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Cerner Reports Fourth Quarter 2012 Results



Cerner Reports Fourth Quarter 2012 Results

Strong Bookings, Revenue, Earnings and Cash Flow

KANSAS CITY, Mo., Feb. 5, 2013 (GLOBE NEWSWIRE) -- Cerner Corporation
(Nasdaq:CERN) today announced results for the 2012 fourth quarter and full
year that ended December 29, 2012, delivering strong levels of bookings,
revenue, earnings and cash flow.

Bookings in the fourth quarter of 2012 were $1.02 billion, an all-time high
and an increase of 13 percent compared to fourth quarter 2011 bookings of
$899.0 million. Full year 2012 bookings were a record $3.14 billion, up 15
percent compared to 2011 bookings of $2.72 billion.

Fourth quarter revenue was a record $710.4 million, an increase of 15 percent
compared to $615.6 million in the year-ago period. Full year 2012 revenue was
$2.67 billion, up 21 percent compared to 2011 revenue of $2.20 billion.

On a U.S. Generally Accepted Accounting Principles (GAAP) basis, fourth
quarter 2012 net earnings were $111.8 million and diluted earnings per share
were $0.63. Fourth quarter 2011 GAAP net earnings were $91.2 million and
diluted earnings per share were $0.52. For the full year, 2012 GAAP net
earnings were $397.2 million and diluted earnings per share were $2.26. Full
year 2011 GAAP net earnings were $306.6 million and diluted earnings per share
were $1.76.

Adjusted (non-GAAP) Net Earnings

Adjusted net earnings for fourth quarter 2012 were $118.2 million, an increase
of 23 percent compared to $96.2 million of adjusted net earnings in the fourth
quarter of 2011. Adjusted diluted earnings per share were $0.67 in the fourth
quarter of 2012 compared to $0.55 of adjusted diluted earnings per share in
the year-ago quarter. Analysts' consensus estimate for fourth quarter 2012
adjusted diluted earnings per share was $0.64. For the full year 2012,
adjusted net earnings were $420.8 million and adjusted diluted earnings per
share were $2.39, compared to full year 2011 adjusted net earnings of $324.9
million and adjusted diluted earnings per share of $1.87.

Adjusted net earnings is not a recognized term under GAAP and should not be
substituted for net earnings as a measure of Cerner's performance but instead
should be utilized as a supplemental measure of financial performance in
evaluating our business. Following is a description of adjustments made to net
earnings. For more detail, please see the accompanying schedule, titled
"Reconciliation of GAAP Results to Non-GAAP Results."

Adjusted net earnings and diluted earnings per share exclude share-based
compensation expense, which reduced fourth quarter 2012 net earnings and
diluted earnings per share by $6.4 million and $0.04, respectively; and
reduced fourth quarter 2011 net earnings and diluted earnings per share by
$5.0 million and $0.03, respectively. Share based compensation expense reduced
full year 2012 net earnings and diluted earnings per share by $23.5 million
and $0.13, respectively, and reduced full year 2011 net earnings and diluted
earnings per share by $18.2 million and $0.11, respectively.

Other 2012 Fourth Quarter and Full Year Highlights:

  * Fourth quarter cash collections of $689.8 million and operating cash flow
    of $180.6 million. For the full year, cash collections were $2.71 billion
    and operating cash flow was $708.3 million.
  * Fourth quarter free cash flow of $99.4 million. For the full year, free
    cash flow was a record $424.7 million, up 18 percent from $358.6 million
    in 2011. Free cash flow is a non-GAAP financial measure defined as GAAP
    cash flows from operating activities less capital purchases and
    capitalized software development costs. For more detail, please see the
    accompanying schedule, titled "Reconciliation of GAAP Results to Non-GAAP
    Results."
  * Fourth quarter days sales outstanding of 74 days, which is down from 83
    days in the year-ago quarter.
  * Total backlog of $7.27 billion, up 19 percent over the year-ago quarter.
    This was comprised of $6.53 billion of contract backlog and $738.2 million
    of support and maintenance backlog.

"2012 was great year for Cerner. We delivered outstanding bookings, revenue,
earnings and cash flow growth, with this growth coming from expanding
relationships with existing clients and record levels of bookings from new
clients," Neal Patterson, Cerner chairman, CEO, president and co-founder said.
"I was also very pleased with our innovation, as we significantly advanced our
cloud-based physician solutions and population health capabilities. In 2013,
we plan to build on this success and continue to invest heavily in research
and development to increase our competitive advantages and position us for
strong growth throughout this decade."

