Cerner Delivers Strong Revenue and Earnings Growth; New Business Bookings an All-Time Record.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 Corp. (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 2005 second quarter ended July July: see month. 2, 2005, delivering record levels of new business bookings and strong earnings and cash flow. New business bookings revenue in the second quarter was $284.4 million, which is up 18 percent over the second quarter of 2004 and an all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal record. Second quarter 2005 revenues increased 22 percent to $277.8 million compared to $228.4 million in the year-ago quarter. Second quarter 2005 net earnings were $19.8 million, and 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 $0.51, or 34 percent higher than the second quarter of 2004. Analysts' consensus estimate for second quarter 2005 diluted earnings per share was $0.49. During the second quarter, the National Health Service (NHS NHS abbr. National Health Service NHS (in Britain) National Health Service ) in England England, the largest and most populous portion of the United Kingdom of Great Britain and Northern Ireland (1991 pop. 46,382,050), 50,334 sq mi (130,365 sq km). It is bounded by Wales and the Irish Sea on the west and Scotland on the north. announced that, subject to contract, Cerner would replace the previous software provider as the subcontractor One who takes a portion of a contract from the principal contractor or from another subcontractor. When an individual or a company is involved in a large-scale project, a contractor is often hired to see that the work is done. for Fujitsu (company) Fujitsu - A Japanese elecronics corporation. Fujitsu owns ICL, Amdahl Corporation, and DMR. Home USA, Japan. Services Ltd. to automate To turn a set of manual steps into an operation that goes by itself. See automation. clinical processes and digitize To convert an image or signal into digital code by scanning, tracing on a graphics tablet or using an analog to digital conversion device. 3D objects can be digitized by a device with a mechanical arm that is moved onto all the corners. medical records in the Southern Cluster cluster, in astronomy: see star cluster; galaxy. (1) Two or more systems working together. See clustering. (2) Also called an "allocation unit" or "file allocation unit," it is some number of disk sectors that are treated as a unit. of England, one of five NHS regions. Cerner and Fujitsu subsequently signed a binding memorandum of understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. and expect to sign a contract in the third quarter of 2005. Cerner's second quarter bookings do not include any contribution from this agreement. Other Second Quarter Highlights: --Near-record cash collections of $277.6 million and 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 $44.3 million. --Days sales outstanding of 98 days compared to 99 days in the first quarter of 2005 and 103 days in the year-ago quarter. --Operating margin of 12.3 percent, which is 100 basis points higher than the second quarter of 2004. --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 $1.72 billion, up 23 percent over the year-ago quarter. This is comprised of $1.34 billion of contract backlog and $380.0 million of support and maintenance backlog. --347 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) solution implementations were completed. Cerner has now turned on more than 4,300 Cerner Millennium solutions at nearly 860 client facilities worldwide. "I am very pleased with our second quarter results, which included strong performance in our domestic business that was bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. by a record quarter in our global business," 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 again produced strong revenue growth while expanding our operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: and generating strong cash flow." "The outlook for the healthcare information technology (HIT) industry remains strong," 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. . "With at least 18 legislative measures containing HIT provisions introduced in Congress this year, it is clear our government recognizes the fact that healthcare information technology has the potential to save thousands of lives and billions of dollars in annual healthcare costs. Cerner is uniquely positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. widespread global HIT adoption because of our unified architecture 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, which span across physician offices, hospitals, clinics, laboratories, 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 , and consumers' homes." Future Period Guidance The Company expects revenue in the third quarter of 2005 to be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $285 million to $290 million. Cerner expects diluted earnings per share in the third quarter to be between $0.54 and $0.55, which is more than 20 percent higher than the third quarter of 2004. Cerner expects new business bookings in the third quarter to be between $245 million and $260 million before inclusion of any potential bookings related to finalizing a contract with Fujitsu as a subcontractor in the Southern Cluster. For the year 2005, the Company expects earnings per share between $2.13 and $2.16, which is up from the prior range of $2.10 to $2.14. 