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Table of Contents

Table of Contents

Table of Contents

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

Cerner Corporation is furnishing herewith as Exhibit 99.1, the Press Release issued by the Company on February 4, 2004, which announces the Company’s financial results for the three months and twelve months ended January 3, 2004. 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 booking 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.

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 DELIVERS RECORD NEW BUSINESS BOOKINGS, STRONG CASH FLOW
Expects to Be Free Cash Flow Positive in 2004

KANSAS CITY, Mo. — February 4, 2004 — Cerner Corporation (NASDAQ:CERN) today announced results for the 2003 fourth quarter ended January 3, 2004. Diluted earnings per share were $0.44, compared to $0.27 in the fourth quarter of 2002. The fourth quarter of 2002 included a gain on the sale of WebMD stock and an impairment charge on various investments that, in aggregate, decreased EPS by $0.16. Analysts’ consensus estimates for fourth quarter earnings per share were $0.43.

Fourth quarter revenues increased 6 percent to $227.4 million compared to $215.0 million in the year-ago quarter. Net earnings in the quarter were $16.2 million, compared to $9.9 million in the fourth quarter of 2002. The aforementioned stock gain and impairment charges together reduced fourth quarter of 2002 net earnings by $5.8 million.

The Company generated operating cash flow of $41.8 million in the fourth quarter driven by strong cash collections and a significant number of Cerner Millennium™ implementations. For the year, operating cash flow totaled $133.6 million.

•

New business bookings revenue of $255.0 million, up 26 percent compared to $202.3 million in the year-ago quarter. This is an all-time record for new business bookings.

•

Record Cash collections of $250.1 million, driving strong operating cash flow of $41.8 million.

•

Operating margins of 12.7 percent, an increase of 220 basis points compared to the third quarter of 2003.

•

Days Sales Outstanding (DSOs) of 103 days, which is 9 days lower than the third quarter of 2003 and 13 days lower than a year ago.

•

Total revenue backlog of $1.25 billion, up 25 percent over the year-ago quarter. This is comprised of $938.2 million of contract backlog and $312.9 million of support and maintenance backlog.

•

204 Cerner Millennium applications were implemented during the quarter, bringing the total for the year to 884. Cerner has now turned on more than 2,600 Cerner Millennium applications at over 550 client sites worldwide.

“We are extremely pleased with our results in the fourth quarter,” said Neal Patterson, Cerner’s co-founder, Chairman and Chief Executive Officer. “Our results reflect our continued ability to generate strong levels of new business bookings and our focus on expanding operating margins and strengthening cash flow performance.”

“We continued to expand our leadership position in the competitive healthcare information technology market,” added Patterson. “Demand for healthcare information technology remains robust, and we believe we are well positioned to benefit from this demand because of our broad range of proven solutions.”

Cerner expects earnings per share in the first quarter of 2004 to be between $0.30 and $0.32. The Company expects revenue in the first quarter to be approximately $215 million to $220 million. Cerner expects bookings revenue in the first quarter to be between $180 million and $200 million.

For 2004, the Company believes that analysts’ earnings per share estimates between $1.60 and $1.65 are reasonable, which is up from previous guidance of $1.55 to $1.60. Cerner expects revenue for 2004 to be between $920 million and $940 million, which is $10 million higher than the Company’s previous guidance range.

The Company also provided cash flow guidance for 2004, indicating that it expects to generate between $120 million and $140 million of operating cash flow. Based on these estimates, the Company expects to generate positive free cash flow, defined as operating cash flow less capital expenditures and capitalized software, in 2004.

Cerner will host an earnings conference call to provide additional detail at 3:30 p.m. CT on February 4, 2004. The dial-in number for the call is 617-786-2961 and the replay number is (617) 801-6888 (Pass code: 37491884). 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”, “guidance”, “expects”, “estimates” 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.


									Notes (1)(2)			Notes (1)(2)(3)(4)
			Three Months						Three Months
			Ended			YTD			Ended			YTD
(In thousands, except per share data)			January 3, 2004			2003			December 28, 2002			2002

Revenue
	System sales		$	90,820			332,349			92,873			332,274
	Support, maintenance and services			128,849			476,795			112,795			419,578
	Reimbursed travel			7,740			30,443			9,359			28,410

		Total revenue		227,409			839,587			215,027			780,262
Margin
	System sales			65,372			221,093			61,108			220,907
	Support, maintenance and services			114,530			424,204			99,029			368,805

		Total margin		179,902			645,297			160,137			589,712

Operating expenses
	Sales and client service			93,197			352,728			85,844			319,265
	Software development			41,066			156,236			34,508			129,620
	General and administrative			16,862			58,236			12,449			50,007

