-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OV+OQ0Gubm9483Z+/R6h7n+N5NsNgFJqvPJDe7fMeiWyb/E3QO3hetHFnW8bqcKB i55MJisfQhAZV3C1XxV4Kw== 0000804753-96-000027.txt : 19960515 0000804753-96-000027.hdr.sgml : 19960515 ACCESSION NUMBER: 0000804753-96-000027 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960330 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CERNER CORP /MO/ CENTRAL INDEX KEY: 0000804753 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 431196944 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15386 FILM NUMBER: 96562264 BUSINESS ADDRESS: STREET 1: 2800 ROCKCREEK PKWY-STE 601 CITY: KANSAS CITY STATE: MO ZIP: 64117 BUSINESS PHONE: 8162211024 MAIL ADDRESS: STREET 1: 2800 ROCKCREEK PKWY STREET 2: DROP 1624 CITY: KANSAS CITY STATE: MO ZIP: 64117 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 30, 1996 ---------------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to_____________ Commission File Number 0-15386 -------------------- CERNER CORPORATION ---------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 43-1196944 --------------- ---------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 2800 Rockcreek Parkway Kansas City, Missouri 64117 (816) 221-1024 ----------------------------------------------------------- (Address of Principal Executive Offices, including zip code; registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) with the Commission, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ There were 32,548,382 shares of Common Stock, $.01 par value, outstanding at March 30, 1996. CERNER CORPORATION AND SUBSIDIARIES I N D E X Part I. Financial Information: Item 1. Financial Statements: Consolidated Balance Sheets as of March 30, 1996 and December 30, 1995 (unaudited) Consolidated Statements of Earnings for the three months ended March 30, 1996 and April 1, 1995 (unaudited) Consolidated Statements of Cash Flows for the three months ended March 30, 1996 and April 1, 1995 (unaudited) Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II. Other Information: Item 6. Exhibits and Reports on Form 8-K Part I. Financial Information Item 1. Financial Statements CERNER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 30, December 30, 1996 1995 ---------- ------------ (In thousands) Assets Current Assets: Cash and cash equivalents $ 7,893 $ 8,640 Short-term investments 106,302 103,478 Receivables 101,327 98,154 Inventory 3,985 2,246 Prepaid expenses and other 5,011 4,393 --------- --------- Total current assets 224,518 216,911 Property and equipment, net 57,254 53,693 Software development costs, net 24,383 22,885 Intangible assets, net 4,410 4,414 Noncurrent receivables 4,136 4,097 Other assets 2,112 1,945 --------- --------- $ 316,813 $ 303,945 ========= ========= Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 18,272 $ 14,932 Current installments of long-term debt 133 130 Advanced billings 7,209 6,162 Accrued income taxes 17,672 13,946 Accrued payroll and tax withholdings 5,952 5,112 Other accrued expenses 2,014 2,565 --------- --------- Total Current Liabilities 51,252 42,847 --------- --------- Long-term debt, net 30,070 30,104 Deferred income taxes 9,619 9,620 Stockholders' Equity: Common stock, $.01 par value, 50,000,000 shares authorized, 33,061,400 shares issued in 1996 and 33,001,973 issued in 1995 331 330 Additional paid-in capital 144,021 143,876 Retained earnings 87,100 82,874 Treasury stock, at cost (513,018 shares in 1996 and 1995) (5,693) (5,693) Foreign currency translation adjustment 113 (13) --------- --------- Total stockholders' equity 225,872 221,374 --------- --------- $ 316,813 $ 303,945 ========= =========
See notes to consolidated financial statements. CERNER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended March 30, April 1, -------------------------- (In thousands, except per share data) 1996 1995 ---- ---- Revenues: System sales $ 37,168 $ 29,988 Support and maintenance 13,579 11,647 Other 1,835 1,557 -------- -------- Total revenues 52,582 43,192 -------- -------- Costs and expenses: Cost of revenues 17,284 12,068 Sales and client service 15,623 11,176 Software development 8,540 7,621 General and administrative 4,850 4,043 -------- -------- Total costs and expenses 46,297 34,908 -------- -------- Operating earnings 6,285 8,284 Interest income (expense), net 671 (468) -------- -------- Earnings before income taxes 6,956 7,816 Income taxes 2,734 3,275 -------- -------- Net earnings $ 4,222 $ 4,541 ======== ======== Earnings per share $ .13 $ .15 ======== ======== Weighted average shares outstanding 33,701 29,893 -------- --------