2005 earnings per share guidance does not include the $0.10 charge for the first quarter 2005 write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of acquired in-process research and development. Cerner expects 2005 revenue to be between $1.12 billion and $1.14 billion, which is up from the prior range of $1.09 billion and $1.11 billion. Earnings Conference Call Cerner will host an earnings conference call to provide additional detail at 3:30 p.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT on July 21, 2005. The dial-in number for the call is 617-786-4513 with a pass code of Cerner. The replay number is 617-801-6888 (Pass code: 89268441). The rebroadcast of the call will be available from approximately 6:00 p.m. CDT, July 21, through 6:00 p.m. CDT, July 24. An audio Webcast will be available both live and archived on Cerner's Web site at www.cerner.com under the About Cerner section (click Investors, then Presentations and Webcasts). 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 the same section of www.cerner.com. 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 "outlook," "positioned," "expects," "to be," "guidance," or the negative of these words, 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. , 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, government regulations, 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 operations Global Operations is a first-person shooter computer game developed by Barking Dog Studios and published by both Crave Entertainment and Electronic Arts. It was released in March of 2002, following its public multiplayer beta version which contained only the Quebec map. , 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, risks related to doing business with third-party suppliers, and the potential inconsistencies in sales forecasts Sales forecast A key input to a firm's financial planning process. External sales forecasts are based on historical experience, statistical analysis, and consideration of various macroeconomic factors. compared to actual sales. 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 STATEMENT OF EARNINGS
Three Months Three Months
Ended YTD Ended YTD
(In thousands, except per share July 2, July 2, July 3, July 3,
data) 2005 2005(1) 2004 2004(2)
---------- ------- ---------- -------
Revenue
System sales $105,200 205,142 84,853 169,365
Support, maintenance and
services 164,251 320,252 133,949 261,018
Reimbursed travel 8,364 14,955 9,588 16,734
------- ------- ------- -------
Total revenue 277,815 540,349 228,390 447,117
Margin
System sales 64,138 128,046 56,009 113,788
Support and maintenance 154,076 297,294 121,817 236,092
------- ------- ------- -------
Total margin 218,214 425,340 177,826 349,880
------- ------- ------- -------
Operating expenses
Sales and client service 114,291 225,131 94,232 187,074
Software development 48,702 98,031 42,769 85,323
General and administrative 21,013 38,935 14,919 29,064
Write-off of in process research
and development - 6,382 - -
------- ------- ------- -------
Total operating expenses 184,006 368,479 151,920 301,461
------- ------- ------- -------
Operating earnings 34,208 56,861 25,906 48,419
Interest income 834 1,718 438 880
Interest expense (2,200) (4,826) (2,230) (4,787)
Other income 47 77 (174) 2,840
------- ------- ------- -------
Non-operating expense,
net (1,319) (3,031) (1,966) (1,067)
Earnings before income taxes 32,889 53,830 23,940 47,352
Income taxes (13,086) (21,507) (9,626) (18,909)
------- ------- ------- -------
Net earnings $19,803 32,323 14,314 28,443
======= ======= ======= =======
Basic earnings per share $0.53 0.87 0.40 0.79
======= ======= ======= =======
Basic weighted average shares
outstanding 37,157 36,947 36,044 35,799
Diluted earnings per share $0.51 0.84 0.38 0.76
======= ======= ======= =======
Diluted weighted average shares
outstanding 38,986 38,673 37,510 37,306
Note 1: Includes a charge for the write off of acquired in process
research and development related to the acquisition of the
medical business division of VitalWorks, Inc. The impact of
this charge is a $3.9 million decrease, net of $2.4 million
tax benefit, in net earnings and a decrease to diluted
earnings per share of $.10 for 2005.
