##### Table of Contents





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,
    2009ORo

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.)131 Dartmouth Street, Boston, MA(Address of principal
    executive offices)

02116(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 par value per share

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

Accelerated
    filer o

Non-accelerated filero

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

Outstanding at February 16, 2010Common Stock, $0.01 par value per share

133,101,181 shares   DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K Form 10-K.




---



##### 





SAPIENT
    CORPORATION
  ANNUAL REPORT ON
    FORM 10-K
 For the Fiscal Year Ended December 31, 2009
  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


17Item 5.


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


18Item 6.


Selected Financial Data


20Item 7.


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


21Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


45Item 8.


Financial Statements and Supplementary Data


48Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


95Item 9A.


Controls and Procedures


95Item 10.


Directors, Executive Officers and Corporate
    Governance


96Item 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-21 List of SubsidiariesEx-23 Consent of PricewaterhouseCoopers LLPEx-31.1 Section 302 Certification of CEOEx-31.2 Section 302 Certification of CFOEx-32.1 Section 906 Certification of CEOEx-32.2 Section 906 Certification of CFO    SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K
 i




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##### Table of Contents



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




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Segment
    Information
        Acquisitions
  and/or
   2




---



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Our
    Services
  SapientNitro
    Integrated
    Marketing and Creative Services
    
    visual concept, design and implementation via multiple media;
    brand building and direct response programs; audience
    segmentation and profiling strategies;
    customer loyalty strategies;
    customer relationship strategy and implementation;
    customer lead generation and management; and
    integrated advertising campaigns.    Web &
    Interactive Development
    Traditional
    Advertising
   3




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Media
    Planning and Buying
    Strategic
    Planning & Marketing Analytics
    Commerce
    Technologies
  ® e-commerce
    
    Business and commercial process consulting
    e-business &
    web strategy
    IT governance & advisory services
    IT strategy for SAP
    program management office  Business
    Applications
   4




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##### Table of Contents




    Business applications;
    Customer relationship solutions;
    Custom & package applications;
    Enterprise resource planning;
    Supply chain solutions; and
    Web solutions.    Sapient
    Global Markets
    Advisory
    Services
    
    Strategy alignment;
    Subject matter expertise;
    Organizational design and change management;
    Process and architecture definition;
    Program management; and
    Training. 5




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Analytics
    
    Industry Benchmarks:  
    Derivatives;
    Commodities;
    Distressed assets; and
    Wealth management;  
    Audits and process reviews;
    Benchmark driven roadmaps; and
    Trade and portfolio valuations.  Technology
    
    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 the UNIX and Microsoft Windows family of
    operating systems, and Linux and associated hardware platforms.
    Packages and Application Suites:  Capabilities
    and partnerships with top package providers in trading and risk
    management, order management systems (OEM), customer
    relationship management (CRM), and supply chain management (SCM).
    Application Maintenance:  Our application
    maintenance services include helpdesk support (i.e., user
    inquiries), production support (incident triaging, problem
    tracking/routing, resolution coordination), ongoing maintenance
    (bug fixes, upgrades, capacity planning, and documentation),
    adoption (user training, transition and change management),
    application enhancements and program management (e.g., change
    management, release planning and communication).
    Application Testing:  We offer our clients
    extensive application testing services. We combine our deep
    expertise in delivering testing solutions for hundreds of
    projects globally with our GDD model to help our clients reduce
    cost by leveraging both onshore and offshore-testing teams to
    deliver
    24-hour test
    operations; reduce testing lifecycles by decreasing testing
    errors, test cycles and by increasing automation; increase
    service levels through rigorous testing-service-level
    agreements; and deliver outstanding results through integration
    of our testing services with our clients business,
    development, and infrastructure teams. 6




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Process
    Solutions
        Sapient
    Government Services
    Program
    Planning and Governance
    Technology
    Development and Integration
    Strategic
    Communications
  Fusion
 7




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Process
    Engineering
    Alliances
      time-to-value
    The
    Sapient Approach
       8




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®
  Strategic
    Context, People and Culture
          Selling
    and Marketing
    http://www.sapient.com
    Competition
  and/or
   9




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Intellectual
    Property Rights
      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
    markets are highly competitive and we may not be able to
    continue to compete effectively.
   10




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and/or
  Our
    international operations and Global Distributed Delivery
    (GDD) model subject us to increased
    risk.
    
    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;
    reduced protection for intellectual property in some
    countries; and
    changes in tax laws.   11




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Our
    business, financial condition and results of operations may be
    materially impacted by military actions, global terrorism,
    natural disasters and political unrest.
    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.
     12




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Due to
    our current inability to sell certain of our Auction Rate
    Securities (ARS), the securities may experience
    additional declines in value, and funds associated with the
    securities may be inaccessible for more than 12 months,
    which may have a material adverse impact to our financial
    condition.
      We
    have significant fixed operating costs, which may be difficult
    to adjust in response to unanticipated fluctuations in
    revenues.
      
    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.  Our
    profits may decrease and/or we may incur significant
    unanticipated costs if we do not accurately estimate the costs
    of fixed-price engagements.
   13




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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.
    We may
    be liable to our clients for substantial damages caused by our
    unauthorized disclosures of confidential information, breaches
    of data security, failure to remedy system failures or other
    material contract breaches.
    back-up
   14




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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;
    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.
   15




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We are
    dependent on our key employees.
    We may
    be unable to achieve anticipated benefits from
    acquisitions.
    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.
    Changes
    in our effective tax rate or tax liability may have an adverse
    effect on our results of operations.
    
    Changes in relative amounts of income before taxes in the
    various jurisdictions in which we operate that have differing
    statutory tax rates; 16




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
    Changes in tax laws and the interpretation of those tax laws;
    Changes to our assessments about the realizability of our
    deferred tax assets which are based on estimates of our future
    results, the prudence and feasibility of possible tax planning
    strategies and the economic environment in which we do business;
    The outcome of future tax audits and examinations;
    Changes in generally accepted accounting principles that affect
    the accounting for taxes.    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings      Item 4.
    Submission
    of Matters to a Vote of Security Holders   17




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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

Low2008:First Quarter

$
8.97


$
6.10Second Quarter

$
7.75


$
6.14Third Quarter

$
9.97


$
5.84Fourth Quarter

$
7.46


$
3.302009:First Quarter

$
5.01


$
3.25Second Quarter

$
6.46


$
4.26Third Quarter

$
8.44


$
5.66Fourth Quarter

$
9.02


$
6.99     COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    Among Sapient Corporation, The NASDAQ Composite Index
    And The Dow Jones US Technology Index
  
   18




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12/31/04


12/31/05


12/31/06


12/31/07


12/31/08


12/31/09Sapient Corporation



100.00




71.93




69.41




111.38




56.13




104.55NASDAQ Composite



100.00




101.33




114.01




123.71




73.11




105.61Dow Jones US Technology



100.00




103.31




113.75




131.60




75.19




123.67       Issuer
    Purchases of Equity Securities
   19




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##### Table of Contents



Item 6.
    Selected
    Financial Data  SELECTED
    CONSOLIDATED FINANCIAL DATA
    Year Ended December 31,2009


2008


2007


2006


2005(In thousands, except per share amounts)Statement of Operations Data(1):Revenues:Service revenues

$
638,884


$
662,412


$
546,438


$
405,582


$
313,556Reimbursable expenses


27,794



25,076



19,551



16,061



13,542Total gross revenues


666,678



687,488



565,989



421,643



327,098Operating expenses:Project personnel expenses


435,859



435,508



372,363



270,213



187,082Reimbursable expenses


27,794



25,076



19,551



16,061



13,542Total project personnel expenses and reimbursable expenses


463,653



460,584



391,914



286,274



200,624Selling and marketing expenses


31,931



36,233



33,113



24,025



13,718General and administrative expenses


118,018



123,188



120,617



109,022



84,725Restructuring and other related charges


4,548



194



32



1,912



6,374Amortization of intangible assets


5,146



2,660



2,038



3,564



1,104Acquisition costs and other related charges


2,962















Total operating expenses


626,258



622,859



547,714



424,797



306,545Income (loss) from operations


40,420



64,629



18,275



(3,154
)


20,553Other income, net


267



1,280



422



1,929



92Interest income, net


2,889



5,806



5,478



4,238



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


43,576



71,715



24,175



3,013



24,826(Benefit from) provision for income taxes:Provision for income taxes


13,735



9,239



8,959



4,432



3,677Benefit from release of valuation allowance


(58,285
)














(4,289
)(Benefit from) provision for income taxes


(44,550
)


