CONCUR TECHNOLOGIES INC - FORM 10-Q

CONCUR TECHNOLOGIES INC - FORM 10-Q - May 5, 2010

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EX-32.01 - CERTIFICATION OF CEO PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14(B) - CONCUR TECHNOLOGIES INC	dex3201.htm
EX-31.02 - CERTIFICATION OF CFO PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14(A) - CONCUR TECHNOLOGIES INC	dex3102.htm
EX-32.02 - CERTIFICATION OF CFO PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14(B) - CONCUR TECHNOLOGIES INC	dex3202.htm
EX-31.01 - CERTIFICATION OF CEO PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14(A) - CONCUR TECHNOLOGIES INC	dex3101.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-25137

Concur Technologies, Inc.

(Exact name of Registrant as specified in its charter)


Delaware		91-1608052
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

18400 NE Union Hill Road Redmond, Washington		98052
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (425) 702-8808

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

Number of shares of the registrant’s common stock outstanding as of April 30, 2010: 49,877,171

CONCUR TECHNOLOGIES, INC.

FORM 10-Q

March 31, 2010

INDEX


		Page
PART I. FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS

Income Statements		3
Balance Sheets		4
Stockholders’ Equity Statements		5
Cash Flow Statements		6
Notes to Financial Statements		7

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		28
ITEM 4. CONTROLS AND PROCEDURES		28

PART II. OTHER INFORMATION		29
ITEM 1. LEGAL PROCEEDINGS		29
ITEM 1A. RISK FACTORS		29
ITEM 6. EXHIBITS		38

SIGNATURE		39

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Concur Technologies, Inc.

Income Statements

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended March 31,						Six Months Ended March 31,
	2010			2009			2010			2009
Revenue	$	72,816		$	61,991		$	140,469		$	120,555
Expenses:
Cost of operations		21,521			18,938			41,692			36,812
Sales and marketing		22,712			17,770			43,484			35,332
Systems development and programming		7,127			6,187			14,017			12,379
General and administrative		8,636			6,793			16,350			13,981
Amortization of intangible assets		1,833			1,541			3,688			3,082

Total expenses		61,829			51,229			119,231			101,586

Operating income		10,987			10,762			21,238			18,969
Other income (expense):
Interest income		294			322			605			1,468
Interest expense		(440	)		(117	)		(543	)		(250	)
Other, net		(332	)		(422	)		(492	)		(567	)

Total other income (expense), net		(478	)		(217	)		(430	)		651

Income before income tax		10,509			10,545			20,808			19,620
Income tax expense		3,682			3,796			7,439			7,062

Net income	$	6,827		$	6,749		$	13,369		$	12,558

Net income per share:
Basic	$	0.14		$	0.14		$	0.27		$	0.26
Diluted		0.13			0.13			0.25			0.24
Weighted average shares used in computing net income per share:
Basic		49,454			48,430			49,248			48,624
Diluted		52,738			51,174			52,619			51,473

See notes to financial statements.

Concur Technologies, Inc.

Balance Sheets

(In thousands, except per share amounts)

(Unaudited)


	March 31, 2010			September 30, 2009
Assets
Current assets:
Cash and cash equivalents	$	162,997		$	119,185
Short-term investments		124,045			143,549
Restricted cash		3,142			3,599
Receivable from senior convertible notes offering and warrants		265,200			—
Accounts receivable, net of allowance of $2,867 and $3,680		48,480			45,801
Deferred tax assets		24,063			24,570
Deferred costs and other assets		20,963			18,979

Total current assets		648,890			355,683
Non-current assets:
Property and equipment, net		33,489			33,999
Investments		6,045			4,045
Deferred costs and other assets		20,407			19,964
Intangible assets, net		39,831			44,383
Deferred tax assets		17,397			23,904
Goodwill		190,077			188,907

Total assets	$	956,136		$	670,885


Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,501		$	3,638
Customer funding liabilities		62,391			56,424
Note hedges payable		52,300			—
Accrued compensation		12,002			17,508
Acquisition-related liabilities		—			902
Other accrued expenses and liabilities		7,728			10,539
Short-term lease liabilities and other		777			1,129
Deferred revenues		41,536			34,955

Total current liabilities		180,235			125,095
Non-current liabilities:
Senior convertible notes, net		194,331			—
Long-term lease liabilities and other		—			199
Deferred rent		1,468			1,601
Deferred revenues		13,423			14,083
Tax liabilities		8,185			8,577

Total liabilities		397,642			149,555

Stockholders’ equity:
Convertible preferred stock, par value $0.001 per share		—			—
Authorized shares: 5,000; No shares issued or outstanding
Common stock, $0.001 par value per share		50			49
Authorized shares: 195,000
Shares issued and outstanding: 49,707 and 48,988
Additional paid-in capital		667,208			640,911
Accumulated deficit		(105,782	)		(119,151	)
Accumulated other comprehensive loss		(2,982	)		(479	)

Total stockholders’ equity		558,494			521,330

Total liabilities and stockholders’ equity	$	956,136		$	670,885

See notes to financial statements.

Concur Technologies, Inc.

Stockholders’ Equity Statements

(In thousands)


	Common Stock					Additional Paid-In			Accumulated			Accumulated Other Comprehensive			Total Stockholders’
	Shares		Amount			Capital			Deficit			Income (Expense)			Equity
Balance as of September 30, 2008	50,286		$	50		$	679,526			(144,828	)		(210	)		534,538
Common stock repurchased	(2,025	)		(2	)		(54,771	)		—			—			(54,773	)
Common stock issued:
Employee Stock Purchase Plan	44			—			1,176			—			—			1,176
Stock option exercises and vesting of restricted stock units	559			1			1,068			—			—			1,069
Acquisition of Etap-On-Line	124			—			4,318			—			—			4,318
Equity Issuance costs	—			—			(2,842	)		—			—			(2,842	)
Share-based compensation expense	—			—			12,436			—			—			12,436
Foreign currency translation adjustment loss	—			—			—			—			(278	)		(278	)
Unrealized gain on investments	—			—			—			—			9			9
Net Income	—			—			—			25,677			—			25,677

Balance as of September 30, 2009	48,988			49			640,911		$	(119,151	)	$	(479	)	$	521,330

Common stock issued:
Employee Stock Purchase Plan	20			—			720			—			—			720
Stock option exercises and vesting of restricted stock units	699			1			(1,489	)		—			—			(1,488	)
Share-based compensation expense	—			—			7,532			—			—			7,532
Equity component of the senior convertible notes issuance, net	—			—			30,061			—			—			30,061
Purchase of note hedges	—			—			(33,202	)		—			—			(33,202	)
Sale of warrants	—			—			22,675			—			—			22,675
Foreign currency translation adjustment loss	—			—			—			—			(2,505	)		(2,505	)
Unrealized gain on investments	—			—			—			—			2			2
Net Income	—			—			—			13,369			—			13,369

Balance as of March 31, 2010	49,707		$	50		$	667,208		$	(105,782	)	$	(2,982	)	$	558,494

See notes to financial statements.

Concur Technologies, Inc.

Cash Flow Statements

(In thousands)

(Unaudited)


	Three Months Ended March 31,						Six Months Ended March 31,
	2010			2009			2010			2009
Operating activities:
Net income	$	6,827		$	6,749		$	13,369		$	12,558
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets		1,833			1,541			3,688			3,082
Depreciation		4,164			4,104			8,296			8,140
Net recovery of sales allowances		(485	)		(383	)		(814	)		(863	)
Share-based compensation expense		3,866			2,141			7,365			4,644
Deferred income taxes		3,659			3,360			7,043			6,029
Changes in operating assets and liabilities:
Accounts receivable		(4,451	)		3,236			(2,140	)		2,371
Deferred costs and other assets		(1,822	)		(1,820	)		(2,529	)		(3,026	)
Accounts payable		(534	)		1,977			(19	)		2,670
Accrued liabilities		915			2,488			(7,996	)		(10,391	)
Deferred revenues		4,270			353			6,128			2,300

Net cash provided by operating activities		18,242			23,746			32,391			27,514

Investing activities:
Purchases of investments		(55,942	)		—			(93,201	)		—
Maturities of investments		72,098			—			112,737			—
Increase in customer funding liabilities, net of changes in restricted cash		20,808			2,306			6,389			1,199
Investments in unconsolidated affiliate		(2,000	)		(4,020	)		(2,000	)		(4,020	)
Purchases of property and equipment		(4,014	)		(4,943	)		(7,659	)		(10,545	)
Payments for acquisitions, net of cash acquired		(2,378	)		(144	)		(3,540	)		(158	)

Net cash provided by (used in) investing activities		28,572			(6,801	)		12,726			(13,524	)

Financing activities:
Payments for issuance of common stock		—			(2,829	)		—			(2,829	)
Net (payments) proceeds from share-based equity award activity		(2,603	)		(909	)		(1,489	)		927
Proceeds from employee stock purchase plan activity		435			—			720			350
Payments on repurchase of common stock		—			—			—			(54,773	)
Repayments on borrowings and capital leases		(279	)		(430	)		(551	)		(852	)

Net cash used in financing activities		(2,447	)		(4,168	)		(1,320	)		(57,177	)

Effect of foreign currency exchange rate changes on cash and cash equivalents		(91	)		(280	)		15			(2,383	)

Net increase (decrease) in cash and cash equivalents		44,276			12,497			43,812			(45,570	)
Cash and cash equivalents at beginning of period		118,721			209,658			119,185			267,725

Cash and cash equivalents at end of period	$	162,997		$	222,155		$	162,997		$	222,155

Supplemental cash flow information:
Cash paid for interest	$	70		$	68		$	106		$	68
Income tax payments, net		619			291			1,064			340

See notes to financial statements.

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS

March 31, 2010

(Unaudited)

Note 1. Description of the Company and Basis of Presentation

Throughout these financial statements Concur Technologies, Inc. is referred to as “Concur,” “we,” “us” and “our.” We report our operating results on the basis of a fiscal year that starts October 1 and ends September 30. We refer to our fiscal years ended September 30, 2009, 2010 and 2011, as “2009,” “2010” and “2011.” All dollar, option and share amounts are reported in thousands, unless otherwise noted.

Description of the Company

We are a leading global provider of on-demand Employee Spend Management solutions. Our integrated travel and expense software solutions enable organizations to control costs by automating the processes used to manage employee spending. Our solutions unite online travel procurement with automated expense reporting, streamline corporate event management, and optimize the process of managing vendor payments, employee check requests and direct reimbursements. Our unified approach to managing these processes provides our customers with visibility into their employee spending, which helps them analyze trends, influence budget decisions, improve forecasting, and monitor and enforce compliance with their corporate policies and external regulations, such as the Sarbanes-Oxley Act of 2002.

Our core mission is to continuously innovate to reduce the costs of employee spend management for our customers. We work closely with our customers to identify opportunities to increase the value of our solutions by streamlining the travel procurement, expense reporting and vendor payment processes, reducing operating costs, improving internal controls, enhancing the overall user experience and user adoption rates, and enabling customers to gain greater insight into their spending patterns through comprehensive analytics.

We sell our solutions primarily as subscription services. We market and sell our solutions worldwide through our direct sales organization and through indirect distribution channels such as strategic resellers.

