8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) July 16, 2003

Cerner Corporation

(Exact name of Registrant as Specified in its Charter)

Delaware

(State or other jurisdiction of Incorporation)

0-15386	43-1196944
(Commission File Number)	(I.R.S. Employer Identification No.)

2800 Rockcreek Parkway, North Kansas City, Missouri	64117
(Address of principal executive offices)	(Zip Code)

(816) 221-1024

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

TABLE OF CONTENTS

EX-99.1 Press Release

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

The following exhibit is furnished herewith.

99.1    Press Release issued July 16, 2003.

Item 9.  Regulation FD Disclosure

Cerner Corporation is furnishing herewith as Exhibit 99.1, the Press Release issued by the Company on July 16, 2003, which announces the Company’s financial results for the three months and six months ended June 28, 2003. This Press Release is being furnished under this Item 9 in accordance with SEC Release No. 33-8216 dated March 27, 2003.

To supplement our consolidated financial statements presented in accordance with GAAP, the Company uses non-GAAP measures of operating results, net income and earnings per share, which are adjusted from results based on GAAP to exclude certain expense items. The Company also discloses certain non-GAAP financial measures, such as bookings revenue and revenue backlog. These non-GAAP measures are provided to enhance the user’s overall understanding of our financial performance. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance.

The information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, unless the registrant expressly states otherwise.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

			CERNER CORPORATION
Date: July 16, 2003	By:	/s/	Marc G. Naughton
			Marc G. Naughton, Senior Vice President,
			Treasurer and Chief Financial Officer

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EXHIBIT INDEX

Exhibit
Number	Description	Page
99.1	Press Release issued July 16, 2003, furnished pursuant to Item 9 of this Form 8-K.

3 EX-99.1 3 c78241exv99w1.htm EX-99.1 PRESS RELEASE

EXHIBIT 99.1

CONTACTS:

INVESTORS: Allan Kells, (816) 201-2445
akells@cerner.com

MEDIA: Donald Trigg, (816) 201-2730
dtrigg@cerner.com

CERNER’S INTERNET HOME PAGE:
http://www.cerner.com

CERNER REPORTS STRONG RESULTS FOR SECOND QUARTER OF 2003

Record New Business Bookings and Cash Flow Performance

KANSAS CITY, Mo. — July 16, 2003 — Cerner Corporation (NASDAQ:CERN) today announced results for the second quarter ended June 28, 2003. Diluted earnings per share were $0.25, compared to $0.39 in the year-ago quarter, which included a gain on the sale of WebMD shares that increased earnings per share by $0.07. Analysts’ consensus estimates for second quarter earnings per share were $0.23.

Second quarter revenues increased 11 percent to $207.7 million, including $8.7 million of revenue from reimbursed travel expense, compared to $186.8 million with $6.3 million of reimbursed travel in the year-ago quarter. Net earnings in the quarter were $8.9 million, compared with $14.7 million in the second quarter of 2002, which included $2.7 million (after $1.6 million in tax) from the gain on the sale of WebMD shares.

The Company generated operating cash flow of $36.6 million in the second quarter driven by strong cash collections and a record number of Cerner Millennium™ implementations.

Other Second Quarter Highlights:

• New business bookings revenue of $201.2 million, up 13 percent compared to $177.9 million in the year-ago quarter. This is a record for second quarter new business bookings and only $1.1 million lower than Cerner’s all-time record bookings of $202.3 million set in the fourth quarter of 2002.

• Cash collections of $214.6 million, driving strong operating cash flow of $36.6 million.

• Days Sales Outstanding (DSOs) in the second quarter were 112 days, which is 10 days lower than a year ago and 3 days lower than the first quarter of 2003. DSOs calculated using revenue before reimbursed travel were 117 days.

• Total revenue backlog of $1.08 billion, up 18 percent over the year-ago quarter. This is comprised of $788.1 million of contract backlog and $290.4 million of support and maintenance backlog.

• A record 302 Cerner Millennium applications were implemented during the quarter. This is 76% higher than the previous record level of 172 conversions in the first quarter of 2003. There are now over 2,200 Cerner Millennium applications live at nearly 500 client sites worldwide.

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“We are very pleased with our strong level of new business bookings, an indication that Cerner remains the top choice in health care information technology,” said Neal Patterson, Cerner’s co-founder, Chairman and Chief Executive Officer. “We are also very pleased with our continued ability to deliver strong levels of cash flow, with this quarter marking our third consecutive quarter of strong cash flow performance.”

“We still participate in a very competitive environment, and health care providers continue to face challenging economics,” added Patterson. “However, we believe there is significant demand by health care providers for advanced health care information technology solutions and that Cerner remains well positioned to benefit from this demand by delivering our industry-leading solutions.”

