Cerner Reports Third Quarter 2008 Results

Cerner Corp. (NASDAQ: CERN) today announced results for the 2008 third quarter that ended September 27, delivering strong levels of revenue, bookings, and earnings.

Bookings in the third quarter of 2008 were $383.6 million. Third quarter 2007 bookings were $356.7 million. Third quarter revenue increased 13.4 percent over the year-ago period to $422.7 million.

On a Generally Accepted Accounting Principles (GAAP) basis, third quarter 2008 net earnings were $45 million, and diluted earnings per share were $0.54. Third quarter 2007 GAAP net earnings were $31.2 million, and diluted earnings per share were $0.37.

Adjusted (non-GAAP) Earnings

Adjusted third quarter 2008 net earnings were $47.4 million, compared to $33.8 million of adjusted net earnings in the third quarter of 2007. Adjusted diluted earnings per share were $0.57 in the third quarter of 2008 compared to $0.40 in the third quarter of 2007. Analysts’ consensus estimate for third quarter 2008 adjusted diluted earnings per share was $0.56.

Adjusted Net Earnings is not a recognized term under GAAP and should not be substituted for net earnings as a measure of the Company’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 third quarter net earnings. For more detail, please see the accompanying schedule, titled "Reconciliation of Adjusted Net Earnings and Adjusted Diluted Earnings Per Share to GAAP Net Earnings and Diluted Earnings Per Share.”

Adjusted third quarter 2008 and 2007 net earnings and diluted earnings per share exclude the impact of accounting pursuant to Statement of Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment, which requires the expensing of stock options. The effect of accounting under SFAS 123R reduced third quarter 2008 net earnings and diluted earnings per share by $2.4 million and $0.03, respectively, and reduced third quarter 2007 net earnings and diluted earnings per share by $2.5 million and $0.03, respectively.

Other Third Quarter Highlights:

• Cash collections of $436 million and operating cash flow of $48 million.
• Days sales outstanding of 93 days compared to 90 days in the second quarter of 2008 and 89 days in the year-ago quarter.
• Total revenue backlog of $3.4 billion, up 9 percent over the year-ago quarter. This is comprised of $2.8 billion of contract backlog and $0.6 billion of support and maintenance backlog.

"We are pleased with our third quarter results, which reflect strong performance across almost all measures,” said Neal Patterson, Cerner co-founder, chairman and chief executive officer. "We delivered strong growth in bookings, revenue and earnings, and continued to expand operating margins and generate free cash flow.”

"We are particularly pleased with our strong results this quarter given that it closed during a time of great economic uncertainty. While healthcare is not immune to being impacted by the financial crisis, we believe it will prove to be more resilient than most industries, and we remain cautiously optimistic about our ability to continue delivering good results going forward. Our inherent strengths come from our diverse base of more than 6,000 clients across the world, our strong business model that derives over two thirds of revenue and margin from recurring or visible sources and, most importantly, healthcare’s need for solutions that address the increasing complexity of delivering safe, efficient, and high-quality care,” Patterson said.

Future Period Guidance

The company expects revenue in the fourth quarter of 2008 to be approximately $435 million to $460 million.

Cerner expects adjusted diluted earnings per share before stock options expense in the fourth quarter to be between $0.58 and $0.64.

The company expects SFAS No. 123R share-based compensation expense to reduce diluted earnings per share in the fourth quarter by approximately $0.03.

Cerner expects new business bookings in the fourth quarter of 2008 to be between $410 million and $440 million.

Earnings Conference Call

Cerner will host an earnings conference call to provide additional detail on third quarter results at 3:30 p.m. CT October 21. The dial-in number for the conference call is 617-213-8055; the passcode is Cerner. The company recommends joining the call 15 minutes early for registration. The re-broadcast of the call will be available from 5:30 p.m. CT, Oct. 21 through 11:59 p.m. CT, Oct. 24. The dial-in number for the re-broadcast is 888-286-8010; the passcode is 24115670.

An audio webcast will be available live and archived on Cerner’s Web site at www.cerner.com under the About Cerner section (click Investors, then Presentations and Webcasts).

About Cerner

Cerner is taking the paper chart out of healthcare, eliminating error, variance and waste in the care process. With more than 6,000 clients worldwide, Cerner is the leading supplier of healthcare information technology. The following are trademarks of Cerner: Cerner, Cerner Millennium and Cerner's logo. (NASDAQ: CERN), www.cerner.com

This release contains forward-looking statements that involve a number of risks and uncertainties. It is important to note that the Company's performance, and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. The words "believe,” "ability to continue,” "guidance,” and "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 global operations; risks associated with our ability to effectively hedge exposure to fluctuations in foreign currency exchange rates; risks associated with our recruitment and retention of key personnel; risks related to our reliance on third party suppliers; risks inherent with business acquisitions; changing political, economic and regulatory influences; government regulation; significant competition and market changes; variations in our quarterly operating results; potential inconsistencies in our sales forecasts compared to actual sales; and the volatility in the trading price of our common stock. Additional discussion of these and other factors affecting the Company's business is contained in the Company's periodic filings with the Securities and Exchange Commission. The Company 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.