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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period from
    
    to   Commission file
    number: 0-28074
  Sapient Corporation
 (Exact name of registrant as
    specified in its charter)
  Delaware

04-3130648(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)25 First Street, Cambridge, MA

02141(Address of principal executive
    offices)

(Zip Code)   617-621-0200
 (Registrants telephone number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.01 per value per share

The Nasdaq Stock Market, LLC.   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      Class

Outstanding at February 22, 2008Common Stock, $0.01 par value per share

126,534,997 shares




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##### 





SAPIENT
    CORPORATION
  ANNUAL REPORT ON
    FORM 10-K
 For the Fiscal Year Ended December 31, 2007
  TABLE OF
    CONTENTS
   
  PageItem 1.


Business


1Item 1A.


Risk Factors


10Item 1B.


Unresolved Staff Comments


17Item 2.


Properties


17Item 3.


Legal Proceedings


17Item 4.


Submission of Matters to a Vote of Security
    Holders


18Item 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


19Item 6.


Selected Financial Data


21Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


22Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


44Item 8.


Financial Statements and Supplementary Data


47Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


93Item 9A.


Controls and Procedures


93Item 10.


Directors, Executive Officers and Corporate
    Governance


95Item 11.


Executive Compensation


97Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


97Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


97Item 14.


Principal Accounting Fees and Services


97Item 15.


Exhibits and Financial Statement Schedules


98Signatures


99Ex-10.19 Amended and Restated Consulting Agreement with Jerry A. GreenbergEx-21 List of SubsidiariesEx-23 Consent of PricewaterhouseCoopers LLPEx-31.1 Section 302 Certification of the C.E.O.Ex-31.2 Section 302 Certification of the C.F.O.Ex-32.1 Section 906 Certification of the C.E.O.Ex-32.2 Section 906 Certification of the C.F.O.    SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K
 i




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PART I
  Item 1.
    Business  General
    (617) 621-0200. http://www.sapient.com.
       1




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Our
    Competitive Advantages
    
    We are driven to make a difference 
    impact.  We are passionate about making a
    difference and fundamentally impacting the manner in which
    companies and industries operate. We help our clients achieve
    success at nearly three times better than the industry average,
    which reflects our passion and commitment to providing superior
    returns for our
    clients.1
    We are committed to our clients
    success.  We define our success by our
    clients success and the value that our clients achieve
    from the services we deliver. We create and sustain business
    innovation for our clients through an unwavering commitment to
    our clients success. We have established, and pride
    ourselves on, a reputation of doing whatever it
    takes to meet our clients objectives. Our client
    feedback reveals that we consistently exceed expectations in key
    areas, including business value derived and overall experience.
    We deliver the right results on-time and
    on-budget.  Our clients value us for delivering
    the right industry expertise and technologies to solve their
    most complex business problems and creating solutions that
    achieve high adoption by end users and substantial business
    value. Throughout our history, we have developed a formidable
    legacy of delivering client solutions on-time and on-budget,
    with the right business results. Our project teams bring a fixed
    price mentality to every engagement. This on-time, on-budget
    legacy helps clients avoid the lost business value that
    frequently occurs as a result of projects never being completed,
    finishing late or over budget, or lacking promised capabilities.
    We offer a unique combination of creativity and
    discipline.  We have accumulated valuable assets
    and expertise that enable us to produce innovative and smart
    solutions for our clients. We continuously challenge ourselves
    and our clients to innovate through breakthrough ideas, and to
    exercise the discipline necessary to implement those ideas
    rapidly and efficiently.    1 Nearly
    three times the industry average
 2




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
    We are great to work with.  Creating and
    maintaining outstanding relationships with our clients is
    fundamental to our success. Our excellent client relationships
    derive from involving clients deeply in the projects and
    solutions we deliver for them, establishing and maintaining a
    high degree of trust, our forthright and direct approach to
    client interactions, our constant focus on doing the right thing
    for the client, and our strength in making the overall
    experience in working with Sapient positive and enriching. In
    fact, from our 2007 client feedback survey results, 98% of our
    clients that responded stated they enjoyed the experience of
    working with us and 97% said they would recommend us to another
    person or organization.  Acquisitions
      ®
  Our
    Services
  Sapient
    Interactive
    
 Interactive
    Marketing & Creative Services
    
    visual concept, design and implementation via multiple
    interactive media;
    brand building and direct response programs; audience
    segmentation and profiling strategies; 3




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
    customer loyalty strategies;
    customer relationship strategy and implementation;
    customer lead generation and management; and
    integrated advertising campaigns.    Web &
    Interactive Development
    Media
    Planning & Buying
    Strategic
    Planning & Marketing Analytics
    Marketing
    Technologies
  ® e-commerce
 4




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Sapient
    Consulting
    Business &
    IT Strategy
    
    Business-process consulting
    E-business &
    web strategy
    IT governance & advisory services
    IT strategy for SAP
    Program management office      Business
    Applications
    
    Business applications
    Customer relationship solutions 5




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
    Custom & package applications
    Enterprise resource planning
    Supply chain solutions
    Web solutions    Business
    Intelligence
      Strategic Assessments & Business Case
    Development.
  Business Intelligence Pilots.
  Business Intelligence Implementation and
    Enhancement. management-business
  SAP Business Intelligence Training.
  Business Intelligence Application
    Outsourcing.
  Outsourcing
    Services
   6




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
    Core Technologies:  Java and Microsoft
    environments, application server platforms and middleware/EAI
    technologies, databases and connectivity to legacy systems
    Platforms and Operating Systems:  Commonly used
    platforms such as UNIX and Microsoft Windows family of operating
    systems, Linux and associated hardware platforms
    Packages and Application Suites:  Capabilities
    and partnerships with top package providers in content lifecycle
    management, enterprise resource planning (ERP), customer
    relationship management (CRM), and supply chain management
    (SCM), in addition to industry-specific, market-leading package
    providers such as SAP and Oracle.  Application Maintenance.
  Application Testing. 24-hour
  Capacity Partnerships.
  Offshore Development Center Setup.
    Alliances
     7




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The
    Sapient Approach
        ®
  Strategic
    Context, People and Culture
       8




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Selling
    and Marketing
    http://www.sapient.com.
    Competition
  and/or
      Intellectual
    Property Rights
     9




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Where to
    Find More Information
  Form 10-K, Form 10-Q, Form 8-K http://www.sapient.com http://www.sec.gov. 1-800-SEC-0330.
  Item 1A.
    Risk
    Factors  Risk
    Factors
    Our
    business, financial condition and results of operations may be
    materially impacted by economic conditions and related
    fluctuations in customer demand for marketing, business,
    technology and other consulting services.
    Our
    market is highly competitive and we may not be able to continue
    to compete effectively.
  and/or
  Our
    international operations and Global Distributed Delivery
    (GDD) model subject us to increased
    risk.
   10




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
    economic recessions in foreign countries;
    fluctuations in currency exchange rates or impositions of
    restrictive currency controls;
    political instability, war or military conflict;
    changes in regulatory requirements;
    complexities and costs in effectively managing multi-national
    operations and associated internal controls and procedures;
    significant changes in immigration policies or difficulties in
    obtaining required immigration approvals for international
    assignments;
    restrictions imposed on the import and export of technologies in
    countries where we operate; and
    reduced protection for intellectual property in some countries.    If we
    do not attract and retain qualified professional staff, we may
    be unable to perform adequately our client engagements and could
    be limited in accepting new client engagements.
    We
    earn revenues, incur costs and maintain cash balances in
    multiple currencies, and currency fluctuations affect our
    financial results.
   11




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Due to
    our current inability to sell certain of our Auction Rate
    Securities, the securities may experience an
    other-than-temporary decline in value, and funds associated with
    the securities may be inaccessible in excess of 12 months,
    resulting in a material adverse impact to our income and results
    of operations.
    We
    have significant fixed operating costs, which may be difficult
    to adjust in response to unanticipated fluctuations in
    revenues.
     12




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
    the contractual terms and timing of completion of projects,
    including achievement of certain business results;
    any delays incurred in connection with projects;
    the adequacy of provisions for losses and bad debts;
    the accuracy of our estimates of resources required to complete
    ongoing projects;
    loss of key highly-skilled personnel necessary to complete
    projects; and
    general economic conditions.  We may
    reduce our profits and/or incur significant unanticipated costs
    if we do not accurately estimate the costs of fixed-price
    engagements.
    Our
    profitability will be adversely impacted if we are unable to
    maintain our pricing and utilization rates as well as control
    our costs.
    We
    partner with third parties on certain complex engagements in
    which our performance depends upon, and may be adversely
    impacted by, the performance of such third
    parties.
    Our
    clients could unexpectedly terminate their contracts for our
    services.
   13




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We may
    be liable to our clients for damages caused by unauthorized
    disclosures of confidential information or by our failure to
    remedy system failures.
    back-up
    Our
    services may infringe the intellectual property rights of third
    parties, and create liability for us as well as harm our
    reputation and client relationships.
    We may
    be unable to protect our proprietary methodology
    Our
    stock price is volatile and may result in substantial losses for
    investors.
    
    quarterly variations in operating results and achievement of key
    business metrics by us or our competitors;
    changes in operating results estimates by securities analysts; 14




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
    any differences between our reported results and securities
    analysts published or unpublished expectations;
    announcements of new contracts or service offerings made by us
    or our competitors;
    announcements of acquisitions or joint ventures made by us or
    our competitors; and
    general economic or stock market conditions.    Our
    former Chairmen and Chief Executive Officers have significant
    voting power and may effectively control the outcome of any
    stockholder vote.
    We are
    dependent on our key employees.
    We may
    be unable to achieve anticipated benefits from acquisitions and
    joint ventures.
    If we
    do not effectively improve our operational and financial
    processes and systems, our ability to achieve efficiencies and
    cost savings may be delayed and our results of operations may be
    adversely impacted.
   15




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The
    failure to successfully and timely implement certain financial
    system changes to improve operating efficiency and enhance our
    reporting controls could harm our business.
    A
    failure to maintain effective internal controls over financial
    reporting could have a material adverse impact on the
    Company.
    We
    face risks related to the restatement of our financial
    statements and the ongoing SEC investigation regarding our
    historical stock-based compensation practices.
  and/or and/or and/or
  Our
    corporate governance provisions may deter a financially
    attractive takeover attempt.
    
    our Board of Directors has the authority, without further action
    by the stockholders, to fix the rights and preferences of and
    issue shares of preferred stock;
    any action that may be taken by stockholders must be taken at an
    annual or special meeting and may not be taken by written
    consent; 16




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
    stockholders must comply with advance notice requirements before
    raising a matter at a meeting of stockholders or nominating a
    director for election; and
    the Chairman of the Board or the Chief Executive Officer are the
    only persons who may call a special meeting of stockholders.    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings  Regulatory
    Proceedings
  and/or and/or
  Private
    Litigation
    Alex Fedoroff, Derivatively on Behalf of Nominal Defendant
    Sapient Corporation v. Jerry A. Greenberg, J. Stuart Moore,
    Susan D. Johnson, et al. Jerry Hamilton,
    Derivatively on Behalf of Nominal Defendant Sapient
    Corporation v. Jerry A. Greenberg, J. Stuart Moore,
    Susan D. Johnson, et al.
 17




