Cerner Delivers Record Earnings and Cash Flow; New Business Bookings near All-Time High.KANSAS CITY Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). , Mo. -- Cerner Cerner Corporation (NYSE: CERN) is an international IT corporation in the healthcare industry with more than 7,700 employees. As of June 2006, approximately 1,900 associates in the United States and 300 associates in India were involved full-time in the software development Corporation (Nasdaq:CERN CERN or European Organization for Nuclear Research, nuclear and particle physics research center straddling the French-Swiss border W of Geneva, Switzerland. ) today announced results for the 2004 fourth quarter ended Jan. 1, 2005, delivering record earnings and cash flow. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $0.56 in the fourth quarter. Analysts' consensus estimates for fourth quarter earnings per share were $0.54. For the year, diluted earnings per share were $1.72, including a gain on the sale of Zynx Health, Incorporated, in the first quarter that increased earnings per share by $0.05 and an accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. vacation VACATION. That period of time between the end of one term and beginning of another. During vacation, rules and orders are made in such cases as are urgent, by a judge at his chambers. pay adjustment in the third quarter that decreased earnings per share by $0.06. Earnings per share were a record for the quarter and year. Fourth quarter revenues increased 9 percent to $248.2 million compared to $227.4 million in the year-ago quarter. Full-year 2004 revenues increased 10 percent to $926.4 million compared to $839.6 million in 2003. Net earnings in the 2004 fourth quarter were $21.4 million, up 32 percent over the fourth quarter of 2003. Net earnings for 2004 were $64.6 million up 51 percent compared to 2003. Net earnings prior to the gain on the sale of Zynx Health and the accrued vacation pay adjustment were $64.9 million in 2004. Net earnings were a record for the quarter and year. New business bookings revenue in the fourth quarter was $244.8 million, which is up 13 percent over the third quarter of 2004 and is the second highest level of new business bookings in the Company's history. The highest level was $255 million in the fourth quarter of 2003, which included an unusually large transaction that was in excess of $50 million. The Company generated record operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of $55.7 million in the fourth quarter driven by strong cash collections and reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of continued operational improvements. Full-year 2004 operating cash flow was also a record at $168.3 million. Other Fourth Quarter and Full-Year 2004 Highlights: --Record cash collections of $256.2 million in the fourth quarter and $937.6 million for the year. --Days Sales Outstanding (DSOs) of 104 days in the fourth quarter. DSOs for the full-year 2004 were 105 days compared to 110 days in 2003. --Operating margin of 14.8 percent for the fourth quarter and 12.0 percent for the full year. The full-year 2004 operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: without the impact of the vacation accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. adjustment in the third quarter of 2004 was 12.4 percent and reflects an increase of 310 basis points compared to the 9.3 percent operating margin in 2003. --Total revenue backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of $1.54 billion, up 23 percent over the year-ago quarter. This is comprised of $1.19 billion of contract backlog and $347.7 million of support and maintenance backlog. --A record of 354 Cerner Millennium millennium [Lat.,=1,000 years], the period of 1,000 years in which, according to some schools of Christian eschatology, Christ will reign again gloriously on earth. Belief in the millennium, based on Rev. 20, has recurred in Christianity since the earliest times. (R) solutions were implemented during the quarter. Cerner has now turned on over 3,700 Cerner Millennium solutions at nearly 750 client facilities worldwide. --The number of Cerner client locations using Computerized computerized adapted for analysis, storage and retrieval on a computer. computerized axial tomography see computed tomography. Physician Order Entry increased from approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 200 at the end of 2003 to nearly 380 at the end of 2004. "Our fourth quarter and full-year 2004 results reflect the strongest overall performance in our history," said Neal Patterson Neal L. Patterson is CEO of Cerner Corporation, a Kansas City-based medical software corporation. Cerner was founded in 1979 by Patterson with Paul Gorup and Cliff Illig. Patterson was featured in a USA Today , Cerner's co-founder, Chairman and Chief Executive Officer. "We generated strong margin expansion and cash flow and demonstrated our superior ability to deliver value to our clients by implementing a record number of Cerner Millennium solutions." "We continue to believe that Cerner remains well positioned in the very active healthcare information technology sector," added Patterson Patterson, family of American journalists. Robert Wilson Patterson, 1850–1910, b. Chicago, grad. Williams, 1871, became (1871) a reporter on the