CERNER CORPORATION |
(Exact name of registrant as specified in its charter) |
Delaware | 43-1196944 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
2800 Rockcreek Parkway North Kansas City, MO | 64117 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of each exchange on which registered | |
Common Stock, $0.01 par value per share | The NASDAQ Stock Market LLC (NASDAQ Global Select Market) |
Class | Outstanding at February 12, 2016 | |
Common Stock, $0.01 par value per share | 340,016,851 shares |
Document | Parts into Which Incorporated | |
Portions of the registrant's Proxy Statement for the Annual Shareholders' Meeting to be held May 27, 2016 | Part III |
Part I | ||
Item 1. | Business | |
Item 1A. | Risk Factors | |
Item 1B. | Unresolved Staff Comments | |
Item 2. | Properties | |
Item 3. | Legal Proceedings | |
Item 4. | Mine Safety Disclosures | |
Part II | ||
Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | |
Item 6. | Selected Financial Data | |
Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | |
Item 8. | Financial Statements and Supplementary Data | |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | |
Item 9A. | Controls and Procedures | |
Item 9B. | Other Information | |
Part III | ||
Item 10. | Directors, Executive Officers and Corporate Governance | |
Item 11. | Executive Compensation | |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | |
Item 13. | Certain Relationships and Related Transactions, and Director Independence | |
Item 14. | Principal Accountant Fees and Services | |
Part IV | ||
Item 15. | Exhibits and Financial Statement Schedules | |
Signatures |
For the Years Ended | ||||||
2015 | 2014 | 2013 | ||||
Revenues by Solutions & Services | ||||||
System sales | 29 | % | 28 | % | 29 | % |
Support and maintenance | 22 | % | 21 | % | 23 | % |
Services | 47 | % | 48 | % | 46 | % |
Reimbursed travel | 2 | % | 3 | % | 2 | % |
100 | % | 100 | % | 100 | % | |
Revenues by Segment | ||||||
Domestic | 88 | % | 89 | % | 88 | % |
Global | 12 | % | 11 | % | 12 | % |
100 | % | 100 | % | 100 | % |
• | Health Information Technology for Economic and Clinical Health (HITECH) provisions within the American Recovery and Reinvestment Act (ARRA) that offer incentives for health care organizations to modernize operations through “Meaningful Use” of HCIT and penalizes for non-compliance; |
• | Value-Based Purchasing programs that link reimbursement to quality, clinical process, patient experience, and outcomes; |
• | Increasing requirements to report quality metrics; and |
• | Readmission reduction programs that penalize hospitals for unnecessary readmissions. |
• | KNOW what is happening and predict what will happen within their population through solutions for data exchange, longitudinal record, enterprise data warehouse, analytics and quality and regulatory reporting; |
• | ENGAGE providers and patients in health and care delivery through personal health portals and solutions for care management, home care, long-term care, and retail pharmacy; and |
• | MANAGE health and improve care with capacity and workforce management, clinical research, predictive modeling, health registries, and contract and network management. |
• | Longitudinal Record - provides clinicians and the patient a view of their consolidated clinical record, gathered and normalized from multiple sources. |
• | Registries - identifies and automatically segments patients by disease, guides interventions according to clinical best practice, provides visibility to quality measures for provider’s population, produces client-defined performance scorecards, and tracks their health and their interventions according to clinical best practice. |
• | Analytics - allows the integrated data to be analyzed for the purpose of population health management and research. |
• | Provider Performance Management - creates visibility for providers on their performance against key clinical and operation metrics and can be aligned with payment models that incentivize high quality and efficient care. |
• | Patient/Member Engagement - an enhanced patient portal complemented by engagement services to help health care organizations create more meaningful interactions and engagement with the members they serve, and provides the ability to target individuals at risk of becoming chronically ill. |
• | Care Management - provides a person-centric approach of proactive surveillance, coordination and facilitation of health services across the care continuum to achieve optimal health status, quality and costs. |
• | Population Health Programs - leverages evidence-based guidelines and the contextual information within HealtheIntent to provide identification, prediction and management of a condition at the population, provider and person level and facilitates a personalized plan of care for each member. |
• | Contract Network Management - for managing provider networks, modeling to inform payer negotiations, determining appropriate business models, and managing contract performance in near real-time. |
Allscripts Healthcare Solutions, Inc. | Healthland, Inc. |
Computer Programs and Systems, Inc. | McKesson Corporation |
Epic Systems Corporation | MEDHOST, Inc. |
GE Healthcare Technologies | Medical Information Technology, Inc. |
Clinovations, Inc. | Impact Advisors |
Dell, Inc. (Dell) | S&P Consultants |
Encore Health Resources, LLC | The Advisory Board Company (Advisory Board) |
IBM Corporation (IBM) | Xerox Corporation, Ltd. |
AmazingCharts.com, Inc. | Practice Fusion, Inc. |
athenahealth, Inc. (athenahealth) | Quality Systems, Inc. |
eClinicalWorks, LLC | SRSsoft |
e-MDs, Inc. | Vitera Healthcare Solutions |
Netsmart Technologies |
CapsuleTech, Inc. | PerfectServe, Inc. |
Becton, Dickinson and Company | Qualcomm, Inc. |
Connexall Company, Ltd. | Siemens AG |
Nanthealth, LLC | Vocera Communication, Inc. |
Omnicell, Inc. |
3M Company | Emdeon Corporation |
Accretive Health, Inc. | Experian plc |
athenahealth | MedAssets, Inc. |
Conifer Health Solutions | Optum, Inc. (Optum) |
Dell | Quadramed Corporation |
Deloitte Consulting, LLP | SSI Group, Inc. |
ActiveHealth Management | IBM |
Advisory Board | Influence Health, Inc. |
Aetna, Inc. | MedeAnalytics, Inc. |
athenahealth | Optum |
Evolent Health, LLC | WellCentive, Inc. |
Health Catalyst |
Name | Age | Positions | ||
Neal L. Patterson | 66 | Chairman of the Board of Directors and Chief Executive Officer | ||
Clifford W. Illig | 65 | Vice Chairman of the Board of Directors | ||
Zane M. Burke | 50 | President | ||
Marc G. Naughton | 60 | Executive Vice President and Chief Financial Officer | ||
Michael R. Nill | 51 | Executive Vice President and Chief Operating Officer | ||
Randy D. Sims | 55 | Senior Vice President, Chief Legal Officer and Secretary | ||
Jeffrey A. Townsend | 52 | Executive Vice President and Chief of Staff | ||
Julia M. Wilson | 53 | Executive Vice President and Chief People Officer |
• | Greater difficulty in collecting accounts receivable and longer collection periods; |
• | Difficulties and costs of staffing and managing non-U.S. operations; |
• | The impact of global economic conditions; |
• | Effects of sovereign debt conditions, including budgetary constraints; |
• | Unfavorable or volatile foreign currency exchange rates; |
• | Legal compliance costs or business risks associated with our global operations where: i) local laws and customs differ from, or are more stringent than those in the U.S., such as those relating to privacy or security breaches or ii) risk is heightened with respect to laws prohibiting improper payments and bribery, including without limitation the U.S. Foreign Corrupt Practices Act, the U.K. Anti-Bribery Act and similar laws and regulations in foreign jurisdictions; |
• | Certification, licensing or regulatory requirements; |
• | Unexpected changes in regulatory requirements; |
• | Changes to or reduced protection of intellectual property rights in some countries; |
• | Potentially adverse tax consequences as a result of changes in tax laws or otherwise, and difficulties associated with repatriating cash generated or held abroad in a tax-efficient manner; |
• | Different or additional functionality requirements or preferences; |
• | Trade protection measures; |
• | Export control regulations; |
• | Health service provider or government spending patterns; |
• | Natural disasters, war or terrorist acts; |
• | Labor disruptions that may occur in a country; |
• | Poor selection of a partner in a country; or |
• | Political unrest which may impact sales or threaten the safety of associates or our continued presence in these countries and the related potential impact on global stability. |
• | managing a larger company; |
• | the possibility of faulty assumptions underlying expectations regarding the integration process, including known and unknown liabilities in the legacy Cerner Health Services business or arising out of the integration, or assumptions around client retention; |
• | integrating two business cultures; |
• | creating uniform standards, controls, procedures, policies and information systems and minimizing the costs associated with such matters; |
• | integrating information systems, purchasing, accounting, finance, legal, sales, billing, payroll and regulatory compliance functions; |
• | preserving client, supplier, research and development, distribution, marketing, promotion and other important relationships; |
• | commercializing "go forward" solutions under development and increasing revenues from existing marketed solutions; |
• | combining the sales force territories and competencies associated with the sale of solutions and services presently sold or provided by legacy Cerner or the Cerner Health Services business; |
• | integrating personnel from different businesses while maintaining focus on providing consistent, high-quality solutions and client support and attracting prospective clients; |
• | integrating complex technologies and solutions from different businesses in a manner that is seamless to clients; and |
• | performance shortfalls as a result of the diversion of management’s attention to the integration of the Cerner Health Services business. |
• | Government entities, particularly in the U.S., often reserve the right to audit our contracts and conduct inquiries and investigations of our business practices with respect to government contracts. U.S. government agencies conduct reviews and investigations and make inquiries regarding our systems in connection with our performance and business practices with respect to our government contracts. Negative findings from audits, investigations or inquiries could affect our future sales and profitability by preventing us, by operation of law or in practice, from receiving new government contracts for some period of time. |
• | If a government client discovers improper or illegal activities in the course of audits or investigations, we may become subject to various civil and criminal penalties, including those under the civil U.S. False Claims Act, and administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and suspensions or debarment from doing business with other agencies of that government. The inherent limitations of internal controls may not prevent or detect all improper or illegal activities. |
• | U.S. government contracting regulations impose strict compliance and disclosure obligations. Disclosure is required if certain company personnel have knowledge of “credible evidence” of a violation of federal criminal laws involving fraud, conflict of interest, bribery or improper gratuity, a violation of the civil U.S. False Claims Act or receipt of a significant overpayment from the government. Failure to make required disclosures could be a basis for suspension and/or debarment from federal government contracting in addition to breach of the specific contract and could also impact contracting beyond the U.S. federal level. Reported matters also could lead to audits or investigations and other civil, criminal or administrative sanctions. |
• | Government contracts are subject to heightened reputational and contractual risks compared to contracts with commercial clients. For example, government contracts and the proceedings surrounding them are often subject to more extensive scrutiny and publicity. Negative publicity, including allegations of improper or illegal activity, poor contract performance, deficiencies in services or other deliverables, or information security breaches, regardless of accuracy, may adversely affect our reputation. |
• | Terms and conditions of government contracts also tend to be more onerous and are often more difficult to negotiate. |
• | Government entities typically fund projects through appropriated monies. While these projects are often planned and executed as multi-year projects, government entities usually reserve the right to change the scope of or terminate these projects for lack of approved funding and/or at their convenience. Changes in government or political developments, including budget deficits, shortfalls or uncertainties, government spending reductions (e.g., Congressional sequestration of funds under the Budget Control Act of 2011) or other debt constraints, such as those recently experienced in the U.S. and Europe, could result in our projects being reduced in price or scope or terminated altogether, which also could limit our recovery of incurred costs, reimbursable expenses and profits on work completed prior to the termination. Furthermore, if insufficient funding is appropriated to the government entity to cover termination costs, we may not be able to fully recover our investments. |
Brooklyn, New York | Durham, North Carolina | New York, New York |
Burlington, Vermont | Franklin, Tennessee | North Kansas City, Missouri |
Carlsbad, California | Garden Grove, California | Rochester, Minnesota |
Columbia, Missouri | Kansas City, Missouri | Salt Lake City, Utah |
Costa Mesa, California | Mason, Ohio | Tempe, Arizona |
Culver City, California | Minneapolis, Minnesota | Waltham, Massachusetts |
Denver, Colorado | Nevada, Missouri | Yardley, Pennsylvania |
Downington, Pennsylvania | New Concord, Ohio |
Abu Dhabi, United Arab Emirates | Gmund, Austria | Oviedo, Spain |
Augsburg, Germany | Gothenburg, Sweden | Paris, France |
Bangalore, India | Hamburg, Germany | Perth, Australia |
Berlin, Germany | Idstein, Germany | Peterborough, Ontario, Canada |
Brasov, Romania | Kolkata, India | Riyadh, Saudi Arabia |
Brisbane, Australia | Kosice, Slovakia | Sao Paulo, Brazil |
Cairo, Egypt | Kuala Lumpur, Malaysia | Singapore |
Doha, Qatar | Lisbon, Portugal | St. Wolfgang, Germany |
Dubai, United Arab Emirates | London, England | Sydney, Australia |
Dublin, Ireland | Madrid, Spain | The Hague, Netherlands |
Erlangen, Germany | Malmo, Sweden | Toronto, Ontario, Canada |
Essen, Germany | Melbourne, Australia | Upplands Vasby, Sweden |
Frankfurt, Germany | Murcia, Spain | Vienna, Austria |
Getafe, Spain | Oslo, Norway |
2015 | 2014 | ||||||||||||||||||||||
High | Low | Last | High | Low | Last | ||||||||||||||||||
First Quarter | $ | 74.83 | $ | 63.19 | $ | 72.77 | $ | 63.07 | $ | 51.65 | $ | 56.15 | |||||||||||
Second Quarter | 75.72 | 65.67 | 68.48 | 56.94 | 48.39 | 51.27 | |||||||||||||||||
Third Quarter | 75.00 | 57.42 | 61.34 | 60.07 | 50.30 | 58.66 | |||||||||||||||||
Fourth Quarter | 68.31 | 55.82 | 60.17 | 66.45 | 55.75 | 65.03 |
Total Number of Shares Purchased (a) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (b) | |||||||||||
Period | ||||||||||||||
October 4, 2015 - October 31, 2015 | — | — | — | $ | 145,000,000 | |||||||||
November 1, 2015 - November 28, 2015 | 2,481,853 | $ | 58.40 | 2,481,853 | — | |||||||||
November 29, 2015 - January 2, 2016 | 8,868 | 59.94 | — | — | ||||||||||
Total | 2,490,721 | $ | 58.41 | 2,481,853 |
(a) | Of the 2,490,721 shares of common stock, par value $0.01 per share, presented on the table above, 8,868 were originally granted to employees as restricted stock pursuant to our 2011 Omnibus Equity Incentive Plan (the Omnibus Plan). The Omnibus Plan allows for the withholding of shares to satisfy minimum tax obligations due upon the vesting of restricted stock. Pursuant to the Omnibus Plan, the shares reflected above were relinquished by employees in exchange for our agreement to pay U.S. federal and state withholding obligations resulting from the vesting of the Company’s restricted stock. |
(b) | As announced on September 8, 2015, our Board of Directors authorized a new share repurchase program for an aggregate purchase of up to $245 million of our common stock, excluding transaction costs. During 2015, the Company repurchased 4.1 million shares for total consideration of $245 million pursuant to a Rule 10b5-1 plan. As of January 2, 2016, the program was complete. |
(In thousands, except per share data) | 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||
(1)(2) | (1)(3) | (1)(4) | (1) | (1) | |||||||||||||||
Statement of Operations Data: | |||||||||||||||||||
Revenues | $ | 4,425,267 | $ | 3,402,703 | $ | 2,910,748 | $ | 2,665,436 | $ | 2,203,153 | |||||||||
Operating earnings | 781,136 | 763,084 | 576,012 | 571,662 | 459,798 | ||||||||||||||
Earnings before income taxes | 781,380 | 774,174 | 588,054 | 587,708 | 469,694 | ||||||||||||||
Net earnings | 539,362 | 525,433 | 398,354 | 397,232 | 306,627 | ||||||||||||||
Earnings per share: | |||||||||||||||||||
Basic | 1.57 | 1.54 | 1.16 | 1.16 | 0.91 | ||||||||||||||
Diluted | 1.54 | 1.50 | 1.13 | 1.13 | 0.88 | ||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||
Basic | 343,178 | 342,150 | 343,636 | 341,861 | 337,267 | ||||||||||||||
Diluted | 350,908 | 350,386 | 352,281 | 351,394 | 347,734 | ||||||||||||||
Balance Sheet Data: | |||||||||||||||||||
Working capital | $ | 1,049,967 | $ | 1,714,471 | $ | 1,121,276 | $ | 1,210,394 | $ | 1,063,593 | |||||||||
Total assets | 5,561,984 | 4,530,565 | 4,098,364 | 3,704,468 | 3,000,358 | ||||||||||||||
Long-term debt and capital lease obligations, excl. current installments | 563,353 | 62,868 | 111,717 | 136,557 | 86,821 | ||||||||||||||
Shareholders' equity | 3,870,384 | 3,565,968 | 3,167,664 | 2,833,650 | 2,310,681 |
(1) | Includes share-based compensation expense. The impact of this expense is as follows: |
(In thousands, except share data) | 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||
Total share-based compensation expense | $ | 74,926 | $ | 62,965 | $ | 48,954 | $ | 38,112 | $ | 29,479 | |||||||||
Amount of related income tax benefit | (23,435 | ) | (22,101 | ) | (18,607 | ) | (14,578 | ) | (11,256 | ) | |||||||||
Net impact on earnings | $ | 51,491 | $ | 40,864 | $ | 30,347 | $ | 23,534 | $ | 18,223 | |||||||||
Decrease to diluted earnings per share | $ | 0.15 | $ | 0.12 | $ | 0.09 | $ | 0.07 | $ | 0.05 |
(2) | Includes pre-tax charges for amortization of acquisition-related intangibles of $79 million and acquisition costs and related adjustments of $46 million, both associated with our acquisition and integration of the Cerner Health Services business, as well as costs related to our voluntary separation plan of $46 million. |
(3) | Includes $16 million of pre-tax acquisition costs and related adjustments associated with our acquisition of the Cerner Health Services business. |
(4) | Includes a pre-tax settlement charge of $106 million, as further described in Note 10 of the notes to consolidated financial statements. |
(In thousands) | 2015 | % of Revenue | 2014 | % of Revenue | % Change | ||||||||||
Revenues | |||||||||||||||
System sales | $ | 1,281,890 | 29 | % | $ | 945,858 | 28 | % | 36 | % | |||||
Support and maintenance | 975,701 | 22 | % | 724,840 | 21 | % | 35 | % | |||||||
Services | 2,094,874 | 47 | % | 1,642,119 | 48 | % | 28 | % | |||||||
Reimbursed travel | 72,802 | 2 | % | 89,886 | 3 | % | (19 | )% | |||||||
Total revenues | 4,425,267 | 100 | % | 3,402,703 | 100 | % | 30 | % | |||||||
Costs of revenue | |||||||||||||||
Costs of revenue | 750,781 | 17 | % | 604,377 | 18 | % | 24 | % | |||||||
Total margin | 3,674,486 | 83 | % | 2,798,326 | 82 | % | 31 | % | |||||||
Operating expenses | |||||||||||||||
Sales and client service | 1,838,600 | 42 | % | 1,395,568 | 41 | % | 32 | % | |||||||
Software development | 539,799 | 12 | % | 392,805 | 12 | % | 37 | % | |||||||
General and administrative | 423,424 | 10 | % | 233,393 | 7 | % | 81 | % | |||||||
Amortization of acquisition-related intangibles | 91,527 | 2 | % | 13,476 | — | % | 579 | % | |||||||
Total operating expenses | 2,893,350 | 65 | % | 2,035,242 | 60 | % | 42 | % | |||||||
Total costs and expenses | 3,644,131 | 82 | % | 2,639,619 | 78 | % | 38 | % | |||||||
Operating earnings | 781,136 | 18 | % | 763,084 | 22 | % | 2 | % | |||||||
Other income, net | 244 | 11,090 | |||||||||||||
Income taxes | (242,018 | ) | (248,741 | ) | |||||||||||
Net earnings | $ | 539,362 | $ | 525,433 | 3 | % |
• | System sales, which include revenues from the sale of licensed software (including perpetual license sales and software as a service), technology resale (hardware, devices, and sublicensed software), deployment period licensed software upgrade rights, installation fees, transaction processing and subscriptions, increased 36% to $1.3 billion in 2015 from $946 million in 2014. The increase in system sales was primarily driven by contributions from the Cerner Health Services business. |
• | Support and maintenance revenues increased 35% to $976 million in 2015 compared to $725 million in 2014. This increase was primarily attributable to contributions from the Cerner Health Services business. |
• | Services revenue, which includes professional services, excluding installation, and managed services, increased 28% to $2.1 billion in 2015 from $1.6 billion in 2014. This increase was driven by contributions from the Cerner Health Services business. |
• | Sales and client service expenses as a percent of total revenues were 42% in 2015, compared to 41% in 2014. These expenses increased 32% to $1.8 billion in 2015, from $1.4 billion in 2014. Sales and client service expenses include salaries and benefits of sales, marketing, support, and services personnel, depreciation and other expenses associated with our managed service business, communications expenses, unreimbursed travel expenses, expense for share-based payments, and trade show and advertising costs. The increase was primarily driven by the addition of the Cerner Health Services business. |
• | Software development expenses as a percent of revenue were 12% in 2015 and 2014. Expenditures for software development reflect ongoing development and enhancement of the Cerner Millennium and HealtheIntent platforms, with a focus on supporting key initiatives to enhance physician experience, revenue cycle and population health solutions. Software development expenses in 2015 also include expenditures related to Cerner Health Services solutions. A summary of our total software development expense in 2015 and 2014 is as follows: |
For the Years Ended | |||||||
(In thousands) | 2015 | 2014 | |||||
Software development costs | $ | 685,260 | $ | 467,158 | |||
Capitalized software costs | (262,177 | ) | (175,262 | ) | |||