9,239



8,959



4,432



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


88,126



62,476



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


88,126



62,476



15,216



2,982



26,399Cumulative effect of accounting change














154



Net income

$
88,126


$
62,476


$
15,216


$
3,136


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

$
0.69


$
0.50


$
0.12


$
(0.01
)

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

$
0.66


$
0.48


$
0.12


$
(0.01
)

$
0.20Basic net income per share

$
0.69


$
0.50


$
0.12


$
0.03


$
0.21Diluted net income per share

$
0.66


$
0.48


$
0.12


$
0.03


$
0.20Weighted average common shares


127,969



125,988



124,180



123,692



124,725Weighted average dilutive common share equivalents


4,912



3,176



3,711







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


132,881



129,164



127,891



123,692



129,759   20




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##### Table of Contents



Year Ended December 31,2009


2008


2007


2006


2005Balance Sheet Data:Working capital

$
276,564


$
198,062


$
189,201


$
148,899


$
179,528Total assets


594,919



452,270



407,604



342,064



286,051Total long-term liabilities


21,207



22,393



20,598



18,386



19,671Redeemable common stock










290



480



671Total stockholders equity(2)

$
426,201


$
301,947


$
260,559


$
214,497


$
201,420     (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)
    
    On February 18, 2010 we declared a special dividend of
    $0.35 for all holders of Sapient common stock as of the record
    date March 1, 2010.*
    
    In addition, we declared a special dividend equivalent payment
    of $0.35 per Restricted Stock Unit (RSU) for all
    outstanding RSU awards as of March 1, 2010, to be paid in
    shares when the awards vest. If a RSU does not vest, the
    dividend is forfeited.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
  The
    Company
        Summary
    of Results of Operations
   21




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##### Table of Contents



Results of Operations
     22




---



##### Table of Contents



Non-GAAP
    Financial Measures
  Results of Operations
  Year Ended December 31,2009


2008


2007(In thousands)Service revenues

$
638,884


$
662,412


$
546,438GAAP income from operations

$
40,420


$
64,629


$
18,275Stock-based compensation expense


14,921



15,213



18,554Restructuring and other related charges


4,548



194



32Amortization of purchased intangible assets


5,146



2,660



2,038Acquisition costs and other related charges


2,962







Stock-based compensation review and restatement (benefit) expense


(992
)


(36
)


7,483Non-GAAP income from operations

$
67,005


$
82,660


$
46,382GAAP operating margin


6.3
%


9.8
%


3.3
%Effect of adjustments detailed above


4.2
%


2.7
%


5.2
%Non-GAAP operating margin


10.5
%


12.5
%


8.5
%     Summary
    of Critical Accounting Policies; Significant Judgments and
    Estimates
   23




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##### Table of Contents



Revenue
    Recognition
    time-and-materials percentage-of-completion percentage-of-completion percentage-of-completion time-and-materials percentage-of-completion percentage-of-labor time-and-materials time-and-materials time-and-materials
       24




---



##### Table of Contents



arrangement-by-arrangement
    Valuation
    and Impairment of Investments and/or Marketable Securities and
    Other Financial Assets
  available-for-sale other-than-temporary available-for-sale available-for-sale and/or
    
    Level 1  Quoted prices in active markets for
    identical assets or liabilities.
    Level 2  Inputs other than Level 1 that are
    observable, either directly or indirectly, such quoted prices
    for similar assets or liabilities; quoted prices in markets that
    are not active; or other inputs that are observable or can be
    corroborated by observable market data for substantially the
    full term of the assets or liabilities. 25




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
    Level 3  Unobservable inputs that are supported
    by little or no market activity and that are significant to the
    fair value of the assets and liabilities.  Accounting
    for Income Taxes
        Valuation
    of Long-Lived Assets and Goodwill
    
    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. 26




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Costs
    Incurred to Develop Computer Software for Internal Use
    Restructuring
    and Other Related Charges
  sub-lease sub-lease sub-lease sub-lease sub-lease sub-lease sub-lease sub-lease sub-lease
  Contingent
    Liabilities
   27




---



##### Table of Contents



Accounting
    for Acquisitions
      Off-Balance
    Sheet Arrangements
   28




---



##### Table of Contents



Results
    of Operations
    Year Ended December 31,2009


2008


2007Revenues:Service revenues


100
%


100
%


100
%Reimbursable expenses


4
%


4
%


4
%Total gross revenues


104
%


104
%


104
%Operating expenses:Project personnel expenses


68
%


66
%


68
%Reimbursable expenses


4
%


4
%


4
%Total project personnel expenses and reimbursable expenses


73
%


70
%


72
%Selling and marketing expenses


5
%


5
%


6
%General and administrative expenses


18
%


19
%


22
%Restructuring and other related charges


1
%


0
%


0
%Amortization of purchased intangible assets


1
%


0
%


0
%Acquisition costs and other related charges


0
%


0
%


0
%Total operating expenses


93
%


90
%


97
%Income from operations


6
%


10
%


3
%Other income, net


0
%


0
%


0
%Interest income, net


1
%


1
%


1
%Income before income taxes


7
%


11
%


4
%Provision for income taxes


2
%


2
%


2
%Benefit from release of valuation allowance


−9
%


0
%


0
%(Benefit from) provision for income taxes


−7
%


2
%


2
%Net income


14
%


9
%


3
%   Years
    Ended December 31, 2009 and 2008
  Service
    Revenues
    Year EndedDecember 31,



Percentage2009

2008

Decrease

Decrease(In thousands, except percentages)Service revenues

$
638,884


$
662,412


$
(23,528
)


−4
%   Results by Operating Segment
 29




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##### Table of Contents



Year Ended





PercentageDecember 31,


Increase/


Increase/Industry Sector

2009


2008


(Decrease)


(Decrease)Financial Services

$
209.0


$
203.7


$
5.3



3
%Consumer & Travel


143.9



132.6



11.3



9
%Technology & Communications


99.5



123.5



(24.0
)


−19
%Government, Health & Education


92.9



98.3



(5.4
)


−5
%Energy Services


84.7



92.4



(7.7
)


−8
%Automotive & Industrial


7.4



10.7



(3.3
)


−31
%Other


1.5



1.2



0.3



25
%Total

$
638.9


$
662.4


$
(23.5
)


−4
%     Year Ended





PercentageDecember 31,


Increase/


Increase/Industry Sector

2009


2008


(Decrease)


(Decrease)Financial Services

$
217.4


$
203.7


$
13.7



7
%Consumer & Travel


147.7



132.6



15.1



11
%Technology & Communications


106.7



123.5



(16.8
)


−14
%Government, Health & Education


100.4



98.3



2.1



2
%Energy Services


88.9



92.4



(3.5
)


−4
%Automotive & Industrial


7.5



10.7



(3.2
)


−30
%Other


1.5



1.2



0.3



25
%Total

$
670.1


$
662.4


$
7.7



1
%        30




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##### Table of Contents



Project
    Personnel Expenses
    Year EndedDecember 31,



Percentage2009

2008

Increase

Increase(In thousands, except percentages)Project personnel expenses

$
435,859


$
435,508


$
351



0
%Project personnel expenses as a percentage of service revenues


68
%


66
%


2 points   Restructuring and Other
    Related Charges
  Selling
    and Marketing Expenses
    Year EndedDecember 31,



Percentage2009

2008

Decrease

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

$
31,931


$
36,233


$
(4,302
)


−12
%Selling and marketing expenses as a percentage of service
    revenues


5
%


5
%


    31




---



##### Table of Contents



General
    and Administrative Expenses
    Year EndedDecember 31,



Percentage2009

2008

Decrease

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

$
118,018


$
123,188


$
(5,170
)


−4
%General and administrative expenses as a percentage of service
    revenues


18
%


19
%


(1 point
)     Restructuring
    and Other Related Charges
  2009 
    Restructure Event
  Results by Operating Segment
  2001,
    2002, 2003  Restructure Events
  Results by Operating
    Segment
  sub-lease
   32




---



##### Table of Contents



Amortization
    of Purchased Intangible Assets
    Acquisition
    Costs and Other Related Charges
    Interest
    and Other Income
    Year EndedDecember 31,



Percentage2009

2008

Decrease

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

$
3,156


$
7,086


$
(3,930
)


−55
%     Provision
    for Income Taxes and Benefit From Release of Valuation
    Allowance
     33