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In re Sapient
    Corporation Derivative Litigation. 07-0629 and/or
  Mike Lane, Derivatively on Behalf of Sapient
    Corporation v. J. Stuart Moore, Jerry A. Greenberg, Sheeroy
    D. Desai et al. and Sapient Corporation; Marc Doyle,
    Derivatively on Behalf of Sapient Corporation v. J. Stuart
    Moore, Jerry A. Greenberg, Sheeroy D. Desai, et al. and Sapient
    Corporation; and Laurence Halaska, Derivatively on Behalf of
    Sapient Corporation v. Jerry A. Greenberg, J. Stuart Moore,
    Scott J. Krenz, et al. and Sapient Corporation. In re Sapient
    Corporation Derivative Litigation
    Item 4.
    Submission
    of Matters to a Vote of Security Holders   18




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PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Price of Common Stock
    High


Low2006:First Quarter

$
8.10


$
5.61Second Quarter

$
8.37


$
4.45Third Quarter

$
5.74


$
4.35Fourth Quarter

$
6.01


$
4.962007:First Quarter

$
7.21


$
5.37Second Quarter

$
8.26


$
6.70Third Quarter

$
8.25


$
5.73Fourth Quarter

$
9.12


$
6.20   2
  
     2
 19




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12/31/02



12/31/03



12/31/04



12/31/05



12/31/06



12/31/07Sapient Corporation



100.00




275.12




385.85




277.56




267.80




429.76NASDAQ Composite



100.00




149.34




161.86




166.64




186.18




205.48Dow Jones US Technology



100.00




151.04




153.70




158.79




174.83




202.27GSTI Computer Services Index



100.00




124.15




135.01




141.38




161.96




152.33     (2)
    
    We have included the GSTI in our Stockholder Return Graph for
    2006 and in prior fiscal years. However, in February 2007,
    Standard & Poors acquired the GSTI and modified the
    list of companies that the GSTI comprises. As a result, we have
    selected the DJTI for inclusion in our 2007 Stockholder Return
    Graph, and will cease using the GSTI in future graphs, as we
    believe that the DJTI listed companies provide a better basis
    for comparison than the as-modified GSTI listed companies.      Issuer
    Purchases of Equity Securities
    Maximum NumberTotal Number of


or Dollar Value ofShares or Units


Shares (or Units)Total Number of


Average Price


Purchased as Part


that May Yet BeShares or Units


Paid per


of Publicly


Purchased Under thePurchased


Share or Unit


Announced Programs


Programs(1)October 1  October 31


54,931


$
6.41



7,108,951


$
10,167,976November 1  November 30


41,367



6.42



7,150,318



9,901,806December 1  December 31










7,150,318



9,901,80696,298     (1)
    
    On November 16, 2004, the Companys Board of Directors
    authorized up to $25.0 million in funds for use in the
    Companys common stock repurchase program. On
    February 10, 2006 the Board of Directors authorized an
    additional $25.0 million in funds for use in such programs.
    As of December 31, 2007, $9.9 million remained
    available for purchase under the repurchase program, and is
    available until the funds have been used. 20




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Item 6.
    Selected
    Financial Data  SELECTED
    CONSOLIDATED FINANCIAL DATA
    Year Ended December 31,2007


2006


2005


2004


2003(In thousands, except per share amounts)Statement of Operations Data(1):Revenues:Service revenues

$
546,438


$
405,582


$
313,556


$
248,154


$
180,671Reimbursable expenses


19,551



16,061



13,542



12,100



9,574Total gross revenues


565,989



421,643



327,098



260,254



190,245Operating expenses:Project personnel expenses


372,363



270,213



187,082



134,994



109,161Reimbursable expenses


19,551



16,061



13,542



12,100



9,574Total project personnel expenses and reimbursable expenses


391,914



286,274



200,624



147,094



118,735Selling and marketing expenses


33,113



24,025



13,718



13,926



18,190General and administrative expenses


120,617



109,022



84,725



67,179



56,227Restructuring and other related charges


32



1,912



6,374



1,546



2,141Amortization of intangible assets


2,038



3,564



1,104



515



1,772Total operating expenses


547,714



424,797



306,545



230,260



197,065Income (loss) from operations


18,275



(3,154
)


20,553



29,994



(6,820
)Other income, net


422



1,929



92



65



2,729Interest income, net


5,478



4,238



4,181



3,011



2,016Income (loss) from continuing operations before income taxes,
    discontinued operations and cumulative effect of accounting
    change


24,175



3,013



24,826



33,070



(2,075
)Provision for (benefit from) income taxes:Provision for income taxes


8,959



4,432



3,677



3,068



1,337Benefit from release of valuation allowance










(4,289
)


(635
)


Provision for (benefit from) income taxes


8,959



4,432



(612
)


2,433



1,337Income (loss) from continuing operations before discontinued,
    operations and cumulative effect of accounting change


15,216



(1,419
)


25,438



30,637



(3,412
)(Loss) income from discontinued operations






(433
)


961



665



(1,089
)Gain on disposal of discontinued operations (net of tax
    provision of $342)






4,834











Income (loss) before cumulative effect of accounting change


15,216



2,982



26,399



31,302



(4,501
)Cumulative effect of accounting change






154











Net income (loss)

$
15,216


$
3,136


$
26,399


$
31,302


$
(4,501
)Basic income (loss) per share from continuing operations

$
0.12


$
(0.01
)

$
0.20


$
0.25


$
(0.03
)Diluted income (loss) per share from continuing operations

$
0.12


$
(0.01
)

$
0.20


$
0.24


$
(0.03
)Basic net income (loss) per share

$
0.12


$
0.03


$
0.21


$
0.25


$
(0.04
)Diluted net income (loss) per share

$
0.12


$
0.03


$
0.20


$
0.24


$
(0.04
)Weighted average common shares


124,180



123,692



124,725



123,040



121,188Weighted average dilutive common share equivalents


3,711







5,034



5,591



Weighted average common shares and dilutive common share
    equivalents


127,891



123,692



129,759



128,631



121,188   21




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Year Ended December 31,2007


2006


2005


2004


2003Balance Sheet Data:Working capital

$
189,201


$
148,899


$
179,528


$
116,830


$
131,064Total assets


407,604



342,064



286,051



269,331



226,549Redeemable common stock


290



480



671







Total stockholders equity(2)

$
260,559


$
214,497


$
201,420


$
183,724


$
139,335     (1)
    
    We sold our HWT, Inc. (HWT) unit in May 2006. As a
    result, operating results of this subsidiary for all prior
    periods presented have been reclassified into the caption
    (Loss) income from discontinued operations.(2)
    
    We have never declared or paid any cash dividends.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
           22




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Summary
    of Critical Accounting Policies; Significant Judgments and
    Estimates
      
    Revenue Recognition.  We recognize revenue from
    the provision of professional services, digital marketing
    services and offline printing and production services
    arrangements with our clients when persuasive evidence of an
    arrangement exists, services or product have been provided to
    the customer, the fee is fixed or determinable and
    collectibility is reasonably assured. In instances where the
    customer, at its discretion, has the right to reject the
    services or product prior to final acceptance, revenue is
    deferred until such acceptance occurs.  81-1, Accounting for Performance of
 23




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Construction Type and Certain Production Type Contracts. Revenue Recognition in Financial
    Statements Revenue Recognition time-and-materials time-and-materials time-and-materials
    No. 00-21, Revenue Arrangements with Multiple Deliverables No. 00-21).
  No. 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent 99-19)
     24




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arrangement-by-arrangement
  
    Allowance for Doubtful Accounts.  We recognize
    revenue for services when collection from the client is
    reasonably assured, and our fees are fixed or determinable. We
    establish billing terms at the time project deliverables and
    milestones are agreed. Our normal payment terms are thirty days
    from invoice date. Revenues recognized in excess of the amounts
    invoiced to clients are classified as unbilled revenues. Amounts
    invoiced to clients in excess of revenue recognized are
    classified as deferred revenues. Our project delivery and
    business unit finance personnel continually monitor timely
    payments from our clients and assess any collection issues. We
    maintain allowances for doubtful accounts for estimated losses
    resulting from the inability of our clients to make required
    payments. We base our estimates on our historical collection and
    write-off experience, current trends, credit policy, detailed
    analysis of specific client situations and percentage of our
    accounts receivable by aging category. While such credit losses
    have historically been within our expectations and the
    allowances we established, we cannot guarantee that we will
    continue to experience the same credit loss rates that we have
    in the past. If the financial condition of our clients were to
    deteriorate, resulting in an impairment of their ability to make
    payment, additional allowances may be required. Our failure to
    accurately estimate the losses for doubtful accounts and ensure
    that payments are received on a timely basis could have a
    material adverse effect on our business, financial condition and
    results of operations.
    Valuation and impairment of investments
    and/or
    marketable securities.  The fair value of our
    investments
    and/or
    marketable securities is generally determined from quoted market
    prices received from pricing services based upon market
    transactions at fair value. We also have investments in auction
    rate securities collateralized by student loans and municipal
    debt. The Companys auction rate securities are recorded at
    cost, which approximates fair market value due to their variable
    interest rates, which typically reset through an auction process
    every seven to thirty-five days. This auction mechanism
    generally allows existing investors to roll over their holdings
    and continue to own their securities or liquidate their holdings
    by selling their securities at par value. Because of these short
    intervals between interest reset dates, we monitor the auctions
    to ensure they are successful, which provides evidence that
    these investments that are carried at par value approximates
    their fair value. To the extent an auction were to fail and the
    securities were not liquid, we would need to seek other
    alternatives to determine the fair value of these securities,
    which may not be based on quoted market transactions. We did not
    need to seek alternative methods of valuation for our auction
    rate securities held as of December 31, 2007, as all of our
    auction rate securities had successful auctions up to
    December 31, 2007 as well as in January 2008.  Investments
    and/or
    marketable securities are considered to be impaired when a
    decline in fair value below cost basis is determined to be other
    than temporary. In the event that the cost basis of a security
    exceeds its fair value, we evaluate, among other factors: the
    duration of the period that, and extent to which, the fair value
    is less than cost basis, the financial health of the business
    outlook for the issuer, including industry and sector
    performance, and operational and financing cash flow factors,
    overall market conditions and trends, and our intent and ability
    to hold the investment. Once a decline in fair value is
    determined to be other than temporary, a write-down is recorded
    through earnings. Assessing the above factors involves inherent
    uncertainty. Accordingly, write-downs, if recorded, could be
    materially different from the actual market performance of
    investments
    and/or
    marketable securities in our portfolio, if, among other things,
    relevant information related to our investments
    and/or
    marketable securities was not publicly available or other
    factors not considered by us would have been relevant to the
    determination of impairment. 25




