and put-like feature resulted in
offsetting gains and losses of $9.3 million, $10.5 million and $19.9 million in 2010, 2009 and
2008, respectively, within other income within the Consolidated Statements of Operations
We regularly review investment securities for impairment based on both quantitative and qualitative
criteria that include the extent to which cost exceeds fair value, the duration of any market
decline, our intent and ability to hold to maturity or until forecasted recovery, and the financial
health of and specific prospects for the issuer. Unrealized losses that are other than temporary
are recognized in earnings.
(4) Fair Value Measurements
We determine fair value measurements used in our consolidated financial statements based upon the
price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value hierarchy
distinguishes between (1) market participant assumptions developed based on market data obtained
from independent sources (observable inputs) and (2) an entitys own assumptions about market
participant assumptions developed based on the best information available in the circumstances
(unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair
value hierarchy are described below:
Level 1 Valuations based on quoted prices in active markets for identical assets or
liabilities that the entity has the ability to access.
Level 2 Valuations based on quoted prices for similar assets or liabilities, quoted
prices in markets that are not active, or other inputs that are observable or can be
corroborated by observable data for substantially the full term of the assets or
liabilities.
Level 3 Valuations based on inputs that are supported by little or no market activity
and that are significant to the fair value of the assets or liabilities.
The following table details our financial assets measured at fair value within the fair value
hierarchy at the end of 2010:
Refer to Note (3) for a comprehensive description of these assets. Our auction rate securities
have historically been classified as Level 3 assets within the fair value hierarchy, as their
valuation required substantial judgment and estimation of factors that were not currently
observable in the market due to the lack of trading in the securities. At the end of 2010, we
transferred our auction rate securities classified as Level 3 to Level 2 based on observable
inputs, as all outstanding auction rate securities were subsequently called at par value by the
issuer in January 2011.
The table below presents the activity of our assets measured at fair value on a recurring basis
using significant unobservable inputs (Level 3) for the years ended 2010 and 2009:
(In thousands)
2010
2009
Beginning balance
$
94,550
$
105,300
Redemptions at par
(76,100
)
(10,750
)
Unrealized gain (loss) on auction rate securities included in earnings
9,346
10,513
Unrealized gain (loss) on put-like feature included in earnings
Receivables consist of accounts receivable and contracts receivable. Accounts receivable represent
recorded revenues that have been billed. Contracts receivable represent recorded revenues that are
billable by us at future dates under the terms of a contract with a client. Billings and other
consideration received on contracts in excess of related revenues recognized are recorded as
deferred revenue. Substantially all receivables are derived from sales and related support and
maintenance and professional services of our clinical, administrative and financial information
systems and solutions to healthcare providers located throughout the United States and in certain
non-U.S. countries.
We perform ongoing credit evaluations of our clients and generally do not require collateral from
our clients. We provide an allowance for estimated uncollectible accounts based on specific
identification, historical experience and our judgment. Provisions for losses on uncollectible
accounts for 2010, 2009 and 2008 totaled $9.9 million, $3.1 million and $10.0 million,
respectively.
A summary of receivables, net is as follows:
2010
2009
(In thousands)
Gross accounts receivable
$
352,554
$
342,992
Less: Allowance for doubtful accounts
15,550
16,895
Accounts receivable, net of allowance
337,004
326,097
Contracts receivable
139,901
135,314
Total receivables, net
$
476,905
$
461,411
During the second quarter of 2008, Fujitsu Services Limiteds (Fujitsu) contract as the prime
contractor in the National Health Service (NHS) initiative to automate clinical processes and
digitize medical records in the Southern region of England was terminated by the NHS. This had the
effect of automatically terminating our subcontract for the project. We are in dispute with
Fujitsu regarding Fujitsus obligation to pay the amounts comprised of accounts receivable and
contracts receivable related to that subcontract, and we are working with Fujitsu to resolve these
issues based on processes provided for in the contract. Part of that process requires resolution
of disputes between Fujitsu and the NHS regarding the contract termination. During the 2009 fourth
quarter certain events occurred in the resolution process between Fujitsu and the NHS which reduced
the likelihood the matter will be resolved in the next 12 months. Therefore we reclassified the
receivables, which represented more than 10% of our net receivables, from current assets to other
long term assets during the 2009 fourth quarter. The circumstances surrounding these receivables
remained unchanged at the end of 2010 and represent the significant majority of other long-term
assets at the end of 2010 and 2009. While the ultimate collectability of the receivables pursuant
to this process is uncertain, management believes that it has valid and equitable grounds for
recovery of such amounts and that collection of recorded amounts is probable.
During 2010 and 2009, we received total client cash collections of $1.9 billion and $1.8 billion,
respectively, of which $66.6 million and $54.0 million were received from third party arrangements
with non-recourse payment assignments.
(6) Property and Equipment
A summary of property, equipment and leasehold improvements stated at cost, less accumulated
depreciation and amortization, is as follows:
Depreciation expense for 2010, 2009 and 2008 was $111.4 million, $104.6 million and
$96.7 million, respectively.
(7) Goodwill and Other Intangible Assets
Goodwill and intangible assets with indefinite lives are tested for impairment annually or whenever
there is an impairment indicator. All goodwill is assigned to a reporting unit, where it is
subject to an impairment test based on fair value using Level 3 inputs as defined in the fair value
hierarchy. Refer to Note (4) - Fair Value Measurements for the definition of the levels in the fair
value hierarchy. The inputs used to calculate the fair value included the projected cash flows and
discount rates that we estimated would be used by a market participant in valuing these assets. Our
most recent annual test of goodwill impairment indicated that goodwill was not impaired. The fair
values of each of our reporting units exceeded their carrying amounts by a significant margin.
The changes in the carrying amounts of goodwill were as follows:
(In thousands)
2010
2009
Beginning Balance
$
151,479
$
146,666
Goodwill acquired and earnout payments for prior acquisitions
11,290
3,425
Foreign currency translation adjustment and other
(1,395
)
1,388
Ending Balance
$
161,374
$
151,479
Our intangible assets, other than goodwill or intangible assets with indefinite lives, are all
subject to amortization, are amortized on a straight-line basis, and are summarized as follows:
Amortization expense for 2010, 2009 and 2008 was $12.0 million, $20.4 million and $20.0
million, respectively.
Estimated aggregate amortization expense for each of the next five years is as follows:
(In thousands)
For year ended:
2011
$
10,535
2012
7,230
2013
5,309
2014
3,795
2015
1,640
(8) Software Development Costs
Information regarding our software development costs is included in the following table:
For the Years Ended
(in thousands)
2010
2009
2008
Software development costs
$
284,836
$
285,187
$
291,368
Capitalized software development costs
(80,979
)
(77,747
)
(69,981
)
Amortization of capitalized software development costs
68,994
63,611
51,132
Total software development expense
$
272,851
$
271,051
$
272,519
We are amortizing capitalized costs over five years. Accumulated amortization as of the end
of 2010 and 2009 was $543.2 million and $474.3 million, respectively.
(9) Indebtedness
The following is a summary of indebtedness outstanding:
(In thousands)
2010
2009
Note agreement, 5.54%
$
72,438
$
90,090
Senior Notes, Series B, 6.42%
19,500
29,250
Other obligations
822
1,180
92,760
120,520
Less: current portion
(24,837
)
(25,014
)
$
67,923
$
95,506
In November 2005, we completed a £65.0 million private placement of debt at 5.54% pursuant to
a Note Agreement. The Note Agreement is payable in seven equal annual installments, which
commenced November 2009. The proceeds were used to repay the outstanding amount under our credit
facility and for general corporate purposes. The Note Agreement contains certain net worth and
fixed charge coverage covenants and provides certain restrictions on our ability to borrow, incur
liens, sell assets and pay dividends. We were in compliance with all covenants at the end of 2010.
In December 2002, we completed a $60.0 million private placement of debt pursuant to a Note
Agreement. The Series A Senior Notes, with a $21.0 million principal amount at 5.57% were paid in
full in 2008. The Series B Senior Notes, with a $39.0 million principal amount at 6.42%, are
payable in four equal annual installments, which commenced December 2009. The proceeds were used
to repay the outstanding amount under our credit facility and for general corporate purposes. The
Note Agreement contains certain net worth and fixed charge coverage covenants and provides certain
restrictions on our ability to borrow, incur liens, sell assets and pay dividends. We were in
compliance with all covenants at the end of 2010.
We maintain a $90 million, multi-year revolving credit facility, which provides an unsecured
revolving line of credit for working capital purposes. Interest is payable at a rate based on
prime or LIBOR plus a spread that varies depending on the net worth ratios maintained. The
agreement provides certain restrictions on our ability to borrow, incur liens, sell assets and pay
dividends and contains certain net
worth, current ratio and fixed charge coverage covenants, which as of the end of 2010, we were in
compliance with. The current agreement expires on May 31, 2013. As of the end of 2010, we had no
outstanding borrowings under this agreement; however, we have $13.6 million of outstanding letters
of credit, which reduced our available borrowing capacity to $76.4 million.
We also have capital lease obligations amounting to $0.2 million, payable over the next two years.
The aggregate maturities for our long-term debt, including capital lease obligations, are as
follows (in thousands):
2011
$
24,837
2012
24,459
2013
14,488
2014
14,488
2015
14,488
Total maturities
$
92,760
We estimate the fair value of our long-term, fixed-rate debt using a level 3 discounted cash
flow analysis based on our current borrowing rates for debt with similar maturities. The fair
value of our long-term debt was approximately $99.6 million and $124.8 million at the end of 2010
and 2009, respectively.
(10) Hedging Activities
We designated all of our Great Britain Pound (GBP) denominated long-term debt as a net investment
hedge of our U.K. operations. The objective of the hedge is to reduce our foreign currency
exposure in our U.K. subsidiary investment. Changes in the exchange rate between the United States
Dollar (USD) and GBP, related to the notional amount of the hedge, are recognized as a component of
other comprehensive income (loss), to the extent the hedge is effective. The following table
represents the fair value of the net investment hedge included within the Consolidated Balance
Sheet and the unrealized gain (loss), net of related income tax effects, on the net investment
hedge recognized in other comprehensive income (loss):
(In thousands)
2010
Net Unrealized Gain
Derivatives designated
Balance Sheet Classification
Fair Value
(Loss)
Net investment hedge
Short-term liabilities
$
14,488
$
445
Net investment hedge
Long-term liabilities
57,950
1,416
Total net investment hedge
$
72,438
$
1,861
(In thousands)
2009
Net Unrealized Gain
Derivatives designated
Balance Sheet Classification
Fair Value
(Loss)
Net investment hedge
Short-term liabilities
$
15,015
$
(1,192
)
Net investment hedge
Long-term liabilities
75,075
(5,543
)
Total net investment hedge
$
90,090
$
(6,735
)
We recognize foreign currency transaction gains and losses within the Consolidated Statements
of Operations as a component of general and administrative expenses. We realized a foreign
currency loss of $0.9 million in 2010 and foreign currency gains of $4.0 million and $9.9 million
in 2009 and 2008, respectively.
Temporary differences between the financial statement carrying amounts and tax basis of assets
and liabilities that give rise to significant portions of deferred income taxes at the end of 2010
and 2009 relate to the following:
(In thousands)
2010
2009
Deferred tax assets
Accrued expenses
$
11,707
$
17,920
Separate return net operating losses
15,882
23,403
Share based compensation
23,514
18,548
Other
482
814
Total deferred tax assets
51,585
60,685
Deferred tax liabilities
Software development costs
(85,692
)
(84,947
)
Contract and service revenues and costs
(3,884
)
(9,205
)
Depreciation and amortization
(67,438
)
(45,762
)
Other
(3,048
)
(4,489
)
Total deferred tax liabilities
(160,062
)
(144,403
)
Net deferred tax liability
$
(108,477
)
$
(83,718
)
At the end of 2010, we had net operating loss carry-forwards subject to Section 382 of the
Internal Revenue Code for Federal income tax purposes of $9.4 million which are available to offset
future Federal taxable income, if any, through 2020. We had net operating loss carry-forwards from
non-U.S. jurisdictions of $1.6 million which are available to offset future taxable income, if any,
through 2015 and $39.0 million which are available to offset future taxable income, if any, with no
expiration. We expect to fully realize all these losses in future periods.
The effective income tax rates for 2010, 2009, and 2008 were 34%, 34%, and 33%, respectively.
These effective rates differ from the Federal statutory rate of 35% as follows:
For the Years Ended
(In thousands)
2010
2009
2008
Tax expense at statutory rates
$
126,744
$
102,438
$
98,500
State income tax, net of federal benefit
10,151
6,658
6,403
Prior period adjustments
(541
)
2,310
(2,879
)
Valuation allowance for deferred tax assets
-
-
(7,982
)
Audit settlements
-
-
4,412
Tax credits
(10,568
)
(5,150
)
(5,150
)
Unrecognized tax benefit
7,501
(5,581
)
5,691
Permanent differences
(4,629
)
(1,200
)
(1,924
)
Other, net
(3,718
)
(259
)
(4,298
)
Total income tax expense
$
124,940
$
99,216
$
92,773
The 2010 beginning and ending amounts of accrued interest related to the underpayment of taxes
was $0.1 million and $0.4 million, respectively. We classify interest and penalties as income tax
expense in our consolidated statement of operations. No accrual for tax penalties was recorded at
the end of the year.
The 2010 tax expense amount includes $0.5 million of tax benefits related to prior period foreign
operating losses. The 2009 tax expense amount includes $2.3 million expense related to adjustments
from prior period tax returns. The 2008 tax expense amount includes the recognition of
approximately $2.9 million of tax benefits related to an adjustment of a foreign tax credit
claimed. These differences accumulated over several years and the impact to any one of the prior
periods is not material.
During 2008, we settled IRS examinations for the 2005 to 2006 periods and as a result reversed
previously recorded reserves for tax uncertainties by $1.3 million. During 2009, the Internal
Revenue Service (IRS) completed
its examination of the 2007 income tax return and refund claim
related to the
foreign tax credit for the 2004, 2005 and 2006 income tax returns. We decreased the unrecognized
tax benefits by $8.0 million primarily due to the settlement of the 2007 IRS audit.
During 2010, the Internal Revenue Service commenced its examination of the 2009 and 2008 income tax
returns. We do not believe this examination will have a material effect on our financial position,
results of operations or liquidity.
As of the end of 2010, the total amount of unrecognized tax benefits, including interest, was $14.1
million. We do not expect to resolve any of these matters within the next 12 months.
A reconciliation of the beginning and ending amount of unrecognized tax is presented below:
(In thousands)
2010
2009
2008
Unrecognized tax benefit - beginning balance
$
6,599
$
12,440
$
8,069
Gross decreases- tax positions in prior periods
-
(7,961
)
-
Gross increases- in current-period tax positions
7,501
2,379
5,690
Settlements
-
(259
)
(1,319
)
Unrecognized tax benefit - ending balance
$
14,100
$
6,599
$
12,440
(13) Earnings Per Share
Basic earnings per share (EPS) excludes dilution and is computed by dividing income available to
common shareholders by the weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if securities or other contracts to
issue stock were exercised or converted into common stock or resulted in the issuance of common
stock that then shared in our earnings. A reconciliation of the numerators and the denominators of
the basic and diluted per-share computations are as follows:
2010
2009
2008
Earnings
Shares
Per-Share
Earnings
Shares
Per-Share
Earnings
Shares
Per-Share
(Numerator)
(Denominator)
Amount
(Numerator)
(Denominator)
Amount
(Numerator)
(Denominator)
Amount
(In thousands, except per share data)
Basic earnings per share:
Income available to common
stockholders
$
237,272
82,458
$
2.88
$
193,465
80,981
$
2.39
$
188,658
80,549
$
2.34
Effect of dilutive securities:
Stock options
2,966
2,901
-
2,886
Diluted earnings per share:
Income available to common
stockholders including
assumed conversions
$
237,272
85,424
$
2.78
$
193,465
83,882
$
2.31
$
188,658
83,435
$
2.26
Options to purchase 0.6 million, 1.8 million and 2.3 million shares of common stock at per
share prices ranging from $58.21 to $91.91, $38.64 to $136.86 and $33.63 to $136.86, were
outstanding at the end of 2010, 2009 and 2008, respectively, but were not included in the
computation of diluted earnings per share because they were anti-dilutive.
As of the end of 2010, we had four fixed stock option and equity plans in effect for associates.
This includes two plans from which we could issue grants, (Plans F & G); and two plans from which
no new
grants were permitted to be issued after January 1, 2005, but some awards remain outstanding,
(Plans D & E).
Under the 2001 Long-Term Incentive Plan F, we are authorized to grant to associates, directors and
consultants 4.0 million shares of common stock awards. Awards under this plan may consist of stock
options, restricted stock and performance shares, as well as other awards such as stock
appreciation rights, phantom stock and performance unit awards which may be payable in the form of
common stock or cash at our discretion. However, not more than 1.0 million of such shares will be
available for granting any types of grants other than options or stock appreciation rights. Options
under Plan F are exercisable at a price not less than fair market value on the date of grant as
determined by the Section 16 Insider Equity and Incentive Compensation Subcommittee (the
Committee). Options under this plan typically vest over a period of five years as determined by
the Committee and are exercisable for periods of up to 25 years.
Under the 2004 Long-Term Incentive Plan G, we are authorized to grant to associates and directors
4.0 million shares of common stock awards. Awards under this plan may consist of stock options,
restricted stock and performance shares, as well as other awards such as stock appreciation rights,
phantom stock and performance unit awards which may be payable in the form of common stock or cash
at our discretion. Options under Plan G are exercisable at a price not less than fair market value
on the date of grant as determined by the Committee. Options under this plan typically vest over a
period of five years as determined by the Committee and are exercisable for periods of up to 12
years. In 2007, Long-Term Incentive Plan G was amended to provide us the ability to recover fringe
benefit tax payments made by us on behalf of our associates in India.
Stock Options
The fair market value of each stock option award is estimated on the date of grant using a lattice
option-pricing model. The pricing model requires the use of the following estimates and
assumptions:
Expected volatilities under the lattice model are based on an equal weighting of implied
volatilities from traded options on our shares and historical volatility. We use
historical data to estimate the stock option exercise and associate departure behavior used
in the lattice model; groups of associates (executives and non-executives) that have
similar historical behavior are considered separately for valuation purposes.
The expected term of stock options granted is derived from the output of the lattice
model and represents the period of time that stock options granted are expected to be
outstanding; the range given below results from certain groups of associates exhibiting
different post-vesting behaviors.
The risk-free rate is based on the zero-coupon U.S. Treasury bond with a term equal to
the contractual term of the awards.
The weighted-average assumptions used to estimate the fair market value of stock options are as
follows:
(In thousands)
2010
2009
2008
Expected volatility (%)
39.0 - 41.7
45.2 - 51.5
45.9 - 52.4
Expected term (yrs)
9.3 - 9.7
9.3 - 9.6
8.4 - 9.7
Risk-free rate (%)
2.9
3.8
4.4
A combined summary of the stock option activity of our four fixed stock option and equity
plans is presented below:
Tax benefit realized upon exercise of stock options
$
33,802
$
23,654
$
10,001
As of the end of 2010, there was $54.2 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 3.02 years.
Non-vested Shares
Non-vested shares were valued at the fair market value on the date of grant and will vest provided
the recipient has continuously served on the Board of Directors through such vesting date or in the
case of an associate provided that performance measures are attained. The expense associated with
these grants is being recognized over the period from the date of grant to the vesting date.
On June 1, 2010 we granted approximately 118,000 shares of performance-based non-vested stock to
certain executive officers, pursuant to our Long-Term Incentive Plan F. The fair value of each of
these awards was $81.90 based on the closing price of our common stock on the date of grant. These
awards will vest according to the following schedule, contingent upon a relative adjusted GAAP
earnings growth percentage over 2009 for each respective year and subjective performance criteria
for certain shares, as defined in the award agreements:
Vesting Dates
Number of Shares
June 1, 2011
14,000
June 1, 2012
15,500
June 1, 2013
88,500
Total Shares
118,000
Subsequent to July 3, 2010, approximately 21% of the total shares related to this award were
forfeited due to the resignation of an executive officer. The amount of compensation expense
recognized is based on managements estimate of the most likely outcome and will be reassessed at
each reporting date through the final vesting date, which may result in adjustments to compensation
cost. Based on a current period vesting probability assessment,
total compensation cost related to
these awards is $7.6 million, net of forfeitures, and is expected to be recognized over a period of
3 years.
A summary of our non-vested restricted stock compensation arrangements granted under all plans is
presented below:
2010
Weighted-Average
Grant Date
Nonvested shares
Number of Shares
Fair Value
Outstanding at beginning of year
13,500
$
56.52
Granted
136,000
82.17
Vested
(13,500
)
56.52
Forfeited
(25,000
)
81.90
Outstanding at end of year
111,000
82.24
For the Years Ended
(In thousands, except for grant date fair value)
2010
2009
2008
Weighted average grant date fair values
$
82.24
$
56.52
$
45.91
Total fair value of shares vested during the year
$
1,147
$
923
$
797
As of the end of 2010, there was $6.6 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 1.92 years.
Associate Stock Purchase Plan
We established an Associate Stock Purchase Plan (ASPP) in 2001, which qualifies under Section 423
of the Internal Revenue Code. Each individual employed by us and associates of our United States
based subsidiaries, except as provided below, are eligible to participate in the Plan
(Participants). The following individuals are excluded from participation: (a) persons who, as of
the beginning of a purchase period under the Plan, have been continuously employed by us or our
domestic subsidiaries for less than two weeks; (b) persons who, as of the beginning of a purchase
period, own directly or indirectly, or hold options or rights to acquire under any agreement or
Company plan, an aggregate of 5% or more of the total combined voting power or value of all
outstanding shares of all classes of Company Common Stock; and, (c) persons who are customarily
employed by us for less than 20 hours per week or for less than five months in any calendar year.
Participants may elect to make contributions from 1% to 20% of compensation to the ASPP, subject to
annual limitations determined by the Internal Revenue Service. Participants may purchase Company
Common Stock at a 15% discount on the last business day of the option period. The purchase of our
Common Stock is made through the ASPP on the open market and subsequently reissued to the
associates. The difference of the open market purchase and the participants purchase price is
being recognized as compensation expense.
Share Based Compensation Cost
Our stock option and non-vested share awards qualify for equity classification. The costs of our
ASPP, along with participant contributions, are recorded as a liability until open market purchases
are completed. The amounts recognized in the consolidated statements of operations with respect to
stock options, non-vested shares and ASPP are as follows:
Stock option and non-vested share compensation expense
$
23,723
$
15,786
$
14,674
Associate stock purchase plan expense
1,692
1,318
1,310
Amounts capitalized in software development costs, net of amortization
(512
)
(262
)
(840
)
Amounts charged against earnings, before income tax benefit
$
24,903
$
16,842
$
15,144
Amount of related income tax benefit recognized in earnings
$
9,329
$
6,274
$
5,641
Treasury Stock
As of the end of 2010 and 2009, we held 0.8 million treasury shares carried at cost of $28.0
million.
Preferred Stock
As of the end of 2010 and 2009, we had 1.0 million shares of authorized but unissued preferred
stock, $0.01 par value.
(15) Foundations Retirement Plan
The Cerner Corporation Foundations Retirement Plan (the Plan) was established under Section 401(k)
of the Internal Revenue Code. All associates age 18 and older and who are not a member of an
excluded class are eligible to participate. Participants may elect to make pretax contributions
from 1% to 80% of eligible compensation to the Plan, subject to annual limitations determined by
the Internal Revenue Service. Participants may direct contributions into mutual funds, a stable
value fund, a Company stock fund, or a self-directed brokerage account. We have a first tier
discretionary match that is made on behalf of participants in an amount equal to 33% of the first
6% of the participants salary contribution. Our first tier discretionary match expenses for the
Plan amounted to $8.9 million, $8.7 million and $8.7 million for 2010, 2009 and 2008, respectively.
We added a second tier discretionary match to the Plan in 2000. Contributions are based on
attainment of established earnings per share goals for the year or the established financial metric
for the Plan. Only participants who defer 2% of their paid base salary, are actively employed as
of the last day of the Plan year and are employed before October 1st of the Plan year
are eligible to receive the discretionary match contribution. For the years ended 2010, 2009 and
2008 we expensed $8.9 million, $2.0 million and $2.2 million for the second tier discretionary
distributions, respectively.