---



##### Table of Contents



Results
    by Operating Segment
          2009


2008(In thousands)Service Revenues:North America

$
374,704


$
412,662Europe


228,361



221,479Government Services


35,819



28,271Total Service Revenues

$
638,884


$
662,412   34




---



##### Table of Contents



2009


2008(In thousands)Income Before Income Taxes:North America(1)

$
99,553


$
128,147Europe(1)


81,230



78,492Government Services(1)


10,302



8,812Total Reportable Segments(1)


191,085



215,451Less Reconciling Items(2)


(147,509
)


(143,736
)Consolidated Income Before Income Taxes

$
43,576


$
71,715     (1)
    
    Reflects only the direct controllable expenses of each business
    unit segment. It does not represent the total operating results
    for each business unit 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 to arrive at consolidated income before income
    taxes include the following:  2009

2008(In thousands)Centrally managed functions

$
125,870


$
132,879Restructuring and other related charges


2,759



194Amortization of intangible assets


5,146



2,660Stock-based compensation expense


14,920



15,125Interest and other income, net


(3,156
)


(7,086
)Acquisition costs and other related charges


2,962



Unallocated expenses(a)


(992
)


(36
)$
147,509


$
143,736   (a)
    
    Includes corporate portion of both selling, marketing and
    general and administrative expenses.  Service
    Revenues by Operating Segments
      Year Ended





PercentageDecember 31,


Increase/


Increase/Industry Sector

2009


2008


(Decrease)


(Decrease)Financial Services

$
151.7


$
154.1


$
(2.4
)


−2
%Consumer & Travel


107.9



97.4



10.5



11
%Energy Services


51.5



69.8



(18.3
)


−26
%Technology & Communications


43.0



54.2



(11.2
)


−21
%Government, Health & Education


16.6



26.2



(9.6
)


−37
%Automotive & Industrial


4.2



10.7



(6.5
)


−61
%Other






0.2



(0.2
)


−100
%Total

$
374.9


$
412.6


$
(37.7
)


−9
%  35




---



##### Table of Contents



Year Ended





PercentageDecember 31,


Increase/


Increase /Industry Sector

2009


2008


(Decrease)


(Decrease)Financial Services

$
153.4


$
154.1


$
(0.7
)


0
%Consumer & Travel


107.6



97.4



10.2



10
%Energy Services


52.6



69.8



(17.2
)


−25
%Technology & Communications


43.2



54.2



(11.0
)


−20
%Government, Health & Education


16.9



26.2



(9.3
)


−35
%Automotive & Industrial


4.2



10.7



(6.5
)


−61
%Other






0.2



(0.2
)


−100
%Total

$
377.9


$
412.6


$
(34.7
)


−8
%           Year Ended





PercentageDecember 31,


Increase/


Increase/Industry Sector

2009


2008


(Decrease)


(Decrease)Financial Services

$
57.3


$
49.4


$
7.9



16
%Technology & Communications


56.6



69.2



(12.6
)


−18
%Government, Health & Education


40.5



44.0



(3.5
)


−8
%Consumer & Travel


36.0



35.2



0.8



2
%Energy Services


33.2



22.6



10.6



47
%Automotive & Industrial


3.2



0.1



3.1



3100
%Other


1.6



1.0



0.6



60
%Total

$
228.4


$
221.5


$
6.9



3
%  36




---



##### Table of Contents



Year Ended





PercentageDecember 31,


Increase/


Increase/Industry Sector

2009


2008


(Decrease)


(Decrease)Financial Services

$
64.0


$
49.4


$
14.6



30
%Technology & Communications


63.5



69.2



(5.7
)


−8
%Government, Health & Education


47.7



44.0



3.7



8
%Consumer & Travel


40.1



35.2



4.9



14
%Energy Services


36.3



22.6



13.7



61
%Automotive & Industrial


3.2



0.1



3.1



3100
%Other


1.7



1.0



0.7



70
%Total

$
256.5


$
221.5


$
35.0



16
%         Operating
    Income by Operating Segments
       37




---



##### Table of Contents



Years
    Ended December 31, 2008 and 2007
  Service
    Revenues
    Year EndedDecember 31,



Percentage2008

2007

Increase

Increase(In thousands, except percentages)Service revenues

$
662,412


$
546,438


$
115,974



21
%   year-over-year
    Year Ended





PercentageDecember 31,


Increase/


Increase/Industry Sector

2008


2007


(Decrease)


(Decrease)Financial Services

$
203.7


$
149.8


$
53.9



36
%Consumer & Travel


132.6



108.4



24.2



22
%Technology & Communications


123.5



131.6



(8.1
)


−6
%Government, Health & Education


98.3



71.8



26.5



37
%Energy Services


92.4



69.0



23.4



34
%Automotive & Industrial


10.7



11.9



(1.2
)


−10
%Other


1.2



3.9



(2.7
)


−69
%Total

$
662.4


$
546.4


$
116.0



21
%       Project
    Personnel Expenses
  Year EndedDecember 31,

Increase/

Percentage2008

2007

(Decrease)

Increase(In thousands, except percentages)Project personnel expenses

$
435,508


$
372,363


$
63,145



17
%Project personnel expenses as a percentage of service revenues


66
%


68
%


(2 points
)    38




---



##### Table of Contents



Selling
    and Marketing Expenses
  Year EndedDecember 31,

Increase/

Percentage2008

2007

(Decrease)

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

$
36,233


$
33,113


$
3,120



9
%Selling and marketing expenses as a percentage of service
    revenues


5
%


6
%


(1 point
)     General
    and Administrative Expenses
  Year EndedDecember 31,

Increase/

Percentage2008

2007

(Decrease)

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

$
123,188


$
120,617


$
2,571



2
%General and administrative expenses as a percentage of service
    revenues


19
%


22
%


(3 points
)      39




---



##### Table of Contents



Restructuring
    and Other Related Charges
  true-up true-up,
  Amortization
    of Intangible Assets
    Interest
    and Other Income
  Year EndedDecember 31,



Percentage2008

2007

Increase

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

$
7,086


$
5,900


$
1,186



20
%     Provision
    for Income Taxes
    Results
    by Operating Segment
   40




---



##### Table of Contents



2008


2007(In thousands)Service Revenues:North America

$
412,662


$
357,084Europe


221,479



166,203Government Services


28,271



23,151Total Service Revenues

$
662,412


$
546,438   2008


2007(In thousands)Income Before Income Taxes:North America(1)

$
128,147


$
101,747Europe(1)


78,492



58,917Government Services(1)


8,812



7,225Total Reportable Segments(1)


215,451



167,889Less Reconciling Items(2)


(143,736
)


(143,714
)Consolidated Income Before Income Taxes

$
71,715


$
24,175     (1)
    
    Reflects only the direct controllable expenses of each business
    unit segment. It does not represent the total operating results
    for each business unit 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 to arrive at consolidated income before income
    taxes include the following:  2008


2007(In thousands)Centrally managed functions

$
132,879


$
120,976Restructuring and other related charges


194



32Amortization of intangible assets


2,660



2,038Stock-based compensation expense


15,125



17,996Interest and other income, net


(7,086
)


(5,900
)Unallocated expenses(a)


(36
)


8,572$
143,736


$
143,714   (a)
    
    Includes corporate portion of both selling, marketing and
    general and administrative expenses.  Service
    Revenues by Operating Segments
   41




---



##### Table of Contents



Year Ended





PercentageDecember 31,


Increase/


Increase/Industry Sector

2008


2007


(Decrease)


(Decrease)Financial Services

$
154.1


$
126.7


$
27.4



22
%Consumer & Travel


97.4



71.7



25.7



36
%Energy Services


69.8



49.2



20.6



42
%Technology & Communications


54.2



72.8



(18.6
)


−26
%Government, Health & Education


26.2



22.0



4.2



19
%Automotive & Industrial


10.7



11.8



(1.1
)


−9
%Other


0.2



2.9



(2.7
)


−93
%Total

$
412.6


$
357.1


$
55.5



16
%         Year Ended





PercentageDecember 31,


Increase/


Increase/Industry Sector

2008


2007


(Decrease)


(Decrease)Financial Services

$
49.4


$
23.1


$
26.3



114
%Technology & Communications


69.2



58.7



10.5



18
%Government, Health & Education


44.0



26.7



17.3



65
%Consumer & Travel


35.2



36.7



(1.5
)


−4
%Energy Services


22.6



19.9



2.7



14
%Automotive & Industrial


0.1



0.1







0
%Other


1.0



1.0







0
%Total

$
221.5


$
166.2


$
55.3



33
%      42




---



##### Table of Contents



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

$
13,640


$
24,011


$
17,771


$
25,479


$
80,901Cash outlays for restructuring and other related activities(1)


