Segment Reporting

6 Months Ended

Jul. 04, 2015

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We have two operating segments, Domestic and Global. Revenues are derived primarily from the sale of clinical, financial and administrative information systems and solutions. The cost of revenues includes the cost of third party consulting services, computer hardware, devices and sublicensed software purchased from manufacturers for delivery to clients. It also includes the cost of hardware maintenance and sublicensed software support subcontracted to the manufacturers. Operating expenses incurred by the geographic business segments consist of sales and client service expenses including salaries of sales and client service personnel, expenses associated with our managed services business, marketing expenses, communications expenses and unreimbursed travel expenses. “Other” includes expenses that have not been allocated to the operating segments, such as software development, general and administrative expenses, acquisition costs and related adjustments, share-based compensation expense, and certain amortization and depreciation. Performance of the segments is assessed at the operating earnings level by our chief operating decision maker, who is our Chief Executive Officer. Items such as interest, income taxes, capital expenditures and total assets are managed at the consolidated level and thus are not included in our operating segment disclosures. Accounting policies for each of the reportable segments are the same as those used on a consolidated basis.

In connection with our acquisition of the Cerner Health Services business, we commenced an evaluation of our methodology for allocating operating expenses to our reportable segments. Effective for our first quarter of 2015, certain expenses historically reported in “Other” have been allocated to the geographic segments. This new allocation reflects the manner in which the business is now managed, subsequent to the acquisition. While this reporting change did not impact our consolidated results, the segment data has been recast to be consistent for all periods presented.

The following table presents a summary of our operating segments and other expense for the three and six months endedJuly 4, 2015 and June 28, 2014:

(In thousands)	Domestic		Global		Other			Total
Three Months Ended 2015
Revenues	$	994,746	$	131,251	$	—		$	1,125,997
Cost of revenues	168,189		24,133		—			192,322
Operating expenses	393,305		59,827		308,807			761,939
Total costs and expenses	561,494		83,960		308,807			954,261
Operating earnings (loss)	$	433,252	$	47,291	$	(308,807	)	$	171,736

(In thousands)	Domestic		Global		Other			Total
Three Months Ended 2014
Revenues	$	766,763	$	84,999	$	—		$	851,762
Cost of revenues	147,776		14,593		—			162,369
Operating expenses	283,609		47,849		166,302			497,760
Total costs and expenses	431,385		62,442		166,302			660,129
Operating earnings (loss)	$	335,378	$	22,557	$	(166,302	)	$	191,633

(In thousands)	Domestic		Global		Other			Total
Six Months Ended 2015
Revenues	$	1,865,253	$	256,833	$	—		$	2,122,086
Cost of revenues	310,906		50,076		—			360,982
Operating expenses	754,391		110,398		557,667			1,422,456
Total costs and expenses	1,065,297		160,474		557,667			1,783,438
Operating earnings (loss)	$	799,956	$	96,359	$	(557,667	)	$	338,648

(In thousands)	Domestic		Global		Other			Total
Six Months Ended 2014
Revenues	$	1,464,467	$	172,056	$	—		$	1,636,523
Cost of revenues	263,121		28,347		—			291,468
Operating expenses	557,599		92,918		324,902			975,419
Total costs and expenses	820,720		121,265		324,902			1,266,887
Operating earnings (loss)	$	643,747	$	50,791	$	(324,902	)	$	369,636