---



##### Table of Contents




    Stock-Based Compensation Expense.  Effective
    January 1, 2006, we adopted the fair value recognition
    provisions of Statement of Financial Accounting Standards
    (SFAS) No. 123R, using the modified prospective
    transition method, and therefore have not restated prior
    periods results for the implementation of
    SFAS No. 123R. Under this method, we recognize
    compensation expense for all share-based payments granted after
    January 1, 2006 and the portion of awards granted prior to
    January 1, 2006 but not yet vested as of January 1,
    2006, in accordance with SFAS No. 123R. Under the fair
    value recognition provisions of SFAS No. 123R, we
    recognize stock-based compensation net of an estimated
    forfeiture rate and only recognize compensation cost for those
    shares expected to vest on a straight-line basis over the
    requisite service period of the award. Prior to SFAS No.
    123Rs adoption, we accounted for share-based payments
    under APB No. 25 and accordingly, generally recognized
    compensation expense related to employee stock options only when
    we granted options with a discounted exercise price.      
    Accounting for Income Taxes.  Statement of
    Financial Accounting Standards No. 109, Accounting for
    Income Taxes, requires the establishment of a valuation
    allowance to reflect the likelihood of realization of deferred
    tax assets. Significant management judgment is required in
    determining our provision for income taxes, our deferred tax
    assets and liabilities and any valuation allowance recorded
    against our net deferred tax assets. We evaluate all available
    evidence, such as recent and expected future operating results
    by tax jurisdiction, current and enacted tax legislation and
    other temporary differences between book and tax accounting, to
    determine whether it is more likely than not that some portion
    or all of the deferred income tax assets will not be realized.
    As a result of operating losses incurred in 2001, 2002 and 2003,
    and uncertainty as to the extent and timing of profitability in
    future periods, we have recorded a valuation allowance of
    approximately $117.4 million as of December 31, 2007
    relating to the deferred tax assets in the United States. Having
    assessed the ability to realize the deferred tax assets in
    certain foreign jurisdictions, we believe that future taxable
    income will be sufficient to realize the deferred tax benefit of
    the deferred tax assets in Canada, the United Kingdom, Germany
    and India. The establishment and amount of the valuation
    allowance requires significant estimates and judgment and can
    materially affect our results of operations. If the realization
    of deferred tax assets in the future is considered more likely
    than not, an adjustment to the deferred tax assets would
    increase net income in the period such determination was made.
    Our effective tax rate may vary from period to period based on
    changes in estimated taxable income or loss in each
    jurisdiction, changes to the valuation allowance, changes to
    federal, state or foreign tax laws, future expansion into areas
    with varying country, state, and local income tax rates,
    deductibility of certain costs and expenses by jurisdiction and
    as a result of acquisitions.  Accounting for Uncertainty
    in Income Taxes Accounting for Income Taxes.
 26




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##### Table of Contents




    Valuation of Long-Lived Assets and Intangible
    Assets.  In accordance with
    SFAS No. 144, Accounting for the Impairment or
    Disposal of Long-Lived Assets,
    (SFAS No. 144) long-lived assets are
    reviewed for impairment on a regular basis for the existence of
    facts and circumstances that may suggest that the carrying
    amount of an asset, or group of assets, may not be recoverable.
    Recoverability of long-lived assets or groups of assets is
    assessed based on a comparison of the carrying amount to the
    estimated undiscounted future cash flows. If estimated future
    undiscounted net cash flows are less than the carrying amount,
    the asset is considered impaired and expense is recorded at an
    amount required to reduce the carrying amount to fair value.
    Determining the fair value of long-lived assets includes
    significant judgment by management, and different judgments
    could yield different results.


    Valuation of Goodwill.  In accordance with
    SFAS No. 142, Goodwill and Other Intangible
    Assets, (SFAS No. 142) requires, among
    other things, the discontinuance of goodwill amortization. The
    standard also includes provisions for the assessment of the
    useful lives of existing recognized intangible assets and the
    identification of reporting units for purposes of assessing
    potential future impairments of goodwill. Factors we consider
    important which could trigger an impairment review include:  
    significant underperformance relative to historical or projected
    future operating results;
    significant changes in the manner of or use of the acquired
    assets or the strategy for our overall business;
    identification of other impaired assets within a reporting unit;
    disposition of a significant portion of an operating segment;
    significant negative industry or economic trends;
    significant decline in our stock price for a sustained
    period; and
    a decline in our market capitalization relative to net book
    value.     27




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##### Table of Contents




    Costs Incurred to Develop Computer Software for Internal
    Use.  We account for costs incurred to develop
    computer software for internal use in accordance with
    SOP 98-1,
    Accounting for the Costs of Computer Software Developed or
    Obtained for Internal Use(SOP 98-1).
    As required by
    SOP 98-1,
    the Company capitalizes the costs incurred during the
    application development stage, which include costs to design the
    software configuration and interfaces, coding, installation and
    testing. Costs incurred for internal use computer software
    during the preliminary project stage and through
    post-implementation stages of internal use computer software are
    expensed as incurred. The capitalization and ongoing assessment
    of recoverability of development cost requires considerable
    judgment by management with respect to certain external factors,
    including, but not limited to, technological and economic
    feasibility, and estimated economic life.    
    Restructuring and Other Related Charges.  We
    established exit plans for each of the restructuring activities
    which took place in 2001 and 2002 and accounted for these plans
    in accordance with EITF Issue No.
    94-3,
    Liability Recognition for Certain Employee Benefits and Other
    Costs to Exit an Activity (including Certain Costs incurred in a
    Restructuring)(EITF
    No. 94-3).
    These exit plans required that we make estimates as to the
    nature, timing and amount of the exit costs that we specifically
    identified. The consolidation of facilities required us to make
    estimates, which included contractual rental commitments or
    lease buy-outs for office space vacated and related costs,
    offset by estimated sub-lease income. We review on a regular
    basis our sub-lease assumptions and lease buy-out assumptions.
    These estimates include lease buy-out costs, anticipated
    sublease rates, other terms and conditions in sub-lease
    contracts, and the timing of these sub-lease arrangements. If
    the rental markets continue to change, our lease buy-out,
    sub-lease and space requirement assumptions may not be accurate
    and it is possible that changes in these estimates could
    materially affect our financial condition and results of
    operations. Our sublease reserve is sensitive to the level of
    sublease rent anticipated and the timing of sublease
    commencement. If the estimated sublease dates were to be delayed
    by six months, based on our current estimates, we would
    potentially have to recognize an additional $200,000 in our
    statement of operations for restructuring and other related
    charges. A 10% reduction in our sublease rate would have
    resulted in an additional $400,000 of charges as of the end of
    2007. If any future adjustments are required to the
    restructuring initiatives recorded under the provisions of EITF
    No. 94-3,
    such adjustments will be measured in accordance with EITF
    No. 94-3.
    SFAS No. 146, Accounting for Costs Associated with Exit
    or Disposal Activities,
    (SFAS No. 146) was effective for exit or
    disposal activities that are initiated after December 31,
    2002. SFAS No. 146 requires that a liability that is
    associated with an exit or disposal activity be recognized when
    the liability is incurred. SFAS No. 146 supersedes the
    guidance in EITF
    No. 94-3.
    SFAS No. 146 includes a rebuttable presumption that if
    an entity has a history of providing similar termination
    benefits to employees, the benefit arrangement is presumed to be
    an ongoing benefit arrangement that should be accounted for
    under SFAS No. 112, Employers Accounting for
    Postemployment Benefits(SFAS No. 112).
    SFAS No. 112 prescribes the accounting for the
    estimated cost of benefits, including severance benefits,
    provided by an employer to former or inactive employees after
    employment but before retirement. A liability is recognized when
    the severance amounts relate to prior services rendered, the
    payment of the amount is probable and the amount can be
    reasonably estimated. Since the second quarter of 2003, we have
    accounted for severance-related restructuring charges in
    accordance with SFAS No. 112 because we have a history
    of paying similar severance benefits since 2001.
    Contingent Liabilities.  We have certain
    contingent liabilities that arise in the ordinary course of our
    business activities. We accrue contingent liabilities when it is
    probable that future expenditures will be made and such
    expenditures can be reasonably estimated. We are subject to
    various legal claims totaling approximately $4.3 million
    and various administrative audits, each of which have arisen in
    the ordinary course of our business. We have an accrual at
    December 31, 2007 of approximately $1.2 million
    related to certain of these items. We intend to defend these
    matters vigorously, although the ultimate outcome of these items
    is uncertain and the potential loss, if any, may be
    significantly higher or lower than the amounts we have
    previously accrued. Further, as noted in Item 3, the
    pending shareholder demand actions do not assert a claim against
    the Company for specific monetary damages and, accordingly, the
    amounts described herein 28




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##### Table of Contents




    Accounting for Acquisitions.  Our accounting
    for acquisitions involves significant judgments and estimates
    primarily, but not limited to: the fair value of certain forms
    of consideration, the fair value of acquired intangible assets,
    which involve projections of future revenues and cash flows, the
    fair value of other acquired assets and assumed liabilities,
    including potential contingencies, and the useful lives and, as
    applicable, the reporting unit, of the assets. The impact of
    prior or future acquisitions on our financial position or
    results of operations may be materially impacted by the change
    in or initial selection of assumptions and estimates.
    Additionally, under SFAS No. 142, we determine the fair
    value of the reporting unit, for purposes of the first step in
    our annual goodwill impairment test based on a discounted future
    cash flows approach. If prior or future acquisitions are not
    accretive to our results of operations as expected, or the fair
    value of a reporting unit declines dramatically, we may be
    required to complete the second step which requires significant
    judgments and estimates and which may result in material
    impairment charges in the period in which they are determined.  Off-Balance
    Sheet Arrangements
      Discontinued
    Operations
    Equity
    Method Investments
   29




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Related
    Party Transactions
     30




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##### Table of Contents



Results
    of Operations
    Year Ended December 31,2007


2006


2005Revenues:Service revenues


100
%


100
%


100
%Reimbursable expenses


4
%


4
%


4
%Total gross revenues


104
%


104
%


104
%Operating expenses:Project personnel expenses


68
%


67
%


60
%Reimbursable expenses


4
%


4
%


4
%Total project personnel expenses and reimbursable expenses


72
%


71
%


64
%Selling and marketing expenses


6
%


6
%


4
%General and administrative expenses


22
%


27
%


27
%Restructuring and other related charges


0
%


0
%


2
%Amortization of intangible assets


0
%


1
%


0
%Total operating expenses (excluding reimbursable expenses)


97
%


101
%


93
%Income (loss) from operations


3
%


(1
)%


7
%Other income, net


0
%


0
%


0
%Interest income


1
%


1
%


1
%Income from continuing operations before income taxes,
    discontinued operations and cumulative effect of accounting
    change


4
%


1
%


8
%Provision for (benefit from) income taxes:Provision for income taxes


2
%


1
%


1
%Benefit from release of valuation allowance


0
%


0
%


(1
)%Provision for (benefit from) income taxes


2
%


1
%


(0
)%Income from continuing operations before discontinued operations
    and cumulative effect of accounting change


3
%


0
%


8
%(Loss) income from discontinued operations


0
%


0
%


0
%Gain on disposal of discontinued operations (net of tax
    provision of $342)


0
%


1
%


0
%Income before cumulative effect of accounting change


3
%


1
%


8
%Cumulative effect of accounting change


0
%


0
%


0
%Net income


3
%


1
%


8
%   Years
    Ended December 31, 2007 and 2006
  Service
    Revenues
    Year EndedDecember 31,


December 31,





Percentage2007


2006


Increase


Increase(In thousands, except percentages)Service revenues

$
546,438


$
405,582


$
140,856



35
%  31




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##### Table of Contents



year-over-year year-over-year
    Project
    Personnel Expenses
    Year EndedDecember 31,


December 31,





Percentage2007


2006


Increase


Increase(In thousands, except percentages)Project personnel expenses

$
372,363


$
270,213


$
102,150



38
%Project personnel expenses as a percentage of service revenues


68
%


67
%


1
%     Selling
    and Marketing Expenses
    Year EndedDecember 31,


December 31,





Percentage2007


2006


Increase


Increase(In thousands, except percentages)Selling and marketing expenses

$
33,113


$
24,025


$
9,088



38
%Selling and marketing expenses as a percentage of service
    revenues


6
%


6
%


    32




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##### Table of Contents



General
    and Administrative Expenses
    Year EndedDecember 31,


December 31,





Percentage2007


2006


Increase/(Decrease)