Capitalized costs related to share-based payments | (2,479 | ) | (2,538 | ) | |||
Amortization of capitalized software costs | 119,195 | 103,447 | |||||
Total software development expense | $ | 539,799 | $ | 392,805 |
• | General and administrative expenses as a percent of total revenues were 10% in 2015, compared to 7% in 2014. These expenses increased 81% to $423 million in 2015, from $233 million in 2014. General and administrative expenses include salaries and benefits for corporate, financial and administrative staffs, utilities, communications expenses, professional fees, depreciation and amortization, transaction gains or losses on foreign currency, expense for share-based payments, acquisition costs and related adjustments. The increase in general and administrative expenses was primarily driven by the addition of the Cerner Health Services business. General and administrative expenses in 2015 and 2014 include acquisition costs and related adjustments associated with our Cerner Health Services business of $46 million and $16 million, respectively. General and administrative expenses in 2015 also include $46 million of costs associated with our voluntary separation plan. We expect acquisition costs and related adjustments to significantly decline in future periods. At the end of 2015, our voluntary separation plan was complete. Refer to Note (1) of the notes to consolidated financial statements for further detail regarding the voluntary separation plan. |
• | Amortization of acquisition-related intangibles increased 579% to $92 million in 2015, from $13 million in 2014. Amortization of acquisition-related intangibles includes the amortization of customer relationships, acquired technology, trade names, and non-compete agreements recorded in connection with our business acquisitions. The increase in amortization of acquisition-related intangibles was driven by the acquisition of the Cerner Health Services business in the first quarter of 2015. Refer to Note (2) of the notes to consolidated financial statements for further detail regarding intangible assets recorded in connection with our acquisition of the Cerner Health Services business. |
• | Other income was less than $1 million in 2015 compared to $11 million in 2014. This decline is primarily due to increased interest expense as a result of the issuance of Senior Notes in January 2015, as further discussed in Note (9) of the notes to consolidated financial statements. Interest income also declined in 2015 due to lower average investment balances throughout the year. Refer to Note (11) of the notes to consolidated financial statements for further detail on the composition of other income. |
• | Our effective tax rate was 31% in 2015 compared to 32% in 2014. The rates include net favorable permanent differences recognized in both periods. Refer to Note (12) of the notes to consolidated financial statements for further information regarding our effective tax rate. |
(In thousands) | 2015 | % of Revenue | 2014 | % of Revenue | % Change | ||||||||
Domestic Segment | |||||||||||||
Revenues | $ | 3,904,454 | 100% | $ | 3,021,790 | 100% | 29% | ||||||
Costs of revenue | 651,826 | 17% | 542,210 | 18% | 20% | ||||||||
Operating expenses | 1,577,594 | 40% | 1,163,413 | 39% | 36% | ||||||||
Total costs and expenses | 2,229,420 | 57% | 1,705,623 | 56% | 31% | ||||||||
Domestic operating earnings | 1,675,034 | 43% | 1,316,167 | 44% | 27% | ||||||||
Global Segment | |||||||||||||
Revenues | 520,813 | 100% | 380,913 | 100% | 37% | ||||||||
Costs of revenue | 98,955 | 19% | 62,167 | 16% | 59% | ||||||||
Operating expenses | 233,047 | 45% | 182,965 | 48% | 27% | ||||||||
Total costs and expenses | 332,002 | 64% | 245,132 | 64% | 35% | ||||||||
Global operating earnings | 188,811 | 36% | 135,781 | 36% | 39% | ||||||||
Other, net | (1,082,709 | ) | (688,864 | ) | 57% | ||||||||
Consolidated operating earnings | $ | 781,136 | $ | 763,084 | 2% |
• | Revenues increased 29% to $3.9 billion in 2015 from $3.0 billion in 2014. This increase was primarily driven by contributions from the Cerner Health Services business. |
• | Cost of revenues was 17% of revenues in 2015 compared to 18% in 2014. The lower cost of revenues as a percent of revenue was primarily driven by a lower mix of technology resale, which carries a higher cost of revenue. |
• | Operating expenses were 40% of revenues in 2015 compared to 39% in 2014. The slight increase as a percent of revenues was primarily driven by the addition of the Cerner Health Services business. |
• | Revenues increased 37% to $521 million in 2015 from $381 million in 2014. This increase was driven by contributions from the Cerner Health Services business. |
• | Cost of revenues was 19% of revenues in 2015 compared to 16% of revenues in 2014. The higher cost of revenues in 2015 was primarily driven by a higher amount of third party resources utilized for support and services. |
• | Operating expenses increased 27% to $233 million in 2015 from $183 million in 2014, due primarily to the addition of the Cerner Health Services business. |
(In thousands) | 2014 | % of Revenue | 2013 | % of Revenue | % Change | ||||||||||
Revenues | |||||||||||||||
System sales | $ | 945,858 | 28 | % | $ | 847,809 | 29 | % | 12 | % | |||||
Support and maintenance | 724,840 | 21 | % | 661,979 | 23 | % | 9 | % | |||||||
Services | 1,642,119 | 48 | % | 1,330,851 | 46 | % | 23 | % | |||||||
Reimbursed travel | 89,886 | 3 | % | 70,109 | 2 | % | 28 | % | |||||||
Total revenues | 3,402,703 | 100 | % | 2,910,748 | 100 | % | 17 | % | |||||||
Costs of revenue | |||||||||||||||
Costs of revenue | 604,377 | 18 | % | 514,722 | 18 | % | 17 | % | |||||||
Total margin | 2,798,326 | 82 | % | 2,396,026 | 82 | % | 17 | % | |||||||
Operating expenses | |||||||||||||||
Sales and client service | 1,395,568 | 41 | % | 1,173,051 | 40 | % | 19 | % | |||||||
Software development | 392,805 | 12 | % | 338,786 | 12 | % | 16 | % | |||||||
General and administrative | 233,393 | 7 | % | 295,383 | 10 | % | (21 | )% | |||||||
Amortization of acquisition-related intangibles | 13,476 | — | % | 12,794 | — | % | 5 | % | |||||||
Total operating expenses | 2,035,242 | 60 | % | 1,820,014 | 63 | % | 12 | % | |||||||
Total costs and expenses | 2,639,619 | 78 | % | 2,334,736 | 80 | % | 13 | % | |||||||
Operating earnings | 763,084 | 22 | % | 576,012 | 20 | % | 32 | % | |||||||
Other income, net | 11,090 | 12,042 | |||||||||||||
Income taxes | (248,741 | ) | (189,700 | ) | |||||||||||
Net earnings | $ | 525,433 | $ | 398,354 | 32 | % |
• | System sales increased 12% to $946 million in 2014 from $848 million in 2013. The increase in system sales was primarily driven by strong growth in software and subscriptions of $65 million and $23 million, respectively. |
• | Support and maintenance revenues increased 9% to $725 million in 2014 compared to $662 million in 2013. This increase was attributable to continued success at selling Cerner Millennium applications and implementing them at client sites. |
• | Services revenue increased 23% to $1.6 billion in 2014 from $1.3 billion in 2013. This increase was driven by growth in CernerWorks managed services of $70 million as a result of continued demand for our hosting services and a $241 million increase in professional services due to increased implementation and consulting activities. |
• | Sales and client service expenses as a percent of total revenues were 41% in 2014, compared to 40% in 2013. These expenses increased 19% to $1.4 billion in 2014, from $1.2 billion in 2013. The increase as a percent of revenue reflects a higher mix of services during the period that was driven by strong services revenue growth. |
• | Software development expenses as a percent of revenue were 12% in 2014 and 2013. Expenditures for software development reflect ongoing development and enhancement of the Cerner Millennium and HealtheIntent platforms, with a focus on supporting key initiatives to enhance physician experience, revenue cycle, and population health solutions. A summary of our total software development expense in 2014 and 2013 is as follows: |
For the Years Ended | |||||||
(In thousands) | 2014 | 2013 | |||||
Software development costs | $ | 467,158 | $ | 418,747 | |||
Capitalized software costs | (175,262 | ) | (172,211 | ) | |||
Capitalized costs related to share-based payments | (2,538 | ) | (2,438 | ) | |||
Amortization of capitalized software costs | 103,447 | 94,688 | |||||
Total software development expense | $ | 392,805 | $ | 338,786 |
• | General and administrative expenses as a percent of total revenues were 7% in 2014, compared to 10% in 2013. These expenses decreased 21% to $233 million in 2014 from $295 million in 2013. The 2013 amount includes a $106 million settlement charge, as further described in Note (10) of our notes to consolidated financial statements. The decrease of $62 million was primarily driven by the 2013 settlement charge, offset by $16 million of acquisition costs related to the acquisition of Siemens Health Services and a $15 million increase in corporate personnel costs, as we increased such personnel to support our overall revenue growth. |
• | Amortization of acquisition-related intangibles was approximately $13 million in both 2014 and 2013. |
• | Other income was $11 million in 2014 and $12 million in 2013. Refer to Note (11) of the notes to consolidated financial statements for further detail on the composition of other income. |
• | Our effective tax rate was 32% in both 2014 and 2013. The rates include net favorable permanent differences recognized in both periods. Refer to Note (12) of the notes to consolidated financial statements for further information regarding our effective tax rate. |
(In thousands) | 2014 | % of Revenue | 2013 | % of Revenue | % Change | ||||||||
Domestic Segment | |||||||||||||
Revenues | $ | 3,021,790 | 100% | $ | 2,550,115 | 100% | 18% | ||||||
Costs of revenue | 542,210 | 18% | 458,540 | 18% | 18% | ||||||||
Operating expenses | 1,163,413 | 39% | 977,334 | 38% | 19% | ||||||||
Total costs and expenses | 1,705,623 | 56% | 1,435,874 | 56% | 19% | ||||||||
Domestic operating earnings | 1,316,167 | 44% | 1,114,241 | 44% | 18% | ||||||||
Global Segment | |||||||||||||
Revenues | 380,913 | 100% | 360,633 | 100% | 6% | ||||||||
Costs of revenue | 62,167 | 16% | 56,182 | 16% | 11% | ||||||||
Operating expenses | 182,965 | 48% | 155,093 | 43% | 18% | ||||||||
Total costs and expenses | 245,132 | 64% | 211,275 | 59% | 16% | ||||||||
Global operating earnings | 135,781 | 36% | 149,358 | 41% | (9)% | ||||||||
Other, net | (688,864 | ) | (687,587 | ) | —% | ||||||||
Consolidated operating earnings | $ | 763,084 | $ | 576,012 | 32% |
• | Revenues increased 18% to $3.0 billion in 2014 from $2.6 billion in the same period in 2013. This increase was driven by growth across most of our business. |
• | Cost of revenues was 18% of revenues in both 2014 and 2013. |
• | Operating expenses increased 19% to $1.2 billion in 2014, from $977 million in 2013, due primarily to an increase in personnel expenses. |
• | Revenues increased 6% to $381 million in 2014 from $361 million in 2013. This increase was primarily driven by increases in managed services and professional services of $11 million and $13 million, respectively, partially offset by a decline in software revenues of $7 million. |
• | Cost of revenues was 16% of revenues in 2014 and 2013. |
• | Operating expenses increased 18% to $183 million in 2014 from $155 million in 2013, due primarily to increases in personnel expense and bad debt expense of $14 million and $7 million, respectively. |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Cash flows from operating activities | $ | 947,526 | $ | 847,027 | $ | 695,865 | |||||
Cash flows from investing activities | (1,405,943 | ) | (284,567 | ) | (688,429 | ) | |||||
Cash flows from financing activities | 236,249 | (120,324 | ) | (119,389 | ) | ||||||
Effect of exchange rate changes on cash | (10,913 | ) | (9,310 | ) | (2,790 | ) | |||||
Total change in cash and cash equivalents | (233,081 | ) | 432,826 | (114,743 | ) | ||||||
Cash and cash equivalents at beginning of period | 635,203 | 202,377 | 317,120 | ||||||||
Cash and cash equivalents at end of period | $ | 402,122 | $ | 635,203 | $ | 202,377 | |||||
Free cash flow (non-GAAP) | $ | 320,738 | $ | 392,643 | $ | 168,339 |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Cash collections from clients | $ | 4,419,650 | $ | 3,480,591 | $ | 3,050,633 | |||||
Cash paid to employees and suppliers and other | (3,340,551 | ) | (2,483,559 | ) | (2,172,418 | ) | |||||
Cash paid for interest | (13,164 | ) | (5,682 | ) | (6,973 | ) | |||||
Cash paid for taxes, net of refunds | (118,409 | ) | (144,323 | ) | (175,377 | ) | |||||
Total cash from operations | $ | 947,526 | $ | 847,027 | $ | 695,865 |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Capital purchases | $ | (362,132 | ) | $ | (276,584 | ) | $ | (352,877 | ) | ||
Capitalized software development costs | (264,656 | ) | (177,800 | ) | (174,649 | ) | |||||
Sales and maturities of investments, net of purchases | 720,406 | 190,810 | (36,221 | ) | |||||||
Acquisition of businesses, net of cash acquired | (1,478,129 | ) | (7,476 | ) | (67,877 | ) | |||||
Purchases of other intangibles | (21,432 | ) | (13,517 | ) | (56,805 | ) | |||||
Total cash flows from investing activities | $ | (1,405,943 | ) | $ | (284,567 | ) | $ | (688,429 | ) |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Long-term debt issuance | $ | 500,000 | $ | — | $ | — | |||||
Repayment of long-term debt and capital lease obligations | (14,325 | ) | (14,930 | ) | (24,700 | ) | |||||
Cash from option exercises (including excess tax benefits) | 107,434 | 71,411 | 71,330 | ||||||||
Treasury stock purchases | (345,057 | ) | (217,082 | ) | (170,042 | ) | |||||
Contingent consideration payments for acquisition of businesses | (11,012 | ) | (10,617 | ) | (800 | ) | |||||
Cash grants | — | 48,000 | — | ||||||||
Other, net | (791 | ) | 2,894 | 4,823 | |||||||
Total cash flows from financing activities | $ | 236,249 | $ | (120,324 | ) | $ | (119,389 | ) |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Cash flows from operating activities (GAAP) | $ | 947,526 | $ | 847,027 | $ | 695,865 | |||||
Capital purchases | (362,132 | ) | (276,584 | ) | (352,877 | ) | |||||
Capitalized software development costs | (264,656 | ) | (177,800 | ) | (174,649 | ) | |||||
Free cash flow (non-GAAP) | $ | 320,738 | $ | 392,643 | $ | 168,339 |
Payments Due by Period | |||||||||||||||||||||||||||
(In thousands) | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 and thereafter | Total | ||||||||||||||||||||
Balance sheet obligations(a): | |||||||||||||||||||||||||||
Long-term debt obligations | $ | — | $ | 2,500 | $ | — | $ | — | $ | 1,100 | $ | 509,850 | $ | 513,450 | |||||||||||||
Interest on long-term debt obligations | 15,588 | 16,099 | 16,474 | 16,714 | 16,892 | 46,391 | 128,158 | ||||||||||||||||||||
Capital lease obligations | 41,797 | 23,035 | 14,225 | 10,016 | 3,343 | — | 92,416 | ||||||||||||||||||||
Interest on capital lease obligations | 2,248 | 1,236 | 654 | 254 | 27 | — | 4,419 | ||||||||||||||||||||
Other obligations: | |||||||||||||||||||||||||||
Operating lease obligations | 26,436 | 25,076 | 20,290 | 15,390 | 9,757 | 15,875 | 112,824 | ||||||||||||||||||||
Purchase obligations | 77,610 | 57,981 | 24,454 | 9,601 | 3,927 | 6,000 | 179,573 | ||||||||||||||||||||
Total | $ | 163,679 | $ | 125,927 | $ | 76,097 | $ | 51,975 | $ | 35,046 | $ | 578,116 | $ | 1,030,840 |
a) | Evaluation of Disclosure Controls and Procedures. |
b) | Management's Report on Internal Control over Financial Reporting. |
c) | Changes in Internal Control over Financial Reporting. |
d) | Limitations on Controls. |
(In thousands, except per share data) | Securities to be issued upon exercise of outstanding options and rights (1) | Weighted average exercise price per share (2) | Securities available for future issuance(3) | ||||||
Plan category | |||||||||
Equity compensation plans approved by security holders (4) | 24,824 | $ | 34.46 | 20,091 | |||||
Equity compensation plans not approved by security holders | — | — | — | ||||||
Total | 24,824 | 20,091 |
a) | Financial Statements and Exhibits |
(1) | Consolidated Financial Statements: |
(2) | See the Index to Exhibits immediately following the signature page of this Annual Report on Form 10-K. |
CERNER CORPORATION | |||
Date: February 17, 2016 | By: | /s/ Neal L. Patterson | |
Neal L. Patterson | |||
Chairman of the Board and | |||
Chief Executive Officer |
Signature and Title | Date | |
/s/ Neal L. Patterson | February 17, 2016 | |
Neal L. Patterson, Chairman of the Board and Chief Executive Officer (Principal Executive Officer) | ||
/s/ Clifford W. Illig | February 17, 2016 | |
Clifford W. Illig, Vice Chairman and Director | ||
/s/ Marc G. Naughton | February 17, 2016 | |
Marc G. Naughton, Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||
/s/ Michael R. Battaglioli | February 17, 2016 | |
Michael R. Battaglioli, Vice President and Chief Accounting Officer (Principal Accounting Officer) | ||
/s/ Gerald E. Bisbee, Jr. | February 17, 2016 | |
Gerald E. Bisbee, Jr., Ph.D., Director | ||
/s/ Denis A. Cortese, M.D. | February 17, 2016 | |
Denis A. Cortese, M.D., Director | ||
/s/ John C. Danforth | February 17, 2016 | |
John C. Danforth, Director | ||
/s/ Mitchell E. Daniels | February 17, 2016 | |
Mitchell E. Daniels, Director | ||
/s/ Linda M. Dillman | February 17, 2016 | |
Linda M. Dillman, Director | ||
/s/ William B. Neaves | February 17, 2016 | |
William B. Neaves, Ph.D., Director | ||
/s/ William D. Zollars | February 17, 2016 | |
William D. Zollars, Director |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | Exhibit(s) | Filing Date SEC File No./Film No. | Filed Herewith | |||||
3.1 | Third Restated Certificate of Incorporation dated September 12, 2013 | 10-K | 3(a) | 2/11/2015 | ||||||
3.2 | Amended & Restated Bylaws as of September 16, 2008 (as amended March 31, 2010, March 9, 2011 and December 23, 2013) | 8-K | 3.2 | 12/23/2013 | ||||||
4 | Specimen stock certificate | 10-K | 4(a) | 2/28/2007 000-15386/07658265 | ||||||
10.1* | 2006 Form of Indemnification Agreement for use between the Registrant and its Directors | 10-K | 10(a) | 2/28/2007 000-15386/07658265 | ||||||
10.2* | 2010 Form of Indemnification Agreement for use between the Registrant and its Directors and Section 16 Officers | 8-K | 99.1 | 6/3/2010 000-15386/10875957 | ||||||
10.3* | Amended & Restated Executive Employment Agreement of Neal L. Patterson dated January 1, 2008 | 10-K | 10(c) | 2/27/2008 000-15386/08646565 | ||||||
10.4* | Amended Stock Option Plan D of Registrant dated December 8, 2000 | 10-K | 10(f) | 3/30/2001 000-15386/1586224 | ||||||
10.5* | Amended Stock Option Plan E of Registrant dated December 8, 2000 | 10-K | 10(g) | 3/30/2001 000-15386/1586224 | ||||||
10.6* | Cerner Corporation 2001 Long-Term Incentive Plan F | DEF 14A | Annex I | 4/16/2001 000-15386/1603080 | ||||||
10.7* | Cerner Corporation 2001 Long-Term Incentive Plan F Nonqualified Stock Option Agreement | 10-K | 10(v) | 3/17/2005 000-15386/05688830 | ||||||
10.8* | Cerner Corporation 2001 Long-Term Incentive Plan F Nonqualified Stock Option Grant Certificate | 10-Q | 10(a) | 11/10/2005 000-15386/051193974 | ||||||
10.9* | Cerner Corporation 2001 Long-Term Incentive Plan F Director Restricted Stock Agreement | 10-K | 10(x) | 3/17/2005 000-15386/05688830 | ||||||
10.10* | Cerner Corporation 2001 Long-Term Incentive Plan F Nonqualified Stock Option Director Agreement | 10-K | 10(w) | 3/17/2005 000-15386/05688830 | ||||||
10.11* | Cerner Corporation 2001 Long-Term Incentive Plan F Performance-Based Restricted Stock Agreement for Section 16 Officers | 8-K | 99.1 | 6/4/2010 000-15386/10879084 | ||||||
10.12* | Cerner Corporation 2004 Long-Term Incentive Plan G (as amended on December 3, 2007) | 10-K | 10(g) | 2/27/2008 000-15386/08646565 | ||||||
10.13* | Cerner Corporation 2004 Long-Term Incentive Plan G Nonqualified Stock Option Grant Certificate | 10-K | 10(q) | 2/27/2008 000-15386/08646565 | ||||||
10.14* | Cerner Corporation 2011 Omnibus Equity Incentive Plan (As Amended and Restated May 22, 2015) | 8-K | 10.2 | 5/27/2015 | ||||||
10.15* | Cerner Corporation 2011 Omnibus Equity Incentive Plan - Director Restricted Stock Agreement | 10-Q | 10.1 | 7/27/2012 | ||||||
10.16* | Cerner Corporation 2011 Omnibus Equity Incentive Plan - Performance Based Restricted Stock Agreement | 10-K | 10(u) | 2/8/2013 | ||||||
10.17* | Cerner Corporation 2011 Omnibus Equity Incentive Plan-Non-Qualified Stock Option Grant Certificate | 10-K | 10(v) | 2/8/2013 | ||||||
10.18* | Cerner Corporation 2001 Associate Stock Purchase Plan as Amended and Restated March 1, 2010 and May 27, 2011 | S-8 | 4.6 | 5/27/2011 333-174568/11877216 | ||||||
10.19* | Cerner Corporation Performance-Based Compensation Plan (as Amended and Restated May 22, 2015) | 8-K | 10.1 | 5/27/2015 | ||||||
10.20* | Form of 2015 Executive Performance Agreement | 10-Q | 10.1 | 5/8/2015 | ||||||
10.21* | Cerner Corporation Executive Deferred Compensation Plan as Amended & Restated dated January 1, 2008 | 10-K | 10(k) | 2/27/2008 000-15386/08646565 | ||||||
10.22* | Cerner Corporation 2005 Enhanced Severance Pay Plan as Amended & Restated Effective January 4, 2015 | 10-K | 10.23 | 2/11/2015 | ||||||
10.23* | Exhibit A Severance Matrix, effective April 1, 2011 to the Cerner Corporation 2005 Enhanced Severance Pay Plan as Amended & Restated dated August 15, 2010 | 10-Q | 10(a) | 4/29/2011 000-15386/11794978 | ||||||
10.24* | Second Amended and Restated Aircraft Time Sharing Agreement between Cerner Corporation and Neal L. Patterson dated July 24, 2013 | 10-Q | 10.1 | 7/26/2013 | ||||||
10.25* | Amendment No. 1 to Second Amended and Restated Aircraft Time Sharing Agreement between Cerner Corporation and Neal Patterson dated October 28, 2015 | X | ||||||||
10.26 | Interparty Agreement, dated January 19, 2010, among Kansas Unified Development, LLC, OnGoal, LLC and Cerner Corporation | 8-K | 99.1 | 1/22/2010 000-153866/10543089 | ||||||
10.27 | Real Estate Purchase Agreement between Cerner Property Development, Inc. and Trails Property II, Inc. dated July 30, 2013 | 8-K | 10.1 | 8/1/2013 | ||||||
10.28 | First Amendment to Real Estate Purchase Agreement between Cerner Property Development, Inc. and Trails Property II, Inc. dated December 23, 2013 | 10-K | 10.28 | 2/11/2015 | ||||||
10.29 | Second Amendment to Real Estate Purchase Agreement between Cerner Property Development, Inc. and Trails Property II, Inc. dated October 16, 2014 | 10-K | 10.29 | 2/11/2015 | ||||||
10.30 | Master Sale and Purchase Agreement between Siemens AG and Cerner Corporation dated August 5, 2014 | 10-Q | 2.1 | 10/24/2014 | ||||||
10.31 | Amendment Agreement to the Master Sale and Purchase Agreement between Siemens AG and Cerner Corporation dated February 2, 2015 | 8-K | 10.1 | 2/2/2015 | ||||||
10.32 | Master Note Purchase Agreement between Cerner Corporation and the Purchasers listed in Schedule A thereto dated December 4, 2014 | 8-K | 10.1 | 12/5/2014 | ||||||