Concur^®, Concur^® Expense, Concur^® Travel & Expense, Concur^® Cliqbook Travel, Concur^® Invoice, Concur^® Connect, Concur^® ExpenseLink, and Concur^® Advantage are among the registered trademarks and registered service marks of Concur or our subsidiaries, in the United States and other countries. Other parties’ marks are the property of their respective owners and should be treated as such.

Basis of Presentation

The accompanying financial statements present our results of operations, financial position and cash flows on a consolidated basis. These unaudited financial statements include the accounts of Concur and our subsidiaries. We have eliminated all intercompany accounts and transactions in these financial statements.

We have prepared the accompanying unaudited financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting. In our opinion, we have included all adjustments necessary for a fair presentation. These adjustments consist of normal recurring items. Our unaudited financial statements are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2009, filed with the Securities and Exchange Commission (“SEC”) on November 18, 2009.

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS—(Continued)

March 31, 2010

(Unaudited)

Reclassifications

Certain amounts previously presented for prior periods have been reclassified to conform to current presentation. The reclassifications had no effect on net income or total stockholders’ equity.

Note 2. Accounting Estimates, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Use of Estimates

We prepared our financial statements in conformity with GAAP, which requires us to make estimates and assumptions affecting the amounts reported in the financial statements and accompanying notes. Changes in these estimates and assumptions may have a material impact on our financial statements and accompanying notes. Examples of estimates and assumptions include the determination of certain provisions, including allowances for accounts receivable, valuing assets and liabilities acquired through business combinations, valuing and estimating useful lives of intangible assets, deferring certain revenues and costs, estimating expected lives of customer relationships, product warranties, estimating useful lives of property and equipment, and estimating tax valuation allowances.

Recently Adopted Accounting Pronouncements

The Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) became effective for us during the fourth quarter of 2009. This codification brings all authoritative GAAP that has been issued by a standard setter into one place. The codification retains existing GAAP without changing it.

On October 1, 2009, we adopted authoritative FASB guidance on business combinations. The guidance retains the fundamental requirements that the acquisition method of accounting (previously referred to as the purchase method of accounting) be used for all business combinations, but requires a number of changes, including changes in the way assets and liabilities are recognized and measured as a result of business combinations. It also requires the capitalization of in-process research and development at fair value and requires the expensing of acquisition-related costs as incurred. Adoption of the new guidance did not have a material impact on our financial statements.

On October 1, 2009, we adopted authoritative FASB guidance that changes the accounting and reporting for non-controlling interests. Non-controlling interests are to be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interests that do not result in a change in control are to be accounted for as equity transactions. In addition, net income attributable to a non-controlling interest is to be included in net income and, upon a loss of control, the interest sold, as well as any interest retained, is to be recorded at fair value with any gain or loss recognized in net income. Adoption of the new guidance did not have a material impact on our financial statements.

On October 1, 2009, we adopted authoritative FASB guidance on fair value measurement for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Adoption of the new guidance did not have a material impact on our financial statements.

Recently Issued Accounting Pronouncements

In October 2009, the FASB issued authoritative guidance on revenue arrangements with multiple deliverables that are outside the scope of the software revenue recognition guidance. Under the new guidance, when vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. The new guidance also eliminates the use of the residual method of allocation and instead requires that arrangement consideration be allocated at the inception of the arrangement, to all deliverables based on their relative selling price. We are required to adopt these changes to revenue recognition in the first quarter of 2011. We believe adoption of this new guidance will not have a material impact on our financial statements

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS—(Continued)

March 31, 2010

(Unaudited)

Note 3. Net Income Per Share

We calculate basic net income per share by dividing net income for the period by the weighted-average number of shares of common stock outstanding during the period. We calculate diluted net income per share by dividing net income for the period by the weighted-average number of shares of common stock outstanding during the period, plus any dilutive effect from share-based equity awards and warrants during the period, under the treasury stock method. Dilutive shares outstanding do not include any effect from the conversion of our senior convertible notes issued in March 2010, or exercise of related warrants, as their impact would be anti-dilutive for the three and six months ended March 31, 2010. The computation of basic and diluted net income per share is as follows:


	Three Months Ended March 31,				Six Months Ended March 31,
	2010		2009		2010		2009
Net income	$	6,827	$	6,749	$	13,369	$	12,558
Weighted average number of shares outstanding:
Basic		49,454		48,430		49,248		48,624
Dilutive effect of share-based equity award plans (1)		3,222		2,744		3,344		2,849
Dillutive effect of warrants (2)		62		—		27		—

Diluted		52,738		51,174		52,619		51,473

Net income per share available to common stockholders:
Basic	$	0.14	$	0.14	$	0.27	$	0.26
Diluted		0.13		0.13		0.25		0.24

(1)	For the three and six months ended March 31, 2010 and 2009, we did not exclude any options to purchase Concur common stock from the calculations of diluted net income per share.

(2)	For the three and six months ended March 31, 2009, we excluded warrants to purchase 1,280 shares of Concur common stock from the calculations of diluted net income per share.

Note 4. Property and Equipment

Our property and equipment consisted of the following:


	March 31, 2010			September 30, 2009
Land and building	$	5,601		$	5,596
Leasehold improvements		5,108			5,111
Computer hardware		19,311			17,590
Computer software		45,731			43,577
Furniture and equipment		1,108			1,395

Property and equipment, gross		76,859			73,269
Less: accumulated depreciation		(43,370	)		(39,270	)

Property and equipment, net	$	33,489		$	33,999

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS—(Continued)

March 31, 2010

(Unaudited)

Note 5. Investments

Equity Investment in Private Company

In January 2009, we made an investment of $4.0 million, including transaction costs, in RideCharge, Inc. (“RideCharge”), a leading provider of ground travel booking that allows business travelers to book, pay and get reimbursed for ground transportation. We initially acquired 3.2 million shares of RideCharge preferred stock, and warrants to purchase an additional 1.6 million shares of RideCharge preferred stock at $1.25 per share. In February 2010, we exercised the warrants to purchase an additional 1.6 million shares of RideCharge preferred stock, increasing our investment to $6.0 million.

Because our preferred stock in RideCharge does not meet all the characteristics of in-substance common stock, we have accounted for our investment under the cost method with net accumulated earnings recorded only to the extent of distributed dividends. We have reported our investment in RideCharge in “Investments” on our balance sheet.

All Other Investments

We generally invest our excess cash in investment grade short- to intermediate-term fixed income securities and money market funds. The portion in cash and cash equivalents represents highly liquid instruments with insignificant interest rate risk and original maturities of three months or less. Unrealized gains and losses related to available for sale securities are reported in “Other comprehensive gain (loss),” as disclosed in Note 12.

Note 6. Intangible Assets

Our intangible assets arise from our business acquisitions. The following table presents our intangible assets as of March 31, 2010, and September 30, 2009:


Description	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount as of March 31, 2010		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount as of September 30, 2009
Trade name and trademarks	$	672	$	90	$	582	$	1,029	$	324	$	705
Technology		13,640		8,985		4,655		13,721		7,432		6,289
Customer relationships		44,335		9,741		34,594		45,120		7,731		37,389

Total	$	58,647	$	18,816	$	39,831	$	59,870	$	15,487	$	44,383

For the three and six months ended March 31, 2010, we recorded amortization expense of $1.8 million and $3.7 million in our income statements, and we recorded $1.5 million and $3.1 million for the same periods in 2009.

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS—(Continued)

March 31, 2010

(Unaudited)

Estimated amortization expense for the remaining estimated useful life of the intangible assets is as follows as of March 31, 2010:


Years Ending September 30,	Amortization of Intangible Assets
2010 (April 1, 2010, through September 30, 2010)	$	3,565
2011		6,866
2012		4,671
2013		4,178
2014		4,156
Thereafter		16,395

Total	$	39,831

Note 7. Customer Funding Liabilities

We draw funds from and make payments on behalf of our customers for employee expense reimbursements and related corporate credit card payments. We hold these funds in cash and record our obligation to make these expense reimbursements and payments on behalf of our customers as Customer Funding Liabilities. Some of our customers require that we maintain restricted bank accounts to hold these funds. Amounts held in these accounts are recorded as restricted cash.

Note 8. Debt

Senior Convertible Notes

In March 2010, we issued at par value $250.0 million principal amount of our 2.50% senior convertible notes due in 2015 (the “Initial Notes”). As of March 31, 2010 we recorded a receivable of $265.2 million from the Initial Notes and the Warrants described below on our balance sheet. In addition, the underwriters were granted an over-allotment option to purchase an additional $37.5 million principal amount of 2.50% senior convertible notes due in 2015, which brings the total amount issued under such notes and the Initial Notes to $287.5 million (collectively, the “Notes”). The overallotment option was exercised in full on April 1, 2010 and therefore is not reflected in our March 31, 2010 financial statements. All amounts from the issuance of the Notes settled in April 2010.

The Notes are governed by an Indenture, dated as of April 6, 2010 (“Indenture”), between the Company and Wells Fargo Bank, National Association, as trustee. The Notes will mature on April 15, 2015, unless earlier repurchased or converted, and bear interest at a rate of 2.50% per year payable semi-annually in arrears on April 15 and October 15 of each year, commencing October 15, 2010.

The Notes are convertible into cash and shares of our common stock, if any, at an initial conversion rate of 19.10 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $52.35 per share, subject to adjustment. Prior to January 15, 2015, conversion is subject to the satisfaction of certain conditions set forth below. Holders of the Notes who convert their Notes in connection with a fundamental change (as defined in the Indenture) will, under certain circumstances, be entitled to a make-whole premium in the form of an increase in the conversion rate. Additionally, in the event of a fundamental change, holders of the Notes may require the Company to repurchase all or a portion of their Notes at a repurchase price equal to 100% of the principal amount of Notes, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date (as defined in the Indenture).

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS—(Continued)

March 31, 2010

(Unaudited)

Holders of the Notes may convert their Notes on or after January 15, 2015, until the close of business on the second scheduled trading day immediately preceding the maturity date. The conversion rate will be subject to adjustment in some events but will not be adjusted for accrued interest. Upon conversion, we will satisfy our conversion obligation by delivering cash and shares of common stock, if any, based on a daily settlement amount (as defined in the Indenture). Prior to January 15, 2015, holders of the Notes may convert their Notes under any of the following conditions:

•

during any calendar quarter commencing after June 30, 2010, (and only during such calendar quarter), if the last reported sale price of common stock for 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to 130% of the applicable conversion price on each applicable trading day;

•

during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each day of that five consecutive trading day period was less than 98% of the product of the last reported sale price of common stock and the applicable conversion rate on such day; or

•

upon the occurrence of specified corporate events.

In accounting for the issuance of the Notes, we separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the Notes as a whole. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense over the term of the Note. The equity component will not be remeasured as long as it continues to meet the conditions for equity classification.

In accounting for the transaction costs related to the issuance of the Notes, we allocated the total amount incurred to the liability and equity components. Transaction costs attributable to the liability component are being amortized to expense over the term of the Notes, and transaction costs attributable to the equity component were netted with the equity component in additional paid-in capital. Debt issuance costs were $6.0 million as of March 31, 2010, and equity issuance costs were $1.5 million. Additionally, we recorded a deferred tax asset of $1.0 million in connection with the Initial Notes.