		Total operating expenses		151,125			567,200			132,801			498,892

		Operating earnings		28,777			78,097			27,336			90,820
	Interest income			325			1,219			115			1,080
	Interest expense			(2,190	)		(8,236	)		(1,529	)		(6,635	)
	Other income			(25	)		142			23			87
	Gain on sale of investments			—			—			869			5,177
	Impairment of investments			—			—			(9,904	)		(9,904	)

		Non-operating expense, net		(1,890	)		(6,875	)		(10,426	)		(10,195	)
Earnings before income taxes and cumulative effect of a change in accounting principle				26,887			71,222			16,910			80,625
Income taxes				(10,679	)		(28,431	)		(6,966	)		(31,817	)

Earnings before cumulative effect of a change in accounting principle				16,208			42,791			9,944			48,808
Cumulative effect of a change in accounting for goodwill, net of $486 income tax benefit				—			—			—			786

Net earnings			$	16,208			42,791			9,944			48,022

Basic earnings per share:
Earnings before cumulative effect of a change in accounting principle			$	0.46			1.21			0.28			1.38
Cumulative effect of a change in accounting for goodwill				—			—			—			(0.02	)

Net earnings			$	0.46			1.21			0.28			1.36

Basic weighted average shares outstanding				35,494			35,355			35,519			35,458
Diluted earnings per share:
Earnings before cumulative effect of a change in accounting principle			$	0.44			1.18			0.27			1.32
Cumulative effect of a change in accounting for goodwill				—			—			—			(0.02	)

Net earnings			$	0.44			1.18			0.27			1.30

Diluted weighted average shares outstanding				36,935			36,356			36,606			37,050

Note (1):

Includes a gain on the sale of shares of WebMD common stock. The impact of this gain is a $.5 million (net of tax) increase in net earnings and an increase to EPS of $.01 for the three months ended December 28, 2002 and the year.

Note (2):

Includes a charge on the impairment of investments. The impact of this charge is a $6.3 million (net of tax) decrease in net earnings and a decrease to EPS of $.17 for the three months ended December 28, 2002 and the year.

Note (3):

Includes a gain on the sale of shares of WebMD common stock. The impact of this gain is a $2.9 million (net of tax) increase in net earnings and an increase to EPS of $.08 for the year.

Note (4):

Includes a non-recurring charge on the impairment of goodwill. The impact of this charge is a $786 (net of tax) decrease in net earnings and a decrease to EPS of $.02 for the year.


			January 3,			December 28,
(In thousands)			2004			2002

Assets
Cash and cash equivalents			$	121,839			142,543
Receivables				256,574			272,668
Inventory				12,434			9,041
Prepaid expenses and other				22,546			23,434

		Total current assets		413,393			447,686
Property and equipment, net				204,953			134,283
Software development costs, net				141,090			117,327
Goodwill, net				51,573			45,938
Intangible assets, net				24,036			23,155
Investments, net				692			964
Other assets				8,017			9,926

Total assets			$	843,754			779,279

Liabilities
Accounts payable			$	20,753			46,822
Current installments of long-term debt				21,162			12,202
Deferred revenue				64,879			45,055
Income taxes				—			4,691
Accrued payroll and tax withholdings				45,004			47,262
Other accrued expenses				10,095			9,519

		Total current liabilities		161,893			165,551

Long-term debt, net				124,570			136,636
Deferred income taxes				59,500			35,848
Deferred revenue				1,945			—

		Total liabilities		347,908			338,035

Minority owners’ equity interest in subsidiary				1,166			—
Stockholders’ Equity
Common stock				371			367
Additional paid-in capital				236,969			226,912
Retained earnings				279,363			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			4,770			(1,668	)
	Unrealized loss on available-for-sale equity security (net of deferred tax asset of $23 in 2002)			—			(76	)

		Total stockholders’ equity		494,680			441,244
Total liabilities and equity			$	843,754			779,279


2800 Rockcreek Parkway, North Kansas City, Missouri		64117

Address of principal executive offices)		(Zip Code)


	Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
	Item 9. Regulation FD Disclosure
SIGNATURES
EXHIBIT INDEX
Press Release


		CERNER CORPORATION

Date: February 4, 2004	By: /s/	Marc G. Naughton Marc G. Naughton, Senior Vice President, Treasurer and Chief Financial Officer

Exhibit

Number

Description

Press Release issued February 4, 2004, furnished pursuant to Item 9 of this Form 8-K.


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