3,428



3,079











6,507Purchase obligations(2)


984



281











1,265Uncertain tax positions






8,921











8,921Total

$
18,052


$
36,292


$
17,771


$
25,479


$
97,594     (1)
    
    Cash outlay for restructuring and other related activities
    include minimum future lease and related payments for excess
    facilities, net of estimated sublease income of
    $4.9 million under existing arrangements, excluding
    expected sublease arrangements of approximately
    $0.7 million.(2)
    
    Purchase obligations represent minimum commitments due to third
    parties, including subcontractor agreements, telecommunications
    contracts, IT maintenance contracts in support of internal use
    of 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, 2009.   43




---



##### Table of Contents



Summary of Critical Accounting Policies; Significant
    Judgments and Estimates
            New
    Accounting Pronouncements
   44




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  available-for-sale Available-for-sale available-for-sale available-for-sale other-than-temporary. available-for-sale other-than-temporary
  available-for-sale available-for-sale
  available-for-sale available-for-sale
  available-for-sale available-for-sale
   45




---



##### Table of Contents



available-for-sale
  and/or
  Exchange
    Rate Sensitivity
        Year EndedDecember 31,2009

2008

2007(Gain) loss on foreign exchange option contracts not designated

$
(19
)

$
802


$
16  46




---



##### Table of Contents



47




---



##### 



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


49Consolidated Balance Sheets


50Consolidated Statements of Operations


51Consolidated Statements of Changes in
    Stockholders Equity


52Consolidated Statements of Cash Flows


53Notes to Consolidated Financial Statements


54Financial Statement Schedule:Schedule II  Valuation and
    Qualifying Accounts and Reserves


94   48




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm     Internal Control 
    Integrated Framework
              49




---



##### Table of Contents



SAPIENT
    CORPORATION
 CONSOLIDATED
    BALANCE SHEETS  December 31,


December 31,2009


2008(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
195,678


$
169,340Marketable securities, current portion


16,082



3,462Restricted cash, current portion


393



372Accounts receivable, less allowance for doubtful accounts of
    $610 and $395 at December 31, 2009 and 2008, respectively


111,987



88,930Unbilled revenues


47,426



43,665Deferred tax assets, current portion


27,616



1,835Prepaid expenses


11,902



7,033Other current assets


12,991



11,355Total current assets


424,075



325,992Marketable securities, net of current portion


1,362



17,267Restricted cash, net of current portion


2,308



2,139Property and equipment, net


29,229



32,397Purchased intangible assets, net


23,061



9,644Goodwill


76,004



51,711Deferred tax assets, net of current portion


33,521



7,520Other assets


5,359



5,600Total assets

$
594,919


$
452,270LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
19,238


$
6,977Accrued expenses


47,185



39,951Accrued compensation


49,147



55,605Accrued restructuring costs, current portion


3,727



3,123Income taxes payable


8,534



6,653Deferred tax liabilities, current portion


136



478Deferred revenues, current portion


19,544



15,143Total current liabilities


147,511



127,930Accrued restructuring costs, net of current portion


2,994



4,799Deferred revenues, net of current portion






289Deferred tax liabilities, net of current portion


1,579



5,092Other long-term liabilities


16,634



12,213Total liabilities


168,718



150,323Commitments and contingencies (Note 14)Stockholders equity:Preferred stock, par value $0.01 per share, 5,000,000 authorized
    and none issued atDecember 31, 2009 and 2008






Common stock, par value $0.01 per share, 200,000,000 shares
    authorized,133,272,997 and 131,785,458 shares issued at
    December 31, 2009 and 2008, respectively


1,333



1,318Additional paid-in capital


583,291



580,936Treasury stock, at cost, 444,418 and 5,239,006 shares at
    December 31, 2009 and 2008, respectively


(2,316
)


(24,165
)Accumulated other comprehensive loss


(12,626
)


(24,535
)Accumulated deficit


(143,481
)


(231,607
)Total stockholders equity


426,201



301,947Total liabilities and stockholders equity

$
594,919


$
452,270    50




---



##### Table of Contents



SAPIENT
    CORPORATION
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  Year Ended December 31,2009


2008


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

$
638,884


$
662,412


$
546,438Reimbursable expenses


27,794



25,076



19,551Total gross revenues


666,678



687,488



565,989Operating expenses:Project personnel expenses


435,859



435,508



372,363Reimbursable expenses


27,794



25,076



19,551Total project personnel expenses and reimbursable expenses


463,653



460,584



391,914Selling and marketing expenses


31,931



36,233



33,113General and administrative expenses


118,018



123,188



120,617Restructuring and other related charges


4,548



194



32Amortization of purchased intangible assets


5,146



2,660



2,038Acquisition costs and other related charges


2,962







Total operating expenses


626,258



622,859



547,714Income from operations


40,420



64,629



18,275Other income, net


267



1,280



422Interest income, net


2,889



5,806



5,478Income before income taxes


43,576



71,715



24,175Provision for income taxes


13,735



9,239



8,959Benefit from release of valuation allowance


(58,285
)






(Benefit from) provision for income taxes


(44,550
)


9,239



8,959Net income

$
88,126


$
62,476


$
15,216Basic net income per share

$
0.69


$
0.50


$
0.12Diluted net income per share

$
0.66


$
0.48


$
0.12Weighted average common shares


127,969



125,988



124,180Weighted average dilutive common share equivalents


4,912



3,176



3,711Weighted average common shares and dilutive common share
    equivalents


132,881



129,164



127,891    51




---



##### Table of Contents






SAPIENT
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
  AccumulatedAdditional











Other





TotalCommon Shares


Paid-


Treasury Shares


Comprehensive


Comprehensive


Accumulated


StockholdersShares


Amount


In Capital


Shares


Amount


Income


Income (Loss)


Deficit


Equity(In thousands)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










190























190Tax benefits from stock 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
)

$
260,559Shares issued under stock option and purchase plans










425



1,304



5,759















6,184Vesting of restricted stock, net










(5,252
)


662



2,799















(2,453
)Stock-based compensation expense










15,122























15,122Repurchase of common stock














(1,441
)


(9,902
)














(9,902
)Reclassification of redeemable common stock










290























290Issuance of common stock in connection with acquisition










5,388



308



1,419















6,807Tax benefits from stock plans










85























85Comprehensive income:Net income






















62,476







62,476



62,476Other comprehensive income:Currency translation adjustments






















(37,064
)


(37,064
)






(37,064
)Net unrealized loss on investments






















(157
)


(157
)






(157
)Total comprehensive income





















$
25,255











Balance at December 31, 2008


131,785


$
1,318


$
580,936



(5,239
)

$
(24,165
)





$
(24,535
)

$
(231,607
)

$
301,947Shares issued under stock option and purchase plans


338



3



1,074



64



296















1,373Vesting of restricted stock, net


838



9



(8,502
)


754



3,479















(5,014
)Stock-based compensation expense










14,721























14,721Issuance of common stock in connection with Derivatives
    Consulting Group Ltd. acquisition


312



3



2,360























2,363Issuance of common stock in connection with Nitro Ltd.
    acquisition










(7,242
)


3,114



14,096















6,854Issuance of employment-based restricted shares in connection
    with Nitro Ltd. acquisition














863



3,978















3,978Tax shortfall from stock plans










(56
)






















(56
)Comprehensive income:Net income






















88,126







88,126



88,126Other comprehensive income:Currency translation adjustments






















11,871



11,871







11,871Net unrealized gain on investments






















38



38







38Total comprehensive income





















$
100,035











Balance at December 31, 2009


133,273


$
1,333


$
583,291



(444
)

$
(2,316
)





$
(12,626
)

$
(143,481
)

$
426,201     52




---



##### Table of Contents



SAPIENT
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2009


2008


2007(In thousands)Cash flows from operating activities:Net income

$
88,126


$
62,476


$
15,216Adjustments to reconcile net income to net cash provided by
    operating activities:Loss recognized on disposition of fixed assets


85



660



72Unrealized loss (gain) on hedge positions


44



(264
)


(11
)Unrealized (gain) loss on marketable securities and put right,
    net


(103
)


310



Depreciation expense


15,984



17,218



15,300Amortization of purchased intangible assets


5,146



2,660



2,038Deferred income taxes


869



45



782Income tax benefit from release of valuation allowance


(58,285
)






Provision for (recovery of) doubtful accounts, net


215



(54
)


(1,426
)Stock-based compensation expense


14,921



15,122



17,996Changes in operating assets and liabilities, net of acquisitions
    and disposition:Accounts receivable


