content_image/222366.jpg content_image/222364.jpg content_image/222363.jpg
Because operating expense declined at a slower pace than revenue, the 2009 operating margin was down about 1.6 percentage points from 2008. The $9.5 million of operating expense described above represented about 2 percentage points of the margin decline. 

<img src='content_image/222366.jpg'>

<img src='content_image/222364.jpg'>

## Consolidated Free Cash Flow 

We define free cash flow as cash provided by or used for operating activities less capital expenditures. We present free cash flow solely as supplemental disclosure to help investors better understand how much cash is available after we spend money to operate our busi- ness. Our management team uses free cash flow to evaluate our business. Free cash flow is not a measure of performance set forth under GAAP. Also, the free cash flow definition we use may not be comparable to similarly titled measures used by other companies. 

We generated positive free cash flow in 2010, 2009, and 2008 as our cash provided by operating activities has consistently exceeded our level of capital expenditures, as shown below: 

<img src='content_image/222363.jpg'>

Free cash flow increased $19.8 million in 2010 after declining $11.9 million in 2009. Cash provided by operating activities and capital expenditures followed similar trends, increasing in 2010 after declin- ing in 2009. 

Cash provided by operating activities:  Cash provided by operating activities increased $22.2 million in 2010, mainly because cash paid in 2010 for bonuses was lower than in 2009. We made bonus pay- ments of $21.4 million in the first quarter of 2010, compared with $58.9 million in the first quarter of 2009. The positive cash flow impact of a lower bonus payment was partially offset by $4.9 million in payments we made to one former and two current executives related to adjusting the tax treatment of certain stock options originally considered incentive stock options (ISOs). We recorded the operating expense related to this matter in the fourth quarter of 2009. 

Cash provided by operating activities decreased $48.1 million in 2009 compared with 2008. The decline in cash provided by operat- ing activities reflects a lower cash benefit from accrued compensa- tion as well as an increase of $9.6 million for bonus payments. We made bonus payments of $58.9 million in the first quarter of 2009, compared with $49.3 million in the first quarter of 2008. Bonuses paid in the first quarter of 2009 included $10.0 million in payments deferred from 2007. We revised our bonus program in January 2009 and no longer defer payment of a portion of bonuses recorded in the prior year. In addition, cash provided by operating activities in 2008 included a $18.9 million benefit from deferred rent, primarily for tenant improvement allowances related to the construction of our new corporate headquarters. This benefit did not recur in 2009. Excess tax benefits declined $17.9 million in 2009 because of a reduction in the number of options exercised and lower average stock prices on the exercise dates. 