Increase(In thousands, except percentages)General and administrative expenses

$
120,617


$
109,022


$
11,595



11
%General and administrative expenses as a percentage of service
    revenues


22
%


27
%


(5
)%       Restructuring
    and Other Related Charges
  2006 
    Restructure Event
  Employers Accounting
    for Postemployment Benefits ,
    Accounting for Cost Associated with Exit or Disposal Activities.
  Workforce(In thousands)2006 Provision

$
572Cash Utilized


(572
)Balance, December 31, 2006

$
  33




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##### Table of Contents



2005 
    Restructure Event
  Accounting for Costs Associated with Exit or Disposal
    Activities.
  Workforce(In thousands)2005 Provision

$
300Balance at December 31, 2005

$
3002006 provision


430Cash Utilized


(505
)Balance at December 31, 2006

$
225Cash Utilized


(225
)Balance at December 31, 2007

$
   2001,
    2002 and 2003  Restructure Events
      34




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##### Table of Contents



Workforce


Facilities


Total(In thousands)Balance at December 31, 2004

$
11


$
26,122


$
26,1332005 (reversals) provision


(11
)


6,074



6,063Cash Utilized






(9,421
)


(9,421
)Non-cash Utilized






(1,500
)


(1,500
)Balance at December 31, 2005

$



$
21,275


$
21,2752006 provision

$



$
910


$
910Cash Utilized






(6,630
)


(6,630
)Non-cash Utilized






(172
)


(172
)Balance at December 31, 2006

$



$
15,383


$
15,3832007 provision

$



$
32


$
32Cash Utilized






(3,867
)


(3,867
)Non-cash Utilized






(275
)


(275
)Balance at December 31, 2007

$



$
11,273


$
11,273   12-month
  sub-tenant
  Amortization
    of Intangible Assets
    Interest
    and Other Income
    Year EndedDecember 31,

December 31,



Percentage2007

2006

Decrease

Decrease(In thousands, except percentages)Interest and other income

$
5,900


$
6,167


$
(267
)


(4
)%    35




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##### Table of Contents



Provision
    for (Benefit from) Income Taxes
  Accounting for Income
    Taxes
    Results
    by Operating Segment
        36




---



##### Table of Contents



Service Revenues

2007


2006(In thousands)North America

$
357,084


$
282,989Government Services


23,151



15,952Europe


166,203



106,641Total Service Revenues

$
546,438


$
405,582   2007


2006(In thousands)Income From Continuing Operations before Income Taxes,
    Discontinued Operations and Cumulative Effect of Accounting
    ChangeNorth America(1)

$
83,574


$
74,433Government Services(1)


5,887



2,993Europe(1)


45,339



28,965Total Reportable Segments(1)


134,800



106,391Less Reconciling Items(2)


(110,625
)


(103,378
)Consolidated Income from Continuing Operations before Income
    Taxes, Discontinued Operations and Cumulative Effect of
    Accounting Change

$
24,175


$
3,013     (1)
    
    Reflects only the direct controllable expenses of each business
    unit segment. It does not represent the total operating results
    for each business unit segment as it does not contain an
    allocation of certain corporate and general and administrative
    expenses incurred in support of the business unit segments.(2)
    
    Adjustments that are made to the total of the segments
    operating income in order to arrive at consolidated income from
    continuing operations before income taxes, discontinued
    operations and cumulative effect of accounting change include
    the following:  2007


2006(In thousands)Centrally managed functions

$
87,887


$
77,461Restructuring and other related charges


32



1,340Amortization of intangible assets


2,038



3,564Stock-based compensation expense


17,996



12,410Interest and other income, net


(5,900
)


(6,167
)Unallocated expenses(3)


8,572



14,770$
110,625


$
103,378   (3)
    
    Includes corporate portion of both selling and marketing and
    general and administrative expenses.  Service
    Revenues by Operating Segments
   37




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##### Table of Contents



Operating
    Income by Operating Segments
    Years
    Ended December 31, 2006 and 2005
  Service
    Revenues
    Year EndedDecember 31,

December 31,



Percentage2006

2005

Increase

Increase(In thousands, except percentages)Service revenues

$
405,582


$
313,556


$
92,026



29
%   year-over-year year-over-year
    Project
    Personnel Expenses
  Year EndedDecember 31,

December 31,



Percentage2006

2005

Increase

Increase(In thousands, except percentages)Project personnel expenses

$
270,213


$
187,082


$
83,131



44
%Project personnel expenses as a percentage of service revenues


67
%


60
%


7
%    38




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##### Table of Contents



Selling
    and Marketing Expenses
  Year EndedDecember 31,

December 31,



Percentage2006

2005

Decrease

Decrease(In thousands, except percentages)Selling and marketing expenses

$
24,025


$
13,718


$
10,307



75
%Selling and marketing expenses as a percentage of service
    revenues


6
%


4
%


2
%   year-over-year
  General
    and Administrative Expenses
  Year EndedDecember 31,

December 31,



Percentage2006

2005

Increase

Increase(In thousands, except percentages)General and administrative expenses

$
109,022


$
84,725


$
24,297



29
%General and administrative expenses as a percentage of service
    revenues


27
%


27
%


       Amortization
    of Intangible Assets
   39




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##### Table of Contents



Interest
    and Other Income
    Year EndedDecember 31,

December 31,



Percentage2006

2005

Increase

Increase(In thousands, except percentages)Interest and other income

$
6,167


$
4,273


$
1,894



44
%     Provision
    for (Benefit from) Income Taxes
  Accounting for Income Taxes
    Results
    by Operating Segment
     40




---



##### Table of Contents



2006


2005(In thousands)Service RevenuesNorth America

$
282,989


$
194,372Government Services


15,952



24,558Europe


106,641



94,626Total Service Revenues

$
405,582


$
313,556   2006


2005(In thousands)Income From Continuing Operations before Income Taxes,
    Discontinued Operations and Cumulative Effect of Accounting
    ChangeNorth America(1)

$
74,433


$
71,840Government Services(1)


2,993



11,404Europe(1)


28,965



28,810Total Reportable Segments(1)


106,391



112,054Less Reconciling Items(2)


(103,378
)


(87,228
)Consolidated Income from Continuing Operations beforeIncome Taxes, Discontinued Operations and Cumulative Effect of
    Accounting Change

$
3,013


$
24,826     (1)
    
    Reflects only the direct controllable expenses of each business
    unit segment. It does not represent the total operating results
    for each business unit segment, as it does not contain an
    allocation of certain corporate and general and administrative
    expenses incurred in support of the business unit segments.(2)
    
    Adjustments that are made to the total of the segments
    operating income in order to arrive at consolidated income from
    continuing operations before income taxes, discontinued
    operations and cumulative effect of accounting change include
    the following:  2006


2005(In thousands)Centrally managed functions

$
77,461


$
79,564Restructuring and other related charges


1,340



6,374Amortization of intangible assets


3,564



1,104Stock-based compensation expense


12,410



2,058Interest and other income, net


(6,167
)


(4,273
)Unallocated expenses(3)


14,770



2,401$
103,378


$
87,228   (3)
    
    Includes corporate portion of both selling and marketing and
    general and administrative expenses. 41




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##### Table of Contents



Service
    Revenues by Operating Segments
    Operating
    Income by Operating Segments
    Liquidity
    and Capital Resources
        Payments Due By PeriodLess Than


1 - 3


3 - 5


More ThanOne Year


Years


Years


5 Years


Total(In thousands)Operating leases

$
10,500


$
14,432


$
5,657


$
3,834


$
34,423Cash outlays for restructuring and other related activities(1)


3,054



3,009



2,725



2,252



11,040Purchase obligations(2)


935



305











1,240Uncertain tax provisions






4,848











4,848Total

$
14,489


$
22,594


$
8,382


$
6,086


$
51,551     (1)
    
    Cash outlays for restructuring and other related activities
    include minimum future lease and related payments for excess
    facilities, net of estimated sublease income of
    $13.7 million under existing arrangements, excluding
    expected sublease arrangements of approximately
    $1.1 million.(2)
    
    Purchase obligations represent minimum commitments due to third
    parties, including subcontractor agreements, telecommunication
    contracts, IT maintenance contracts in support of internal use
    software and hardware and other marketing and consulting
    contracts. Contracts for which our commitment is variable based
    on volumes, with no fixed minimum quantities, and contracts that
    can be cancelled without payment penalties, have been excluded.
    Amounts presented also exclude accounts payable and accrued
    expenses at December 31, 2007.   42




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##### Table of Contents



New
    Accounting Pronouncements
  Fair Value Measurement
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115
 43




---



##### Table of Contents



available-for-sale held-to-maturity Accounting for Certain Investments in
    Debt and Equity Securities.
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of Accounting Research
    Bulletin
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Accounting for Investments in Debt
    and Equity Securities
     44




---



##### Table of Contents



Exchange
    Rate Sensitivity
     45




---



##### Table of Contents



46




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  SAPIENT
    CORPORATION
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Report of Independent Registered Public
    Accounting Firm


48Consolidated Balance Sheets


49Consolidated Statements of Operations


50Consolidated Statements of Changes in
    Stockholders Equity


51Consolidated Statements of Cash Flows


52Notes to Consolidated Financial Statements


53Financial Statement Schedule:Schedule II  Valuation and
    Qualifying Accounts and Reserves


92  47




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm     Internal Control 
    Integrated Framework
            48




---



##### Table of Contents



SAPIENT
    CORPORATION



CONSOLIDATED
    BALANCE SHEETS  December 31,


December 31,2007


2006(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
118,697


$
75,022Marketable securities


57,667



51,859Restricted cash, current portion


458



551Accounts receivable, less allowance for doubtful accounts of
    $956 and $2,573 at December 31, 2007 and 2006, respectively


82,413



75,402Unbilled revenues


33,403



34,201Deferred tax assets, current portion


1,557



815Prepaid expenses


8,054



5,955Other current assets


13,109



13,795Total current assets


315,358



257,600Restricted cash, net of current portion


1,294



1,338Property and equipment, net


34,914



27,623Purchased intangible assets, net


5,512



7,550Goodwill


40,544



38,929Deferred tax assets, net of current portion


5,164



5,085Other assets


4,818



3,939Total assets

$
407,604


$
342,064LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS
    EQUITYCurrent liabilities:Accounts payable

$
7,264


$
9,818Accrued expenses


46,298



42,147Accrued compensation


54,203



33,077Accrued restructuring costs, current portion


3,584



3,867Income taxes payable


1,107



4,921Deferred revenues, current portion


13,701



14,871Total current liabilities


126,157



108,701Accrued restructuring costs, net of current portion


7,689



11,741Deferred revenues, net of current portion


577



865Other long-term liabilities


12,332



5,780Total liabilities


146,755



127,087Commitments and contingencies (Note 14)Redeemable common stock, par value $0.01 per share, 134,995 and
    224,469 issuedand outstanding at December 31, 2007 and 2006, respectively


290



480Stockholders equity:Preferred stock, par value $0.01 per share, 5,000,000 authorized
    and none issued at December 31, 2007 and 2006






Common stock, par value $0.01 per share, 200,000,000 shares
    authorized, 131,785,458 shares issued at December 31,
    2007 and 2006


1,318



1,318Additional paid-in capital


564,878



547,369Treasury stock, at cost, 6,072,232 and 8,489,614 shares at
    December 31, 2007 and 2006, respectively


(24,240
)


(30,673
)Accumulated other comprehensive income


12,686



5,782Accumulated deficit


(294,083
)


