Cerner Delivers Strong New Business Bookings; Margin Expansion and Cash Flow also Strong.Business Editors 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.--(BUSINESS WIRE)--April 21, 2004 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 NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :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 first quarter ended April 3, 2004. 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 $0.38, compared to $0.15 in the first quarter of 2003. The first quarter of 2004 included a gain on the sale of Zynx Health Incorporated that increased earnings per share by $0.05. Analysts' consensus estimates for first quarter earnings per share were $0.32. First quarter revenues increased 10 percent to $218.7 million compared to $198.2 million in the year-ago quarter. Net earnings in the quarter were $14.1 million, compared to $5.6 million in the first quarter of 2003. The gain on the sale of Zynx Health increased first quarter of 2004 net earnings by $1.8 million ($3 million, net of $1.2 million of tax). The Company continued to experience strong demand for its solutions with $216.4 million of new business bookings, up 43 percent compared to $151.1 million in the first quarter of 2003. The Company generated strong 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 $30.7 million in the first quarter driven by strong cash collections and a significant number of 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. (TM) implementations. Other First Quarter Highlights: -- Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 10.3 percent, an increase of 460 basis points compared to the first quarter of 2003. -- Strong cash collections of $218 million. -- Days Sales Outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). (DSOs) of 108 days, which is 7 days lower than a year ago. -- 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 $1.32 billion, up 29 percent over the year-ago quarter. This is comprised of $1.0 billion of contract backlog and $318.5 million of support and maintenance backlog. -- 187 Cerner Millennium solutions were implemented during the quarter. Cerner has now turned on more than 2,800 Cerner Millennium solutions at over 600 client facilities worldwide. -- Computerized computerized adapted for analysis, storage and retrieval on a computer. computerized axial tomography see computed tomography. Physician Order Entry was brought live at 54 locations, bringing the total to more than 250. "We are very pleased with the progress Cerner made on many fronts in the first quarter," 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 continued to create quality revenue growth along with strong margin expansion and cash flow generation." "Our high level of new business bookings reflects our continued leadership in the important healthcare information technology industry," 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 there remains significant demand for healthcare information technology, and we feel good about our ability to benefit from this demand because of our proven solutions and unmatched 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 offerings." Future Period Guidance Cerner expects earnings per share in the second quarter of 2004 to be between $0.35 and $0.37. The Company expects revenue in the second quarter to be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $225 million to $230 million. Cerner expects bookings revenue in the second quarter to be between $200 million and $220 million. For 2004, the Company expects earnings per share between $1.63 and $1.67 (not including the $0.05 gain from the sale of Zynx Health), which is up from previous guidance of $1.60 to $1.65. Cerner expects revenue for 2004 to be at the upper end of its existing guidance range of $920 million to $940 million. The Company also reiterated its cash flow guidance for 2004, indicating that it expects to generate between $120 million and $140 million of operating cash flow. Based on these estimates, the Company expects to generate positive free cash flow, defined as operating cash flow less capital expenditures and capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. software, in 2004. Earnings Conference Call Cerner will host an earnings conference call to provide additional detail at 3:30 p.m. CT on April 21, 2004. The dial-in number for the call is (617) 786-2963 and the replay number is (617) 801-6888 (Pass code: 50856446). 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 News and Events. 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 News and Events. 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 may contain 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", "feel", "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 Income
Three Months Three Months
Ended Ended
(In thousands, except per share April 3, 2004(1) March 29, 2003
data)
---------------- ---------------
Revenue
System sales $ 84,512 78,594
Support, maintenance and
services 127,069 112,932
Reimbursed travel 7,146 6,665
------------------- ---------------
Total revenue 218,727 198,191
Margin
System sales 57,779 50,389
Support and maintenance 114,275 99,550
------------------- ---------------
Total margin 172,054 149,939
------------------- ---------------
Operating expenses
Sales and client service 92,842 88,091
Software development 42,554 37,458
General and administrative 14,145 13,142
------------------- ---------------
Total operating
expenses 149,541 138,691
------------------- ---------------
Operating earnings 22,513 11,248
Interest income 442 409
Interest expense (2,557) (2,255)
Other income 3,014 16
------------------- ---------------
Non-operating income
(expense), net 899 (1,830)
Earnings before income taxes 23,412 9,418
Income taxes (9,283) (3,825)
------------------- ---------------
Net earnings $ 14,129 5,593
=================== ===============
Basic earnings per share $ 0.40 0.16
=================== ===============
Basic weighted average shares
outstanding 35,661 35,559
Diluted earnings per share $ 0.38 0.15
=================== ===============
Diluted weighted average shares
outstanding 37,222 36,710
Note 1: Includes a gain on the sale of Zynx Health Incorporated. 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
Consolidated Balance Sheets
(In thousands) April 3, January 3,
2004 2004
--------- ----------
Assets
Cash and cash equivalents $ 141,528 121,839
Receivables 259,065 256,574
Inventory 11,885 12,434
Prepaid expenses and other 33,379 38,132
------------- ----------
Total current assets 445,857 428,979
Property and equipment, net 211,408 204,953
Software development costs, net 145,633 141,090
Goodwill, net 52,855 51,573
Intangible assets, net 22,375 24,036
Investments, net 664 692
Other assets 5,447 8,017
------------- ----------
Total assets $ 884,239 859,340
============= ==========
Liabilities
Accounts payable $ 14,385 20,753
Current installments of long-term debt 23,532 21,162
Deferred revenue 63,241 64,879
Deferred income taxes 15,555 15,586
Accrued payroll and tax withholdings 46,920 45,004
Other accrued expenses 12,629 10,095
------------- ----------
Total current liabilities 176,262 177,479
------------- ----------
Long-term debt, net 130,534 124,570
Deferred income taxes 61,158 59,500
Deferred revenue 1,945 1,945
------------- ----------
Total liabilities 369,899 363,494
------------- ----------
Minority owners' equity interest in
subsidiary 1,166 1,166
Stockholders' Equity
Common stock 374 371
Additional paid-in capital 241,432 236,969
Retained earnings 293,492 279,363
Treasury stock, at cost (1,502,999 shares
in 2003 and 2002) (26,793) (26,793)
Foreign currency translation adjustment 4,669 4,770
------------- ----------
Total stockholders' equity 513,174 494,680
Total liabilities and equity $ 884,239 859,340
============= ==========
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