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS—(Continued)

March 31, 2010

(Unaudited)

The following table shows the amounts recorded within our financials as of March 31, 2010, and the additional amounts recognized in April 2010, from the exercise of the over allotment of $37.5 million:


	Transaction traded
	March 2010			April 2010
	$250.0 Million			Over-Allotment ($37.5 million)			Total
Liability components:
Principal amount	$	250,000		$	37,500		$	287,500
Less: note discount		(49,679	)		(7,452	)		(57,131	)
Less: note issuance costs		(5,990	)		(826	)		(6,816	)

Convertible senior notes, net	$	194,331		$	29,222		$	223,553

Equity components	$	49,679		$	7,452		$	57,131
Less: issuance costs		(1,485	)		(205	)		(1,690	)

Additional paid-in capital	$	48,194		$	7,247		$	55,441

Note hedge costs	$	52,300		$	7,845		$	60,145
Warrants proceeds		22,675			3,401			26,076

Net cost	$	29,625		$	4,444		$	34,069

We did not record any interest expense related to the Notes in the financial statements for the period ending March 31, 2010.

The net proceeds from the Notes was approximately $279.0 million after payment of the initial purchasers’ discounts and offering expenses. We used approximately $34.1 million of the net proceeds of the Notes offering to pay the cost of the Note Hedges described below, which was partially offset by the proceeds from our sale of the Warrants described below. We expect to use the net proceeds of the Notes for general corporate purposes, including potential acquisitions and strategic transactions.

Note Hedges

To minimize the impact of potential economic dilution upon conversion of the Notes, we entered into note hedge transactions (“Note Hedges”) with respect to our common stock. We paid $52.3 million for the note hedges, which is shown in “note hedges Payable” on our March 31, 2010, balance sheet. The Note Hedges cover approximately 5.0 million shares of our common stock at a strike price of $52.35, subject to anti-dilution adjustments, and are exercisable upon conversion of the Notes. The Note Hedges will expire upon the maturity of the Notes. The Note Hedges are intended to reduce the potential economic dilution upon conversion of the Notes in the event that the market value per share of our common stock, as measured under the Notes, at the time of exercise is greater than the conversion price of the Notes.

Warrants

Separately, we entered into warrant transactions (“Warrants”), whereby we sold warrants to acquire shares of our common stock at a strike price of $73.29 per share, subject to anti-dilution adjustments. The Warrants will expire upon the maturity of the Notes. We received proceeds of $22.7 million from the sale of the Warrants, which is shown as part of the $265.2 million from the Initial Notes and Warrants on our March 31, 2010, balance sheet. If the market value per share of our common stock, as measured under the Warrants, exceeds the strike price of the Warrants, the Warrants will have a dilutive effect on our net income per share.

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS—(Continued)

March 31, 2010

(Unaudited)

Revolving Credit Facility

On March 29, 2010, we terminated a credit agreement with a financial institution that provided for a revolving credit facility for up to $70 million that was set to expire in September 2012, or earlier as provided in the credit agreement. As of March 29, 2010, we were in compliance with all loan covenants under the terms of the credit agreement, and had no outstanding borrowings under the agreement.

Note 9. Income Taxes

We make estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

We measure and recognize uncertain tax positions. To recognize such positions we must first determine if it is more likely than not that the position will be sustained on audit. We then must measure the benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Since we are in a net operating loss position for those positions that require a reserve we do not include interest and penalties related to our contingencies in our income tax expense.

Our tax provision for interim periods is derived using an estimate of our annual effective rate, adjusted for any material items. Our effective tax rate of 35.75% varies from the statutory 35% rate due to a reserve for uncertain tax positions and state income taxes moderated by research and development tax credits and lower foreign income tax rates.

Note 10. Share-based Compensation

Our 2007 Equity Incentive Plan (“Equity Plan”) provides for grants of stock options, restricted stock, stock bonuses, stock appreciation rights (“SARs”) and restricted stock units (“RSUs”). As of March 31, 2010, we had 1.2 million shares of common stock reserved for future grants under our Equity Plan, excluding shares of common stock reserved for future issue under our ESPP. We recognize compensation expense for equity awards on a straight line basis over the requisite service period of the award.

We have calculated an additional paid in capital (“APIC”) pool that represents the excess tax benefits related to share-based compensation that are available to absorb future tax deficiencies. We include those excess tax benefits in APIC only when they have been realized. If the amount of future tax deficiencies is greater than the available APIC pool, we will record the excess as income tax expense in our income statements. For the three and six months ended March 31, 2010 and 2009, we did not record any tax deficiencies against the APIC pool. Excess tax benefits or tax deficiencies, to the extent realized, are a factor in the calculation of diluted shares used in computing dilutive income per share.

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS—(Continued)

March 31, 2010

(Unaudited)

The following table presents our share-based compensation resulting from equity awards that we recorded in our income statements for the three and six months ended March 31, 2010 and 2009:


	Three Months Ended March 31,				Six Months Ended March 31,
	2010		2009		2010		2009
Cost of operations	$	597	$	326	$	1,081	$	710
Sales and marketing		1,786		844		3,493		1,847
Systems development and programming		576		373		1,076		806
General and administrative		907		598		1,715		1,281

Total share-based compensation	$	3,866	$	2,141	$	7,365	$	4,644

Net cash proceeds from the exercise of stock options were $1.6 million and $2.7 million for the three and six months ended March 31, 2010, and $0.3 million and $2.1 million for the same periods in 2009. For the three and six month periods ended March 31, 2010 and 2009, we did not realize any income tax benefits or deficiencies from stock option exercises. We present excess tax benefits from the exercise of stock options, if any, as financing cash flows rather than operating cash flows.

The following table presents our stock option activity for the six months ended March 31, 2010:


	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding as of September 30, 2009	3,168		$	6.95
Exercised	(467	)		5.75
Forfeited or expired	—			—

Outstanding as of March 31, 2010	2,701			7.06	3.33	$	91,443

Exercisable as of March 31, 2010	2,697			7.04	3.33		91,326

For the six months ended March 31, 2010, the total intrinsic value of options exercised was $19.4 million.

RSUs are awards that entitle the holder to shares of our common stock as the award vests. Our RSUs generally vest over four years, but may accelerate in certain circumstances. The compensation expense incurred for RSUs is based on the closing market price of our common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite service period.

The following table presents a summary of RSU award activity for the six months ended March 31, 2010:


	Shares		Weighted Average Share Value
Outstanding as of September 30, 2009	1,327		$	24.86
Granted	440			39.58
Vested and released	(332	)		25.78
Cancelled	(14	)		22.60

Outstanding as of March 31, 2010	1,421			29.27

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS—(Continued)

March 31, 2010

(Unaudited)

As of March 31, 2010, we expect $24.4 million of total unrecognized compensation costs related to non-vested stock options and RSUs to be recognized over a weighted average period of 1.8 years. For the six months ended March 31, 2010, the total grant date fair value of options and RSUs vested was $14.6 million, compared to $4.9 million for the same period in 2009.

Note 11. Fair Value Measurements

The accounting guidance for fair value measurements and its subsequent updates establishes a three-tier fair value hierarchy, categorizing the inputs used to measure fair value. The hierarchy can be described as follows: Level 1- observable inputs such as quoted prices in active markets; Level 2- inputs other than the quoted prices in active markets that are observable either directly or indirectly; and Level 3- unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

We have highly liquid investments classified as cash equivalents and short-term investments included in our balance sheet. Cash equivalents consist of money market instruments and commercial paper that have original maturities of 90 days or less. We also invest in commercial paper with maturities greater than 90 days but generally mature within 270 days. Such instruments are classified within Level 2 of the fair value hierarchy. We had no financial liabilities measured at fair value on a recurring basis at March 31, 2010.

Our financial assets measured at fair value as of March 31, 2010, are summarized below:


	Fair Value Measurement Using						Assets at Fair Value
	Level 1		Level 2		Level 3		Assets at Fair Value
Assets:
Money market accounts	$	4,578	$	—	$	—	$	4,578
Commercial paper		—		147,394		—		147,394
Other fixed income securities		—		38,868				38,868

Total	$	4,578	$	186,262	$	—	$	190,840

Equity Investment in Private Company

During 2009 and 2010, we have made investments in RideCharge. The valuation of investments in non-public companies requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such assets. As of March 31, 2010, this investment is recorded at $6.0 million in “Investments” on our balance sheet.

The investment in RideCharge will be subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. We will record impairment charges when an investment has experienced a decline that we deem to be other-than-temporary. The determination that a decline is other-than-temporary is, in part, subjective and influenced by many factors. Future adverse changes in market conditions or poor operating results of an investee could result in losses or an inability to recover the carrying value of our investment. When assessing our investments for other-than-temporary declines in value, we will consider many factors, including but not limited to the following: the performance of the investee in relation to its own operating targets and its business plan; the investee’s revenue and cost trends; the investee’s liquidity and cash position; and market acceptance of the investee’s products and services. From time to time, we may consider third-party evaluations. In the event an investment experiences other-than-temporary declines in value, we will record an impairment loss in “Other income (expense)” in our income statement.

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS—(Continued)

March 31, 2010

(Unaudited)

Note 12. Comprehensive Income

The following table presents the components of our comprehensive income:


	Three Months Ended March 31,						Six Months Ended March 31,
	2010			2009			2010			2009
Net income	$	6,827		$	6,749		$	13,369		$	12,558
Other comprehensive gain (loss):
Foreign currency translation adjustment loss		(2,028	)		(298	)		(2,505	)		(2,258	)
Net unrealized gain (loss) on investments, net of tax		(31	)		—			2			—

Total comprehensive income	$	4,768		$	6,451		$	10,866		$	10,300

Note 13. Segment Reporting We operate in and report on one segment, which is on-demand Employee Spend Management Solutions. We market our services and products primarily in the United States and operate in a single industry segment. For the three and six months ended March 31, 2010 and 2009, no single customer accounted for more than 10% of our total revenues. The following table presents our revenues by geographic region:
	Three Months Ended March 31,						Six Months Ended March 31,
	2010			2009			2010			2009
United States	$	63,920		$	55,922		$	122,856		$	108,831
Europe		5,785			3,463			11,737			6,595
Other		3,111			2,606			5,876			5,129

Total revenues	$	72,816		$	61,991		$	140,469		$	120,555

Note 14. Contingencies

Product Warranty and Indemnification Obligations

We provide services and software solutions to our customers under sales contracts, which usually include a limited warranty regarding product and service performance and a limited indemnification of customers against losses, expenses and liabilities from damages that may be awarded against them if our services or software are found to infringe upon a patent, copyright, trademark, or other proprietary right of a third party. The contracts generally limit the scope of and remedies for such indemnification obligations in a variety of industry-standard respects. We also enter into similar limited indemnification terms in agreements with certain strategic business partners and vendors. To date, we have experienced minimal warranty claims and have not had to reimburse any customers for any losses related to the limited indemnification described above.

Legal Matters

From time to time we are involved in legal proceedings that arise in the ordinary course of our business. Any such proceedings, whether meritorious or not, could be time consuming, costly, and result in the diversion of significant operational resources or management time.