(16) Related Party Transactions
From July 1994 until August 2008 we leased an airplane from PANDI, Inc. (PANDI), a company owned by
Neal L. Patterson and Clifford W. Illig, our Chairman of the Board and CEO and Vice Chairman of the
Board, respectively. During 2009 and 2008 we paid an aggregate of $1.4 million and $0.4 million for
the rental of the airplane, respectively. The airplane was used principally by us for client
development and support and business development activities; and in particular, to reduce business
related travel time of our executives and associates, increase travel flexibility and increase the
number of client visits than would have been possible using solely commercial travel. On August 14,
2008, PANDI sold the airplane to a third party and the lease agreement with us was terminated.
Following the sale of the airplane, PANDI undertook a complete accounting of the actual financing,
operation, depreciation and maintenance costs of the airplane during the 14 year time period that
we leased the airplane from PANDI. Following the due diligence efforts by a committee comprised of
the independent members of the Board of Directors, during 2009 we were authorized to pay PANDI the
sum of $1.4 million.
We are committed under operating leases for office space and computer equipment through October
2027. Rent expense for office and warehouse space for our regional and global offices for 2010,
2009 and 2008 was $20.5 million, $16.6 million and $16.1 million, respectively. Aggregate minimum
future payments under these non-cancelable operating leases are as follows:
Operating Lease
Obligations
(In thousands)
2011
23,646
2012
21,891
2013
19,847
2014
17,564
2015
11,392
2016 and thereafter
48,799
Total:
$
143,139
Purchase Obligations
We have purchase commitments with various vendors through 2019. These commitments represent
non-cancellable commitments primarily to provide ongoing support, maintenance and service to our
clients. Aggregate future payments under these commitments are as follows:
Purchase
Obligations
(In thousands)
2011
18,810
2012
13,707
2013
7,850
2014
6,515
2015
3,263
2016 and thereafter
13,291
Total:
$
63,436
(18) Segment Reporting
We have two operating segments, Domestic and Global. Revenues are derived primarily from the sale
of clinical, financial and administrative information systems and solutions. The cost of revenues
includes the cost of third party consulting services, computer hardware and sublicensed software
purchased from computer and software manufacturers for delivery to clients. It also includes the
cost of hardware maintenance and sublicensed software support subcontracted to the manufacturers.
Operating expenses incurred by the geographic business segments consist of sales and client service
expenses including salaries of sales and client service personnel, communications expenses and
unreimbursed travel expenses. Performance of the segments is assessed at the operating earnings
level and, therefore, the segment operations have been presented as such. Other includes
revenues not generated by the operating segments and expenses that have not been allocated to the
operating segments, such as software development, marketing, general and administrative,
share-based compensation expense and depreciation. We manage our operating segments to the
operating earnings level. Items such as interest, income
taxes, capital expenditures and total assets and are managed at the consolidated level and
thus are not included in our operating segment disclosures.
Accounting policies for each of the reportable segments are the same as those used on a
consolidated basis. The following table presents a summary of the operating information for 2010,
2009 and 2008.
Operating Segments
(In thousands)
Domestic
Global
Other
Total
2010
Revenues
$
1,562,563
$
287,659
$
-
$
1,850,222
Cost of revenues
272,385
47,971
-
320,356
Operating expenses
417,181
124,546
628,806
1,170,533
Total costs and expenses
689,566
172,517
628,806
1,490,889
Operating earnings (loss)
$
872,997
$
115,142
$
(628,806
)
$
359,333
Operating Segments
(In thousands)
Domestic
Global
Other
Total
2009
Revenues
$
1,398,715
$
273,149
$
-
$
1,671,864
Cost of revenues
240,847
40,351
-
281,198
Operating expenses
372,370
130,256
596,034
1,098,660
Total costs and expenses
613,217
170,607
596,034
1,379,858
Operating earnings (loss)
$
785,498
$
102,542
$
(596,034
)
$
292,006
Operating Segments
(In thousands)
Domestic
Global
Other
Total
2008
Revenues
$
1,307,510
$
368,518
$
-
$
1,676,028
Cost of revenues
225,955
70,108
-
296,063
Operating expenses
361,213
150,729
589,138
1,101,080
Total costs and expenses
587,168
220,837
589,138
1,397,143
Operating earnings (loss)
$
720,342
$
147,681
$
(589,138
)
$
278,885
(19)Quarterly Results (unaudited)
Selected quarterly financial data for 2010 and 2009 is set forth below:
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Cerner Corporation:
Under date of February 16, 2011, we reported on the consolidated balance sheets of Cerner
Corporation and subsidiaries (collectively, the Corporation) as of January 1, 2011 and January 2,
2010, and the related consolidated statements of operations, changes in stockholders equity, and
cash flows for each of the years in the three-year period ended January 1, 2011, which are included
in the Corporations 2010 Annual Report on Form 10-K. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related consolidated
financial statement schedule as listed under Item 15(a)(2). This consolidated financial statement
schedule is the responsibility of the Corporations management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.
In our opinion, this financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
/s/KPMG LLP
Kansas City, Missouri
February 16, 2011
79
EX-21
2
c62126exv21.htm
EX-21
exv21
Exhibit 21
SUBSIDIARIES OF REGISTRANT
Name
State/Country of
Incorporation
1. Cerner Campus Redevelopment Corporation
Missouri
2. Cerner Canada Limited
Delaware
3. Cerner Chile Limitada
Chile
4. Cerner Corporation PTY Limited
New South Wales (Australia)
5. Cerner Deutschland GmbH
Germany
6. Cerner Egypt LLC
Egypt
7. Cerner France SAS
France
8. Cerner Galt, Inc.
Delaware
9. Cerner Healthcare Solutions, Inc.
Delaware
10. Cerner Healthcare Solutions Private Limited
India
11. Cerner Health Connections, Inc.
Delaware
12. Cerner Iberia, S.L.
Spain
13. Cerner India Sales Private Limited
India
14. Cerner Innovation, Inc.
Delaware
15. Cerner International, Inc.
Delaware
16. Cerner Ireland Limited
Ireland
17. Cerner Limited
United Kingdom
18. Cerner Lingologix, Inc.
Delaware
19. Cerner Middle East FZ-LLC
Emirate of Dubai, UAE
20. Cerner Middle East, Ltd.
Cayman Islands
21. Cerner Multum, Inc.
Delaware
22. Cerner Properties, Inc.
Delaware
23. Cerner Singapore Limited
Delaware
24. Cerner (Malaysia) SDN BHD
Malaysia
25. The Health Exchange, Inc.
Missouri
26. Rockcreek Aviation, Inc.
Delaware
EX-23
3
c62126exv23.htm
EX-23
exv23
Exhibit 23
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Cerner Corporation:
We consent to the incorporation by reference in the Registration Statements (No. 333-125492, No.
333-77029, No. 333-93379, No. 333-24899, No. 333-24909, No. 333-75308, No. 333-70170, No. 33-63226,
No. 33-56868, No. 33-55082, No. 33-41580, No. 33-39777, No. 33-39776, No. 33-20155, No. 33-15156,
and No. 333-40156) on Form S-8 and (No. 333-72024 and No. 333-40156) on Form S-4 of Cerner
Corporation of our reports dated February 16, 2011, with respect to the consolidated balance sheets
of Cerner Corporation and subsidiaries as of January 1, 2011 and January 2, 2010, and the related
consolidated statements of operations, changes in stockholders equity, cash flows for each of the
years in the three-year period ended January 1, 2011, and the related consolidated financial
statement schedule, and the effectiveness of internal control over financial reporting as of
January 1, 2011, which reports appear in the 2010 Annual Report on Form 10 K of Cerner Corporation.
/s/ KPMG
LLP
Kansas City, Missouri
February 16, 2011
EX-31.1
4
c62126exv31w1.htm
EX-31.1
exv31w1
Exhibit 31.1
CERTIFICATION
I, Neal L. Patterson, certify that:
1. I have reviewed this annual report on Form 10-K of Cerner Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the registrants
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal control over financial
reporting; and
5. The registrants other certifying officers and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the
registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrants internal control over financial reporting.
Date: February 16, 2011
/s/ Neal L. Patterson
Neal L. Patterson
Chief Executive Officer
EX-31.2
5
c62126exv31w2.htm
EX-31.2
exv31w2
Exhibit 31.2
CERTIFICATION
I, Marc G. Naughton, certify that:
1. I have reviewed this annual report on Form 10-K of Cerner Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the registrants
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal control over financial
reporting; and
5. The registrants other certifying officers and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the
registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrants internal control over financial reporting.
Date: February 16, 2011
/s/Marc G. Naughton
Marc G. Naughton
Chief Financial Officer
EX-32.1
6
c62126exv32w1.htm
EX-32.1
exv32w1
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION. 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of the Annual Report on Form 10-K for the fiscal year ended January
1, 2011 (the Report) by Cerner Corporation (the Company), the undersigned, as the Chief Executive
Officer of the Company, hereby certifies pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.
906 of the Sarbanes-Oxley Act of 2002, that:
The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
/s/Neal L. Patterson
Neal L. Patterson, Chairman of the Board,
Chief Executive Officer and President
Date: February 16, 2011
A signed original of this written statement required by Section 906 has been provided to
Cerner Corporation and will be retained by Cerner Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.
EX-32.2
7
c62126exv32w2.htm
EX-32.2
exv32w2
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION. 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of the Annual Report on Form 10-K for the fiscal year ended January
1, 2011 (the Report) by Cerner Corporation (the Company), the undersigned, as the Chief Financial
Officer of the Company, hereby certifies pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.
906 of the Sarbanes-Oxley Act of 2002, that:
The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
/s/Marc G. Naughton
Marc G. Naughton, Executive Vice President
and Chief Financial Officer
Date: February 16, 2011
A signed original of this written statement required by Section 906 has been provided to
Cerner Corporation and will be retained by Cerner Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.
EX-101.INS
8
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EX-101 INSTANCE DOCUMENT
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<!-- Begin Block Tagged Note 1 - cern:BasisOfPresentationNatureOfOperationsAndSummaryOfSignificantAccountingPoliciesTextBlock-->
<div align="left" style="font-family: Helvetica,Arial,sans-serif">
<!-- xbrl,ns -->
<!-- xbrl,nx -->
<div align="justify" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>(1) Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b><i>Basis of Presentation</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The consolidated financial statements include all the accounts of Cerner Corporation and its
subsidiaries. All significant intercompany transactions have been eliminated in consolidation.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The consolidated financial statements were prepared using accounting principles generally accepted
in the United States. These principles require us to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and
the reported amounts of revenues and expenses. Actual results could differ from those estimates.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Certain prior year amounts in the consolidated financial statements have been reclassified to
conform to the current year presentation. These reclassifications had no effect on the results of
operations or stockholders’ equity as previously reported.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Our fiscal year ends on the Saturday closest to December 31. Fiscal year 2010 consisted of 52
weeks and ended on January 1, 2011; fiscal year 2009 consisted of 52 weeks and ended on January 2,
2010; and fiscal year 2008 consisted of 53 weeks and ended on January 3, 2009. All references to
years in these notes to consolidated financial statements represent fiscal years unless otherwise
noted.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b><i>Nature of Operations</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We design, develop, market, install, host and support healthcare information technology, healthcare
devices and content solutions for healthcare organizations and consumers. We also provide a wide
range of value-added services, including implementing solutions as individual, combined or
enterprise-wide systems; hosting solutions in our data center; and clinical process optimization
services. Furthermore, we provide fully–automated on-site employer health clinics and third party
administrator health plan services for employers.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b><i>Summary of Significant Accounting Policies</i></b>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"><b>(a)</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify"><b>Revenue Recognition </b>– We recognize software related revenue in accordance with the
provisions of ASC 985-605, <i>Software – Revenue Recognition </i>and non-software related revenue in
accordance with ASC 605, <i>Revenue Recognition</i>. In general, revenue is recognized when all of
the following criteria have been met:
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Pervasive evidence of an arrangement exists;
</div></td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Delivery has occurred and been accepted by the client;
</div></td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Our fee is fixed, determinable and,
</div></td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Collection of the revenue is probable
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"> </td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">    The following are our major components of revenue:
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 8pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">System sales <i>– </i>includes the licensing of computer software, deployment period
upgrades, installation, content subscriptions, transaction processing and the sale of
computer hardware and sublicensed software;
</div></td>
</tr>
<tr>
<td style="font-size: 8pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Support, Maintenance and Service – includes software support and hardware
maintenance, remote hosting and managed services, training, consulting and
implementation services;
</div></td>
</tr>
<tr>
<td style="font-size: 8pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Reimbursed Travel – includes reimbursable out-of-pocket expenses (primarily travel)
incurred in connection with our client service activities.
</div></td>
</tr>
</table>
</div>
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</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We provide for several models of procurement of our information systems and related services. The
predominant model involves multiple deliverables and includes a perpetual software license
agreement, project-related installation services, implementation and consulting services, software
support and either
hosting services or computer hardware and sublicensed software, which requires that we allocate
revenue to each of these elements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>Allocation of Revenue to Multiple Element Arrangements</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Revenue earned on software arrangements involving multiple-elements is generally required to be
allocated to each element based on the relative fair values of those elements if fair values exist
for all elements of the arrangement. Since we do not have vendor specific objective evidence
(VSOE) of fair values on all the elements within our multiple element arrangements, we recognize
revenue using the residual method.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Under the residual method, revenue is recognized in a multiple-element arrangement when
vendor-specific objective evidence of fair value exists for all of the undelivered elements in the
arrangement (i.e. professional services, software support, hardware maintenance, remote hosting
services, hardware and sublicensed software), but does not exist for one or more of the delivered
elements in the arrangement (i.e. licenses for software solutions including project-related
installation services). We allocate revenue to each undelivered element in a multiple-element
arrangement based on the element’s respective fair value, with the fair value determined by the
price charged when that element is sold separately. Specifically, we determine the fair value of
the software support, hardware maintenance, sublicensed software support, remote hosting,
subscriptions and application service provider (ASP) portions of the arrangement based on the
substantive renewal price for these services charged to clients; professional services (including
training and consulting) portion of the arrangement, other than installation services, based on
hourly rates which we charge for these services when sold apart from a software license; and, the
hardware and sublicensed software, based on the prices for these elements when they are sold
separately from the software. The residual amount of the fee after allocating revenue to the fair
value of the undelivered elements is attributed to the licenses for software solutions, including
project-related installation services. If evidence of the fair value cannot be established for the
undelivered elements of a license agreement, the entire amount of revenue under the arrangement is
deferred until these elements have been delivered or objective evidence can be established.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">For certain arrangements, revenue for software, implementation services and, in certain cases,
support services for which VSOE fair value cannot be established are accounted for as a single unit
of accounting. The revenue recognized from these single units of accounting are typically allocated
and classified as system sales and support, maintenance and services. If available, the VSOE fair
value of the services provides the basis for support, maintenance and services allocation and the
remaining residual consideration provides the basis for system sales revenue allocations. In cases
where VSOE fair value of the services cannot be established, revenue is classified based on the
nature of related costs incurred. The following table details these revenue classification
allocations for these single units of accounting arrangements:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 5pt">
<td width="67%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In millions)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">System Sales
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">17.5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">18.1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">26.7</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Support, maintenance and services
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">88.1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">60.4</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">86.6</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 14pt"><i>Revenue Recognition Models for Each Element</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We provide project-related installation services when licensing our software solutions, which
include project-scoping services, conducting pre-installation audits and creating initial
environments. We have deemed installation services to be essential to the functionality of the
software, and therefore recognize the software license over the software installation period using
the percentage of completion method. We measure the percentage of completion based on output
measures which reflect direct labor hours incurred, beginning at software delivery and culminating
at completion of installation. The installation services process length is dependent upon client
specific factors and generally occurs in the same period the contracts are executed but can extend
up to one year.
</div>
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</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We provide implementation and consulting services. These services vary depending on the scope and
complexity requested by the client. Examples of such services may include database consulting,
system configuration, project management, testing assistance, network consulting, post conversion
review and application management services. Except for limited arrangements where our software
requires significant modifications or customization, implementation and consulting services
generally are not deemed to be essential to the functionality of the software, and thus do not
impact the timing of the software license recognition. However, if software license fees are tied
to implementation milestones, then portion of the software license fee tied to implementation
milestones is deferred until the related milestone is accomplished and related fees become billable
and non-forfeitable. Implementation fees are recognized over the service period, which may extend
from nine months to three years for multi-phased projects.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Remote hosting and managed services are marketed under long-term arrangements generally over
periods of five to 10 years. These services are typically provided to clients that have acquired a
perpetual license for licensed software and have contracted with us to host the software in our
data center. Under these arrangements, the client generally has the contractual right to take
possession of the licensed software at any time during the hosting period without significant
penalty and it is feasible for the client to either run the software on its own equipment or
contract with another party unrelated to us to host the software. Additionally, these services are
not deemed to be essential to the functionality of the licensed software or other elements of the
arrangement and as such, we allocate a portion of the services fee to the software and recognize it
once the client has the ability to take possession of the software. The remaining services fee in
these arrangements, as well as the services fees for arrangements where the client does not have
the contractual right or the ability to take possession of the software at any time, are generally
recognized ratably over the hosting service period.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We also offer our solutions on an ASP service model, making available time based licenses for our
software functionality and providing the software solutions on a remote processing basis from our
data centers. The data centers provide system and administrative support as well as processing
services. Revenue on software and services provided on an ASP or term license basis is combined
and recognized on a monthly basis over the term of the contract. We capitalize related direct
costs consisting of third party costs and direct software installation and implementation costs
associated with the initial set up of the client on the ASP service. These costs are amortized
over the term of the arrangement.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Software support fees are marketed under annual and multi-year arrangements and are recognized as
revenue ratably over the contracted support term. Hardware and sublicensed software maintenance
revenues are recognized ratably over the contracted maintenance term.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Subscription and content fees are generally marketed under annual and multi-year agreements and are
recognized ratably over the contracted terms.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Hardware and sublicensed software sales are generally recognized when delivered to the client,
assuming title and risk of loss have transferred to the client.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Where we have contractually agreed to develop new or customized software code for a client as a
single element arrangement, we utilize percentage of completion accounting, labor-hours method.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>Payment Arrangements</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Our payment arrangements with clients typically include an initial payment due upon contract
signing and date-based licensed software payment terms and payments based upon delivery for
services, hardware and sublicensed software. Revenue recognition on support payments received in
advance of the services being performed are deferred and classified as either current or long term
deferred revenue depending on whether the revenue will be earned within one year.
</div>
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</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We have periodically provided long-term financing options to creditworthy clients through third
party financing institutions and have directly provided extended payment terms to clients from
contract date. These extended payment term arrangements typically provide for date based payments
over periods ranging from 12 months up to seven years. As a significant portion of the fee is due
beyond one year, we have analyzed our history with these types of arrangements and have concluded
that we have a standard business practice of using extended payment term arrangements and a long
history of successfully collecting under the original payment terms for arrangements with similar
clients, product offerings, and
economics without granting concessions. Accordingly, we consider the fee to be fixed and
determinable in these extended payment term arrangements and, thus, the timing of revenue is not
impacted by the existence of extended payments.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Some of these payment streams have been assigned on a non-recourse basis to third party financing
institutions. We account for the assignment of these receivables as sales. Provided all revenue
recognition criteria have been met, we recognize revenue for these arrangements under our normal
revenue recognition criteria, and if appropriate, net of any payment discounts from financing
transactions.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>NHS Initiative</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In England, we have contracted with third parties to customize software and provide implementation
and support services under long term arrangements (nine years). Prior to 2008 we accounted for the
arrangements as single units of accounting because the arrangements require customization and
development of software, and fair value for the support services had not been established. Also
prior to 2008 we believed it was reasonably assured that no loss would be incurred under these
arrangements and therefore we utilized the zero margin approach of applying
percentage-of-completion accounting.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">During 2008 we established fair value of the undelivered elements of the arrangement that are not
subject to percentage of completion accounting. Also, during the fourth quarter of 2008 we
realized a significant milestone in London which significantly enhances our ability to reliably
estimate work effort for the remainder of the contract and estimate a minimum level of profit on
the arrangement. These events, combined with our experience since the contract signed in 2006 and
the experience gained in the South, allowed us to conclude that reasonably dependable work effort
estimates could be produced and allow for margin recognition.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">As a result, our 2008 revenues included a cumulative catch-up adjustment, resulting from the
significant change in accounting estimate, in the amount of $28.6 million which represents the
margin on the contract which had been previously deferred as a result of the zero margin approach
of applying percentage of completion accounting. Greater than a majority of the catch-up
adjustment revenue was included in support, maintenance and services. The remaining margin
attributed to the services subject to percentage completion accounting will be recognized over the
remaining service period until the services are complete and amounts allocated to the other support
services not subject to percentage completion accounting will be recognized over the relevant
support periods. The contract expires in 2014.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(b) Cash Equivalents </b>– Cash equivalents consist of short-term marketable securities with original
maturities less than 90 days.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(c) Investments – </b>Investment securities which we have the ability and intent to hold until
maturity are classified as held-to-maturity investments and are stated at amortized cost.
Investment securities which are bought and held principally for the purpose of selling them in the
near term are classified as trading securities and are stated at fair market value with changes
recorded through earnings.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Our short-term investments are primarily invested in time deposits, commercial paper, government
and corporate bonds. Our long-term investments are primarily invested in government and corporate
bonds. All of our short-term and long-term investments are classified as held-to-maturity
securities and stated at their amortized cost which approximates fair value.
</div>
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</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Premiums are amortized and discounts are accreted over the life of the security as adjustments to
interest income using the effective interest method. Interest income is recognized when earned.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Refer to Note (3) and Note (4) for a comprehensive description of these assets and their value.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(d) Concentrations </b>– Substantially all of our cash and cash equivalents and short-term
investments are held at four major financial institutions. The majority of our cash equivalents
consist of money market funds. Deposits held with banks may exceed the amount of insurance
provided on such deposits. Generally these deposits may be redeemed upon demand and, therefore,
bear minimal risk.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Substantially all of our clients are integrated delivery networks, physicians, hospitals and other
healthcare related organizations. If significant adverse macro-economic factors were to impact
these organizations it
could materially adversely affect us. Our access to certain software and hardware components is
dependent upon single and sole source suppliers. The inability of any supplier to fulfill our
supply requirements could affect future results.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">As of the end of 2010, we had significant concentration of receivables owed to us by Fujitsu
Services Limited, which are currently in dispute. Refer to Note (5) for additional information.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(e) Inventory </b>- Inventory consists primarily of computer hardware, sublicensed software held for
resale and <i>RxStation </i>medication dispensing units. Inventory is recorded at the lower of cost
(first-in, first-out) or market.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(f) Property and Equipment </b>- Property, equipment and leasehold improvements are stated at cost.
Depreciation of property and equipment is computed using the straight-line method over periods of
two to 50 years. Amortization of leasehold improvements is computed using a straight-line method
over the shorter of the lease terms or the useful lives, which range from periods of two to 15
years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(g) Software Development Costs </b>– Software development costs are accounted for in accordance with
ASC 985-20, <i>Costs of Software to be Sold, Leased or Marketed</i>. Software development costs incurred
internally in creating computer software products are expensed until technological feasibility has
been established upon completion of a detailed program design. Thereafter, all software
development costs incurred through the software’s general release date are capitalized and
subsequently reported at the lower of amortized cost or net realizable value. Capitalized costs
are amortized based on current and expected future revenue for each software solution with minimum
annual amortization equal to the straight-line amortization over the estimated economic life of the
solution.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(h) Goodwill and Other Intangible Assets – </b>We account for goodwill under the provisions of ASC
350, <i>Intangibles – Goodwill and Other. </i>Goodwill and intangible assets with indefinite lives are
not amortized but are evaluated for impairment annually or whenever there is an impairment
indicator. Based on these evaluations, there was no impairment of goodwill in 2010, 2009 or 2008.
Refer to Note (7) for more information of Goodwill and other intangible assets.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(i) Contingencies </b>– We accrue estimates for resolution of any legal and other contingencies when
losses are probable and estimable, in accordance with ASC 450, <i>Contingencies. </i>We currently have no
material pending litigation.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The terms of our software license agreements with our clients generally provide for a limited
indemnification of such intellectual property against losses, expenses and liabilities arising from
third party claims based on alleged infringement by our solutions of an intellectual property right
of such third party. The terms of such indemnification often limit the scope of and remedies for
such indemnification obligations and generally include a right to replace or modify an infringing
solution. To date, we have not had to reimburse any of our clients for any losses related to these
indemnification provisions pertaining to third party intellectual property infringement claims. For
several reasons, including the lack of prior indemnification claims and the lack of a monetary
liability limit for certain infringement cases under the terms of the corresponding agreements with
our clients, we cannot determine the maximum amount of potential future payments, if any, related
to such indemnification provisions.
