Cerner Reports Second Quarter 2008 Results.Strong Earnings Growth, Bookings, Cash Flow 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 Corp. (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 2008 second quarter that ended June 28, delivering strong levels of bookings, earnings and cash flow. Bookings in the second quarter of 2008 were $404 million. Second quarter 2007 bookings were $487 million. Second quarter 2007 bookings included $98 million related to Cerner's participation in the National Health Service (NHS NHS abbr. National Health Service NHS (in Britain) National Health Service ) initiative to automate 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 England and approximately $20 million of higher than expected hardware bookings. Second quarter 2008 bookings are 10 percent higher than adjusted second quarter 2007 bookings of $369 million. Second quarter revenue increased 4 percent over the year-ago period to $402.8 million. On a Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) basis, second quarter 2008 net earnings were $35.3 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 $0.42. Second quarter 2007 GAAP net earnings were $26.8 million, and diluted earnings per share were $0.32. Adjusted (non-GAAP) Earnings Adjusted second quarter 2008 net earnings were $42.5 million, compared to $29.6 million of adjusted net earnings in the second quarter of 2007. Adjusted diluted earnings per share were $0.51 in the second quarter of 2008 compared to $0.36 in the second quarter of 2007. Analysts' consensus estimate for second quarter 2008 adjusted diluted earnings per share was $0.50. Adjusted Net Earnings is not a recognized term under GAAP and should not be substituted for net earnings as a measure of the Company's performance but instead should be utilized as a supplemental measure of financial performance in evaluating our business. Following is a description of adjustments made to second quarter net earnings. For more detail, please see the accompanying schedule, titled "Reconciliation of Adjusted Net Earnings and Adjusted Diluted Earnings Per Share to GAAP Net Earnings and Diluted Earnings Per Share." Adjusted second quarter 2008 and 2007 net earnings and diluted earnings per share exclude the impact of accounting pursuant to Statement of Financial Accounting Standards (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) No. 123R, Share-Based Payment, which requires the expensing of stock options. The effect of accounting under SFAS 123R reduced second quarter 2008 net earnings and diluted earnings per share by $2.1 million and $0.03, respectively, and reduced second quarter 2007 net earnings and diluted earnings per share by $2.7 million and $0.04, respectively. Adjusted earnings and diluted earnings per share in the second quarter 2008 also exclude the impact of a third party supplier settlement that increased sales and client service expense by $8.0 million, decreased net earnings by $5.0 million, and decreased diluted earnings per share by $0.06. During the second quarter, the Company finalized See finalization. a settlement with a third party provider of software related to the use of the third party's software in the Company's remote hosting business. The settlement included compensation for use of the software for periods prior to the second quarter of 2008 as well as compensation for licenses of the software for future use for existing clients as well as additional clients through January 2009. Based on a relative value allocation of the settlement amount, the amount attributable to the utilization of software for current and prior periods is $8.0 million, which was recognized in the second quarter, and the amount attributable to the license for future use is approximately $15 million, which will be amortized ratably over the hosting period for the applicable arrangement. The Company determined that approximately $5 million of the amount expensed in the 2008 second quarter should have been recorded in prior periods. The Company determined that the effect of this adjustment on prior annual and interim periods is not material to any previously reported results. Other Second Quarter Highlights: * Cash collections of $426 million and 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 $85 million, up from $62 million in the second quarter of 2007. * 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). of 90 days compared to 92 days in the first quarter of 2008 and 86 days in the year-ago quarter. * Total revenue backlog of $3.3 billion, up 10 percent over the year-ago quarter. This is comprised of $2.7 billion of contract backlog and $0.6 billion of support and maintenance backlog. "Our second quarter results demonstrate another quarter of solid execution," 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 co-founder, chairman and chief executive officer. "While declines in sales of hardware, a non-core part of our business, again impacted our overall revenue growth, our core business is strong, as evidenced by our strong levels of bookings, earnings growth, operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: expansion and cash generation in the second quarter and year to date." "Cerner's strategic worldwide footprint across healthcare is unmatched, with clients spanning acute care, ambulatory care ambulatory care n. Medical care provided to outpatients. ambulatory care, n the health services provided on an outpatient basis to those who can visit a health care facility and return home the same day. , retail pharmacy, laboratory, pharmaceutical companies, and employers. This footprint, our unmatched depth and breadth of solutions and services, and our strategic initiatives that continue to expand Cerner's boundaries, uniquely position us for strong sustainable growth," Patterson said. Future Period Guidance The company expects revenue in the third quarter of 2008 to be approximately $410 million to $425 million. For the year 2008, Cerner continues to expect revenue growth of approximately 10 percent over 2007. Cerner expects adjusted diluted earnings per share before stock options expense in the third quarter to be between $0.55 and $0.56. For the year, the Company remains comfortable with the current consensus EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $2.17, which is before options expense and the third party supplier settlement, plus the $0.01 over-attainment this quarter, leading to an estimate of $2.18. The company expects SFAS No. 123R share-based compensation expense to reduce diluted earnings per share in the third quarter and full year by approximately $0.03 and $0.12, respectively. Cerner expects new business bookings in the third quarter of 2008 to be between $370 million and $400 million. Earnings Conference Call Cerner will host an earnings conference call to provide additional detail on second quarter results at 3:30 p.m. CT, July 22. The dial-in number for the conference call is 617-614-3669; the passcode is Cerner. The company recommends joining the call 15 minutes early for registration. The re-broadcast of the call will be available from 5:30 p.m. CT, July 22 through 11:59 p.m. CT, July 25. The dial-in number for the re-broadcast is 888-286-8010; the passcode is 21143886. An audio webcast will be available live and archived on Cerner's Web site at www.cerner.com under the About Cerner section (click Investors, then Presentations and Webcasts). About Cerner Cerner is taking the paper chart out of healthcare, eliminating error, variance and waste in the care process. With more than 6,000 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 "position," "guidance," "expects," and "comfortable" 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: the possibility of product-related liabilities; potential claims for system errors and warranties; the possibility of interruption at our data centers or client support facilities; our proprietary technology may be subject to claims for infringement or misappropriation misappropriation n. the intentional, illegal use of the property or funds of another person for one's own use or other unauthorized purpose, particularly by a public official, a trustee of a trust, an executor or administrator of a dead person's estate, or by any of intellectual property rights of others, or may be infringed or misappropriated mis·ap·pro·pri·ate tr.v. mis·ap·pro·pri·at·ed, mis·ap·pro·pri·at·ing, mis·ap·pro·pri·ates 1. a. To appropriate wrongly: misappropriating the theories of social science. by others; risks associated with our 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. ; risks associated with our ability to effectively hedge exposure to fluctuations in foreign currency exchange rates; risks associated with our recruitment and retention of key personnel; risks related to our reliance on third party suppliers; risks inherent with business acquisitions; changing political, economic and regulatory influences; government regulation; significant competition and market changes; variations in our quarterly operating results; potential inconsistencies in our 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; and the volatility in the trading price Trading price The price at which a security is currently selling. of our common stock. 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. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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