Future Period Guidance

Cerner expects earnings per share in the third quarter of 2003 to be between $0.31 to $0.33 and full-year 2003 to be between $1.13 and $1.18. Previous 2003 guidance was $1.10 to $1.15 per share. The Company expects 2003 revenue to be approximately $845 to $865 million, including approximately $30 million of revenue from reimbursed travel expense. In the third quarter, Cerner expects revenue to be approximately $210 to $215 million, including approximately $7 million of revenue from reimbursed travel expense. The Company expects bookings revenue in the third quarter to be approximately $190 to $200 million.

The Company is not providing specific 2004 earnings guidance at this time, but indicated that the current analyst consensus for earnings per share in 2004 of $1.49, which reflects annual growth of 25 to 30 percent, is reasonable.

Earnings Conference Call

Cerner will host an earnings conference call to provide additional detail at 3:30 p.m. CT on July 16, 2003. The dial-in number for the call is 617-786-2962 and the replay number is 617-801-6888 (Pass code: 63333038). The call will also be Web cast and available both live and archived on Cerner’s Web site at www.cerner.com in the Investors’ section under News and Events. Please access the site fifteen minutes early to register and to download and install any necessary audio software. For those who cannot listen to the live broadcast, replays will be made available shortly after the call and will run for two weeks. A copy of the script used during the call will also be available at www.cerner.com in the Investors’ section under News and Events.

Cerner Corporation is taking the paper chart out of health care, eliminating error, variance and unnecessary waste in the care process. With more than 1500 clients worldwide, Cerner is the leading supplier of health care information technology. The following are trademarks of Cerner: Cerner, Cerner’s logo and Cerner Millennium. Nasdaq: CERN, www.cerner.com

This release may contain forward-looking statements that involve a number of risks and uncertainties. It is important to note that the Company’s performance, financial condition or business could differ materially from those expressed in such forward-looking statements. The words “believe”, “estimates”, “expects”, “guidance”, and similar expressions are intended to identify such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: quarterly operating results may vary, stock price may be volatile, market risk of investments, potential impairment of goodwill, changes in the health care industry, significant competition, the Company’s proprietary technology may be subjected to infringement claims or may be infringed upon, regulation of the Company’s software by the U.S. Food and Drug Administration or other government regulation, the possibility of product-related liabilities, possible system errors or failures or defects in the performance of the Company’s software, and risks associated with the Company’s global operations. Additional discussion of these and other factors affecting the Company’s business is contained in the Company’s periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time.

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Cerner Corporation

CONSOLIDATED BALANCE SHEETS

(In thousands)			June 28,			December 28,
			2003			2002
Assets
Cash and cash equivalents			$	121,038			142,543
Receivables				255,635			272,668
Inventory				8,551			9,041
Prepaid expenses and other				25,961			23,434
		Total current assets		411,185			447,686
Property and equipment, net				155,367			134,283
Software development costs, net				128,644			117,327
Goodwill, net				47,146			45,938
Intangible assets, net				20,508			23,155
Investments, net				1,096			964
Other assets				9,370			9,926
Total assets			$	773,316			779,279
Liabilities
Accounts payable			$	32,361			46,822
Current installments of long-term debt				12,008			12,202
Deferred revenue				54,623			45,055
Income taxes				5,690			4,691
Accrued payroll and tax withholdings				39,723			47,262
Other accrued expenses				11,523			9,519
		Total current liabilities		155,928			165,551
Long-term debt, net				123,901			136,636
Deferred income taxes				39,882			35,848
		Total liabilities		319,711			338,035
Stockholders’ Equity
Common stock				368			367
Additional paid-in capital				228,033			226,912
Retained earnings				251,108			236,572
Treasury stock, at cost (1,502,999 and 1,202,999 shares in 2003 and 2002, respectively)				(26,793	)		(20,863	)
Accumulated other comprehensive income:
	Foreign currency translation adjustment			851			(1,668	)
	Unrealized gain (loss) on available-for-sale equity security (net of deferred tax liability of $22 in 2003 and deferred tax asset of $23 in 2002)			38			(76	)
		Total stockholders’ equity		453,605			441,244
Total liabilities and equity			$	773,316			779,279