(309,299
)Total stockholders equity


260,559



214,497Total liabilities, redeemable common stock and
    stockholders equity

$
407,604


$
342,064    49




---



##### Table of Contents



SAPIENT
    CORPORATION



CONSOLIDATED
    STATEMENTS OF OPERATIONS   Year Ended December 31,2007


2006


2005(In thousands, except per share amounts)Revenues:Service revenues

$
546,438


$
405,582


$
313,556Reimbursable expenses


19,551



16,061



13,542Total gross revenues


565,989



421,643



327,098Operating expenses:Project personnel expenses


372,363



270,213



187,082Reimbursable expenses


19,551



16,061



13,542Total project personnel expenses and reimbursable expenses


391,914



286,274



200,624Selling and marketing expenses


33,113



24,025



13,718General and administrative expenses


120,617



109,022



84,725Restructuring and other related charges


32



1,912



6,374Amortization of intangible assets


2,038



3,564



1,104Total operating expenses


547,714



424,797



306,545Income (loss) from operations


18,275



(3,154
)


20,553Other income, net


422



1,929



92Interest income, net


5,478



4,238



4,181Income from continuing operations before income taxes,
    discontinuedoperations and cumulative effect of accounting change


24,175



3,013



24,826Provision for (benefit from) income taxes:Provision for income taxes


8,959



4,432



3,677Benefit from release of valuation allowance










(4,289
)Provision for (benefit from) income taxes


8,959



4,432



(612
)Income (loss) from continuing operations before discontinuedoperations and cumulative effect of accounting change


15,216



(1,419
)


25,438(Loss) income from discontinued operations






(433
)


961Gain on disposal of discontinued operations (net of tax
    provision of $342)






4,834



Income before cumulative effect of accounting change


15,216



2,982



26,399Cumulative effect of accounting change






154



Net income

$
15,216


$
3,136


$
26,399Basic income (loss) per share from continuing operations

$
0.12


$
(0.01
)

$
0.20Diluted income (loss) per share from continuing operations

$
0.12


$
(0.01
)

$
0.20Basic net income per share

$
0.12


$
0.03


$
0.21Diluted net income per share

$
0.12


$
0.03


$
0.20Weighted average common shares


124,180



123,692



124,725Weighted average dilutive common share equivalents


3,711







5,034Weighted average common shares and dilutive common share
    equivalents


127,891



123,692



129,759    50




---



##### Table of Contents






SAPIENT
    CORPORATION



CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY  AccumulatedAdditional














Other





TotalCommon Stock


Paid-


Treasury Stock


Deferred


Comprehensive


Comprehensive


Accumulated


StockholdersShares


Amount


In Capital


Shares


Amount


Compensation


Income


Income


Deficit


Equity(In thousands)Balance at December 31, 2004


130,478


$
1,304


$
525,293



(6,218
)

$
(7,251
)


(875
)





$
4,087


$
(338,834
)

$
183,724Shares issued under stock option and purchase plans










4,107



1,813



3,064



















7,171Issuance of restricted stock units, net










10,994







2,546



(13,540
)














Vesting of restricted stock, net










(301
)


54



20



281















Repurchase of common stock














(3,010
)


(17,594
)


















(17,594
)Stock-based compensation expense










(152
)










2,207















2,055Tax benefits from employee stock plans










62



























62Issuance of common stock and redeemable common stock in
    connection with acquisition










2,025



409



614



















2,639Comprehensive income:Net income


























26,399







26,399



26,399Other comprehensive income:Currency translation adjustments


























(3,261
)


(3,261
)






(3,261
)Net unrealized gain on investments


























225



225







225Total comprehensive income

























$
23,363











Balance at December 31, 2005


130,478


$
1,304


$
542,028



(6,952
)

$
(18,601
)

$
(11,927
)





$
1,051


$
(312,435
)

$
201,420Elimination of deferred compensation upon adoption of
    SFAS No. 123R










(11,927
)










11,927















Cumulative effect of accounting change upon adoption of
    SFAS No. 123R










(154
)


























(154
)Shares issued under stock option and purchase plans










446



1,610



5,060



















5,506Stock-based compensation expense










10,723



288



977



















11,700Repurchase of common stock














(3,436
)


(18,109
)


















(18,109
)Tax benefits from stock plans










220



























220Issuance of common stock in connection withacquisition


1,307



14



5,842



























5,856Reclassification of redeemable common stock (See Note 3)










191



























191Comprehensive income:Net income


























3,136







3,136



3,136Other comprehensive income:Currency translation adjustments


























4,266



4,266







4,266Net unrealized gain on investments


























465



465







465Total comprehensive income

























$
7,867











Balance at December 31, 2006


131,785


$
1,318


$
547,369



(8,490
)

$
(30,673
)

$







$
5,782


$
(309,299
)

$
214,497Shares issued under stock option and purchase plans










2,134



2,565



8,934



















11,068Vesting of restricted stock, net










(3,216
)


555



1,894



















(1,322
)Stock-based compensation expense










17,996



























17,996Repurchase of common stock














(702
)


(4,395
)


















(4,395
)Reclassification of redeemable common stock (See Note 3)










190



























190Tax benefit from employee stock option plans










405



























405Comprehensive income:Net income


























15,216







15,216



15,216Other comprehensive income:Currency translation adjustments


























6,882



6,882







6,882Net unrealized gain on investments


























22



22







22Total comprehensive income

























$
22,120











Balance at December 31, 2007


131,785


$
1,318


$
564,878



(6,072
)

$
(24,240
)

$







$
12,686


$
(294,083
)

$
260,559    51




---



##### Table of Contents





SAPIENT
    CORPORATION



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,2007


2006


2005(In thousands)Cash flows from operating activities:Net income

$
15,216


$
3,136


$
26,399Adjustments to reconcile net income to net cash provided by
    operating activities:Loss recognized on disposition of fixed assets


72



128



235Unrealized gain on hedge positions


(11
)






Depreciation expense


15,300



10,016



6,398Amortization of purchased intangible assets


2,038



3,564



1,104Deferred income taxes


782



508



236Income tax benefit from release of valuation allowance










(4,289
)(Recovery of) provision for allowance for doubtful accounts, net


(1,426
)


1,776



(733
)Tax benefits from employee stock option plans










62Stock-based compensation expense


17,996



12,410



2,058Non-cash restructuring costs










130Gain on disposal of discontinued operations






(4,834
)


Cumulative effect of accounting change






(154
)


Changes in operating assets and liabilities, net of acquisitions
    and disposition:Accounts receivable


(3,676
)


(6,993
)


(8,594
)Unbilled revenues


1,726



(16,075
)


(947
)Prepaid expenses


(1,823
)


1,473



(1,521
)Other current assets


776



(8,835
)


178Other assets


(499
)


(3,172
)


34Accounts payable


(3,342
)


122



(724
)Accrued expenses


2,064



20,733



(629
)Accrued compensation


18,180



5,896



7,086Accrued restructuring costs


(4,572
)


(5,724
)


(3,139
)Income taxes payable


(3,802
)


646



130Deferred revenues


(1,922
)


2,680



(2,118
)Other long-term liabilities


5,124



899



1,024Net cash provided by operating activities


58,201



18,200



22,380Cash flows from investing activities:Cash paid for acquisitions, including transaction costs, net of
    cash received


(883
)


(27,655
)


(13,334
)Cash received for sale of discontinued operations, net, and
    payment tominority stockholders


436



5,276



Purchases of property and equipment and cost of internally
    developed software


(20,361
)


(14,333
)


(14,473
)Sales and maturities of marketable securities


103,637



151,511



63,559Purchases of marketable securities


(109,423
)


(116,451
)


(47,435
)Restricted cash


360



(223
)


4,844Net cash used in investing activities


(26,234
)


(1,875
)


(6,839
)Cash flows from financing activities:Principal payments under capital lease obligations


(106
)


(135
)


Tax benefit on employee stock option plans


182







Proceeds from stock option and purchase plans


11,068



5,506



7,171Repurchases of common stock


(4,395
)


(18,109
)


(17,594
)Net cash provided by(used in) financing activities


6,749



(12,738
)


(10,423
)Effect of exchange rate changes on cash and cash equivalents


4,959



1,487



(1,949
)Increase in cash and cash equivalents


43,675



5,074



3,169Cash and cash equivalents, at beginning of year


75,022



69,948



66,779Cash and cash equivalents, at end of year

$
118,697


$
75,022


$
69,948    52




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  (1)
    Nature of
    Business    (2)
    Summary
    of Significant Accounting Policies  (a)
    Principles
    of Consolidation and Basis of Presentation      (b)
    Use of
    Estimates  other-than-temporary,
  (c)
    Foreign
    Currency Translation and Transactions  non-U.S. subsidiaries,
 53




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  non-U.S. subsidiaries,
    (d)
    Cash
    and Cash Equivalents    (e)
    Marketable
    Securities  available-for-sale, available-for-sale available-for-sale other-than-temporary.
    and/or
   54




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (f)
    Financial
    Instruments and Concentration of Credit Risk        (g)
    Derivative
    Financial Instruments        (h)
    Property
    and Equipment   55




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (i)
    Costs
    Incurred to Develop Computer Software for Internal
    Use  98-1, Accounting for the Costs of Computer Software Developed or
    Obtained for Internal Use (SOP 98-1). SOP 98-1,
    (j)
    Costs
    Incurred to Sell, Lease, or Otherwise Market Computer
    Software  Accounting for the
    Costs of Computer Software to be Sold, Leased, or Otherwise
    Marketed
  (k)
    Goodwill
    and Purchased Intangible Assets  Goodwill and Other
    Intangible Assets
  
    significant underperformance relative to historical or projected
    future operating results; 56




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    significant changes in the manner of or use of the acquired
    assets or the strategy for our overall business;
    identification of other impaired assets within a reporting unit;
    disposition of a significant portion of an operating segment;
    significant negative industry or economic trends;
    significant decline in our stock price for a sustained
    period; and
    a decline in our market capitalization relative to net book
    value.      (l)
    Valuation
    of Long-lived Assets    (m)
    Revenue
    Recognition and Allowance for Doubtful Accounts    percentage-of-completion SOP 81-1, Accounting for Performance of Construction Type and Certain
    Production Type Contracts. Revenue
    Recognition in Financial Statements Revenue Recognition percentage-of-completion time-and-material
 57




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      No. 00-21 No. 00-21), Revenue Arrangements with Multiple Deliverables.
  No. 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent No. 99-19)
    arrangement-by-arrangement
 58




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (n)
    Stock-Based
    Compensation  Share-Based Payment Accounting for
    Stock-Based Compensation
  Accounting for Stock-Based Compensation 
    Transition and Disclosure
  Accounting for Stock Issued to Employees paid-in-capital
 59




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the TwelveMonths EndedDecember 31, 2005Net income

$
26,399Add back: APB 25 compensation expense, net of tax effects


2,058Deduct: FAS 123 historical compensation expense, net of tax
    effects


(12,606
)Net income  FAS 123 pro forma

$
15,851Net income per share:Basic

$
0.21Diluted

$
0.20Pro forma net income per shareBasic

$
0.13Diluted

$
0.12    2007


2006


2005(In thousands)Project personnel expenses

$
9,029


$
6,140


$
1,299Selling and marketing expenses

$
3,729


$
2,818


$
124General and administrative expenses

$
5,238


$
3,452


$
635   (o)
    Advertising
    Costs    (p)
    Income
    Taxes  Accounting
    for Income Taxes
 60




