11-K 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year end December 31, 1999 ------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from ________ to ________ Commission file number 0-15386 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Cerner Corporation Foundations Retirement Plan 2800 Rockcreek Parkway Kansas City, MO 64117 B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: CERNER CORPORATION FOUNDATIONS RETIREMENT PLAN Financial Statements and Schedule December 31, 1999 and 1998 (With Independent Auditors' Report Thereon) KPMG 1000 Walnut, Suite 1600 Kansas City, MO 64106 Independent Auditors' Report The Board of Directors Cerner Corporation: We have audited the accompanying statements of net assets available for participants of the Cerner Corporation Foundations Retirement Plan as of December 31, 1999 and 1998 and the related statements of changes in net assets available for participants for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for participants of the Cerner Corporation Foundations Retirement Plan as of December 31, 1999 and 1998 and the changes in net assets available for participants for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary schedules of assets held for investment purposes and reportable transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. KPMG LLP June 9, 2000 CERNER CORPORATION FOUNDATIONS RETIREMENT PLAN Statements of Net Assets Available for Participants December 31, 1999 and 1998
Assets 1999 1998 ----------- ----------- Investments at fair value (note 6) $ 72,226,973 61,202,054 Cash 39,806 2,662 Contributions receivable: Associates 502,178 369,547 Cerner Corporation 100,435 73,910 ----------- ----------- Net assets available for participants $ 72,869,392 61,648,173 =========== ===========
See accompanying notes to financial statements. 2 CERNER CORPORATION FOUNDATIONS RETIREMENT PLAN Statements of Changes in Net Assets Available for Participants Years ended December 31, 1999 and 1998
1999 1998 ------------ ------------ Additions to net assets attributed to: Net appreciation (depreciation) in fair value of investments $ (1,771,273) 9,415,697 Interest and dividends 3,156,056 3,251,403 Employer contributions (note 2) 1,218,959 1,026,321 Associates contributions (note 2) 12,325,312 10,791,357 ------------ ------------ Total additions 14,929,054 24,484,778 ------------ ------------ Deductions from net assets attributed to: Distributions to associates (note 3) (3,705,121) (3,854,255) Investment expenses (2,714) (2,260) ------------ ------------ Total deductions (3,707,835) (3,856,515) ------------ ------------ Net increase 11,221,219 20,628,263 Beginning of year balance 61,648,173 41,019,910 ------------ ------------ End of year balance $ 72,869,392 61,648,173 ============ ============
See accompanying notes to financial statements. 3 CERNER CORPORATION FOUNDATIONS RETIREMENT PLAN Notes to Financial Statements December 31, 1999 and 1998 (1) Summary of Significant Accounting Policies General The following brief description of the Cerner Corporation Foundations Retirement Plan (the Plan) is provided for general information purposes only. Participants should refer to the Plan Agreement for more complete information. The Plan was adopted by the Board of Directors of Cerner Corporation (the Company or Employer) effective November 1, 1987. The Plan is administered by a third-party administrator. All full-time associates of the Company are eligible for participation in the Plan after attaining age eighteen. Basis of Presentation The accompanying financial statements have been prepared on the accrual basis in conformity with generally accepted accounting principles and present the Plan's net assets available for participants and changes in those net assets. Expenses Substantially all costs and expenses incurred in administering the Plan are paid by the Company. Expenses related to issuance of loans to participants are charged to the participant obtaining the loan. Investments The Plan's investments and earnings thereon are held in a bank trust account. The fair values of investments are based principally on quotations from national securities exchanges. Purchases and sales of securities are recorded on a trade-date basis. Loans to Participants At the discretion of the Company, loans may be made to participants in an amount up to 50% of the participant's self- directed funds balance. The loan period may not exceed ten years and the interest rate is prime plus 1%. Use of Estimates The Plan utilizes a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 4 (Continued) CERNER CORPORATION FOUNDATIONS RETIREMENT PLAN Notes to Financial Statements December 31, 1999 and 1998 (2) Contributions Participating associates may elect to make pretax contributions from 1% to 15% of their compensation to the Plan, subject to annual limits imposed by the Internal