Cerner Delivers Strong Revenue, Earnings and Cash Flow; New Business Bookings a Second Quarter Record

On a GAAP basis, second quarter 2006 net earnings were $23.9million, and diluted earnings per share were $0.29. Second quarter2005 GAAP net earnings were $19.8 million, and diluted earnings pershare were $0.25. Second quarter 2006 net earnings and dilutedearnings per share reflect the impact of adopting Statement ofFinancial Accounting Standards (SFAS) No. 123R, Share-Based Payment,which requires the expensing of stock options. Adoption of SFAS No.123R reduced second quarter 2006 net earnings and diluted earnings pershare by $3.1 million and $0.04, respectively.

Before stock options expense, second quarter 2006 net earningswere $27.0 million, which is 36 percent higher than the $19.8 millionof net earnings in the second quarter of 2005. Diluted earnings pershare before stock options expense were $0.33 in the second quarter of2006 compared to $0.25 in the second quarter of 2005. Analysts'consensus estimate for second quarter 2006 diluted earnings per sharebefore stock options expense was $0.32.

Other Second Quarter Highlights:

-- Strong cash collections of $354.7 million.

-- Operating cash flow of $59.7 million compared to $44.3 million in the second quarter of 2005.

-- Days sales outstanding of 91 days compared to 98 days in the year-ago quarter.

-- Total revenue backlog of $2.27 billion, up 32 percent over the year-ago quarter. This is comprised of $1.83 billion of contract backlog and $440.4 million of support and maintenance backlog.

-- 382 Cerner Millennium(R) solution implementations were completed. Cerner has now turned on more than 5,500 Cerner Millennium solutions at more than 1,000 client facilities worldwide.

"Our second quarter results reflect continued strong sales andoperational performance," said Neal Patterson, Cerner co-founder,chairman and chief executive officer. "We continued to deliver againstour financial imperatives with strong revenue growth, expandingoperating margins, and strong cash flow.

"We remain excited about Cerner's prospects in the healthcareinformation technology (IT) marketplace, both in the United States andacross the globe. Using the strength of the largest intellectualproperty and professional services organizations in the worldwidehealthcare IT industry, we expect to continue innovating new solutionsand services that will make healthcare safer, more efficient and ofhigher quality."

Future Period Guidance

The company expects revenue in the third quarter of 2006 to beapproximately $330 million to $340 million. Cerner expects dilutedearnings per share before stock options expense in the third quarterto be between $0.35 and $0.36, a 1 cent increase from priorexpectations. The company expects SFAS No. 123R share-basedcompensation expense to reduce diluted earnings per share in the thirdquarter by approximately $0.04, leading to expected diluted earningsper share between $0.31 and $0.32.

Cerner expects new business bookings in the third quarter to bebetween $335 million and $350 million. The mid-point of the bookingsguidance reflects 14 percent growth over the record third quarter of2005 bookings of $301.1 million (adjusted for a unique large $149.4million contract with Fujitsu Services Ltd. in the third quarter of2005 related to the National Health Service initiative to automateclinical processes and digitize medical records in the SouthernCluster of England).

For the year 2006, Cerner expects diluted earnings per share of$1.37 to $1.38 before stock options expense, which reflects growth ofapproximately 26 percent over 2005 and is 2 cents higher than thecompany's prior guidance. The company expects SFAS No. 123Rshare-based compensation expense to reduce diluted earnings per sharefor 2006 by approximately $0.16, leading to expected diluted earningsper share of approximately $1.21 to $1.22. Cerner expects 2006 revenueto be between $1.32 billion and $1.35 billion.

Earnings Conference Call

Cerner will host an earnings conference call to provide additionaldetail on second quarter results at 3:30 p.m. CDT on July 20. Thedial-in number for the call is 617-213-8063 with a pass code ofCerner. The replay number is 617-801-6888 (Pass code: 50371949). Therebroadcast of the call will be available from approximately 6:30 p.m.CDT, July 20, through 6:30 p.m. CDT, July 23.

An audio webcast will be available both live and archived onCerner's Web site at www.cerner.com under the About Cerner section(click Investors, then Presentations and Webcasts). A copy of thescript used during the call will also be available at the same sectionof www.cerner.com.