Chicago Times and after 1873 was attached to the Chicago Tribune. . "We believe Cerner's single architecture approach and depth and breadth Breadth The percentage of assets or stocks advancing relative to those unchanged or declining. Also the number of independent forecasts available per year. A stock picker forecasting returns to 100 stocks every quarter exhibits a breadth of 400, assuming each forecast is of solutions and services uniquely position us to play a major role in providing a network for healthcare information that connects families, physicians, hospitals, clinics, laboratories and pharmacies This article is a list of major pharmacies (also known as chemists and drugstores) by country. Australia Pharmacies in Australia are mostly independently-owned by pharmacists, often operated as franchises of retail brands offered by the three major across major metropolitan and rural areas. This vision and our abilities align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. with the government's consideration of a national health information network that is needed to reduce costs and improve safety in our healthcare system." Future Period Guidance Cerner expects earnings per share in the first quarter of 2005 to be between $0.41 and $0.42, which is approximately 25 percent over the first quarter of 2004. The Company expects revenue in the first quarter to be approximately $250 million to $255 million. For 2005, the Company expects earnings per share between $2.07 and $2.12, which is up from the prior range of $2.05 to $2.10. Cerner expects revenue for 2005 to be between $1.08 billion and $1.1 billion, which is up from the prior range of $1.01 billion to $1.03 billion. Cerner Board Member Announcement Cerner also announced that former U.S. Senator SENATOR, government. One who is a member of a senate. 2. No person shall be a senator [of the national senate] who shall not have attained the age of thirty years, and been nine years a citizen of the United States and who shall not when elected, be an John C. Danforth Danforth may refer to:
ambassador Highest-ranking diplomatic representative of one government to another or to an international organization. to the United Nations, affording him the opportunity to re-join the Cerner Board. Earnings Conference Call Cerner will host an earnings conference call to provide additional detail at 3:30 p.m. CT on February February: see month. 3, 2005. The dial-in number for the call is 617-786-2903 and the replay number is 617-801-6888 (Pass code: 90190036). The call will also be Web cast and available both live and archived on Cerner's Web site at www.cerner.com in the Investors' section under Presentation and Webcasts. Please access the site fifteen minutes early to register and to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. For those who cannot listen to the live broadcast, replays will be made available shortly after the call and will run for two weeks. A copy of the script (1) A program written in a general-purpose programming language. Such languages are typically interpreted and less comprehensive than full-blown compiled languages. See scripting language and interpreter. used during the call will also be available at www.cerner.com in the Investors' section under Presentation and Webcasts. Cerner Corp. is taking the paper chart out of healthcare, eliminating error, variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality and waste in the care process. With more than 1,500 clients worldwide, Cerner is the leading supplier of healthcare information technology. The following are trademarks of Cerner: Cerner, Cerner Millennium, and Cerner's logo. (Nasdaq:CERN), www.cerner.com. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve a number of risks and uncertainties. It is important to note that the Company's performance and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. The words "believe," "expects," "guidance," or variations thereof or similar expressions are intended to identify such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: quarterly operating results may vary, stock price may be volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. , market risk of investments, potential impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of goodwill, changes in the healthcare industry, significant competition, the Company's proprietary technology may be subjected to infringement The encroachment, breach, or violation of a right, law, regulation, or contract. The term is most frequently used in reference to the invasion of rights secured by Copyright, patent, or trademark. claims or may be infringed upon, regulation of the Company's software by the U.S. Food and Drug Administration or other government regulation, the possibility of product-related liabilities, possible system errors or failures or defects in the performance of the Company's software, risks associated with the Company's global operation and the recruitment recruitment /re·cruit·ment/ (re-krldbomact´ment) 1. the gradual increase to a maximum in a reflex when a stimulus of unaltered intensity is prolonged. 2. and retention of key personnel. Additional discussion of these and other factors affecting the Company's business is contained in the Company's periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time.