Cerner Corporation

CONSOLIDATED STATEMENTS OF EARNINGS

			Three Months						Three Months
			Ended			YTD			Ended			YTD
(In thousands, except per share data)			June 28, 2003			June 28, 2003			June 29, 2002			June 29, 2002
Revenue
	System sales		$	82,742			161,336			75,291			154,535
	Support, maintenance and services			116,240			229,172			105,282			201,318
	Reimbursed travel (Note 1)			8,713			15,378			6,251			12,393
		Total revenue		207,695			405,886			186,824			368,246
Margin
	System sales			51,188			101,577			49,922			99,497
	Support, maintenance and services			103,411			202,961			91,657			176,918
		Total margin		154,599			304,538			141,579			276,415
Operating expenses
	Sales and client service			86,646			174,737			76,837			151,255
	Software development			38,457			75,915			31,569			61,262
	General and administrative			13,149			26,291			12,300			24,342
		Total operating expenses		138,252			276,943			120,706			236,859
		Operating earnings		16,347			27,595			20,873			39,556
	Interest income			191			600			240			591
	Interest expense			(1,794	)		(4,049	)		(1,613	)		(3,487	)
	Other income			127			143			20			31
	Gain on sale of investment			—			—			4,308			4,308
		Non-operating income (expense), net		(1,476	)		(3,306	)		2,955			1,443
Earnings before income taxes and cumulative effect of a change in accounting principle				14,871			24,289			23,828			40,999
Income taxes				(5,928	)		(9,753	)		(9,136	)		(15,903	)
Earnings before cumulative effect of a change in accounting principle				8,943			14,536			14,692			25,096
Cumulative effect of a change in accounting for goodwill, net of $486 income tax benefit				—			—			—			786
Net earnings			$	8,943			14,536			14,692			24,310
Basic earnings per share:
Earnings before cumulative effect of a change in accounting principle			$	0.25			0.41			0.41			0.73
Cumulative effect of a change in accounting for goodwill				—			—			—			(0.02	)
Net earnings			$	0.25			0.41			0.41			0.71
Basic weighted average shares outstanding				35,395			35,476			35,442			34,410
Diluted earnings per share
Earnings before cumulative effect of a change in accounting principle			$	0.25			0.40			0.39			0.67
Cumulative effect of a change in accounting for goodwill				—			—			—			(0.02	)
Net earnings			$	0.25			0.40			0.39			0.65
Diluted weighted average shares outstanding				35,731			36,215			37,478			37,360

Note (1): The Company incurs out-of-pocket expenses in connection with its client service activities, which are reimbursed by its clients. In accordance with EITF 01-14, these amounts have been reclassified from other income to revenue with a corresponding amount in cost of goods sold. This has no impact on the dollar amount of gross margin, operating margin, or net earnings, but does slightly change the percent of revenue each of these items represents.

Cerner Corporation

NON-GAAP

CONSOLIDATED STATEMENTS OF EARNINGS (1)

			Three Months						Three Months
			Ended			YTD			Ended			YTD
(In thousands, except per share data)			June 28, 2003			June 28, 2003			June 29, 2002			June 29, 2002
Revenue
	System sales		$	82,742			161,336			75,291			154,535
	Support, maintenance and services			116,240			229,172			105,282			201,318
	Reimbursed travel			8,713			15,378			6,251			12,393
		Total revenue		207,695			405,886			186,824			368,246
Margin
	System sales			51,188			101,577			49,922			99,497
	Support, maintenance and services			103,411			202,961			91,657			176,918
		Total margin		154,599			304,538			141,579			276,415
Operating expenses
	Sales and client service			86,646			174,737			76,837			151,255
	Software development			38,457			75,915			31,569			61,262
	General and administrative			13,149			26,291			12,300			24,342
		Total operating expenses		138,252			276,943			120,706			236,859
		Operating earnings		16,347			27,595			20,873			39,556
	Interest income			191			600			240			591
	Interest expense			(1,794	)		(4,049	)		(1,613	)		(3,487	)
	Other income			127			143			20			31
		Non-operating expense, net		(1,476	)		(3,306	)		(1,353	)		(2,865	)
Earnings before income taxes				14,871			24,289			19,520			36,691
Income taxes				(5,928	)		(9,753	)		(7,564	)		(14,331	)
Net earnings			$	8,943			14,536			11,956			22,360
Basic earnings per share			$	0.25			0.41			0.34			0.65
Basic weighted average shares outstanding				35,395			35,476			35,442			34,410
Diluted earnings per share			$	0.25			0.40			0.32			0.60
Diluted weighted average shares outstanding				35,731			36,215			37,478			37,360
Note (1): The non-GAAP statements exclude a special gain on the sale of shares of WebMD common stock and a charge on the impairment of goodwill.

RECONCILIATION OF NON-GAAP

TO GAAP CONSOLIDATED STATEMENTS OF EARNINGS

	Three Months				Three Months
	Ended		YTD		Ended			YTD
(In thousands, except per share data)	June 28, 2003		June 28, 2003		June 29, 2002			June 29, 2002
Non-GAAP net income	$	8,943		14,536		11,956			22,360
Gain on sale of WebMD		—		—		4,308			4,308
Charge on the impairment of goodwill		—		—		—			(1,272	)
Income tax effect		—		—		(1,572	)		(1,086	)
GAAP net income	$	8,943		14,536		14,692			24,310
Basic earnings per share	$	0.25		0.41		0.41			0.71
Basic weighted average shares outstanding		35,395		35,476		35,442			34,410
Diluted earnings per share	$	0.25		0.40		0.39			0.65
Diluted weighted average shares outstanding		35,731		36,215		37,478			37,360

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EX-99.1

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