EX-99.1 2 c17013exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
Investors Contact: Allan Kells, (816) 201-2445, akells@cerner.com
Media Contact: Jennifer Bosshardt, (816) 201-0048, jennifer.bosshardt@cerner.com
Cerner’s Internet Home Page: www.cerner.com
Cerner Delivers Strong Bookings, Revenue and Earnings Growth
KANSAS CITY, Mo. — July 24, 2007 — Cerner Corp. (NASDAQ: CERN) today announced results for the 2007 second quarter that ended June 30, delivering strong new business bookings, revenue and earnings growth.
Bookings in the second quarter 2007 were $486.8 million, an increase of 56 percent over the year-ago quarter. Second quarter 2007 bookings included a $97.8 million booking related to Cerner’s participation in the London and Southern regions of the National Health Service (NHS) initiative to automate clinical processes and digitize medical records in England. Excluding this booking, Cerner’s bookings were $389.0 million, which is 25 percent higher than the second quarter of 2006. Second quarter 2007 revenue increased 17 percent to $386.6 million compared to $330.6 million in the year-ago quarter.
On a Generally Accepted Accounting Principles (GAAP) basis, second quarter 2007 net earnings were $31.1 million, and diluted earnings per share were $0.37. Second quarter 2006 GAAP net earnings were $23.9 million and diluted earnings per share were $0.29. Adjusted second quarter 2007 net earnings were $33.8 million, which is 25 percent higher than the $27.0 million of adjusted net earnings in the second quarter of 2006. Adjusted diluted earnings per share were $0.41 in the second quarter of 2007 compared to $0.33 in the second quarter of 2006. Analysts’ consensus estimate for second quarter 2007 adjusted diluted earnings per share was $0.41.

 

 

Adjusted second quarter 2007 and 2006 net earnings and diluted earnings per share exclude the impact of adopting Statement of Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment, which requires the expensing of stock options. The adoption of SFAS 123R reduced second quarter 2007 net earnings and diluted earnings per share by $2.7 million and $0.04, respectively, and reduced second quarter 2006 net earnings and diluted earnings per share by $3.1 million and $0.04, respectively.
Included in second quarter earnings is an adjustment to increase a valuation allowance related to new information about the realization of Cerner’s foreign net operating losses, adjustments related to uncertain tax positions under FIN 48 and certain out-of-period tax adjustments related to foreign net operating losses. The net impact of these adjustments increased tax expense by approximately $2 million.
Other Second Quarter Highlights:
  •   Cash collections of $437.6 million and operating cash flow of $63 million.
 
  •   Days sales outstanding of 86 days compared to 91 days in the year-ago quarter.
 
  •   Total revenue backlog of $3.00 billion, up 32 percent over the year-ago quarter. This is comprised of $2.49 billion of contract backlog and $513 million of support and maintenance backlog.
 
  •   349 Cerner MillenniumÒ solution implementations were completed. Cerner has now turned on more than 6,700 Cerner Millennium solutions at more than 1,100 client facilities worldwide.
“We are pleased with our strong results in the second quarter,” said Neal Patterson, Cerner co-founder, chairman and chief executive officer. “Our good execution led to record bookings, as well as strong revenue and earnings growth.
“In addition to our strong financial performance, I am pleased with our progress at advancing several strategic initiatives. Consistently delivering strong results while steadily advancing our future growth engines is a hallmark of Cerner, and this quarter was no exception.”