Cerner Corp. is taking the paper chart out of healthcare,eliminating error, variance and waste in the care process. With morethan 1,500 clients worldwide, Cerner is the leading supplier ofhealthcare information technology. The following are trademarks ofCerner: Cerner, Cerner Millennium, and Cerner's logo. (Nasdaq:CERN),www.cerner.com.

This release contains forward-looking statements that involve anumber of risks and uncertainties. It is important to note that theCompany's performance, and actual results, financial condition orbusiness could differ materially from those expressed in suchforward-looking statements. The words "guidance" and "expects" or thenegative of these words, variations thereof or similar expressions areintended to identify such forward-looking statements. Factors thatcould cause or contribute to such differences include, but are notlimited to: the possibility of product-related liabilities; potentialclaims for system errors and warranties; the possibility ofinterruption at our data centers or client support facilities; ourproprietary technology may be subjected to infringement claims or maybe infringed upon; risks associated with our global operations;recruitment and retention of key personnel; risks related to thirdparty suppliers; risks inherent with business acquisitions; changingpolitical, economic and regulatory influences; government regulation;significant competition and market changes; variations in ourquarterly operating results; and potential inconsistencies in oursales forecasts compared to actual sales. Additional discussion ofthese and other factors affecting the Company's business is containedin the Company's periodic filings with the Securities and ExchangeCommission. The Company undertakes no obligation to updateforward-looking statements to reflect changed assumptions, theoccurrence of unanticipated events or changes in future operatingresults, financial condition or business over time.
CERNER CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS

Three Three
Months Months
Ended YTD Ended YTD
(In thousands, except per share July 1, July 1, July 2, July 2,
data) 2006(1) 2006(1) 2005 2005(2)
-------- -------- -------- --------

Revenue
System sales $114,364 231,214 105,200 205,142
Support, maintenance and
services 206,217 401,803 164,251 320,252
Reimbursed travel 9,991 18,780 8,364 14,955
-------- -------- -------- --------

Total revenue 330,572 651,797 277,815 540,349

Margin
System sales 73,441 144,127 64,138 128,046
Support, maintenance and
services 192,939 375,459 154,076 297,294
-------- -------- -------- --------

Total margin 266,380 519,586 218,214 425,340
-------- -------- -------- --------

Operating expenses
Sales and client service 141,877 281,401 114,291 225,131
Software development 60,888 119,904 48,702 98,031
General and administrative 23,702 46,373 21,013 38,935
Write-off of in process research
and development - - - 6,382
-------- -------- -------- --------

Total operating expenses 226,467 447,678 184,006 368,479
-------- -------- -------- --------

Operating earnings 39,913 71,908 34,208 56,861

Interest income 2,592 5,181 834 1,718
Interest expense (3,070) (6,352) (2,200) (4,826)
Other income (67) 2,058 47 77
-------- -------- -------- --------

Non-operating expense,
net (545) 887 (1,319) (3,031)

Earnings before income taxes 39,368 72,795 32,889 53,830
Income taxes (15,495) (28,778) (13,086) (21,507)
-------- -------- -------- --------

Net earnings $ 23,873 44,017 19,803 32,323
======== ======== ======== ========

Basic earnings per share $ 0.31 0.57 0.27 0.44
======== ======== ======== ========

Basic weighted average shares
outstanding 77,524 77,340 74,314 73,894

Diluted earnings per share $ 0.29 0.54 0.25 0.42
======== ======== ======== ========

Diluted weighted average shares
outstanding 81,413 81,411 77,972 77,342

Note 1: 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.

Note 2: Includes a charge for the write off of acquired in process
research and development related to the acquisition of the
medical business division of VitalWorks, Inc. The impact of
this charge is a $3.9 million decrease, net of $2.4 million
tax benefit, in net earnings and a decrease to diluted
earnings per share of $.05 for 2005.
CERNER CORPORATION
NON-GAAP
CONSOLIDATED STATEMENTS OF EARNINGS

Three Three
Months Months
Ended YTD Ended YTD
(In thousands, except per share July 1, July 1, July 2, July 2,
data) 2006 2006 2005 2005
-------- ---------------- --------

Revenue
System sales $114,364 231,214 105,200 205,142
Support, maintenance and
services 206,217 401,803 164,251 320,252
Reimbursed travel 9,991 18,780 8,364 14,955
-------- ---------------- --------