10.33 | Third Amended and Restated Credit Agreement, dated October 30, 2015, among Cerner Corporation and U.S. Bank National Association, Bank of America, N.A. and Commerce Bank, N.A. | 8-K | 10.1 | 11/3/2015 | ||||||
21 | Subsidiaries of Registrant | X | ||||||||
23 | Consent of Independent Registered Public Accounting Firm | X | ||||||||
31.1 | Certification of Neal L. Patterson pursuant to Section 302 of Sarbanes-Oxley Act of 2002 | X | ||||||||
31.2 | Certification of Marc G. Naughton pursuant to Section 302 of Sarbanes-Oxley Act of 2002 | X | ||||||||
32.1 | Certification of Neal L. Patterson pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 | X | ||||||||
32.2 | Certification of Marc G. Naughton pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 | X | ||||||||
101.INS | XBRL Instance Document | X | ||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | X | ||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | X |
(In thousands, except share data) | 2015 | 2014 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 402,122 | $ | 635,203 | |||
Short-term investments | 111,059 | 785,663 | |||||
Receivables, net | 1,034,084 | 672,778 | |||||
Inventory | 15,788 | 23,789 | |||||
Prepaid expenses and other | 264,780 | 209,278 | |||||
Deferred income taxes, net | — | 22,075 | |||||
Total current assets | 1,827,833 | 2,348,786 | |||||
Property and equipment, net | 1,309,214 | 924,260 | |||||
Software development costs, net | 562,559 | 420,199 | |||||
Goodwill | 799,182 | 320,538 | |||||
Intangible assets, net | 688,058 | 126,636 | |||||
Long-term investments | 173,073 | 231,147 | |||||
Other assets | 202,065 | 158,999 | |||||
Total assets | $ | 5,561,984 | $ | 4,530,565 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 215,510 | $ | 160,285 | |||
Current installments of long-term debt and capital lease obligations | 41,797 | 67,460 | |||||
Deferred revenue | 278,443 | 209,655 | |||||
Accrued payroll and tax withholdings | 184,225 | 140,230 | |||||
Other accrued expenses | 57,891 | 56,685 | |||||
Total current liabilities | 777,866 | 634,315 | |||||
Long-term debt and capital lease obligations | 563,353 | 62,868 | |||||
Deferred income taxes and other liabilities | 324,516 | 256,601 | |||||
Deferred revenue | 25,865 | 10,813 | |||||
Total liabilities | 1,691,600 | 964,597 | |||||
Shareholders’ Equity: | |||||||
Common stock, $.01 par value, 500,000,000 shares authorized, 350,323,367 shares issued at January 2, 2016 and 346,985,811 shares issued at January 3, 2015 | 3,503 | 3,470 | |||||
Additional paid-in capital | 1,075,782 | 933,446 | |||||
Retained earnings | 3,457,843 | 2,918,481 | |||||
Treasury stock, 10,364,691 shares at January 2, 2016 and 4,652,515 shares at January 3, 2015 | (590,390 | ) | (245,333 | ) | |||
Accumulated other comprehensive loss, net | (76,354 | ) | (44,096 | ) | |||
Total shareholders’ equity | 3,870,384 | 3,565,968 | |||||
Total liabilities and shareholders’ equity | $ | 5,561,984 | $ | 4,530,565 |
For the Years Ended | |||||||||||
(In thousands, except per share data) | 2015 | 2014 | 2013 | ||||||||
Revenues: | |||||||||||
System sales | $ | 1,281,890 | $ | 945,858 | $ | 847,809 | |||||
Support, maintenance and services | 3,070,575 | 2,366,959 | 1,992,830 | ||||||||
Reimbursed travel | 72,802 | 89,886 | 70,109 | ||||||||
Total revenues | 4,425,267 | 3,402,703 | 2,910,748 | ||||||||
Costs and expenses: | |||||||||||
Cost of system sales | 430,335 | 314,089 | 302,374 | ||||||||
Cost of support, maintenance and services | 247,644 | 200,402 | 142,239 | ||||||||
Cost of reimbursed travel | 72,802 | 89,886 | 70,109 | ||||||||
Sales and client service | 1,838,600 | 1,395,568 | 1,173,051 | ||||||||
Software development (Includes amortization of $119,195, $103,447 and $94,688, respectively) | 539,799 | 392,805 | 338,786 | ||||||||
General and administrative | 423,424 | 233,393 | 295,383 | ||||||||
Amortization of acquisition-related intangibles | 91,527 | 13,476 | 12,794 | ||||||||
Total costs and expenses | 3,644,131 | 2,639,619 | 2,334,736 | ||||||||
Operating earnings | 781,136 | 763,084 | 576,012 | ||||||||
Other income, net | 244 | 11,090 | 12,042 | ||||||||
Earnings before income taxes | 781,380 | 774,174 | 588,054 | ||||||||
Income taxes | (242,018 | ) | (248,741 | ) | (189,700 | ) | |||||
Net earnings | $ | 539,362 | $ | 525,433 | $ | 398,354 | |||||
Basic earnings per share | $ | 1.57 | $ | 1.54 | $ | 1.16 | |||||
Diluted earnings per share | $ | 1.54 | $ | 1.50 | $ | 1.13 | |||||
Basic weighted average shares outstanding | 343,178 | 342,150 | 343,636 | ||||||||
Diluted weighted average shares outstanding | 350,908 | 350,386 | 352,281 |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Net earnings | $ | 539,362 | $ | 525,433 | $ | 398,354 | |||||
Foreign currency translation adjustment and other (net of tax benefits of $3,201, $1,111 and $3,604, respectively) | (32,171 | ) | (30,145 | ) | (8,185 | ) | |||||
Change in net unrealized holding gain (loss) on available-for-sale investments (net of taxes (benefits) of $(46), $(331) and $10, respectively) | (87 | ) | (522 | ) | 11 | ||||||
Comprehensive income | $ | 507,104 | $ | 494,766 | $ | 390,180 |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net earnings | $ | 539,362 | $ | 525,433 | $ | 398,354 | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 452,225 | 302,353 | 263,538 | ||||||||
Share-based compensation expense | 70,121 | 59,292 | 46,295 | ||||||||
Provision for deferred income taxes | 65,245 | 106,905 | (22,647 | ) | |||||||
Changes in assets and liabilities (net of businesses acquired): | |||||||||||
Receivables, net | (160,124 | ) | (74,786 | ) | (9,599 | ) | |||||
Inventory | 12,951 | 8,117 | (8,111 | ) | |||||||
Prepaid expenses and other | (55,363 | ) | (14,625 | ) | (36,038 | ) | |||||
Accounts payable | 7 | 2,974 | 4,130 | ||||||||
Accrued income taxes | (690 | ) | (21,764 | ) | 14,694 | ||||||
Deferred revenue | 9,450 | 4,346 | 18,053 | ||||||||
Other accrued liabilities | 14,342 | (51,218 | ) | 27,196 | |||||||
Net cash provided by operating activities | 947,526 | 847,027 | 695,865 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Capital purchases | (362,132 | ) | (276,584 | ) | (352,877 | ) | |||||
Capitalized software development costs | (264,656 | ) | (177,800 | ) | (174,649 | ) | |||||
Purchases of investments | (487,981 | ) | (1,214,036 | ) | (1,106,819 | ) | |||||
Sales and maturities of investments | 1,208,387 | 1,404,846 | 1,070,598 | ||||||||
Purchase of other intangibles | (21,432 | ) | (13,517 | ) | (56,805 | ) | |||||
Acquisition of businesses, net of cash acquired | (1,478,129 | ) | (7,476 | ) | (67,877 | ) | |||||
Net cash used in investing activities | (1,405,943 | ) | (284,567 | ) | (688,429 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Long-term debt issuance | 500,000 | — | — | ||||||||
Repayment of long-term debt and capital lease obligations | (14,325 | ) | (14,930 | ) | (24,700 | ) | |||||
Proceeds from excess tax benefits from share-based compensation | 55,959 | 39,532 | 39,927 | ||||||||
Proceeds from exercise of options | 51,475 | 31,879 | 31,403 | ||||||||
Treasury stock purchases | (345,057 | ) | (217,082 | ) | (170,042 | ) | |||||
Contingent consideration payments for acquisition of businesses | (11,012 | ) | (10,617 | ) | (800 | ) | |||||
Cash grants | — | 48,000 | — | ||||||||
Other | (791 | ) | 2,894 | 4,823 | |||||||
Net cash provided by (used in) financing activities | 236,249 | (120,324 | ) | (119,389 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (10,913 | ) | (9,310 | ) | (2,790 | ) | |||||
Net increase (decrease) in cash and cash equivalents | (233,081 | ) | 432,826 | (114,743 | ) | ||||||
Cash and cash equivalents at beginning of period | 635,203 | 202,377 | 317,120 | ||||||||
Cash and cash equivalents at end of period | $ | 402,122 | $ | 635,203 | $ | 202,377 | |||||
Summary of acquisition transactions: | |||||||||||
Fair value of tangible assets acquired | $ | 532,625 | $ | 184 | $ | 6,165 | |||||
Fair value of intangible assets acquired | 637,980 | 3,800 | 25,489 | ||||||||
Fair value of goodwill | 485,387 | 16,785 | 59,570 | ||||||||
Less: Fair value of liabilities assumed | (176,863 | ) | (1,693 | ) | (3,615 | ) | |||||
Less: Fair value of contingent liability payable | (1,000 | ) | (11,600 | ) | (18,982 | ) | |||||
Cash paid for acquisitions | 1,478,129 | 7,476 | 68,627 | ||||||||
Cash acquired | — | — | (750 | ) | |||||||
Net cash used | $ | 1,478,129 | $ | 7,476 | $ | 67,877 |
Common Stock | Additional | Retained | Treasury | Accumulated Other | ||||||||||||||||||
(In thousands) | Shares | Amount | Paid-in Capital | Earnings | Stock | Comprehensive Income (Loss) | ||||||||||||||||
Balance at December 29, 2012 | 344,179 | $ | 3,442 | $ | 840,769 | $ | 1,994,694 | $ | — | $ | (5,255 | ) | ||||||||||
Exercise of stock options (including net-settled option exercises) | 3,204 | 32 | 27,056 | — | — | — | ||||||||||||||||
Employee share-based compensation expense | — | — | 46,295 | — | — | — | ||||||||||||||||
Employee share-based compensation net excess tax benefit | — | — | 40,493 | — | — | — | ||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | (8,174 | ) | |||||||||||||||
Treasury stock purchases | — | — | — | — | (170,042 | ) | — | |||||||||||||||
Distribution of treasury stock in stock split | (3,045 | ) | (31 | ) | (141,760 | ) | — | 141,791 | — | |||||||||||||
Net earnings | — | — | — | 398,354 | — | — | ||||||||||||||||
Balance at December 28, 2013 | 344,338 | 3,443 | 812,853 | 2,393,048 | (28,251 | ) | (13,429 | ) | ||||||||||||||
Exercise of stock options (including net-settled option exercises) | 2,648 | 27 | 21,613 | — | — | — | ||||||||||||||||
Employee share-based compensation expense | — | — | 59,292 | — | — | — | ||||||||||||||||
Employee share-based compensation net excess tax benefit | — | — | 39,688 | — | — | — | ||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | (30,667 | ) | |||||||||||||||
Treasury stock purchases | — | — | — | — | (217,082 | ) | — | |||||||||||||||
Net earnings | — | — | — | 525,433 | — | — | ||||||||||||||||
Balance at January 3, 2015 | 346,986 | 3,470 | 933,446 | 2,918,481 | (245,333 | ) | (44,096 | ) | ||||||||||||||
Exercise of stock options (including net-settled option exercises) | 3,337 | 33 | 15,647 | — | — | — | ||||||||||||||||
Employee share-based compensation expense | — | — | 70,121 | — | — | — | ||||||||||||||||
Employee share-based compensation net excess tax benefit | — | — | 56,568 | — | — | — | ||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | (32,258 | ) | |||||||||||||||
Treasury stock purchases | — | — | — | — | (345,057 | ) | — | |||||||||||||||
Net earnings | — | — | — | 539,362 | — | — | ||||||||||||||||
Balance at January 2, 2016 | 350,323 | $ | 3,503 | $ | 1,075,782 | $ | 3,457,843 | $ | (590,390 | ) | $ | (76,354 | ) |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Cash paid during the year for: | |||||||||||
Interest (including amounts capitalized of $7,106, $1,583, and $2,281, respectively) | $ | 13,164 | $ | 5,682 | $ | 6,973 | |||||
Income taxes, net of refunds | 118,409 | 144,323 | 175,377 |
• | Persuasive evidence of an arrangement exists; |
• | Delivery has occurred or services have been rendered; |
• | Our fee is fixed or determinable; and |
• | Collection of the revenue is reasonably assured. |
• | System sales – includes the licensing of computer software, software as a service, deployment period upgrades, installation, content subscriptions, transaction processing and the sale of computer hardware and sublicensed software; |
• | Support, maintenance and service – includes software support and hardware maintenance, remote hosting and managed services, training, consulting and implementation services; and |
• | Reimbursed travel – includes reimbursable out-of-pocket expenses (primarily travel) incurred in connection with our client service activities. |
(in thousands) | Allocation Amount | Estimated Weighted Average Useful Life | ||||
Receivables, net of allowances of $34,159 | $ | 232,432 | ||||
Other current assets | 55,392 | |||||
Property and equipment | 158,288 | 20 years | ||||
Goodwill | 485,387 | |||||
Intangible assets: | ||||||
Customer relationships | 396,000 | 10 years | ||||
Existing technologies | 201,990 | 5 years | ||||
Trade names | 39,990 | 8 years | ||||
Total intangible assets | 637,980 | |||||
Other non-current assets | 513 | |||||
Accounts payable | (42,327 | ) | ||||
Deferred revenue (current) | (102,320 | ) | ||||
Other current liabilities | (17,286 | ) | ||||
Deferred revenue (non-current) | (14,930 | ) | ||||
Total purchase price | $ | 1,393,129 |
For the Years Ended | ||||||||
(In thousands, except per share data) | 2015 | 2014 | ||||||
Pro forma revenues | $ | 4,518,947 | $ | 4,549,387 | ||||
Pro forma net earnings | 546,027 | 463,344 | ||||||
Pro forma diluted earnings per share | 1.56 | 1.32 |
(In thousands) | Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 126,752 | $ | — | $ | — | $ | 126,752 | ||||||||
Time deposits | 5,677 | — | — | 5,677 | ||||||||||||
Government and corporate bonds | 73 | — | — | 73 | ||||||||||||
Total cash equivalents | 132,502 | — | — | 132,502 | ||||||||||||
Short-term investments: | ||||||||||||||||
Time deposits | 30,989 | — | — | 30,989 | ||||||||||||
Commercial paper | 1,500 | — | (2 | ) | 1,498 | |||||||||||
Government and corporate bonds | 78,655 | 20 | (103 | ) | 78,572 | |||||||||||
Total short-term investments | 111,144 | 20 | (105 | ) | 111,059 | |||||||||||
Long-term investments: | ||||||||||||||||
Government and corporate bonds | 156,527 | 14 | (569 | ) | 155,972 | |||||||||||
Total available-for-sale investments | $ | 400,173 | $ | 34 | $ | (674 | ) | $ | 399,533 |
(In thousands) | Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 189,137 | $ | — | $ | — | $ | 189,137 | ||||||||
Time deposits | 9,989 | — | — | 9,989 | ||||||||||||
Commercial Paper | 115,638 | — | — | 115,638 | ||||||||||||
Total cash equivalents | 314,764 | — | — | 314,764 | ||||||||||||
Short-term investments: | ||||||||||||||||
Time deposits | 52,830 | — | (1 | ) | 52,829 | |||||||||||
Commercial paper | 435,555 | 1 | (12 | ) | 435,544 | |||||||||||
Government and corporate bonds | 297,311 | 69 | (90 | ) | 297,290 | |||||||||||
Total short-term investments | 785,696 | 70 | (103 | ) | 785,663 | |||||||||||
Long-term investments: | ||||||||||||||||
Government and corporate bonds | 219,439 | 26 | (500 | ) | 218,965 | |||||||||||
Total available-for-sale investments | $ | 1,319,899 | $ | 96 | $ | (603 | ) | $ | 1,319,392 |
• | Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. |
• | Level 2 – Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. |
• | Level 3 – Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
(In thousands) | ||||||||||||||
Fair Value Measurements Using | ||||||||||||||
Description | Balance Sheet Classification | Level 1 | Level 2 | Level 3 | ||||||||||
Money market funds | Cash equivalents | $ | 126,752 | $ | — | $ | — | |||||||
Time deposits | Cash equivalents | — | 5,677 | — | ||||||||||
Government and corporate bonds | Cash equivalents | — | 73 | — | ||||||||||
Time deposits | Short-term investments | — | 30,989 | — | ||||||||||
Commercial paper | Short-term investments | — | 1,498 | — | ||||||||||
Government and corporate bonds | Short-term investments | — | 78,572 | — | ||||||||||
Government and corporate bonds | Long-term investments | — | 155,972 | — |
(In thousands) | ||||||||||||||
Fair Value Measurements Using | ||||||||||||||
Description | Balance Sheet Classification | Level 1 | Level 2 | Level 3 | ||||||||||
Money market funds | Cash equivalents | $ | 189,137 | $ | — | $ | — | |||||||
Time deposits | Cash equivalents | — | 9,989 | — | ||||||||||
Commercial paper | Cash equivalents | — | 115,638 | — | ||||||||||
Time deposits | Short-term investments | — | 52,829 | — | ||||||||||
Commercial paper | Short-term investments | — | 435,544 | — | ||||||||||
Government and corporate bonds | Short-term investments | — | 297,290 | — | ||||||||||
Government and corporate bonds | Long-term investments | — | 218,965 | — |
(In thousands) | 2015 | 2014 | |||||
Gross accounts receivable | $ | 1,043,069 | $ | 641,160 | |||
Less: Allowance for doubtful accounts | 48,119 | 25,531 | |||||
Accounts receivable, net of allowance | 994,950 | 615,629 | |||||
Current portion of lease receivables | 39,134 | 57,149 | |||||
Total receivables, net | $ | 1,034,084 | $ | 672,778 |
(in thousands) | 2015 | 2014 | 2013 | ||||||||
Allowance for doubtful accounts - beginning balance | $ | 25,531 | $ | 36,286 | $ | 33,230 | |||||
Additions charged to costs and expenses | 2,317 | 5,274 | 6,954 | ||||||||
Additions through acquisitions | 34,159 | — | 489 | ||||||||
Deductions(a) | (13,888 | ) | (16,029 | ) | (4,387 | ) | |||||
Allowance for doubtful accounts - ending balance | $ | 48,119 | $ | 25,531 | $ | 36,286 | |||||
(a) Deductions in 2014 include a $14 million reclassification to other non-current assets. |
(In thousands) | 2015 | 2014 | |||||
Minimum lease payments receivable | $ | 101,968 | $ | 125,906 | |||
Less: Unearned income | 5,593 | 6,089 | |||||
Total lease receivables | 96,375 | 119,817 | |||||
Less: Long-term receivables included in other assets | 57,241 | 62,668 | |||||
Current portion of lease receivables | $ | 39,134 | $ | 57,149 |
(In thousands) | |||
2016 | $ | 42,083 | |
2017 | 28,242 | ||
2018 | 15,985 | ||
2019 | 11,269 | ||
2020 | 4,389 |
(In thousands) | Depreciable Lives (Yrs) | 2015 | 2014 | ||||||||
Computer and communications equipment | 1 | — | 5 | $ | 1,261,338 | $ | 1,137,497 | ||||
Land, buildings and improvements | 12 | — | 50 | 742,760 | 439,567 | ||||||
Leasehold improvements | 1 | — | 15 | 201,155 | 187,351 | ||||||
Furniture and fixtures | 5 | — | 12 | 102,681 | 96,244 | ||||||
Capital lease equipment | 3 | — | 5 | 3,200 | 3,196 | ||||||
Other equipment | 3 | — | 20 | 1,155 | 915 | ||||||
2,312,289 | 1,864,770 | ||||||||||
Less accumulated depreciation and leasehold amortization | 1,003,075 | 940,510 | |||||||||
Total property and equipment, net | $ | 1,309,214 | $ | 924,260 |
(In thousands) | Domestic | Global | Total | ||||||||
Balance at the end of 2013 | $ | 294,413 | $ | 13,009 | $ | 307,422 | |||||
Goodwill recorded in connection with business acquisitions | 16,757 | — | 16,757 | ||||||||
Foreign currency translation adjustment and other | — | (3,641 | ) | (3,641 | ) | ||||||
Balance at the end of 2014 | 311,170 | 9,368 | 320,538 | ||||||||
Goodwill recorded in connection with business acquisitions | 419,667 | 65,720 | 485,387 | ||||||||
Foreign currency translation adjustment and other | — | (6,743 | ) | (6,743 | ) | ||||||
Balance at the end of 2015 | $ | 730,837 | $ | 68,345 | $ | 799,182 |
2015 | 2014 | ||||||||||||||
(In thousands) | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||
Purchased software | $ | 370,073 | $ | 168,024 | $ | 169,703 | $ | 110,344 | |||||||
Customer lists | 495,328 | 115,325 | 100,681 | 73,637 | |||||||||||
Internal use software | 68,966 | 36,062 | 42,336 | 19,712 | |||||||||||
Trade names | 40,739 | 5,690 | 962 | 507 | |||||||||||
Other | 43,133 | 5,080 | 25,561 | 8,407 | |||||||||||
Total | $ | 1,018,239 | $ | 330,181 | $ | 339,243 | $ | 212,607 | |||||||
Intangible assets, net | $ | 688,058 | $ | 126,636 |
(In thousands) | |||
2016 | $ | 121,473 | |
2017 | 114,428 | ||
2018 | 100,109 | ||
2019 | 96,191 | ||
2020 | 53,452 |
For the Years Ended | |||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||
Software development costs | $ | 685,260 | $ | 467,158 | $ | 418,747 | |||
Capitalized software development costs | (264,656 | ) | (177,800 | ) | (174,649 | ) | |||
Amortization of capitalized software development costs | 119,195 | 103,447 | 94,688 | ||||||
Total software development expense | $ | 539,799 | $ | 392,805 | $ | 338,786 |
(In thousands) | 2015 | 2014 | |||||
Note agreement, 5.54% | $ | — | $ | 14,233 | |||
Senior Notes | 500,000 | — | |||||
Capital lease obligations | 92,416 | 116,095 | |||||
Other | 13,450 | — | |||||
Debt and capital lease obligations | 605,866 | 130,328 | |||||
Less: debt issuance costs | (716 | ) | — | ||||
Debt and capital lease obligations, net | 605,150 | 130,328 | |||||
Less: current portion | (41,797 | ) | (67,460 | ) | |||
Long-term debt and capital lease obligations | $ | 563,353 | $ | 62,868 |
Capital Lease Obligations | |||||||||||||||||||||||
(In thousands) | Minimum Lease Payments | Less: Interest | Principal | Senior Notes | Other | Total | |||||||||||||||||
2016 | $ | 44,045 | $ | 2,248 | $ | 41,797 | $ | — | $ | — | $ | 41,797 | |||||||||||
2017 | 24,271 | 1,236 | 23,035 | — | 2,500 | 25,535 | |||||||||||||||||
2018 | 14,879 | 654 | 14,225 | — | — | 14,225 | |||||||||||||||||
2019 | 10,270 | 254 | 10,016 | — | — | 10,016 | |||||||||||||||||
2020 | 3,370 | 27 | 3,343 | — | 1,100 | 4,443 | |||||||||||||||||
2021 and thereafter | — | — | — | 500,000 | 9,850 | 509,850 | |||||||||||||||||
Total | $ | 96,835 | $ | 4,419 | $ | 92,416 | $ | 500,000 | $ | 13,450 | $ | 605,866 |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Interest income | $ | 11,990 | $ | 16,342 | $ | 15,314 | |||||
Interest expense | (11,820 | ) | (3,993 | ) | (4,226 | ) | |||||
Other | 74 | (1,259 | ) | 954 | |||||||
Other income, net | $ | 244 | $ | 11,090 | $ | 12,042 |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Current: | |||||||||||
Federal | $ | 140,921 | $ | 114,508 | $ | 178,424 | |||||
State | 18,647 | 13,504 | 25,148 | ||||||||
Foreign | 17,205 | 13,824 | 8,775 | ||||||||
Total current expense | 176,773 | 141,836 | 212,347 | ||||||||
Deferred: | |||||||||||
Federal | 60,015 | 95,057 | (9,792 | ) | |||||||
State | 5,680 | 8,873 | (7,116 | ) | |||||||
Foreign | (450 | ) | 2,975 | (5,739 | ) | ||||||
Total deferred expense (benefit) | 65,245 | 106,905 | (22,647 | ) | |||||||
Total income tax expense | $ | 242,018 | $ | 248,741 | $ | 189,700 |
(In thousands) | 2015 | 2014 | |||||
Deferred tax assets: | |||||||
Accrued expenses | $ | 27,555 | $ | 25,398 | |||
Tax credits and separate return net operating losses | 29,265 | 28,953 | |||||
Share based compensation | 69,555 | 58,271 | |||||
Other | 16,334 | 10,347 | |||||
Gross deferred tax assets | 142,709 | 122,969 | |||||
Less: Valuation allowance | — | (776 | ) | ||||
Total deferred tax assets | 142,709 | 122,193 | |||||
Deferred tax liabilities: | |||||||
Software development costs | (216,435 | ) | (163,938 | ) | |||
Depreciation and amortization | (133,242 | ) | (129,684 | ) | |||
Prepaid expenses | (25,655 | ) | (80 | ) | |||
Contract and service revenues and costs | (10,684 | ) | (7,511 | ) | |||
Other | (3,589 | ) | (3,545 | ) | |||
Total deferred tax liabilities | (389,605 | ) | (304,758 | ) | |||
Net deferred tax liability | $ | (246,896 | ) | $ | (182,565 | ) |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Tax expense at statutory rates | $ | 273,483 | $ | 270,961 | $ | 205,819 | |||||
State income tax, net of federal benefit | 16,129 | 19,301 | 17,425 | ||||||||
Tax credits | (20,681 | ) | (19,469 | ) | (18,683 | ) | |||||
Foreign rate differential | (14,821 | ) | (13,057 | ) | (480 | ) | |||||
Permanent differences | (14,314 | ) | (12,253 | ) | (14,760 | ) | |||||
Other, net | 2,222 | 3,258 | 379 | ||||||||