</div>
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</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">From time to time we are involved in routine litigation incidental to the conduct of our business,
including for example, employment disputes and litigation alleging solution defects, intellectual
property infringement, violations of law and breaches of contract and warranties. We believe that
no such routine litigation currently pending against us, if adversely determined, would have a
material adverse effect on our consolidated financial position, results of operations or cash
flows.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(j) Derivative Instruments and Hedging Activities - </b>Historically, our use of hedging instruments
has primarily been to hedge foreign currency denominated assets and liabilities. We record all
hedging instruments on our Consolidated Balance Sheet at fair value. For hedging instruments that
are designated and qualify as a net investment hedge, the effective portion of the gain or loss on
the hedging instrument is reported in the foreign currency translation component of other
comprehensive income (loss). Any ineffective portion of the gain or loss on the hedging instrument
for a cash flow hedge or net investment hedge is recorded in the results of operations immediately.
Refer to Note (10) for more information on our hedging activities.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(k) Income Taxes </b>- Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. Refer to Note (12)
for additional information regarding income taxes.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(l) Earnings per Common Share </b>Basic earnings per share (EPS) excludes dilution and is computed, in
accordance with ASC 260, <i>Earnings Per Share</i>, by dividing income available to common shareholders
by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution that could occur if securities or other contracts to issue stock were
exercised or converted into common stock or resulted in the issuance of common stock that then
shared in our earnings. Refer to Note (13) for additional details of our earnings per share
computations.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(m) Accounting for Share-based payments - </b>We recognize all share-based payments to associates,
directors and consultants, including grants of stock options, restricted stock and performance
shares, in the financial statements as compensation cost based on their fair value on the date of
grant, in accordance with ASC 718, Stock Compensation. This compensation cost is recognized over
the vesting period on a straight-line basis for the fair value of awards that actually vest. Refer
to Note (14) for a detailed discussion of share-based payments.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(n) Foreign Currency </b>- Assets and liabilities of non-U.S. subsidiaries whose functional currency is
the local currency are translated into U.S. dollars at exchange rates prevailing at the balance
sheet date. Revenues and expenses are translated at average exchange rates during the year. The
net exchange differences resulting from these translations are reported in accumulated other
comprehensive income. Gains and losses resulting from foreign currency transactions are included
in the consolidated statements of operations. Refer to Note (10) for additional details of our
foreign currency transactions.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(o) Collaborative Arrangements </b>- In accordance with ASC 808, <i>Collaborative Arrangements, </i>third
party costs incurred and revenues generated by arrangements involving joint operating activities of
two or more parties that are each actively involved and exposed to risks and rewards of the
activities are classified in the consolidated statements of operations on a gross basis only if we
are determined to be the principal participant in the arrangement. Otherwise, third party revenues
and costs generated by collaborative arrangements are presented on a net basis. Payments between
participants are recorded and classified based on the nature of the payments.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>(p) Recent Accounting Pronouncements</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Recently Adopted Accounting Pronouncements</i>
In January 2010 we adopted guidance issued by the FASB on transfers of financial assets, which
among other things, created more stringent conditions for reporting a transfer of a portion of a
financial asset as a sale. The adoption did not have a material impact on our consolidated
financial statements.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In January 2010, we adopted guidance issued by the FASB improving disclosures about fair value
measurements, which requires disclosures of transfers into and out of Levels 1 and 2, more detailed
roll forward reconciliations of Level 3 recurring fair value measurements on a gross basis, fair
value information by class of assets and liabilities, and descriptions of valuation techniques and
inputs for Level 2 and 3 measurements. We adopted the guidance during the first quarter 2010,
which did not have a material impact on our consolidated financial statements.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">On February 24, 2010, FASB issued guidance to eliminate contradictions between the requirements of
U.S. GAAP and the Securities and Exchange Commission’s (SEC) filing rules. The amendments also
discharge the requirement that public companies disclose the date of their financial statements in
both issued and revised financial statements. The guidance was effective upon issuance and did not
have a material impact on our consolidated financial statements.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In July 2010, the FASB issued guidance to require increased disclosures about the credit quality of
financing receivables and allowances for credit losses, including disclosure about credit quality
indicators, past due information and modifications of financing receivables. Trade accounts receivable with
maturities of one year or less are excluded from the disclosure requirements. We adopted the
guidance for the period ended 2010, which did not have a material impact on our consolidated
financial statements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>Recently Issued Accounting Pronouncements Not Yet Adopted</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">During 2009, the FASB issued guidance on revenue recognition for non-software elements that became
effective for us beginning on January 2, 2011. Under the new guidance an entity is required to
apply the relative selling price allocation method in order to estimate selling price for all units
of accounting, including delivered items, when vendor-specific objective evidence (VSOE) or
acceptable third party evidence (TPE) does not exist. In addition, expanded disclosures are
required to provide both qualitative and quantitative information about the significant judgments
made in applying the guidance and subsequent changes in those judgments that may significantly
affect the timing or amount of revenue recognition. Further, for arrangements that include software
elements, tangible products that have software components that are essential to the functionality
of the tangible product will no longer be within the scope of the software revenue recognition
guidance, and software-enabled products will now be subject to other relevant revenue recognition
guidance. The guidance is effective for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010 and shall be applied on a prospective basis. We do
not believe the adoption of the new guidance will have a material impact on our financial position
and results of operations.
</div>
</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>(2) Business Acquisitions</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>IMC Health Care, Inc.</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">On January 4, 2010, we completed the purchase of 100% of the outstanding common shares of IMC
Health Care, Inc. (IMC), a provider of employer sponsored on-site health centers. The acquisition
of IMC expanded our employer health initiatives, such as on-site employer health centers,
occupational health services and wellness programs. Consideration for this transaction was $15.7
million in cash plus additional contingent consideration. We initially valued the contingent
consideration at $1.7 million based on a probability-weighted assessment of potential contingent
consideration payment scenarios ranging up to $2.5 million. Based on a final assessment of the
contingent liability at the end of 2010, we reduced the contingent consideration liability to $0.9
million and recognized a gain of $0.8 million within the Consolidated Statements of Operations as a
component of general and administrative expenses. The allocation of the purchase price to the
estimated fair values of the identified tangible and intangible assets acquired, net of liabilities
assumed, is summarized below:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="98%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="17%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(in thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 1pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Allocation Amount</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Tangible assets and liabilities
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Current assets
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,862</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Property and equipment
</div></td>
<td> </td>
<td> </td>
<td align="right">264</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Current liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,057</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="3" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total net tangible assets acquired
</div></td>
<td> </td>
<td> </td>
<td align="right">1,069</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Intangible assets
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Customer relationships
</div></td>
<td> </td>
<td> </td>
<td align="right">4,073</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Non-compete agreements
</div></td>
<td> </td>
<td> </td>
<td align="right">1,003</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="3" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total intangible assets acquired
</div></td>
<td> </td>
<td> </td>
<td align="right">5,076</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Goodwill
</div></td>
<td> </td>
<td> </td>
<td align="right">11,290</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="3" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Total purchase price
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">17,435</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="3" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The fair values of the acquired intangible assets and the contingent consideration were
estimated by applying the income approach. Such estimations required the use of inputs that were
unobservable in the market place (Level 3), including a discount rate that we estimated would be
used by a market participant in valuing these assets, projections of revenues and cash flows,
probability weighting factors and client attrition rates. See Note (4) for further information
about the fair value level hierarchy.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The goodwill was allocated to our Domestic operating segment and is expected to be deductible for
tax purposes. The other identifiable intangible assets are being amortized over five years. The
operating results of IMC were combined with our operating results subsequent to the purchase date
of January 4, 2010. Pro-forma results of operations have not been presented because the effect of this
acquisition was not material to our results.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>LingoLogix, Inc</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">On August 1, 2008, we completed the purchase of LingoLogix, Inc. (LingoLogix), for $4.0 million in
cash. LingoLogix was a provider of software used for computer automated coding technology. The
acquisition of LingoLogix enhanced our revenue cycling offerings as the solutions can be used in
both inpatient and outpatient environments to improve physician workflow and drive more accurate
and efficient reimbursement through automated coding. The operating results of LingoLogix were
combined with our operating results subsequent to the purchase date of August 1, 2008. The
allocation of the purchase price to the estimated fair values of the identified tangible and
intangible assets acquired and liabilities assumed resulted in goodwill of $1.3 million and $4.1
million in intangible assets, which consisted of $3.6 million in developed technology. Total assets
and liabilities at the date of acquisition were $5.3 million and $1.3 million, respectively.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The goodwill was allocated to our Domestic operating segment. The intangible assets are being
amortized over 5 years. Pro-forma results of operations have not been presented because the effect
of this acquisition was not material to our results.
</div>
</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>(3) Cash and Investments</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Our cash, cash equivalents and investment securities consisted of the following:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="94%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="71%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Cash and cash equivalents:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Cash
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">170,274</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">144,764</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Money market funds
</div></td>
<td> </td>
<td> </td>
<td align="right">44,237</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">80,242</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Time deposits
</div></td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,523</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Corporate bonds
</div></td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,194</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Total cash and cash equivalents
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">214,511</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">241,723</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Short-term investments
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Time deposits
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">41,764</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">37,784</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Commercial paper
</div></td>
<td> </td>
<td> </td>
<td align="right">44,500</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">19,987</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Government and corporate bonds
</div></td>
<td> </td>
<td> </td>
<td align="right">251,787</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">164,792</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Auction rate securities
</div></td>
<td> </td>
<td> </td>
<td align="right">18,450</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">85,203</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Put-like feature
</div></td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,347</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Total short-term investments
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">356,501</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">317,113</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Long-term investments
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Government and corporate bonds
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">264,467</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Total long-term investments
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">264,467</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">All of our short-term and long-term investments are classified as held-to-maturity securities
and stated at their amortized cost which approximates fair value, except for our auction rate
securities, which are classified as trading and stated at fair value. Subsequent to the year-ended
2010, in January 2011, all outstanding auction rate securities were called by the issuer at par
value. Refer to Note (4) for details of the fair value measurements within the fair value hierarchy
of these financial assets.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Auction rate securities are debt instruments with long-term nominal maturities, for which the
interest rates regularly reset every 7-35 days under an auction system. Because auction rate
securities historically re-priced frequently, they traded in the market on a par-in, par-out basis.
In periods prior to 2008, we regularly liquidated our investments in these securities for reasons
including, among others, changes in the market interest rates and changes in the availability of,
and the yield on, alternative investments. Beginning in February 2008, liquidity issues in the
global credit markets resulted in the progressive failure of auctions representing all of the
auction rate securities we hold, because the amount of securities submitted for sale in those
auctions exceeded the amount of bids. However, we continued to collect all interest receivable on
our auction rate securities when due.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In August 2008, our broker agreed to a settlement in principle with the SEC, the New York Attorney
General and other regulatory agencies to restore liquidity to clients who hold auction rate
securities. During the fourth quarter of 2008, we entered into a settlement agreement (the
Settlement Agreement)
with the investment firm that sold us the auction rate securities. Under the terms of the
Settlement Agreement, we received the right to redeem the securities at par during a period from
mid-2010 through mid-2012.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In conjunction with the execution of the Settlement Agreement, we transferred the auction rate
securities from available-for-sale to trading securities. At the end of 2010, we held auction rate
securities with a par value of $18.5 million, which approximated fair value, as all outstanding
auction rate securities were subsequently called at par value by the issuer in January 2011.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The Settlement Agreement had been accounted for as a put-like feature and was carried at fair value
with changes recorded through earnings. We valued the put-like feature as the difference between
the par value of the auction rate securities and the fair value of the securities, discounted by
the credit risk of the broker. The loan option was also valued taking into account the settlement
discount and credit risk during the time necessary to administer the loan. Based on the fair value
assessment of the auction rate securities at the end of 2010, we valued the put-like feature at
zero.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The changes in fair value of the auction rate securities and put-like feature resulted in
offsetting gains and losses of $9.3 million, $10.5 million and $19.9 million in 2010, 2009 and
2008, respectively, within other income within the Consolidated Statements of Operations
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We regularly review investment securities for impairment based on both quantitative and qualitative
criteria that include the extent to which cost exceeds fair value, the duration of any market
decline, our intent and ability to hold to maturity or until forecasted recovery, and the financial
health of and specific prospects for the issuer. Unrealized losses that are other than temporary
are recognized in earnings.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 4 - us-gaap:FairValueDisclosuresTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>(4) Fair Value Measurements</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We determine fair value measurements used in our consolidated financial statements based upon the
price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value hierarchy
distinguishes between (1) market participant assumptions developed based on market data obtained
from independent sources (observable inputs) and (2) an entity’s own assumptions about market
participant assumptions developed based on the best information available in the circumstances
(unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair
value hierarchy are described below:
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Level 1 – Valuations based on quoted prices in active markets for identical assets or
liabilities that the entity has the ability to access.
</div></td>
</tr>
<tr>
<td style="font-size: 10pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Level 2 – Valuations based on quoted prices for similar assets or liabilities, quoted
prices in markets that are not active, or other inputs that are observable or can be
corroborated by observable data for substantially the full term of the assets or
liabilities.
</div></td>
</tr>
<tr>
<td style="font-size: 10pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Level 3 – Valuations based on inputs that are supported by little or no market activity
and that are significant to the fair value of the assets or liabilities.
</div></td>
</tr>
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The following table details our financial assets measured at fair value within the fair value
hierarchy at the end of 2010:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center">
<table style="font-size: 7.5pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="17%"> </td>
<td width="3%"> </td>
<td width="15%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="2%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="2%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 7.5pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 7.5pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">Balance Sheet</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000">Fair Value Measurements Using</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000">Fair Value Measurements Using</td>
</tr>
<tr style="font-size: 7.5pt" valign="bottom">
<td nowrap="nowrap" align="left">Description</td>
<td> </td>
<td nowrap="nowrap" align="left">Classification</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 1</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 2</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 3</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 1</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 2</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 3</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Money market funds
</div></td>
<td> </td>
<td align="left" valign="bottom">Cash equivalents</td>
<td> </td>
<td align="left">  $</td>
<td align="right">44,237</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">80,242</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Time deposits
</div></td>
<td> </td>
<td align="left" valign="bottom">Cash equivalents</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,523</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Corporate bonds
</div></td>
<td> </td>
<td align="left" valign="bottom">Cash equivalents</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,194</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Time deposits
</div></td>
<td> </td>
<td align="left" valign="bottom" nowrap="nowrap">Short-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">41,764</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">37,784</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Commercial paper
</div></td>
<td> </td>
<td align="left" valign="bottom">Short-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">44,500</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">19,987</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Government and
corporate bonds
</div></td>
<td> </td>
<td align="left" valign="bottom">Short-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">251,787</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">164,792</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Auction rate securities
</div></td>
<td> </td>
<td align="left" valign="bottom">Short-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18,450</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">85,203</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Put-like feature
</div></td>
<td> </td>
<td align="left" valign="bottom">Short-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,347</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Government and
corporate bonds
</div></td>
<td> </td>
<td align="left" valign="bottom">Long-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">264,467</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt">Refer to Note (3) for a comprehensive description of these assets. Our auction rate securities
have historically been classified as Level 3 assets within the fair value hierarchy, as their
valuation required substantial judgment and estimation of factors that were not currently
observable in the market due to the lack of trading in the securities. At the end of 2010, we
transferred our auction rate securities classified as Level 3 to Level 2 based on observable
inputs, as all outstanding auction rate securities were subsequently called at par value by the
issuer in January 2011.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The table below presents the activity of our assets measured at fair value on a recurring basis
using significant unobservable inputs (Level 3) for the years ended 2010 and 2009:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="71%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Beginning balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">94,550</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">105,300</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Redemptions at par
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(76,100</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10,750</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrealized gain (loss) on auction rate securities included in earnings
</div></td>
<td> </td>
<td> </td>
<td align="right">9,346</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,513</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrealized gain (loss) on put-like feature included in earnings
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(9,346</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10,513</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Transfers out of Level 3 to Level 2
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(18,450</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Ending balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">94,550</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 5 - us-gaap:LoansNotesTradeAndOtherReceivablesDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(5)   Receivables</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">Receivables consist of accounts receivable and contracts receivable. Accounts receivable represent
recorded revenues that have been billed. Contracts receivable represent recorded revenues that are
billable by us at future dates under the terms of a contract with a client. Billings and other
consideration received on contracts in excess of related revenues recognized are recorded as
deferred revenue. Substantially all receivables are derived from sales and related support and
maintenance and professional services of our clinical, administrative and financial information
systems and solutions to healthcare providers located throughout the United States and in certain
non-U.S. countries.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 8pt; margin-right: 1%">We perform ongoing credit evaluations of our clients and generally do not require collateral from
our clients. We provide an allowance for estimated uncollectible accounts based on specific
identification, historical experience and our judgment. Provisions for losses on uncollectible
accounts for 2010, 2009 and 2008 totaled $9.9 million, $3.1 million and $10.0 million,
respectively.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">A summary of receivables, net is as follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="56%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Gross accounts receivable
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">352,554</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">342,992</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Allowance for doubtful accounts
</div></td>
<td> </td>
<td> </td>
<td align="right">15,550</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">16,895</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Accounts receivable, net of allowance
</div></td>
<td> </td>
<td> </td>
<td align="right">337,004</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">326,097</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Contracts receivable
</div></td>
<td> </td>
<td> </td>
<td align="right">139,901</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">135,314</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total receivables, net
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">476,905</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">461,411</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">During the second quarter of 2008, Fujitsu Services Limited’s (Fujitsu) contract as the prime
contractor in the National Health Service (NHS) initiative to automate clinical processes and
digitize medical records in the Southern region of England was terminated by the NHS. This had the
effect of automatically terminating our subcontract for the project. We are in dispute with
Fujitsu regarding Fujitsu’s obligation to pay the amounts comprised of accounts receivable and
contracts receivable related to that subcontract, and we are working with Fujitsu to resolve these
issues based on processes provided for in the contract. Part of that process requires resolution
of disputes between Fujitsu and the NHS regarding the contract termination. During the 2009 fourth
quarter certain events occurred in the resolution process between Fujitsu and the NHS which reduced
the likelihood the matter will be resolved in the next 12 months. Therefore we reclassified the
receivables, which represented more than 10% of our net receivables, from current assets to other
long term assets during the 2009 fourth quarter. The circumstances surrounding these receivables
remained unchanged at the end of 2010 and represent the significant majority of other long-term
assets at the end of 2010 and 2009. While the ultimate collectability of the receivables pursuant
to this process is uncertain, management believes that it has valid and equitable grounds for
recovery of such amounts and that collection of recorded amounts is probable.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">During 2010 and 2009, we received total client cash collections of $1.9 billion and $1.8 billion,
respectively, of which $66.6 million and $54.0 million were received from third party arrangements
with non-recourse payment assignments.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 6 - us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(6)   Property and Equipment</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">A summary of property, equipment and leasehold improvements stated at cost, less accumulated
depreciation and amortization, is as follows:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="37%"> </td>
<td width="2%"> </td>
<td width="2%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="2%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 0px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>  Depreciable Lives (Yrs)  </b></td>
<td style="border-bottom: 0px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 5pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Furniture and fixtures
</div></td>
<td> </td>
<td> </td>
<td align="center">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">12</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">57,763</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">56,631</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Computer and communications equipment
</div></td>
<td> </td>
<td> </td>
<td align="center">2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">660,741</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">585,685</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Leasehold improvements
</div></td>
<td> </td>
<td> </td>
<td align="center">2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">15</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">164,498</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">139,331</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Capital lease equipment
</div></td>
<td> </td>
<td> </td>
<td align="center">3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,914</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">17,147</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Land, buildings and improvements
</div></td>
<td> </td>
<td> </td>
<td align="center">12</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">50</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">195,193</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">204,080</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other equipment
</div></td>
<td> </td>
<td> </td>
<td align="center">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">20</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">564</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">964</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,084,673</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,003,838</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 5pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less accumulated depreciation and amortization
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">585,844</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">494,660</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 5pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total property and equipment, net
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">498,829</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">509,178</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 16pt">Depreciation expense for 2010, 2009 and 2008 was $111.4 million, $104.6 million and
$96.7 million, respectively.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 7 - us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 20pt"><b>(7) Goodwill and Other Intangible Assets</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 12pt; margin-right: 6%">Goodwill and intangible assets with indefinite lives are tested for impairment annually or whenever
there is an impairment indicator. All goodwill is assigned to a reporting unit, where it is
subject to an impairment test based on fair value using Level 3 inputs as defined in the fair value
hierarchy. Refer to Note (4) - Fair Value Measurements for the definition of the levels in the fair
value hierarchy. The inputs used to calculate the fair value included the projected cash flows and
discount rates that we estimated would be used by a market participant in valuing these assets. Our
most recent annual test of goodwill impairment indicated that goodwill was not impaired. The fair
values of each of our reporting units exceeded their carrying amounts by a significant margin.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 6%">The changes in the carrying amounts of goodwill were as follows:
</div>
<div align="justify">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="94%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 15pt">
<td width="58%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Beginning Balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">151,479</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">146,666</td>
<td> </td>
</tr>
<tr style="font-size: 3pt" valign="bottom">
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Goodwill acquired and earnout payments for prior acquisitions
</div></td>
<td> </td>
<td> </td>
<td align="right">11,290</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,425</td>
<td> </td>
</tr>
<tr style="font-size: 3pt" valign="bottom">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign currency translation adjustment and other
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,395</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">1,388</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 3pt" valign="bottom">
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Ending Balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">161,374</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">151,479</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt; margin-right: 6%">Our intangible assets, other than goodwill or intangible assets with indefinite lives, are all
subject to amortization, are amortized on a straight-line basis, and are summarized as follows:
</div>
<div align="justify">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="94%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="30%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="13%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="11%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted-Average</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 0px solid #000000"> </td>
<td style="border-bottom: 0px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Amortization</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Gross Carrying</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Accumulated</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Gross Carrying</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Accumulated</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Period (Yrs)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amount</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amortization</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amount</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amortization</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 5pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Purchased software
</div></td>
<td> </td>
<td> </td>
<td align="right">5.0</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">70,864</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">48,085</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">84,968</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">62,802</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Customer lists
</div></td>
<td> </td>
<td> </td>
<td align="right">5.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">59,556</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">54,241</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">55,606</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">50,960</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Patents
</div></td>
<td> </td>
<td> </td>
<td align="right">16.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,128</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,365</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,184</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,729</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right">5.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,491</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">880</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,057</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">605</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td> </td>
<td align="right">6.1</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">144,039</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">105,571</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">149,815</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">116,096</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000; border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Amortization expense for 2010, 2009 and 2008 was $12.0 million, $20.4 million and $20.0
million, respectively.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Estimated aggregate amortization expense for each of the next five years is as follows:
</div>
<div align="center" style="margin-right: 6%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="75%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="50%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">For year ended:
</div></td>
<td> </td>
<td> </td>
<td align="right">2011</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">10,535</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">2012</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,230</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">2013</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,309</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">2014</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,795</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">2015</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,640</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 8 - us-gaap:ResearchDevelopmentAndComputerSoftwareDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 20pt"><b>(8) Software Development Costs</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Information regarding our software development costs is included in the following table:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="56%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(in thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Software development costs
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">284,836</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">285,187</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">291,368</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Capitalized software development costs
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(80,979</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(77,747</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(69,981</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of capitalized software development costs
</div></td>
<td> </td>
<td> </td>
<td align="right">68,994</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">63,611</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">51,132</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total software development expense
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">272,851</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">271,051</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">272,519</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 12pt">We are amortizing capitalized costs over five years. Accumulated amortization as of the end
of 2010 and 2009 was $543.2 million and $474.3 million, respectively.