Although the outcomes of legal proceedings are inherently difficult to predict, we are not currently involved in any legal proceeding in which the outcome, in our judgment based on information currently available, is likely to have a material adverse effect on our business or financial position.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides information that we believe is relevant to an assessment and understanding of our results of operations and financial condition. This discussion should be read in conjunction with the Financial Statements and Notes that are included with this report. Also, the discussion of Critical Accounting Policies and Estimates in this section is an integral part of the analysis of our results of operations and financial condition.

Throughout this MD&A, we refer to Concur Technologies, Inc. as “Concur,” “we,” “us” and “our.” We report our operating results on a fiscal year basis that starts October 1 and ends September 30. We refer to our fiscal years ended September 30, 2009, 2010 and 2011, as “2009,” “2010” and “2011.” Throughout this MD&A, where we provide discussion of the three and six months ended March 31, 2010, and we provide data for the same period in the prior year, we will refer to the prior period as “2009.” All dollar, option and share amounts (other than per share dollar amounts) are reported in thousands, unless otherwise noted.

Special Note Regarding Forward-Looking Statements

This document contains forward-looking statements regarding our plans, objectives, expectations, intentions, future financial performance, future financial condition, and other statements that are not historical facts. These statements can be identified by our use of the future tense, or by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “estimate,” “continue” and other similar words and phrases. These forward-looking statements involve many risks and uncertainties, described in Part II, Item 1A, Risk Factors, as well as in our other filings with the Securities and Exchange Commission (“SEC”). The occurrence of any of these risks and uncertainties may cause our actual results to differ materially from those anticipated in our forward-looking statements, which could have a material adverse effect on our business, results of operations, and financial condition. All forward-looking statements included in this report are based on information available to us as of the date of this report. We undertake no obligation to revise or update any such forward-looking statements for any reason.

Overview

We are a leading provider of on-demand Employee Spend Management solutions. Our integrated travel and expense software solutions enable organizations to control costs by automating the processes used to manage employee spending. Our solutions unite online travel procurement with automated expense reporting, streamline corporate event management, and optimize the process of managing vendor payments, employee check requests and direct reimbursements. Our unified approach to managing these processes provides our customers with visibility into their employee spending, which helps them analyze trends, influence budget decisions, improve forecasting, and monitor and enforce compliance with their corporate policies and external regulations, such as the Sarbanes-Oxley Act of 2002.

We generate our revenues predominantly from the delivery of subscription services, and to a much lesser degree from consulting services and other services, which includes the sale of software licenses. Our subscription services revenues are recognized over the time period we provide our services to customers, in contrast to license revenues, which typically are recognized upon software delivery to the customer.

On August 1, 2009, we completed the acquisition of Etap-On-Line (“Etap Acquisition”). Etap-On-Line is a leading European provider of business travel and expense management solutions, based in Paris, France. The Etap Acquisition is expected to strengthen our operations and client base in the European market.

In March 2010, we issued at par value $250.0 million principal amount of 2.50% senior convertible notes due in 2015 (the “Initial Notes”). In addition, the underwriters were granted an over-allotment option to purchase an additional $37.5 million principal amount of 2.50% senior convertible notes due in 2015, which brings the total amount issued under such notes and the Initial Notes to $287.5 million (collectively, the “Notes”). The overallotment option was exercised in full on April 1, 2010 and therefore is not reflected in our March 31, 2010 financial statements.

In March 2010 we also entered into note hedge and warrant transactions that cover the number of shares of our common stock that are underlying the Notes. The note hedge transactions are designed, but not guaranteed, to reduce or eliminate the potential economic dilution arising upon conversion. We also sold warrants to acquire shares of our common stock at a strike price of $73.29.

Our strategic focus in 2010 is to continue to grow our core subscription business and to reduce our cost of deploying and operating our services as a percentage of revenue. We expect our subscription revenues to increase in 2010 compared to 2009 due to anticipated growth in demand. We expect our sales and marketing expenses to increase on both an absolute basis and as a percentage of revenues in 2010 compared to 2009, primarily reflecting our continued emphasis on growing our sales and marketing personnel to support expected demand and create additional awareness in our target market. In recent quarters, we have observed trends of declining travel transactions, increased unemployment and business contraction generally, which tend to reduce revenue, we believe they will be outweighed by cross-selling additional services and expansion of our customer base.

We operate in and report on one segment, which is on-demand Employee Spend Management solutions.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

Selected Financial Data

The following table presents financial data derived from our unaudited income statements as a percentage of total revenues for the periods indicated.


	Three Months Ended March 31,				Six Months Ended March 31,
	2010		2009		2010		2009
Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Expenses:
Cost of operations	29.5		30.5		29.7		30.5
Sales and marketing	31.2		28.7		31.0		29.2
Systems development and programming	9.8		10.0		10.0		10.3
General and administrative	11.9		11.0		11.6		11.6
Amortization of intangible assets	2.5		2.5		2.6		2.6

Total expenses	84.9		82.7		84.9		84.2

Operating income	15.1		17.3		15.1		15.8
Other income (expense):
Interest income	0.4		0.5		0.4		1.2
Interest expense	(0.6	)	(0.2	)	(0.4	)	(0.2	)
Other, net	(0.4	)	(0.6	)	(0.3	)	(0.5	)

Total other income (expense), net	(0.6	)	(0.3	)	(0.3	)	0.5

Income before income tax	14.5		17.0		14.8		16.3
Income tax expense	5.1		6.1		5.3		5.9

Net income	9.4	%	10.9	%	9.5	%	10.4	%

Results of Operations

Revenues


	Three Months Ended March 31,						Six Months Ended March 31,
	2010		2009		Change		2010		2009		Change
Revenues	$	72,816	$	61,991	17.5	%	$	140,469	$	120,555	16.5	%


	Three Months Ended March 31,								Six Months Ended March 31,
	2010		%		2009		%		2010		%		2009		%
United States	$	63,920	87.7	%	$	55,922	90.2	%	$	122,856	87.5	%	$	108,831	90.3	%
Europe		5,785	8.0	%		3,463	5.6	%		11,737	8.3	%		6,595	5.5	%
Other		3,111	4.3	%		2,606	4.2	%		5,876	4.2	%		5,129	4.2	%

Total revenues	$	72,816	100.0	%	$	61,991	100.0	%	$	140,469	100.0	%	$	120,555	100.0	%

Revenues. Revenues consist primarily of fees paid for subscription services. To a much lesser degree, revenues also include the amortization of set-up fees paid to us in connection with subscription services, and the amortization of fees paid for software maintenance services under software license arrangements and in multiple element subscription arrangements where there is no vendor specific objective evidence of fair value for an undelivered subscription element. Revenues are affected by pricing, the number of new customers, customer contract durations and our customer retention rate.

Revenues increased 17.5%, or $10.8 million, for the three months ended March 31, 2010, and 16.5%, or $19.9 million, for the six months ended March 31, 2010, compared to the same periods in 2009. The increase was primarily due to the increased number of customers for our subscription services. The growth in customers reflects increased market demand for our subscription services and high rates of retention of existing subscription customers. We believe this demand reflects the market’s growing awareness of our on-demand Employee Spend Management Solutions and the increasing acceptance of outsourced services, driven in part by limited information technology capital budgets.

We expect revenues to continue to grow in 2010 as a result of customer growth and to a lesser extent increased revenue per customer, in part due to our planned increase in spending on sales and marketing.

International Revenues. Revenues from customers outside the United States represented 12% and 13% of total revenues for the three and six months ended March 31, 2010, compared to 10% for the same periods in 2009. We expect our international revenues to grow in the near term, as our products and services continue to gain acceptance in international markets, due to our Etap Acquisition, our investment in global distribution and increased global awareness of our products. Historically, fluctuations in foreign currency exchange rates have not had a material effect on our operating results.

Expenses


	Three Months Ended March 31,						Six Months Ended March 31,
	2010		2009		Change		2010		2009		Change
Cost of operations	$	21,521	$	18,938	13.6	%	$	41,692	$	36,812	13.3	%
Sales and marketing		22,712		17,770	27.8	%		43,484		35,332	23.1	%
Systems development and programming		7,127		6,187	15.2	%		14,017		12,379	13.2	%
General and administrative		8,636		6,793	27.1	%		16,350		13,981	16.9	%
Amortization of intangible assets		1,833		1,541	18.9	%		3,688		3,082	19.7	%

Total operating expenses	$	61,829	$	51,229	20.7	%	$	119,231	$	101,586	17.4	%

Cost of Operations. Cost of operations expenses consist primarily of salaries and related expenses (including travel related expenses) and allocated overhead costs (including depreciation, occupancy, insurance, telecommunications and computer equipment expenses) associated with employees and contractors who provide our subscription and consulting services. Cost of operations expenses also include co-location and related telecommunications costs, fees paid to third parties for referrals, resale arrangements, royalties and amortization of deferred set-up costs that we incur in connection with our subscription services.

Cost of operations expenses as a percentage of total revenues decreased to 29.5% and 29.7% for the three and six months ended March 31, 2010, compared to 30.5% for the same periods in 2009. Cost of operations expenses increased by 13.6%, or $2.6 million, for the three months ended March 31, 2010, and 13.3%, or $4.9 million, for the six months ended March 31, 2010, compared to the same periods in 2009. Total salaries and related expenses increased by 10.1%, or $1.0 million for the three months ended March 31, 2010, and 9.7%, or $1.9 million, for the six months ended March 31, 2010, compared to the same periods in 2009. Allocated overhead costs increased by 9.8%, or $0.4 million for the three months ended March 31, 2010, and 9.1%, or $0.7 million for the six months ended March 31, 2010, compared to the same periods in 2009. Initial set-up costs that we incur in connection with our subscription services increased by 19.7%, or $0.9 million, for the three months ended March 31, 2010, and 19.2%, or $1.7 million, for the six months ended March 31, 2010, compared to the same periods in 2009. These increases were primarily due to an increase in headcount and growth of the business.

We expect cost of operations expenses to continue to trend down as a percentage of total revenues over the long term, because the incremental cost to deploy and support each new customer is expected to decrease due to economies of scale anticipated in our subscription service model infrastructure. We anticipate that cost of operations will increase in absolute dollars as we continue to expand our capacity to deploy and support additional new customers.

Sales and Marketing. Sales and marketing expenses consist of salaries and related expenses (including sales commissions and travel related expenses) and allocated overhead costs associated with our sales and marketing personnel, miscellaneous sales and marketing costs, such as advertising, trade shows and other promotional activities

Sales and marketing expenses as a percentage of total revenues increased to 31.2% and 31.0% for the three and six months ended March 31, 2010, compared to 28.7% and 29.2% for the same periods in 2009. Sales and marketing expenses increased by 27.8%, or $4.9 million, for the three months ended March 31, 2010, and 23.1%, or $8.2 million, for the six months ended March 31, 2010, compared to the same periods in 2009. Total salaries and related expenses increased by 22.1%, or $2.9 million, for the three months ended March 31, 2010, and 18.5%, or $4.7 million, for the six months ended March 31, 2010, compared to the same periods in 2009. Allocated overhead costs increased by 87.1%, or $1.6 million, for the three months ended March 31, 2010, and 52.2%, or $2.4 million, for the six months ended March 31, 2010, compared to the same periods in 2009. Initial costs that we incur in connection with our subscription services increased by 31.4%, or $0.8 million, for the three months ended March 31, 2010, and 34.7%, or $1.6 million, for the six months ended March 31, 2010, compared to the same periods in 2009. These increases were primarily attributable to an increase in sales personnel and marketing programs. These increases were partially offset by a decrease in royalty and referral fee expenses of 77.3%, or $0.3 million, for the three months ended March 31, 2010, and 76.9%, or $0.6 million, for the six months ended March 31, 2010, compared to the same periods in 2009.