 

 

Future Period Guidance
The company expects revenue in the third quarter of 2007 to be approximately $385 million to $395 million. For the year 2007, Cerner expects revenue between $1.55 billion and $1.57 billion, or 14 to 15 percent over 2006.
Cerner expects adjusted diluted earnings per share before stock options expense in the third quarter to be between $0.44 and $0.45. The company expects SFAS No. 123R share-based compensation expense to reduce diluted earnings per share in the third quarter by approximately $0.04, leading to expected diluted earnings per share between $0.40 and $0.41.
For the full year 2007, Cerner expects adjusted diluted earnings per share before stock options expense to grow in the mid-twenty percent range. This expectation is consistent with earnings per share before options expense in the range of $1.72 to $1.73, with the high end of the range reflecting a $0.01 increase from where consensus was the last time the company provided guidance. The company expects SFAS No. 123R share-based compensation expense to reduce diluted earnings per share for 2007 by approximately $0.14 to $0.15.
Cerner expects new business bookings in the third quarter of 2007 to be between $365 million and $380 million.
Earnings Conference Call
Cerner will host an earnings conference call to provide additional detail on second quarter results at 3:30 p.m. CT on July 24. The dial-in number for the conference call is (617) 213-8058; the passcode is Cerner. The company recommends accessing the call 15 minutes early for registration. The rebroadcast of the call will be available from 5:30 p.m. CT, July 24 through 11:59 p.m. CT, July 27. The dial-in number for the rebroadcast is (617) 801-6888; the passcode is 48918578.
An audio webcast will be available both live and archived on Cerner’s Web site at www.cerner.com under the About Cerner section (click Investors, then Presentations and

 

 

Webcasts). A copy of the script used during the call will also be available at the same section of www.cerner.com.
About Cerner
Cerner Corp. is taking the paper chart out of healthcare, eliminating error, variance and waste in the care process. With more than 6,000 clients worldwide, Cerner is the leading supplier of healthcare information technology. The following are trademarks of Cerner: Cerner, Cerner Millennium and Cerner’s logo. (NASDAQ: CERN), www.cerner.com
This release contains forward-looking statements that involve a number of risks and uncertainties. It is important to note that the Company’s performance, and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. The words “guidance” and “expects” or variations thereof or similar expressions are intended to identify such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the possibility of product-related liabilities; potential claims for system errors and warranties; the possibility of interruption at our data centers or client support facilities; our proprietary technology may be subjected to infringement claims or may be infringed upon; risks associated with our global operations; our potential failure to effectively hedge against foreign currency exchange rate fluctuations; risks associated with the recruitment and retention of key personnel; risks related to third party suppliers; risks inherent with business acquisitions; changing political, economic and regulatory influences; government regulation; significant competition and market changes; variations in the our quarterly operating results; and, potential inconsistencies in our sales forecasts compared to actual sales. Additional discussion of these and other factors affecting the Company’s business is contained in the Company’s periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time.

 

 

CERNER CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
                                         
    Three Months                 Three Months            
    Ended       YTD       Ended       YTD    
(In thousands, except per share data)   June 30, 2007 (1)       June 30, 2007 (1)       July 1, 2006 (2)       July 1, 2006 (2)    
 
                                        
Revenue
                                        
System sales
   $ 130,097         252,966         114,364         231,214    
Support, maintenance and services
     246,210         480,100         206,217         401,803    
Reimbursed travel
     10,281         19,374         9,991         18,780    
 
                                
 
                                        
Total revenue
     386,588         752,440         330,572         651,797    
 
                                        
Margin
                                        
System sales
     74,569         150,438         73,441         144,127    
Support, maintenance and services
     231,057         448,577         192,939         375,459    
 
                                
 
                                        
Total margin
     305,626         599,015         266,380         519,586    
 
                                
 
                                        
Operating expenses
                                        
Sales and client service
     165,844         323,002         141,877         281,401    
Software development
     62,873         128,696         60,888         119,904    
General and administrative
     27,887         54,342         23,702         46,373    
 
                                
 
                                        
Total operating expenses
     256,604         506,040         226,467         447,678    
 
                                
 
                                        
Operating earnings
     49,022         92,975         39,913         71,908    
 
                                        
Interest income
     3,361         6,490         2,592         5,181    
Interest expense
     (2,937 )       (5,945 )       (3,070 )       (6,352 )  
Other income
     (415 )       (738 )       (67 )       2,058    
 
                                
 