Total income tax expense | $ | 242,018 | $ | 248,741 | $ | 189,700 |
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Unrecognized tax benefit - beginning balance | $ | 7,202 | $ | 2,100 | $ | 2,176 | |||||
Gross decreases - tax positions in prior periods | (4,323 | ) | (804 | ) | (76 | ) | |||||
Gross increases - tax positions in prior periods | 690 | 5,906 | — | ||||||||
Gross increases - tax positions in current year | 2,824 | — | — | ||||||||
Settlements | (1,299 | ) | — | — | |||||||
Currency translation | (216 | ) | — | — | |||||||
Unrecognized tax benefit - ending balance | $ | 4,878 | $ | 7,202 | $ | 2,100 |
2015 | 2014 | 2013 | ||||||||||||||||||||||||||||||
Earnings | Shares | Per-Share | Earnings | Shares | Per-Share | Earnings | Shares | Per-Share | ||||||||||||||||||||||||
(In thousands, except per share data) | (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||||||
Basic earnings per share: | ||||||||||||||||||||||||||||||||
Income available to common shareholders | $ | 539,362 | 343,178 | $ | 1.57 | $ | 525,433 | 342,150 | $ | 1.54 | $ | 398,354 | 343,636 | $ | 1.16 | |||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||||||||
Stock options and non-vested shares | — | 7,730 | — | 8,236 | — | 8,645 | ||||||||||||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||||||||||||||
Income available to common shareholders including assumed conversions | $ | 539,362 | 350,908 | $ | 1.54 | $ | 525,433 | 350,386 | $ | 1.50 | $ | 398,354 | 352,281 | $ | 1.13 |
• | Expected volatilities under the BSM model are based on an equal weighting of implied volatilities from traded options on our common shares and historical volatility. |
• | The expected term of stock options granted is the period of time for which an option is expected to be outstanding beginning on the grant date. Our calculation of expected term takes into account the contractual term of the option, as well as the effects of employees' historical exercise patterns; groups of associates (executives and non-executives) that have similar historical behavior are considered separately for valuation purposes. |
• | The risk-free rate is based on the zero-coupon U.S. Treasury bond with a term consistent with the expected term of the awards. |
For the Years Ended | |||||||||
2015 | 2014 | 2013 | |||||||
Expected volatility (%) | 27.6 | % | 29.7 | % | 30.5 | % | |||
Expected term (yrs) | 7 | 9 | 9 | ||||||
Risk-free rate (%) | 1.8 | % | 2.9 | % | 1.9 | % |
(In thousands, except per share data) | Number of Shares | Weighted- Average Exercise Price | Aggregate Intrinsic Value | Weighted-Average Remaining Contractual Term (Yrs) | ||||||||
Outstanding at beginning of year | 24,629 | $ | 27.00 | |||||||||
Granted | 3,678 | 67.07 | ||||||||||
Exercised | (3,723 | ) | 16.15 | |||||||||
Forfeited and expired | (317 | ) | 48.42 | |||||||||
Outstanding at end of year | 24,267 | 34.46 | $ | 649,227 | 5.96 | |||||||
Exercisable at end of year | 13,694 | $ | 19.42 | $ | 557,957 | 4.29 |
For the Years Ended | |||||||||||
(In thousands, except for grant date fair values) | 2015 | 2014 | 2013 | ||||||||
Weighted-average grant date fair values | $ | 21.51 | $ | 22.59 | $ | 19.57 | |||||
Total intrinsic value of options exercised | $ | 196,127 | $ | 124,828 | $ | 118,051 | |||||
Cash received from exercise of stock options | 51,475 | 31,879 | 31,403 | ||||||||
Tax benefit realized upon exercise of stock options | 66,868 | 44,029 | 43,523 |
(In thousands, except per share data) | Number of Shares | Weighted-Average Grant Date Fair Value | ||||
Outstanding at beginning of year | 506 | $ | 46.21 | |||
Granted | 315 | 68.57 | ||||
Vested | (206 | ) | 45.60 | |||
Forfeited | (58 | ) | 43.57 | |||
Outstanding at end of year | 557 | $ | 59.42 |
For the Years Ended | |||||||||||
(In thousands, except for grant date fair values) | 2015 | 2014 | 2013 | ||||||||
Weighted average grant date fair values for shares granted during the year | $ | 68.57 | $ | 55.27 | $ | 46.66 | |||||
Total fair value of shares vested during the year | $ | 13,730 | $ | 11,294 | $ | 13,649 |
For the Years Ended | |||||||||||
(In thousands) | 2015 | 2014 | 2013 | ||||||||
Stock option and non-vested share compensation expense | $ | 70,121 | $ | 59,292 | $ | 46,295 | |||||
Associate stock purchase plan expense | 5,393 | 4,603 | 3,704 | ||||||||
Amounts capitalized in software development costs, net of amortization | (588 | ) | (930 | ) | (1,045 | ) | |||||
Amounts charged against earnings, before income tax benefit | $ | 74,926 | $ | 62,965 | $ | 48,954 | |||||
Amount of related income tax benefit recognized in earnings | $ | 23,435 | $ | 22,101 | $ | 18,607 |
(In thousands) | Operating Lease Obligations | ||
2016 | $ | 26,436 | |
2017 | 25,076 | ||
2018 | 20,290 | ||
2019 | 15,390 | ||
2020 | 9,757 | ||
2021 and thereafter | 15,875 | ||
$ | 112,824 |
(In thousands) | Purchase Obligations | ||
2016 | $ | 77,610 | |
2017 | 57,981 | ||
2018 | 24,454 | ||
2019 | 9,601 | ||
2020 | 3,927 | ||
2021 and thereafter | 6,000 | ||
$ | 179,573 |
(In thousands) | Domestic | Global | Other | Total | |||||||||||
2015 | |||||||||||||||
Revenues | $ | 3,904,454 | $ | 520,813 | $ | — | $ | 4,425,267 | |||||||
Cost of revenues | 651,826 | 98,955 | — | 750,781 | |||||||||||
Operating expenses | 1,577,594 | 233,047 | 1,082,709 | 2,893,350 | |||||||||||
Total costs and expenses | 2,229,420 | 332,002 | 1,082,709 | 3,644,131 | |||||||||||
Operating earnings (loss) | $ | 1,675,034 | $ | 188,811 | $ | (1,082,709 | ) | $ | 781,136 |
(In thousands) | Domestic | Global | Other | Total | |||||||||||
2014 | |||||||||||||||
Revenues | $ | 3,021,790 | $ | 380,913 | $ | — | $ | 3,402,703 | |||||||
Cost of revenues | 542,210 | 62,167 | — | 604,377 | |||||||||||
Operating expenses | 1,163,413 | 182,965 | 688,864 | 2,035,242 | |||||||||||
Total costs and expenses | 1,705,623 | 245,132 | 688,864 | 2,639,619 | |||||||||||
Operating earnings (loss) | $ | 1,316,167 | $ | 135,781 | $ | (688,864 | ) | $ | 763,084 |
(In thousands) | Domestic | Global | Other | Total | |||||||||||
2013 | |||||||||||||||
Revenues | $ | 2,550,115 | $ | 360,633 | $ | — | $ | 2,910,748 | |||||||
Cost of revenues | 458,540 | 56,182 | — | 514,722 | |||||||||||
Operating expenses | 977,334 | 155,093 | 687,587 | 1,820,014 | |||||||||||
Total costs and expenses | 1,435,874 | 211,275 | 687,587 | 2,334,736 | |||||||||||
Operating earnings (loss) | $ | 1,114,241 | $ | 149,358 | $ | (687,587 | ) | $ | 576,012 |
(In thousands, except per share data) | Revenues | Earnings Before Income Taxes | Net Earnings | Basic Earnings Per Share | Diluted Earnings Per Share | ||||||||||||||
2015 | |||||||||||||||||||
First Quarter (a) | $ | 996,089 | $ | 167,120 | $ | 110,934 | $ | 0.32 | $ | 0.32 | |||||||||
Second Quarter (a)(b) | 1,125,997 | 170,657 | 115,038 | 0.33 | 0.33 | ||||||||||||||
Third Quarter (a)(b) | 1,127,887 | 215,671 | 147,282 | 0.43 | 0.42 | ||||||||||||||
Fourth Quarter (a)(b) | 1,175,294 | 227,932 | 166,108 | 0.49 | 0.48 | ||||||||||||||
Total | $ | 4,425,267 | $ | 781,380 | $ | 539,362 | |||||||||||||
(a) First through Fourth quarter results include pre-tax acquisition costs of $17 million, $3 million, $1 million and $1 million, respectively, as further described in Note (2). | |||||||||||||||||||
(b) Second through Fourth quarter results include pre-tax costs related to the VSP of $42 million, $3 million and $1 million, respectively, as further described in Note (1). |
(In thousands, except per share data) | Revenues | Earnings Before Income Taxes | Net Earnings | Basic Earnings Per Share | Diluted Earnings Per Share | ||||||||||||||
2014 | |||||||||||||||||||
First Quarter | $ | 784,761 | $ | 180,993 | $ | 119,526 | $ | 0.35 | $ | 0.34 | |||||||||
Second Quarter | 851,762 | 194,370 | 129,033 | 0.38 | 0.37 | ||||||||||||||
Third Quarter (c) | 840,149 | 190,335 | 129,002 | 0.38 | 0.37 | ||||||||||||||
Fourth Quarter (c) | 926,031 | 208,476 | 147,872 | 0.43 | 0.42 | ||||||||||||||
Total | $ | 3,402,703 | $ | 774,174 | $ | 525,433 | |||||||||||||
(c) Third and Fourth quarter results include pre-tax acquisition costs of $9 million and $6 million, respectively, as further described in Note (2). |
1. | The first “WHEREAS” Paragraph of the Agreement is hereby deleted in its entirety and replaced with the following: |
2. | Exhibit A attached hereto is hereby attached to the Agreement as Exhibit A. |
3. | Section 2 is hereby deleted in its entirety and replaced with the following: |
(b) | Travel expenses of the crew, including food, lodging, and ground transportation. |
(c) | Hangar and tie-down costs away from the Aircraft’s base of operations. |
(f) | Customs, foreign permit, and similar fees directly related to the flight. |
(j) | An additional charge equal to 100% of the expenses listed in subparagraph (a) of this paragraph. |
4. | Except as expressly amended by this Amendment, the Agreement remains in full force and effect, and this Amendment shall not be construed to alter or amend any of the other terms or conditions set forth in the Agreement. In the event of a conflict between the terms of the Agreement and this Amendment, the provisions of this Amendment shall prevail. |
5. | This Amendment shall be governed by and construed in accordance with the laws of the State of Missouri (excluding the conflicts of law rules thereof). |
6. | Except as otherwise defined herein, capitalized terms in this Amendment shall have the same meaning as in the Agreement. |
Registration Number | Serial Number | Aircraft Description |
N979CF | HA-195 | Hawker 900XP |
N979CM | RK-570 | Hawker 400XP model 400A |
N979TM | RC-28 | Hawker 4000 |
N219TF | HB-41 | Hawker 750 |
N411TF | RC-74 | Hawker 4000 |
N621TF | RC-69 | Hawker 4000 |
SUBSIDIARIES OF REGISTRANT | |
Name | State/Country of Incorporation |
1. Cerner Belgium BVBA | Belgium |
2. Cerner Campus Redevelopment Corporation | Missouri |
3. Cerner Canada Limited LLC | Delaware |
4. Cerner Canada ULC | Canada |
5. Cerner Capital, Inc. | Delaware |
6. Cerner Chile Limitada | Chile |
7. Cerner Chouteau Data Center, Inc. | Delaware |
8. Cerner Corporation PTY Limited | New South Wales (Australia) |
9. Cerner Deutschland GmbH | Germany |
10. Cerner Egypt L.L.C | Egypt |
11. Cerner Finland Oy | Finland |
12. Cerner France SAS | France |
13. Cerner Galt, Inc. | Delaware |
14. Cerner Healthcare Sales India Private Limited | India |
15. Cerner Health Services, Inc. | Delaware |
16. Cerner Health Services Deutschland GmbH | Germany |
17. Cerner Healthcare Solutions, Inc. | Delaware |
18. Cerner Healthcare Solutions Private Limited | India |
19. Cerner Health Connections, Inc. | Delaware |
20. Cerner Iberia, S.L.U. | Spain |
21. Cerner India Health Services Private Limited | India |
22. Cerner India Sales Private Limited | India |
23. Cerner Innovation, Inc. | Delaware |
24. Cerner International, Inc. | Delaware |
25. Cerner Ireland Limited | Ireland |
26. Cerner Limited | United Kingdom |
27. Cerner Lingologix, Inc. | Delaware |
28. Cerner Math, Inc. | Delaware |
29. Cerner México, S. de R. L. de C.V. | Mexico |
30. Cerner Middle East FZ-LLC | Emirate of Dubai, UAE |
31. Cerner Middle East, Ltd. | Cayman Islands |
32. Cerner Multum, Inc. | Delaware |
33. Cerner Nederland B.V. | Netherlands |
34. Cerner Global Holdings B.V. | Netherlands |
35. Cerner Norge AS | Norway |
36. Cerner Österreich GmbH | Austria |
37. Cerner Portugal Unipessoal, Lda. | Portugal |
38. Cerner Properties, Inc. | Delaware |
39. Cerner Property Development, Inc. | Delaware |
40. Cerner RevWorks, LLC | Delaware |
41. Cerner România S.R.L | Romania |
42. Cerner Singapore Limited LLC | Delaware |
43. Cerner Slovensko s.r.o. | Slovakia |
44. Cerner Soluções para a Saúde Ltda. | Brazil |
45. Cerner Sverige AB | Sweden |
46. Cerner (Malaysia) SDN BHD | Malaysia |
47. The Health Exchange, Inc. | Missouri |
48. Rockcreek Aviation, Inc. | Delaware |
Date: February 17, 2016 | /s/Neal L. Patterson | |||||||
Neal L. Patterson | ||||||||
Chief Executive Officer | ||||||||
(Principal Executive Officer) |
Date: February 17, 2016 | /s/Marc G. Naughton | |||||||
Marc G. Naughton | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial Officer) |
1. | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/Neal L. Patterson |
Neal L. Patterson, Chairman of the Board |
and Chief Executive Officer |
(Principal Executive Officer) |
Date: February 17, 2016 |
1. | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/Marc G. Naughton |
Marc G. Naughton, Executive Vice President |
and Chief Financial Officer |
(Principal Financial Officer) |
Date: February 17, 2016 |
Document And Entity Information - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Feb. 12, 2016 |
Jul. 04, 2015 |
|
Entity Information [Line Items] | |||
Entity Registrant Name | CERNER CORP /MO/ | ||
Entity Central Index Key | 0000804753 | ||
Document Type | 10-K | ||
Document Period End Date | Jan. 02, 2016 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --01-02 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 340,016,851 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 21.0 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jan. 02, 2016 |
Jan. 03, 2015 |
---|---|---|
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 350,323,367 | 346,985,811 |
Treasury stock, shares | 10,364,691 | 4,652,515 |
Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Revenues: | |||
System sales | $ 1,281,890 | $ 945,858 | $ 847,809 |
Support, maintenance and services | 3,070,575 | 2,366,959 | 1,992,830 |
Reimbursed travel | 72,802 | 89,886 | 70,109 |
Total revenues | 4,425,267 | 3,402,703 | 2,910,748 |
Costs and expenses: | |||
Cost of system sales | 430,335 | 314,089 | 302,374 |
Cost of support, maintenance and services | 247,644 | 200,402 | 142,239 |
Cost of reimbursed travel | 72,802 | 89,886 | 70,109 |
Sales and client service | 1,838,600 | 1,395,568 | 1,173,051 |
Software development (Includes amortization of $119,195, $103,447 and $94,688, respectively) | 539,799 | 392,805 | 338,786 |
General and administrative | 423,424 | 233,393 | 295,383 |
Amortization of acquisition related intangibles | 91,527 | 13,476 | 12,794 |
Total costs and expenses | 3,644,131 | 2,639,619 | 2,334,736 |
Operating earnings | 781,136 | 763,084 | 576,012 |
Other income, net | 244 | 11,090 | 12,042 |
Earnings before income taxes | 781,380 | 774,174 | 588,054 |
Income taxes | (242,018) | (248,741) | (189,700) |
Net earnings | $ 539,362 | $ 525,433 | $ 398,354 |
Basic earnings per share | $ 1.57 | $ 1.54 | $ 1.16 |
Diluted earnings per share | $ 1.54 | $ 1.50 | $ 1.13 |
Basic weighted average shares outstanding | 343,178 | 342,150 | 343,636 |
Diluted weighted average shares outstanding | 350,908 | 350,386 | 352,281 |
Consolidated Statements Of Operations (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Income Statement [Abstract] | |||
Software development, amortization | $ 119,195 | $ 103,447 | $ 94,688 |
Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||
Net earnings | $ 539,362 | $ 525,433 | $ 398,354 |
Foreign currency translation adjustment and other (net of tax benefits of $3,201, $1,111 and $3,604, respectively) | (32,171) | (30,145) | (8,185) |
Change in net unrealized holding gain (loss) on available-for-sale investments (net of taxes (benefits) of $(46), $(331) and $10, respectively) | (87) | (522) | 11 |
Comprehensive income | $ 507,104 | $ 494,766 | $ 390,180 |
Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||
Foreign currency translation adjustment and other, taxes (benefit) | $ (3,201) | $ (1,111) | $ (3,604) |
Change in net unrealized holding gain (loss) on available-for-sale investments, taxes (benefit) | $ (46) | $ (331) | $ 10 |
Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements include all the accounts of Cerner Corporation (Cerner, the Company, we, us or our) and its subsidiaries. All significant intercompany transactions have been eliminated in consolidation. The consolidated financial statements were prepared using accounting principles generally accepted in the United States. These principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Our fiscal year ends on the Saturday closest to December 31. Fiscal years 2015 and 2013 each consisted of 52 weeks and ended on January 2, 2016 and December 28, 2013, respectively. Fiscal year 2014 consisted of 53 weeks and ended on January 3, 2015. All references to years in these notes to consolidated financial statements represent fiscal years unless otherwise noted. Nature of Operations We design, develop, market, install, host and support health care information technology, health care devices, hardware and content solutions for health care organizations and consumers. We also provide a wide range of value-added services, including implementation and training, remote hosting, operational management services, revenue cycle services, support and maintenance, health care data analysis, clinical process optimization, transaction processing, employer health centers, employee wellness programs and third party administrator services for employer-based health plans. Factors Impacting Comparability of Financial Statements Siemens Health Services On February 2, 2015, we acquired Siemens Health Services, as further described in Note (2). The addition of the Siemens Health Services business has a significant impact on the comparability of our consolidated financial statements as of and for the year ended January 2, 2016, in relation to the comparative periods presented herein. 52/53 Week Periods Our 2014 fiscal year included 53 weeks, as discussed above. This additional week impacts the comparability of our consolidated financial statements as of and for the year ended January 3, 2015, in relation to the comparative periods presented herein. Amortization of Acquisition-related Intangibles Amortization of acquisition-related intangibles includes the amortization of customer relationships, acquired technology, trade names, and non-compete agreements recorded in connection with our business acquisitions. Historically, such amounts were included in general and administrative expense in our consolidated statements of operations. Effective for our second quarter of 2015, amortization of acquisition-related intangibles is presented on a separate line within our consolidated statements of operations. While this reporting change did not impact our consolidated results, prior period reclassifications have been made to conform to the current period presentation. Acquisition Transactions within our Consolidated Statements of Cash Flows Historically, the fair value of tangible assets acquired and liabilities assumed in business acquisitions were presented on a net basis within our consolidated statements of cash flows. Effective for our first quarter of 2015, the fair value of tangible assets acquired and the fair value of liabilities assumed are presented separately. While this reporting change did not impact our consolidated results, prior period reclassifications have been made to conform to the current period presentation. Voluntary Separation Plan In the first quarter of 2015, the Company adopted a voluntary separation plan ("VSP") for eligible associates. Generally, the VSP was available to U.S. associates who met a minimum level of combined age and tenure, excluding, among others, our executive officers. Associates who elected to participate in the VSP receive financial benefits commensurate with their tenure and position, along with vacation payout and medical benefits. We account for voluntary separation benefits in accordance with the provisions of Accounting Standards Codification (ASC) Topic 712, Compensation-Nonretirement Postemployment Benefits. Voluntary separation benefits are recorded to expense when the associates irrevocably accept the offer and the amount of the termination liability is reasonably estimable. The irrevocable acceptance period for most associates electing to participate in the VSP ended in May 2015. During 2015, we recorded pre-tax charges for the VSP of $46 million, which is included in general and administrative expense in our consolidated statements of operations. At the end of 2015, this program was complete. Supplemental Disclosures of Cash Flow Information
Summary of Significant Accounting Policies (a) Revenue Recognition - We recognize software related revenue in accordance with the provisions of ASC 985-605, Software – Revenue Recognition and non-software related revenue in accordance with ASC 605, Revenue Recognition. In general, revenue is recognized when all of the following criteria have been met:
The following are our major components of revenue:
We provide for several models of procurement of our information systems and related services. The predominant model involves multiple deliverables and includes a perpetual software license agreement, project-related implementation and consulting services, software support and either hosting services or computer hardware and sublicensed software, which requires that we allocate revenue to each of these elements. Allocation of Revenue to Multiple Element Arrangements For multiple element arrangements that contain software and non-software elements, we allocate revenue to software and software-related elements as a group and any non-software element separately. After the arrangement consideration has been allocated to the non-software elements, revenue is recognized when the basic revenue recognition criteria are met for each element. For the group of software and software-related elements, revenue is recognized under the guidance applicable to software transactions. Since we do not have vendor specific objective evidence (VSOE) of fair value on software licenses within our multiple element arrangements, we recognize revenue on our software and software-related elements using the residual method. Under the residual method, license revenue is recognized in a multiple-element arrangement when vendor-specific objective evidence of fair value exists for all of the undelivered elements in the arrangement, when software is delivered, installed and all other conditions to revenue recognition are met. We allocate revenue to each undelivered element in a multiple-element arrangement based on the element’s respective fair value, with the fair value determined by the price charged when that element is sold separately. Specifically, we determine the fair value of the software support, hardware maintenance, sublicensed software support, remote hosting, subscriptions and software as a service portions of the arrangement based on the substantive renewal price for these services charged to clients; professional services (including training and consulting) portion of the arrangement, based on hourly rates which we charge for these services when sold apart from a software license; and sublicensed software based on its price when sold separately from the software. The residual amount of the fee after allocating revenue to the fair value of the undelivered elements is attributed to the licenses for software solutions. If evidence of the fair value cannot be established for the undelivered elements of a license agreement using VSOE, the entire amount of revenue under the arrangement is deferred until these elements have been delivered or VSOE of fair value can be established. We also enter into arrangements that include multiple non-software deliverables. For each element in a multiple element arrangement that does not contain software-related elements to be accounted for as a separate unit of accounting, the following must be met: the delivered products or services have value to the client on a stand-alone basis; and for an arrangement that includes a general right of return relative to the delivered products or services, delivery or performance of the undelivered product or service is considered probable and is substantially controlled by the Company. We allocate the arrangement consideration to each element based on the selling price hierarchy of VSOE of fair value, if it exists, or third-party evidence (TPE) of selling price. If neither VSOE nor TPE are available, we use estimated selling price. After the arrangement consideration has been allocated to the elements, we account for each respective element in the arrangement as described below. For certain arrangements, revenue for software, implementation services and, in certain cases, support services for which VSOE of fair value cannot be established are accounted for as a single unit of accounting. If VSOE of fair value cannot be established for both the implementation services and the support services, the entire arrangement fee is recognized ratably over the period during which the implementation services are expected to be performed or the support period, whichever is longer, beginning with delivery of the software, provided that all other revenue recognition criteria are met. The revenue recognized from single units of accounting are typically allocated and classified as system sales and support, maintenance and services. In cases where VSOE cannot be established, revenue is classified based on contract value. Revenue Recognition Policies for Each Element We provide implementation and consulting services. These services vary depending on the scope and complexity of the engagement. Examples of such services may include database consulting, system configuration, project management, testing assistance, network consulting, post conversion review and application management services. Except for limited arrangements where our software requires significant modifications or customization, implementation and consulting services generally are not deemed to be essential to the functionality of the software and, thus, do not impact the timing of the software license recognition. However, if software license fees are tied to implementation milestones, then the portion of the software license fee tied to implementation milestones is deferred until the related milestone is accomplished and related fees become due and payable and non-forfeitable. Implementation fees, for which VSOE of fair value can be determined, are recognized over the service period, which may extend from nine months to several years for multi-phased projects. Remote hosting and managed services are marketed under long-term arrangements generally over periods of five to 10 years. These services are typically provided to clients that have acquired a perpetual license for licensed software and have contracted with us to host the software in our data center. Under these arrangements, the client generally has the contractual right to take possession of the licensed software at any time during the hosting period without significant penalty and it is feasible for the client to either run the software on its own equipment or contract with another party unrelated to us to host the software. Additionally, these services are not deemed to be essential to the functionality of the licensed software or other elements of the arrangement. As such, in situations for which we have VSOE of fair value for the undelivered items, we allocate the residual portion of the arrangement fee to the software and recognize it once the client has the ability to take possession of the software. The remaining fees in these arrangements, as well as the fees for arrangements where the client does not have the contractual right or the ability to take possession of the software at any time or for situations in which VSOE of fair value does not exist for undelivered elements, are generally recognized ratably over the hosting service period. We also offer our solutions on a software as a service model, providing time-based licenses for our software solutions available within an environment that we manage from our data centers. The data centers provide system and administrative support as well as processing services. Revenue on these services is combined and recognized on a monthly basis over the term of the contract. We capitalize related pre-contract direct set-up costs consisting of third party costs and direct software installation and implementation costs associated with the initial set up of a software as a service client. These costs are amortized over the term of the arrangement. Software support fees are marketed under annual and multi-year arrangements and are recognized as revenue ratably over the contractual support term. Hardware and sublicensed software maintenance revenues are recognized ratably over the contractual maintenance term. Subscription and content fees are generally marketed under annual and multi-year agreements and are recognized ratably over the contractual terms. Hardware and sublicensed software sales are generally recognized when title and risk of loss have transferred to the client. The sale of equipment under sales-type leases is recorded as system sales revenue at the inception of the lease. Sales-type leases also produce financing income, which is included in system sales revenue and is recognized at consistent rates of return over the lease term. Where we have contractually agreed to develop new or customized software code for a client, we utilize percentage-of-completion accounting, labor-hours method. Revenue generally is recognized net of any taxes collected from clients and subsequently remitted to governmental authorities. Payment Arrangements Our payment arrangements with clients typically include an initial payment due upon contract signing and date-based licensed software payment terms and payments based upon delivery for services, hardware and sublicensed software. Revenue recognition on support payments received in advance of the services being performed are deferred and classified as either current or long term deferred revenue depending on whether the revenue will be earned within one year. We have periodically provided long-term financing options to creditworthy clients through third party financing institutions and have directly provided extended payment terms to clients from contract date. These extended payment term arrangements typically provide for date based payments over periods ranging from 12 months up to seven years. As a significant portion of the fee is due beyond one year, we have analyzed our history with these types of arrangements and have concluded that we have a standard business practice of using extended payment term arrangements and a long history of successfully collecting under the original payment terms for arrangements with similar clients, product offerings, and economics without granting concessions. Accordingly, in these situations, we consider the fee to be fixed and determinable in these extended payment term arrangements and, thus, the timing of revenue is not impacted by the existence of extended payments. Some of these payment streams have been assigned on a non-recourse basis to third party financing institutions. We account for the assignment of these receivables as sales of financial assets. Provided all revenue recognition criteria have been met, we recognize revenue for these arrangements under our normal revenue recognition criteria, and if appropriate, net of any payment discounts from financing transactions. (b) Cash Equivalents - Cash equivalents consist of short-term marketable securities with original maturities less than 90 days. (c) Investments – Our short-term investments are primarily invested in time deposits, commercial paper, government and corporate bonds, with maturities of less than one year. Our long-term investments are primarily invested in government and corporate bonds with maturities of less than two years. All of our investments, other than a small portion accounted for under the cost and equity methods, are classified as available-for-sale. Available-for-sale securities are recorded at fair value with the unrealized gains and losses reflected in accumulated other comprehensive loss until realized. Realized gains and losses from the sale of available-for-sale securities, if any, are determined on a specific identification basis. We regularly review investment securities for impairment based on both quantitative and qualitative criteria that include the extent to which cost exceeds fair value, the duration of any market decline, and the financial health of and specific prospects for the issuer. Unrealized losses that are other than temporary are recognized in earnings. Premiums are amortized and discounts are accreted over the life of the security as adjustments to interest income for our investments. Interest income is recognized when earned. Refer to Note (3) and Note (4) for further description of these assets and their fair value. (d) Concentrations - The majority of our cash and cash equivalents are held at three major financial institutions. The majority of our cash equivalents consist of money market funds. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally these deposits may be redeemed upon demand. As of the end of 2015, we had a significant concentration of receivables owed to us by Fujitsu Services Limited, which are currently in dispute. Refer to Note (5) for additional information. (e) Inventory - Inventory consists primarily of computer hardware and sublicensed software, held for resale. Inventory is recorded at the lower of cost (first-in, first-out) or net realizable value. (f) Property and Equipment - We account for property and equipment in accordance with ASC 360, Property, Plant, and Equipment. Property, equipment and leasehold improvements are stated at cost. Depreciation of property and equipment is computed using the straight-line method over periods of one to 50 years. Amortization of leasehold improvements is computed using a straight-line method over the shorter of the lease terms or the useful lives, which range from periods of one to 15 years. (g) Software Development Costs - Software development costs are accounted for in accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed. Software development costs incurred internally in creating computer software products are expensed until technological feasibility has been established upon completion of a detailed program design. Thereafter, all software development costs incurred through the software’s general release date are capitalized and subsequently reported at the lower of amortized cost or net realizable value. Capitalized costs are amortized based on current and expected future revenue for each software solution with minimum annual amortization equal to the straight-line amortization over the estimated economic life of the solution. We amortize capitalized software development costs over five years. (h) Goodwill - We account for goodwill under the provisions of ASC 350, Intangibles – Goodwill and Other. Goodwill is not amortized but is evaluated for impairment annually or whenever there is an impairment indicator. All goodwill is assigned to a reporting unit, where it is subject to an annual impairment assessment. Based on these evaluations, there was no impairment of goodwill in 2015, 2014 or 2013. Refer to Note (7) for more information on goodwill and other intangible assets. (i) Intangible Assets - We account for intangible assets in accordance with ASC 350, Intangibles – Goodwill and Other. Amortization of finite-lived intangible assets is computed using the straight-line method over periods of three to 30 years. (j) Income Taxes - Income taxes are accounted for in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Refer to Note (12) for additional information regarding income taxes. (k) Earnings per Common Share - Basic earnings per share (EPS) excludes dilution and is computed, in accordance with ASC 260, Earnings Per Share, by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. Refer to Note (13) for additional details of our earnings per share computations. (l) Accounting for Share-based Payments - We recognize all share-based payments to associates, directors and consultants, including grants of stock options, restricted stock and performance shares, in the financial statements as compensation cost based on their fair value on the date of grant, in accordance with ASC 718, Compensation-Stock Compensation. This compensation cost is recognized over the vesting period on a straight-line basis for the fair value of awards that actually vest. Refer to Note (14) for a detailed discussion of share-based payments. (m) Foreign Currency - In accordance with ASC 830, Foreign Currency Matters, assets and liabilities of non-U.S. subsidiaries whose functional currency is the local currency are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Revenues and expenses are translated at average exchange rates during the year. The net exchange differences resulting from these translations are reported in accumulated other comprehensive loss. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations. (n) Collaborative Arrangements - In accordance with ASC 808, Collaborative Arrangements, third party costs incurred and revenues generated by arrangements involving joint operating activities of two or more parties that are each actively involved and exposed to risks and rewards of the activities are classified in the consolidated statements of operations on a gross basis only if we are determined to be the principal participant in the arrangement. Otherwise, third party revenues and costs generated by collaborative arrangements are presented on a net basis. Payments between participants are recorded and classified based on the nature of the payments. (o) Recently Issued Accounting Pronouncements Revenue Recognition. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP. The new standard is effective for the Company in the first quarter of 2018, with early adoption permitted in the first quarter of 2017. The standard permits the use of either the retrospective or cumulative effect transition method. At this time, we have not selected a transition method, nor have we determined if we will adopt early. We are currently evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. Debt Issuance Costs. In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the debt liability. ASU 2015-03 is effective for the Company in the first quarter of 2016, with early adoption permitted, and retrospective application required. The Company adopted the standard early, effective in the first quarter of 2015. The adoption of ASU 2015-03 did not have a material impact on our consolidated financial statements. Refer to Note (9) for further information regarding debt issuance costs. Consolidation. In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which provides guidance when evaluating whether to consolidate certain legal entities. The updated guidance modifies evaluation criteria of limited partnerships and similar legal entities, eliminates the presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for the Company in the first quarter of 2016, with early adoption permitted. We do not expect the adoption of ASU 2015-02 to have a material impact on our consolidated financial statements and related disclosures. Measurement-Period Adjustments. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. An acquirer now must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for the Company in the first quarter of 2016, with early adoption permitted. The Company adopted the standard early, effective in the third quarter of 2015. The adoption of ASU 2015-16 did not have a material impact on our consolidated financial statements. Deferred Income Taxes. In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires all deferred income tax assets and liabilities to be classified as noncurrent in our consolidated balance sheets. ASU 2015-17 is effective for the Company in the first quarter of 2017, with early adoption permitted, and either prospective or retrospective application accepted. The Company adopted the standard early, in the fourth quarter of 2015, and elected prospective application, which is reflected in our consolidated balance sheet for the year ended January 2, 2016. Prior periods have not been retrospectively adjusted. The adoption of ASU 2015-17 did not have a material impact on our consolidated financial statements. Financial Instruments. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for the Company in the first quarter of 2018, with early adoption permitted. We are currently evaluating the effect that ASU 2016-01 will have on our consolidated financial statements and related disclosures. |
Acquisitions |
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Business Acquisitions | Business Acquisitions Siemens Health Services On February 2, 2015, we acquired substantially all of the assets, and assumed certain liabilities of Siemens Health Services, the health information technology business unit of Siemens AG ("Siemens"), a stock corporation established under the laws of Germany, and its affiliates. Siemens Health Services offered a portfolio of enterprise-level clinical and financial health care information technology solutions, as well as departmental, connectivity, population health, and care coordination solutions globally. Solutions were offered on the Soarian, Invision, and i.s.h.med platforms, among others. Siemens Health Services also offered a range of complementary services, including support, hosting, managed services, implementation services, and strategic consulting. We believe the acquisition enhances our organic growth opportunities as it provides us a larger base into which we can sell our combined portfolio of solutions and services. The acquisition also augments our non-U.S. footprint and growth opportunities, increases our ability and scale for R&D investment, and adds over 5,000 highly-skilled associates that will enhance our capabilities. These factors, combined with the synergies and economies of scale expected from combining the operations of Cerner and Siemens Health Services, are the basis for acquisition and comprise the resulting goodwill recorded. Consideration for the acquisition was $1.39 billion of cash, consisting of the $1.3 billion agreed upon purchase price plus working capital and certain other adjustments under the Master Sale and Purchase Agreement ("MSPA") dated August 5, 2014, as amended. We incurred pre-tax costs of $22 million and $16 million in 2015 and 2014, respectively, in connection with our acquisition of Siemens Health Services, which are included in general and administrative expense in our consolidated statements of operations. The acquisition of Siemens Health Services is being treated as a purchase in accordance with ASC Topic 805, Business Combinations, which requires allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed in the transaction. Our allocation of purchase price is based on management's judgment after evaluating several factors, including a preliminary valuation assessment. The allocation of purchase price is preliminary and subject to changes, which could be significant, as appraisals of tangible and intangible assets are finalized, and additional information becomes available. The preliminary allocation of purchase price is as follows:
The intangible assets in the table above are being amortized on a straight-line basis over their estimated useful lives, with such amortization included in amortization of acquisition-related intangibles in our consolidated statements of operations. The fair value measurements of tangible and intangible assets and liabilities were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy. Level 3 inputs included, among others, discount rates that we estimated would be used by a market participant in valuing these assets and liabilities, projections of revenues and cash flows, client attrition rates, royalty rates, and market comparables. Property and equipment was valued primarily using the sales comparison method, a form of the market approach, in which the value is derived by evaluating the market prices of assets with comparable features such as size, location, condition and age. Our analysis included multiple property categories, including land, buildings, and personal property and included assumptions for market prices of comparable assets, and physical and economic obsolescence, among others. Customer relationship intangible assets were valued using the excess earnings method, a form of the income approach, in which the value is derived by estimation of the after-tax cash flows specifically attributable to the customer relationships. Our analysis consisted of two customer categories, order backlog and existing customer relationships and included assumptions for projections of revenues and expenses, contributory asset charges, discount rates, and a tax amortization benefit, among others. Existing technology and trade name intangible assets were valued using the relief from royalty method, a form of the income approach, in which the value is derived by estimation of the after-tax royalty savings attributable to owning the assets. Assumptions in these analyses included projections of revenues, royalty rates representing costs avoided due to ownership of the assets, discount rates, and a tax amortization benefit. Deferred revenue was valued using an income approach, in which the value was derived by estimation of the fulfillment cost, plus a normal profit margin (which excludes any selling margin), for performance obligations assumed in the acquisition. Assumptions included estimations of costs incurred to fulfill the obligations, profit margins a market participant would expect to receive, and a discount rate. The goodwill of $485 million was allocated among our Domestic and Global operating segments, and is expected to be deductible for tax purposes. Refer to Note (7) for additional information on goodwill. Our consolidated statements of operations include revenues of approximately $930 million attributable to the acquired business (now referred to as "Cerner Health Services") since the February 2, 2015 acquisition date. Disclosure of the earnings contribution from the Cerner Health Services business is not practicable, as we have already integrated operations in many areas. The following table provides unaudited pro forma results of operations for the years ended January 2, 2016 and January 3, 2015, as if the acquisition had been completed on the first day of our 2014 fiscal year.