We expect total sales and marketing expenses in 2010 to increase as a percentage of revenue and in absolute dollars compared to 2009, driven primarily by an increase in sales personnel and marketing programs globally. These increases reflect a key part of our strategic focus in 2010, which is to ensure that our sales and marketing efforts are expanded to create awareness in our target markets to support expected demand.

Systems Development and Programming Costs. Systems development and programming costs consist of salaries and related expenses and allocated overhead costs associated with employees and contractors engaged in software engineering, program management and quality assurance.

Systems development and programming costs as a percentage of total revenues decreased to 9.8% and 10.0% for the three and six months ended March 31, 2010, compared to 10.0% and 10.3% for the same periods in 2009. This decrease reflects our higher revenues compared to relatively stable

expenses in this area. Systems development and programming costs increased 15.2%, or $0.9 million, for the three months ended March 31, 2010, and 13.2%, or $1.6 million, for the six months ended March 31, 2010, compared to the same periods in 2009. Total salaries and related expenses increased by 13.8%, or $0.5 million, for the three months ended March 31, 2010, and 10.1%, or $0.7 million, for the six months ended March 31, 2010, compared to the same periods in 2009. Allocated overhead costs increased by 17.1%, or $0.4 million, for the three months ended March 31, 2010, and 17.9%, or $0.9 million, for the six months ended March 31, 2010, compared to the same periods in 2009. These increases were primarily due to the growth of the business.

In response to the demand for our subscription services, the majority of our systems and development resources are focused on developing internal-use software used to provide these services to our customers. We capitalize costs in accordance with accounting principles generally accepted in the United States (“GAAP”) for corporate software developed or obtained for internal use and amortize it over its useful life. Capitalized internal-use software costs, net of amortization, increased $0.8 million, from $16.5 million at September 30, 2009, to $17.3 million at March 31, 2010.

We anticipate that recognized systems development and programming costs in 2010 will increase in absolute dollars and remain relatively consistent as a percentage of revenue compared to 2009 as we continue to focus on product innovation and enhancement.

General and Administrative. General and administrative expenses consist of salaries and related expenses and allocated overhead costs, all associated with employees and contractors in finance, human resources, legal and facilities, as well as miscellaneous costs, such as professional fees and public company regulatory compliance costs.

General and administrative expenses as a percentage of total revenues increased to 11.9% for the three months ended March 31, 2010, compared to 11.0% for the same period in 2009. General and administrative expenses as a percentage of total revenues remained unchanged at 11.6% for the six months ended periods March 31, 2010 and 2009. General and administrative expense increased by 27.1%, or $1.8 million, for the three months ended March 31, 2010, and 16.9%, or $2.4 million, for the six months ended March 31, 2010, compared to the same periods in 2009. These increases are primarily due to the growth of the business and increases in salaries and related expenses.

We expect the absolute dollar amount of general and administrative expenses to increase in 2010 compared to 2009 due to increases in personnel costs related to the growth of our business. However, we expect general and administrative costs as a percentage of revenue to remain relatively consistent with 2009 due to economies of scale.

Amortization of Intangible Assets. Amortization of intangible assets represents the amortization of the intangible assets from acquisitions. We are amortizing our intangible assets as non-cash charges to operations over an expected useful life which is consistent with the timing and level of expected cash flows attributed to customer relationships, use of acquired technology, trade name and trademarks, and non-compete agreements.

Interest Income, Interest Expense and Other


	Three Months Ended March 31,								Six Months Ended March 31,
	2010			2009			Change		2010			2009			Change
Interest income	$	294		$	322		(8.7	)%	$	605		$	1,468		(58.8	)%
Interest expense		(440	)		(117	)	276.1	%		(543	)		(250	)	117.2	%
Other, net		(332	)		(422	)	(21.3	)%		(492	)		(567	)	(13.2	)%

Total other income, net	$	(478	)	$	(217	)	120.3	%	$	(430	)	$	651		(166.1	)%

Interest income decreased for the three and six months ended March 31, 2010, compared to the same periods in 2009, due to lower interest rates during 2010 compared to 2009. We record realized gains and losses on fluctuations in exchange rates in the Other income (expense) section of the income statement. We expect interest expense to be significantly higher in fiscal 2010 compared to 2009 because of the interest expense associated with our 2010 issuance of the Notes. We also expect interest income to be higher as a result of the investment of the proceeds of that offering pending use.

Income Tax Expense


	Three Months Ended March 31,						Six Months Ended March 31,
	2010		2009		Change		2010		2009		Change
Income tax expense	$	3,682	$	3,796	(3.0	)%	$	7,439	$	7,062	5.3	%

We are subject to income taxes both in the U.S. and numerous foreign jurisdictions. We make estimates and judgments in determining income tax expense for financial statement purposes. We also make estimates and judgments in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

We measure and recognize uncertain tax positions. To recognize such positions we must first determine if is more likely than not that the position will be sustained on audit. We then must measure the benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. Since we are in a net operating loss position for those positions that require a reserve we do not include interest and penalties related to our contingencies in our income tax expense.

Financial Condition

Our total assets increased by 42.5%, or $285.3 million, to $956.1 million at March 31, 2010, from $670.9 million at September 30, 2009. This increase is primarily due to the $265.2 million receivable from our Initial Notes and the Warrants.

Our total current liabilities increased by 44.1%, or $55.1 million, to $180.2 million at March 31, 2010, from $125.1 million at September 30, 2009. This increase is primarily due to the $52.3 million payable from the note hedge transactions that we entered into in connection with our Initial Notes.

Our additional paid in capital increased by 4.1%, or $26.3 million, to $667.2 million at March 31, 2010, from $640.9 million at September 30, 2009. The increase was primarily due to the equity component of our Initial Notes, the share-based compensation recognized during the periods, and the purchase of stock under our employee stock purchase plan.

Liquidity and Capital Resources

Our available sources of liquidity as of March 31, 2010, consisted principally of cash and cash equivalents totaling $163.0 million. In addition, we completed our Notes offering, which is discussed in more detail below.

Our operating cash inflows consist of payments received from our customers related to our subscription and other product offerings. Our operating cash outflows consist of employee salaries, payments to vendors directly related to our services, payments under arrangements with third parties who provide hosting infrastructure services in connection with our subscription services offerings, related sales and marketing and administrative costs, cost of operations and systems development and programming costs. Net cash provided by operating activities was $18.2 million and $32.4 million for the three and six months ended March 31, 2010, compared to $23.7 million and $27.5 million for the same periods in 2009. Cash provided by operating activities was primarily affected by changes in working capital accounts, particularly in accounts receivable for the three and six months ended March 31, 2010 and 2009.

Cash provided by (used in) investing activities corresponds with purchases, sales, and maturities of investments, cash outlays for acquisitions, purchases of fixed assets, including leasehold improvements and internal-use software and changes in customer funding liabilities, net of the change in restricted cash. Our investing activities provided $28.6 million and $12.7 million for the three and six months ended March 31,

2010, compared to cash used of $6.8 million and $13.5 million for the same periods in 2009. The net maturities of our short-term investments provided cash of $16.2 million and $19.5 million for the three and six months ended March 31, 2010. Purchases of property and equipment were $4.0 million and $7.7 million for the three and six months ended March 31, 2010, compared to $4.9 million and $10.5 million for the same periods in 2009. The increase in customer funding liabilities, net of changes in restricted cash resulted in $20.8 million and $6.4 million in cash provided for the three and six months ended March 31, 2010, compared to $2.3 million and $1.2 million for the same periods in 2009.

Our financing activities used $2.4 million and $1.3 million for the three and six months ended March 31, 2010, compared to $4.2 million and $57.2 million for the same periods in 2009. Financing activities included $54.8 million in cash used for repurchases of our common stock during the six months ended March 31, 2009. The exercise of stock options, net of the change in withholding taxes paid for equity awards on behalf of our employees used $2.6 million and $1.5 million for the three and six months ended March 31, 2010, compared to $0.9 million cash used and $0.9 million cash provided for the same periods in 2009. Included in financing activities for the three months ending March 31, 2009, is a $2.8 million payment for common stock issuance costs for the 6.4 million shares issued to American Express Travel Related Services Company, Inc. in 2008.

In March 2010, we issued Notes, Note Hedges and Warrants. The Notes will mature on April 15, 2015, unless earlier converted. As of March 31, 2010 we recorded a receivable of $265.2 million from the Initial Notes and Warrants on our balance sheet. In addition, we recorded a payable of $52.3 million for the Note Hedges, which is shown in “Note Hedges Payable” on our March 31, 2010, balance sheet. All amounts in connection with the Notes, Note Hedges, and Warrants were settled in cash in April 2010. As of March 31, 2010, the Notes have not been repurchased or converted. We also have not received any shares under the Note Hedges or delivered cash or shares under the Warrants. For further information, see Note 8 to the notes to consolidated financial statements.

Our Board of Directors previously authorized a stock repurchase program (“Repurchase Program”) that allowed us to repurchase up to 7.0 million shares of our common stock through January 2011. In December 2009, our Board of Directors extended the Repurchase Program for an additional two-year period expiring in January 2013, and increased the number of shares eligible for repurchase by an additional 2.0 million shares, from 7.0 million shares to 9.0 million shares. We may repurchase our common stock from time to time in the open market based on market conditions. Any repurchases will be made at the then-current market prices, and repurchased shares will be retired. As of March 31, 2010, 4.1 million shares remained eligible for repurchase under the Repurchase Program. We did not have any stock repurchases during the three months ended March 31, 2010.

We believe our cash and cash equivalents, amounts available under existing credit arrangements, as well as expected positive operating cash flows, will be sufficient to meet our anticipated cash needs for normal business operations, working capital needs and capital expenditures for at least the next 12 months. In the longer term, or if we decide to acquire assets or businesses, we may require additional funds and may seek to raise such additional funds through private or public sales of debt or equity securities, or securities convertible or exchangeable into such securities, strategic relationships, bank debt, lease financing arrangements or other available means. There can be no assurances that any such funds will be available or, if they are available, that they will be available on acceptable terms to meet our business needs. If additional funds are raised through the issuance of equity securities, stockholders may experience dilution, or such equity securities may have rights, preferences, or privileges senior to those of the holders of our common stock.

Contractual Obligations and Commercial Commitments

The following table summarizes our outstanding contractual obligations as of March 31, 2010:


Years ending September 30,	Convertible Senior Notes, including interest		Capital Leases		Operating Leases		Purchase Obligations
2010 (April 1, 2010, through September 30, 2010)		3,125		578		1,675		911
2011		6,250		199		3,138		1,622
2012		6,250		—		3,302		1,234
2013		6,250		—		2,314		446
2014		6,250		—		610		83
2015 and thereafter		253,125		—		—		66

Total	$	281,250	$	777	$	11,039	$	4,362

Capital Leases

We lease equipment, some of which is required to be capitalized if it meets certain criteria, with the related asset recorded in property and equipment and an offsetting amount recorded as a liability.