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        (q)
    Restructuring
    and Other Related Charges  No. 94-3, Liability Recognition for Certain Employee Benefits and Other
    Costs to Exit an Activity (including Certain Costs incurred in a
    Restructuring) No. 94-3). sub-lease sub-lease sub-lease sub-lease No. 94-3, No. 94-3. Accounting for Costs Associated with
    Exit or Disposal Activities No. 94-3. Employers Accounting for
    Postemployment Benefits
  (r)
    Income
    Per Share  Earnings Per Share
 61




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (s)
    Comprehensive
    Income  Reporting Comprehensive Income
  (t)
    New
    Accounting Pronouncements  Fair Value Measurement
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115 available-for-sale held-to-maturity Accounting for Certain Investments in
    Debt and Equity Securities.
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of Accounting Research
    Bulletin
 62




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (3)
    Acquisitions  Planning
    Group International, Inc.
            AmountTotal purchase consideration:Cash consideration

$
29,215Fair value of shares issued


5,855Transaction costs


570Total purchase consideration

$
35,640Allocation of the purchase consideration:Cash

$
3,304Other current assets


4,459Property and equipment


2,195Identifiable intangible assets


8,170Goodwill


26,168Total assets acquired

$
44,296Accounts payable, accrued expenses and other liabilities


(7,373
)Deferred revenue


(1,283
)Total liabilities assumed

$
(8,656
)Total allocation of purchase consideration

$
35,640  63




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted  Average UsefulAmount


Life(In thousands)


(In years)Customer relationships

$
5,800



3.5Order backlog


1,200



1.0Non-compete agreements


1,170



5.0$
8,170     Business
    Information Solutions, LLC
        Put option:
  Call option:
   64




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Business Combination
     65




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair Value(In thousands)Cash

$
100Accounts receivable


1,867Other assets


33Property and equipment


73Intangible assets


3,400Goodwill


11,770Total assets acquired

$
17,243         (4)
    Supplemental
    Cash Flow Information      (5)
    Marketable
    Securities  available-for-sale.
    December 31, 2007Amortized


Gross Unrealized


Gross Unrealized


Estimated FairCost


Gains


Losses


Value(In thousands)Auction rate securities

$
41,575


$



$



$
41,575Corporate debt securities


11,599







(5
)


11,594Municipal bonds


999







(4
)


995Certificates of deposit


3,501



2







3,503Total

$
57,674


$
2


$
(9
)

$
57,667   66




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006Amortized


Gross Unrealized


Gross Unrealized


Estimated FairCost


Gains


Losses


Value(In thousands)Auction rate securities

$
15,650


$



$



$
15,650Corporate debt securities


29,743







(26
)


29,717Certificates of deposit


6,493







(1
)


6,492Total

$
51,886


$



$
(27
)

$
51,859   other-than-temporarily
  December 31, 2007Less Than 12 MonthsUnrealizedFair Value


Gains/(Losses)(In thousands)Auction rate securities

$
41,575


$
Corporate debt securities


11,594



(5
)Municipal bonds


995



(4
)Certificates of deposit


3,503



2Total

$
57,667


$
(7
)        67




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (6)
    Restricted
    Cash    (7)
    Property
    and Equipment    December 31,2007


2006


Estimated Useful Life(In thousands)Leasehold improvements

$
19,397


$
15,829


Lessor of estimated useful life or the
    remaining lease termFurniture and fixtures


5,440



4,378


5 yearsOffice equipment


4,470



3,539


5 yearsComputer software


21,143



11,030


3 yearsComputer hardware


21,423



13,722


3 yearsProperty and equipment, gross


71,873



48,498Less accumulated depreciation


(36,959
)


(20,875
)Property and equipment, net

$
34,914


$
27,623     (8)
    Goodwill    North America(In thousands)Goodwill as of December 31, 2005

$
11,770Goodwill acquired during the period


26,168Contingent consideration paid during the period


991Goodwill as of December 31, 2006


38,929Contingent consideration recorded during the period


1,615Goodwill as of December 31, 2007

$
40,544    68




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (9)
    Purchased
    Intangible and Long-lived Assets    December 31, 2007Gross





NetCarrying


Accumulated


BookAmount


Amortization


Value(In thousands)Customer lists and customer relationships

$
8,100


$
(3,364
)

$
4,736SAP license agreement


1,100



(1,025
)


75Non-compete agreements


1,170



(469
)


701Total purchased intangibles

$
10,370


$
(4,858
)

$
5,512   December 31, 2006Gross





NetCarrying


Accumulated


BookAmount


Amortization


Value(In thousands)Customer lists and customer relationships

$
8,100


$
(1,812
)

$
6,288SAP license agreement


1,100



(775
)


325Non-compete agreements


1,170



(233
)


937Order backlog


1,200



(1,200
)


Total purchased intangibles

$
11,570


$
(4,020
)

$
7,550    69




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Total(In thousands)2008


1,8502009


1,7852010


7882011


3632012


3632013


363Total

$
5,512   (10)
    Investments
    and Minority Interest      (11)
    Restructuring
    and Other Related Charges  2006 
    Restructure Event
  Employers Accounting
    for Postemployment Benefits Accounting for Costs Associated with Exit or Disposal
    Activities.
  Workforce(In thousands)2006 Provision

$
572Cash Utilized


(572
)Balance, December 31, 2006

$
   2005 
    Restructure Event
  Accounting for Costs Associated with
    Exit or Disposal Activities
 70




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Workforce(In thousands)2005 Provision

$
300Balance at December 31, 2005

$
3002006 provision


430Cash Utilized


(505
)Balance at December 31, 2006

$
225Cash Utilized


(225
)Balance at December 31, 2007

$
   2001,
    2002 and 2003  Restructure Events
    sub-lease
  71




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Workforce


Facilities


Total(In thousands)Balance at December 31, 2004

$
11


$
26,122


$
26,1332005 (reversals) provision


(11
)


6,074



6,063Cash Utilized






(9,421
)


(9,421
)Non-cash Utilized






(1,500
)


(1,500
)Balance at December 31, 2005

$



$
21,275


$
21,2752006 provision






910



910Cash Utilized






(6,630
)


(6,630
)Non-cash Utilized






(172
)


(172
)Balance at December 31, 2006

$



$
15,383


$
15,3832007 provision






32



32Cash Utilized






(3,867
)


(3,867
)Non-cash Utilized






(275
)


(275
)Balance at December 31, 2007

$



$
11,273


$
11,273   12-month
  sub-lease sub-tenant
  (12)
    Income
    Taxes    2007


2006


2005(In thousands)Federal, current

$
400


$
39


$
28State, current


289



(257
)


331Foreign, current


7,487



4,776



2,987Subtotal, current income tax provision


8,176



4,558



3,346Federal, deferred


929



712



160State, deferred


153



336



28Foreign, deferred


(299
)


(1,174
)


(4,146
)Subtotal, deferred income tax (benefit)


783



(126
)


(3,958
)Income tax provision (benefit)

$
8,959


$
4,432


$
(612
)  72




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006


2005Statutory income tax rate


35.0
%


35.0
%


35.0
%Permanent items


4.7
%


25.3
%


5.1
%State Taxes, net of Federal benefit


1.2
%


1.6
%


0.7
%Foreign Taxes


(10.0
%)


(62.7
%)


(4.9
%)Amortization


4.5
%


34.7
%


0.8
%Valuation allowance


(2.1
%)


119.3
%


(43.4
%)Other


3.8
%


(6.1
%)


4.2
%Effective income tax (benefit) rate


37.1
%


147.1
%


(2.5
%)     December 31,2007


2006(In thousands)Deferred income tax assets (liabilities), current:Deferred revenues

$
1,783


$
3,357Allowance for doubtful accounts


357



870Other reserves and accruals


4,076



3,645Unbilled revenues and costs


1,434



(7,356
)Restructuring charges


1,408



1,503Gross deferred income tax assets, current


9,058



2,019Valuation allowance


(7,501
)


(1,204
)Net deferred income tax assets (liabilities), current

$
1,557


$
815Deferred income taxes (liabilities), non-current:Property and equipment

$
697


$
520Deferred revenues


892



1,520Deferred Compensation


19,131



16,825Goodwill and other intangibles


4,452



5,652Tax credits


6,320



5,107Unused net operating losses


78,014



87,089Restructuring charges


3,057



4,772Other


(328
)


129Gross deferred income taxes, non-current


112,235



121,614Valuation allowance


(109,908
)


(117,763
)Net deferred income tax assets, non-current

$
2,327


$
3,851Net deferred income tax assets

$
3,884


$
4,666  73




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2007


2006(In thousands)Current deferred tax assets

$
1,557


$
815Non-current deferred tax assets


5,164



5,085Current deferred tax liabilities






Non-current deferred tax liabilities,included in other long-term
    liabilities


(2,837
)


(1,234
)Net deferred tax assets

$
3,884


$
4,666            74




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Balance January 1, 2007

$
(2,707
)Prior Year Adjustments


Current Year Provision


(2,141
)Balance December 31, 2007

$
(4,848
)   non-U.S. income
    (13)
    Discontinued
    Operations   75




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (14)
    Commitments
    and Contingencies  Lease
    Commitments
    Total(In thousands)2008


10,5002009


8,0392010


6,3932011


4,5732012


1,084Thereafter


3,834Total

$
34,423       Total(In thousands)2008


5022009


1,4152010


1,4152011


1,5072012


1,690Thereafter


9,902$
16,431   Guarantees
    and Indemnification Obligations
   76




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Legal
    Claims
     77




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Alex Fedoroff, Derivatively on Behalf of Nominal Defendant
    Sapient Corporation v. Jerry A. Greenberg, J. Stuart Moore,
    Susan D. Johnson, et al. Jerry Hamilton,
    Derivatively on Behalf of Nominal Defendant Sapient
    Corporation v. Jerry A. Greenberg, J. Stuart Moore, Susan
    D. Johnson, et al.
  In re Sapient
    Corporation Derivative Litigation. 07-0629 and/or
  Mike Lane, Derivatively on Behalf of Sapient
    Corporation v. J. Stuart Moore, Jerry A. Greenberg, Sheeroy
    D. Desai et al. and Sapient Corporation; Marc Doyle,
    Derivatively on Behalf of Sapient Corporation v. J. Stuart
    Moore, Jerry A. Greenberg, Sheeroy D. Desai, et al. and Sapient
    Corporation; and Laurence Halaska, Derivatively on Behalf of
    Sapient Corporation v. Jerry A. Greenberg, J. Stuart Moore,
    Scott J. Krenz, et al. and Sapient Corporation. In re Sapient
    Corporation Derivative Litigation
   78




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    and/or and/or
  Other
    Contingencies
        (15)
    Stock
    Plans     79




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Form 10-Q Form 10-K
 80




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (a)
    1996
    Equity Stock Incentive Plan    (b)
    1996 Director
    Stock Option Plan    (c)
    1998
    Stock Incentive Plan    (d)
    Human
    Code 1994 Stock Option/Stock Issuance Plan    (e)
    2001
    Stock Option Plan   81




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  below-FMV
  (f)
    2002
    Employee Stock Purchase Plan    (g)
    2005
    Employee Stock Purchase Plan   82




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007WeightedAverageShares


Exercise PriceOutstanding as of beginning of year


14,610


$
11.05Options granted


155



7.05Options exercised


(2,565
)


4.32Options forfeited/cancelled


(1,855
)