These pro forma results are based on estimates and assumptions, which we believe are reasonable. They are not the results that would have been realized had we been a combined company during the periods presented, nor are they indicative of our consolidated results of operations in future periods. The pro forma results for the 2015 year include pre-tax adjustments for amortization of intangible assets, fair value adjustments for deferred revenue, and the elimination of acquisition costs of $7 million, $6 million and $22 million, respectively. Pro forma results for the 2014 year include pre-tax adjustments for amortization of intangible assets, fair value adjustments for deferred revenue, and elimination of acquisition costs of $86 million, $52 million, and $16 million respectively. Lee's Summit Tech Center On December 17, 2015, we purchased real estate interests, in-place tenant leases, and certain other assets associated with the property commonly referred to as the Summit Technology Campus, located in Lee's Summit, Missouri. The acquired property (now referred to as the "Lee's Summit Tech Center") consists of a 550,000 square foot multi-tenant office building. We expect to utilize this space to support our data center and office space needs. Consideration for the Lee's Summit Tech Center is expected to total $86 million, consisting of $85 million of up-front cash plus contingent consideration not to exceed $1 million. The acquisition of the Lee's Summit Tech Center is being treated as a purchase in accordance with ASC Topic 805. The preliminary allocation of purchase price resulted in the allocation of $86 million to property and equipment, net in our consolidated balance sheets. This preliminary allocation of purchase price is based on management's judgment after evaluating several factors, including an appraisal of the acquired real estate. Such allocation is subject to changes, as intangible assets and obligations associated with the in-place tenant leases are evaluated and additional information becomes available; however, we do not expect material changes. No goodwill is expected to result from the transaction. We expect the in-place tenant leases to have a de minimis impact on our consolidated financial statements. InterMedHx On April 1, 2014, we purchased 100% of the outstanding membership interests of InterMedHx, LLC (InterMedHx). InterMedHx was a provider of health technology solutions in the areas of preventive care, patient administration, and medication history. We believe the addition of InterMedHx solutions provides additional capabilities in the market. Consideration for the acquisition of InterMedHx is expected to total $19 million, consisting of up-front cash plus contingent consideration, which is payable at a percentage of the revenue contribution from InterMedHx solutions and services. We valued the contingent consideration at $12 million based on projections of revenue over the assessment period. During 2015, we paid $2 million to satisfy a portion of this contingent consideration obligation. The allocation of purchase price to the estimated fair value of the identified tangible and intangible assets acquired and liabilities assumed resulted in goodwill of $17 million and $4 million in intangible assets related to the value of existing technologies. The goodwill was allocated to our Domestic operating segment and is expected to be deductible for tax purposes. Identifiable intangible assets are being amortized over a period of five years. The operating results of InterMedHx were combined with our operating results subsequent to the purchase date of April 1, 2014. Pro-forma results of operations have not been presented because the effect of this acquisition was not material to our results. PureWellness On March 4, 2013, we purchased the net assets of Kaufman & Keen, LLC (doing business as PureWellness). PureWellness was a health and wellness company that developed solutions for the administration and management of wellness programs, and to enable plan member engagement strategies. Our acquisition of PureWellness further expands what we believe to be a robust offering of solutions to manage and improve the health of populations. Consideration for the acquisition of PureWellness was $69 million consisting of up-front cash plus contingent consideration, which was payable upon the achievement of certain revenue milestones from PureWellness solutions and services during the period commencing on August 1, 2013 and ending April 30, 2015. During 2015 and 2014, we paid $10 million and $11 million, respectively, to satisfy all contingent consideration obligations. The allocation of the purchase price to the estimated fair value of the identified tangible and intangible assets acquired and liabilities assumed resulted in goodwill of $49 million and $20 million in intangible assets, of which $10 million and $10 million was related to the value of established customer relationships and existing technologies, respectively. The goodwill was allocated to our Domestic operating segment and is expected to be deductible for tax purposes. Identifiable intangible assets are being amortized over a weighted-average period of seven years. The operating results of PureWellness were combined with our operating results subsequent to the purchase date of March 4, 2013. Labotix On March 18, 2013, we purchased 100% of the outstanding stock of Labotix Corporation (together with its wholly owned subsidiary Labotix Automation, Inc., Labotix). Labotix was a developer of laboratory automation solutions for clinical laboratories. We believe the combination of Cerner Millennium, Cerner Copath, and Labotix allows us to offer a comprehensive set of capabilities to support high volume laboratory testing. Consideration for the acquisition of Labotix was $18 million, which was paid in cash. The allocation of purchase price to the estimated fair value of the identified tangible and intangible assets acquired and liabilities assumed resulted in goodwill of $12 million and $5 million in intangible assets related to the value of existing technologies. The goodwill was allocated to our Domestic operating segment and is not expected to be deductible for tax purposes. Identifiable intangible assets are being amortized over a period of five years. The operating results of Labotix were combined with our operating results subsequent to the purchase date of March 18, 2013. |
Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments Available-for-sale investments at the end of 2015 were as follows:
Available-for-sale investments at the end of 2014 were as follows:
Investments reported under the cost method of accounting as of January 2, 2016 and January 3, 2015 were $16 million and $9 million, respectively. Investments reported under the equity method of accounting as of January 2, 2016 and January 3, 2015 were $1 million and $4 million, respectively. We sold available-for-sale investments for proceeds of $293 million and $698 million in 2015 and 2014, respectively, resulting in insignificant gains or losses in each period. |
Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements We determine fair value measurements used in our consolidated financial statements based upon the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
The following table details our financial assets measured and recorded at fair value on a recurring basis at the end of 2015:
The following table details our financial assets measured and recorded at fair value on a recurring basis at the end of 2014:
We estimate the fair value of our long-term, fixed rate debt using a Level 3 discounted cash flow analysis based on current borrowing rates for debt with similar maturities. We estimate the fair value of our long-term, variable rate debt using a Level 3 discounted cash flow analysis based on LIBOR rate forward curves. The fair value of our long-term debt, including current maturities, at the end of 2015 and 2014 was approximately $505 million and $15 million, respectively. The carrying amount of such debt at the end of 2015 and 2014 was $500 million and $14 million, respectively. |
Receivables |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables | Receivables Receivables consist of accounts receivable and the current portion of amounts due under sales-type leases. Accounts receivable primarily represent recorded revenues that have been billed. Billings and other consideration received on contracts in excess of related revenues recognized are recorded as deferred revenue. Substantially all receivables are derived from sales and related support and maintenance and professional services of our clinical, administrative and financial information systems and solutions to health care providers. We perform ongoing credit evaluations of our clients and generally do not require collateral from our clients. We provide an allowance for estimated uncollectible accounts based on specific identification, historical experience and our judgment. A summary of net receivables is as follows:
A reconciliation of the beginning and ending amount of our allowance for doubtful accounts is as follows:
Lease receivables represent our net investment in sales-type leases resulting from the sale of certain health care devices to our clients. The components of our net investment in sales-type leases are as follows:
Future minimum lease payments to be received under existing sales-type leases for the next five years are as follows:
During the second quarter of 2008, Fujitsu Services Limited’s (Fujitsu) contract as the prime contractor in the National Health Service (NHS) initiative to automate clinical processes and digitize medical records in the Southern region of England was terminated by the NHS. This had the effect of automatically terminating our subcontract for the project. We continue to be in dispute with Fujitsu regarding Fujitsu’s obligation to pay the amounts comprised of accounts receivable and contracts receivable related to that subcontract, and we are working with Fujitsu to resolve these issues based on processes provided for in the contract. Part of that process requires final resolution of disputes between Fujitsu and the NHS regarding the contract termination. As of January 2, 2016, it remains unlikely that our matter with Fujitsu will be resolved in the next 12 months. Therefore, these receivables have been classified as long-term and represent less than the majority of other long-term assets at the end of 2015 and 2014. While the ultimate collectability of the receivables pursuant to this process is uncertain, we believe that we have valid and equitable grounds for recovery of such amounts and that collection of recorded amounts is probable. Nevertheless, it is reasonably possible that our estimates regarding collectability of such amounts might materially change in the near term, considering that we do not have complete knowledge of the status of the proceedings between Fujitsu and NHS and their effect on our claim. During 2015 and 2014, we received total client cash collections of $4.4 billion and $3.5 billion, respectively. |
Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment A summary of property, equipment and leasehold improvements stated at cost, less accumulated depreciation and amortization, is as follows:
Depreciation and leasehold amortization expense for 2015, 2014 and 2013 was $217 million, $163 million and $136 million, respectively. |
Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Text Block] | Goodwill and Other Intangible Assets The changes in the carrying amounts of goodwill were as follows:
A summary of net intangible assets is as follows:
Amortization expense for 2015, 2014 and 2013 was $116 million, $36 million and $33 million, respectively. Estimated aggregate amortization expense for each of the next five years is as follows:
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Software Development Costs |
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Software Development Costs | Software Development Information regarding our software development costs is included in the following table:
Accumulated amortization as of the end of 2015 and 2014 was $1.0 billion and $891 million, respectively. |
Indebtedness |
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Idebtedness | Long-term Debt and Capital Lease Obligations The following is a summary of indebtedness outstanding:
5.54% Notes In November 2005, we completed a £65 million unsecured private placement of debt at 5.54% pursuant to a Note Agreement. The Note Agreement was payable in seven equal annual installments, which commenced November 2009. These 5.54% Notes were paid in full in 2015. Senior Notes In January 2015, we issued $500 million aggregate principal amount of unsecured Senior Notes ("Senior Notes"), pursuant to a Master Note Purchase Agreement dated December 4, 2014. The issuance consisted of $225 million of 3.18% Series 2015-A Notes due February 15, 2022, $200 million of 3.58% Series 2015-B Notes due February 14, 2025, and $75 million in floating rate Series 2015-C Notes due February 15, 2022. Interest is payable semiannually on February 15th and August 15th in each year, commencing on August 15, 2015 for the Series 2015-A Notes and Series 2015-B Notes. The Series 2015-C Notes will accrue interest at a floating rate equal to the Adjusted LIBOR Rate (as defined in the Master Note Purchase Agreement), payable quarterly on February 15th, May 15th, August 15th and November 15th in each year, commencing on May 15, 2015. As of January 2, 2016, the interest rate for the current interest period was 1.36% based on the three-month floating LIBOR rate. The debt issuance costs in the table above relate to the issuance of these Senior Notes. The Master Note Purchase Agreement contains certain leverage and interest coverage ratio covenants and provides certain restrictions on our ability to borrow, incur liens, sell assets, and other customary terms. Proceeds from the Senior Notes are available for general corporate purposes. Capital Leases Our capital lease obligations are primarily related to the procurement of hardware and health care devices, and generally have a term of five years. Other Other indebtedness includes estimated amounts payable through September 2025, under an agreement entered into in September 2015. Credit Facility In October 2015, we amended and restated our revolving credit facility. The amended facility provides a $100 million unsecured revolving line of credit for working capital purposes, which includes a letter of credit facility, expiring in October 2020. We have the ability to increase the maximum capacity to $200 million at any time during the facility’s term, subject to lender participation. Interest is payable at a rate based on prime, LIBOR, or the U.S. federal funds rate, plus a spread that varies depending on the leverage ratios maintained. The agreement provides certain restrictions on our ability to borrow, incur liens, sell assets and pay dividends and contains certain cash flow and liquidity covenants. As of the end of 2015, we had no outstanding borrowings under this facility; however, we had $16 million of outstanding letters of credit, which reduced our available borrowing capacity to $84 million. Covenant Compliance As of January 2, 2016, we were in compliance with all debt covenants. Minimum annual payments under existing capital lease obligations and maturities of indebtedness outstanding at the end of 2015 are as follows:
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Commitments and Contingencies Disclosure [Abstract] | |
Contingencies Disclosure [Text Block] | Contingencies We accrue estimates for resolution of any legal and other contingencies when losses are probable and estimable, in accordance with ASC 450, Contingencies. The terms of our software license agreements with our clients generally provide for a limited indemnification of such clients against losses, expenses and liabilities arising from third party claims based on alleged infringement by our solutions of an intellectual property right of such third party. The terms of such indemnification often limit the scope of and remedies for such indemnification obligations and generally include a right to replace or modify an infringing solution. To date, we have not had to reimburse any of our clients for any judgments or settlements to third parties related to these indemnification provisions pertaining to intellectual property infringement claims. For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement cases under the terms of the corresponding agreements with our clients, we cannot determine the maximum amount of potential future payments, if any, related to such indemnification provisions. In addition to commitments and obligations in the ordinary course of business, we are subject to various legal proceedings and claims, including for example, employment disputes and litigation alleging solution defects, personal injury, intellectual property infringement, violations of law and breaches of contract and warranties. Many of these proceedings are at preliminary stages and many seek an indeterminate amount of damages. No less than quarterly, we review the status of each significant matter and assess our potential financial exposure. We accrue a liability for an estimated loss if the potential loss from any legal proceeding or claim is considered probable and the amount can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether the amount of an exposure is reasonably estimable, and accruals are based only on the information available to our management at the time the judgment is made. Furthermore, the outcome of legal proceedings is inherently uncertain, and we may incur substantial defense costs and expenses defending any of these matters. Should any one or a combination of more than one of these proceedings be successful, or should we determine to settle any or a combination of these matters, we may be required to pay substantial sums, become subject to the entry of an injunction or be forced to change the manner in which we operate our business, which could have a material adverse impact on our business, results of operations or financial condition. Settlement Charge On December 10, 2013, the Company received an interim ruling on a pending arbitration matter between Cerner and a client, awarding the client damages and awarding us part of our counterclaim to collect accounts receivable. The client dispute arose from allegations that a certain patient accounting software solution sold to the client in 2008 was defective and did not deliver the promised benefits. This matter was resolved and paid in 2013. We recognized a gross pre-tax charge of $106 million in the fourth quarter of 2013, which is included in general and administrative expense in our consolidated statements of operations. |
Other Income |
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Other Income | Other Income A summary of other income is as follows:
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Income tax expense (benefit) for 2015, 2014 and 2013 consists of the following:
Temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities that give rise to significant portions of deferred income taxes at the end of 2015 and 2014 relate to the following:
At the end of 2015, we had net operating loss carry-forwards subject to Section 382 of the Internal Revenue Code for U.S. federal income tax purposes of $5 million that are available to offset future U.S. federal taxable income, if any, through 2020. We had net operating loss carry-forwards from foreign jurisdictions of $1 million that are available to offset future taxable income, with expiration dates occurring between 2021 and 2034, and $38 million that are available to offset future taxable income with no expiration. We had a deferred tax asset for state net operating loss carry-forwards of $1 million which are available to offset future taxable income, if any, through 2034. In addition, we have a state income tax credit carry-forward of $16 million available to offset income tax liabilities through 2030, and a foreign jurisdiction tax credit carry-forward available to offset future tax liabilities of $1 million through 2026. During 2013, we recorded a valuation allowance of $1 million against our deferred tax asset for certain foreign net operating losses. During 2015, we removed the valuation allowance against foreign net operating losses, as a result of a change in judgment caused by a change in circumstances. We expect to fully utilize the net operating loss and tax credit carry-forwards in future periods. At the end of 2015, we had not provided tax on the cumulative undistributed earnings of our foreign subsidiaries of approximately $108 million, because it is our intention to reinvest these earnings indefinitely. If these earnings were distributed, we would be subject to U.S. federal and state income taxes and foreign withholding taxes, net of U.S. foreign tax credits which may be available. The calculation of this unrecognized deferred tax liability is complex and not practicable. The effective income tax rates for 2015, 2014, and 2013 were 31%, 32%, and 32%, respectively. These effective rates differ from the U.S. federal statutory rate of 35% as follows:
A reconciliation of the beginning and ending amount of unrecognized tax benefit is presented below:
If recognized, $4 million of the unrecognized tax benefit will favorably impact our effective tax rate. We anticipate that it is reasonably possible that our unrecognized tax benefits will decrease by up to $2 million within the next twelve months due to the potential settlement of examinations by taxing authorities and lapse of the statutes of limitations in various taxing jurisdictions. Our U.S. federal returns have been examined by the Internal Revenue Service through 2012. We have various state and foreign returns under examination. The ending amounts of accrued interest and penalties related to unrecognized tax benefits were $1 million in both 2015 and 2014. We classify interest and penalties as income tax expense in our consolidated statement of operations. The foreign portion of our earnings before income taxes was $83 million, $68 million, and $5 million in 2015, 2014, and 2013 respectively, and the remaining portion was domestic. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share A reconciliation of the numerators and the denominators of the basic and diluted per share computations are as follows:
Options to purchase 2.9 million, 5.7 million and 6.1 million shares of common stock at per share prices ranging from $50.04 to $73.40, $44.05 to $66.10 and $36.92 to $56.39, were outstanding at the end of 2015, 2014 and 2013, respectively, but were not included in the computation of diluted earnings per share because they were anti-dilutive. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation and Equity | Share-Based Compensation and Equity Stock Option and Equity Plans As of the end of 2015, we had five fixed stock option and equity plans in effect for associates and directors. This includes one plan from which we could issue grants, the Cerner Corporation 2011 Omnibus Equity Incentive Plan (the Omnibus Plan); and four plans from which no new grants are permitted, but some awards remain outstanding (Plans D, E, F, and G). Awards under the Omnibus Plan may consist of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, performance grants and bonus shares. At the end of 2015, 20.1 million shares remain available for awards. Stock options granted under the Omnibus Plan are exercisable at a price not less than fair market value on the date of grant. Stock options under the Omnibus Plan typically vest over a period of five years and are exercisable for periods of up to 10 years. Stock Options The fair market value of each stock option award granted in 2015 is estimated on the date of grant using the Black-Scholes-Merton (BSM) pricing model. The pricing model requires the use of the following estimates and assumptions:
The weighted-average assumptions used to estimate the fair market value of stock options were as follows:
Stock option activity for 2015 was as follows:
As of the end of 2015, there was $154 million of total unrecognized compensation cost related to stock options granted under all plans. That cost is expected to be recognized over a weighted-average period of 3.16 years. Non-vested Shares Non-vested shares are valued at fair market value on the date of grant and will vest provided the recipient has continuously served on the Board of Directors through such vesting date or, in the case of an associate, provided that performance measures are attained. The expense associated with these grants is recognized over the period from the date of grant to the vesting date, when achievement of the performance condition is deemed probable. Non-vested share activity for 2015 was as follows:
As of the end of 2015, there was $16 million of total unrecognized compensation cost related to non-vested share awards granted under all plans. That cost is expected to be recognized over a weighted-average period of 2.01 years. Associate Stock Purchase Plan We established an Associate Stock Purchase Plan (ASPP) in 2001, which qualifies under Section 423 of the Internal Revenue Code. Each individual employed by us and associates of our U.S. based subsidiaries, except as provided below, are eligible to participate in the ASPP (Participants). The following individuals are excluded from participation: (a) persons who, as of the beginning of a purchase period under the Plan, have been continuously employed by us or our domestic subsidiaries for less than two weeks; (b) persons who, as of the beginning of a purchase period, own directly or indirectly, or hold options or rights to acquire under any agreement or Company plan, an aggregate of 5% or more of the total combined voting power or value of all outstanding shares of all classes of Company common stock; and, (c) persons who are customarily employed by us for less than 20 hours per week or for less than five months in any calendar year. Participants may elect to make contributions from 1% to 20% of compensation to the ASPP, subject to annual limitations determined by the Internal Revenue Service. Participants may purchase Company common stock at a 15% discount on the last business day of the option period. The purchase of Company common stock is made through the ASPP on the open market and subsequently reissued to Participants. The difference between the open market purchase and the Participant’s purchase price is recognized as compensation expense, as such difference is paid by Cerner, in cash. Share Based Compensation Cost Our stock option and non-vested share awards qualify for equity classification. The costs of our ASPP, along with participant contributions, are recorded as a liability until open market purchases are completed. The amounts recognized in the consolidated statements of operations with respect to stock options, non-vested shares and ASPP are as follows:
Preferred Stock As of the end of 2015 and 2014, we had 1.0 million shares of authorized but unissued preferred stock, $0.01 par value. Treasury Stock In September 2015, our Board of Directors authorized a repurchase program that allowed the Company to repurchase shares of our common stock up to $245 million, excluding transaction costs. During 2015, we repurchased 4.1 million shares for total consideration of $245 million under the program. These shares were recorded as treasury stock and accounted for under the cost method. No repurchased shares have been retired. This program is now complete. In December of 2013, our Board of Directors authorized a share repurchase under which the Company was authorized to repurchase common stock in an amount up to $217 million. In May 2014, our Board of Directors approved an amendment to the repurchase program that was authorized in December 2013. Under the amendment, the Company was authorized to repurchase shares of our common stock up to an additional $100 million, for an aggregate of $317 million, excluding transaction costs. Under this program, we repurchased 1.6 million shares for total consideration of $100 million, and 4.1 million shares for total consideration of $217 million, in 2015 and 2014, respectively. These shares were recorded as treasury stock and accounted for under the cost method. No repurchased shares have been retired. This program is now complete. In December 2012, our Board of Directors authorized a repurchase program that allowed the Company to repurchase shares of our common stock of up to $170 million, excluding transaction costs. During 2013, we repurchased 3.6 million shares for total consideration of $170 million. All of the repurchased shares at the time of our June 2013 stock split were utilized to settle a portion of the stock split distribution. This program is now complete. |
Foundations Retirement Plan |
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Jan. 02, 2016 | |
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract] | |