Operating Leases

We lease office space and equipment under non-cancelable operating leases. We lease our current headquarters in Redmond, Washington under an operating lease that expires on May 31, 2013. The lease agreement for our headquarters in Redmond, Washington provides for an eight-year term with an option to renew for an additional five years. Amounts for operating leases do not include certain operating expenses under these leases such as common area maintenance. As of March 31, 2010, we also leased office space in the United States in the states of Arizona, California, Georgia, Illinois, Massachusetts, Minnesota, Texas and Virginia, and internationally in Australia, China (Hong Kong), Czech Republic, France, Germany, Netherlands, Singapore and the United Kingdom.

Purchase Obligations

We have future minimum purchase obligations under arrangements with third parties who provide hosting infrastructure services in connection with the provision of our subscription service offerings.

Senior Convertible Notes

As of March 31, 2010, holders of the Initial Notes may require us to repurchase all or a portion of their Initial Notes at a purchase price in cash equal to the full principle amount of the Initial Notes plus any accrued and unpaid interest on or after January 15, 2015, or upon the occurrence of certain events including specified corporate events or trading. For further information, see Note 8 to the notes to financial statements.

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets,

liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances; such estimates and judgments are periodically re-evaluated. Actual results may differ materially from these estimates under different assumptions, judgments or conditions.

The estimates and judgments noted above are affected by our application of accounting policies. Our critical accounting policies are those we deem most important to the portrayal of our financial condition and results of operations, including those that require the most difficult, subjective or complex judgments. Our critical accounting policies include business combinations, revenue recognition, allowances for accounts receivable, share-based compensation and income taxes.

Business Combinations

We are required to allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. This valuation requires management to make significant estimates and assumptions, especially with respect to long-lived and intangible assets.

Critical estimates in valuing intangible assets include but are not limited to estimates about: future expected cash flows from customer contracts, customer lists, distribution agreements, proprietary technology and non-compete agreements; the acquired company’s brand awareness and market position, as well as assumptions about the period of time the brand will continue to be used in our product portfolio; and discount rates. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur.

Other estimates associated with the accounting for these acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed.

Revenue Recognition

We generate our revenues from the delivery of subscription services (which include software maintenance services), and to a much lesser degree, consulting services and the sale of software licenses. We recognize revenues in accordance with accounting standards for software and service companies.

We recognize revenue when:

•

evidence of an arrangement exists;

•

delivery has occurred;

•

the fees are fixed or determinable; and

•

collection is considered probable.

If collection is not considered probable, we recognize revenues when the fees are collected. If the fees are not fixed or determinable, we recognize revenues as payments become due from the customer. Accordingly, our judgment as to the probability of collection and determinability of fees may materially affect the timing of our revenue recognition and results of operations. If non-standard acceptance periods or non-standard performance criteria are required, we recognize revenue upon the expiration of the acceptance period or satisfaction of the acceptance/performance criteria, as applicable.

In contractual arrangements that include the provision of multiple elements, we apply the accounting guidance most applicable to the specific arrangement to determine how contract consideration should be measured and allocated to the separate elements in the arrangement. Multiple element arrangements require the delivery or performance of multiple products, services and/or rights to use assets. Generally, separate contracts with the same customer that are entered into at or near the same time are presumed to have been negotiated together and, therefore, are accounted for as a single contractual arrangement in determining how contract consideration should be measured and allocated to the separate elements in the arrangement. Typically, we measure and allocate the total arrangement fee among each of the

elements based on their fair value or, if necessary, vendor-specific objective evidence of their fair value (“VSOE”). VSOE is determined by the price charged when an element is sold separately or, in the case of an element not yet sold separately, the price set by authorized management, if it is probable that the price, once established, will not materially change prior to separate market introduction.

Revenues

Our revenues are typically recognized monthly as the service is provided to the customer and consist of:

•

monthly fees paid for subscription services;

•

amortization of related set-up fees; and

•

amortization of fees paid for software maintenance services under software license arrangements.

Set-up fees paid by customers in connection with subscription services, as well as the associated direct and incremental costs, such as labor and commissions, are deferred and recognized ratably over the expected lives of the customer relationships, which generally range from two to five years. In addition to set-up fees, our deferred revenue balances include subscription fees paid in advance of their recognition and software maintenance fees related to our legacy license offerings. For those subscription service offerings that have been commercially available for only a short period of time, the contractual lives are used as the best estimate of the expected lives of the customer relationships. We continue to evaluate and adjust the length of these amortization periods as we gain more experience with customer contract renewals and contract cancellations. It is possible that, in the future, the estimates of expected customer lives may change and, if so, the periods over which such subscription set-up fees and costs are amortized will be adjusted. Any such change in estimated expected customer lives will affect our future results of operations.

Software maintenance services include technical support and the right to receive unspecified upgrades and enhancements on a when-and-if available basis. Fees for software maintenance services are typically billed annually in advance of performance of the services with provisions for subsequent automatic annual renewals. We defer the related revenues and recognize them ratably over the respective maintenance terms, which typically are one year.

Revenues are adjusted for estimated sales allowances, which are based on our historical experience, including a review of our experience related to price adjustments and sales credits issued.

Portions of our revenues are generated from sales made through our reseller partners. When we assume a majority of the business risks associated with performance of the contractual obligations, we record the revenues on a gross basis and amounts paid to our reseller partners are recognized as cost of operations. Our assumption of such business risks is evidenced when, among other things, we take responsibility for delivery of the product or service, establish pricing of the arrangement and are the primary obligor in the arrangement. When our reseller partner assumes the majority of the business risks associated with the performance of the contractual obligations, we record the associated revenues net of the amounts paid to our reseller partner. Our judgment as to whether we have assumed the majority of the business risks associated with performance of the contractual obligations materially affects how we report revenues and cost of operations.

Accounts Receivable Allowances

We record provisions for estimated sales allowances against subscription and consulting revenues in the period in which the related revenues are recorded. We record our sales allowances based on historical experience, including a review of our experience related to price adjustments and sales credits issued.

We make judgments as to our ability to collect outstanding receivables, and we provide an allowance for doubtful accounts, included in general and administrative expenses. In estimating allowances for doubtful accounts, we consider specific receivables when collection is doubtful, as well as

an analysis of our historical bad debt experience and the current economic environment. If the data used to estimate the allowance provided for doubtful accounts does not adequately reflect our future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed and future results of operations could be materially affected.

Income Taxes

We measure and recognize uncertain tax positions. To recognize such positions we must first determine if is more likely than not that the position will be sustained on audit. We must then measure the benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Since we are in a net operating loss position for those positions that require a reserve we do not include interest and penalties related to our contingencies in our income tax expense.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business. These risks include primarily interest rate and foreign exchange risks.

Interest Rate Risk. We maintain cash in highly liquid investment vehicles including money market accounts that bear interest at variable overnight or short term rates. Variable interest rate investment and debt exposes us to differences in future cash flows resulting from changes in market interest rates. Variable interest rate risk can be quantified by estimating the change in cash flows resulting from a hypothetical 100 basis point increase in interest rates. We do not enter into investments for trading or speculative purposes.

Foreign Currency Risk. We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar. We do not believe movements in the foreign currencies in which we transact will significantly affect future net earnings. Foreign currency risk can be quantified by estimating the change in cash flows resulting from a hypothetical 10% adverse change in foreign exchange rates. We believe such a change would not have a material impact on our cash flows or financial instruments that are sensitive to foreign currency exchange risk. We do not enter into any hedging contracts for trading or speculative purposes.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on our management’s evaluation (with the participation of our Chief Executive Officer and Chief Financial Officer), our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) were effective in providing reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the three months ended March 31, 2010, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitation on Effectiveness of Controls

It should be noted that any system of controls, including disclosure controls and procedures and internal controls over financial reporting, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. The design of any control system is based, in part, upon the benefits of the control system relative to its costs. Our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and the actual effectiveness of our disclosure controls and procedures is described above.

Control systems can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. In addition, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

On April 6, 2010, Concur Technologies, Inc. was named as one of 38 defendants in a purported patent infringement lawsuit, captioned CEATS, Inc. v. Continental Airlines, Inc., et al., in the United States District Court for the Eastern District of Texas. The complaint generally alleges patent infringement by the defendants under the Patent Laws of the United States of America, 35 U.S.C. §§ 1 et seq., including 35 U.S.C. § 271(a), (b), (c), and/or (f). The plaintiff seeks injunctions enjoining the defendants from the alleged infringement and damages in an unspecified amount.

ITEM 1A.

RISK FACTORS

We operate in a dynamic and rapidly changing business environment that involves multiple risks and substantial uncertainty. The following discussion addresses the risks and uncertainties that could cause, or contribute to causing, actual results to differ from expectations in material ways. In evaluating our business, investors should pay particular attention to the risks and uncertainties described below and in other sections of this report and in our subsequent filings with the SEC.

We depend on sales of a relatively small number of our solutions for a substantial majority of our revenues, and decreased demand for any of those solutions could substantially harm our revenues and results of operations.

We generated 94% of our total revenues for the three months ended March 31, 2010, from four solutions—Concur Travel & Expense, Concur Expense, Concur ExpenseLink and Concur Cliqbook Travel. We expect these solutions to continue to constitute a large percentage of our total revenues as we continue to expand our service offerings. Our financial performance and business outlook depends on continued market acceptance of these solutions. If customers reduce or cancel their subscriptions for our solutions due to economic conditions or because our competitors (some of which have substantially greater resources than we do) develop new offerings, or if we do not keep up with technological advancements in services and software platforms, delivery models or product features, our revenues could decline. There can be no assurance that our solutions will continue to maintain current levels of market penetration or that we will maintain current levels of revenues from sales of these solutions in the future.

If the market for integrated travel and expense services does not grow as we expect it to, our business will be harmed.

The market for integrated travel and expense services is developing, and it is not certain whether these services will continue to achieve market acceptance and sustain high demand. Our future revenue and profits depend on increasing customer subscriptions for integrated travel and expense services. The market for integrated travel and expense services may not grow, or may shrink. Our future financial

performance and revenue growth depend on the willingness of enterprise customers to use integrated travel and expense services. Many enterprises have internal resources and processes to manage corporate travel and expenses, so they may not perceive the benefit of our external integrated travel and expense management services. Privacy concerns and transition costs are also factors that may affect an enterprise’s decision to subscribe to an external solution. If enterprises do not value the benefit of integrated travel and expense services, then the market for these services will not develop at the rate that we anticipate.

Unfavorable economic conditions may continue or worsen, affecting our business and financial performance.

Our financial performance depends, in part, on the state of the economy, which deteriorated in the recent broad recession, and which may deteriorate in the future. Lower levels of economic activity result in declines in corporate spending on travel, fewer travel and expense transactions, lower information technology spending, and deceased revenue for us. The core factors that affect customer usage and therefore our subscription revenue are unemployment, recession-driven attrition through business failure or acquisition, and travel budget cutbacks. The 2008—2009 contraction in the global economy appears to be lingering, and continuing or worsening economic conditions, as well as increased volatility of foreign exchange rates, and impairment of goodwill and other assets, may further adversely affect our business and operating results. If unfavorable economic conditions continue or worsen, our business, operating results and financial condition could be materially and adversely affected.