Future Period Guidance

Cerner currently expects:

  * First quarter 2013 revenue between $690 million and $715 million.
  * Full year 2013 revenue between $2.95 billion and $3.05 billion.
  * First quarter 2013 adjusted diluted earnings per share before share based
    compensation expense between $0.61 and $0.63.
  * Full year 2013 adjusted diluted earnings per share before share based
    compensation expense between $2.75 and $2.82.
  * First quarter 2013 new business bookings between $720 million and $760
    million.
  * Share based compensation expense to reduce diluted earnings per share by
    approximately $0.04 in the first quarter of 2013 and between $0.16 and
    $0.17 for the year.

Earnings Conference Call

Cerner will host an earnings conference call to provide additional detail on
these results at 3:30 p.m. CT on February 5. The dial-in number for the
conference call is (617) 597-5311; the passcode is Cerner. Cerner recommends
joining the call 15 minutes early for registration. The re-broadcast of the
call will be available from 5:30 p.m. CT, February 5 through 11:59 p.m. CT,
February 8. The dial-in number for the re-broadcast is (617)-801-6888; the
passcode is 92987383.

An audio webcast will be available live and archived on Cerner's website at
www.cerner.com under the About Cerner section (click Investor Relations, then
Presentations and Webcasts).

About Cerner

Cerner is contributing to the systemic change of health and care delivery. For
more than 30 years Cerner has been executing its vision to make health care
safer and more efficient. We started with the foundation of digitizing paper
processes and now offer the most comprehensive array of information software,
professional services, medical device integration, remote hosting and employer
health and wellness services. Cerner systems are used by everyone from
individual consumers, to single-doctor practices, hospitals, employers and
entire countries. Taking what we've learned over more than three decades,
Cerner is building on the knowledge that is in the system to support
evidence-based clinical decisions, prevent medical errors and empower patients
in their care.

Cerner^® solutions are licensed by approximately 10,000 facilities around the
world, including more than 2,700 hospitals; 4,150 physician practices; 45,000
physicians; 550 ambulatory facilities, such as laboratories, ambulatory
centers, behavioral health centers, cardiac facilities, radiology clinics and
surgery centers; 800 home health facilities; 45 employer sites and 1,750
retail pharmacies.

Certain trademarks, service marks and logos (collectively, the "Marks") set
forth herein are owned by Cerner Corporation and/or its subsidiaries in the
United States and certain other countries throughout the world. All other
non-Cerner Marks are the property of their respective owners. Nasdaq:CERN. For
more information about Cerner, please visit www.cerner.com,  Twitter, Facebook
and YouTube.

This release contains forward-looking statements that involve a number of
risks and uncertainties. It is important to note that Cerner's performance,
and actual results, financial condition or business could differ materially
from those expressed in such forward-looking statements. The words "plan",
guidance", "expects" or the negative of these words, variations thereof or
similar expressions are intended to identify such forward-looking statements.
Factors that could cause or contribute to such differences include, but are
not limited to: the possibility of product-related liabilities; potential
claims for system errors and warranties; the possibility of interruption at
our data centers or client support facilities; our proprietary technology may
be subject to claims for infringement or misappropriation of intellectual
property rights of others, or may be infringed or misappropriated by others;
risks associated with our non-U.S. operations; risks associated with our
ability to effectively hedge exposure to fluctuations in foreign currency
exchange rates; the potential for tax legislation initiatives that could
adversely affect our tax position and/or challenges to our tax positions in
the United States and non-U.S. countries; risks associated with our
recruitment and retention of key personnel; risks related to our dependence on
third party suppliers; risks inherent with business acquisitions; the
potential for losses resulting from asset impairment charges; risks associated
with uncertainty in global economic conditions; changing political, economic,
regulatory and judicial influences; government regulation; significant
competition and market changes; variations in our quarterly operating results;
potential inconsistencies in our sales forecasts compared to actual sales;
volatility in the trading price of our common stock and the timing and volume
of market activity; our directors' authority to issue preferred stock and the
anti-takeover provisions in our corporate governance documents; and material
adverse resolution of legal proceedings. Additional discussion of these and
other risks, uncertainties and factors affecting Cerner's business is
contained in Cerner's periodic filings with the Securities and Exchange
Commission. The reader should not place undue reliance on forward-looking
statements, since the statements speak only as of the date that they are made.
Cerner 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 AND                                             
SUBSIDIARIES
CONDENSED CONSOLIDATED                                             
STATEMENTS OF OPERATIONS
For the three and twelve months ended
December 29, 2012 and December 31,                                 
2011
(unaudited)                                                        
                                                                   
