Notes to Consolidated Financial Statements (in thousands, except share and per share data) A common stock. Accordingly, as of such date, there are no shares of Class B common stock outstanding and the share and equity balances that relate to Class B common stock will be reclassed to the share and equity balances of Class A common stock. The conversion of Class B common stock to Class A common stock has not been reflected in the accompanying financial statements and all applicable references to the number of outstanding Class A and Class B common stock, as well as IMS Health’s ownership interest have not been restated to reflect the exchange offer. Stockholders’ equity accounts will subsequently be restated to reflect the reclassification of the share and equity balances that relate to Class B common stock to the share and equity balances of Class A common stock. On March 5, 2003, the Board of Directors declared a 3-for-1 stock split of Class A common stock effected by a 200% stock dividend payable on April 1, 2003 to stockholders of record on March 19, 2003. The stock split has been reflected in the financial statements, and all applicable references to the number of outstanding common shares and per share information has been restated. Appropriate adjustments have been made in the exercise price and number of shares subject to stock options. Stockholders’ equity account have been restated to reflect the reclassification of an amount equal to the par value of the increase in issued common shares from the additional paid in capital account to the common stock accounts. In July 1997, CTS adopted a Key Employees Stock Option Plan, which pro- vides for the grant of up to 4,192,500 stock options (each option exercisable into one (1) share of the Company’s Class A common stock.) to eligible employees. Options granted under this plan may not be granted at an exer- cise price less than fair market value of the underlying shares on the date of grant. As a result of the IPO, all options have a life of ten years, vest propor- tionally over four years and have an exercise price equal to the fair market value of the common stock on the grant date. In December 1997, CTS adopted a Non-Employee Directors’ Stock Option Plan, which provides for the grant of up to 429,000 stock options (each option exercisable into one (1) share of the Company’s Class A common stock.) to eligible directors. Options granted under this plan may not be granted at an exercise price less than fair market value of the underlying shares on the date of grant. As a result of the IPO, all options have a life of ten years, vest proportionally over two years and have an exercise price equal to the fair market value of the common stock on the grant date. In March 1998, CTS granted non-qualified stock options to purchase an aggregate of 292,500 shares of Class A common stock to CTS’s Chairman and Chief Executive Officer at an exercise price of $4.61 per share, an amount less than the then fair market value of the underlying shares on the date of the grant. The Company has recorded the related compensation expense over the vesting period of these options. A summary of the Company’s stock option activity, and related information is as follows as of December 31, 2002, 2001 and 2000: During the year ended December 31, 2002, approximately 84,000 shares of Class A common stock were purchased by employees under the Purchase Plan. At December 31, 2002, there were approximate 2,125,815 shares available for future issuance under the Purchase Plan. In May 1999, CTS adopted the Employee Stock Purchase Plan (the “Purchase Plan”), which provides for the issuance of up to 2,400,000 shares of CTS Class A common stock to eligible employees. The Purchase Plan provides for eligible employees to designate in advance of specified purchase periods a percentage of compensation to be withheld from their pay and applied toward the purchase of such number of whole shares of Class A common stock as can be purchased at a price of 90% of the lesser of (a) the fair market value of a share of Class A common stock on the first date of the pur- chase period; or (b) the fair market value of a share of Class A common stock on the last date of the purchase period. No employee can purchase more than $25,000 worth of stock annually, and no stock can be purchased by any person which would result in the purchaser owning more than five percent or more of the total combined voting power or value of all classes of stock of the Company. In accordance with APB 25, no compensation expense was recorded in connection with the purchase of shares by employees. In May 1999, CTS adopted the 1999 Incentive Compensation Plan, which pro- vides for the grant of up to 6,000,000 stock options (each option exercisable into one (1) share of the Company’s Class A common stock) to eligible employees, nonemployee Directors and independent contractors. Options granted under this plan may not be granted at an exercise price less than fair market value of the underlying shares on the date of grant. All options have a life of ten years, vest proportionally over four years, unless specified otherwise, and have an exercise price equal to the fair market value of the common stock on the grant date. On May 23, 2000, the stockholders of the Company approved an increase in the number of shares available for issuance under this plan from 6,000,000 to 9,000,000 shares. On May 30, 2001, the stockholders of the Company approved an increase in the number of shares available for issuance under this plan from 9,000,000 to 18,000,000. 35 2002 2001 2000 Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price Outstanding at beginning of year  12,916,623 $ 8.03 11,043,936 $ 6.30 7,655,424 $ 2.79 Granted, 1999 Incentive Comp. Plan  2,077,500 $15.07 4,624,800 $10.57 4,224,000 $12.53 Exercised  (3,112,770) $ 6.08 (1,998,057) $ 2.57 (389,604) $ 2.00 Cancelled (444,000) $12.14 (715,056) $12.52 (443,634) $ 8.81 Expired  (8,700) $14.44 (39,000) $ 17.90 (2,250) $ 4.07 Outstanding - end of year  11,428,653 $ 9.67 12,916,623 $ 8.03 11,043,936 $ 6.30 Exercisable - end of year  3,643,734 $ 6.84 3,577,530 $ 4.66 2,869,824 $ 1.94 8. Employee Stock-Based Compensation Plans