We face significant competition from companies with longer operating histories and greater resources than we have, and our business will suffer if we fail to compete effectively.

Our principal direct competition comes from independent vendors of corporate travel and expense management software and services, as well as financial institutions and enterprise resource planning software vendors that sell products similar to ours along with their suites of other products and services. Some of these competitors may offer services similar to ours at a greatly reduced price in order to achieve greater sales of other services. Many of our competitors have longer operating histories; more financial, technical, marketing and other resources; greater name recognition and more customers for their products and services than we do. Some of our competitors, particularly major financial institutions and enterprise resource planning software vendors, have well-established relationships with our current and potential customers, as well as with systems integrators and other vendors and service providers. These competitors may also be able to respond more quickly to new or emerging technologies and changes in customer requirements, devote greater resources to the development, promotion and sale of their products, or better withstand economic downturns. We also compete with the internal development efforts of potential customers and, at times, have to overcome their reluctance to move away from existing paper-based systems. In addition, we anticipate the entrance of new competitors in the future. This competitive landscape may make it difficult for us to achieve our objective of increasing the number of our customers and expanding our role in the travel supply chain. Increased competition may also result in price reductions, reduced gross margins and change in market share and could have a material adverse effect on our business, financial condition and results of operations.

Because we depend upon strategic relationships with third parties, our revenues could decline if we do not sustain and develop these relationships.

We depend on strategic reseller and referral relationships to offer products and services to a larger customer base than we can reach through our current direct sales, telesales and internal marketing efforts. Some of our strategic relationships are in early stages of operation and, accordingly, it is uncertain whether these third parties will be able or willing to expend the required effort and resources to market our products and services successfully or provide the volume and quality of orders and lead referrals that we currently expect. In order to expand our market presence and broaden our distribution capacity, in 2008 we entered into a strategic referral relationship with American Express Travel Related Services Company, Inc., and we realized our first customer additions as a result of that relationship in 2009. In 2010, we announced the participation of Concur Breeze, our expense management service for small and mid-sized businesses, in Google’s application marketplace. We believe that application marketplaces such as Google’s will be an important channel for the small business market. In the event that we are unable to effectively utilize this channel, or competitors utilize this channel more effectively, our future growth prospects may be adversely affected.

Our success depends in part on the ultimate success of our strategic reseller and referral partners and their ability to market our products and services successfully. Some of these third parties have entered, and may continue to enter, into strategic relationships with our competitors. Further, many of our strategic partners have multiple strategic relationships and they may not regard us as significant for their businesses. Our strategic partners may terminate their respective relationships with us, pursue other partnerships or relationships, or attempt to develop or acquire products or services that compete with our products or services. Our strategic partners also may impair our ability to enter into other desirable strategic relationships. Further, unfavorable global economic conditions may hurt our strategic partners, making them less effective or causing them to modify or cancel their relationships with us.

If we are unable to maintain our existing strategic relationships or enter into new ones, we would have to devote substantially more resources to the distribution, sales and marketing of our products and services, which would increase our costs and decrease our earnings.

Our future growth and financial performance depends on our ability to grow our subscription services.

Our costs of providing subscription services are relatively fixed in the short term, so we may not be able to adjust expenses quickly enough to offset slowdowns in subscription sales. In addition, any delays in deployment may prevent us from recognizing subscription revenue for indeterminate periods of time, even when we have already incurred costs relating to the deployment of our subscription services. Further, we may experience unanticipated increases in costs associated with providing our subscription services to customers over the term of our customer contracts as a result of inaccurate internal cost projections or other factors, which may harm our operating results. If our customers cannot make payments or gain access to credit to make payments, they may be forced to cancel existing subscriptions for our products and services. Some of our sales contracts contain cancellation provisions and, if cancelled, could result in us recognizing substantially less revenue than the aggregate value of those contracts over their terms. If customers cancel or otherwise seek to terminate subscription agreements prior to the end of their respective terms, or if we are unable to renew such agreements, our operating results in future periods could be adversely affected.

We depend on our relationships with travel suppliers, so any adverse changes in these relationships could adversely affect our business, financial condition and results of operations.

An important component of our business success is our ability to maintain and develop relationships with travel suppliers. Adverse changes in existing relationships, including any impact of the economic recession on the businesses of those suppliers, could reduce the amount, quality and breadth of attractively priced travel products and services that we are able to offer, which could adversely affect our business, financial condition and results of operations.

If our customers have concerns over the scalability or security of our products, they might discontinue buying them and our revenues will decline.

If customers believe that our subscription services offerings are not sufficiently scalable, do not provide adequate security for the dissemination of information over the Internet or corporate extranets, or are otherwise inadequate for Internet or extranet use or if, for any other reason, our customers decide not to accept our subscription services for use, our business will be harmed. As part of our subscription services, we receive credit card, travel booking, employee, purchasing, supplier and other financial and accounting data, through the Internet or extranets and there can be no assurance that this information will not be subject to computer break-ins, theft and other improper activity that could jeopardize the security of information handled by our products. Any such lapse in security could expose us to litigation, loss of customers, damage to our reputation, or otherwise harm our business.

In addition, any person who circumvents our security measures could steal proprietary or confidential customer information or cause interruptions in our operations. We incur significant costs to protect against security breaches, and may incur significant additional costs to alleviate problems caused by any breaches. Customers’ concerns about security could deter them from using the Internet to conduct transactions that involve confidential information, so our failure to prevent security breaches, or well-publicized security breaches affecting the Internet in general, could significantly harm our business and financial results.

Privacy concerns could result in regulatory changes that may harm our business.

Personal privacy has become a significant issue in the United States and many other countries where we operate. The United States and many other countries have imposed restrictions and requirements on the use of personal information by those collecting such information. Changes to laws or regulations affecting privacy, if applicable to our business, could impose additional costs and liability on us and could limit our use and disclosure of such information. If we were required to change our business activities or revise or eliminate services, our business could be harmed.

Interruption of our operations could prevent us from delivering our products and services to our customers, which could significantly harm our business.

Because our business is primarily conducted over the Internet, it depends on our ability to protect our computer equipment and the information stored in our computer equipment, offices and hosting facilities against damage from earthquake, floods, fires, power loss, telecommunications failures, unauthorized intrusion and other events. There can be no assurance that our disaster preparedness will prevent significant interruption of our operations.

In addition, we engage third party facility providers for our Web hosting facilities and related infrastructure that is essential for our subscription services. Our service to customers could be interrupted in the event of a natural disaster, by a hosting provider decision to close a facility or terminate operations or by other unanticipated problems. Similarly, we use third-party telecommunications providers for Internet and other telecommunication services. Any of these third-party providers may fail to perform their obligations adequately, causing business interruption or system damage that could reduce our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions, or decrease our renewal rates.

Our quarterly revenues and operating results may fluctuate in future periods, we may fail to meet expectations of investors and public market analysts or we may be affected by other adverse factors, which could cause the market price of our common stock to be volatile or to decline.

Our revenues and operating results may fluctuate significantly from quarter to quarter, and if they fall below the expectations of investors or public market analysts, the price of our common stock could decline substantially. Factors that might cause quarterly fluctuations in our operating results include:

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general economic and market conditions;

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the evolving demand for our solutions;

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spending decisions by our customers and prospective customers;

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our ability to manage expenses;

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the timing of new product releases;

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changes in our pricing policies or those of our competitors;

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the timing of large contracts or contract terminations;

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changes in mix of our offerings;

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the mix of sales channels through which our solutions are sold;

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costs of developing new products and enhancements;

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our ability to adequately provide software solutions on-demand; and

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global political conditions.

Our acquisitions of, and investments in, other companies, products, or technologies may not yield expected benefits.

We have acquired and invested in other companies from time to time, and we may acquire or invest in other companies, products or technologies in the future. Our most recent acquisition, for example, occurred in August 2009 when we acquired Etap-On-Line, a provider of business and travel expense management solutions based in Paris, France in order to expand our presence in the European market.

We may not realize the anticipated benefits of our acquisitions or investments to the extent that we anticipate, or at all. We may issue additional equity securities to pay for future acquisitions or investments, the issuance of which could be dilutive to our existing stockholders and affect the trading price of the notes. If any acquisition or investment is not perceived as ultimately improving our financial condition and results of operations, our stock price may decline. In addition, we may have unanticipated costs or liabilities from our acquisitions or investments and may not be able to retain key employees from acquired businesses. The value of acquired businesses or investments may decline due to market conditions or adverse developments in the acquired business, as a result of factors such as the performance of the business relative to its business plan, revenue and cost trends, its liquidity and cash position, and market acceptance of its products.

Our ability to integrate acquisitions may affect our business, operating results and financial condition.

For us to realize the benefits of past and future acquisitions, we must successfully integrate the acquired businesses with ours. Some of the challenges to successful integration include:

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unanticipated costs or liabilities associated with an acquisition;

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difficulties integrating acquired operations, personnel, technologies or products;

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diversion of management attention from business operations and strategy;

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commitment of resources that are needed in other parts of our business;

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potential loss of key employees;

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potential litigation by third parties, such as claims related to intellectual property or other assets acquired or liabilities assumed; and

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non-cash amortization charges which could harm our future operating results.

To the extent that these challenges are not effectively overcome, our future business, operating results or financial condition may be adversely affected.

The growth of the international component of our business subjects us to risks associated with foreign operations.

Our international operations are an increasingly important part of our business. Revenues from customers located outside the United States represented 12% of total revenues for the three months ended March 31, 2010. In addition, a portion of our United States revenue reflects utilization of our services outside of the United States by customers located in the United States. We expect international revenues as a percentage of our total revenues to increase. Our international operations are subject to many difficulties and incremental costs, including:

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costs to customize our products for foreign markets;

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foreign currency exchange rate risk;

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compliance with multiple, conflicting and changing governmental laws and regulations;

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different pricing environments;

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longer sales cycles;

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greater difficulty in collecting accounts receivable;

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import and export restrictions and tariffs;

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adverse tax consequences;

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potentially weaker protection for our intellectual property than in the United States and practical difficulties in enforcing our rights abroad; and

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difficulties staffing and managing foreign operations.

Our ability to successfully sell and implement into international markets will depend on our ability to develop and support solutions that incorporate the tax laws, accounting practices and currencies of applicable countries. Our international operations also involve foreign currency risks for us. Most of our revenues are denominated in United States dollars, but we believe that an increasing portion of our revenues will be denominated in foreign currencies. Unfavorable economic conditions have been accompanied by increased foreign currency exchange rate volatility. We currently do not engage in foreign exchange hedging activities and, therefore, our international revenues and expenses are currently subject to the risks of foreign currency fluctuations.

Our international operations also increase our exposure to international laws and regulations. If we are unable to comply with foreign laws and regulations, which are often complex and subject to variation and unexpected changes, we could incur unexpected costs and potential litigation. For example, the governments of foreign countries might attempt to regulate our services and products or levy sales or other taxes relating to our activities. In addition, foreign countries might impose tariffs, duties, price controls or other restrictions on foreign currencies or trade barriers, any of which could make it more difficult for us to conduct our business in international markets.