Pension and Other Postretirement Benefits Disclosure [Text Block] | Foundations Retirement Plan The Cerner Corporation Foundations Retirement Plan (the Plan) was established under Section 401(k) of the Internal Revenue Code. All associates age 18 and older and who are not a member of an excluded class are eligible to participate. Participants may elect to make pre-tax and Roth (post-tax) contributions from 1% to 80% of eligible compensation to the Plan, subject to annual limitations determined by the Internal Revenue Service. Participants may direct contributions into mutual funds, a stable value fund, a Company stock fund, or a self-directed brokerage account. The Plan has a first tier discretionary match that is made on behalf of participants in an amount equal to 33% of the first 6% of the participant’s salary contribution. The Plan's first tier discretionary match expenses amounted to $30 million, $18 million and $15 million for 2015, 2014 and 2013, respectively. The Plan also provides for a second tier matching contribution that is purely discretionary, the payment of which will depend on overall Company performance and other conditions. If approved by the Compensation Committee, contributions by the Company will be tied to attainment of established financial metric goals, such as earnings per share for the year. Participants who defer 2% of their paid base salary, are actively employed as of the last day of the Plan year and are employed before October 1st of the Plan year are eligible to receive the second tier discretionary match contribution, if any such second tier matching contribution is approved by the Compensation Committee. For the years ended 2015, 2014 and 2013 we expensed $7 million, $5 million and $14 million for the second tier discretionary distributions, respectively. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Continuous Campus During 2009, as part of our long-term space planning analysis, we determined that we would require additional office space for associates to accommodate our anticipated growth. We evaluated various sites in the Kansas City metropolitan area and negotiated with several different governmental entities regarding available incentives. Upon completion of this review, we decided to proceed with an office development (known as our “Continuous Campus”) in Wyandotte County, Kansas. In order to maximize available incentives, we agreed to pursue the office development in conjunction with the development of an 18,000 seat, multi-sport stadium complex and related recreational athletic complex. The stadium complex was developed by Kansas Unified Development, LLC (the “Developer”), an entity controlled by Neal Patterson, Chairman of the Board of Directors and Chief Executive Officer of the Company, and Clifford Illig, Vice Chairman of the Board of Directors of the Company. Sporting Kansas City (“Sporting KC”) is the principal tenant of the stadium complex. OnGoal LLC (“OnGoal”), the owner of the Sporting KC professional soccer club, is also controlled by Messrs. Patterson and Illig. The Company currently estimates it will receive incentives in the aggregate of $82 million from the Developer, the Unified Government of Wyandotte County/Kansas City, Kansas (the “Unified Government”) and the Kansas Department of Commerce. Components of the $82 million of incentives are described below: Cash Grants - In January 2014 we received $48 million of cash grants from the Kansas Department of Commerce for project costs. The State of Kansas has issued bonds in order to fund these incentives and has incurred costs of issuance and debt service obligations. As consideration for the grant, we made certain new job and state payroll tax withholding commitments. Should aggregate state payroll tax withholdings (related to associates at our Continuous Campus) over a 10-year period commencing in January 2014 be less than $49 million (the $48 million of cash we received plus amounts representing debt service costs incurred by the State of Kansas), we would be required to repay the shortfall. The $49 million maximum repayment amount will be adjusted up or down during the 10-year period, based on any future change to Kansas payroll tax withholding rates. Under a separate agreement, the Developer and OnGoal have agreed to be responsible for certain shortfall payments that may become due. If no payment from Developer or OnGoal becomes due at the end of the 10-year period, the Developer or OnGoal will pay us a success fee of $4 million. We recorded the cash grants as an obligation/liability at $48 million, upon receipt in January 2014. Over time this liability will accrete, utilizing the effective interest method, up to the maximum repayment amount, offset by reductions based on actual state payroll tax withholdings generated by our Continuous Campus associates. This activity is recognized as a component of operating expense as it occurs over a period not to exceed 10 years. At the end of 2015, the obligation/liability balance was $35 million, the majority of which is included in deferred income taxes and other liabilities in our consolidated balance sheets. Sales Tax Exemptions - We have received a sales tax exemption on materials and other fixed assets purchased in connection with the construction. As such, we were not required to remit an aggregate of $11 million of sales tax on these capital purchases. State Income Tax Credits - We expect state income tax credits to aggregate $19 million. Such credits are available to offset our Kansas state income tax, and are being recognized as a reduction of income tax expense as we are eligible to claim them. Land - We acquired the land for our Continuous Campus from the Unified Government with certain contingencies upon which the office complex was being constructed. The purchase price of the land, equal to the site’s fair market value, was paid by the Developer. In the second quarter of 2012, we commenced vertical construction on the office development, which resolved contingencies and the land contributed to the Company from the Unified Government was recorded at its $4 million appraisal value. Trails Campus Development In December 2013, we purchased approximately 237 acres of land located in Kansas City, Missouri, from Trails Properties II, Inc. (“Trails”), for $43 million. Trails is an entity controlled by Messrs. Patterson and Illig. The property (currently known as our "Trails Campus") was acquired as a site for future office space development to further accommodate our anticipated growth. Construction on the Trails Campus began in November 2014. GRAND Construction, LLC GRAND Construction, LLC ("Grand") is a limited liability company owned in part by an entity controlled by Messrs. Patterson and Illig. Grand has historically provided construction management and related services to the Company in connection with our office campuses, for which we paid $2 million in both 2015 and 2013. The amount paid in 2014 was less than $1 million. We expect to pay Grand an additional $3 million, under an existing agreement, over a period estimated at two years. |
Commitments |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Text Block] | Commitments Leases We are committed under operating leases primarily for office and data center space and computer equipment through October 2027. Rent expense for office and warehouse space for our regional and global offices for 2015, 2014 and 2013 was $32 million, $25 million and $20 million, respectively. Aggregate minimum future payments under these non-cancelable operating leases are as follows:
Other Obligations We have purchase commitments with various vendors, and minimum funding commitments under collaboration agreements through 2023. Aggregate future payments under these commitments are as follows:
Siemens Innovation Alliance Concurrently with the execution of the MSPA, we entered into an agreement with Siemens AG to create a strategic alliance to jointly invest in innovative projects that integrate health information technology with medical technologies for the purpose of enhancing workflows and improving clinical outcomes. Each company will contribute up to $50 million to fund projects of shared importance to both companies and their clients, over an initial term of three years, commencing on February 2, 2015. In 2015, we contributed less than $1 million to fund approved projects. |
Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting We have two operating segments, Domestic and Global. Revenues are derived primarily from the sale of clinical, financial and administrative information systems and solutions. The cost of revenues includes the cost of third party consulting services, computer hardware, devices and sublicensed software purchased from manufacturers for delivery to clients. It also includes the cost of hardware maintenance and sublicensed software support subcontracted to the manufacturers. Operating expenses incurred by the geographic business segments consist of sales and client service expenses including salaries of sales and client service personnel, expenses associated with our managed services business, marketing expenses, communications expenses and unreimbursed travel expenses. “Other” includes expenses that have not been allocated to the operating segments, such as software development, general and administrative expenses (including the settlement charge discussed in Note (10)), acquisition costs and related adjustments, share-based compensation expense, and certain amortization and depreciation. Performance of the segments is assessed at the operating earnings level by our chief operating decision maker, who is our Chief Executive Officer. Items such as interest, income taxes, capital expenditures and total assets are managed at the consolidated level and thus are not included in our operating segment disclosures. Accounting policies for each of the reportable segments are the same as those used on a consolidated basis. In connection with our acquisition of the Cerner Health Services business, we commenced an evaluation of our methodology for allocating operating expenses to our reportable segments. Effective for our first quarter of 2015, certain expenses historically reported in "Other" have been allocated to the geographic segments. This new allocation reflects the manner in which the business is now managed, subsequent to the acquisition. While this reporting change did not impact our consolidated results, the segment data has been recast to be consistent for all periods presented. The following table presents a summary of our operating segments and other expense for 2015, 2014 and 2013:
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Quarterly Results |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Results | Quarterly Results (unaudited) Selected quarterly financial data for 2015 and 2014 is set forth below:
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Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The consolidated financial statements include all the accounts of Cerner Corporation (Cerner, the Company, we, us or our) and its subsidiaries. All significant intercompany transactions have been eliminated in consolidation. The consolidated financial statements were prepared using accounting principles generally accepted in the United States. These principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Our fiscal year ends on the Saturday closest to December 31. Fiscal years 2015 and 2013 each consisted of 52 weeks and ended on January 2, 2016 and December 28, 2013, respectively. Fiscal year 2014 consisted of 53 weeks and ended on January 3, 2015. All references to years in these notes to consolidated financial statements represent fiscal years unless otherwise noted. |
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Nature of Operations | Nature of Operations We design, develop, market, install, host and support health care information technology, health care devices, hardware and content solutions for health care organizations and consumers. We also provide a wide range of value-added services, including implementation and training, remote hosting, operational management services, revenue cycle services, support and maintenance, health care data analysis, clinical process optimization, transaction processing, employer health centers, employee wellness programs and third party administrator services for employer-based health plans. |
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Fiscal Period, Policy [Policy Text Block] | Our fiscal year ends on the Saturday closest to December 31. Fiscal years 2015 and 2013 each consisted of 52 weeks and ended on January 2, 2016 and December 28, 2013, respectively. Fiscal year 2014 consisted of 53 weeks and ended on January 3, 2015. All references to years in these notes to consolidated financial statements represent fiscal years unless otherwise noted. | ||||||||||||||||||||||||||||
Postemployment Benefit Plans, Policy [Policy Text Block] | We account for voluntary separation benefits in accordance with the provisions of Accounting Standards Codification (ASC) Topic 712, Compensation-Nonretirement Postemployment Benefits. Voluntary separation benefits are recorded to expense when the associates irrevocably accept the offer and the amount of the termination liability is reasonably estimable. |
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Revenue Recognition | Revenue Recognition - We recognize software related revenue in accordance with the provisions of ASC 985-605, Software – Revenue Recognition and non-software related revenue in accordance with ASC 605, Revenue Recognition. In general, revenue is recognized when all of the following criteria have been met:
The following are our major components of revenue:
We provide for several models of procurement of our information systems and related services. The predominant model involves multiple deliverables and includes a perpetual software license agreement, project-related implementation and consulting services, software support and either hosting services or computer hardware and sublicensed software, which requires that we allocate revenue to each of these elements. Allocation of Revenue to Multiple Element Arrangements For multiple element arrangements that contain software and non-software elements, we allocate revenue to software and software-related elements as a group and any non-software element separately. After the arrangement consideration has been allocated to the non-software elements, revenue is recognized when the basic revenue recognition criteria are met for each element. For the group of software and software-related elements, revenue is recognized under the guidance applicable to software transactions. Since we do not have vendor specific objective evidence (VSOE) of fair value on software licenses within our multiple element arrangements, we recognize revenue on our software and software-related elements using the residual method. Under the residual method, license revenue is recognized in a multiple-element arrangement when vendor-specific objective evidence of fair value exists for all of the undelivered elements in the arrangement, when software is delivered, installed and all other conditions to revenue recognition are met. We allocate revenue to each undelivered element in a multiple-element arrangement based on the element’s respective fair value, with the fair value determined by the price charged when that element is sold separately. Specifically, we determine the fair value of the software support, hardware maintenance, sublicensed software support, remote hosting, subscriptions and software as a service portions of the arrangement based on the substantive renewal price for these services charged to clients; professional services (including training and consulting) portion of the arrangement, based on hourly rates which we charge for these services when sold apart from a software license; and sublicensed software based on its price when sold separately from the software. The residual amount of the fee after allocating revenue to the fair value of the undelivered elements is attributed to the licenses for software solutions. If evidence of the fair value cannot be established for the undelivered elements of a license agreement using VSOE, the entire amount of revenue under the arrangement is deferred until these elements have been delivered or VSOE of fair value can be established. We also enter into arrangements that include multiple non-software deliverables. For each element in a multiple element arrangement that does not contain software-related elements to be accounted for as a separate unit of accounting, the following must be met: the delivered products or services have value to the client on a stand-alone basis; and for an arrangement that includes a general right of return relative to the delivered products or services, delivery or performance of the undelivered product or service is considered probable and is substantially controlled by the Company. We allocate the arrangement consideration to each element based on the selling price hierarchy of VSOE of fair value, if it exists, or third-party evidence (TPE) of selling price. If neither VSOE nor TPE are available, we use estimated selling price. After the arrangement consideration has been allocated to the elements, we account for each respective element in the arrangement as described below. For certain arrangements, revenue for software, implementation services and, in certain cases, support services for which VSOE of fair value cannot be established are accounted for as a single unit of accounting. If VSOE of fair value cannot be established for both the implementation services and the support services, the entire arrangement fee is recognized ratably over the period during which the implementation services are expected to be performed or the support period, whichever is longer, beginning with delivery of the software, provided that all other revenue recognition criteria are met. The revenue recognized from single units of accounting are typically allocated and classified as system sales and support, maintenance and services. In cases where VSOE cannot be established, revenue is classified based on contract value. Revenue Recognition Policies for Each Element We provide implementation and consulting services. These services vary depending on the scope and complexity of the engagement. Examples of such services may include database consulting, system configuration, project management, testing assistance, network consulting, post conversion review and application management services. Except for limited arrangements where our software requires significant modifications or customization, implementation and consulting services generally are not deemed to be essential to the functionality of the software and, thus, do not impact the timing of the software license recognition. However, if software license fees are tied to implementation milestones, then the portion of the software license fee tied to implementation milestones is deferred until the related milestone is accomplished and related fees become due and payable and non-forfeitable. Implementation fees, for which VSOE of fair value can be determined, are recognized over the service period, which may extend from nine months to several years for multi-phased projects. Remote hosting and managed services are marketed under long-term arrangements generally over periods of five to 10 years. These services are typically provided to clients that have acquired a perpetual license for licensed software and have contracted with us to host the software in our data center. Under these arrangements, the client generally has the contractual right to take possession of the licensed software at any time during the hosting period without significant penalty and it is feasible for the client to either run the software on its own equipment or contract with another party unrelated to us to host the software. Additionally, these services are not deemed to be essential to the functionality of the licensed software or other elements of the arrangement. As such, in situations for which we have VSOE of fair value for the undelivered items, we allocate the residual portion of the arrangement fee to the software and recognize it once the client has the ability to take possession of the software. The remaining fees in these arrangements, as well as the fees for arrangements where the client does not have the contractual right or the ability to take possession of the software at any time or for situations in which VSOE of fair value does not exist for undelivered elements, are generally recognized ratably over the hosting service period. We also offer our solutions on a software as a service model, providing time-based licenses for our software solutions available within an environment that we manage from our data centers. The data centers provide system and administrative support as well as processing services. Revenue on these services is combined and recognized on a monthly basis over the term of the contract. We capitalize related pre-contract direct set-up costs consisting of third party costs and direct software installation and implementation costs associated with the initial set up of a software as a service client. These costs are amortized over the term of the arrangement. Software support fees are marketed under annual and multi-year arrangements and are recognized as revenue ratably over the contractual support term. Hardware and sublicensed software maintenance revenues are recognized ratably over the contractual maintenance term. Subscription and content fees are generally marketed under annual and multi-year agreements and are recognized ratably over the contractual terms. Hardware and sublicensed software sales are generally recognized when title and risk of loss have transferred to the client. The sale of equipment under sales-type leases is recorded as system sales revenue at the inception of the lease. Sales-type leases also produce financing income, which is included in system sales revenue and is recognized at consistent rates of return over the lease term. Where we have contractually agreed to develop new or customized software code for a client, we utilize percentage-of-completion accounting, labor-hours method. Revenue generally is recognized net of any taxes collected from clients and subsequently remitted to governmental authorities. Payment Arrangements Our payment arrangements with clients typically include an initial payment due upon contract signing and date-based licensed software payment terms and payments based upon delivery for services, hardware and sublicensed software. Revenue recognition on support payments received in advance of the services being performed are deferred and classified as either current or long term deferred revenue depending on whether the revenue will be earned within one year. We have periodically provided long-term financing options to creditworthy clients through third party financing institutions and have directly provided extended payment terms to clients from contract date. These extended payment term arrangements typically provide for date based payments over periods ranging from 12 months up to seven years. As a significant portion of the fee is due beyond one year, we have analyzed our history with these types of arrangements and have concluded that we have a standard business practice of using extended payment term arrangements and a long history of successfully collecting under the original payment terms for arrangements with similar clients, product offerings, and economics without granting concessions. Accordingly, in these situations, we consider the fee to be fixed and determinable in these extended payment term arrangements and, thus, the timing of revenue is not impacted by the existence of extended payments. Some of these payment streams have been assigned on a non-recourse basis to third party financing institutions. We account for the assignment of these receivables as sales of financial assets. Provided all revenue recognition criteria have been met, we recognize revenue for these arrangements under our normal revenue recognition criteria, and if appropriate, net of any payment discounts from financing transactions. |
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Cash Equivalents | Cash Equivalents - Cash equivalents consist of short-term marketable securities with original maturities less than 90 days. |
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Investments | Investments – Our short-term investments are primarily invested in time deposits, commercial paper, government and corporate bonds, with maturities of less than one year. Our long-term investments are primarily invested in government and corporate bonds with maturities of less than two years. All of our investments, other than a small portion accounted for under the cost and equity methods, are classified as available-for-sale. Available-for-sale securities are recorded at fair value with the unrealized gains and losses reflected in accumulated other comprehensive loss until realized. Realized gains and losses from the sale of available-for-sale securities, if any, are determined on a specific identification basis. We regularly review investment securities for impairment based on both quantitative and qualitative criteria that include the extent to which cost exceeds fair value, the duration of any market decline, and the financial health of and specific prospects for the issuer. Unrealized losses that are other than temporary are recognized in earnings. Premiums are amortized and discounts are accreted over the life of the security as adjustments to interest income for our investments. Interest income is recognized when earned. Refer to Note (3) and Note (4) for further description of these assets and their fair value. |
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Concentrations | Concentrations - The majority of our cash and cash equivalents are held at three major financial institutions. The majority of our cash equivalents consist of money market funds. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally these deposits may be redeemed upon demand. As of the end of 2015, we had a significant concentration of receivables owed to us by Fujitsu Services Limited, which are currently in dispute. Refer to Note (5) for additional information. |
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Inventory | Inventory - Inventory consists primarily of computer hardware and sublicensed software, held for resale. Inventory is recorded at the lower of cost (first-in, first-out) or net realizable value. |
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Property and Equipment | Property and Equipment - We account for property and equipment in accordance with ASC 360, Property, Plant, and Equipment. Property, equipment and leasehold improvements are stated at cost. Depreciation of property and equipment is computed using the straight-line method over periods of one to 50 years. Amortization of leasehold improvements is computed using a straight-line method over the shorter of the lease terms or the useful lives, which range from periods of one to 15 years. |
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Software Development Costs | Software Development Costs - Software development costs are accounted for in accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed. Software development costs incurred internally in creating computer software products are expensed until technological feasibility has been established upon completion of a detailed program design. Thereafter, all software development costs incurred through the software’s general release date are capitalized and subsequently reported at the lower of amortized cost or net realizable value. Capitalized costs are amortized based on current and expected future revenue for each software solution with minimum annual amortization equal to the straight-line amortization over the estimated economic life of the solution. We amortize capitalized software development costs over five years. |
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Goodwill | Goodwill - We account for goodwill under the provisions of ASC 350, Intangibles – Goodwill and Other. Goodwill is not amortized but is evaluated for impairment annually or whenever there is an impairment indicator. All goodwill is assigned to a reporting unit, where it is subject to an annual impairment assessment. Based on these evaluations, there was no impairment of goodwill in 2015, 2014 or 2013. Refer to Note (7) for more information on goodwill and other intangible assets. |
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Intangible Assets | Intangible Assets - We account for intangible assets in accordance with ASC 350, Intangibles – Goodwill and Other. Amortization of finite-lived intangible assets is computed using the straight-line method over periods of three to 30 years. |
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Income Taxes | Income Taxes - Income taxes are accounted for in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Refer to Note (12) for additional information regarding income taxes. |
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Earnings per Common Share | Earnings per Common Share - Basic earnings per share (EPS) excludes dilution and is computed, in accordance with ASC 260, Earnings Per Share, by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. Refer to Note (13) for additional details of our earnings per share computations. |
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Accounting for Share-based Payments | Accounting for Share-based Payments - We recognize all share-based payments to associates, directors and consultants, including grants of stock options, restricted stock and performance shares, in the financial statements as compensation cost based on their fair value on the date of grant, in accordance with ASC 718, Compensation-Stock Compensation. This compensation cost is recognized over the vesting period on a straight-line basis for the fair value of awards that actually vest. Refer to Note (14) for a detailed discussion of share-based payments. |
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Foreign Currency | Foreign Currency - In accordance with ASC 830, Foreign Currency Matters, assets and liabilities of non-U.S. subsidiaries whose functional currency is the local currency are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Revenues and expenses are translated at average exchange rates during the year. The net exchange differences resulting from these translations are reported in accumulated other comprehensive loss. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations. |
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Collaborative Arrangements | Collaborative Arrangements - In accordance with ASC 808, Collaborative Arrangements, third party costs incurred and revenues generated by arrangements involving joint operating activities of two or more parties that are each actively involved and exposed to risks and rewards of the activities are classified in the consolidated statements of operations on a gross basis only if we are determined to be the principal participant in the arrangement. Otherwise, third party revenues and costs generated by collaborative arrangements are presented on a net basis. Payments between participants are recorded and classified based on the nature of the payments. |
Receivables Trade and Other Accounts Receivable (Policies) |
12 Months Ended |
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Jan. 02, 2016 | |
Receivables [Abstract] | |
Trade and Other Accounts Receivable, Policy [Policy Text Block] | Receivables consist of accounts receivable and the current portion of amounts due under sales-type leases. Accounts receivable primarily represent recorded revenues that have been billed. Billings and other consideration received on contracts in excess of related revenues recognized are recorded as deferred revenue. Substantially all receivables are derived from sales and related support and maintenance and professional services of our clinical, administrative and financial information systems and solutions to health care providers. We perform ongoing credit evaluations of our clients and generally do not require collateral from our clients. We provide an allowance for estimated uncollectible accounts based on specific identification, historical experience and our judgment. |
Contingencies Details (Policies) |
12 Months Ended |
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Jan. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies, Policy [Policy Text Block] | We accrue estimates for resolution of any legal and other contingencies when losses are probable and estimable, in accordance with ASC 450, Contingencies. The terms of our software license agreements with our clients generally provide for a limited indemnification of such clients against losses, expenses and liabilities arising from third party claims based on alleged infringement by our solutions of an intellectual property right of such third party. The terms of such indemnification often limit the scope of and remedies for such indemnification obligations and generally include a right to replace or modify an infringing solution. To date, we have not had to reimburse any of our clients for any judgments or settlements to third parties related to these indemnification provisions pertaining to intellectual property infringement claims. For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement cases under the terms of the corresponding agreements with our clients, we cannot determine the maximum amount of potential future payments, if any, related to such indemnification provisions. In addition to commitments and obligations in the ordinary course of business, we are subject to various legal proceedings and claims, including for example, employment disputes and litigation alleging solution defects, personal injury, intellectual property infringement, violations of law and breaches of contract and warranties. Many of these proceedings are at preliminary stages and many seek an indeterminate amount of damages. No less than quarterly, we review the status of each significant matter and assess our potential financial exposure. We accrue a liability for an estimated loss if the potential loss from any legal proceeding or claim is considered probable and the amount can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether the amount of an exposure is reasonably estimable, and accruals are based only on the information available to our management at the time the judgment is made. Furthermore, the outcome of legal proceedings is inherently uncertain, and we may incur substantial defense costs and expenses defending any of these matters. Should any one or a combination of more than one of these proceedings be successful, or should we determine to settle any or a combination of these matters, we may be required to pay substantial sums, become subject to the entry of an injunction or be forced to change the manner in which we operate our business, which could have a material adverse impact on our business, results of operations or financial condition. |
Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies Supplemental Cash Flow Information (Table) |
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures [Table Text Block] | Supplemental Disclosures of Cash Flow Information
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Acquisitions Pro Formas (Table) |
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro Formas (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition, Pro Forma Information [Table Text Block] | The following table provides unaudited pro forma results of operations for the years ended January 2, 2016 and January 3, 2015, as if the acquisition had been completed on the first day of our 2014 fiscal year.