CERNER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
Note (1) (2)
Three Three
Months Months
Ended YTD Ended YTD
(In thousands, except per Jan. 1, Jan. 1, Jan. 3, Jan. 3,
share data) 2005 2005 2004 2004
---------- -------- -------- ---------
Revenue
System sales $ 99,614 351,861 90,820 332,349
Support, maintenance and
services 141,273 542,414 128,849 476,795
Reimbursed travel 7,285 32,081 7,740 30,443
---------- --------- -------- ---------
Total revenue 248,172 926,356 227,409 839,587
Margin
System sales 65,113 236,058 65,372 221,093
Support, maintenance and
services 128,961 493,950 114,530 424,204
---------- --------- -------- ---------
Total margin 194,074 730,008 179,902 645,297
---------- --------- -------- ---------
Operating expenses
Sales and client service 97,635 383,628 93,197 352,728
Software development 43,429 171,589 41,066 156,236
General and administrative 16,321 63,327 16,862 58,236
---------- --------- -------- ---------
Total operating
expenses 157,385 618,544 151,125 567,200
---------- --------- -------- ---------
Operating earnings 36,689 111,464 28,777 78,097
Interest income 1,663 3,022 325 1,219
Interest expense (2,323) (9,174) (2,190) (8,236)
Other income, (expense) (284) 2,608 (25) 142
---------- --------- -------- ---------
Non-operating
expense, net (944) (3,544) (1,890) (6,875)
Earnings before income taxes 35,745 107,920 26,887 71,222
Income taxes (14,319) (43,272) (10,679) (28,431)
---------- --------- -------- ---------
Net earnings $ 21,426 64,648 16,208 42,791
========== ========= ======== =========
---------- --------- -------- ---------
Basic earnings per share $ 0.59 1.79 0.46 1.21
========== ========= ======== =========
Basic weighted average shares
outstanding 36,495 36,087 35,494 35,355
---------- --------- -------- ---------
Diluted earnings per share $ 0.56 1.72 0.44 1.18
========== ========= ======== =========
Diluted weighted average
shares outstanding 38,055 37,571 36,935 36,356
Note 1: Includes a charge for vacation accrual of $3.3 million
included in general and adminstrative. The impact of this charge
is a $2.1 million decrease, net of $1.2 million tax benefit, in
net earnings and a decrease to diluted earnings per share of $.06
for 2004.
Note 2: Includes a gain on the sale of Zynx Health Incorporated
included in other income, (expense). The impact of this gain is a
$1.8 million increase, net of $1.2 million tax expense, in net
earnings and an increase to diluted earnings per share of $.05 for
2004.