(In thousands, except    Three Months Ended          Years Ended
per share data)
                         2012 (1)      2011 (1)      2012 (1)     2011 (1)
Revenues                                                           
System sales              $ 251,759     $ 220,492     $ 902,799    $ 706,714
Support, maintenance and  445,098       383,956       1,707,329    1,451,747
services
Reimbursed travel         13,527        11,178        55,308       44,692
Total revenues            710,384       615,626       2,665,436    2,203,153
                                                                   
Margin                                                             
System sales              142,496       128,185       475,343      410,153
Support, maintenance and  414,777       355,395       1,581,896    1,351,328
services
Total margin              557,273       483,580       2,057,239    1,761,481
                                                                   
Operating expenses                                                 
Sales and client service  274,550       238,224       1,020,640    869,962
Software development      78,624        73,323        301,370      286,801
General and               43,655        34,299        163,567      144,920
administrative
Total operating expenses  396,829       345,846       1,485,577    1,301,683
                                                                   
Operating earnings        160,444       137,734       571,662      459,798
                                                                   
Other income, net         7,257         2,230         16,046       9,896
                                                                   
Earnings before income    167,701       139,964       587,708      469,694
taxes
Income taxes              (55,893)      (48,772)      (190,476)    (163,067)
Net earnings              $ 111,808     $ 91,192      $ 397,232    $ 306,627
                                                                   
Basic earnings per share  $ 0.65        $ 0.54        $ 2.32       $ 1.82
                                                                   
Basic weighted average    171,744       169,472       170,931      168,634
shares outstanding
                                                                   
Diluted earnings per      $ 0.63        $ 0.52        $ 2.26       $ 1.76
share
                                                                   
Diluted weighted average  176,180       174,488       175,697      173,867
shares outstanding
                                                                   
Note 1: Operating expenses for the three and twelve months ended December 29,
2012 and December 31, 2011 include share-based compensation expense. The
impact of this expense on net earnings and diluted earnings per share is
presented below:
                                                                   
(In thousands, except    Three Months Ended          Years Ended
per share data)
                         2012          2011          2012         2011
                                                                   
Sales and client service  $ 5,100       $ 3,923       $ 17,316     $ 13,313
Software development      2,322         1,950         9,217        8,372
General and               2,922         2,162         11,579       7,794
administrative
Total share-based         10,344        8,035         38,112       29,479
compensation
Amount of related income  (3,957)       (3,074)       (14,578)     (11,256)
tax benefit
Net impact on net         $ 6,387       $ 4,961       $ 23,534     $ 18,223
earnings
                                                                   
Decrease to diluted       $ 0.04        $ 0.03        $ 0.13       $ 0.11
earnings per share
                                                                   

                                                                  
CERNER CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS^1
For the three and twelve months ended December 29, 2012 and December 31, 2011
(unaudited)
                                                                  
RECONCILIATION OF ADJUSTED NET EARNINGS TO GAAP NET EARNINGS^1
                                                                  
(In thousands)         Three Months Ended          Years Ended
                       2012          2011          2012          2011
Net Earnings                                                      
Net earnings (GAAP)     $ 111,808     $ 91,192      $ 397,232     $ 306,627
Share-based             10,344        8,035         38,112        29,479
compensation expense
Income tax benefit of
share-based             (3,957)       (3,074)       (14,578)      (11,256)
compensation
Adjusted net earnings   $ 118,195     $ 96,153      $ 420,766     $ 324,850
(non-GAAP)^2
                                                                  
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE TO GAAP DILUTED EARNINGS
PER SHARE^1
                                                                  
                       Three Months Ended          Years Ended
                       2012          2011          2012          2011
Diluted Earnings Per                                              
Share
Diluted earnings per    $ 0.63        $ 0.52        $ 2.26        $ 1.76
share (GAAP)
Share-based
compensation expense    0.04          0.03          0.13          0.11
(net of tax)
Adjusted diluted
earnings per share      $ 0.67        $ 0.55        $ 2.39        $ 1.87
(non-GAAP)^2
                                                                  