See notes to consolidated financial statements. CERNER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 30, April 1, --------- -------- (In thousands) 1996 1995 ---- ---- Cash flows from operating activities: Net earnings $ 4,222 $ 4,541 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 3,603 3,090 Issuance of stock as compensation -- 7 Provision for deferred income taxes 3,725 2,185 Loss on disposal of capital equipment 14 2 Changes in assets and liabilities: Receivables (3,213) (4,288) Inventory (1,739) 551 Prepaid expenses and other (1,074) (113) Accounts payable 3,340 (2,183) Accrued income taxes -- 1,000 Other accrued liabilities 1,336 717 --------- --------- Total adjustments 5,992 968 --------- --------- Net cash provided by operating activities 10,214 5,509 --------- --------- Cash flows from investing activities: Purchase of capital equipment (5,179) (2,246) Purchase of land, building and improvements (219) (1,681) Capitalized software development costs (2,981) (2,061) --------- -------- Net cash used in investing activities (8,379) (5,988) --------- -------- Cash flows from financing activities: Proceeds from issuance of long-term debt 3 2,266 Repayment of long-term debt (34) (1,085) Proceeds from exercise of options 147 523 --------- -------- Net cash provided by financing activities 116 1,704 --------- -------- Foreign currency translation adjustment 126 (85) --------- -------- Net increase in cash, cash equivalents and short-term investments 2,077 1,140 Cash, cash equivalents and short-term investments at beginning of period 112,118 15,305 --------- -------- Cash, cash equivalents and short-term investments at end of period $ 114,195 $ 16,445 ========= ========
See notes to consolidated financial statements. CERNER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Interim Statement Presentation The consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position at March 30, 1996 and December 30, 1995 and the results of operations and cash flows for the periods presented. The results of the three-month periods are not necessarily indicative of the operating results for the entire year. (2) Earnings Per Share Net earnings per share for the three months ended March 30, 1996 and April 1, 1995 is based on the weighted average number of common shares and common share equivalents outstanding during those periods. Common share equivalents consist of shares issuable upon exercise of stock options using the treasury stock method. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Three Months Ended March 30, 1996 Compared to Three Months Ended April 1, 1995 Revenues for the three months ended March 30, 1996 increased 22% to $52,582,000 from $43,192,000 for the three months ended April 1, 1995. Net earnings for the three months ended March 30, 1996 decreased 7% to $4,222,000 from $4,541,000 in the same prior year period. In the 1996 period, revenues increased due to an increase in system sales and support of installed systems. System sales in the first quarter of 1996 increased 24% to $37,168,000 from $29,988,000 in the first quarter of 1995. This increase in system sales resulted principally from an increase in installations under HNA contracts and additional hardware and software sales to the Company's existing client base. HNA contracts comprised 50% of total system sales in the first three months of 1996 compared to 47% for the same period in 1995. The sale of additional hardware and software products to the installed client base increased 50% in the first three months of 1996 over the first three months of 1995. At March 30, 1996, the Company had $89,406,000 in contract backlog and $98,638,000 in support and maintenance backlog, compared to $54,726,000 in contract backlog and $81,022,000 in support and maintenance backlog on April 1, 1995. Support and maintenance revenues increased 17% to $13,579,000 in the first quarter of 1996 from $11,647,000 in the first quarter of 1995. This increase was due primarily to the increase in the Company's installed and converted client base. Other revenues increased 18% to $1,835,000 in the first quarter of 1996 from $1,557,000 in the same prior year period. This increase was due primarily to an increase in services performed above the contracted requirements for existing clients. The cost of revenues includes the cost of computer hardware and sublicensed software purchased from computer and software manufacturers for delivery to clients. It also includes the cost of hardware maintenance and sublicensed software support subcontracted to manufacturers. The cost of revenue was 33% of total revenues in the first quarter of 1996 compared to 28% of total revenues for the same period in 1995. Such costs, as a percent of revenue, typically have varied as the mix of revenue (software, hardware, and support) components carrying different margin rates changes from period to period. The decrease in margin is due to equipment being a larger component of system sales in the first quarter of 1996 compared to the first quarter of 1995. Sales and client service expenses include salaries of client service personnel, communication expenses, and travel expenses. Also included are sales and marketing salaries, and trade show costs. These expenses as a percent of revenue were 30% and 26% in the first quarter of 1996 and 1995, respectively. The increase in total sales and client service expenses to $15,623,000 in 1996 from $11,176,000 in 1995 was attributable to personnel and operating expenses associated with the larger regional sales and service organization and certain marketing initiatives. Software development expenses include salaries, documentation and other direct expenses incurred in products development, as well as amortization of software development costs previously capitalized. Total expenditures