13.26Outstanding as of end of year


10,345


$
12.42Vested and expected to vest at year end


10,182


$
12.52Options exercisable at year-end


9,533


$
12.92Aggregate intrinsic value of outstanding

$
24,825Aggregate intrinsic value of vested and expected to vest

$
24,447Aggregate intrinsic value of exerciseable

$
23,034       Year Ended December 31,2006


2006


2005Stock Option


Stock Purchase


Stock OptionPlans


Plan


PlansDividend yield


None



None



NoneExpected volatility


63.2
%


45.0
%


49-99
%Average risk-free interest rate


4.79
%


4.82
%


3.88-4.26
%      83




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007Number of Shares


WeightedUnderlying


Average GrantRestricted Units


Date Fair ValueUnvested as of beginning of year


3,965


$
5.80Restricted units granted


2,439



7.23Vesting


(724
)

$
7.60Restricted units forfeited/cancelled


(398
)


6.35Unvested as of end of year


5,282


$
6.19Unvested and expected to vest


4,465


$
6.19     (16)
    Retirement
    Plans    (17)
    Stockholders
    Equity  (a)
    Redeemable
    Common Stock    (b)
    Preferred
    Stock   84




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (c)
    Restricted
    Common Stock    (d)
    Treasury
    Stock     85




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (e)
    Income
    Per Share    2007


2006


2005(In thousands, except per share amounts)Income (loss) from continuing operations

$
15,216


$
(1,419
)

$
25,438Basic income (loss) per share from continuing operations:Weighted average common shares outstanding


124,180



123,692



124,725Basic income (loss) per share from continuing operations

$
0.12


$
(0.01
)

$
0.20Diluted income (loss) per share from continuing operations:Weighted average common shares outstanding


124,180



123,692



124,725Weighted average dilutive common share equivalents


3,711







5,034Weighted average common shares and dilutive common share
    equivalents


127,891



123,692



129,759Diluted income (loss) per share from continuing operations

$
0.12


$
(0.01
)

$
0.20Net income

$
15,216


$
3,136


$
26,399Basic net income per share:Weighted average common shares outstanding


124,180



123,692



124,725Basic net income per share

$
0.12


$
0.03


$
0.21Diluted net income per share:Weighted average common shares outstanding


124,180



123,692



124,725Weighted average dilutive common share equivalents


3,711







5,034Weighted average common shares and dilutive common share
    equivalents


127,891



123,692



129,759Diluted net income per share

$
0.12


$
0.03


$
0.20Anti-dilutive options and share based awards not included in the
    calculation


7,147



13,388



8,714     (18)
    Related
    Party Transactions   86




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (19)
    Segment
    Reporting          Service Revenues

2007


2006


2005(In thousands)North America

$
357,084


$
282,989


$
194,372Government Services


23,151



15,952



24,558Europe


166,203



106,641



94,626Consolidated Total

$
546,438


$
405,582


$
313,556   87




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2007


2006


2005(In thousands)Income From Continuing Operations before  Income Taxes,
    Discontinued Operations and  Cumulative Effect of Accounting
    ChangeNorth America(1)

$
83,574


$
74,433


$
71,840Government Services(1)


5,887



2,993



11,404Europe(1)


45,339



28,965



28,810Total Reportable Segments(1)


134,800



106,391



112,054Less Reconciling Items(2)


(110,625
)


(103,378
)


(87,228
)Consolidated Income from Continuing Operations before Income
    Taxes, Discontinued Operations and Cumulative Effect of
    Accounting Change

$
24,175


$
3,013


$
24,826     (1)
    
    Reflects only the direct controllable expenses of each business
    unit segment. It does not represent the total operating results
    for each business unit segment as it does not contain an
    allocation of certain corporate and general and administrative
    expenses incurred in support of the business unit segments.(2)
    
    Adjustments that are made to the total of the segments
    operating income in order to arrive at consolidated income
    (loss) from continuing operations before income taxes include
    the following:  2007


2006


2005(In thousands)Centrally managed functions

$
87,887


$
77,461


$
79,564Restructuring and other related charges


32



1,340



6,374Amortization of intangible assets


2,038



3,564



1,104Stock-based compensation expense


17,996



12,410



2,058Interest and other (income), net


(5,900
)


(6,167
)


(4,273
)Unallocated expenses(3)


8,572



14,770



2,401$
110,625


$
103,378


$
87,228   (3)
    
    Includes corporate portion of both selling and marketing and
    general and administrative expenses.  Geographic
    Data
    December 31,2007


2006


2005(In thousands)Service revenues:United States

$
338,528


$
268,792


$
199,777International


207,910



136,790



113,779Total service revenues

$
546,438


$
405,582


$
313,556   88




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31,2007


2006


2005(In thousands)Long-lived assets:United States

$
17,454


$
13,871


$
8,765International


28,736



24,114



18,759Total long-lived assets

$
46,190


$
37,985


$
27,524   (20)
    Prepaid
    Expenses and Other Current Assets, Other Assets and Other
    Current Accrued Liabilities    December 31, 2007


December 31, 2006(In thousands)Prepaid expenses:Prepaid insurance

$
1,021


$
1,053Prepaid rent


2,130



1,715Prepaid other


4,903



3,187$
8,054


$
5,955Other Current Assets:VAT tax receivable

$
4,766


$
2,803Prepaid media


4,339


$
7,910Other current assets


4,004



3,082$
13,109


$
13,795Accrued expenses:Accrued media

$
9,797


$
12,796Accrued accounts payable


17,774



16,798VAT tax payable


10,319



5,262Other accrued expenses


8,408



7,291$
46,298


$
42,147  89




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (21)
    Quarterly
    Financial Results (Unaudited)    Three Months EndedMarch 31,


June 30,


September 30,


December 31,2007


2007


2007


2007(In thousands, except per share amounts)(Unaudited)Revenues:Service revenues

$
121,295


$
128,594


$
141,590


$
154,959Reimbursable expenses


4,494



4,531



4,825



5,701Total gross revenues


125,789



133,125



146,415



160,660Operating expenses:Project personnel expenses


83,830



87,157



96,694



104,682Reimbursable expenses


4,494



4,531



4,825



5,701Total project personnel expenses and reimbursable expenses


88,324



91,688



101,519



110,383Selling and marketing expenses


7,608



8,141



8,664



8,700General and administrative expenses


29,504



31,441



29,223



30,449Restructuring and other related (benefits) charges


(112
)


(57
)


(35
)


236Amortization of intangible assets


542



523



487



486Total operating expenses


125,866



131,736



139,858



150,254(Loss) income from operations


(77
)


1,389



6,557



10,406Interest and other income, net


1,303



1,216



1,596



1,785Income before income taxes


1,226



2,605



8,153



12,191Provision for income taxes


451



1,758



3,732



3,018Net income

$
775


$
847


$
4,421


$
9,173Basic income per share from continuing operations

$
0.01


$
0.01


$
0.04


$
0.07Diluted income per share from continuing operations

$
0.01


$
0.01


$
0.03


$
0.07Basic net income per share

$
0.01


$
0.01


$
0.04


$
0.07Diluted net income per share

$
0.01


$
0.01


$
0.03


$
0.07Weighted average common shares


123,301



123,423



124,875



125,025Weighted average dilutive common share equivalents


3,593



4,153



3,439



3,658Weighted average common shares and dilutive common share
    equivalents


126,894



127,576



128,314



128,683   90




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Three Months EndedMarch 31,


June 30,


September 30,


December 31,2006


2006


2006


2006(In thousands, except per share amounts)(Unaudited)Revenues:Service revenues

$
87,094


$
98,003


$
106,924


$
113,561Reimbursable expenses


2,969



3,378



4,193



5,521Total gross revenues


90,063



101,381



111,117



119,082Operating expenses:Project personnel expenses


57,942



66,232



72,811



73,228Reimbursable expenses


2,969



3,378



4,193



5,521Total project personnel expenses and reimbursable expenses


60,911



69,610



77,004



78,749Selling and marketing expenses


6,833



4,589



5,670



6,933General and administrative expenses


23,314



24,244



29,993



31,471Restructuring and other related charges


814



334



187



577Amortization of intangible assets


1,037



844



842



841Total operating expenses


92,909



99,621



113,696



118,571(Loss) income from operations


(2,846
)


1,760



(2,579
)


511Interest and other income, net


1,380



2,160



1,180



1,447(Loss) income from continuing operations before income taxes,
    discontinued operations and cumulative effect of accounting
    change


(1,466
)


3,920



(1,399
)


1,958(Benefit from) provision for income taxes


(238
)


3,742



(2,134
)


3,062(Loss) income from continuing operations before discontinuedoperations and cumulative effect of accounting change


(1,228
)


178



735



(1,104
)Loss from discontinued operations


(368
)


(65
)






Gain on disposal of discontinued operations (net of tax
    provision of $342)






4,834







(Loss) income before cumulative effect of accounting change


(1,596
)


4,947



735



(1,104
)Cumulative effect of accounting change


154











Net (loss) income

$
(1,442
)

$
4,947


$
735


$
(1,104
)Basic (loss) income per share from continuing operations

$
(0.01
)

$
0.00


$
0.01


$
(0.01
)Diluted (loss) income per share from continuing operations

$
(0.01
)

$
0.00


$
0.01


$
(0.01
)Basic net (loss) income per share

$
(0.01
)

$
0.04


$
0.01


$
(0.01
)Diluted net (loss) income per share

$
(0.01
)

$
0.04


$
0.01


$
(0.01
)Weighted average common shares


124,173



124,373



123,051



123,190Weighted average dilutive common share equivalents






2,725



3,074



Weighted average common shares and dilutive common share
    equivalents


124,173



127,098



126,125



123,190  91




---



##### Table of Contents



SAPIENT
    CORPORATION
  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 Years
    Ended December 31, 2007, 2006 and 2005
  Balance at











Balance atBeginning of


Charge (Benefit)








End ofAllowance for Doubtful Accounts

Year


to Expense


Recoveries


Write-Offs


Year(In thousands)December 31, 2005

$
1,896


$
726


$
(1,509
)

$
(226
)

$
887December 31, 2006

$
887


$
1,946


$
(170
)

$
(90
)

$
2,573December 31, 2007

$
2,573


$



$
(1,426
)

$
(191
)

$
956  92




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and procedures
  Rule 13a-15(e)
  Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f)
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of assets of the Company;
    provide reasonable assurance that the 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
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Companys 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 policies or procedures may
    deteriorate.    Internal
    Control  Integrated Framework
    Remediation
    of Prior Material Weakness
   93




---



##### Table of Contents



Changes
    in Internal Control Over Financial Reporting
   94




---



##### Table of Contents



PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Executive
    Officers
    Preston B. Bradford, Chief Operations and
    Administrative Officer


51


Mr. Bradford joined Sapient in September 1994. Mr. Bradford was
    appointed as Senior Vice President in April 2000 and Executive
    Vice President in February 2004. Prior to joining Sapient, Mr.
    Bradford held various positions with Sprint Corporation, a
    telecommunications company, from July 1980 to August 1994.Alan J. Herrick, President and Chief Executive Officer


42


Mr. Herrick joined Sapient in March 1995. Mr. Herrick was
    appointed as Vice President in December 1996, Executive Vice
    President in June 2002 and President and Chief Executive Officer
    in October 2006.Christian Oversohl, Senior Vice President and Managing Director,
    Europe


40


Mr. Oversohl joined Sapient in April 2000, following
    Sapients merger with the company he founded, The Launch
    Group. Mr. Oversohl serves as Senior Vice President and Managing
    Director of Sapients European Operations. Prior to joining
    Sapient, Mr. Oversohl was a manager at A.T. Kearney and also
    worked with Dicke & Wicharz Management Consulting, BMW,
    Henkel-Kosmetik, and Dresdner Bank.Jane E. Owens, Senior Vice President and General Counsel