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Acquisitions Schedule of Recognized Identifiable Assets Acquired and Liabilities Assumed (Tables) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The preliminary allocation of purchase price is as follows:
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Investments Investments (Tables) |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of available-for-sale investments | Available-for-sale investments at the end of 2015 were as follows:
Available-for-sale investments at the end of 2014 were as follows:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table details our financial assets measured and recorded at fair value on a recurring basis at the end of 2015:
The following table details our financial assets measured and recorded at fair value on a recurring basis at the end of 2014:
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Receivables (Tables) |
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Receivables | A summary of net receivables is as follows:
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Schedule of Valuation and Qualifying Accounts Disclosure [Text Block] | A reconciliation of the beginning and ending amount of our allowance for doubtful accounts is as follows:
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Schedule of Sales-Type Leases | The components of our net investment in sales-type leases are as follows:
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Schedule of Future Minimum Lease Payments to be Received Under Existing Sales-Type Leases | Future minimum lease payments to be received under existing sales-type leases for the next five years are as follows:
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Property and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | A summary of property, equipment and leasehold improvements stated at cost, less accumulated depreciation and amortization, is as follows:
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Carrying Amounts of Goodwill | The changes in the carrying amounts of goodwill were as follows:
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Schedule of Finite-Lived Intangible Assets | A summary of net intangible assets is as follows:
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Schedule of Finite-Lived Intangible Asets, Future Amortization Expense | Estimated aggregate amortization expense for each of the next five years is as follows:
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Software Development Costs (Tables) |
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Research and Development [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Software Development Costs | Information regarding our software development costs is included in the following table:
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Indebtedness (Tables) |
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Indebtedness Outstanding | The following is a summary of indebtedness outstanding:
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Schedule of Minimum Annual Payments Under Capital Lease Obligation and Maturities of Indebtedness | Minimum annual payments under existing capital lease obligations and maturities of indebtedness outstanding at the end of 2015 are as follows:
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Other Income (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonoperating Income (Expense) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Nonoperating Income (Expense) [Table Text Block] | A summary of other income is as follows:
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Income Taxes Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) | Income tax expense (benefit) for 2015, 2014 and 2013 consists of the following:
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Schedule of Deferred Tax Assets and Liabilities | Temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities that give rise to significant portions of deferred income taxes at the end of 2015 and 2014 relate to the following:
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Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | The effective income tax rates for 2015, 2014, and 2013 were 31%, 32%, and 32%, respectively. These effective rates differ from the U.S. federal statutory rate of 35% as follows:
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Schedule of Unrecognized Tax Benefits Roll Forward [Table Text Block] | A reconciliation of the beginning and ending amount of unrecognized tax benefit is presented below:
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Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation Of The Numerators And The Denominators Of The Basic And Diluted Per Share | A reconciliation of the numerators and the denominators of the basic and diluted per share computations are as follows:
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Share-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The weighted-average assumptions used to estimate the fair market value of stock options were as follows:
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Schedule Of Stock Options Activity | Stock option activity for 2015 was as follows:
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Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value [Table Text Block] |
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Schedule Of Non-Vested Shares Activity | Non-vested share activity for 2015 was as follows:
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Compensation Expense Recognized In The Condensed Consolidated Statements Of Operations | The amounts recognized in the consolidated statements of operations with respect to stock options, non-vested shares and ASPP are as follows:
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Commitments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Aggregate Future Minimum Payments for Non-Cancelable Operating Leases | Aggregate minimum future payments under these non-cancelable operating leases are as follows:
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Schedule of Aggregate Future Payments for Purchase Commitments | Aggregate future payments under these commitments are as follows:
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Segment Reporting (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Operating Information | The following table presents a summary of our operating segments and other expense for 2015, 2014 and 2013:
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Quarterly Results (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information [Table Text Block] | Selected quarterly financial data for 2015 and 2014 is set forth below:
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Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies Investments Policy (Details) |
12 Months Ended |
---|---|
Jan. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Maximum Time Until Maturity of Short-term Available-for-Sale Investments | 1 year |
Maximum Time Until Maturity of Long-term Available-for-Sale Investments | 2 years |
Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies (Details) |
12 Months Ended |
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Jan. 02, 2016 | |
Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 1 year |
Finite-Lived Intangible Asset, Useful Life | 3 years |
Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 50 years |
Finite-Lived Intangible Asset, Useful Life | 30 years |
Software | |
Property, Plant and Equipment [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 5 years |
Leasehold improvements | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 1 year |
Leasehold improvements | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 15 years |
Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies Presentation (Details) $ in Millions |
12 Months Ended |
---|---|
Jan. 02, 2016
USD ($)
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Postemployment Benefits | Associates who elected to participate in the VSP receive financial benefits commensurate with their tenure and position, along with vacation payout and medical benefits. |
Postemployment Benefits, Period Expense | $ 46 |
Acquired Intangible Amortization [Member] | |
Statement Presentation [Line Items] | |
Reclassifications [Text Block] | Amortization of acquisition-related intangibles includes the amortization of customer relationships, acquired technology, trade names, and non-compete agreements recorded in connection with our business acquisitions. Historically, such amounts were included in general and administrative expense in our consolidated statements of operations. Effective for our second quarter of 2015, amortization of acquisition-related intangibles is presented on a separate line within our consolidated statements of operations. While this reporting change did not impact our consolidated results, prior period reclassifications have been made to conform to the current period presentation. |
Summary of Acquisition Transactions [Member] | |
Statement Presentation [Line Items] | |
Reclassifications [Text Block] | Historically, the fair value of tangible assets acquired and liabilities assumed in business acquisitions were presented on a net basis within our consolidated statements of cash flows. Effective for our first quarter of 2015, the fair value of tangible assets acquired and the fair value of liabilities assumed are presented separately. While this reporting change did not impact our consolidated results, prior period reclassifications have been made to conform to the current period presentation. |
ASU 2014-09 Revenue from Contracts with Customers [Member] | |
Statement Presentation [Line Items] | |
New Accounting Pronouncements, Policy [Policy Text Block] | In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP. The new standard is effective for the Company in the first quarter of 2018, with early adoption permitted in the first quarter of 2017. The standard permits the use of either the retrospective or cumulative effect transition method. At this time, we have not selected a transition method, nor have we determined if we will adopt early. We are currently evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. |
ASU 2015-03 Interest - Imputation of Interest [Member] | |
Statement Presentation [Line Items] | |
New Accounting Pronouncements, Policy [Policy Text Block] | In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the debt liability. ASU 2015-03 is effective for the Company in the first quarter of 2016, with early adoption permitted, and retrospective application required. The Company adopted the standard early, effective in the first quarter of 2015. The adoption of ASU 2015-03 did not have a material impact on our consolidated financial statements. Refer to Note (9) for further information regarding debt issuance costs. |
ASU 2015-02 Consolidation (Topic 810) [Member] | |
Statement Presentation [Line Items] | |
New Accounting Pronouncements, Policy [Policy Text Block] | In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which provides guidance when evaluating whether to consolidate certain legal entities. The updated guidance modifies evaluation criteria of limited partnerships and similar legal entities, eliminates the presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for the Company in the first quarter of 2016, with early adoption permitted. We do not expect the adoption of ASU 2015-02 to have a material impact on our consolidated financial statements and related disclosures. |
ASU 2015-16 Measurement-Period Adjustments [Member] | |
Statement Presentation [Line Items] | |
New Accounting Pronouncements, Policy [Policy Text Block] | In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. An acquirer now must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for the Company in the first quarter of 2016, with early adoption permitted. The Company adopted the standard early, effective in the third quarter of 2015. The adoption of ASU 2015-16 did not have a material impact on our consolidated financial statements. |
ASU 2015-17 Income Taxes [Member] | |
Statement Presentation [Line Items] | |
New Accounting Pronouncements, Policy [Policy Text Block] | In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires all deferred income tax assets and liabilities to be classified as noncurrent in our consolidated balance sheets. ASU 2015-17 is effective for the Company in the first quarter of 2017, with early adoption permitted, and either prospective or retrospective application accepted. The Company adopted the standard early, in the fourth quarter of 2015, and elected prospective application, which is reflected in our consolidated balance sheet for the year ended January 2, 2016. Prior periods have not been retrospectively adjusted. The adoption of ASU 2015-17 did not have a material impact on our consolidated financial statements. |
ASU 2016-01 Financial Instruments [Member] | |
Statement Presentation [Line Items] | |
New Accounting Pronouncements, Policy [Policy Text Block] | In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for the Company in the first quarter of 2018, with early adoption permitted. We are currently evaluating the effect that ASU 2016-01 will have on our consolidated financial statements and related disclosures. |
Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Supplemental Cash Flow Elements [Abstract] | |||
Interest Paid, Capitalized | $ 7,106 | $ 1,583 | $ 2,281 |
Interest Paid | 13,164 | 5,682 | 6,973 |
Income Taxes Paid, Net | $ 118,409 | $ 144,323 | $ 175,377 |
Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies Schedule of Intangible Assets (Details) |
12 Months Ended |
---|---|
Jan. 02, 2016 | |
Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 3 years |
Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 30 years |
Investments (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
|
Investments [Abstract] | ||
Cost method investments | $ 16 | $ 9 |
Equity Method Investments | 1 | 4 |
Proceeds from sale of available-for-sale securities | $ 293 | $ 698 |
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions |
Jan. 02, 2016 |
Jan. 03, 2015 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Fair value of long-term debt, including current maturities | $ 505 | $ 15 |
Carrying amount of long-term debt | $ 500 | $ 14 |
Receivables (Narrative) (Details) - USD ($) $ in Billions |
12 Months Ended | |
---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
|
Receivables [Abstract] | ||
Client cash collections | $ 4.4 | $ 3.5 |
Receivables (Summary Of Net Receivables) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Jan. 03, 2015 |
---|---|---|
Receivables [Abstract] | ||
Gross accounts receivable | $ 1,043,069 | $ 641,160 |
Less: Allowance for doubtful accounts | 48,119 | 25,531 |
Accounts receivable, net of allowance | 994,950 | 615,629 |
Current portion of lease receivables | 39,134 | 57,149 |
Total receivables, net | $ 1,034,084 | $ 672,778 |
Receivables (Schedule of Sales-Type Leases) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Jan. 03, 2015 |
---|---|---|
Receivables [Abstract] | ||
Minimum lease payments receivable | $ 101,968 | $ 125,906 |
Less: Unearned income | 5,593 | 6,089 |
Total lease receivables | 96,375 | 119,817 |
Less: Long-term receivables included in other assets | 57,241 | 62,668 |
Current portion of lease receivables | $ 39,134 | $ 57,149 |
Receivables (Future Minimum Lease Payments To Be Received Under Existing Sales-Type Leases) (Details) $ in Thousands |
Jan. 02, 2016
USD ($)
|
---|---|
Receivables [Abstract] | |
Next Year | $ 42,083 |
2 Years | 28,242 |
3 Years | 15,985 |
4 Years | 11,269 |
5 Years | $ 4,389 |
Receivables Schedule of Valuation and Qualifying Accounts (Details) - Allowance for Doubtful Accounts [Member] - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of period | $ 25,531 | $ 36,286 | $ 33,230 |
Additions charged to costs and expenses | 2,317 | 5,274 | 6,954 |
Additions through acquisitions | 34,159 | 0 | 489 |
Deductions | (13,888) | (16,029) | (4,387) |
Balance at end of period | $ 48,119 | $ 25,531 | $ 36,286 |
Property and Equipment (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Property, Plant and Equipment [Abstract] | |||
Depreciation and leasehold amortization expense | $ 217 | $ 163 | $ 136 |
Goodwill and Other Intangible Assets (Schedule of Changes in Carrying Amounts of Goodwill) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
|
Goodwill [Roll Forward] | ||
Beginning Balance | $ 320,538 | $ 307,422 |
Goodwill recorded in connection with business acquisitions | 485,387 | 16,757 |
Foreign currency translation adjustment and other | (6,743) | (3,641) |
Ending Balance | 799,182 | 320,538 |
Domestic Segment [Member] | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 311,170 | 294,413 |
Goodwill recorded in connection with business acquisitions | 419,667 | 16,757 |
Foreign currency translation adjustment and other | 0 | 0 |
Ending Balance | 730,837 | 311,170 |
Global Segment [Member] | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 9,368 | 13,009 |
Goodwill recorded in connection with business acquisitions | 65,720 | 0 |
Foreign currency translation adjustment and other | (6,743) | (3,641) |
Ending Balance | $ 68,345 | $ 9,368 |
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 116 | $ 36 | $ 33 |
Goodwill and Other Intangible Assets (Schedule of Estimated Aggregate Amortization Expense) (Details) $ in Thousands |
Jan. 02, 2016
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2016 | $ 121,473 |
2017 | 114,428 |
2018 | 100,109 |
2019 | 96,191 |
2020 | $ 53,452 |
Software Development Costs (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Research and Development [Abstract] | |||
Software development costs | $ 685,260 | $ 467,158 | $ 418,747 |
Capitalized software development costs | (264,656) | (177,800) | (174,649) |
Amortization of capitalized software development costs | 119,195 | 103,447 | 94,688 |
Total software development expense | 539,799 | 392,805 | $ 338,786 |
Accumulated capitalized computer software amortization | $ 1,000,000 | $ 891,000 |
Indebtedness (Schedule of Indebtedness Outstanding) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Jan. 03, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt and capital lease obligations | $ 605,866 | $ 130,328 |
Deferred Finance Costs, Noncurrent, Net | (716) | 0 |
Long-term Debt and Capital Lease Obligations, Net of Debt Issuance Costs | 605,150 | 130,328 |
Less: current portion | (41,797) | (67,460) |
Long-term debt and capital lease obligations | 563,353 | 62,868 |
Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total debt and capital lease obligations | 500,000 | 0 |
Note agreement, 5.54% | ||
Debt Instrument [Line Items] | ||
Total debt and capital lease obligations | 0 | 14,233 |
Capital lease obligations | ||
Debt Instrument [Line Items] | ||
Total debt and capital lease obligations | 92,416 | 116,095 |
Other [Member] | ||
Debt Instrument [Line Items] | ||
Total debt and capital lease obligations | $ 13,450 | $ 0 |
Contingencies (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 28, 2013
USD ($)
| |
Commitments and Contingencies Disclosure [Abstract] | |
Settlement charge | $ 106 |
Other Income (Schedule of Interest Income and Expense) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Nonoperating Income (Expense) [Abstract] | |||
Interest income | $ 11,990 | $ 16,342 | $ 15,314 |
Interest expense | (11,820) | (3,993) | (4,226) |
Other | 74 | (1,259) | 954 |
Other income, net | $ 244 | $ 11,090 | $ 12,042 |
Income Taxes (Schedule of Components of Income Tax Expense (Benefit)) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Current: | |||
Federal | $ 140,921 | $ 114,508 | $ 178,424 |
State | 18,647 | 13,504 | 25,148 |
Foreign | 17,205 | 13,824 | 8,775 |
Total current expense | 176,773 | 141,836 | 212,347 |
Deferred: | |||
Federal | 60,015 | 95,057 | (9,792) |
State | 5,680 | 8,873 | (7,116) |
Foreign | (450) | 2,975 | (5,739) |
Total deferred expense (benefit) | 65,245 | 106,905 | (22,647) |
Total income tax expense | $ 242,018 | $ 248,741 | $ 189,700 |
Income Taxes (Schedule of Deferred Tax Assets and Deferred Tax Liabilities) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
---|---|---|---|
Deferred tax assets: | |||
Accrued expenses | $ 27,555 | $ 25,398 | |
Tax credits and separate return net operating losses | 29,265 | 28,953 | |
Share based compensation | 69,555 | 58,271 | |
Other | 16,334 | 10,347 | |
Deferred Tax Assets, Gross | 142,709 | 122,969 | |
Deferred Tax Assets, Valuation Allowance | 0 | (776) | $ (1,000) |
Total deferred tax assets | 142,709 | 122,193 | |
Deferred tax liabilities: | |||
Software development costs | (216,435) | (163,938) | |
Depreciation and amortization | (133,242) | (129,684) | |
Prepaid expenses | (25,655) | (80) | |
Contract and service revenues and costs | (10,684) | (7,511) | |
Other | (3,589) | (3,545) | |
Total deferred tax liabilities | (389,605) | (304,758) | |
Net deferred tax liability | $ (246,896) | $ (182,565) |
Income Taxes (Schedule of Effective Income Tax Rate Reconciliation) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Tax expense at statutory rates | $ 273,483 | $ 270,961 | $ 205,819 |
State income tax, net of federal benefit | 16,129 | 19,301 | 17,425 |
Tax credits | (20,681) | (19,469) | (18,683) |
EffectiForeign rate differential | (14,821) | (13,057) | (480) |
Permanent differences | (14,314) | (12,253) | (14,760) |
Other, net | 2,222 | 3,258 | 379 |
Total income tax expense | $ 242,018 | $ 248,741 | $ 189,700 |
Income Taxes (Schedule of Unrecognized Tax Benefits Rollforward) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | $ 4,000 | ||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefit - beginning balance | 7,202 | $ 2,100 | $ 2,176 |
Gross decreases - tax positions in prior periods | (4,323) | (804) | (76) |
Gross increases - tax positions in prior periods | 690 | 5,906 | 0 |
Gross increases - tax positions in current year | 2,824 | 0 | 0 |
Settlements | (1,299) | 0 | 0 |
Currency translation | (216) | 0 | 0 |
Unrecognized tax benefit - ending balance | $ 4,878 | $ 7,202 | $ 2,100 |
Income Taxes Foreign Income (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Income Tax - Foreign Disclosure [Abstract] | |||
Income (Loss) from Continuing Operations before Income Taxes, Foreign | $ 83 | $ 68 | $ 5 |
Earnings Per Share (Reconciliation Of The Numerators And The Denominators Of The Basic And Diluted Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 02, 2016 |
Oct. 03, 2015 |
Jul. 04, 2015 |
Apr. 04, 2015 |
Jan. 03, 2015 |
Sep. 27, 2014 |
Jun. 28, 2014 |
Mar. 29, 2014 |
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Earnings Per Share [Abstract] | |||||||||||
Income available to common shareholders, basic | $ 539,362 | $ 525,433 | $ 398,354 | ||||||||
Income available to common shareholders including assumed conversions, diluted | $ 539,362 | $ 525,433 | $ 398,354 | ||||||||
Basic weighted average shares outstanding | 343,178 | 342,150 | 343,636 | ||||||||
Stock options and non-vested shares, incremental shares | 7,730 | 8,236 | 8,645 | ||||||||
Diluted weighted average shares outstanding | 350,908 | 350,386 | 352,281 | ||||||||
Basic earnings per share | $ 0.49 | $ 0.43 | $ 0.33 | $ 0.32 | $ 0.43 | $ 0.38 | $ 0.38 | $ 0.35 | $ 1.57 | $ 1.54 | $ 1.16 |
Diluted earnings per share | $ 0.48 | $ 0.42 | $ 0.33 | $ 0.32 | $ 0.42 | $ 0.37 | $ 0.37 | $ 0.34 | $ 1.54 | $ 1.50 | $ 1.13 |
Earnings Per Share (Narrative) (Details) - $ / shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Earnings Per Share [Abstract] | |||
Antidilutive securities excluded from computation of earnings per share, amount | 2.9 | 5.7 | 6.1 |
Antidilutive securities excluded from computation of earnings per share, exercise price, lower range limit | $ 50.04 | $ 44.05 | $ 36.92 |
Antidilutive securities excluded from computation of earnings per share, exercise price, upper range limit | $ 73.40 | $ 66.10 | $ 56.39 |
Share-Based Compensation (Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions) (Details) |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Expected volatility (%) | 27.60% | 29.70% | 30.50% |
Expected term (yrs) | 7 years | 9 years | 9 years |
Risk-free rate (%) | 1.80% | 2.90% | 1.90% |
Share-Based Compensation (Schedule of Weighted Average Grant Date Fair Values of Options Granted in Period and Other Disclosures) (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Weighted-average grant date fair value | $ 21.51 | $ 22.59 | $ 19.57 |
Total intrinsic value of options exercised | $ 196,127 | $ 124,828 | $ 118,051 |
Cash received from exercise of stock options | 51,475 | 31,879 | 31,403 |
Tax benefit realized upon exercise of stock options | $ 66,868 | $ 44,029 | $ 43,523 |
Foundations Retirement Plan (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
First Tier Discretionary Match [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Defined Contribution Plan, Cost Recognized | $ 30 | $ 18 | $ 15 |
Second Tier Discretionary Match [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Defined Contribution Plan, Cost Recognized | $ 7 | $ 5 | $ 14 |
Related Party Transactions Related Parties (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Jan. 02, 2016 |
Dec. 28, 2013 |
|
Related Party Transaction [Line Items] | ||
Estimated Incentives | $ 82 | |
Kansas Unified Development and OnGoal [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Description of Transaction | The stadium complex was developed by Kansas Unified Development, LLC (the “Developer”), an entity controlled by Neal Patterson, Chairman of the Board of Directors and Chief Executive Officer of the Company, and Clifford Illig, Vice Chairman of the Board of Directors of the Company. Sporting Kansas City (“Sporting KC”) is the principal tenant of the stadium complex. OnGoal LLC (“OnGoal”), the owner of the Sporting KC professional soccer club, is also controlled by Messrs. Patterson and Illig | |
Grand Construction [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Description of Transaction | GRAND Construction, LLC ("Grand") is a limited liability company owned in part by an entity controlled by Messrs. Patterson and Illig. Grand has historically provided construction management and related services to the Company in connection with our office campuses | |
Related Party Transaction, Amounts of Transaction | $ 2 | |
Related Party Transaction, Estimated Future Expense | 3 | |
Trails [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Description of Transaction | In December 2013, we purchased approximately 237 acres of land located in Kansas City, Missouri, from Trails Properties II, Inc. (“Trails”) | |
Related Party Transaction, Amounts of Transaction | $ 43 | |
Cash Grant [Member] | ||
Related Party Transaction [Line Items] | ||
Estimated Incentives | $ 48 | |
Remaining Incentive | 35 | |
Sales Tax Exemptions [Member] | ||
Related Party Transaction [Line Items] | ||
Estimated Incentives | $ 11 | |
State Income Tax Credits [Member] | ||
Related Party Transaction [Line Items] | ||
Estimated Incentives | 19 | |
Land Received [Member] | ||
Related Party Transaction [Line Items] | ||
Estimated Incentives | $ 4 | |
Success Payment [Member] | ||
Related Party Transaction [Line Items] | ||
Gain Contingency, Description | Under a separate agreement, the Developer and OnGoal have agreed to be responsible for certain shortfall payments that may become due. If no payment from Developer or OnGoal becomes due at the end of the 10-year period, the Developer or OnGoal will pay us a success fee of $4 million | |
Cash Grant [Member] | ||
Related Party Transaction [Line Items] | ||
Gain Contingency, Description | Should aggregate state payroll tax withholdings (related to associates at our Continuous Campus) over a 10-year period commencing in January 2014 be less than $49 million (the $48 million of cash we received plus amounts representing debt service costs incurred by the State of Kansas), we would be required to repay the shortfall. The $49 million maximum repayment amount will be adjusted up or down during the 10-year period, based on any future change to Kansas payroll tax withholding rates |
Commitments (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Other Commitments, Description | Concurrently with the execution of the MSPA, we entered into an agreement with Siemens AG to create a strategic alliance to jointly invest in innovative projects that integrate health information technology with medical technologies for the purpose of enhancing workflows and improving clinical outcomes. | ||
Other Commitment | $ 50 | ||
Rent expense for office and warehouse space | 32 | $ 25 | $ 20 |
Other Commitments, Amount Contributed | $ 1 |
Commitments (Schedule of Aggregate Future Minimum Payments for Non-Cancelable Operating Leases) (Details) $ in Thousands |
Jan. 02, 2016
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2016 | $ 26,436 |
2017 | 25,076 |
2018 | 20,290 |
2019 | 15,390 |
2020 | 9,757 |
2021 and thereafter | 15,875 |
Total | $ 112,824 |
Commitments (Schedule of Aggregate Future Payments for Purchase Commitments) (Details) $ in Thousands |
Jan. 02, 2016
USD ($)
|
---|---|
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract] | |
2016 | $ 77,610 |
2017 | 57,981 |
2018 | 24,454 |
2019 | 9,601 |
2020 | 3,927 |
2021 and thereafter | 6,000 |
Total | $ 179,573 |
Segment Reporting (Summary Of The Operating Information) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 02, 2016 |
Oct. 03, 2015 |
Jul. 04, 2015 |
Apr. 04, 2015 |
Jan. 03, 2015 |
Sep. 27, 2014 |
Jun. 28, 2014 |
Mar. 29, 2014 |
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Segment Reporting Information [Line Items] | |||||||||||
Revenue | $ 1,175,294 | $ 1,127,887 | $ 1,125,997 | $ 996,089 | $ 926,031 | $ 840,149 | $ 851,762 | $ 784,761 | $ 4,425,267 | $ 3,402,703 | $ 2,910,748 |
Cost of revenues | 750,781 | 604,377 | 514,722 | ||||||||
Operating expenses | 2,893,350 | 2,035,242 | 1,820,014 | ||||||||
Total costs and expenses | 3,644,131 | 2,639,619 | 2,334,736 | ||||||||
Operating earnings | 781,136 | 763,084 | 576,012 | ||||||||
Domestic Segment [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 3,904,454 | 3,021,790 | 2,550,115 | ||||||||
Cost of revenues | 651,826 | 542,210 | 458,540 | ||||||||
Operating expenses | 1,577,594 | 1,163,413 | 977,334 | ||||||||
Total costs and expenses | 2,229,420 | 1,705,623 | 1,435,874 | ||||||||
Operating earnings | 1,675,034 | 1,316,167 | 1,114,241 | ||||||||
Global Segment [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 520,813 | 380,913 | 360,633 | ||||||||
Cost of revenues | 98,955 | 62,167 | 56,182 | ||||||||
Operating expenses | 233,047 | 182,965 | 155,093 | ||||||||
Total costs and expenses | 332,002 | 245,132 | 211,275 | ||||||||
Operating earnings | 188,811 | 135,781 | 149,358 | ||||||||
Other | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Operating expenses | 1,082,709 | 688,864 | 687,587 | ||||||||
Total costs and expenses | 1,082,709 | 688,864 | 687,587 | ||||||||
Operating earnings | $ (1,082,709) | $ (688,864) | $ (687,587) |
Segment Reporting Segments (Details) |
12 Months Ended |
---|---|
Jan. 02, 2016 | |
Segment Reporting [Abstract] | |
Description of Effect on Previously Reported Segment Information for Change in Composition of Reportable Segments | In connection with our acquisition of the Cerner Health Services business, we commenced an evaluation of our methodology for allocating operating expenses to our reportable segments. Effective for our first quarter of 2015, certain expenses historically reported in "Other" have been allocated to the geographic segments. This new allocation reflects the manner in which the business is now managed, subsequent to the acquisition. While this reporting change did not impact our consolidated results, the segment data has been recast to be consistent for all periods presented. |
Quarterly Results (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 02, 2016 |
Oct. 03, 2015 |
Jul. 04, 2015 |
Apr. 04, 2015 |
Jan. 03, 2015 |
Sep. 27, 2014 |
Jun. 28, 2014 |
Mar. 29, 2014 |
Jan. 02, 2016 |
Jan. 03, 2015 |
Dec. 28, 2013 |
|
Selected Quarterly Financial Information [Line Items] | |||||||||||
Revenue | $ 1,175,294 | $ 1,127,887 | $ 1,125,997 | $ 996,089 | $ 926,031 | $ 840,149 | $ 851,762 | $ 784,761 | $ 4,425,267 | $ 3,402,703 | $ 2,910,748 |
Earnings before income taxes | 227,932 | 215,671 | 170,657 | 167,120 | 208,476 | 190,335 | 194,370 | 180,993 | 781,380 | 774,174 | 588,054 |
Net earnings | $ 166,108 | $ 147,282 | $ 115,038 | $ 110,934 | $ 147,872 | $ 129,002 | $ 129,033 | $ 119,526 | $ 539,362 | $ 525,433 | $ 398,354 |
Basic earnings per share | $ 0.49 | $ 0.43 | $ 0.33 | $ 0.32 | $ 0.43 | $ 0.38 | $ 0.38 | $ 0.35 | $ 1.57 | $ 1.54 | $ 1.16 |
Diluted earnings per share | $ 0.48 | $ 0.42 | $ 0.33 | $ 0.32 | $ 0.42 | $ 0.37 | $ 0.37 | $ 0.34 | $ 1.54 | $ 1.50 | $ 1.13 |
Acquisition-related Costs [Member] | |||||||||||
Selected Quarterly Financial Information [Line Items] | |||||||||||
Quarterly Financial Information, Quarterly Charges and Credits, Amount Affecting Comparability | $ 1,000 | $ 1,000 | $ 3,000 | $ 17,000 | $ 6,000 | $ 9,000 | |||||
Voluntary Separation Plan Costs [Member] | |||||||||||
Selected Quarterly Financial Information [Line Items] | |||||||||||
Quarterly Financial Information, Quarterly Charges and Credits, Amount Affecting Comparability | $ 1,000 | $ 3,000 | $ 42,000 |
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