(8,805
)


(7,132
)


(3,676
)Unbilled revenues


(1,286
)


(15,914
)


1,726Prepaid expenses


(3,090
)


101



(1,823
)Other current assets


(165
)


652



776Other assets


(141
)


(189
)


(499
)Accounts payable


3,484



(685
)


(3,342
)Accrued expenses


(7,471
)


1,984



2,064Accrued compensation


(17,048
)


2,009



18,180Accrued restructuring costs


(1,207
)


(3,323
)


(4,572
)Income taxes payable


2,098



6,409



(3,802
)Deferred revenues


3,325



3,002



(1,922
)Other long-term liabilities


2,016



(27
)


5,124Net cash provided by operating activities


38,712



85,060



58,201Cash flows from investing activities:Cash paid for acquisitions, net of cash received


(19,057
)


(23,517
)


(883
)Cash received for sale of discontinued operations, net, and
    payment to minority stockholders






720



436Purchases of property and equipment and cost of internally
    developed software


(9,419
)


(17,889
)


(20,361
)Sales and maturities of marketable securities


4,023



54,741



103,637Purchases of marketable securities






(8,330
)


(109,423
)Designation of cash equivalent to marketable securities






(11,626
)


Cash received (paid) on financial instruments, net


479



(955
)


Restricted cash


(122
)


(908
)


360Net cash used in investing activities


(24,096
)


(7,764
)


(26,234
)Cash flows from financing activities:Principal payments under capital lease obligations


(34
)


(68
)


(106
)Repayment of bank loan






(1,364
)


Tax benefit from stock plans


29



85



182Proceeds from stock option and purchase plans


1,373



6,184



11,068Repurchases of common stock






(9,902
)


(4,395
)Net cash provided by (used in) financing activities


1,368



(5,065
)


6,749Effect of exchange rate changes on cash and cash equivalents


10,354



(21,588
)


4,959Increase in cash and cash equivalents


26,338



50,643



43,675Cash and cash equivalents, at beginning of period


169,340



118,697



75,022Cash and cash equivalents, at end of period

$
195,678


$
169,340


$
118,697    53




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##### 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,
  non-U.S. subsidiaries,
 54




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (d)
    Cash
    and Cash Equivalents    (e)
    Marketable
    Securities, Investment and Other Financial Assets  available-for-sale Available-for-sale available-for-sale available-for-sale other-than-temporary available-for-sale other-than-temporary available-for-sale
  available-for-sale other-than-temporary available-for-sale available-for-sale and/or
     55




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  other-than-temporary
        
    Level 1  Quoted prices in active markets for
    identical assets or liabilities.
    Level 2  Inputs other than Level 1 that are
    observable, either directly or indirectly, such quoted prices
    for similar assets or liabilities; quoted prices in markets that
    are not active; or other inputs that are observable or can be
    corroborated by observable market data for substantially the
    full term of the assets or liabilities.
    Level 3  Unobservable inputs that are supported
    by little or no market activity and that are significant to the
    fair value of the assets and liabilities.   56




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (f)
    Financial
    Instruments and Concentration of Credit Risk        (g)
    Derivative
    Financial Instruments          Derivative Assets Reported in


Derivative Liabilities ReportedOther Current Assets


in Accrued ExpensesDecember 31,


December 31,2009


2008


2009


2008Foreign exchange option contracts not designated

$
238


$
691


$
21


$
  57




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedDecember 31,2009


2008


2007(Gain) loss on foreign exchange option contracts not designated

$
(19
)

$
802


$
16   (h)
    Property
    and Equipment    (i)
    Costs
    Incurred to Develop Computer Software for Internal
    Use      (j)
    Costs
    Incurred to Sell, Lease, or Otherwise Market Computer
    Software   58




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (k)
    Purchased
    Intangible Assets and Goodwill    
    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.      (l)
    Valuation
    of Long-lived Assets   59




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (m)
    Revenue
    Recognition and Allowance for Doubtful Accounts    time-and-materials percentage-of-completion percentage-of-completion percentage-of-completion time-and-materials percentage-of-completion percentage-of-labor time-and-materials time-and-materials time-and-materials
       60




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        arrangement-by-arrangement
    (n)
    Stock-Based
    Compensation     61




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (o)
    Advertising
    Costs    (p)
    Income
    Taxes      (q)
    Restructuring
    and Other Related Charges  sub-lease sub-lease sub-lease sub-lease sub-lease
 62




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (r)
    Net
    Income Per Share    (s)
    Comprehensive
    Income    (t)
    New
    Accounting Pronouncements        (u)
    Accounting
    for Acquisitions   63




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (3)
    Acquisitions  Nitro
    Limited
        AmountCash

$
3,290Accounts receivable


10,956Other current assets


2,790Property and equipment


2,281Indentifiable intangible assets


18,000Goodwill


16,943Total assets acquired


54,260Accounts payable, accrued expenses and other current liabilities


(16,912
)Deferred revenues


(416
)Deferred tax liability


(1,379
)Other long term liabilities


(1,312
)Total liabilities assumed


(20,019
)Total allocation of purchase price consideration


34,241Less: cash acquired


(3,290
)Total purchase price, net of cash acquired

$
30,951  64




---



##### Table of Contents



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

Life(In years)Customer relationships

$
10,100



7Non-compete agreements


5,600



5Tradename


2,300



5Identifiable intangible assets

$
18,000        65




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended December 31,2009


2008


2007(unaudited)Service revenues

$
663,189


$
718,608


$
580,684Net income

$
84,399


$
62,846


$
12,722Basic net income per share

$
0.66


$
0.50


$
0.10Diluted net income per share

$
0.65


$
0.49


$
0.10     Derivatives
    Consulting Group Limited
     66




---



##### Table of Contents



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

$
2,294Accounts receivable


9,370Other current assets


1,660Property and equipment


834Indentifiable intangible assets


9,045Goodwill


18,130Total assets acquired


41,333Accounts payable, accrued expenses and other current liabilities


(7,327
)Deferred revenues


(221
)Deferred tax liability


(2,533
)Total liabilities assumed


(10,081
)Total allocation of purchase price consideration

$
31,252     Weighted Average UsefulAmount


Life(In years)Customer relationships

$
5,814



5Non-compete agreements


2,193



5Tradename


1,038



1.5Identifiable intangible assets

$
9,045      67




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedDecember 31,2008


2007Service revenues

$
686,992


$
578,389Net income

$
60,871


$
14,766Basic net income per share

$
0.48


$
0.12Diluted net income per share

$
0.47


$
0.11     (4)
    Supplemental
    Cash Flow Information      (5)
    Marketable
    Securities, the Put Right and Fair Value Disclosures  Marketable
    Securities and the Put Right
    available-for-sale available-for-sale
    Available-for-Sale Securities as of December 31, 2009(In thousands)Amortized


Gross Unrealized


Gross Unrealized


Estimated FairCost


Gains


Losses


ValueLong-term:Auction rate securities

$
1,500


$



$
(138
)

$
1,362Short-term:Money market fund deposits


940







(186
)


754Total

$
2,440


$



$
(324
)

$
2,116   68




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Trading Securities as of December 31, 2009(In thousands)Amortized


Gross Unrealized


Gross Unrealized


Estimated FairCost


Gains


Losses


ValueShort-term:Auction rate securities

$
16,425


$



$
(1,097
)

$
15,328   Available-for-Sale Securities as of December 31, 2008(In thousands)Amortized


Gross Unrealized


Gross Unrealized


Estimated FairCost


Gains


Losses


ValueLong-term:Auction rate securities

$
1,500


$



$
(157
)

$
1,343Short-term:Corporate debt securities


1,003







(1
)


1,002Money market fund deposits


2,460











2,460Total

$
4,963


$



$
(158
)

$
4,805   Trading Securities as of December 31, 2008(In thousands)Gross


GrossAmortized


Unrealized


Unrealized


Estimated FairCost


Gains


Losses


ValueLong-term:Auction rate securities

$
17,925


$



$
(2,001
)

$
15,924   available-for-sale available-for-sale
  available-for-sale available-for-sale
   69




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  other-than-temporary other-than-temporary available-for-sale
  Year EndedDecember 31,2009


2008Total
    other-than-temporary
    losses(1)

$
(205
)

$
(157
)Less: portion of loss recognized in other comprehensive loss(2)






(157
)Net impairment losses recognized in earnings

$
(205
)

$
     (1)
    
    Reflects $186 impairment for Primary Fund and $19 credit losses
    related to ARS.(2)
    