for software development, including both capitalized and non- capitalized portions for the first quarter of 1996 and 1995 were $10,049,000 and $8,344,000, respectively. These amounts exclude amortization. Capitalized software costs for the first quarter of 1996 and 1995 were $2,981,000 and $2,061,000, respectively. The increase in expenditures for software development in 1996 was due primarily to increased investment in the development of version 500 of the Company's existing clinical information systems and new clinical information system products for automation of clinical processes. General and administrative expenses include salaries for corporate, financial and administrative staffs, utilities, communications expenses and professional fees. These expenses as a percentage of revenues were 9% in the first quarter of 1996 and 9% for the same period in 1995. Total general and administrative expenses for the first quarter of 1996 and 1995 were $4,850,000 and $4,043,000, respectively. Net interest income increased 243% in the first three months of 1996 over the same period in 1995. This decrease was due primarily to interest income from investment of the proceeds from the sale of 3,716,000 new shares of common stock from the August 1995 public offering. The Company's quarterly revenues and net earnings have historically been variable and cyclical. The variability is attributable primarily to the number and size of project milestone events in any fiscal quarter. The Company expects fluctuations in quarterly financial results to continue. Capital Resources and Liquidity - ------------------------------- The Company's liquidity position remains strong with total cash and cash equivalents of $7,893,000 and short term investments of $106,302,000 at March 30, 1996 and working capital of $173,266,000. The Company generated net cash from operations of $10,214,000 and $5,509,000 during the three months ended March 30, 1996 and April 1, 1995. During August 1995, the Company sold 3,716,000 shares of common stock. The proceeds of this sale, net of underwriting discounts and commissions and expenses, were $108,287,000. Prior to the public offering the Company financed its operations, capital expenditures (other than the purchase of the Kansas City headquarters complex and its anticipated capital improvements), and working capital from the internally generated funds and bank borrowings. The Company has $18,000,000 of long-term, revolving credit from bank, all of which was available as of March 30, 1996. Revenues provided under the Company's support and maintenance agreements represent recurring cash flows. The Company's revenue backlog at March 30, 1996 included $98,638,000 representing twelve months of equipment maintenance and software support associated with signed contracts. The Company believes its present cash, cash equivalents and short-term investment position, together with cash generated from operations and available under its current bank borrowing facility, will be sufficient to meet anticipated cash requirements during the next twelve months. Part II. Other Information Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 11 Computation of Earnings Per Share Exhibit 27 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended March 30, 1996. SIGNATURES 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 thereunto duly authorized. CERNER CORPORATION Registrant May 13, 1996 By:/s/ Marc G. Naughton - ------------ -------------------- Date Marc G. Naughton Chief Financial Officer EX-11 2 EARNINGS PER SHARE Exhibit 11 CERNER CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE
Three Months Ended Three Months Ended March 30, April 1, ------------------------------------------- 1996 1995 ---- ---- Net earnings: $ 4,222,000 $ 4,541,000 Weighted average number of common and common stock equivalent shares: Weighted average number of outstanding common shares 32,538,127 28,130,788 Dilutive effect (excess of number of shares issuable over number of shares assumed to be re- purchased with the proceeds of exercised options based on the average market price during the period) 1,162,807 1,762,116 ------------- ------------- 33,700,934 29,892,904 Earnings per common and common stock equivalent shares: $ .13 $ .15 ============= ============= Weighted average number of common and common stock equivalent shares, assuming full dilution: Additional dilutive effect (reduction in number of shares assumed to be repurchased with the proceeds of exercised stock options and converted warrants based on the end of the period market price of the stock, if higher than the average price) 214 17,650 ------------- -------------- 33,701,148 29,910,554 ============= ============== Earnings per common and common stock equivalent shares assuming full dilution: $ .13 $ .15 ============= ==============
EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-28-1996 MAR-30-1996 7,893,000 106,302,000 102,456,000 1,129,000 3,985,000 224,518,000 80,438,000 23,184,000 316,813,000 51,252,000 0 331,000 0 0 0 316,813,000 52,582,000 52,582,000 17,284,000 29,013,000 0 0 (671,000) 6,956,000 2,734,000 4,222,000 0 0 0 4,222,000 .13 .13
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