</div>
</div>
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<!-- Begin Block Tagged Note 9 - us-gaap:DebtDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(9)   Indebtedness</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The following is a summary of indebtedness outstanding:
</div>
<div align="left">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="98%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="60%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Note agreement, 5.54%
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">72,438</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">90,090</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Senior Notes, Series B, 6.42%
</div></td>
<td> </td>
<td> </td>
<td align="right">19,500</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">29,250</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other obligations
</div></td>
<td> </td>
<td> </td>
<td align="right">822</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,180</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">92,760</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">120,520</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: current portion
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(24,837</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(25,014</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">67,923</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">95,506</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In November 2005, we completed a £65.0 million private placement of debt at 5.54% pursuant to
a Note Agreement. The Note Agreement is payable in seven equal annual installments, which
commenced November 2009. The proceeds were used to repay the outstanding amount under our credit
facility and for general corporate purposes. The Note Agreement contains certain net worth and
fixed charge coverage covenants and provides certain restrictions on our ability to borrow, incur
liens, sell assets and pay dividends. We were in compliance with all covenants at the end of 2010.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In December 2002, we completed a $60.0 million private placement of debt pursuant to a Note
Agreement. The Series A Senior Notes, with a $21.0 million principal amount at 5.57% were paid in
full in 2008. The Series B Senior Notes, with a $39.0 million principal amount at 6.42%, are
payable in four equal annual installments, which commenced December 2009. The proceeds were used
to repay the outstanding amount under our credit facility and for general corporate purposes. The
Note Agreement contains certain net worth and fixed charge coverage covenants and provides certain
restrictions on our ability to borrow, incur liens, sell assets and pay dividends. We were in
compliance with all covenants at the end of 2010.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We maintain a $90 million, multi-year revolving credit facility, which provides an unsecured
revolving line of credit for working capital purposes. Interest is payable at a rate based on
prime or LIBOR plus a spread that varies depending on the net worth ratios maintained. The
agreement provides certain restrictions on our ability to borrow, incur liens, sell assets and pay
dividends and contains certain net
worth, current ratio and fixed charge coverage covenants, which as of the end of 2010, we were in
compliance with. The current agreement expires on May 31, 2013. As of the end of 2010, we had no
outstanding borrowings under this agreement; however, we have $13.6 million of outstanding letters
of credit, which reduced our available borrowing capacity to $76.4 million.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We also have capital lease obligations amounting to $0.2 million, payable over the next two years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The aggregate maturities for our long-term debt, including capital lease obligations, are as
follows (in thousands):
</div>
<div align="center" style="margin-right: 10%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="65%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 15pt">
<td width="70%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="18%"> </td>
<td width="1%"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2011
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">24,837</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">24,459</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">14,488</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2014
</div></td>
<td> </td>
<td> </td>
<td align="right">14,488</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2015
</div></td>
<td> </td>
<td> </td>
<td align="right">14,488</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total maturities
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">92,760</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 30pt">We estimate the fair value of our long-term, fixed-rate debt using a level 3 discounted cash
flow analysis based on our current borrowing rates for debt with similar maturities. The fair
value of our long-term debt was approximately $99.6 million and $124.8 million at the end of 2010
and 2009, respectively.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 10 - us-gaap:DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(10) Hedging Activities</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We designated all of our Great Britain Pound (GBP) denominated long-term debt as a net investment
hedge of our U.K. operations. The objective of the hedge is to reduce our foreign currency
exposure in our U.K. subsidiary investment. Changes in the exchange rate between the United States
Dollar (USD) and GBP, related to the notional amount of the hedge, are recognized as a component of
other comprehensive income (loss), to the extent the hedge is effective. The following table
represents the fair value of the net investment hedge included within the Consolidated Balance
Sheet and the unrealized gain (loss), net of related income tax effects, on the net investment
hedge recognized in other comprehensive income (loss):
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="30%"> </td>
<td width="2%"> </td>
<td width="30%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>2010</b></td>
</tr>
<tr>
<td style="font-size: 2pt"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Net Unrealized Gain</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left">Derivatives designated</td>
<td> </td>
<td nowrap="nowrap" align="left">    Balance Sheet Classification</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Fair Value</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">(Loss)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net investment hedge
</div></td>
<td> </td>
<td align="left" valign="top">Short-term liabilities</td>
<td> </td>
<td align="left">  $</td>
<td align="right">14,488</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">445</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net investment hedge
</div></td>
<td> </td>
<td align="left" valign="top">Long-term liabilities</td>
<td> </td>
<td> </td>
<td align="right">57,950</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,416</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:26px; text-indent:-15px">Total net investment hedge
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">72,438</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,861</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr>
<td style="font-size: 2pt"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Net Unrealized Gain</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left">Derivatives designated</td>
<td> </td>
<td nowrap="nowrap" align="left">    Balance Sheet Classification</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Fair Value</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">(Loss)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net investment hedge
</div></td>
<td> </td>
<td align="left" valign="top">Short-term liabilities</td>
<td> </td>
<td align="left">  $</td>
<td align="right">15,015</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(1,192</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net investment hedge
</div></td>
<td> </td>
<td align="left" valign="top">Long-term liabilities</td>
<td> </td>
<td> </td>
<td align="right">75,075</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,543</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td colspan="7" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total net investment hedge
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">90,090</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(6,735</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td colspan="7" nowrap="nowrap" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt">We recognize foreign currency transaction gains and losses within the Consolidated Statements
of Operations as a component of general and administrative expenses. We realized a foreign
currency loss of $0.9 million in 2010 and foreign currency gains of $4.0 million and $9.9 million
in 2009 and 2008, respectively.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 11 - us-gaap:InterestIncomeAndInterestExpenseDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(11) </b>  <b>Interest Income</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">A summary of interest income and expense is as follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="53%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest income
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">10,347</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">8,801</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">13,604</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest expense
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(6,908</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(8,493</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10,548</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest income, net
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">3,439</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">308</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,056</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 12 - us-gaap:IncomeTaxDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 20pt"><b>(12) </b>  <b>Income Taxes</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Income tax expense (benefit) for 2010, 2009 and 2008 consists of the following:
</div>
<div align="center" style="margin-right: 13%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="54%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Current:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Federal
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">85,106</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">90,992</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">68,466</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">State
</div></td>
<td> </td>
<td> </td>
<td align="right">10,355</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,350</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,338</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(883</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">4,015</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,789</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total Current Expense
</div></td>
<td> </td>
<td> </td>
<td align="right">94,578</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">103,357</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">87,593</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td style="border-top: 0px solid #000000"> </td>
<td style="border-top: 0px solid #000000"> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Federal
</div></td>
<td> </td>
<td> </td>
<td align="right">22,297</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,545</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">10,873</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">State
</div></td>
<td> </td>
<td> </td>
<td align="right">4,038</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">845</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,105</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign
</div></td>
<td> </td>
<td> </td>
<td align="right">4,027</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,441</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,588</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total deferred expense (benefit)
</div></td>
<td> </td>
<td> </td>
<td align="right">30,362</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,141</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">5,180</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total income tax expense
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">124,940</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">99,216</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">92,773</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">Temporary differences between the financial statement carrying amounts and tax basis of assets
and liabilities that give rise to significant portions of deferred income taxes at the end of 2010
and 2009 relate to the following:
</div>
<div align="left" style="margin-right: 1%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="99%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="60%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred tax assets
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Accrued expenses
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">11,707</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">17,920</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Separate return net operating losses
</div></td>
<td> </td>
<td> </td>
<td align="right">15,882</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">23,403</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Share based compensation
</div></td>
<td> </td>
<td> </td>
<td align="right">23,514</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18,548</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right">482</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">814</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total deferred tax assets
</div></td>
<td> </td>
<td> </td>
<td align="right">51,585</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">60,685</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred tax liabilities
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Software development costs
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(85,692</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(84,947</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Contract and service revenues and costs
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,884</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(9,205</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Depreciation and amortization
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(67,438</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(45,762</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Other
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,048</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,489</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total deferred tax liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(160,062</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(144,403</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net deferred tax liability
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(108,477</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(83,718</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">At the end of 2010, we had net operating loss carry-forwards subject to Section 382 of the
Internal Revenue Code for Federal income tax purposes of $9.4 million which are available to offset
future Federal taxable income, if any, through 2020. We had net operating loss carry-forwards from
non-U.S. jurisdictions of $1.6 million which are available to offset future taxable income, if any,
through 2015 and $39.0 million which are available to offset future taxable income, if any, with no
expiration. We expect to fully realize all these losses in future periods.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">The effective income tax rates for 2010, 2009, and 2008 were 34%, 34%, and 33%, respectively.
These effective rates differ from the Federal statutory rate of 35% as follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 1pt">
<td width="54%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Tax expense at statutory rates
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">126,744</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">102,438</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">98,500</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">State income tax, net of federal benefit
</div></td>
<td> </td>
<td> </td>
<td align="right">10,151</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,658</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,403</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Prior period adjustments
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(541</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">2,310</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,879</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Valuation allowance for deferred tax assets
</div></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(7,982</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Audit settlements
</div></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,412</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Tax credits
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10,568</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,150</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,150</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrecognized tax benefit
</div></td>
<td> </td>
<td> </td>
<td align="right">7,501</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,581</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">5,691</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Permanent differences
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,629</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,200</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,924</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other, net
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,718</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(259</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,298</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total income tax expense
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">124,940</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">99,216</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">92,773</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">The 2010 beginning and ending amounts of accrued interest related to the underpayment of taxes
was $0.1 million and $0.4 million, respectively. We classify interest and penalties as income tax
expense in our consolidated statement of operations. No accrual for tax penalties was recorded at
the end of the year.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">The 2010 tax expense amount includes $0.5 million of tax benefits related to prior period foreign
operating losses. The 2009 tax expense amount includes $2.3 million expense related to adjustments
from prior period tax returns. The 2008 tax expense amount includes the recognition of
approximately $2.9 million of tax benefits related to an adjustment of a foreign tax credit
claimed. These differences accumulated over several years and the impact to any one of the prior
periods is not material.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">During 2008, we settled IRS examinations for the 2005 to 2006 periods and as a result reversed
previously recorded reserves for tax uncertainties by $1.3 million. During 2009, the Internal
Revenue Service (IRS) completed
its examination of the 2007 income tax return and refund claim
related to the
foreign tax credit for the 2004, 2005 and 2006 income tax returns. We decreased the unrecognized
tax benefits by $8.0 million primarily due to the settlement of the 2007 IRS audit.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">During 2010, the Internal Revenue Service commenced its examination of the 2009 and 2008 income tax
returns. We do not believe this examination will have a material effect on our financial position,
results of operations or liquidity.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">As of the end of 2010, the total amount of unrecognized tax benefits, including interest, was $14.1
million. We do not expect to resolve any of these matters within the next 12 months.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">A reconciliation of the beginning and ending amount of unrecognized tax is presented below:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 12pt">
<td width="55%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<tr style="font-size: 3pt" valign="bottom">
<td nowrap="nowrap" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrecognized tax benefit - beginning balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">6,599</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12,440</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">8,069</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Gross decreases- tax positions in prior periods
</div></td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(7,961</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Gross increases- in current-period tax positions
</div></td>
<td> </td>
<td> </td>
<td align="right">7,501</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,379</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,690</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Settlements
</div></td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(259</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,319</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrecognized tax benefit - ending balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">14,100</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6,599</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12,440</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 13 - us-gaap:EarningsPerShareTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(13)  Earnings Per Share</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Basic earnings per share (EPS) excludes dilution and is computed by dividing income available to
common shareholders by the weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if securities or other contracts to
issue stock were exercised or converted into common stock or resulted in the issuance of common
stock that then shared in our earnings. A reconciliation of the numerators and the denominators of
the basic and diluted per-share computations are as follows:
</div>
<div align="center">
<table style="font-size: 7pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="15%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="35" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<tr style="font-size: 10px">
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Earnings</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Shares</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Per-Share</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Earnings</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Shares</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Per-Share</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Earnings</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Shares</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Per-Share</td>
<td> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Numerator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Denominator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amount</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Numerator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Denominator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amount</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Numerator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Denominator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amount</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="35" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 6pt" valign="bottom">
<td nowrap="nowrap" align="left" colspan="2"><i>(In thousands, except per share data)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 5pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Basic earnings per share:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:8px; text-indent:-8px">Income available to common
stockholders
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">237,272</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">82,458</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.88</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">193,465</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">80,981</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.39</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">188,658</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">80,549</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.34</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:8px; text-indent:-8px"><b>Effect of dilutive securities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:8px; text-indent:-8px">Stock options
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,966</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,901</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,886</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="35" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:8px; text-indent:-8px"><b>Diluted earnings per share:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:8px; text-indent:-8px">Income available to common
stockholders including
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="35" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:16px; text-indent:-8px">assumed conversions
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">237,272</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">85,424</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.78</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">193,465</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">83,882</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.31</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">188,658</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">83,435</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.26</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="35" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 6pt">Options to purchase 0.6 million, 1.8 million and 2.3 million shares of common stock at per
share prices ranging from $58.21 to $91.91, $38.64 to $136.86 and $33.63 to $136.86, were
outstanding at the end of 2010, 2009 and 2008, respectively, but were not included in the
computation of diluted earnings per share because they were anti-dilutive.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 14 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 20pt"><b>(14) </b>  <b>Share Based Compensation and Equity</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Stock Option and Equity Plans</i>
As of the end of 2010, we had four fixed stock option and equity plans in effect for associates.
This includes two plans from which we could issue grants, (Plans F & G); and two plans from which
no new
grants were permitted to be issued after January 1, 2005, but some awards remain outstanding,
(Plans D & E).
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Under the 2001 Long-Term Incentive Plan F, we are authorized to grant to associates, directors and
consultants 4.0 million shares of common stock awards. Awards under this plan may consist of stock
options, restricted stock and performance shares, as well as other awards such as stock
appreciation rights, phantom stock and performance unit awards which may be payable in the form of
common stock or cash at our discretion. However, not more than 1.0 million of such shares will be
available for granting any types of grants other than options or stock appreciation rights. Options
under Plan F are exercisable at a price not less than fair market value on the date of grant as
determined by the Section 16 Insider Equity and Incentive Compensation Subcommittee (the
Committee). Options under this plan typically vest over a period of five years as determined by
the Committee and are exercisable for periods of up to 25 years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Under the 2004 Long-Term Incentive Plan G, we are authorized to grant to associates and directors
4.0 million shares of common stock awards. Awards under this plan may consist of stock options,
restricted stock and performance shares, as well as other awards such as stock appreciation rights,
phantom stock and performance unit awards which may be payable in the form of common stock or cash
at our discretion. Options under Plan G are exercisable at a price not less than fair market value
on the date of grant as determined by the Committee. Options under this plan typically vest over a
period of five years as determined by the Committee and are exercisable for periods of up to 12
years. In 2007, Long-Term Incentive Plan G was amended to provide us the ability to recover fringe
benefit tax payments made by us on behalf of our associates in India.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Stock Options</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The fair market value of each stock option award is estimated on the date of grant using a lattice
option-pricing model. The pricing model requires the use of the following estimates and
assumptions:
</div>
<div style="margin-top: 0pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="3%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Expected volatilities under the lattice model are based on an equal weighting of implied
volatilities from traded options on our shares and historical volatility. We use
historical data to estimate the stock option exercise and associate departure behavior used
in the lattice model; groups of associates (executives and non-executives) that have
similar historical behavior are considered separately for valuation purposes.
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="3%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">The expected term of stock options granted is derived from the output of the lattice
model and represents the period of time that stock options granted are expected to be
outstanding; the range given below results from certain groups of associates exhibiting
different post-vesting behaviors.
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="3%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">The risk-free rate is based on the zero-coupon U.S. Treasury bond with a term equal to
the contractual term of the awards.
</div></td>
</tr>
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The weighted-average assumptions used to estimate the fair market value of stock options are as
follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="45%"> </td>
<td width="2%"> </td>
<td width="12%"> </td>
<td width="3%"> </td>
<td width="12%"> </td>
<td width="3%"> </td>
<td width="12%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"> </td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<tr style="font-size: 12pt" valign="bottom">
<td nowrap="nowrap" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected volatility (%)
</div></td>
<td> </td>
<td align="center" valign="bottom">39.0    -    41.7</td>
<td> </td>
<td align="center" valign="bottom">45.2    -    51.5</td>
<td> </td>
<td align="center" valign="bottom">45.9    -    52.4</td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="center" valign="bottom"> </td>
<td> </td>
<td align="center" valign="bottom"> </td>
<td> </td>
<td align="center" valign="bottom"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected term (yrs)
</div></td>
<td> </td>
<td align="center" valign="bottom">9.3    -    9.7</td>
<td> </td>
<td align="center" valign="bottom">9.3    -    9.6</td>
<td> </td>
<td align="center" valign="bottom">8.4    -    9.7</td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="center" valign="bottom"> </td>
<td> </td>
<td align="center" valign="bottom"> </td>
<td> </td>
<td align="center" valign="bottom"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Risk-free rate (%)
</div></td>
<td> </td>
<td align="center" valign="bottom">2.9</td>
<td> </td>
<td align="center" valign="bottom">3.8</td>
<td> </td>
<td align="center" valign="bottom">4.4</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">A combined summary of the stock option activity of our four fixed stock option and equity
plans is presented below:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="margin-right: 1%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="99%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="46%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>2010</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted-</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted-</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Average</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Average</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Aggregate</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Remaining</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Number of</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Exercise</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Intrinsic</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Contractual</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left">Options</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Shares</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Price</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Value</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Term</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at beginning of year
</div></td>
<td> </td>
<td> </td>
<td align="right">8,281,924</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">31.30</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">705,495</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">86.48</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Exercised
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,451,077</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">23.93</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Forfeited and Expired
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(160,037</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">44.63</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="1" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at end of year
</div></td>
<td> </td>
<td> </td>
<td align="right">7,376,305</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">37.73</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">420,520,520</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6.19</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="1" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Options exercisable at the end of the year
</div></td>
<td> </td>
<td> </td>
<td align="right">4,785,823</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">26.18</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">328,092,174</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5.21</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 40pt">
<td width="52%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands, except for grant date fair value)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<tr style="font-size: 6pt" valign="bottom">
<td nowrap="nowrap" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted-average grant date fair values
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">44.83</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">27.96</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">22.99</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total intrinsic value of options exercised
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">88,876</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">63,465</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">26,841</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Cash received from exercise of stock options
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">34,724</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">29,789</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15,364</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Tax benefit realized upon exercise of stock options
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">33,802</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">23,654</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">10,001</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt">As of the end of 2010, there was $54.2 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 3.02 years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Non-vested Shares</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Non-vested shares were valued at the fair market value on the date of grant and will vest provided
the recipient has continuously served on the Board of Directors through such vesting date or in the
case of an associate provided that performance measures are attained. The expense associated with
these grants is being recognized over the period from the date of grant to the vesting date.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">On June 1, 2010 we granted approximately 118,000 shares of performance-based non-vested stock to
certain executive officers, pursuant to our Long-Term Incentive Plan F. The fair value of each of
these awards was $81.90 based on the closing price of our common stock on the date of grant. These
awards will vest according to the following schedule, contingent upon a relative adjusted GAAP
earnings growth percentage over 2009 for each respective year and subjective performance criteria
for certain shares, as defined in the award agreements:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="40%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="20%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="center">Vesting Dates</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Number of Shares</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="center">
<div style="margin-left:15px; text-indent:-15px">June 1, 2011
</div></td>
<td> </td>
<td> </td>
<td align="right">14,000</td>
<td> </td>
</tr>
<tr valign="bottom">
<td align="center">
<div style="margin-left:15px; text-indent:-15px">June 1, 2012
</div></td>
<td> </td>
<td> </td>
<td align="right">15,500</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="center">
<div style="margin-left:15px; text-indent:-15px">June 1, 2013
</div></td>
<td> </td>
<td> </td>
<td align="right">88,500</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td align="center" style="border-top: 1px solid #000000">
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td align="center">
<div style="margin-left:15px; text-indent:-15px"><b>Total Shares</b>
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>118,000</b></td>
<td style="border-bottom: 0px solid #000000"> </td>
</tr>
<tr style="font-size: 1px">
<td align="center" style="border-top: 1px solid #000000">
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt">Subsequent to July 3, 2010, approximately 21% of the total shares related to this award were
forfeited due to the resignation of an executive officer. The amount of compensation expense
recognized is based on management’s estimate of the most likely outcome and will be reassessed at
each reporting date through the final vesting date, which may result in adjustments to compensation
cost. Based on a current period vesting probability assessment,
total compensation cost related to
these awards is $7.6 million, net of forfeitures, and is expected to be recognized over a period of
3 years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">A summary of our non-vested restricted stock compensation arrangements granted under all plans is
presented below:
</div>
<div align="left" style="margin-right: 1%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="99%">
<!-- Begin Table Head -->
<tr style="font-size: 10pt">
<td width="50%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="13%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="13%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>2010</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted-Average</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Grant Date</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left">Nonvested shares</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Number of Shares</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Fair Value</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at beginning of year
</div></td>
<td> </td>
<td> </td>
<td align="right">13,500</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">56.52</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">136,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">82.17</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Vested
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(13,500</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">56.52</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Forfeited
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(25,000</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">81.90</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at end of year
</div></td>
<td> </td>
<td> </td>
<td align="right">111,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">82.24</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="margin-right: 1%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="99%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="54%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands, except for grant date fair value)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 8pt" valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted average grant date fair values
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">82.24</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">56.52</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">45.91</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total fair value of shares vested during the year
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,147</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">923</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">797</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt">As of the end of 2010, there was $6.6 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 1.92 years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Associate Stock Purchase Plan</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We established an Associate Stock Purchase Plan (ASPP) in 2001, which qualifies under Section 423
of the Internal Revenue Code. Each individual employed by us and associates of our United States
based subsidiaries, except as provided below, are eligible to participate in the Plan
(Participants). The following individuals are excluded from participation: (a) persons who, as of
the beginning of a purchase period under the Plan, have been continuously employed by us or our
domestic subsidiaries for less than two weeks; (b) persons who, as of the beginning of a purchase
period, own directly or indirectly, or hold options or rights to acquire under any agreement or
Company plan, an aggregate of 5% or more of the total combined voting power or value of all
outstanding shares of all classes of Company Common Stock; and, (c) persons who are customarily
employed by us for less than 20 hours per week or for less than five months in any calendar year.
Participants may elect to make contributions from 1% to 20% of compensation to the ASPP, subject to
annual limitations determined by the Internal Revenue Service. Participants may purchase Company
Common Stock at a 15% discount on the last business day of the option period. The purchase of our
Common Stock is made through the ASPP on the open market and subsequently reissued to the
associates. The difference of the open market purchase and the participant’s purchase price is
being recognized as compensation expense.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Share Based Compensation Cost</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Our stock option and non-vested share awards qualify for equity classification. The costs of our
ASPP, along with participant contributions, are recorded as a liability until open market purchases
are completed. The amounts recognized in the consolidated statements of operations with respect to
stock options, non-vested shares and ASPP are as follows:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="54%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Stock option and non-vested share compensation expense
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">23,723</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15,786</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">14,674</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Associate stock purchase plan expense
</div></td>
<td> </td>
<td> </td>
<td align="right">1,692</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,318</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,310</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Amounts capitalized in software development costs, net of amortization
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(512</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(262</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(840</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Amounts charged against earnings, before income tax benefit
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">24,903</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">16,842</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15,144</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Amount of related income tax benefit recognized in earnings
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">9,329</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6,274</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">5,641</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Treasury Stock</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">As of the end of 2010 and 2009, we held 0.8 million treasury shares carried at cost of $28.0
million.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Preferred Stock</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 5%">As of the end of 2010 and 2009, we had 1.0 million shares of authorized but unissued preferred
stock, $0.01 par value.
</div>
</div>
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<!-- Begin Block Tagged Note 15 - us-gaap:PensionAndOtherPostretirementBenefitsDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(15) </b>  <b>Foundations Retirement Plan</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 5%">The Cerner Corporation Foundations Retirement Plan (the Plan) was established under Section 401(k)
of the Internal Revenue Code. All associates age 18 and older and who are not a member of an
excluded class are eligible to participate. Participants may elect to make pretax contributions
from 1% to 80% of eligible compensation to the Plan, subject to annual limitations determined by
the Internal Revenue Service. Participants may direct contributions into mutual funds, a stable
value fund, a Company stock fund, or a self-directed brokerage account. We have a first tier
discretionary match that is made on behalf of participants in an amount equal to 33% of the first
6% of the participant’s salary contribution. Our first tier discretionary match expenses for the
Plan amounted to $8.9 million, $8.7 million and $8.7 million for 2010, 2009 and 2008, respectively.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 5%">We added a second tier discretionary match to the Plan in 2000. Contributions are based on
attainment of established earnings per share goals for the year or the established financial metric
for the Plan. Only participants who defer 2% of their paid base salary, are actively employed as
of the last day of the Plan year and are employed before October 1<sup style="font-size: 85%; vertical-align: text-top">st</sup> of the Plan year
are eligible to receive the discretionary match contribution. For the years ended 2010, 2009 and
2008 we expensed $8.9 million, $2.0 million and $2.2 million for the second tier discretionary
distributions, respectively.