RECONCILIATION OF NON-GAAP FREE CASH FLOW TO GAAP OPERATING CASH FLOW^1
                                                                  
(In thousands)         Three Months Ended          Years Ended
                       2012          2011          2012          2011
Cash flows from
operating activities    $ 180,554     $ 168,489     $ 708,314     $ 546,294
(GAAP)
Capital purchases       (53,463)      (29,193)      (183,429)     (104,795)
Capitalized software    (27,683)      (21,115)      (100,189)     (82,942)
development costs
Free cash flow          $ 99,408      $ 118,181     $ 424,696     $ 358,557
(non-GAAP)^3
                                                                  
Note 1: The presentation of Adjusted Diluted Earnings per Share, Adjusted Net
Earnings and Free Cash Flow, non-GAAP financial measures, are not meant to be
considered in isolation, nor as a substitute for, or superior to, Generally
Accepted Accounting Principles (GAAP) results and investors should be aware
that non-GAAP measures have inherent limitations and should be read only in
conjunction with Cerner's consolidated financial statements prepared in
accordance with GAAP. Adjusted Diluted Earnings per Share, Adjusted Net
Earnings and Free Cash Flow may also be different from similar non-GAAP
financial measures used by other companies and may not be comparable to
similarly titled captions of other companies due to potential inconsistencies
in the method of calculations. We believe that Adjusted Diluted Earnings per
Share, Adjusted Net Earnings and Free Cash Flow are important to enable
investors to better understand and evaluate our ongoing operating results and
allows for more comprehensive review and understanding of our overall
financial, operational and economic performance.
                                                                  
Note 2: Cerner provides earnings with and without share-based compensation
expense because earnings excluding this expense is used by management along
with GAAP results to analyze its business, make strategic decisions and for
management compensation purposes.
                                                                  
Note 3: Cerner provides free cash flow because it takes into account the
capital expenditures necessary to operate our business.
                                                                  

                                                                   
CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 29, 2012 (unaudited) and December 31, 2011
                                                      
(In thousands)                                       2012         2011
                                                                   
Assets                                                             
Current assets:                                                    
Cash and cash equivalents                             $ 317,120    $ 243,146
Short-term investments                                719,665      531,635
Receivables, net                                      577,848      563,209
Inventory                                             23,681       23,296
Prepaid expenses and other                            113,572      94,232
Deferred income taxes, net                            38,620       46,795
Total current assets                                  1,790,506    1,502,313
                                                                   
Property and equipment, net                           569,708      488,996
Software development costs, net                       267,307      248,750
Goodwill                                              247,616      211,826
Intangible assets, net                                132,045      75,366
Long-term investments                                 509,467      359,324
Other assets                                          187,819      113,783
Total assets                                          $ 3,704,468  $ 3,000,358
                                                                   
Liabilities and Shareholders' Equity                               
Current liabilities:                                               
Accounts payable                                      $ 141,212    $ 85,545
Current installments of long-term debt and capital    59,582       39,722
lease obligations
Deferred revenue                                      189,652      153,139
Accrued payroll and tax withholdings                  125,253      109,227
Other accrued expenses                                64,413       51,087
Total current liabilities                             580,112      438,720
                                                                   
Long-term debt and capital lease obligations          136,557      86,821
Deferred income taxes and other liabilities           143,212      150,229
Deferred revenue                                      10,937       13,787
Total liabilities                                     870,818      689,557
                                                                   
Shareholders' Equity:                                              
Common stock                                          1,721        1,696
Additional paid-in capital                            842,490      723,490
Retained earnings                                     1,994,694    1,597,462
Accumulated other comprehensive loss, net             (5,255)      (11,967)
Total Cerner Corporation shareholders' equity         2,833,650    2,310,681
Noncontrolling interest                               --           120
Total shareholders' equity                            2,833,650    2,310,801
Total liabilities and shareholders' equity            $ 3,704,468  $ 3,000,358
                                                                   

CONTACT: Investor Contact:
         Allan Kells
         (816) 201-2445
         akells@cerner.com
         Media Contact: Megan Moriarty
         (816) 888-2470
         megan.moriarty@cerner.com

         Cerner's Internet Home Page: www.cerner.com
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