    The Company recognized an increase in the fair value of its ARS
    classified as
    available-for-sale
    during the twelve months ended December 31, 2009. As a
    result, a gain was recorded in accumulated other
    comprehensive loss.  other-than-temporary
   70




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair
    Value Disclosures
    Fair Value Measurements at Reporting Date Using(In thousands)Level 1


Level 2


Level 3


TotalFinancial assets:Auction rate securities

$



$



$
16,690


$
16,690Bank time deposits






56,202







56,202Foreign exchange option contracts, net






238







238Money market fund deposits


44,571







754



45,325Put Right










1,096



1,096Non-financial assets:Indemnification assets acquired










2,307



2,307Total

$
44,571


$
56,440


$
20,847


$
121,858Level 1


Level 2


Level 3


TotalFinancial liabilities:Foreign exchange option contracts, net

$



$
21


$



$
21Non-financial liabilities:Deferred consideration acquired










4,437



4,437Other long-term liabilities acquired










1,299



1,299Total

$



$
21


$
5,736


$
5,757        71




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Level 3 InputsAssets


Liabilities(In thousands)Balance at December 31, 2008

$
21,418


$
Transfers into Level 3 (marketable securities)






Transfers into Level 3 (acquired indemnification assets)(1)


1,202



Transfers into Level 3 (deferred consideration and other
    long-term liability acquired)(1)






9,299Gain on increase in fair value of acquired indemnification
    assets included ingeneral and administrative expenses ($1,079) and acquisition
    costsand other related charges(2)


1,105



Loss on increase of fair value of deferred consideration
    acquired included inacquisition costs and other related charges






154Currency transaction loss on deferred consideration acquired
    included ingeneral and administrative expenses(2)






1,079Loss on increase in fair value of other long-term liability
    acquired includedin general and administrative expenses






61Payment of acquired deferred consideration






(4,857
)Unrealized gain included in accumulated other comprehensive loss


38



Unrealized loss included in other income, net


(797
)


Unrealized gain included in other income, net


904



Maturities and sales of marketable securities


(3,023
)


Balance at December 31, 2009

$
20,847


$
5,736     (1)
    
    Related to Nitro acquisiton, see Note 3(2)
    
    Deferred consideration acquired in Nitro transaction is
    denominated in a foreign currency. Persuant to the purchase
    agreement, the Company is indemnified against all currency
    transaction losses related to the deferred consideration.  Acquisitions,
    (6)
    Restricted
    Cash   72




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (7)
    Property
    and Equipment    December 31,2009


2008


Estimated Useful Life(In thousands)Leasehold improvements

$
23,379


$
20,182


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


7,310



6,329


5 yearsOffice equipment


5,623



3,668


5 yearsComputer software


29,547



26,386


3 yearsComputer hardware


28,289



23,236


3 yearsProperty and equipment, gross


94,148



79,801Less accumulated depreciation


(64,919
)


(47,404
)Property and equipment, net

$
29,229


$
32,397     (8)
    Goodwill    North America


Europe


Total(In thousands)Goodwill as of December 31, 2007

$
40,544


$



$
40,544Contingent consideration paid during the period


230







230Goodwill acquired during the period






18,130



18,130Exchange rate effect






(4,708
)


(4,708
)Adjustment to goodwill recorded during the period


(2,485
)






(2,485
)Goodwill as of December 31, 2008


38,289



13,422



51,711Contingent consideration paid during the period






5,565



5,565Goodwill acquired during the period


5,100



11,843



16,943Costs associated with employee termination (see Note 3)






517



517Adjustment to goodwill recorded during the period


(103
)






(103
)Exchange rate effect






1,371



1,371Goodwill as of December 31, 2009

$
43,286


$
32,718


$
76,004    73




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Acquisitions
    (9)
    Purchased
    Intangible and Long-lived Assets    December 31, 2009Gross





NetCarrying


Accumulated


BookAmount


Amortization


Value(In thousands)Customer lists and customer relationships

$
22,927


$
(8,804
)

$
14,123SAP license agreement


1,100



(1,100
)


Non-compete agreements


8,554



(1,716
)


6,838Tradenames


3,144



(1,044
)


2,100Total purchased intangibles

$
35,725


$
(12,664
)

$
23,061   December 31, 2008Gross





NetCarrying


Accumulated


BookAmount


Amortization


Value(In thousands)Customer lists and customer relationships

$
12,466


$
(5,322
)

$
7,144SAP license agreement


1,100



(1,100
)


Non-compete agreements


2,817



(854
)


1,963Tradenames


779



(242
)


537Total purchased intangibles

$
17,162


$
(7,518
)

$
9,644       Total(In thousands)2010


5,4952011


5,0412012


5,3802013


4,1472014


1,861Thereafter


1,137Total

$
23,061  74




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (10)
    Investments
    and Minority Interest      (11)
    Restructuring
    and Other Related Charges  2009 
    Restructure Event
  Segment
    Reporting
    Workforce(In thousands)2009 provision

$
1,958Cash utilized


(1,958
)Balance, December 31, 2009

$
   2001,
    2002 and 2003  Restructure Events
  Segment Reporting
  sub-lease
 75




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Facilities(In thousands)Balance at December 31, 2007

$
11,2732008 provision


194Cash utilized


(3,542
)Non-cash utilized


(3
)Balance at December 31, 2008


7,9222009 provision


2,590Cash utilized


(3,791
)Non-cash utilized


Balance at December 31, 2009

$
6,721   12-month
  sub-lease sub-tenant
 76




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (12)
    Income
    Taxes    2009


2008


2007(In thousands)Federal, current

$
1,488


$
1,274


$
400State, current


3,595



1,160



289Foreign, current


4,878



7,097



7,487Subtotal, current income tax (benefit) provision


9,961



9,531



8,176Federal, deferred


(48,239
)


946



929State, deferred


(9,217
)


156



153Foreign, deferred


2,945



(1,394
)


(299
)Subtotal, deferred income tax (benefit) provision


(54,511
)


(292
)


783Income tax (benefit) provision

$
(44,550
)

$
9,239


$
8,959     2009


2008


2007Statutory income tax rate


35.0
%


35.0
%


35.0
%Permanent items


4.8



1.7



4.7State income taxes, net of federal benefit


8.2



1.5



1.2Foreign taxes


42.8



(8.7
)


(10.0
)Amortization


1.9



1.5



4.5Valuation allowance


(198.4
)


(19.0
)


(2.1
)Other


3.5



0.9



3.8Effective income tax (benefit) rate


(102.2
)%


12.9
%


37.1
%       2009


2008


2007(In thousands)United States

$
77,265


$
40,307


$
(1,814
)International


(33,689
)


31,408



25,989$
43,576


$
71,715


$
24,175    77




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      December 31,2009


2008(In thousands)Deferred income tax assets (liabilities), current:Deferred revenues


5,822



1,413Unused net operating losses


19,786



Other reserves and accruals


2,562



4,320Unbilled revenues and costs






1,528Restructuring charges


1,481



84Gross deferred income tax assets, current


29,651



7,345Valuation allowance


(2,171
)


(5,988
)Net deferred income tax assets (liabilities), current

$
27,480


$
1,357Deferred income taxes (liabilities), non-current:Property and equipment

$
2,086


$
1,790Deferred revenues






2,868Deferred compensation


18,624



20,402Goodwill and other intangibles


(1,834
)


(1,559
)Tax credits


8,203



6,338Unused net operating losses


17,060



72,826Restructuring charges


1,200



3,944Unremitted earnings


(13,200
)


Other


3,495



1,969Gross deferred income taxes, non-current


35,634



108,578Valuation allowance


(3,692
)


(106,150
)Net deferred income tax assets, non-current

$
31,942


$
2,428Net deferred income tax assets

$
59,422


$
3,785      78




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2009


2008


2007Balance at beginning of year

$
112,138


$
117,409


$
118,967Additions






8,354



Utilization


(47,990
)


(13,625
)


(508
)Releases


(58,285
)






Other adjustments










(1,050
)Balance at end of year

$
5,863


$
112,138


$
117,409     December 31,2009


2008(In thousands)Current deferred tax assets

$
27,616


$
1,835Non-current deferred tax assets


33,521



7,520Current deferred tax liabilities


(136
)


(478
)Non-current deferred tax liabilities


(1,579
)


(5,092
)Net deferred tax assets

$
59,422


$
3,785       paid-in-capital
   79




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            AmountBalance January 1, 2008