</div>
</div>
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<!-- Begin Block Tagged Note 16 - us-gaap:RelatedPartyTransactionsDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 20pt"><b>(16) </b>  <b>Related Party Transactions</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 5%">From July 1994 until August 2008 we leased an airplane from PANDI, Inc. (PANDI), a company owned by
Neal L. Patterson and Clifford W. Illig, our Chairman of the Board and CEO and Vice Chairman of the
Board, respectively. During 2009 and 2008 we paid an aggregate of $1.4 million and $0.4 million for
the rental of the airplane, respectively. The airplane was used principally by us for client
development and support and business development activities; and in particular, to reduce business
related travel time of our executives and associates, increase travel flexibility and increase the
number of client visits than would have been possible using solely commercial travel. On August 14,
2008, PANDI sold the airplane to a third party and the lease agreement with us was terminated.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 5%">Following the sale of the airplane, PANDI undertook a complete accounting of the actual financing,
operation, depreciation and maintenance costs of the airplane during the 14 year time period that
we leased the airplane from PANDI. Following the due diligence efforts by a committee comprised of
the independent members of the Board of Directors, during 2009 we were authorized to pay PANDI the
sum of $1.4 million.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 17 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(17) </b>  <b>Commitments</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Leases</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We are committed under operating leases for office space and computer equipment through October
2027. Rent expense for office and warehouse space for our regional and global offices for 2010,
2009 and 2008 was $20.5 million, $16.6 million and $16.1 million, respectively. Aggregate minimum
future payments under these non-cancelable operating leases are as follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="50%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="38%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="15%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Operating Lease</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Obligations</td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2011
</div></td>
<td> </td>
<td> </td>
<td align="right">23,646</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">21,891</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">19,847</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2014
</div></td>
<td> </td>
<td> </td>
<td align="right">17,564</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2015
</div></td>
<td> </td>
<td> </td>
<td align="right">11,392</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2016 and thereafter
</div></td>
<td> </td>
<td> </td>
<td align="right">48,799</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total:
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">143,139</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 28pt"><i>Purchase Obligations</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We have purchase commitments with various vendors through 2019. These commitments represent
non-cancellable commitments primarily to provide ongoing support, maintenance and service to our
clients. Aggregate future payments under these commitments are as follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="50%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="38%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="15%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">    Purchase    </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">    Obligations    </td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2011
</div></td>
<td> </td>
<td> </td>
<td align="right">18,810</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">13,707</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">7,850</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2014
</div></td>
<td> </td>
<td> </td>
<td align="right">6,515</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2015
</div></td>
<td> </td>
<td> </td>
<td align="right">3,263</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2016 and thereafter
</div></td>
<td> </td>
<td> </td>
<td align="right">13,291</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total:
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">63,436</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 18 - us-gaap:SegmentReportingDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 28pt"><b>(18) </b>  <b>Segment Reporting</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We have two operating segments, Domestic and Global. Revenues are derived primarily from the sale
of clinical, financial and administrative information systems and solutions. The cost of revenues
includes the cost of third party consulting services, computer hardware and sublicensed software
purchased from computer and software manufacturers for delivery to clients. It also includes the
cost of hardware maintenance and sublicensed software support subcontracted to the manufacturers.
Operating expenses incurred by the geographic business segments consist of sales and client service
expenses including salaries of sales and client service personnel, communications expenses and
unreimbursed travel expenses. Performance of the segments is assessed at the operating earnings
level and, therefore, the segment operations have been presented as such. “Other” includes
revenues not generated by the operating segments and expenses that have not been allocated to the
operating segments, such as software development, marketing, general and administrative,
share-based compensation expense and depreciation. We manage our operating segments to the
operating earnings level. Items such as interest, income
taxes, capital expenditures and total assets and are managed at the consolidated level and
thus are not included in our operating segment disclosures.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Accounting policies for each of the reportable segments are the same as those used on a
consolidated basis. The following table presents a summary of the operating information for 2010,
2009 and 2008.
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="28%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 1px solid #000000">Operating Segments</td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Domestic</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Global</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Other</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>2010</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,562,563</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">287,659</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,850,222</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 16pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Cost of revenues
</div></td>
<td> </td>
<td> </td>
<td align="right">272,385</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">47,971</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">320,356</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 4pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Operating expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">417,181</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">124,546</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">628,806</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,170,533</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 4pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:25px; text-indent:-15px">Total costs and expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">689,566</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">172,517</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">628,806</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,490,889</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Operating earnings (loss)
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">872,997</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">115,142</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(628,806</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right">359,333</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="28%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 1px solid #000000">Operating Segments</td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Domestic</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Global</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Other</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>2009</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,398,715</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">273,149</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,671,864</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 16pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Cost of revenues
</div></td>
<td> </td>
<td> </td>
<td align="right">240,847</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">40,351</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">281,198</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 4pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Operating expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">372,370</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">130,256</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">596,034</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,098,660</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:25px; text-indent:-15px">Total costs and expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">613,217</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">170,607</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">596,034</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,379,858</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Operating earnings (loss)
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">785,498</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">102,542</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(596,034</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right">292,006</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="28%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 1px solid #000000">Operating Segments</td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Domestic</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Global</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Other</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>2008</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,307,510</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">368,518</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,676,028</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 16pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Cost of revenues
</div></td>
<td> </td>
<td> </td>
<td align="right">225,955</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">70,108</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">296,063</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 4pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Operating expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">361,213</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">150,729</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">589,138</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,101,080</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:25px; text-indent:-15px">Total costs and expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">587,168</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">220,837</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">589,138</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,397,143</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Operating earnings (loss)
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">720,342</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">147,681</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(589,138</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right">278,885</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 19 - us-gaap:QuarterlyFinancialInformationTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 24pt"><b>(19)</b>  <b>Quarterly Results
(unaudited)</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">Selected quarterly financial data for 2010 and 2009 is set forth below:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="8%"> </td>
<td width="2%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="3%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Earnings Before</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Basic Earnings</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Diluted Earnings</b></td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands, except per share data)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Revenues</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Income Taxes</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Net Earnings</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Per Share</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Per Share</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td> </td>
<td colspan="20" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2010 quarterly results:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">First Quarter
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">431,337</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">77,363</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">50,286</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.61</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.59</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Second Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">456,001</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">86,278</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">55,477</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.67</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.65</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Third Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">462,683</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">94,084</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">60,872</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.74</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.71</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Fourth Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">500,201</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">104,487</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">70,637</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.85</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.82</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td colspan="12" align="left" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,850,222</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">362,212</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">237,272</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td colspan="12" align="left" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 18pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2009 quarterly results:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">First Quarter
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">392,322</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">61,863</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">40,830</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.51</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.49</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Second Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">403,806</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">66,223</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">43,745</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.54</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.52</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Third Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">409,415</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">70,887</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">48,394</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.60</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.57</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Fourth Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">466,321</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">93,708</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">60,496</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.74</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.71</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td colspan="12" align="left" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,671,864</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">292,681</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">193,465</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td colspan="12" align="left" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 20 - us-gaap:ScheduleOfValuationAndQualifyingAccountsDisclosureTextBlock-->
<!-- xbrl,nx -->
<div align="left" style="font-size: 10pt; margin-top: 0pt; margin-left: 6%">
</div>
<div align="center" style="font-size: 10pt; margin-top: 10pt">Cerner Corporation<br />
Valuation and Qualifying Accounts
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 24pt">
<td width="38%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Additions</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Through</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(in thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Additions</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Acquisitions and</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Charged to</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Consolidation of</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Beginning</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Costs and</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Variable Interest</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="center">Description</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">of Period</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Expenses</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Entity</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Deductions</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">End of Period</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="21" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:22px; text-indent:-15px"><b>2008</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:22px; text-indent:-15px">Doubtful Accounts and Sale Allowances
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">15,469</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">9,957</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(7,277</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left"> $</td>
<td align="right">18,149</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="21" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:22px; text-indent:-15px"><b>2009</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:22px; text-indent:-15px">Doubtful Accounts and Sale Allowances
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">18,149</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,108</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(4,362</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left"> $</td>
<td align="right">16,895</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="21" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:22px; text-indent:-15px"><b>2010</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:22px; text-indent:-15px">Doubtful Accounts and Sale Allowances
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">16,895</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">9,856</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(11,201</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left"> $</td>
<td align="right">15,550</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="21" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 18pt">See accompanying report of independent registered public accounting firm.
</div>
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IDEA: Income Taxes
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 20pt"><b>(12) </b>  <b>Income Taxes</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Income tax expense (benefit) for 2010, 2009 and 2008 consists of the following:
</div>
<div align="center" style="margin-right: 13%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="54%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Current:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Federal
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">85,106</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">90,992</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">68,466</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">State
</div></td>
<td> </td>
<td> </td>
<td align="right">10,355</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,350</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,338</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(883</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">4,015</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,789</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total Current Expense
</div></td>
<td> </td>
<td> </td>
<td align="right">94,578</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">103,357</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">87,593</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td style="border-top: 0px solid #000000"> </td>
<td style="border-top: 0px solid #000000"> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Federal
</div></td>
<td> </td>
<td> </td>
<td align="right">22,297</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,545</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">10,873</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">State
</div></td>
<td> </td>
<td> </td>
<td align="right">4,038</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">845</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,105</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign
</div></td>
<td> </td>
<td> </td>
<td align="right">4,027</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,441</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,588</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total deferred expense (benefit)
</div></td>
<td> </td>
<td> </td>
<td align="right">30,362</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,141</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">5,180</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total income tax expense
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">124,940</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">99,216</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">92,773</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">Temporary differences between the financial statement carrying amounts and tax basis of assets
and liabilities that give rise to significant portions of deferred income taxes at the end of 2010
and 2009 relate to the following:
</div>
<div align="left" style="margin-right: 1%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="99%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="60%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred tax assets
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Accrued expenses
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">11,707</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">17,920</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Separate return net operating losses
</div></td>
<td> </td>
<td> </td>
<td align="right">15,882</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">23,403</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Share based compensation
</div></td>
<td> </td>
<td> </td>
<td align="right">23,514</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18,548</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right">482</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">814</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total deferred tax assets
</div></td>
<td> </td>
<td> </td>
<td align="right">51,585</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">60,685</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred tax liabilities
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Software development costs
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(85,692</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(84,947</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Contract and service revenues and costs
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,884</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(9,205</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Depreciation and amortization
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(67,438</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(45,762</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Other
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,048</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,489</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total deferred tax liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(160,062</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(144,403</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net deferred tax liability
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(108,477</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(83,718</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">At the end of 2010, we had net operating loss carry-forwards subject to Section 382 of the
Internal Revenue Code for Federal income tax purposes of $9.4 million which are available to offset
future Federal taxable income, if any, through 2020. We had net operating loss carry-forwards from
non-U.S. jurisdictions of $1.6 million which are available to offset future taxable income, if any,
through 2015 and $39.0 million which are available to offset future taxable income, if any, with no
expiration. We expect to fully realize all these losses in future periods.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">The effective income tax rates for 2010, 2009, and 2008 were 34%, 34%, and 33%, respectively.
These effective rates differ from the Federal statutory rate of 35% as follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 1pt">
<td width="54%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Tax expense at statutory rates
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">126,744</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">102,438</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">98,500</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">State income tax, net of federal benefit
</div></td>
<td> </td>
<td> </td>
<td align="right">10,151</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,658</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,403</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Prior period adjustments
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(541</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">2,310</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,879</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Valuation allowance for deferred tax assets
</div></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(7,982</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Audit settlements
</div></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,412</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Tax credits
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10,568</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,150</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,150</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrecognized tax benefit
</div></td>
<td> </td>
<td> </td>
<td align="right">7,501</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,581</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">5,691</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Permanent differences
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,629</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,200</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,924</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other, net
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,718</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(259</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,298</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total income tax expense
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">124,940</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">99,216</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">92,773</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">The 2010 beginning and ending amounts of accrued interest related to the underpayment of taxes
was $0.1 million and $0.4 million, respectively. We classify interest and penalties as income tax
expense in our consolidated statement of operations. No accrual for tax penalties was recorded at
the end of the year.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">The 2010 tax expense amount includes $0.5 million of tax benefits related to prior period foreign
operating losses. The 2009 tax expense amount includes $2.3 million expense related to adjustments
from prior period tax returns. The 2008 tax expense amount includes the recognition of
approximately $2.9 million of tax benefits related to an adjustment of a foreign tax credit
claimed. These differences accumulated over several years and the impact to any one of the prior
periods is not material.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">During 2008, we settled IRS examinations for the 2005 to 2006 periods and as a result reversed
previously recorded reserves for tax uncertainties by $1.3 million. During 2009, the Internal
Revenue Service (IRS) completed
its examination of the 2007 income tax return and refund claim
related to the
foreign tax credit for the 2004, 2005 and 2006 income tax returns. We decreased the unrecognized
tax benefits by $8.0 million primarily due to the settlement of the 2007 IRS audit.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">During 2010, the Internal Revenue Service commenced its examination of the 2009 and 2008 income tax
returns. We do not believe this examination will have a material effect on our financial position,
results of operations or liquidity.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">As of the end of 2010, the total amount of unrecognized tax benefits, including interest, was $14.1
million. We do not expect to resolve any of these matters within the next 12 months.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">A reconciliation of the beginning and ending amount of unrecognized tax is presented below:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 12pt">
<td width="55%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<tr style="font-size: 3pt" valign="bottom">
<td nowrap="nowrap" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrecognized tax benefit - beginning balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">6,599</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12,440</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">8,069</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Gross decreases- tax positions in prior periods
</div></td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(7,961</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Gross increases- in current-period tax positions
</div></td>
<td> </td>
<td> </td>
<td align="right">7,501</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,379</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,690</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Settlements
</div></td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(259</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,319</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrecognized tax benefit - ending balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">14,100</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6,599</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12,440</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
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-Name Regulation S-X (SX)
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
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IDEA: Fair Value Measurements
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<!-- Begin Block Tagged Note 4 - us-gaap:FairValueDisclosuresTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>(4) Fair Value Measurements</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We determine fair value measurements used in our consolidated financial statements based upon the
price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value hierarchy
distinguishes between (1) market participant assumptions developed based on market data obtained
from independent sources (observable inputs) and (2) an entity’s own assumptions about market
participant assumptions developed based on the best information available in the circumstances
(unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair
value hierarchy are described below:
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Level 1 – Valuations based on quoted prices in active markets for identical assets or
liabilities that the entity has the ability to access.
</div></td>
</tr>
<tr>
<td style="font-size: 10pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Level 2 – Valuations based on quoted prices for similar assets or liabilities, quoted
prices in markets that are not active, or other inputs that are observable or can be
corroborated by observable data for substantially the full term of the assets or
liabilities.
</div></td>
</tr>
<tr>
<td style="font-size: 10pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Level 3 – Valuations based on inputs that are supported by little or no market activity
and that are significant to the fair value of the assets or liabilities.
</div></td>
</tr>
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The following table details our financial assets measured at fair value within the fair value
hierarchy at the end of 2010:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center">
<table style="font-size: 7.5pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="17%"> </td>
<td width="3%"> </td>
<td width="15%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="2%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="2%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 7.5pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 7.5pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">Balance Sheet</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000">Fair Value Measurements Using</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000">Fair Value Measurements Using</td>
</tr>
<tr style="font-size: 7.5pt" valign="bottom">
<td nowrap="nowrap" align="left">Description</td>
<td> </td>
<td nowrap="nowrap" align="left">Classification</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 1</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 2</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 3</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 1</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 2</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Level 3</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Money market funds
</div></td>
<td> </td>
<td align="left" valign="bottom">Cash equivalents</td>
<td> </td>
<td align="left">  $</td>
<td align="right">44,237</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">80,242</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Time deposits
</div></td>
<td> </td>
<td align="left" valign="bottom">Cash equivalents</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,523</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Corporate bonds
</div></td>
<td> </td>
<td align="left" valign="bottom">Cash equivalents</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,194</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Time deposits
</div></td>
<td> </td>
<td align="left" valign="bottom" nowrap="nowrap">Short-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">41,764</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">37,784</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Commercial paper
</div></td>
<td> </td>
<td align="left" valign="bottom">Short-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">44,500</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">19,987</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Government and
corporate bonds
</div></td>
<td> </td>
<td align="left" valign="bottom">Short-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">251,787</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">164,792</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Auction rate securities
</div></td>
<td> </td>
<td align="left" valign="bottom">Short-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18,450</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">85,203</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Put-like feature
</div></td>
<td> </td>
<td align="left" valign="bottom">Short-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,347</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="bottom"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Government and
corporate bonds
</div></td>
<td> </td>
<td align="left" valign="bottom">Long-term investments</td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">264,467</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt">Refer to Note (3) for a comprehensive description of these assets. Our auction rate securities
have historically been classified as Level 3 assets within the fair value hierarchy, as their
valuation required substantial judgment and estimation of factors that were not currently
observable in the market due to the lack of trading in the securities. At the end of 2010, we
transferred our auction rate securities classified as Level 3 to Level 2 based on observable
inputs, as all outstanding auction rate securities were subsequently called at par value by the
issuer in January 2011.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The table below presents the activity of our assets measured at fair value on a recurring basis
using significant unobservable inputs (Level 3) for the years ended 2010 and 2009:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="71%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Beginning balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">94,550</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">105,300</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Redemptions at par
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(76,100</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10,750</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrealized gain (loss) on auction rate securities included in earnings
</div></td>
<td> </td>
<td> </td>
<td align="right">9,346</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,513</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrealized gain (loss) on put-like feature included in earnings
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(9,346</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10,513</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Transfers out of Level 3 to Level 2
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(18,450</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Ending balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">94,550</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringThis item represents the complete disclosure regarding the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value,
disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the Company is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risk is are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to
understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 17-22, 27, 28
falsefalse12Fair Value MeasurementsUnKnownUnKnownUnKnownUnKnownfalsetrueXML
16
R10.xml
IDEA: Cash and Investments
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<!-- Begin Block Tagged Note 3 - cern:CashCashEquivalentsAndMarketableSecuritiesTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>(3) Cash and Investments</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Our cash, cash equivalents and investment securities consisted of the following:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="94%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="71%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Cash and cash equivalents:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Cash
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">170,274</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">144,764</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Money market funds
</div></td>
<td> </td>
<td> </td>
<td align="right">44,237</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">80,242</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Time deposits
</div></td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,523</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Corporate bonds
</div></td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,194</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Total cash and cash equivalents
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">214,511</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">241,723</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Short-term investments
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Time deposits
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">41,764</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">37,784</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Commercial paper
</div></td>
<td> </td>
<td> </td>
<td align="right">44,500</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">19,987</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Government and corporate bonds
</div></td>
<td> </td>
<td> </td>
<td align="right">251,787</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">164,792</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Auction rate securities
</div></td>
<td> </td>
<td> </td>
<td align="right">18,450</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">85,203</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Put-like feature
</div></td>
<td> </td>
<td> </td>
<td align="right">-    </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,347</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Total short-term investments
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">356,501</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">317,113</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Long-term investments
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Government and corporate bonds
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">264,467</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Total long-term investments
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">264,467</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-    </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">All of our short-term and long-term investments are classified as held-to-maturity securities
and stated at their amortized cost which approximates fair value, except for our auction rate
securities, which are classified as trading and stated at fair value. Subsequent to the year-ended
2010, in January 2011, all outstanding auction rate securities were called by the issuer at par
value. Refer to Note (4) for details of the fair value measurements within the fair value hierarchy
of these financial assets.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Auction rate securities are debt instruments with long-term nominal maturities, for which the
interest rates regularly reset every 7-35 days under an auction system. Because auction rate
securities historically re-priced frequently, they traded in the market on a par-in, par-out basis.
In periods prior to 2008, we regularly liquidated our investments in these securities for reasons
including, among others, changes in the market interest rates and changes in the availability of,
and the yield on, alternative investments. Beginning in February 2008, liquidity issues in the
global credit markets resulted in the progressive failure of auctions representing all of the
auction rate securities we hold, because the amount of securities submitted for sale in those
auctions exceeded the amount of bids. However, we continued to collect all interest receivable on
our auction rate securities when due.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In August 2008, our broker agreed to a settlement in principle with the SEC, the New York Attorney
General and other regulatory agencies to restore liquidity to clients who hold auction rate
securities. During the fourth quarter of 2008, we entered into a settlement agreement (the
Settlement Agreement)
with the investment firm that sold us the auction rate securities. Under the terms of the
Settlement Agreement, we received the right to redeem the securities at par during a period from
mid-2010 through mid-2012.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In conjunction with the execution of the Settlement Agreement, we transferred the auction rate
securities from available-for-sale to trading securities. At the end of 2010, we held auction rate
securities with a par value of $18.5 million, which approximated fair value, as all outstanding
auction rate securities were subsequently called at par value by the issuer in January 2011.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The Settlement Agreement had been accounted for as a put-like feature and was carried at fair value
with changes recorded through earnings. We valued the put-like feature as the difference between
the par value of the auction rate securities and the fair value of the securities, discounted by
the credit risk of the broker. The loan option was also valued taking into account the settlement
discount and credit risk during the time necessary to administer the loan. Based on the fair value
assessment of the auction rate securities at the end of 2010, we valued the put-like feature at
zero.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The changes in fair value of the auction rate securities and put-like feature resulted in
offsetting gains and losses of $9.3 million, $10.5 million and $19.9 million in 2010, 2009 and
2008, respectively, within other income within the Consolidated Statements of Operations
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We regularly review investment securities for impairment based on both quantitative and qualitative
criteria that include the extent to which cost exceeds fair value, the duration of any market
decline, our intent and ability to hold to maturity or until forecasted recovery, and the financial
health of and specific prospects for the issuer. Unrealized losses that are other than temporary
are recognized in earnings.
</div>
</div>
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<div align="justify" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>(1) Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b><i>Basis of Presentation</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The consolidated financial statements include all the accounts of Cerner Corporation and its
subsidiaries. All significant intercompany transactions have been eliminated in consolidation.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The consolidated financial statements were prepared using accounting principles generally accepted
in the United States. These principles require us to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and
the reported amounts of revenues and expenses. Actual results could differ from those estimates.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Certain prior year amounts in the consolidated financial statements have been reclassified to
conform to the current year presentation. These reclassifications had no effect on the results of
operations or stockholders’ equity as previously reported.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Our fiscal year ends on the Saturday closest to December 31. Fiscal year 2010 consisted of 52
weeks and ended on January 1, 2011; fiscal year 2009 consisted of 52 weeks and ended on January 2,
2010; and fiscal year 2008 consisted of 53 weeks and ended on January 3, 2009. All references to
years in these notes to consolidated financial statements represent fiscal years unless otherwise
noted.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b><i>Nature of Operations</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We design, develop, market, install, host and support healthcare information technology, healthcare
devices and content solutions for healthcare organizations and consumers. We also provide a wide
range of value-added services, including implementing solutions as individual, combined or
enterprise-wide systems; hosting solutions in our data center; and clinical process optimization
services. Furthermore, we provide fully–automated on-site employer health clinics and third party
administrator health plan services for employers.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b><i>Summary of Significant Accounting Policies</i></b>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"><b>(a)</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify"><b>Revenue Recognition </b>– We recognize software related revenue in accordance with the
provisions of ASC 985-605, <i>Software – Revenue Recognition </i>and non-software related revenue in
accordance with ASC 605, <i>Revenue Recognition</i>. In general, revenue is recognized when all of
the following criteria have been met:
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Pervasive evidence of an arrangement exists;
</div></td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Delivery has occurred and been accepted by the client;
</div></td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Our fee is fixed, determinable and,
</div></td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Collection of the revenue is probable
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"> </td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">    The following are our major components of revenue:
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 8pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">System sales <i>– </i>includes the licensing of computer software, deployment period
upgrades, installation, content subscriptions, transaction processing and the sale of
computer hardware and sublicensed software;
</div></td>
</tr>
<tr>
<td style="font-size: 8pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Support, Maintenance and Service – includes software support and hardware
maintenance, remote hosting and managed services, training, consulting and
implementation services;
</div></td>
</tr>
<tr>
<td style="font-size: 8pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="7%" style="background: transparent"> </td>
<td width="2%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Reimbursed Travel – includes reimbursable out-of-pocket expenses (primarily travel)
incurred in connection with our client service activities.