We intend to continue to expand our global sales and marketing activities and enter into relationships with additional international distribution partners. We are in the early stages of developing our distribution channels in markets outside the United States. We may not be able to attract and retain distribution partners that will be able to market our products effectively.

Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations.

A change in accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and will occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our reported financial results or the way in which we conduct our business.

If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, our ability to operate our business and investor views of us.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis in a costly and time- consuming effort that needs to be re-evaluated frequently. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. We have in the past experienced a material weakness in our internal controls, and we may discover material weaknesses in our internal controls in the future. Any failure to maintain or implement required controls could cause us to fail to meet our periodic reporting obligations, or result in material misstatements in our financial information. Any such delays or restatements could cause investors to lose confidence in our reported financial information and lead to a decline in the trading price of our stock.

Our lengthy sales cycle could adversely affect our financial results.

Our sales cycle, which is the time between initial contact with a potential customer and the ultimate sale, is often lengthy and unpredictable. Our potential customers typically commit significant resources to an evaluation of available alternatives and require us to expend substantial time, effort and money educating them about the value of our offerings. As a result, we have limited ability to forecast the timing and size of specific sales. In addition, customers may delay their purchases from one quarter to another as they wait for new product enhancements. Customers may delay their purchases for even longer periods due to their inability to assess and forecast future business activity, impaired purchasing ability or other economic factors. Any delay in completing, or failure to complete, sales in a particular quarter or year could harm our business and could cause our operating results to vary significantly.

We may not successfully develop or introduce new products or enhancements to existing products, or successfully integrate acquired products and services with our offerings, and as a result we may lose existing customers or fail to attract new customers and our revenues may suffer.

Our future financial performance and revenue growth depends upon the successful development, introduction and customer acceptance of new and enhanced versions of our software solutions and on our ability to integrate products and services that we acquire into our existing and future solutions. Our business could be harmed if we fail to deliver enhancements to our solutions that meet customer needs. We have experienced delays in the planned release dates of enhancements to our solutions and we have discovered errors in new releases after their introduction. Either situation could result in adverse publicity, loss of sales, delay in market acceptance of our products and services, or customer claims, including, among other things, warranty claims against us, any of which could harm our business. If we do not deliver new product versions, upgrades or other enhancements to existing products and services on a timely and cost-effective basis, our business will be harmed. We are also continually seeking to develop new offerings. However, we remain subject to all of the risks inherent in product development, including unanticipated technical or other development problems, which could result in material delays in product introduction and acceptance or significantly increased costs. There can be no assurance that we will be able to develop new solutions successfully, or to introduce and gain market acceptance of new solutions in a timely manner.

If our products and services do not keep pace with technological change, our sales could decline and our business could be harmed.

We must continually modify and enhance our software solutions to keep pace with changes in hardware and software platforms, database technology, electronic commerce technical standards and other items. As a result, uncertainties related to the timing and nature of new product announcements or introductions, or modifications by vendors of operating systems, back-office applications and browsers and other Internet-related applications, could harm our business.

We rely on third-party software and services that may be difficult to replace.

We license or purchase software and services provided by third parties in order to offer some of our services and software offerings. Such third-party software and services may not continue to be available on commercially reasonable terms, if at all. The loss or inability to maintain our rights to use any of these software or services could result in delays in the sale of our services or software offerings until equivalent technology is either developed by us, or, if available, is identified, licensed and integrated, which could harm our business.

Our stock price has experienced high volatility, may continue to be volatile and may decline.

The trading price of our common stock has fluctuated widely in the past and may do so in the future, as a result of many factors. In particular, the stock market as a whole has experienced extreme price and volume fluctuations that affected the market price of many technology companies in ways that may have been unrelated to those companies’ operating performance. Factors that could cause our stock price to fluctuate include:

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general and industry-specific business, economic and market conditions;

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the announcement of a merger or acquisition;

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fluctuations in our actual and anticipated operating results;

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changes in our earnings estimates by analysts;

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failing to achieve revenue or earnings expectations;

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volatility inherent in prices of technology company stocks;

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adverse publicity; and

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the volume of trading in our common stock, including sales upon exercise of outstanding options.

Securities class action litigation has often been brought against companies that experience periods of volatility in the market prices of their securities. Securities class action litigation could result in substantial costs and a diversion of our management’s attention and resources.

If we fail to attract and retain qualified personnel, our business could be harmed.

Our success depends in large part on our ability to attract, motivate and retain highly qualified personnel, including personnel added through our acquisition of Etap-On-Line. Competition for such personnel is intense and there can be no assurance that we will be successful in attracting, motivating and retaining key personnel. Many of our competitors have greater financial and other resources than us for attracting experienced personnel. We also compete for personnel with other software vendors and consulting and professional services companies. Further, changes in applicable stock exchange listing standards relating to obtaining stockholder approval of equity compensation plans could make it more difficult or expensive for us to grant options to employees in the future. We rely on our direct sales force to sell our services and software in the marketplace. We anticipate increasing our direct sales force. There is significant competition for direct sales personnel with the advanced sales skills and technical knowledge we need. If we were unable to hire or retain competent sales personnel our business would suffer. In addition, by relying primarily on a direct sales model, we may miss sales opportunities that might be available through other sales channels, such as domestic and international resellers and strategic referral arrangements. Any inability to hire and retain salespeople or any other qualified personnel, or any loss of the services of key personnel, would harm our business.

Our ability to protect our intellectual property is limited and our products may be subject to infringement claims by third parties.

Our success depends, in part, upon our proprietary technology, processes, trade secrets and other proprietary information and our ability to protect this information from unauthorized disclosure and use. We rely on a combination of patent, copyright, trade secret and trademark laws, confidentiality procedures, contractual provisions and other similar measures to protect our proprietary information. Although we have six patent applications pending in various countries, we do not own any issued patents. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as proprietary and third parties may attempt to develop similar technology independently. We provide our licensed customers with access to object code versions of our software and to other proprietary information underlying our software. Policing unauthorized use of our products is difficult, particularly because the global nature of the Internet makes it difficult to control the ultimate destination or security of software or other data transmitted. While we are unable to determine the extent to which piracy of our software products exists, software piracy can be expected to be a persistent problem. In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as do the laws of the United States and we expect that it will become more difficult to monitor use of our products as we increase our international presence. There can be no assurance that our means of protecting our proprietary rights will be adequate, or that our competitors will not independently develop similar technology. In addition, there can be no assurance that

third parties will not claim infringement by us with respect to current or future products or other intellectual property rights. Any such claims could have a material adverse effect on our business, results of operations and financial condition. In addition, over the past several years, we have made numerous changes in our product names. Although we own registered trademarks in the United States and have filed trademark applications in the United States and in certain other countries, we cannot assure you that our strategy with respect to our trademark portfolio will be adequate to secure or protect all necessary intellectual property.

Anti-takeover effects of our charter documents and Delaware law could discourage or prevent a change in control of Concur.

Provisions of our certificate of incorporation and bylaws, and of Delaware General Corporation Law, may discourage, delay or prevent a change of control. For example:

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our Board of Directors may, without stockholder approval, issue shares of preferred stock with special voting or economic rights;

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our stockholders do not have cumulative voting rights and, therefore, each of our directors can only be elected by a majority of our votes cast at a stockholder meeting;

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a special meeting of stockholders may only be called by a majority of our Board of Directors, the Chairman of our Board of Directors, or our Chief Executive Officer;

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our stockholders may not take action by written consent;

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our Board of Directors is divided into three classes, only one of which is elected each year;

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we require advance notice for nominations for election to the Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and

•

we are subject to Section 203 of the Delaware General Corporation Law, which, under certain circumstances, may make it more difficult for a person who would be an “Interested Stockholder,” as defined in Section 203, to effect various business combinations with us for a three-year period. Our amended and restated certificate of incorporation and amended and restated bylaws do not exclude us from the restrictions imposed under Section 203.

We Have Increased Our Indebtedness.

In April 2010 we completed an offering of $287.5 million aggregate principal amount of our senior convertible notes due 2015, as a result of which we incurred approximately $287.5 million principal amount of new indebtedness that we may be required to repurchase at maturity in 2015 or upon the occurrence of certain fundamental changes involving us. This indebtedness could, among other things:

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make it difficult for us to pay other obligations;

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make it difficult to obtain favorable terms for any necessary future financing for working capital, capital expenditures, debt service requirements or other purposes;

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require us to dedicate a substantial portion of our cash flow from operations to service the indebtedness, thereby reducing the amount of cash flow available for other purposes; and

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limit our flexibility in planning for and reacting to changes in our business.

Conversion of our senior convertible notes will dilute the ownership interest of existing stockholders.

The conversion of some or all of our outstanding senior convertible notes due 2015 will dilute the ownership interest of existing stockholders to the extent we deliver newly-issued shares of common stock upon conversion. Holders of such notes may convert them on or after January 15, 2015 until the close of business on the second scheduled trading day immediately preceding the maturity date of such notes. We expect to satisfy our conversion obligation by delivering cash and potentially shares of common stock. Prior to January 15, 2015, conversion of such notes is subject to satisfaction of certain conditions. Any sales in the public market of shares of common stock issued upon conversion of such notes could adversely affect trading prices of our common stock. In addition, the existence of such notes may encourage short selling by market participants because the conversion of such notes could be used to satisfy short positions, or anticipated conversion of such notes into shares of our common stock could depress the price of our common stock.

The note hedges and warrants may affect the value of our common stock.

In connection with our recent offering of senior convertible notes due 2015, we entered into note hedges covering approximately 5 million shares of our common stock. We also sold warrants to acquire up to approximately 5.5 million shares of our common stock at an initial strike price of $73.29. The note hedges are intended to reduce the potential economic dilution to our common stock upon conversion of the senior convertible notes. However, the warrants could have a dilutive effect, if the market price per share of our common stock exceeds the strike price of the warrants. The counterparties to our note hedge and warrants are likely to enter into or unwind various derivatives with respect to our common stock, or purchase or sell shares of our common stock or other securities linked to or referencing our common stock in secondary market transactions prior to the maturity of the senior convertible notes. These activities could adversely affect the value of our common stock.

ITEM 6.

EXHIBITS

(a) The following exhibits are filed as a part of this report:


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Date of First Filing	Exhibit Number	Provided Herewith

3.01	Second Amended and Restated Certificate of Incorporation	8-K	000-25137	March 29, 2010	3.1	—

31.01	Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).	—	—	—	—	X

31.02	Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).	—	—	—	—	X

32.01	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*	—	—	—	—	X

32.02	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*	—	—	—	—	X

This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Concur specifically incorporates it by reference.

SIGNATURE

Pursuant to the requirements 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.

Dated: May 4, 2010


		CONCUR TECHNOLOGIES, INC.

		By		/s/ JOHN F. ADAIR
				John F. Adair
				Chief Financial Officer

				principal financial officer and duly authorized signatory

EXHIBIT INDEX


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Date of First Filing	Exhibit Number	Provided Herewith

3.01	Second Amended and Restated Certificate of Incorporation	8-K	000-25137	March 29, 2010	3.1	—

31.01	Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).	—	—	—	—	X

31.02	Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).	—	—	—	—	X

32.01	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*	—	—	—	—	X

32.02	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*	—	—	—	—	X

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