$
(4,848
)Prior year adjustments


2008 provision


(1,821
)Balance January 1, 2009


(6,669
)Prior year adjustments


192009 provision


(2,271
)Balance at December 31, 2009

$
8,921   non-U.S. income
     80




---



##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (13)
    Discontinued
    Operations    (14)
    Commitments
    and Contingencies  Lease
    Commitments
    Total(In thousands)2010

$
13,6402011


13,0282012


10,9832013


10,1842014


7,587Thereafter


25,479Total

$
80,901     Guarantees
    and Indemnification Obligations
     81




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Legal
    Claims
     82




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other
    Contingencies
    (15)
    Stock
    Plans    2009


2008


2007(In thousands)Project personnel expenses

$
8,222


$
6,890


$
9,029Selling and marketing expenses

$
1,472


$
3,403


$
3,729General and administrative expenses

$
5,227


$
4,829


$
5,238        83




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##### 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   84




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (d)
    2001
    Stock Option Plan  below-FMV
  (e)
    2005
    Employee Stock Purchase Plan     85




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009WeightedAverageShares


Exercise PriceOutstanding as of beginning of year


7,323


$
13.72Options exercised


(420
)


3.48Options forfeited/cancelled


(1,093
)


24.02Outstanding as of end of year


5,810


$
12.55Outstanding and expected to vest


5,810Options exercisable at year-end


5,807Aggregate intrinsic value of outstanding

$
13,805Aggregate intrinsic value of vested and expected to vest

$
13,804Aggregate intrinsic value of exerciseable

$
13,798         2009Number of Shares


WeightedUnderlying


Average GrantRestricted Units


Date Fair ValueUnvested as of beginning of year


6,234


$
6.30Restricted units granted


3,138



6.04Vesting


(2,443
)


6.22Restricted units forfeited/cancelled


(300
)


5.84Unvested as of end of year


6,629


$
6.23Unvested and expected to vest


5,963    86




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (16)
    Retirement
    Plans    (17)
    Stockholders
    Equity  (a)
    Preferred
    Stock    (b)
    Restricted
    Common Stock    (c)
    Treasury
    Stock     87




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (d)
    Net
    Income Per Share    2009


2008


2007(In thousands, except per share amounts)Net income

$
88,126


$
62,476


$
15,216Basic net income per share:Weighted average common shares outstanding


127,969



125,988



124,180Basic net income per share

$
0.69


$
0.50


$
0.12Diluted net income per share:Weighted average common shares outstanding


127,969



125,988



124,180Weighted average dilutive common share equivalents


4,912



3,176



3,711Weighted average common shares and dilutive common share
    equivalents


132,881



129,164



127,891Diluted net income per share

$
0.66


$
0.48


$
0.12Anti-dilutive options and share-based awards not included in the
    calculation


4,887



6,414



7,147     (18)
    Related
    Party Transactions    (19)
    Segment
    Reporting     88




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2009


2008


2007(In thousands)Service Revenues:North America

$
374,704


$
412,662


$
357,084Europe


228,361



221,479



166,203Government Services


35,819



28,271



23,151Consolidated Total

$
638,884


$
662,412


$
546,438   2009


2008


2007(In thousands)Income Before Income Taxes:North America(1)

$
99,553


$
128,147


$
101,747Europe(1)


81,230



78,492



58,917Government Services(1)


10,302



8,812



7,225Total Reportable Segments(1)


191,085



215,451



167,889Less Reconciling Items(2)


(147,509
)


(143,736
)


(143,714
)Consolidated Income Before Income Taxes

$
43,576


$
71,715


$
24,175     (1)
    
    Reflects only the direct controllable expenses of each business
    unit segment. It does not represent the total operating results
    for each business unit as it does not contain an allocation of
    certain corporate and general and administrative expenses
    incurred in support of the business unit segments. 89




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (2)
    
    Adjustments that are made to the total of the segments
    operating income to arrive at consolidated income before income
    taxes include the following:  2009


2008


2007(In thousands)Centrally managed functions

$
125,870


$
132,879


$
120,976Restructuring and other related charges


2,759



194



32Amortization of intangible assets


5,146



2,660



2,038Stock-based compensation expense


14,920



15,125



17,996Interest and other (income), net


(3,156
)


(7,086
)


(5,900
)Acquisition Costs and other related charges


2,962







Unallocated expenses(a)


(992
)


(36
)


8,572$
147,509


$
143,736


$
143,714   (a)
    
    Includes corporate portion of both selling, marketing and
    general and administrative expenses.    Geographic
    Data
    December 31,2009


2008


2007(In thousands)Service revenues:United States

$
353,092


$
370,858


$
338,528International


285,792



291,554



207,910Total service revenues

$
638,884


$
662,412


$
546,438   December 31,2009


2008(In thousands)Long-lived assets:United States

$
14,844


$
18,574International


14,385



13,823Total long-lived assets(1)

$
29,229


$
32,397     (1)
    
    Reflects net book value of the Companys property and
    equipment. 90




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##### Table of Contents



SAPIENT
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (20)
    Prepaid
    Expenses, Other Current Assets, Other Non-Current Assets, Other
    Accrued Liabilities and Other Long-Term Liabilities    December 31, 2009


December 31, 2008(In thousands)Prepaid expenses and other current assets:Prepaid insurance

$
1,100


$
838Prepaid media


6,661



831Prepaid rent


3,108



1,404VAT tax receivable


301



6,571Put right related to marketable securities


1,115



Prepaid other


12,608



8,744$
24,893


$
18,388Other assets:Put right related to marketable securities

$



$
1,691Other assets


5,359



3,909$
5,359


$
5,600Other accrued liabilities:Accrued media

$
5,016


$
5,917Accrued accounts payable


19,250



12,752VAT tax payable


6,032



11,459Other accrued expenses


16,877



9,823$
47,185


$
39,951Other long-term liabilities:Unrecognized tax benefit

$
8,924


$
6,368Other long-term liabilities


7,710



5,845$
16,634


$
12,213  91




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##### 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 31,2009


2009


2009


2009(In thousands, except per share amounts)(Unaudited)Revenues:Service revenues

$
142,359


$
147,534


$
165,541


$
183,450Reimbursable expenses


6,953



6,070



6,919



7,851Total gross revenues


149,312



153,604



172,460



191,301Operating expenses:Project personnel expenses


100,178



101,939



114,219



119,523Reimbursable expenses


6,953



6,070



6,919



7,851Total project personnel expenses and reimbursable expenses


107,131



108,009



121,138



127,374Selling and marketing expenses


7,142



7,274



8,055



9,460General and administrative expenses


26,354



27,764



30,207



33,693Restructuring and other related (benefits) charges


2,145



158



2,518



(273
)Amortization of purchased intangible assets


867



898



1,681



1,700Acquisition costs and other related charges


638



1,035



1,110



179Total operating expenses


144,277



145,138



164,709



172,133Income from operations


5,035



8,466



7,751



19,168Interest and other income, net


1,006



809



652



689Income before income taxes


6,041



9,275



8,403



19,857Provision for income taxes


1,543



1,679



2,470



8,043Benefit from release of valuation allowance














(58,285
)(Benefit from) provision for income taxes


1,543



1,679



2,470



(50,242
)Net income

$
4,498


$
7,596


$
5,933


$
70,099Basic net income per share

$
0.04


$
0.06


$
0.05


$
0.54Diluted net income per share

$
0.03


$
0.06


$
0.04


$
0.51Weighted average common shares


126,889



127,066



128,582



129,273Weighted average dilutive common share equivalents


3,479



3,759



6,739



7,089Weighted average common shares and dilutive common share
    equivalents


130,368



130,825



135,321



136,362   92




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##### Table of Contents



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


June 30,


September 30,


December 31,2008


2008


2008


2008(In thousands, except per share amounts)(Unaudited)Revenues:Service revenues

$
154,231


$
165,826


$
177,671


$
164,684Reimbursable expenses


6,303



4,498



6,449



7,825Total gross revenues


160,534



170,324



184,120



172,509Operating expenses:Project personnel expenses


106,907



110,674



114,031



103,896Reimbursable expenses


6,303



4,498



6,449



7,825Total project personnel expenses and reimbursable expenses


113,210



115,172



120,480



111,721Selling and marketing expenses


10,853



10,498



8,659



6,223General and administrative expenses


30,041



32,155



33,462



27,530Restructuring and other related (benefits) charges


143



(136
)