</div></td>
</tr>
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We provide for several models of procurement of our information systems and related services. The
predominant model involves multiple deliverables and includes a perpetual software license
agreement, project-related installation services, implementation and consulting services, software
support and either
hosting services or computer hardware and sublicensed software, which requires that we allocate
revenue to each of these elements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>Allocation of Revenue to Multiple Element Arrangements</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Revenue earned on software arrangements involving multiple-elements is generally required to be
allocated to each element based on the relative fair values of those elements if fair values exist
for all elements of the arrangement. Since we do not have vendor specific objective evidence
(VSOE) of fair values on all the elements within our multiple element arrangements, we recognize
revenue using the residual method.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Under the residual method, revenue is recognized in a multiple-element arrangement when
vendor-specific objective evidence of fair value exists for all of the undelivered elements in the
arrangement (i.e. professional services, software support, hardware maintenance, remote hosting
services, hardware and sublicensed software), but does not exist for one or more of the delivered
elements in the arrangement (i.e. licenses for software solutions including project-related
installation services). We allocate revenue to each undelivered element in a multiple-element
arrangement based on the element’s respective fair value, with the fair value determined by the
price charged when that element is sold separately. Specifically, we determine the fair value of
the software support, hardware maintenance, sublicensed software support, remote hosting,
subscriptions and application service provider (ASP) portions of the arrangement based on the
substantive renewal price for these services charged to clients; professional services (including
training and consulting) portion of the arrangement, other than installation services, based on
hourly rates which we charge for these services when sold apart from a software license; and, the
hardware and sublicensed software, based on the prices for these elements when they are sold
separately from the software. The residual amount of the fee after allocating revenue to the fair
value of the undelivered elements is attributed to the licenses for software solutions, including
project-related installation services. If evidence of the fair value cannot be established for the
undelivered elements of a license agreement, the entire amount of revenue under the arrangement is
deferred until these elements have been delivered or objective evidence can be established.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">For certain arrangements, revenue for software, implementation services and, in certain cases,
support services for which VSOE fair value cannot be established are accounted for as a single unit
of accounting. The revenue recognized from these single units of accounting are typically allocated
and classified as system sales and support, maintenance and services. If available, the VSOE fair
value of the services provides the basis for support, maintenance and services allocation and the
remaining residual consideration provides the basis for system sales revenue allocations. In cases
where VSOE fair value of the services cannot be established, revenue is classified based on the
nature of related costs incurred. The following table details these revenue classification
allocations for these single units of accounting arrangements:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 5pt">
<td width="67%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In millions)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">System Sales
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">17.5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">18.1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">26.7</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Support, maintenance and services
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">88.1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">60.4</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">86.6</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 14pt"><i>Revenue Recognition Models for Each Element</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We provide project-related installation services when licensing our software solutions, which
include project-scoping services, conducting pre-installation audits and creating initial
environments. We have deemed installation services to be essential to the functionality of the
software, and therefore recognize the software license over the software installation period using
the percentage of completion method. We measure the percentage of completion based on output
measures which reflect direct labor hours incurred, beginning at software delivery and culminating
at completion of installation. The installation services process length is dependent upon client
specific factors and generally occurs in the same period the contracts are executed but can extend
up to one year.
</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We provide implementation and consulting services. These services vary depending on the scope and
complexity requested by the client. Examples of such services may include database consulting,
system configuration, project management, testing assistance, network consulting, post conversion
review and application management services. Except for limited arrangements where our software
requires significant modifications or customization, implementation and consulting services
generally are not deemed to be essential to the functionality of the software, and thus do not
impact the timing of the software license recognition. However, if software license fees are tied
to implementation milestones, then portion of the software license fee tied to implementation
milestones is deferred until the related milestone is accomplished and related fees become billable
and non-forfeitable. Implementation fees are recognized over the service period, which may extend
from nine months to three years for multi-phased projects.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Remote hosting and managed services are marketed under long-term arrangements generally over
periods of five to 10 years. These services are typically provided to clients that have acquired a
perpetual license for licensed software and have contracted with us to host the software in our
data center. Under these arrangements, the client generally has the contractual right to take
possession of the licensed software at any time during the hosting period without significant
penalty and it is feasible for the client to either run the software on its own equipment or
contract with another party unrelated to us to host the software. Additionally, these services are
not deemed to be essential to the functionality of the licensed software or other elements of the
arrangement and as such, we allocate a portion of the services fee to the software and recognize it
once the client has the ability to take possession of the software. The remaining services fee in
these arrangements, as well as the services fees for arrangements where the client does not have
the contractual right or the ability to take possession of the software at any time, are generally
recognized ratably over the hosting service period.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We also offer our solutions on an ASP service model, making available time based licenses for our
software functionality and providing the software solutions on a remote processing basis from our
data centers. The data centers provide system and administrative support as well as processing
services. Revenue on software and services provided on an ASP or term license basis is combined
and recognized on a monthly basis over the term of the contract. We capitalize related direct
costs consisting of third party costs and direct software installation and implementation costs
associated with the initial set up of the client on the ASP service. These costs are amortized
over the term of the arrangement.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Software support fees are marketed under annual and multi-year arrangements and are recognized as
revenue ratably over the contracted support term. Hardware and sublicensed software maintenance
revenues are recognized ratably over the contracted maintenance term.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Subscription and content fees are generally marketed under annual and multi-year agreements and are
recognized ratably over the contracted terms.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Hardware and sublicensed software sales are generally recognized when delivered to the client,
assuming title and risk of loss have transferred to the client.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Where we have contractually agreed to develop new or customized software code for a client as a
single element arrangement, we utilize percentage of completion accounting, labor-hours method.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>Payment Arrangements</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Our payment arrangements with clients typically include an initial payment due upon contract
signing and date-based licensed software payment terms and payments based upon delivery for
services, hardware and sublicensed software. Revenue recognition on support payments received in
advance of the services being performed are deferred and classified as either current or long term
deferred revenue depending on whether the revenue will be earned within one year.
</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We have periodically provided long-term financing options to creditworthy clients through third
party financing institutions and have directly provided extended payment terms to clients from
contract date. These extended payment term arrangements typically provide for date based payments
over periods ranging from 12 months up to seven years. As a significant portion of the fee is due
beyond one year, we have analyzed our history with these types of arrangements and have concluded
that we have a standard business practice of using extended payment term arrangements and a long
history of successfully collecting under the original payment terms for arrangements with similar
clients, product offerings, and
economics without granting concessions. Accordingly, we consider the fee to be fixed and
determinable in these extended payment term arrangements and, thus, the timing of revenue is not
impacted by the existence of extended payments.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Some of these payment streams have been assigned on a non-recourse basis to third party financing
institutions. We account for the assignment of these receivables as sales. Provided all revenue
recognition criteria have been met, we recognize revenue for these arrangements under our normal
revenue recognition criteria, and if appropriate, net of any payment discounts from financing
transactions.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>NHS Initiative</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In England, we have contracted with third parties to customize software and provide implementation
and support services under long term arrangements (nine years). Prior to 2008 we accounted for the
arrangements as single units of accounting because the arrangements require customization and
development of software, and fair value for the support services had not been established. Also
prior to 2008 we believed it was reasonably assured that no loss would be incurred under these
arrangements and therefore we utilized the zero margin approach of applying
percentage-of-completion accounting.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">During 2008 we established fair value of the undelivered elements of the arrangement that are not
subject to percentage of completion accounting. Also, during the fourth quarter of 2008 we
realized a significant milestone in London which significantly enhances our ability to reliably
estimate work effort for the remainder of the contract and estimate a minimum level of profit on
the arrangement. These events, combined with our experience since the contract signed in 2006 and
the experience gained in the South, allowed us to conclude that reasonably dependable work effort
estimates could be produced and allow for margin recognition.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">As a result, our 2008 revenues included a cumulative catch-up adjustment, resulting from the
significant change in accounting estimate, in the amount of $28.6 million which represents the
margin on the contract which had been previously deferred as a result of the zero margin approach
of applying percentage of completion accounting. Greater than a majority of the catch-up
adjustment revenue was included in support, maintenance and services. The remaining margin
attributed to the services subject to percentage completion accounting will be recognized over the
remaining service period until the services are complete and amounts allocated to the other support
services not subject to percentage completion accounting will be recognized over the relevant
support periods. The contract expires in 2014.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(b) Cash Equivalents </b>– Cash equivalents consist of short-term marketable securities with original
maturities less than 90 days.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(c) Investments – </b>Investment securities which we have the ability and intent to hold until
maturity are classified as held-to-maturity investments and are stated at amortized cost.
Investment securities which are bought and held principally for the purpose of selling them in the
near term are classified as trading securities and are stated at fair market value with changes
recorded through earnings.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Our short-term investments are primarily invested in time deposits, commercial paper, government
and corporate bonds. Our long-term investments are primarily invested in government and corporate
bonds. All of our short-term and long-term investments are classified as held-to-maturity
securities and stated at their amortized cost which approximates fair value.
</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Premiums are amortized and discounts are accreted over the life of the security as adjustments to
interest income using the effective interest method. Interest income is recognized when earned.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Refer to Note (3) and Note (4) for a comprehensive description of these assets and their value.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(d) Concentrations </b>– Substantially all of our cash and cash equivalents and short-term
investments are held at four major financial institutions. The majority of our cash equivalents
consist of money market funds. Deposits held with banks may exceed the amount of insurance
provided on such deposits. Generally these deposits may be redeemed upon demand and, therefore,
bear minimal risk.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Substantially all of our clients are integrated delivery networks, physicians, hospitals and other
healthcare related organizations. If significant adverse macro-economic factors were to impact
these organizations it
could materially adversely affect us. Our access to certain software and hardware components is
dependent upon single and sole source suppliers. The inability of any supplier to fulfill our
supply requirements could affect future results.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">As of the end of 2010, we had significant concentration of receivables owed to us by Fujitsu
Services Limited, which are currently in dispute. Refer to Note (5) for additional information.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(e) Inventory </b>- Inventory consists primarily of computer hardware, sublicensed software held for
resale and <i>RxStation </i>medication dispensing units. Inventory is recorded at the lower of cost
(first-in, first-out) or market.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(f) Property and Equipment </b>- Property, equipment and leasehold improvements are stated at cost.
Depreciation of property and equipment is computed using the straight-line method over periods of
two to 50 years. Amortization of leasehold improvements is computed using a straight-line method
over the shorter of the lease terms or the useful lives, which range from periods of two to 15
years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(g) Software Development Costs </b>– Software development costs are accounted for in accordance with
ASC 985-20, <i>Costs of Software to be Sold, Leased or Marketed</i>. Software development costs incurred
internally in creating computer software products are expensed until technological feasibility has
been established upon completion of a detailed program design. Thereafter, all software
development costs incurred through the software’s general release date are capitalized and
subsequently reported at the lower of amortized cost or net realizable value. Capitalized costs
are amortized based on current and expected future revenue for each software solution with minimum
annual amortization equal to the straight-line amortization over the estimated economic life of the
solution.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(h) Goodwill and Other Intangible Assets – </b>We account for goodwill under the provisions of ASC
350, <i>Intangibles – Goodwill and Other. </i>Goodwill and intangible assets with indefinite lives are
not amortized but are evaluated for impairment annually or whenever there is an impairment
indicator. Based on these evaluations, there was no impairment of goodwill in 2010, 2009 or 2008.
Refer to Note (7) for more information of Goodwill and other intangible assets.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(i) Contingencies </b>– We accrue estimates for resolution of any legal and other contingencies when
losses are probable and estimable, in accordance with ASC 450, <i>Contingencies. </i>We currently have no
material pending litigation.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The terms of our software license agreements with our clients generally provide for a limited
indemnification of such intellectual property against losses, expenses and liabilities arising from
third party claims based on alleged infringement by our solutions of an intellectual property right
of such third party. The terms of such indemnification often limit the scope of and remedies for
such indemnification obligations and generally include a right to replace or modify an infringing
solution. To date, we have not had to reimburse any of our clients for any losses related to these
indemnification provisions pertaining to third party intellectual property infringement claims. For
several reasons, including the lack of prior indemnification claims and the lack of a monetary
liability limit for certain infringement cases under the terms of the corresponding agreements with
our clients, we cannot determine the maximum amount of potential future payments, if any, related
to such indemnification provisions.
</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">From time to time we are involved in routine litigation incidental to the conduct of our business,
including for example, employment disputes and litigation alleging solution defects, intellectual
property infringement, violations of law and breaches of contract and warranties. We believe that
no such routine litigation currently pending against us, if adversely determined, would have a
material adverse effect on our consolidated financial position, results of operations or cash
flows.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(j) Derivative Instruments and Hedging Activities - </b>Historically, our use of hedging instruments
has primarily been to hedge foreign currency denominated assets and liabilities. We record all
hedging instruments on our Consolidated Balance Sheet at fair value. For hedging instruments that
are designated and qualify as a net investment hedge, the effective portion of the gain or loss on
the hedging instrument is reported in the foreign currency translation component of other
comprehensive income (loss). Any ineffective portion of the gain or loss on the hedging instrument
for a cash flow hedge or net investment hedge is recorded in the results of operations immediately.
Refer to Note (10) for more information on our hedging activities.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(k) Income Taxes </b>- Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. Refer to Note (12)
for additional information regarding income taxes.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(l) Earnings per Common Share </b>Basic earnings per share (EPS) excludes dilution and is computed, in
accordance with ASC 260, <i>Earnings Per Share</i>, by dividing income available to common shareholders
by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution that could occur if securities or other contracts to issue stock were
exercised or converted into common stock or resulted in the issuance of common stock that then
shared in our earnings. Refer to Note (13) for additional details of our earnings per share
computations.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(m) Accounting for Share-based payments - </b>We recognize all share-based payments to associates,
directors and consultants, including grants of stock options, restricted stock and performance
shares, in the financial statements as compensation cost based on their fair value on the date of
grant, in accordance with ASC 718, Stock Compensation. This compensation cost is recognized over
the vesting period on a straight-line basis for the fair value of awards that actually vest. Refer
to Note (14) for a detailed discussion of share-based payments.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(n) Foreign Currency </b>- Assets and liabilities of non-U.S. subsidiaries whose functional currency is
the local currency are translated into U.S. dollars at exchange rates prevailing at the balance
sheet date. Revenues and expenses are translated at average exchange rates during the year. The
net exchange differences resulting from these translations are reported in accumulated other
comprehensive income. Gains and losses resulting from foreign currency transactions are included
in the consolidated statements of operations. Refer to Note (10) for additional details of our
foreign currency transactions.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(o) Collaborative Arrangements </b>- In accordance with ASC 808, <i>Collaborative Arrangements, </i>third
party costs incurred and revenues generated by arrangements involving joint operating activities of
two or more parties that are each actively involved and exposed to risks and rewards of the
activities are classified in the consolidated statements of operations on a gross basis only if we
are determined to be the principal participant in the arrangement. Otherwise, third party revenues
and costs generated by collaborative arrangements are presented on a net basis. Payments between
participants are recorded and classified based on the nature of the payments.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>(p) Recent Accounting Pronouncements</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Recently Adopted Accounting Pronouncements</i>
In January 2010 we adopted guidance issued by the FASB on transfers of financial assets, which
among other things, created more stringent conditions for reporting a transfer of a portion of a
financial asset as a sale. The adoption did not have a material impact on our consolidated
financial statements.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In January 2010, we adopted guidance issued by the FASB improving disclosures about fair value
measurements, which requires disclosures of transfers into and out of Levels 1 and 2, more detailed
roll forward reconciliations of Level 3 recurring fair value measurements on a gross basis, fair
value information by class of assets and liabilities, and descriptions of valuation techniques and
inputs for Level 2 and 3 measurements. We adopted the guidance during the first quarter 2010,
which did not have a material impact on our consolidated financial statements.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">On February 24, 2010, FASB issued guidance to eliminate contradictions between the requirements of
U.S. GAAP and the Securities and Exchange Commission’s (SEC) filing rules. The amendments also
discharge the requirement that public companies disclose the date of their financial statements in
both issued and revised financial statements. The guidance was effective upon issuance and did not
have a material impact on our consolidated financial statements.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In July 2010, the FASB issued guidance to require increased disclosures about the credit quality of
financing receivables and allowances for credit losses, including disclosure about credit quality
indicators, past due information and modifications of financing receivables. Trade accounts receivable with
maturities of one year or less are excluded from the disclosure requirements. We adopted the
guidance for the period ended 2010, which did not have a material impact on our consolidated
financial statements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>Recently Issued Accounting Pronouncements Not Yet Adopted</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">During 2009, the FASB issued guidance on revenue recognition for non-software elements that became
effective for us beginning on January 2, 2011. Under the new guidance an entity is required to
apply the relative selling price allocation method in order to estimate selling price for all units
of accounting, including delivered items, when vendor-specific objective evidence (VSOE) or
acceptable third party evidence (TPE) does not exist. In addition, expanded disclosures are
required to provide both qualitative and quantitative information about the significant judgments
made in applying the guidance and subsequent changes in those judgments that may significantly
affect the timing or amount of revenue recognition. Further, for arrangements that include software
elements, tangible products that have software components that are essential to the functionality
of the tangible product will no longer be within the scope of the software revenue recognition
guidance, and software-enabled products will now be subject to other relevant revenue recognition
guidance. The guidance is effective for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010 and shall be applied on a prospective basis. We do
not believe the adoption of the new guidance will have a material impact on our financial position
and results of operations.
</div>
</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(15) </b>  <b>Foundations Retirement Plan</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 5%">The Cerner Corporation Foundations Retirement Plan (the Plan) was established under Section 401(k)
of the Internal Revenue Code. All associates age 18 and older and who are not a member of an
excluded class are eligible to participate. Participants may elect to make pretax contributions
from 1% to 80% of eligible compensation to the Plan, subject to annual limitations determined by
the Internal Revenue Service. Participants may direct contributions into mutual funds, a stable
value fund, a Company stock fund, or a self-directed brokerage account. We have a first tier
discretionary match that is made on behalf of participants in an amount equal to 33% of the first
6% of the participant’s salary contribution. Our first tier discretionary match expenses for the
Plan amounted to $8.9 million, $8.7 million and $8.7 million for 2010, 2009 and 2008, respectively.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 5%">We added a second tier discretionary match to the Plan in 2000. Contributions are based on
attainment of established earnings per share goals for the year or the established financial metric
for the Plan. Only participants who defer 2% of their paid base salary, are actively employed as
of the last day of the Plan year and are employed before October 1<sup style="font-size: 85%; vertical-align: text-top">st</sup> of the Plan year
are eligible to receive the discretionary match contribution. For the years ended 2010, 2009 and
2008 we expensed $8.9 million, $2.0 million and $2.2 million for the second tier discretionary
distributions, respectively.