                                        
Non-operating expense, net
     9         (193 )       (545 )       887    
 
                                        
Earnings before income taxes
     49,031         92,782         39,368         72,795    
Income taxes
     (17,916 )       (34,087 )       (15,495 )       (28,778 )  
 
                                
 
                                        
Net earnings
   $ 31,115         58,695         23,873         44,017    
 
                                
 
                                        
Basic earnings per share
   $ 0.39         0.74         0.31         0.57    
 
                                
 
                                        
Basic weighted average shares outstanding
     79,223         78,967         77,524         77,340    
 
                                        
Diluted earnings per share
   $ 0.37         0.71         0.29         0.54    
 
                                
 
                                        
Diluted weighted average shares outstanding
     83,092         82,879         81,413         81,411    
     
Note 1:
  Operating expenses for the three and six months ended June 30, 2007 include share-based compensation expense. The impact of this expense for the quarter is a $2.7 million decrease, net of $1.7 million tax benefit, in net earnings and a decrease to diluted earnings per share of $.04. The allocation of share-based compensation expense for the quarter is $2.6 million to Sales and client service, $.8 million to Software development and $1.0 million to General and administrative. The impact of this expense for the six month period is a $5.1 million decrease, net of $3.1 million tax benefit, in net earnings and a decrease to diluted earnings per share of $.06. The allocation of share-based compensation expense for the six month period is $5.0 million to Sales and client service, $1.5 million to Software development and $1.7 million to General and administrative.
 
    
Note 2:
  Operating expenses for the three and six months ended July 1, 2006 include share-based compensation expense. The impact of this expense for the quarter is a $3.1 million decrease, net of $1.9 million tax benefit, in net earnings and a decrease to diluted earnings per share of $.04. The allocation of share-based compensation expense for the quarter is $3 million to Sales and client service, $1.1 million to Software development and $.9 million to General and administrative. The impact of this expense for the six month period is a $6.1 million decrease, net of $3.7 million tax benefit, in net earnings and a decrease to diluted earnings per share of $.08. The allocation of share-based compensation expense for the six month period is $6 million to Sales and client service, $2.2 million to Software development and $1.7 million to General and administrative.

 

 

CERNER CORPORATION
CONSOLIDATED BALANCE SHEETS
                 
(In thousands)   June 30,     December 30,  
    2007     2006  
Assets
                
 
                
Cash and cash equivalents
   $ 158,278       162,545  
Short-term investments
     123,574       146,239  
Receivables, net
     364,656       361,424  
Inventory
     12,443       18,084  
Prepaid expenses and other
     57,202       55,272  
Deferred income taxes
     2,282       2,423  
 
            
 
                
Total current assets
     718,435       745,987  
 
                
Property and equipment, net
     443,265       357,942  
Software development costs, net
     193,558       187,788  
Goodwill, net
     143,055       128,819  
Intangible assets, net
     55,152       54,428  
Other assets
     17,397       16,426  
 
            
 
                
Total assets
   $ 1,570,862       1,491,390  
 
            
 
                
Liabilities
                
 
                
Accounts payable
   $ 78,757       79,735  
Current installments of long-term debt
     14,422       20,242  
Deferred revenue
     98,555       93,699  
Accrued payroll and tax withholdings
     72,470       77,914  
Other accrued expenses
     4,227       29,741  
 
            
 
                
Total current liabilities
     268,431       301,331  
 
            
 
                
Long-term debt
     183,974       187,391  
Deferred income taxes
     75,255       68,693  
Deferred revenue
     16,878       14,557  
 
            
 
                
Total liabilities
     544,538       571,972  
 
            
 
                
Minority owners’ equity interest in subsidiary
     1,286       1,286  
 
                
Stockholders’ Equity
                
 
                
Common stock
     794       784  
Additional paid-in capital
     422,127       376,595  
Retained earnings
     598,848       540,153  
Foreign currency translation adjustment
     3,269       600  
 
            
 
                
Total stockholders’ equity
     1,025,038       918,132  
 
                
Total liabilities and equity
   $ 1,570,862       1,491,390