Total revenue 330,572 651,797 277,815 540,349

Margin
System sales 73,441 144,127 64,138 128,046
Support, maintenance and
services 192,939 375,459 154,076 297,294
-------- ---------------- --------

Total margin 266,380 519,586 218,214 425,340
-------- ---------------- --------

Operating expenses
Sales and client service 138,804 275,517 114,291 225,131
Software development 59,792 117,676 48,702 98,031
General and administrative 22,787 44,686 21,013 38,935
-------- ---------------- --------

Total operating expenses 221,383 437,879 184,006 362,097
-------- ---------------- --------

Operating earnings 44,997 81,707 34,208 63,243

Interest income 2,592 5,181 834 1,718
Interest expense (3,070) (6,352) (2,200) (4,826)
Other income (67) 2,058 47 77
-------- ---------------- --------

Non-operating expense,
net (545) 887 (1,319) (3,031)

Earnings before income taxes 44,452 82,594 32,889 60,212
Income taxes (17,440) (32,523)(13,086) (23,948)
-------- ---------------- --------

Net earnings $ 27,012 50,071 19,803 36,264
======== ================ ========

Basic earnings per share $ 0.35 0.65 0.27 0.49
======== ================ ========

Basic weighted average shares
outstanding 77,524 77,340 74,314 73,894

Diluted earnings per share $ 0.33 0.62 0.25 0.47
======== ================ ========

Diluted weighted average shares
outstanding 81,413 81,411 77,972 77,342


RECONCILIATION OF NON-GAAP
TO GAAP CONSOLIDATED STATEMENTS OF EARNINGS

Three Three
Months Months
Ended YTD Ended YTD
(In thousands, except per share July 1, July 1, July 2, July 2,
data) 2006 2006 2005 2005
-------- ---------------- --------

Non-GAAP net income $ 27,012 50,071 19,803 36,264
Share-based compensation expense (5,084) (9,799) - -
Income tax benefit 1,945 3,745 - -
Write off of acquired in process
research and development - - - (6,382)
Income tax benefit - - - 2,441
-------- ---------------- --------

GAAP net income $ 23,873 44,017 19,803 32,323
======== ================ ========

Basic earnings per share $ 0.31 0.57 0.27 0.44
======== ================ ========

Basic weighted average shares
outstanding 77,524 77,340 74,314 73,894

Diluted earnings per share $ 0.29 0.54 0.25 0.42
======== ================ ========

Diluted weighted average shares
outstanding 81,413 81,411 77,972 77,342
CERNER CORPORATION
CONSOLIDATED BALANCE SHEETS

(In thousands) July 1, Dec. 31,
2006 2005
---------- ----------
Assets

Cash and cash equivalents $ 124,159 113,057
Short-term investments 152,529 161,230
Receivables, net 331,316 316,965
Inventory 18,069 9,585
Prepaid expenses and other 50,115 42,685
Deferred income taxes 7,519 8,109
---------- ----------

Total current assets 683,707 651,631

Property and equipment, net 321,890 292,608
Software development costs, net 182,785 172,548
Goodwill, net 119,036 116,142
Intangible assets, net 54,558 60,448
Other assets 11,299 10,252
---------- ----------

Total assets $1,373,275 1,303,629
========== ==========

Liabilities

Accounts payable $ 55,632 65,377
Current installments of long-term debt 21,407 28,743
Deferred revenue 90,419 79,890
Accrued payroll and tax withholdings 64,280 66,002
Other accrued expenses 32,329 20,078
---------- ----------

Total current liabilities 264,067 260,090
---------- ----------


Long-term debt 180,116 194,265
Deferred income taxes 78,778 72,922
Deferred revenue 15,413 14,533
---------- ----------

Total liabilities 538,374 541,810
---------- ----------

Minority owners' equity interest in subsidiary 1,286 1,286

Stockholders' Equity

Common stock 776 770
Additional paid-in capital 352,059 325,134
Retained earnings 474,279 430,262
Foreign currency translation adjustment 6,501 4,367
---------- ----------

Total stockholders' equity 833,615 760,533

Total liabilities and equity $1,373,275 1,303,629
========== ==========