</div>
</div>
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-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 8
-Subparagraph m
Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph h
Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph a
Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph q
falsefalse12Foundations Retirement PlanUnKnownUnKnownUnKnownUnKnownfalsetrueXML
19
R18.xml
IDEA: Interest Income
2.2.0.25falsefalse0211 - Disclosure - Interest Incometruefalsefalse1falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
USD ($)
USD ($) / shares
$Jan-03-2010_Jan-01-2011http://www.sec.gov/CIK0000804753duration2010-01-03T00:00:002011-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0us-gaap_InterestIncomeExpenseNetAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse3false0us-gaap_InterestIncomeAndInterestExpenseDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 11 - us-gaap:InterestIncomeAndInterestExpenseDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(11) </b>  <b>Interest Income</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">A summary of interest income and expense is as follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="53%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest income
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">10,347</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">8,801</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">13,604</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest expense
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(6,908</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(8,493</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10,548</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest income, net
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">3,439</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">308</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,056</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringThis text block may contain information related to interest income and interest expense for enterprises that derive a significant portion of their revenue from interest collected on investments, loans, and securities.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Paragraph 1 - 9
-Article 9
falsefalse12Interest IncomeUnKnownUnKnownUnKnownUnKnownfalsetrueXML
20
R12.xml
IDEA: Receivables
2.2.0.25falsefalse0205 - Disclosure - Receivablestruefalsefalse1falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
USD ($)
USD ($) / shares
$Jan-03-2010_Jan-01-2011http://www.sec.gov/CIK0000804753duration2010-01-03T00:00:002011-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0us-gaap_ReceivablesNetCurrentAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse3false0us-gaap_LoansNotesTradeAndOtherReceivablesDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 5 - us-gaap:LoansNotesTradeAndOtherReceivablesDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(5)   Receivables</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">Receivables consist of accounts receivable and contracts receivable. Accounts receivable represent
recorded revenues that have been billed. Contracts receivable represent recorded revenues that are
billable by us at future dates under the terms of a contract with a client. Billings and other
consideration received on contracts in excess of related revenues recognized are recorded as
deferred revenue. Substantially all receivables are derived from sales and related support and
maintenance and professional services of our clinical, administrative and financial information
systems and solutions to healthcare providers located throughout the United States and in certain
non-U.S. countries.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 8pt; margin-right: 1%">We perform ongoing credit evaluations of our clients and generally do not require collateral from
our clients. We provide an allowance for estimated uncollectible accounts based on specific
identification, historical experience and our judgment. Provisions for losses on uncollectible
accounts for 2010, 2009 and 2008 totaled $9.9 million, $3.1 million and $10.0 million,
respectively.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">A summary of receivables, net is as follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="56%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Gross accounts receivable
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">352,554</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">342,992</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Allowance for doubtful accounts
</div></td>
<td> </td>
<td> </td>
<td align="right">15,550</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">16,895</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Accounts receivable, net of allowance
</div></td>
<td> </td>
<td> </td>
<td align="right">337,004</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">326,097</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Contracts receivable
</div></td>
<td> </td>
<td> </td>
<td align="right">139,901</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">135,314</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total receivables, net
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">476,905</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">461,411</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">During the second quarter of 2008, Fujitsu Services Limited’s (Fujitsu) contract as the prime
contractor in the National Health Service (NHS) initiative to automate clinical processes and
digitize medical records in the Southern region of England was terminated by the NHS. This had the
effect of automatically terminating our subcontract for the project. We are in dispute with
Fujitsu regarding Fujitsu’s obligation to pay the amounts comprised of accounts receivable and
contracts receivable related to that subcontract, and we are working with Fujitsu to resolve these
issues based on processes provided for in the contract. Part of that process requires resolution
of disputes between Fujitsu and the NHS regarding the contract termination. During the 2009 fourth
quarter certain events occurred in the resolution process between Fujitsu and the NHS which reduced
the likelihood the matter will be resolved in the next 12 months. Therefore we reclassified the
receivables, which represented more than 10% of our net receivables, from current assets to other
long term assets during the 2009 fourth quarter. The circumstances surrounding these receivables
remained unchanged at the end of 2010 and represent the significant majority of other long-term
assets at the end of 2010 and 2009. While the ultimate collectability of the receivables pursuant
to this process is uncertain, management believes that it has valid and equitable grounds for
recovery of such amounts and that collection of recorded amounts is probable.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">During 2010 and 2009, we received total client cash collections of $1.9 billion and $1.8 billion,
respectively, of which $66.6 million and $54.0 million were received from third party arrangements
with non-recourse payment assignments.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph k
-Article 4
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 3, 4
-Article 5
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 7
-Article 9
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 01-6
-Paragraph 13
-Subparagraph d
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21
R3.xml
IDEA: Consolidated Balance Sheets (Parenthetical)
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-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 4
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 30
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 30
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 30
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30
-Article 5
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22
R14.xml
IDEA: Goodwill and Other Intangible Assets
2.2.0.25falsefalse0207 - Disclosure - Goodwill and Other Intangible Assetstruefalsefalse1falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
USD ($)
USD ($) / shares
$Jan-03-2010_Jan-01-2011http://www.sec.gov/CIK0000804753duration2010-01-03T00:00:002011-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0cern_GoodwillAndOtherIntangibleAssetsAbstractcernfalsenadurationGoodwill And Other Intangible Assets.falsefalse<
/IsSegmentTitle>falsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringGoodwill And Other Intangible Assets.falsefalse3false0us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 7 - us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 20pt"><b>(7) Goodwill and Other Intangible Assets</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 12pt; margin-right: 6%">Goodwill and intangible assets with indefinite lives are tested for impairment annually or whenever
there is an impairment indicator. All goodwill is assigned to a reporting unit, where it is
subject to an impairment test based on fair value using Level 3 inputs as defined in the fair value
hierarchy. Refer to Note (4) - Fair Value Measurements for the definition of the levels in the fair
value hierarchy. The inputs used to calculate the fair value included the projected cash flows and
discount rates that we estimated would be used by a market participant in valuing these assets. Our
most recent annual test of goodwill impairment indicated that goodwill was not impaired. The fair
values of each of our reporting units exceeded their carrying amounts by a significant margin.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 6%">The changes in the carrying amounts of goodwill were as follows:
</div>
<div align="justify">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="94%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 15pt">
<td width="58%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Beginning Balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">151,479</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">146,666</td>
<td> </td>
</tr>
<tr style="font-size: 3pt" valign="bottom">
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Goodwill acquired and earnout payments for prior acquisitions
</div></td>
<td> </td>
<td> </td>
<td align="right">11,290</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,425</td>
<td> </td>
</tr>
<tr style="font-size: 3pt" valign="bottom">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign currency translation adjustment and other
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,395</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">1,388</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 3pt" valign="bottom">
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Ending Balance
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">161,374</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">151,479</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt; margin-right: 6%">Our intangible assets, other than goodwill or intangible assets with indefinite lives, are all
subject to amortization, are amortized on a straight-line basis, and are summarized as follows:
</div>
<div align="justify">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="94%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="30%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="13%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="11%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted-Average</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 0px solid #000000"> </td>
<td style="border-bottom: 0px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Amortization</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Gross Carrying</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Accumulated</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Gross Carrying</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Accumulated</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Period (Yrs)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amount</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amortization</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amount</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amortization</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 5pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Purchased software
</div></td>
<td> </td>
<td> </td>
<td align="right">5.0</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">70,864</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">48,085</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">84,968</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">62,802</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Customer lists
</div></td>
<td> </td>
<td> </td>
<td align="right">5.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">59,556</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">54,241</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">55,606</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">50,960</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Patents
</div></td>
<td> </td>
<td> </td>
<td align="right">16.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,128</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,365</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,184</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,729</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right">5.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,491</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">880</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,057</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">605</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td> </td>
<td align="right">6.1</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">144,039</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">105,571</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">149,815</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">116,096</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000; border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Amortization expense for 2010, 2009 and 2008 was $12.0 million, $20.4 million and $20.0
million, respectively.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Estimated aggregate amortization expense for each of the next five years is as follows:
</div>
<div align="center" style="margin-right: 6%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="75%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="50%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">For year ended:
</div></td>
<td> </td>
<td> </td>
<td align="right">2011</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">10,535</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">2012</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,230</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">2013</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,309</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">2014</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,795</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">2015</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,640</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDiscloses the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and writte
n off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain or loss on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. Fo
r each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. This element may be used as a single block of text to incl
ude the entire intangible asset disclosure including data and tables.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 142
-Paragraph 42, 43, 44, 45, 46, 47
falsefalse12Goodwill and Other Intangible AssetsUnKnownUnKnownUnKnownUnKnownfalsetrueXML
23
R15.xml
IDEA: Software Development Costs
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USD ($)
USD ($) / shares
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 20pt"><b>(8) Software Development Costs</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Information regarding our software development costs is included in the following table:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="56%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(in thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Software development costs
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">284,836</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">285,187</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">291,368</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Capitalized software development costs
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(80,979</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(77,747</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(69,981</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of capitalized software development costs
</div></td>
<td> </td>
<td> </td>
<td align="right">68,994</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">63,611</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">51,132</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total software development expense
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">272,851</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">271,051</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">272,519</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 12pt">We are amortizing capitalized costs over five years. Accumulated amortization as of the end
of 2010 and 2009 was $543.2 million and $474.3 million, respectively.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescription, amount and terms involving research, development, and computer software activities, including contracts and arrangements to be performed for others and with federal government. Includes costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to tra
nslate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility and in-process research and development acquired in a business combination consummated during the period.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 68
-Paragraph 14
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Audit and Accounting Guide (AAG)
-Number AAG-FGC
-Chapter 3
-Paragraph 56, 57
-IssueDate 2006-05-01
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 2
-Paragraph 12, 13
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 86
-Paragraph 11, 12
falsefalse12Software Development CostsUnKnownUnKnownUnKnownUnKnownfalsetrueXML
24
R24.xml
IDEA: Commitments
2.2.0.25falsefalse0217 - Disclosure - Commitmentstruefalsefalse1falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
USD ($)
USD ($) / shares
$Jan-03-2010_Jan-01-2011http://www.sec.gov/CIK0000804753duration2010-01-03T00:00:002011-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0cern_CommitmentsAbstractcernfalsenadurationCommitments.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringCommitments.falsefalse3false0us-gaap_CommitmentsAndContingenciesDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1<
IsNumeric>falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 17 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(17) </b>  <b>Commitments</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Leases</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We are committed under operating leases for office space and computer equipment through October
2027. Rent expense for office and warehouse space for our regional and global offices for 2010,
2009 and 2008 was $20.5 million, $16.6 million and $16.1 million, respectively. Aggregate minimum
future payments under these non-cancelable operating leases are as follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="50%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="38%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="15%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Operating Lease</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Obligations</td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2011
</div></td>
<td> </td>
<td> </td>
<td align="right">23,646</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">21,891</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">19,847</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2014
</div></td>
<td> </td>
<td> </td>
<td align="right">17,564</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2015
</div></td>
<td> </td>
<td> </td>
<td align="right">11,392</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2016 and thereafter
</div></td>
<td> </td>
<td> </td>
<td align="right">48,799</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total:
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">143,139</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 28pt"><i>Purchase Obligations</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We have purchase commitments with various vendors through 2019. These commitments represent
non-cancellable commitments primarily to provide ongoing support, maintenance and service to our
clients. Aggregate future payments under these commitments are as follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="50%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="38%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="15%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">    Purchase    </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">    Obligations    </td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2011
</div></td>
<td> </td>
<td> </td>
<td align="right">18,810</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">13,707</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">7,850</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2014
</div></td>
<td> </td>
<td> </td>
<td align="right">6,515</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2015
</div></td>
<td> </td>
<td> </td>
<td align="right">3,263</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2016 and thereafter
</div></td>
<td> </td>
<td> </td>
<td align="right">13,291</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total:
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">63,436</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringIncludes disclosure of commitments and contingencies. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
falsefalse12CommitmentsUnKnownUnKnownUnKnownUnKnownfalsetrueXML
25
R20.xml
IDEA: Earnings Per Share
2.2.0.25falsefalse0213 - Disclosure - Earnings Per Sharetruefalsefalse1falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
USD ($)
USD ($) / shares
$Jan-03-2010_Jan-01-2011http://www.sec.gov/CIK0000804753duration2010-01-03T00:00:002011-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0us-gaap_EarningsPerShareAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse3false0us-gaap_EarningsPerShareTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 13 - us-gaap:EarningsPerShareTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(13)  Earnings Per Share</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Basic earnings per share (EPS) excludes dilution and is computed by dividing income available to
common shareholders by the weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if securities or other contracts to
issue stock were exercised or converted into common stock or resulted in the issuance of common
stock that then shared in our earnings. A reconciliation of the numerators and the denominators of
the basic and diluted per-share computations are as follows:
</div>
<div align="center">
<table style="font-size: 7pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="15%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="35" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<tr style="font-size: 10px">
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Earnings</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Shares</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Per-Share</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Earnings</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Shares</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Per-Share</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Earnings</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Shares</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Per-Share</td>
<td> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Numerator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Denominator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amount</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Numerator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Denominator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amount</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Numerator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">(Denominator)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Amount</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="35" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 6pt" valign="bottom">
<td nowrap="nowrap" align="left" colspan="2"><i>(In thousands, except per share data)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 5pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Basic earnings per share:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:8px; text-indent:-8px">Income available to common
stockholders
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">237,272</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">82,458</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.88</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">193,465</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">80,981</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.39</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">188,658</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">80,549</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.34</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:8px; text-indent:-8px"><b>Effect of dilutive securities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:8px; text-indent:-8px">Stock options
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,966</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,901</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,886</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="35" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:8px; text-indent:-8px"><b>Diluted earnings per share:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 3px">
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:8px; text-indent:-8px">Income available to common
stockholders including
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="35" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:16px; text-indent:-8px">assumed conversions
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">237,272</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">85,424</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.78</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">193,465</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">83,882</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.31</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">188,658</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">83,435</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.26</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="35" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 6pt">Options to purchase 0.6 million, 1.8 million and 2.3 million shares of common stock at per
share prices ranging from $58.21 to $91.91, $38.64 to $136.86 and $33.63 to $136.86, were
outstanding at the end of 2010, 2009 and 2008, respectively, but were not included in the
computation of diluted earnings per share because they were anti-dilutive.
</div>
</div>
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27
R27.xml
IDEA: Valuation and Qualifying Accounts
2.2.0.25falsefalse0301 - Schedule - Valuation and Qualifying Accountstruefalsefalse1falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
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<div align="left" style="font-size: 10pt; margin-top: 0pt; margin-left: 6%">
</div>
<div align="center" style="font-size: 10pt; margin-top: 10pt">Cerner Corporation<br />
Valuation and Qualifying Accounts
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 24pt">
<td width="38%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Additions</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Through</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(in thousands)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Additions</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Acquisitions and</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Charged to</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Consolidation of</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Beginning</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Costs and</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Variable Interest</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="center">Description</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">of Period</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Expenses</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Entity</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Deductions</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">End of Period</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="21" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:22px; text-indent:-15px"><b>2008</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:22px; text-indent:-15px">Doubtful Accounts and Sale Allowances
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">15,469</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">9,957</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(7,277</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left"> $</td>
<td align="right">18,149</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="21" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:22px; text-indent:-15px"><b>2009</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:22px; text-indent:-15px">Doubtful Accounts and Sale Allowances
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">18,149</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,108</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(4,362</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left"> $</td>
<td align="right">16,895</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="21" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:22px; text-indent:-15px"><b>2010</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 8pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:22px; text-indent:-15px">Doubtful Accounts and Sale Allowances
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">16,895</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">9,856</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(11,201</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left"> $</td>
<td align="right">15,550</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="21" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 18pt">See accompanying report of independent registered public accounting firm.
</div>
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28
R16.xml
IDEA: Indebtedness
2.2.0.25falsefalse0209 - Disclosure - Indebtednesstruefalsefalse1falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
USD ($)
USD ($) / shares
$Jan-03-2010_Jan-01-2011http://www.sec.gov/CIK0000804753duration2010-01-03T00:00:002011-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0cern_IndebtednessAbstractcernfalsenadurationIndebtedness.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringIndebtedness.falsefalse3false0us-gaap_DebtDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 9 - us-gaap:DebtDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(9)   Indebtedness</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The following is a summary of indebtedness outstanding:
</div>
<div align="left">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="98%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="60%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Note agreement, 5.54%
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">72,438</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">90,090</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Senior Notes, Series B, 6.42%
</div></td>
<td> </td>
<td> </td>
<td align="right">19,500</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">29,250</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other obligations
</div></td>
<td> </td>
<td> </td>
<td align="right">822</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,180</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">92,760</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">120,520</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: current portion
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(24,837</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(25,014</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">67,923</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">95,506</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In November 2005, we completed a £65.0 million private placement of debt at 5.54% pursuant to
a Note Agreement. The Note Agreement is payable in seven equal annual installments, which
commenced November 2009. The proceeds were used to repay the outstanding amount under our credit
facility and for general corporate purposes. The Note Agreement contains certain net worth and
fixed charge coverage covenants and provides certain restrictions on our ability to borrow, incur
liens, sell assets and pay dividends. We were in compliance with all covenants at the end of 2010.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">In December 2002, we completed a $60.0 million private placement of debt pursuant to a Note
Agreement. The Series A Senior Notes, with a $21.0 million principal amount at 5.57% were paid in
full in 2008. The Series B Senior Notes, with a $39.0 million principal amount at 6.42%, are
payable in four equal annual installments, which commenced December 2009. The proceeds were used
to repay the outstanding amount under our credit facility and for general corporate purposes. The
Note Agreement contains certain net worth and fixed charge coverage covenants and provides certain
restrictions on our ability to borrow, incur liens, sell assets and pay dividends. We were in
compliance with all covenants at the end of 2010.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We maintain a $90 million, multi-year revolving credit facility, which provides an unsecured
revolving line of credit for working capital purposes. Interest is payable at a rate based on
prime or LIBOR plus a spread that varies depending on the net worth ratios maintained. The
agreement provides certain restrictions on our ability to borrow, incur liens, sell assets and pay
dividends and contains certain net
worth, current ratio and fixed charge coverage covenants, which as of the end of 2010, we were in
compliance with. The current agreement expires on May 31, 2013. As of the end of 2010, we had no
outstanding borrowings under this agreement; however, we have $13.6 million of outstanding letters
of credit, which reduced our available borrowing capacity to $76.4 million.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We also have capital lease obligations amounting to $0.2 million, payable over the next two years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The aggregate maturities for our long-term debt, including capital lease obligations, are as
follows (in thousands):
</div>
<div align="center" style="margin-right: 10%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="65%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 15pt">
<td width="70%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="18%"> </td>
<td width="1%"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2011
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">24,837</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">24,459</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">14,488</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2014
</div></td>
<td> </td>
<td> </td>
<td align="right">14,488</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2015
</div></td>
<td> </td>
<td> </td>
<td align="right">14,488</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total maturities
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">92,760</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 30pt">We estimate the fair value of our long-term, fixed-rate debt using a level 3 discounted cash
flow analysis based on our current borrowing rates for debt with similar maturities. The fair
value of our long-term debt was approximately $99.6 million and $124.8 million at the end of 2010
and 2009, respectively.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringInformation about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters
important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 19, 20, 22
-Article 5
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 4
falsefalse12IndebtednessUnKnownUnKnownUnKnownUnKnownfalsetrueXML
29
R9.xml
IDEA: Business Acquisitions
2.2.0.25falsefalse0202 - Disclosure - Business Acquisitionstruefalsefalse1falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
USD ($)
USD ($) / shares
$Jan-03-2010_Jan-01-2011http://www.sec.gov/CIK0000804753duration2010-01-03T00:00:002011-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0cern_AcquisitionsAbstractcernfalsenadurationAcquisitions.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringAcquisitions.falsefalse3false0us-gaap_BusinessCombinationDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1<
/Id>falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 2 - us-gaap:BusinessCombinationDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>(2) Business Acquisitions</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>IMC Health Care, Inc.</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">On January 4, 2010, we completed the purchase of 100% of the outstanding common shares of IMC
Health Care, Inc. (IMC), a provider of employer sponsored on-site health centers. The acquisition
of IMC expanded our employer health initiatives, such as on-site employer health centers,
occupational health services and wellness programs. Consideration for this transaction was $15.7
million in cash plus additional contingent consideration. We initially valued the contingent
consideration at $1.7 million based on a probability-weighted assessment of potential contingent
consideration payment scenarios ranging up to $2.5 million. Based on a final assessment of the
contingent liability at the end of 2010, we reduced the contingent consideration liability to $0.9
million and recognized a gain of $0.8 million within the Consolidated Statements of Operations as a
component of general and administrative expenses. The allocation of the purchase price to the
estimated fair values of the identified tangible and intangible assets acquired, net of liabilities
assumed, is summarized below:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="98%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="17%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(in thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 1pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Allocation Amount</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Tangible assets and liabilities
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Current assets
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,862</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Property and equipment
</div></td>
<td> </td>
<td> </td>
<td align="right">264</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Current liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,057</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="3" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total net tangible assets acquired
</div></td>
<td> </td>
<td> </td>
<td align="right">1,069</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Intangible assets
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Customer relationships
</div></td>
<td> </td>
<td> </td>
<td align="right">4,073</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Non-compete agreements
</div></td>
<td> </td>
<td> </td>
<td align="right">1,003</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="3" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total intangible assets acquired
</div></td>
<td> </td>
<td> </td>
<td align="right">5,076</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Goodwill
</div></td>
<td> </td>
<td> </td>
<td align="right">11,290</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="3" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Total purchase price
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">17,435</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="3" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The fair values of the acquired intangible assets and the contingent consideration were
estimated by applying the income approach. Such estimations required the use of inputs that were
unobservable in the market place (Level 3), including a discount rate that we estimated would be
used by a market participant in valuing these assets, projections of revenues and cash flows,
probability weighting factors and client attrition rates. See Note (4) for further information
about the fair value level hierarchy.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The goodwill was allocated to our Domestic operating segment and is expected to be deductible for
tax purposes. The other identifiable intangible assets are being amortized over five years. The
operating results of IMC were combined with our operating results subsequent to the purchase date
of January 4, 2010. Pro-forma results of operations have not been presented because the effect of this
acquisition was not material to our results.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>LingoLogix, Inc</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">On August 1, 2008, we completed the purchase of LingoLogix, Inc. (LingoLogix), for $4.0 million in
cash. LingoLogix was a provider of software used for computer automated coding technology. The
acquisition of LingoLogix enhanced our revenue cycling offerings as the solutions can be used in
both inpatient and outpatient environments to improve physician workflow and drive more accurate
and efficient reimbursement through automated coding. The operating results of LingoLogix were
combined with our operating results subsequent to the purchase date of August 1, 2008. The
allocation of the purchase price to the estimated fair values of the identified tangible and
intangible assets acquired and liabilities assumed resulted in goodwill of $1.3 million and $4.1
million in intangible assets, which consisted of $3.6 million in developed technology. Total assets
and liabilities at the date of acquisition were $5.3 million and $1.3 million, respectively.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The goodwill was allocated to our Domestic operating segment. The intangible assets are being
amortized over 5 years. Pro-forma results of operations have not been presented because the effect
of this acquisition was not material to our results.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescription of a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. This element may be used as a single block of text to encapsulate the entire disclosure (including data and tables) regarding business combinations, including leverage buyout transactions (as applicable).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141
-Paragraph 51, 52
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 88-16
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 67-73
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph F4
-Subparagraph e
-Appendix F
falsefalse12Business AcquisitionsUnKnownUnKnownUnKnownUnKnownfalsetrueXML
30
R6.xml
IDEA: Consolidated Statements of Changes in Stockholders' Equity
2.2.0.25truefalse0130 - Statement - Consolidated Statements of Changes in Stockholders' EquitytruefalseIn Thousandsfalse1falsefalseUSDtruefalse{us-gaap_StatementEquityComponentsAxis} : Common Stock
1/3/2010 - 1/1/2011
USD ($)
$TwelveMonthsEnded_01Jan2011_Common_Stock_Memberhttp://www.sec.gov/CIK0000804753na0001-01-01T00:00:000001-01-01T00:00:00falsefalseus-gaap_CommonStockMemberus-gaap_StatementEquityComponentsAxisxbrldihttp://xbrl.org/2006/xbrldius-gaap_CommonStockMemberus-gaap_StatementEquityComponentsAxisexplicitMemberUSDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2falsefalseUSDtruefalse{us-gaap_StatementEquityComponentsAxis} : Additional Paid-in Capital
1/3/2010 - 1/1/2011
USD ($)
$TwelveMonthsEnded_01Jan2011_Additional_Paid_In_Capital_Memberhttp://www.sec.gov/CIK0000804753na0001-01-01T00:00:000001-01-01T00:00:00falsefalseus-gaap_AdditionalPaidInCapitalMemberus-gaap_StatementEquityComponentsAxisxbrldihttp://xbrl.org/2006/xbrldius-gaap_AdditionalPaidInCapitalMemberus-gaap_StatementEquityComponentsAxisexplicitMemberUSDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDUSD$3falsefalseUSDtruefalse{us-gaap_StatementEquityComponentsAxis} : Retained Earnings
1/3/2010 - 1/1/2011
USD ($)
$TwelveMonthsEnded_01Jan2011_Retained_Earnings_Memberhttp://www.sec.gov/CIK0000804753na0001-01-01T00:00:000001-01-01T00:00:00falsefalseus-gaap_RetainedEarningsMemberus-gaap_StatementEquityComponentsAxisxbrldihttp://xbrl.org/2006/xbrldius-gaap_RetainedEarningsMemberus-gaap_StatementEquityComponentsAxisexplicitMemberUSDStandardhttp://www.xbrl.org/20
03/iso4217USDiso42170USDUSD$4falsefalseUSDtruefalse{us-gaap_StatementEquityComponentsAxis} : Treasury Stock
12/31/2007 - 1/3/2009
USD ($)
$TwelveMonthsEnded_03Jan2009_Treasury_Stock_Memberhttp://www.sec.gov/CIK0000804753na0001-01-01T00:00:000001-01-01T00:00:00falsefalseus-gaap_TreasuryStockMemberus-gaap_StatementEquityComponentsAxisxbrldihttp://xbrl.org/2006/xbrldius-gaap_TreasuryStockMemberus-gaap_StatementEquityComponentsAxisexplicitMemberUSDStandardhttp://www.xbrl.org/2003/iso421
7USDiso42170USDUSD$5falsefalseUSDtruefalse{us-gaap_StatementEquityComponentsAxis} : Accumulated Other Comprehensive Income (Loss)
1/3/2010 - 1/1/2011
USD ($)
$TwelveMonthsEnded_01Jan2011_Accumulated_Other_Comprehensive_Income_Memberhttp://www.sec.gov/CIK0000804753na0001-01-01T00:00:000001-01-01T00:00:00falsefalseus-gaap_AccumulatedOtherComprehensiveIncomeMemberus-gaap_StatementEquityComponentsAxisxbrldihttp://xbrl.org/2006/xbrldius-gaap_AccumulatedOtherComprehensiveIncomeMemberus-gaap_StatementEquityComponentsAxisexplicitMemberUSDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDUSD$6falsefalseUSDtruefalse{us-gaap_StatementEquityComponentsAxis} : Comprehensive Income (Loss)
1/3/2010 - 1/1/2011
USD ($)
$TwelveMonthsEnded_01Jan2011_Comprehensive_Income_Memberhttp://www.sec.gov/CIK0000804753na0001-01-01T00:00:000001-01-01T00:00:00falsefalseus-gaap_ComprehensiveIncomeMemberus-gaap_StatementEquityComponentsAxisxbrldihttp://xbrl.org/2006/xbrldius-gaap_ComprehensiveIncomeMemberus-gaap_StatementEquityComponentsAxisexplicitMemberUSDStandardhttp://www.xb
rl.org/2003/iso4217USDiso42170USDUSD$7falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
USD ($)
USD ($) / shares
$Jan-03-2010_Jan-01-2011http://www.sec.gov/CIK0000804753na0001-01-01T00:00:000001-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDivide
http://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$1false0us-gaap_StockholdersEquityus-gaaptruecreditinstantNo definition available.falsefalsefalsetruefalsefalsefalsetruefalsefalseperiodstartlabelinstant2007-12-31T00:00:000001-01-01T00:00:001truefalsefalse801000801falsetruefalsetruefalse2truefalsefalse451876000451876falsetruefalsetruefalse3truefalsefalse671440000671440falsetruefalsetruefalse4truefalsefalse00falsetruefalsetruefalse5truefalsefalse83110008311falsetruefalsetruefalse
Cell>6truefalsefalse00falsetruefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTotal of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A3
-Appendix A
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5
falsefalse2false0us-gaap_SharesIssuedus-gaaptruenainstantNo definition available.falsefalsefalsetruefalsefalsefalsetruefalsefalseperiodstartlabelinstant2007-12-31T00:00:0000
01-01-01T00:00:001truefalsefalse8014800080148falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefalsefalse00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetru
efalse7falsefalsefalse00falsefalsefalsefalsefalseSharesxbrli:sharesItemTypesharesNumber of shares of stock issued as of the balance sheet date, including shares that had been issued and were previously outstanding but which are now held in the treasury.No authoritative reference available.fal