Note 2: 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
NON-GAAP CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Three Months
Ended YTD Ended YTD
(In thousands, except per share July 2, July 2, July 3, July 3,
data) 2005 2005 2004 2004
---------- ------- ---------- -------
Revenue
System sales $105,200 205,142 84,853 169,365
Support, maintenance and
services 164,251 320,252 133,949 261,018
Reimbursed travel 8,364 14,955 9,588 16,734
------- ------- ------- -------
Total revenue 277,815 540,349 228,390 447,117
Margin
System sales 64,138 128,046 56,009 113,788
Support and maintenance 154,076 297,294 121,817 236,092
------- ------- ------- -------
Total margin 218,214 425,340 177,826 349,880
------- ------- ------- -------
Operating expenses
Sales and client service 114,291 225,131 94,232 187,074
Software development 48,702 98,031 42,769 85,323
General and administrative 21,013 38,935 14,919 29,064
------- ------- ------- -------
Total operating expenses 184,006 362,097 151,920 301,461
------- ------- ------- -------
Operating earnings 34,208 63,243 25,906 48,419
Interest income 834 1,718 438 880
Interest expense (2,200) (4,826) (2,230) (4,787)
Other income 47 77 (174) (183)
------- ------- ------- -------
Non-operating expense,
net (1,319) (3,031) (1,966) (4,090)
Earnings before income taxes 32,889 60,212 23,940 44,329
Income taxes (13,086) (23,948) (9,626) (17,712)
------- ------- ------- -------
Net earnings $19,803 36,264 14,314 26,617
======= ======= ======= =======
Basic earnings per share $0.53 0.98 0.40 0.74
======= ======= ======= =======
Basic weighted average shares
outstanding 37,157 36,947 36,044 35,799
Diluted earnings per share $0.51 0.94 0.38 0.71
======= ======= ======= =======
Diluted weighted average shares
outstanding 38,986 38,673 37,510 37,306
RECONCILIATION OF NON-GAAP
TO GAAP CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Three Months
Ended YTD Ended YTD
(In thousands, except per share July 2, July 2, July 3, July 3,
data) 2005 2005 2004 2004
---------- ------- ---------- -------
Non-GAAP net income $19,803 36,264 14,314 26,617
Write off of acquired in process
research and development - (6,382) - -
Income tax effect - 2,441 - -
Gain on sale of Zynx - - - 3,023
Income tax effect - - - (1,197)
------- ------- ------- -------
GAAP net income $19,803 32,323 14,314 28,443
======= ======= ======= =======
Basic earnings per share $0.53 0.87 0.40 0.79
======= ======= ======= =======
Basic weighted average shares
outstanding 37,157 36,947 36,044 35,799
Diluted earnings per share $0.51 0.84 0.38 0.76
======= ======= ======= =======
Diluted weighted average shares
outstanding 38,986 38,673 37,510 37,306
CERNER CORPORATION
CONSOLIDATED BALANCE SHEETS
July 2, January 1,
(In thousands) 2005 2005
---- ----
Assets
Cash and cash equivalents $132,335 189,784
Receivables, net 299,673 282,199
Inventory 11,102 7,373
Prepaid expenses and other 37,401 30,117
------- -------
Total current assets 480,511 509,473
Property and equipment, net 258,909 230,440
Software development costs, net 165,635 157,765
Goodwill, net 110,375 54,600
Intangible assets, net 60,645 22,690
Other assets 7,707 7,297
------- -------
Total assets $1,083,782 982,265
========= =======
Liabilities
Accounts payable $49,999 37,008
Current installments of long-term debt 21,879 21,908
Note payable to bank 40,000 -
Deferred revenue 76,766 77,445
Deferred income taxes 8,383 430
Accrued payroll and tax withholdings 54,518 55,819
Other accrued expenses 17,331 6,634
------- -------
Total current liabilities 268,876 199,244
------- -------
Long-term debt 91,043 108,804
Deferred income taxes 71,852 69,863
Deferred revenue 6,006 5,703
------- -------
Total liabilities 437,777 383,614
------- -------
Minority owners' equity interest in
subsidiary 1,286 1,166
Stockholders' Equity
Common stock 389 381
Additional paid-in capital 288,808 271,116
Retained earnings 376,335 344,011
Treasury stock, at cost (1,502,999 shares
in 2005 and 2004) (26,793) (26,793)
Foreign currency translation adjustment 5,980 8,770
------- -------
Total stockholders' equity 644,719 597,485
Total liabilities and equity $1,083,782 982,265
========= =======
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