92



95Amortization of purchased intangible assets


487



473



732



968Acquisition costs and other related charges














Total operating expenses


154,734



158,162



163,425



146,537Income from operations


5,800



12,162



20,695



25,972Interest and other income, net


2,770



1,584



1,450



1,282Income before income taxes


8,570



13,746



22,145



27,254Provision for income taxes


1,454



2,172



4,078



1,535Net income

$
7,116


$
11,574


$
18,067


$
25,719Basic net income per share

$
0.06


$
0.09


$
0.14


$
0.20Diluted net income per share

$
0.06


$
0.09


$
0.14


$
0.20Weighted average common shares


126,031



125,544



125,835



126,528Weighted average dilutive common share equivalents


2,925



3,101



4,278



2,401Weighted average common shares and dilutive common share
    equivalents


128,956



128,645



130,113



128,929   (22)
    Subsequent
    Event      Form 10-K
 93




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##### Table of Contents



SAPIENT
    CORPORATION
 SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
    Years Ended December 31, 2009, 2008 and 2007 Balance at







Balance atBeginning of

Charge (Benefit)





End ofAllowance for Doubtful Accounts

Year

to Expense

Recoveries

Write-Offs

Year(In thousands)December 31, 2007

$
2,573


$



$
(1,426
)

$
(191
)

$
956December 31, 2008

$
956


$
262


$
(316
)

$
(507
)

$
395December 31, 2009

$
395


$
266


$



$
(51
)

$
610  94




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##### 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.    Internal
    Control  Integrated Framework
    Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(d)
 95




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##### Table of Contents



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


53


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


44


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


42


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


56


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.H. B. Chip Register, Senior Vice President and
    Managing Director, Sapient Global Markets


43


Mr Register joined Sapient in June 2007 and serves as Senior
    Vice President and Managing Director, Global Markets. Prior to
    joining Sapient, Mr. Register was most recently a Senior Vice
    President at Louis Dreyfus Energy Services and over the last two
    decades has built and managed a number of trading groups there
    as well as at Essent Energy in the Netherlands, CIBC World
    Markets and Weyerhauser in Toronto, and Union Bank of
    Switzerland, New York.Joseph S. Tibbetts, Jr., Senior Vice President, Chief Financial
    Officer and Chief Accounting Officer


57


Mr. Tibbetts joined Sapient in October 2006 as Senior Vice
    President and Chief Financial Officer. In 2009 Mr. Tibbetts
    began serving as the Companys Chief Accounting 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


46


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.  96




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##### Table of Contents



Directors
      Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    (c)(a)





Number of SecuritiesNumber of Securities


(b)


Remaining Available forto be Issued Upon


Weighted-Average


Future Issuance UnderExercise of


Exercise Price of


Equity Compensation PlansOutstanding Options,


Outstanding Options,


(Excluding SecuritiesPlan Category

Warrants and Rights


Warrants and Rights


Reflected in Column (a)(1)(2)Equity compensation plans approved by stockholders


12,084,239


$
9.20



9,113,121Equity compensation plans not approved by stockholders(3)


352,302



6.27



Total


12,436,541


$
9.11



9,113,121     (1)
    
    5,644,627 of the shares listed in column (c) may be issued
    in the form of restricted stock or RSUs, pursuant to the terms
    of our 1998 Stock Incentive Plan, as amended. No shares of
    restricted stock are currently available for issuance under our
    other equity compensation plans.(2)
    
    Column (c) includes 1,773,600 shares that are
    available for issuance under our 2005 Employee Stock Purchase
    Plan as of December 31, 2009, should the Company decide to
    continue the 2005 Employee Stock Purchase Plan.(3)
    
    Consists of RSU awards approved by the Companys Board of
    Directors and granted as inducements material to employment
    following the Companys acquisition of Nitro Group Ltd. A
    portion of the RSUs will vest on the third anniversary of the
    award date and the rest will vest over the next four years on a
    schedule consistent with the vesting schedule of equity awards
    that each individual held in Nitro. All unvested RSUs will be
    forfeited upon termination of employment for any reason. The RSU
    awards were granted without shareholder approval in reliance
    upon NASDAQ Marketplace Rule 5635(c)(4).  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




---



##### Table of Contents



SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the
    Securities Exchange Act of 1934, the Registrant has duly caused
    this report to be signed on its behalf by the undersigned,
    thereunto duly authorized.



SAPIENT CORPORATION 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 23, 2010Principal Financial and Accounting Officer:/s/  JOSEPH
    S. TIBBETTS, JR.Joseph
    S. Tibbetts, Jr.

Chief Financial Officer

February 23, 2010Directors:/s/  JAMES
    M. BENSONJames
    M. Benson



February 23, 2010/s/  HERMANN
    BUERGERHermann
    Buerger



February 23, 2010/s/  DARIUS
    W. GASKINS, JR.Darius
    W. Gaskins, Jr.



February 23, 2010/s/  ALAN
    J. HERRICKAlan
    J. Herrick



February 23, 2010/s/  J.
    STUART MOOREJ.
    Stuart Moore



February 23, 2010/s/  BRUCE
    D. PARKERBRUCE
    D. PARKER



February 23, 2010/s/  ASHOK
    SHAHASHOK
    SHAH



February 23, 2010/s/  VIJAY
    SINGALVijay
    Singal



February 23, 2010  99




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber



Description2.1



Agreement dated as of August 6, 2008, among Sapient Limited,
    Sapient Corporation and the persons listed on Schedule I
    thereto(1)3.1



Second Amended and Restated Certificate of Incorporation(2)3.2



Amended and Restated Bylaws(3)4.1



Specimen Certificate for Shares of Common Stock, $.01 par
    value, of the Company(4)10.1



1996 Equity Stock Incentive Plan(4)10.2



1996 Director Stock Option Plan(4)10.3



1998 Stock Incentive Plan(5)10.4



Amendment to 1998 Stock Incentive Plan(6)10.5



2001 Stock Option Plan(7)10.6



Sapient Corporation Winning Performance Plan(8)10.7



2007 Global Performance Bonus Plan(9)10.8



Joseph S. Tibbetts, Jr. Restricted Stock Units Agreement(9)10.9



Director Compensation Matters(10)10.10



J. Stuart Moore Separation Agreement(10)10.11



Joseph S. Tibbetts, Jr. Offer Letter(10)10.12



Alan M. Wexler Severance Agreement(10)10.13



Alan J. Herrick Employment Agreement(6)10.14



Amendment to Alan J. Herrick Employment Agreement(13)10.15



Form of Restricted Stock Units Agreement for Initial Grant to
    re-elected Board members(6)10.16



Form of Restricted Stock Units Agreement for Initial Grant to
    newly appointed Board members(6)10.17



Form of Restricted Stock Units Agreement for Employees(6)10.18



Employment Agreement between Sapient GmbH and Dr. Christian
    Oversohl(11)10.19



Second Amended and Restated Consulting Agreement with Jerry A.
    Greenberg(12)21*



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 8-K
    filed August 7, 2008. (File
    No. 000-28074).(2)
    
    Incorporated herein by reference to
    the Companys
    Form 10-Q
    for the fiscal quarter ended September 30, 2004 (File
    No. 000-28074).(3)
    
    Incorporated herein by reference to
    the Companys
    Form 8-K
    filed February 10, 2009. (File
    No. 000-28074).(4)
    
    Incorporated herein by reference to
    the Companys Registration Statement on
    Form S-1
    (File
    No. 333-12671).(5)
    
    Incorporated herein by reference to
    the Companys
    Form 10-K
    for the fiscal year ended December 31, 1998 (File
    No. 000-28074).(6)
    
    Incorporated herein by reference to
    the Companys
    Form 10-Q
    for the period ended September 30, 2007 (File
    No. 000-28074).(7)
    
    Incorporated herein by reference to
    the Companys Proxy Statement for the 2001 Annual Meeting
    of Stockholders (File
    No. 000-28074).(8)
    
    Incorporated herein by reference to
    the Companys
    Form 10-Q
    for the period ended June 30, 2006 (File
    No. 000-28074).(9)
    
    Incorporated herein by reference to
    the Companys
    Form 10-Q
    for the period ended June 30, 2007 (File
    No. 000-28074).(10)
    
    Incorporated herein by reference to
    the Companys
    Form 10-K
    for the fiscal year ended December 31, 2006 (File
    No. 000-28074).(11)
    
    Incorporated herein by reference to
    the Companys
    Form 8-K
    filed March 19, 2008 (File
    No. 000-28074).(12)
    
    Incorporated herein by reference to
    the Companys
    Form 8-K
    filed November 12, 2009. (File
    No. 000-28074).(13)
    
    Incorporated herein by reference to
    the Companys
    Form 10-Q
    for the period ended June 30, 2009 (File
    No. 000-28074). 100