sefalse3false0us-gaap_StockIssuedDuringPeriodValueStockOptionsExercisedus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1truefalsefalse90009falsefalsefalsetruefalse2truefalsefalse1525000015250falsefalsefalsetruefalse3falsefalse
false00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefalsefalse00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryValue stock issued during the period as a result of the exercise of stock options.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5
falsefalse4false0us-gaap_StockIssuedDuringPeriodSharesStockOptionsExercisedus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse895000895falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefalse
false00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseSharesxbrli:sharesItemTypesharesNumber of shares issued during the period as a result of the exercise of stock options.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30
-Article 5
falsefalse5false0us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValueus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00falsefalsefalsetruefalse2truefalsefalse1478800014788falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefalsefalse00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThis element represents the amount of recognized share-based compensation during the period, that is, the amount recognized as expense in the income statement (or as asset if compensation is capitalized).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 39
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64
-Subparagraph b
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A91
falsefalse6false0us-gaap_AdjustmentsToAdditionalPaidInCapitalTaxEffectFromShareBasedCompensationus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00falsefalsefalsetruefalse2truefalsefalse91660009166falsefalsefalsetruefalse<
Cell>3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefalsefalse00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTax benefit associated with any share-based compensation plan other than an employee stock ownership plan (ESOP). The tax benefit results from the deduction by the entity on its tax return for an award of stock that exceeds the cumulative compensation cost for common stock or preferred stock recognized for financial reporting. Includes any resultin
g tax benefit that exceeds the previously recognized deferred tax asset (excess tax benefits).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 62
falsefalse7false0us-gaap_TreasuryStockValueAcquiredCostMethodus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsetruenegated1fa
lsefalsefalse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4truefalsefalse-28002000-28002falsefalsefalsetruefalse5fals
efalsefalse00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryCost of common and preferred stock that were repurchased during the period. Recorded using the cost method.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Chapter 1
-Section B
-Paragraph 7
-Subparagraph b
falsefalse8false0us-gaap_OtherComprehensiveIncomeLossNetOfTaxPeriodIncreaseDecreaseus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1false
IsNumeric>falsefalse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse-21288000-21288falsefalsefalsetruefalse6truefalsefalse-21288000-21288falsefalsefalsetruefalse7fals
efalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThis element represents Other Comprehensive Income (Loss), Net of Tax, for the period. Includes deferred gains (losses) on qualifying hedges, unrealized holding gains (losses) on available-for-sale securities, minimum pension liability, and cumulative translation adjustment.Reference 1: http://www.xbrl.org/2003/role/presenta
tionRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph c(3)
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 22, 23, 24, 25
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
falsefalse9false0us-gaap_NetIncomeLossus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel1falsef
alsefalse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3truefalsefalse188658000188658falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefal
sefalse00falsefalsefalsetruefalse6truefalsefalse188658000188658falsefalsefalsetruefalse7truefalsefalse188658000188658falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe portion of consolidated profit or loss for the period, net of income taxes, which is attributable to the parent. If the entity does not present consolidated financial statements, the amount of profit or loss for the period, net of income taxes.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 19
-Article 5
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph d
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A7
-Appendix A
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph a
Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Paragraph 20
-Article 9
Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 10, 15
Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 87-21
Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 28, 29, 30
truefalse10false0us-gaap_ComprehensiveIncomeNetOfTaxus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel1falsefalsefalse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefalsefalse
00falsefalsefalsetruefalse6truefalsefalse167370000167370falsefalsefalsetruefalse7falsefalse
false00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the reporting entity. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, but excludes any and all transactions which are directly or indirectly attributable to that ow
nership interest in subsidiary equity which is not attributable to the parent.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A5
-Appendix A
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 30
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph c(3)
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 8, 9, 10, 11, 12, 13, 14
truefalse11false0us-gaap_StockholdersEquityus-gaaptruecreditinstantNo definition available.falsefalsefalsetruefalsefalsefalsefalsetruefalseperiodendlabelinstant2009-01-03T00:00:000001-01-
01T00:00:001truefalsefalse810000810falsefalsefalsetruefalse2truefalsefalse491080000491080falsefalsefalsetruefalse3truefalsefalse860098000860098falsefalsefalsetruefalse4truefalsefalse-28002000-28002falsefalsefalsetruefalse5truefalsefalse-12977000-12977falsefalsefalsetruefalse6truefalsefalse00falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTotal of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to
the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A3
-Appendix A
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5
falsefalse12false0us-gaap_SharesIssuedus-gaaptruenainstantNo definition available.falsefalsefalsetruefalsefalsefalsefalsetruefalseperiodendlabelinstant2009-01-03T00:00:000001-0
1-01T00:00:001truefalsefalse8104300081043falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalse
truefalse5falsefalsefalse00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseSharesxbrli:sharesItemTypesharesNumber of shares of stock issued as of the balance sheet date, including shares that had been issued and were previously outstanding but which are now held in the treasury.No authoritative reference available.false
IsTotalLabel>false13false0us-gaap_StockIssuedDuringPeriodValueStockOptionsExercisedus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1truefalsefalse1600016falsefalsefalsetruefalse2truefalsefalse2977300029773falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefalse<
DisplayZeroAsNone>false00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryValue stock issued during the period as a result of the exercise of stock options.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5
falsefalse14false0us-gaap_StockIssuedDuringPeriodSharesStockOptionsExercisedus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse15220001522falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefa
lsefalse00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseSharesxbrli:sharesItemTypesharesNumber of shares issued during the period as a result of the exercise of stock options.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30
-Article 5
falsefalse15false0us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValueus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00falsefalsefalsetruefalse2truefalsefalse1578600015786falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse
Cell>5falsefalsefalse00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThis element represents the amount of recognized share-based compensation during the period, that is, the amount recognized as expense in the income statement (or as asset if compensation is capitalized).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 39
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64
-Subparagraph b
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A91
falsefalse16false0us-gaap_AdjustmentsToAdditionalPaidInCapitalTaxEffectFromShareBasedCompensationus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel<
Cell>1falsefalsefalse00falsefalsefalsetruefalse2truefalsefalse2090600020906falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefalsefalse00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetruefalse7<
/Id>falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTax benefit associated with any share-based compensation plan other than an employee stock ownership plan (ESOP). The tax benefit results from the deduction by the entity on its tax return for an award of stock that exceeds the cumulative compensation cost for common stock or preferred stock recognized for financial reporting. Includes any resul
ting tax benefit that exceeds the previously recognized deferred tax asset (excess tax benefits).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 62
falsefalse17false0us-gaap_OtherComprehensiveIncomeLossNetOfTaxPeriodIncreaseDecreaseus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse
3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5<
IsNumeric>truefalsefalse97230009723falsefalsefalsetruefalse6truefalsefalse97230009723falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThis element represents Other Comprehensive Income (Loss), Net of Tax, for the period. Includes deferred gains (losses) on qualifying hedges, unrealized holding gains (losses) on available-for-sale securities, minimum pension liability, and cumulative translation adjustment.Reference 1: http://www.xbrl
.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph c(3)
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 22, 23, 24, 25
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
falsefalse18false0us-gaap_NetIncomeLossus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel1false
falsefalse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3truefalsefalse193465000193465falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefa
lsefalse00falsefalsefalsetruefalse6truefalsefalse193465000193465falsefalsefalsetruefalse7truefalsefalse193465000193465falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe portion of consolidated profit or loss for the period, net of income taxes, which is attributable to the parent. If the entity does not present consolidated financial statements, the amount of profit or loss for the period, net of income taxes.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 19
-Article 5
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph d
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A7
-Appendix A
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph a
Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Paragraph 20
-Article 9
Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 10, 15
Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 87-21
Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 28, 29, 30
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nership interest in subsidiary equity which is not attributable to the parent.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Research Bulletin (ARB)
-Number 51
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Cell>5falsefalsefalse00falsefalsefalsetruefalse6falsefalsefalse00falsefalsefalsetruefalse7falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThis element represents the amount of recognized share-based compensation during the period, that is, the amount recognized as expense in the income statement (or as asset if compensation is capitalized).Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
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/Id>falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTax benefit associated with any share-based compensation plan other than an employee stock ownership plan (ESOP). The tax benefit results from the deduction by the entity on its tax return for an award of stock that exceeds the cumulative compensation cost for common stock or preferred stock recognized for financial reporting. Includes any resul
ting tax benefit that exceeds the previously recognized deferred tax asset (excess tax benefits).Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
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.org/2003/role/presentationRef
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-Name Accounting Research Bulletin (ARB)
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-Name Statement of Financial Accounting Standard (FAS)
-Number 130
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-Name Accounting Principles Board Opinion (APB)
-Number 12
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-Name Regulation S-X (SX)
-Number 210
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-Name Regulation S-X (SX)
-Number 210
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lsefalse00falsefalsefalsetruefalse6truefalsefalse237272000237272falsefalsefalsetruefalse7truefalsefalse237272000237272falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe portion of consolidated profit or loss for the period, net of income taxes, which is attributable to the parent. If the entity does not present consolidated financial statements, the amount of profit or loss for the period, net of income taxes.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 19
-Article 5
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A7
-Appendix A
Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
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-Name Regulation S-X (SX)
-Number 210
-Section 04
-Paragraph 20
-Article 9
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 10, 15
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-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 87-21
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-Name Statement of Financial Accounting Standard (FAS)
-Number 95
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nership interest in subsidiary equity which is not attributable to the parent.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
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-Name Accounting Research Bulletin (ARB)
-Number 51
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-Name Accounting Research Bulletin (ARB)
-Number 51
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-Name Accounting Research Bulletin (ARB)
-Number 51
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-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 20pt"><b>(16) </b>  <b>Related Party Transactions</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 5%">From July 1994 until August 2008 we leased an airplane from PANDI, Inc. (PANDI), a company owned by
Neal L. Patterson and Clifford W. Illig, our Chairman of the Board and CEO and Vice Chairman of the
Board, respectively. During 2009 and 2008 we paid an aggregate of $1.4 million and $0.4 million for
the rental of the airplane, respectively. The airplane was used principally by us for client
development and support and business development activities; and in particular, to reduce business
related travel time of our executives and associates, increase travel flexibility and increase the
number of client visits than would have been possible using solely commercial travel. On August 14,
2008, PANDI sold the airplane to a third party and the lease agreement with us was terminated.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 5%">Following the sale of the airplane, PANDI undertook a complete accounting of the actual financing,
operation, depreciation and maintenance costs of the airplane during the 14 year time period that
we leased the airplane from PANDI. Following the due diligence efforts by a committee comprised of
the independent members of the Board of Directors, during 2009 we were authorized to pay PANDI the
sum of $1.4 million.
</div>
<!-- Folio -->
<!-- /Folio -->
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<div style="font-family: Helvetica,Arial,sans-serif">
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and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Interest expense is due to long-term debt.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.Basis Of Presentation Nature Of Operations And Summary Of Significant Accounting Policies Text Block.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.Sales and client service expenses include salaries of sales and client service personnel, depreciation and other expenses associated with our CernerWorks managed service business, communications expenses, unreimbursed travel expenses, expense for share-based payments, sales and marketing salaries and trade show and advertising costs.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.Services revenue includes professional services excluding installation, and managed services.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.System sales includes revenues from the sale of software, technology resale (hardware and sublicensed software), deployment period licensed software upgrade rights, installation fees, transaction processing and subscriptions.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.No authoritative reference available.XML
34
R21.xml
IDEA: Share Based Compensation and Equity
2.2.0.25falsefalse0214 - Disclosure - Share Based Compensation and Equitytruefalsefalse1falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
USD ($)
USD ($) / shares
$Jan-03-2010_Jan-01-2011http://www.sec.gov/CIK0000804753duration2010-01-03T00:00:002011-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0us-gaap_ShareBasedCompensationAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse3false0us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 14 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 20pt"><b>(14) </b>  <b>Share Based Compensation and Equity</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Stock Option and Equity Plans</i>
As of the end of 2010, we had four fixed stock option and equity plans in effect for associates.
This includes two plans from which we could issue grants, (Plans F & G); and two plans from which
no new
grants were permitted to be issued after January 1, 2005, but some awards remain outstanding,
(Plans D & E).
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Under the 2001 Long-Term Incentive Plan F, we are authorized to grant to associates, directors and
consultants 4.0 million shares of common stock awards. Awards under this plan may consist of stock
options, restricted stock and performance shares, as well as other awards such as stock
appreciation rights, phantom stock and performance unit awards which may be payable in the form of
common stock or cash at our discretion. However, not more than 1.0 million of such shares will be
available for granting any types of grants other than options or stock appreciation rights. Options
under Plan F are exercisable at a price not less than fair market value on the date of grant as
determined by the Section 16 Insider Equity and Incentive Compensation Subcommittee (the
Committee). Options under this plan typically vest over a period of five years as determined by
the Committee and are exercisable for periods of up to 25 years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Under the 2004 Long-Term Incentive Plan G, we are authorized to grant to associates and directors
4.0 million shares of common stock awards. Awards under this plan may consist of stock options,
restricted stock and performance shares, as well as other awards such as stock appreciation rights,
phantom stock and performance unit awards which may be payable in the form of common stock or cash
at our discretion. Options under Plan G are exercisable at a price not less than fair market value
on the date of grant as determined by the Committee. Options under this plan typically vest over a
period of five years as determined by the Committee and are exercisable for periods of up to 12
years. In 2007, Long-Term Incentive Plan G was amended to provide us the ability to recover fringe
benefit tax payments made by us on behalf of our associates in India.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Stock Options</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The fair market value of each stock option award is estimated on the date of grant using a lattice
option-pricing model. The pricing model requires the use of the following estimates and
assumptions:
</div>
<div style="margin-top: 0pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="3%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Expected volatilities under the lattice model are based on an equal weighting of implied
volatilities from traded options on our shares and historical volatility. We use
historical data to estimate the stock option exercise and associate departure behavior used
in the lattice model; groups of associates (executives and non-executives) that have
similar historical behavior are considered separately for valuation purposes.
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="3%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">The expected term of stock options granted is derived from the output of the lattice
model and represents the period of time that stock options granted are expected to be
outstanding; the range given below results from certain groups of associates exhibiting
different post-vesting behaviors.
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="3%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">The risk-free rate is based on the zero-coupon U.S. Treasury bond with a term equal to
the contractual term of the awards.
</div></td>
</tr>
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The weighted-average assumptions used to estimate the fair market value of stock options are as
follows:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="45%"> </td>
<td width="2%"> </td>
<td width="12%"> </td>
<td width="3%"> </td>
<td width="12%"> </td>
<td width="3%"> </td>
<td width="12%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"> </td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<tr style="font-size: 12pt" valign="bottom">
<td nowrap="nowrap" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected volatility (%)
</div></td>
<td> </td>
<td align="center" valign="bottom">39.0    -    41.7</td>
<td> </td>
<td align="center" valign="bottom">45.2    -    51.5</td>
<td> </td>
<td align="center" valign="bottom">45.9    -    52.4</td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="center" valign="bottom"> </td>
<td> </td>
<td align="center" valign="bottom"> </td>
<td> </td>
<td align="center" valign="bottom"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected term (yrs)
</div></td>
<td> </td>
<td align="center" valign="bottom">9.3    -    9.7</td>
<td> </td>
<td align="center" valign="bottom">9.3    -    9.6</td>
<td> </td>
<td align="center" valign="bottom">8.4    -    9.7</td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="center" valign="bottom"> </td>
<td> </td>
<td align="center" valign="bottom"> </td>
<td> </td>
<td align="center" valign="bottom"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Risk-free rate (%)
</div></td>
<td> </td>
<td align="center" valign="bottom">2.9</td>
<td> </td>
<td align="center" valign="bottom">3.8</td>
<td> </td>
<td align="center" valign="bottom">4.4</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">A combined summary of the stock option activity of our four fixed stock option and equity
plans is presented below:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="margin-right: 1%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="99%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="46%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>2010</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted-</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted-</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Average</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Average</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Aggregate</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Remaining</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Number of</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Exercise</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Intrinsic</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Contractual</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left">Options</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Shares</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Price</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Value</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Term</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at beginning of year
</div></td>
<td> </td>
<td> </td>
<td align="right">8,281,924</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">31.30</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">705,495</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">86.48</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Exercised
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,451,077</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">23.93</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Forfeited and Expired
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(160,037</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">44.63</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="1" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at end of year
</div></td>
<td> </td>
<td> </td>
<td align="right">7,376,305</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">37.73</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">420,520,520</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6.19</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="1" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Options exercisable at the end of the year
</div></td>
<td> </td>
<td> </td>
<td align="right">4,785,823</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">26.18</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">328,092,174</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5.21</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 40pt">
<td width="52%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands, except for grant date fair value)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<tr style="font-size: 6pt" valign="bottom">
<td nowrap="nowrap" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted-average grant date fair values
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">44.83</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">27.96</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">22.99</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total intrinsic value of options exercised
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">88,876</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">63,465</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">26,841</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Cash received from exercise of stock options
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">34,724</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">29,789</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15,364</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Tax benefit realized upon exercise of stock options
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">33,802</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">23,654</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">10,001</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt">As of the end of 2010, there was $54.2 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 3.02 years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Non-vested Shares</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Non-vested shares were valued at the fair market value on the date of grant and will vest provided
the recipient has continuously served on the Board of Directors through such vesting date or in the
case of an associate provided that performance measures are attained. The expense associated with
these grants is being recognized over the period from the date of grant to the vesting date.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">On June 1, 2010 we granted approximately 118,000 shares of performance-based non-vested stock to
certain executive officers, pursuant to our Long-Term Incentive Plan F. The fair value of each of
these awards was $81.90 based on the closing price of our common stock on the date of grant. These
awards will vest according to the following schedule, contingent upon a relative adjusted GAAP
earnings growth percentage over 2009 for each respective year and subjective performance criteria
for certain shares, as defined in the award agreements:
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="40%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="20%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="center">Vesting Dates</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Number of Shares</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="center">
<div style="margin-left:15px; text-indent:-15px">June 1, 2011
</div></td>
<td> </td>
<td> </td>
<td align="right">14,000</td>
<td> </td>
</tr>
<tr valign="bottom">
<td align="center">
<div style="margin-left:15px; text-indent:-15px">June 1, 2012
</div></td>
<td> </td>
<td> </td>
<td align="right">15,500</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="center">
<div style="margin-left:15px; text-indent:-15px">June 1, 2013
</div></td>
<td> </td>
<td> </td>
<td align="right">88,500</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td align="center" style="border-top: 1px solid #000000">
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td align="center">
<div style="margin-left:15px; text-indent:-15px"><b>Total Shares</b>
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>118,000</b></td>
<td style="border-bottom: 0px solid #000000"> </td>
</tr>
<tr style="font-size: 1px">
<td align="center" style="border-top: 1px solid #000000">
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt">Subsequent to July 3, 2010, approximately 21% of the total shares related to this award were
forfeited due to the resignation of an executive officer. The amount of compensation expense
recognized is based on management’s estimate of the most likely outcome and will be reassessed at
each reporting date through the final vesting date, which may result in adjustments to compensation
cost. Based on a current period vesting probability assessment,
total compensation cost related to
these awards is $7.6 million, net of forfeitures, and is expected to be recognized over a period of
3 years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">A summary of our non-vested restricted stock compensation arrangements granted under all plans is
presented below:
</div>
<div align="left" style="margin-right: 1%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="99%">
<!-- Begin Table Head -->
<tr style="font-size: 10pt">
<td width="50%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="13%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="13%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>2010</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted-Average</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Grant Date</td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left">Nonvested shares</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Number of Shares</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Fair Value</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at beginning of year
</div></td>
<td> </td>
<td> </td>
<td align="right">13,500</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">56.52</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">136,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">82.17</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Vested
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(13,500</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">56.52</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Forfeited
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(25,000</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">81.90</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at end of year
</div></td>
<td> </td>
<td> </td>
<td align="right">111,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">82.24</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="margin-right: 1%">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="99%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="54%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands, except for grant date fair value)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 8pt" valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted average grant date fair values
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">82.24</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">56.52</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">45.91</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total fair value of shares vested during the year
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,147</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">923</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">797</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt">As of the end of 2010, there was $6.6 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 1.92 years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Associate Stock Purchase Plan</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">We established an Associate Stock Purchase Plan (ASPP) in 2001, which qualifies under Section 423
of the Internal Revenue Code. Each individual employed by us and associates of our United States
based subsidiaries, except as provided below, are eligible to participate in the Plan
(Participants). The following individuals are excluded from participation: (a) persons who, as of
the beginning of a purchase period under the Plan, have been continuously employed by us or our
domestic subsidiaries for less than two weeks; (b) persons who, as of the beginning of a purchase
period, own directly or indirectly, or hold options or rights to acquire under any agreement or
Company plan, an aggregate of 5% or more of the total combined voting power or value of all
outstanding shares of all classes of Company Common Stock; and, (c) persons who are customarily
employed by us for less than 20 hours per week or for less than five months in any calendar year.
Participants may elect to make contributions from 1% to 20% of compensation to the ASPP, subject to
annual limitations determined by the Internal Revenue Service. Participants may purchase Company
Common Stock at a 15% discount on the last business day of the option period. The purchase of our
Common Stock is made through the ASPP on the open market and subsequently reissued to the
associates. The difference of the open market purchase and the participant’s purchase price is
being recognized as compensation expense.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Share Based Compensation Cost</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">Our stock option and non-vested share awards qualify for equity classification. The costs of our
ASPP, along with participant contributions, are recorded as a liability until open market purchases
are completed. The amounts recognized in the consolidated statements of operations with respect to
stock options, non-vested shares and ASPP are as follows:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 10pt">
<td width="54%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>For the Years Ended</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Stock option and non-vested share compensation expense
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">23,723</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15,786</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">14,674</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Associate stock purchase plan expense
</div></td>
<td> </td>
<td> </td>
<td align="right">1,692</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,318</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,310</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Amounts capitalized in software development costs, net of amortization
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(512</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(262</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(840</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Amounts charged against earnings, before income tax benefit
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">24,903</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">16,842</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15,144</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Amount of related income tax benefit recognized in earnings
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">9,329</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6,274</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">5,641</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Treasury Stock</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">As of the end of 2010 and 2009, we held 0.8 million treasury shares carried at cost of $28.0
million.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Preferred Stock</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 5%">As of the end of 2010 and 2009, we had 1.0 million shares of authorized but unissued preferred
stock, $0.01 par value.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDisclosure of compensation-related costs for share-based compensation which may include disclosure of policies, compensation plan details, allocation of stock compensation, incentive distributions, share-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14
falsefalse12Share Based Compensation and EquityUnKnownUnKnownUnKnownUnKnownfalsetrueXML
35
R13.xml
IDEA: Property and Equipment
2.2.0.25falsefalse0206 - Disclosure - Property and Equipmenttruefalsefalse1falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
USD ($)
USD ($) / shares
$Jan-03-2010_Jan-01-2011http://www.sec.gov/CIK0000804753duration2010-01-03T00:00:002011-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0us-gaap_PropertyPlantAndEquipmentAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse3false0us-gaap_PropertyPlantAndEquipmentDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 6 - us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(6)   Property and Equipment</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 1%">A summary of property, equipment and leasehold improvements stated at cost, less accumulated
depreciation and amortization, is as follows:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="37%"> </td>
<td width="2%"> </td>
<td width="2%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="2%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 0px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>  Depreciable Lives (Yrs)  </b></td>
<td style="border-bottom: 0px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 5pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Furniture and fixtures
</div></td>
<td> </td>
<td> </td>
<td align="center">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">12</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">57,763</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">56,631</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Computer and communications equipment
</div></td>
<td> </td>
<td> </td>
<td align="center">2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">660,741</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">585,685</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Leasehold improvements
</div></td>
<td> </td>
<td> </td>
<td align="center">2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">15</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">164,498</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">139,331</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Capital lease equipment
</div></td>
<td> </td>
<td> </td>
<td align="center">3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,914</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">17,147</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Land, buildings and improvements
</div></td>
<td> </td>
<td> </td>
<td align="center">12</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">50</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">195,193</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">204,080</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other equipment
</div></td>
<td> </td>
<td> </td>
<td align="center">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="center">20</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">564</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">964</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,084,673</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,003,838</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 5pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less accumulated depreciation and amortization
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">585,844</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">494,660</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 5pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total property and equipment, net
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">498,829</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">509,178</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 16pt">Depreciation expense for 2010, 2009 and 2008 was $111.4 million, $104.6 million and
$96.7 million, respectively.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDisclosure of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, building and production equipment. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization e
xpense and useful lives, income statement disclosures, assets held for sale and public utility disclosures. This element may be used as a single block of text to include the entire PPE disclosure, including data and tables.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 5
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36
R26.xml
IDEA: Quarterly Results (unaudited)
2.2.0.25falsefalse0219 - Disclosure - Quarterly Results (unaudited)truefalsefalse1falsefalseUSDfalsefalse1/3/2010 - 1/1/2011
USD ($)
USD ($) / shares
$Jan-03-2010_Jan-01-2011http://www.sec.gov/CIK0000804753duration2010-01-03T00:00:002011-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0us-gaap_QuarterlyFinancialDataAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse3false0us-gaap_QuarterlyFinancialInformationTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 19 - us-gaap:QuarterlyFinancialInformationTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 24pt"><b>(19)</b>  <b>Quarterly Results
(unaudited)</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">Selected quarterly financial data for 2010 and 2009 is set forth below:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="8%"> </td>
<td width="2%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="3%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Earnings Before</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Basic Earnings</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Diluted Earnings</b></td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands, except per share data)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Revenues</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Income Taxes</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Net Earnings</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Per Share</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Per Share</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td> </td>
<td colspan="20" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2010 quarterly results:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">First Quarter
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">431,337</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">77,363</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">50,286</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.61</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.59</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Second Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">456,001</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">86,278</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">55,477</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.67</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.65</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Third Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">462,683</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">94,084</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">60,872</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.74</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.71</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Fourth Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">500,201</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">104,487</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">70,637</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.85</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.82</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td colspan="12" align="left" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,850,222</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">362,212</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">237,272</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td colspan="12" align="left" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 18pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2009 quarterly results:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">First Quarter
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">392,322</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">61,863</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">40,830</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.51</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.49</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Second Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">403,806</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">66,223</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">43,745</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.54</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.52</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Third Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">409,415</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">70,887</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">48,394</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.60</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.57</td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Fourth Quarter
</div></td>
<td> </td>
<td> </td>
<td align="right">466,321</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">93,708</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">60,496</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.74</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.71</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td colspan="12" align="left" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,671,864</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">292,681</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">193,465</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td colspan="12" align="left" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
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