Revenue Service. Participants may direct contributions into nine different investment funds. These funds include investments in the Company common stock, the American Century Ultra Fund, the American Century Growth Fund, the American Century Select Fund, the American Century Balanced Fund, the American Century Value Fund, the American Century International Growth Fund, the American Century Stable Asset Fund, and the Charles B. Schwab Personal Choice Account. The Company will make matching contributions in an amount equal to 20% of the participant's annual contribution, not to exceed the lesser of 2% of the participant's compensation or $600 per participant. All Company contributions are directed to Company common stock. On June 1, 1999, American Century merged all assets from the American Century Preservation Trust Fund into the American Century Stable Assets Fund. The investment objective and fees of the merged funds are identical. (3) Distributions Upon normal retirement, retirement for permanent disability, or death, a participant is entitled to the full value of the assets attributable to his or her contributions and Company contributions made on his or her behalf. Upon termination for any other reason, a participant is entitled to 100% of his or her contributions and the vested portion of Company contributions. Company contributions vest 20% after three years of service and 20% for each additional year of service until a participant is 100% vested upon completing seven years of service. Forfeitures of nonvested contributions are allocated to all Plan participants as of the Plan year-end on a pro rata basis according to individual participant annual earnings. Participants receive distributions of Company common stock in shares of the Company's common stock, except that cash is distributed for fractional shares. Participants may also elect to receive cash for distributions with a value less than $1,000. During the years ended December 31, 1999 and 1998, 46,925 and 79,572 shares of the Company's common stock, respectively, were distributed to withdrawing participants. Participants receive distributions from all other funds in cash. (4) Tax Status The Plan received a favorable determination letter, dated August 25, 1994, from the Internal Revenue Service confirming the tax-exempt status of the Plan under Section 401(a) of the Internal Revenue Code. The Company is not aware of any activity or transactions that may adversely affect the qualified status of the Plan. 5 (Continued) CERNER CORPORATION FOUNDATIONS RETIREMENT PLAN Notes to Financial Statements December 31, 1999 and 1998 (5) Plan Participants The following summarizes the number of participants by fund as of December 31:
1999 1998 ----- ----- Company common stock 2,746 2,348 American Century Mutual Funds: Ultra 1,837 1,553 Growth 1,543 1,298 Select 1,125 922 Balanced 639 584 Value 332 208 International Growth 363 198 Stable Asset 493 418 Charles B. Schwab Personal Choice Account 33 18 ===== =====
Because associates may invest in more than one fund, the number of associate participants above exceeds the total number of associate participants. (6) Investments In September 1999, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 99-3, Accounting for and Reporting of Certain Defined Contribution Plan Investments and Other Disclosure Matters. SOP 99-3 simplifies the disclosure for certain investments and is effective for plan years ending after December 15, 1999. The Plan adopted SOP 99-3 during the Plan year ended December 31, 1999. Accordingly, information previously required to be disclosed about participant-directed fund investment programs is not presented in the Plan's 1999 financial statements. The Plan's 1998 financial statements have been reclassified to conform to the current year presentation. The following presents investments that represent 5% or more of the Plan's net assets:
1999 1998 ------------ ------------ Company common stock $ 29,762,204 34,139,126 American Century: Ultra Fund 17,581,138 10,739,820 Growth Fund 11,431,439 7,102,584 Select Fund 6,349,799 4,354,084 Other 7,102,393 4,866,440 ------------ ------------ $ 72,226,973 61,202,054 ============ ============
6 (Continued) CERNER CORPORATION FOUNDATIONS RETIREMENT PLAN Notes to Financial Statements December 31, 1999 and 1998 During 1999 and 1998, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows:
1999 1998 ------------ ------------ Mutual funds $ 6,496,676 2,438,398 Common stock (8,267,949) 6,977,299 ------------ ------------ $ (1,771,273) 9,415,697 ============ ============
(7) Nonparticipant-directed Investment As described in note 2, Company contributions are invested exclusively in Company common stock. Information about the net assets and significant components of the changes in net assets relating to the nonparticipant-directed investment at December 31, 1999 and 1998 are as follows:
1999 1998 ------------ ------------ Net assets available for participants - Company common stock $ 30,043,055 34,327,903 ============ ============ Changes in net assets available for participants: Contributions $ 4,633,822 4,306,323 Dividends 2,219 2,458 Transfers in (out) 243,192 (88,582) Net appreciation (depreciation) (8,267,949) 6,977,299 Distributions (896,132) (2,092,624) ------------ ------------ $ (4,284,848) 9,104,874 ============ ============
(8) Subsequent Event The Plan was restated for the Plan year beginning January 1, 2000. The effect of the amendments were to increase the Employer matching contributions, provide for a discretionary Employer match, shorten the vesting schedule, and revise the loan policy. 7 (Continued) CERNER CORPORATION FOUNDATIONS RETIREMENT PLAN Notes to Financial Statements December 31, 1999 and 1998 (9) Transactions with Parties-in-interest Transactions with parties-in-interest during the years ended December 31, 1999 and 1998 were as follows:
Description of transaction Cost ------------------------------- ----------- 1999: Purchased 298,982 shares of Company common stock $ 5,102,832 =========== 1998: Purchased 197,531 shares of Company common stock $ 4,640,928 ===========
8 Schedule 1 CERNER CORPORATION FOUNDATIONS RETIREMENT PLAN Item 27(a) - Schedule of Assets Held for Investment Purposes December 31, 1999
Fair Asset Description Cost Value --------------------- ------------------------------------------------------- ------------- ---------- Cerner Corporation 1,511,731 shares of common stock $ 20,145,780 29,762,204 American Century Ultra Investors Mutual Fund, 384,035 shares (1) 17,581,138 American Century Growth Investors Mutual Fund, 354,134 shares (1) 11,431,439 American Century Select Investors Mutual Fund, 120,535 shares (1) 6,349,799 American Century Balanced Investors Mutual Fund, 161,385 shares (1) 2,779,047 American Century Value Mutual Fund, 110,046 shares (1) 604,152 American Century International Growth Mutual Fund, 45,840 shares (1) 686,231 American Century Stable Asset Fund, 1,957,116 units of participation (1) 1,957,116 Charles B. Schwab Schwab Personal Choice Account, 599,770 shares (1) 599,770 Loans to participants Loans to participants (bearing interest from 7% to 10%) (1) 476,077 ------------ $ 72,226,973 ============
(1) In accordance with instructions to the Form 5500, the Plan is no longer required to disclose the cost component of participant directed investments. See accompanying independent auditors' report 9 Schedule 2 CERNER CORPORATION FOUNDATIONS RETIREMENT PLAN Schedule of Reportable Transactions Year ended December 31, 1999
Identity of party Description Purchase Selling Original Net gain involved of asset price price cost (loss) ------------------ ------------ ---------- ------- --------- -------- Cerner Corporation Common stock $ 5,102,832 -- 5,102,832 -- ========== ======= ========== ========
NOTES: A reportable transaction is defined by the Department of Labor as: . A single transaction in excess of 5% of the fair value of Plan assets. . A series of transactions with or in conjunction with the same person, involving property other than securities, which amounts in the aggregate to more than 5% of the fair value of the Plan assets. . A series of transactions with respect to securities of the same issue which amounts in the aggregate to more than 5% of the fair value of the total Plan assets. . Any transaction with or in conjunction with a person if a prior or subsequent single transaction has occurred with respect to securities with or in conjunction with the same person in an amount in excess of 5% of the fair value of Plan assets. A reportable transaction is identified by comparing the fair value of the transaction at the transaction date with the fair value of the Plan assets at the beginning of the year ended December 31, 1999. See accompanying independent auditors' report. 10 Independent Auditors' Consent The Board of Directors Cerner Corporation: We consent to incorporation by reference in the registration statements (No. 33-56868, No. 33-55082, No. 33-41580, No. 33-39777, No. 33-39776, No. 33-20155, and No. 33-15156) on Form S-8 of Cerner Corporation of our report, dated June 9, 2000, relating to the statements of net assets available for participants of Cerner Corporation Foundations Retirement Plan as of December 31, 1999 and 1998, and the related statements of changes in net assets available for participants for the years then ended and the related supplemental schedules of assets held for investment purposes and reportable transactions, which report is included herein. KPMG LLP Kansas City, Missouri June 28, 2000 SIGNATURES The Plan, pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. FOUNDATIONS RETIREMENT PLAN Dated: 6/28/2000 By: \S\David M. Evans --------------------- -------------------------