54


Ms. Owens joined Sapient in September 2000 as Senior Vice
    President, General Counsel and Secretary. Prior to joining
    Sapient, Ms. Owens served as Senior Vice President, General
    Counsel and Secretary of The Dial Corporation, a consumer
    products company, from May 1997 to September 2000.Stephen P. Sarno, Vice President, Corporate Controller and Chief
    Accounting Officer


40


Mr. Sarno joined Sapient in October 2005 as Vice President,
    Corporate Controller and Chief Accounting Officer. Prior to
    joining Sapient, Mr. Sarno served as a Director of Finance with
    BearingPoint from 2004 to 2005. Mr. Sarno was formerly a Senior
    Manager with PricewaterhouseCoopers LLP.Joseph S. Tibbetts, Jr., Senior Vice President and Chief
    Financial Officer


55


Mr. Tibbetts joined Sapient in October 2006 as Senior Vice
    President and Chief Financial Officer. Prior to joining Sapient,
    Mr. Tibbetts was most recently the Chief Financial Officer of
    Novell, Inc. and also held a variety of senior financial
    management positions at Charles River Ventures, Lightbridge,
    Inc., and SeaChange International, Inc. Mr. Tibbetts also was
    formerly a partner with Price Waterhouse LLP.Alan M. Wexler, Senior Vice President and Managing Director,
    North America


44


Mr. Wexler joined Sapient in April 1998 and serves as Senior
    Vice President and Managing Director of Sapients North
    American Operations. Since joining Sapient in 1998, Mr. Wexler
    has held a number of key management positions, including Vice
    President and Managing Director of Sapients Technology and
    Communications Group. He launched Sapients Global Wireless
    Group, and led Sapients Media, Entertainment, and
    Communication Group in New York. Prior to joining Sapient, Mr.
    Wexler founded and operated a management and
    technology-consulting firm.  95




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Directors
    James M. Benson

61

Mr. Benson currently is the Chief Executive Officer of Clark
    Benson LLC (Clark Benson), a position he has held
    since January 2006, and a principal of its parent company, Clark
    Wamberg, LLC, a position he has held since the companys
    formation in February 2007. Mr. Benson served as a director of
    Clark, Inc., the former parent company of Clark Benson, from
    January 2006 until March 12, 2007.Prior to joining Clark Benson, Mr. Benson served as President
    and Chief Executive Officer of John Hancock Life Insurance
    Company, a division of Manulife Financial, from 2002 to 2006.
    From 1997 to 2002, Mr. Benson served as President of
    MetLifes Individual Business enterprise, as well as
    Chairman, President and Chief Executive Officer of two separate
    MetLife affiliates: New England Financial, and GenAmerica
    Financial Corporation.Hermann Buerger

63

Mr. Buerger has been a Director and Audit Committee chair since
    June 2006. Mr. Buerger was employed by Commerzbank AG from 1972
    through 2004, holding a variety of senior executive positions,
    focusing on commercial lending for multinational businesses.Mr. Buerger retired from Commerzbank AG as Chief Executive
    Officer and regional board member for the Americas. Mr. Buerger
    currently is a director and chairman of the audit committee of
    EMS Technologies.Jeffrey M. Cunningham

55

Mr. Cunningham has been a Director since September 2004 and has
    served as the Chairman of the Board of Directors since October
    2006.  He is Chairman and CEO of Newsmarkets LLC, parent company
    of Directorship Magazine. From 2002 through 2005, Mr. Cunningham
    was CEO of New England Ventures, an investor in media and
    technology. From 2000 until 2002, Mr. Cunningham was Managing
    Partner of Schroders, the UK Venture company. From 1998 through
    2000, Mr. Cunningham held positions as Chairman of Bankrate.com
    and was President of the internet incubator, CMGI. From 1980
    until 1998, Mr. Cunningham was publisher of Forbes Magazine.Mr. Cunningham currently serves as a director and Governance
    Committee chair of Countrywide Financial, a Fortune
    100 company, and a director of TheStreet.com. Mr.
    Cunninghams previous public board service includes
    Switzerlands Schindler Holdings, Data General, Genuity,
    Equivest, Pagenet and Bankrate.com.Darius W. Gaskins, Jr.

68

Mr. Gaskins has been a Director since September 1995. He is a
    founding partner of Norbridge, Inc., formerly Carlisle, Fagan,
    Gaskins & Wise, Inc., a management consulting firm.Alan J. Herrick

42

Mr. Herrick has served as a Director and Sapients
    President and Chief Executive Officer since October 2006. Prior
    to his current position, Mr. Herrick served as Executive Vice
    President in charge of Sapient North America and Europe. Mr.
    Herrick joined Sapient in 1995. Prior to joining Sapient, Mr.
    Herrick held management positions at PSE&G, Prudential,
    Home Holdings (a division of Zurich Insurance) and several other
    financial services institutions.Gary S. McKissock

64

Lt. Gen. McKissock has been a Director since March 2003 and
    currently serves as Compensation Committee chair. Since his
    retirement from the United States Marine Corps in November 2002,
    Mr. McKissock has formed a consulting firm which focuses on
    supply chain management and has served as an advisor to the
    United States Department of Defense regarding logistics and
    supply chain management issues. From September 1999 to November
    2002, Mr. McKissock was Deputy Commandant, Installations and
    Logistics at the United States Marine Corps Headquarters in
    Washington D.C. From September 1998 to September 1999. He was
    commander of the Marine Corps Materiel Command. From May 1997 to
    September 1998, Mr. McKissock was commander of the Marine Corps
    Logistic Bases. 96




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##### Table of Contents



J. Stuart Moore

45

Mr. Moore co-founded Sapient Corporation in 1991 and served as
    the Companys Co-Chairman of the Board of Directors and
    Co-Chief Executive Officer from the Companys inception
    until June 1, 2006, at which point Mr. Moore stepped down as
    Co-Chief Executive Officer. Mr. Moore continued to serve as the
    Co-Chairman of the Board of Directors until he elected to step
    down on October 16, 2006 to allow for an independent chairman.
    Mr. Moore continues to serve as a Board member.Bruce D. Parker

60

Mr. Parker has been a Director since September 1995. He served
    as Executive Vice President of Sapient from December 1999 until
    his retirement in July 2002. Mr. Parker has served as the
    Chairman, CEO and President of AirNet Systems, Inc., an Express
    Cargo Airline, since December 2006. He also serves as President
    of the IT Management Group LLC, a consulting company he founded
    after retiring from Sapient in 2002. Prior to joining Sapient,
    Mr. Parker served as Senior Vice President and Chief Information
    Officer at United Airlines, Inc. from December 1997 until
    December 1999. From September 1994 to December 1997, Mr. Parker
    was Senior Vice President - Management Information Systems and
    Chief Information Officer at Ryder System Inc., a transportation
    company.     Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   97




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##### Table of Contents



PART IV
  Item 15.
    Exhibits
    and Financial Statement Schedules  15(a)
    (1) Financial Statements
    15(a)
    (2) Consolidated Financial Statement Schedules
    15(a)
    (3) Exhibits
  Form 10-K Form 10-K Form 10-K.
 98




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##### Table of Contents



SIGNATURES      By:
    /s/  Alan
    J. Herrick   President and Chief Executive Officer
      Signature

Title

DatePrincipal Executive Officer:/s/  ALAN
    J. HERRICKAlan
    J. Herrick

President and Chief Executive Officer

February 28, 2008Principal Financial Officer:/s/  JOSEPH
    S. TIBBETTS, JR.Joseph
    S. Tibbetts, Jr.

Chief Financial Officer

February 28, 2008Principal Accounting Officer:/s/  STEPHEN
    P. SARNOStephen
    P. Sarno

Chief Accounting Officer

February 28, 2008Directors:/s/  JEFFREY
    M. CUNNINGHAMJeffrey
    M. Cunningham



February 28, 2008/s/  HERMANN
    BUERGERHermann
    Buerger



February 28, 2008/s/  JAMES
    M. BENSONJames
    M. Benson



February 28, 2008/s/  DARIUS
    W. GASKINS, JR.Darius
    W. Gaskins, Jr.



February 28, 2008/s/  ALAN
    J. HERRICKAlan
    J. Herrick



February 28, 2008 99




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##### Table of Contents



Signature

Title

Date/s/  GARY
    S. MCKISSOCKGary
    S. McKissock



February 28, 2008/s/  J.
    STUART MOOREJ.
    Stuart Moore



February 28, 2008/s/  BRUCE
    D. PARKERBruce
    D. Parker



February 28, 2008  100




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber



Description3.1



Second Amended and Restated Certificate of Incorporation(1)3.2



Amended and Restated Bylaws(1)4.1



Specimen Certificate for Shares of Common Stock, $.01 par
    value, of the Company(2)10.1



1996 Equity Stock Incentive Plan(2)10.2



1996 Director Stock Option Plan(2)10.3



1998 Stock Incentive Plan(3)10.4



Amendment to 1998 Stock Incentive Plan(4)10.5



2001 Stock Option Plan(5)10.6



Sapient Corporation Winning Performance Plan(6)10.7



2007 Global Performance Bonus Plan(7)10.8



Director Compensation Matters(8)10.9



J. Stuart Moore Separation Agreement(8)10.10



Joseph S. Tibbetts, Jr. Offer Letter(8)10.11



Alan M. Wexler Severance Agreement(8)10.12



Sheeroy D. Desai Transition Agreement(7)10.13



Sheeroy D. Desai Recruiting Agreement(7)10.14



Joseph S. Tibbetts, Jr. Restricted Stock Units Agreement(7)10.15



Alan J. Herrick Employment Agreement(9)10.16



Form of Restricted Stock Units Agreement for Initial Grant to
    re-elected Board members(9)10.17



Form of Restricted Stock Units Agreement for Initial Grant to
    newly appointed Board members(9)10.18



Form of Restricted Stock Units Agreement for Employees(9)10.19*



Amended and Restated Consulting Agreement with Jerry A. Greenberg21*



List of Subsidiaries23*



Consent of PricewaterhouseCoopers LLP31.1*



Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200231.2*



Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200232.1*



Certification Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 200232.2*



Certification Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002     *
    
    Exhibits filed herewith.
    
    Management contract or compensatory plan or arrangement.(1)
    
    Incorporated herein by reference to the Companys
    Form 10-Q
    for the fiscal quarter ended September 30, 2004 (File
    No. 000-28074).(2)
    
    Incorporated herein by reference to the Companys
    Registration Statement on
    Form S-1
    (File
    No. 333-12671).(3)
    
    Incorporated herein by reference to the Companys
    Form 10-K
    for the fiscal year ended December 31, 1998 (File
    No. 000-28074).(4)
    
    Incorporated herein by reference to the Companys
    Form 10-Q
    for the period ended September 30, 2006 (File No.
    000-28074).(5)
    
    Incorporated herein by reference to the Companys Proxy
    Statement for the 2001 Annual Meeting of Stockholders (File
    No. 000-28074).(6)
    
    Incorporated herein by reference to the Companys
    Form 10-Q
    for the period ended June 30, 2006 (File No.
    000-28074).(7)
    
    Incorporated herein by reference to the Companys
    Form 10-Q
    for the period ended June 30, 2007 (File No.
    000-28074).(8)
    
    Incorporated herein by reference to the Companys
    Form 10-K
    for the fiscal year ended December 31, 2006 (File
    No. 000-28074).(9)
    
    Incorporated herein by reference to the Companys
    Form 10-Q
    for the period ended September 30, 2007 (File
    No. 000-28074). 101