CERNER CORPORATION
NON-GAAP
CONSOLIDATED STATEMENTS OF EARNINGS
Three Three
Months Months
Ended YTD Ended YTD
(In thousands, except per Jan. 1, Jan. 1, Jan. 3, Jan. 3,
share data) 2005 2005 2004 2004
---------- ------- --------- ---------
Revenue
System sales $ 99,614 351,861 90,820 332,349
Support, maintenance and
services 141,273 542,414 128,849 476,795
Reimbursed travel 7,285 32,081 7,740 30,443
---------- --------- -------- ----------
Total revenue 248,172 926,356 227,409 839,587
Margin
System sales 65,113 236,058 65,372 221,093
Support, maintenance and
services 128,961 493,950 114,530 424,204
---------- --------- -------- ----------
Total margin 194,074 730,008 179,902 645,297
---------- --------- -------- ----------
Operating expenses
Sales and client service 97,635 383,628 93,197 352,728
Software development 43,429 171,589 41,066 156,236
General and administrative 16,321 59,981 16,862 58,236
---------- --------- -------- ----------
Total operating
expenses 157,385 615,198 151,125 567,200
---------- --------- -------- ----------
Operating earnings 36,689 114,810 28,777 78,097
Interest income 1,663 3,022 325 1,219
Interest expense (2,323) (9,174) (2,190) (8,236)
Other income, (expense) (284) (415) (25) 142
---------- --------- -------- ----------
Non-operating
expense, net (944) (6,567) (1,890) (6,875)
Earnings before income taxes 35,745 108,243 26,887 71,222
Income taxes (14,319) (43,345) (10,679) (28,431)
---------- --------- -------- ----------
Net earnings $ 21,426 64,898 16,208 42,791
========== ========= ======== ==========
---------- --------- -------- ----------
Basic earnings per share $ 0.59 1.80 0.46 1.21
========== ========= ======== ==========
Basic weighted average shares
outstanding 36,495 36,087 35,494 35,355
---------- --------- -------- ----------
Diluted earnings per share $ 0.56 1.73 0.44 1.18
========== ========= ======== ==========
Diluted weighted average
shares outstanding 38,055 37,571 36,935 36,356
RECONCILIATION OF NON-GAAP
TO GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
Three Three
Months Months
Ended YTD Ended YTD
(In thousands, except per Jan. 1, Jan. 1, Jan. 3, Jan. 3,
share data) 2005 2005 2004 2004
---------- -------- -------- ----------
Non-GAAP net income $ 21,426 64,898 16,208 42,791
Vacation accrual - (3,346) - -
Income tax effect - 1,270 - -
Gain on sale of Zynx - 3,023 - -
Income tax effect - (1,197) - -
---------- --------- -------- ----------
GAAP net income $ 21,426 64,648 16,208 42,791
========== ========= ======== ==========
---------- --------- -------- ----------
Basic earnings per share $ 0.59 1.79 0.46 1.21
========== ========= ======== ==========
Basic weighted average shares
outstanding 36,495 36,087 35,494 35,355
---------- --------- -------- ----------
Diluted earnings per share $ 0.56 1.72 0.44 1.18
========== ========= ======== ==========
Diluted weighted average
shares outstanding 38,055 37,571 36,935 36,356
CERNER CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands) Jan. 1, Jan. 3,
2005 2004
-------- --------
Assets
Cash and cash equivalents $189,784 121,839
Receivables, net 282,199 256,574
Inventory 7,373 12,434
Prepaid expenses and other 30,117 33,057
-------- --------
Total current assets 509,473 423,904
Property and equipment, net 230,440 204,953
Software development costs, net 157,765 141,090
Goodwill, net 54,600 51,573
Intangible assets, net 22,690 24,036
Other assets 7,288 8,017
Investments 9 692
-------- --------
Total assets $982,265 854,265
======== ========
Liabilities
Accounts payable $ 37,008 20,753
Current installments of long-term debt 21,908 21,162
Deferred revenue 77,445 64,879
Deferred income taxes 1,301 15,586
Accrued payroll and tax withholdings 55,819 45,004
Other accrued expenses 5,763 10,095
-------- --------
Total current liabilities 199,244 177,479
-------- --------
Long-term debt 108,804 124,570
Deferred income taxes 69,863 54,425
Deferred revenue 5,703 1,945
-------- --------
Total liabilities 383,614 358,419
-------- --------
Minority owners' equity interest in subsidiary 1,166 1,166
Stockholders' Equity
Common stock 381 371
Additional paid-in capital 271,116 236,969
Retained earnings 344,011 279,363
Treasury stock, at cost (1,502,999 shares in 2004
and 2003) (26,793) (26,793)
Foreign currency translation adjustment 8,770 4,770
-------- --------
Total stockholders' equity 597,485 494,680
Total liabilities and equity $982,265 854,265
========= ========
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