Cerner Reports Fourth Quarter 2012 Results

Cerner ^® solutions are licensed by approximately 10,000 facilities around the world, including more than 2,700 hospitals; 4,150 physician practices; 45,000 physicians; 550 ambulatory facilities, such as laboratories, ambulatory centers, behavioral health centers, cardiac facilities, radiology clinics and surgery centers; 800 home health facilities; 45 employer sites and 1,750 retail pharmacies.

Certain trademarks, service marks and logos (collectively, the "Marks") set forth herein are owned by Cerner Corporation and/or its subsidiaries in the United States and certain other countries throughout the world. All other non-Cerner Marks are the property of their respective owners. Nasdaq:CERN. For more information about Cerner, please visit www.cerner.com , Twitter , Facebook and YouTube .

This release contains forward-looking statements that involve a number of risks and uncertainties. It is important to note that Cerner's performance, and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. The words "plan", guidance", "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 non-U.S. operations; risks associated with our ability to effectively hedge exposure to fluctuations in foreign currency exchange rates; the potential for tax legislation initiatives that could adversely affect our tax position and/or challenges to our tax positions in the United States and non-U.S. countries; risks associated with our recruitment and retention of key personnel; risks related to our dependence on third party suppliers; risks inherent with business acquisitions; the potential for losses resulting from asset impairment charges; risks associated with uncertainty in global economic conditions; changing political, economic, regulatory and judicial influences; government regulation; significant competition and market changes; variations in our quarterly operating results; potential inconsistencies in our sales forecasts compared to actual sales; volatility in the trading price of our common stock and the timing and volume of market activity; our directors' authority to issue preferred stock and the anti-takeover provisions in our corporate governance documents; and material adverse resolution of legal proceedings. Additional discussion of these and other risks, uncertainties and factors affecting Cerner's business is contained in Cerner's periodic filings with the Securities and Exchange Commission. The reader should not place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made. Cerner 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.

CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and twelve months ended December 29, 2012 and December 31, 2011
(unaudited)
(In thousands, except per share data)	Three Months Ended		Years Ended
	2012 (1)	2011 (1)	2012 (1)	2011 (1)
Revenues
System sales	$ 251,759	$ 220,492	$ 902,799	$ 706,714
Support, maintenance and services	445,098	383,956	1,707,329	1,451,747
Reimbursed travel	13,527	11,178	55,308	44,692
Total revenues	710,384	615,626	2,665,436	2,203,153
Margin
System sales	142,496	128,185	475,343	410,153
Support, maintenance and services	414,777	355,395	1,581,896	1,351,328
Total margin	557,273	483,580	2,057,239	1,761,481
Operating expenses
Sales and client service	274,550	238,224	1,020,640	869,962
Software development	78,624	73,323	301,370	286,801
General and administrative	43,655	34,299	163,567	144,920
Total operating expenses	396,829	345,846	1,485,577	1,301,683
Operating earnings	160,444	137,734	571,662	459,798
Other income, net	7,257	2,230	16,046	9,896
Earnings before income taxes	167,701	139,964	587,708	469,694
Income taxes	(55,893)	(48,772)	(190,476)	(163,067)
Net earnings	$ 111,808	$ 91,192	$ 397,232	$ 306,627
Basic earnings per share	$ 0.65	$ 0.54	$ 2.32	$ 1.82
Basic weighted average shares outstanding	171,744	169,472	170,931	168,634
Diluted earnings per share	$ 0.63	$ 0.52	$ 2.26	$ 1.76
Diluted weighted average shares outstanding	176,180	174,488	175,697	173,867
Note 1: Operating expenses for the three and twelve months ended December 29, 2012 and December 31, 2011 include share-based compensation expense. The impact of this expense on net earnings and diluted earnings per share is presented below:
(In thousands, except per share data)	Three Months Ended		Years Ended
	2012	2011	2012	2011
Sales and client service	$ 5,100	$ 3,923	$ 17,316	$ 13,313
Software development	2,322	1,950	9,217	8,372
General and administrative	2,922	2,162	11,579	7,794
Total share-based compensation	10,344	8,035	38,112	29,479
Amount of related income tax benefit	(3,957)	(3,074)	(14,578)	(11,256)
Net impact on net earnings	$ 6,387	$ 4,961	$ 23,534	$ 18,223
Decrease to diluted earnings per share	$ 0.04	$ 0.03	$ 0.13	$ 0.11

CERNER CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS 1
For the three and twelve months ended December 29, 2012 and December 31, 2011
(unaudited)
RECONCILIATION OF ADJUSTED NET EARNINGS TO GAAP NET EARNINGS 1
(In thousands)	Three Months Ended		Years Ended
	2012	2011	2012	2011
Net Earnings
Net earnings (GAAP)	$ 111,808	$ 91,192	$ 397,232	$ 306,627
Share-based compensation expense	10,344	8,035	38,112	29,479
Income tax benefit of share-based compensation	(3,957)	(3,074)	(14,578)	(11,256)
Adjusted net earnings (non-GAAP) 2	$ 118,195	$ 96,153	$ 420,766	$ 324,850
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE TO GAAP DILUTED EARNINGS PER SHARE 1
	Three Months Ended		Years Ended
	2012	2011	2012	2011
Diluted Earnings Per Share
Diluted earnings per share (GAAP)	$ 0.63	$ 0.52	$ 2.26	$ 1.76
Share-based compensation expense (net of tax)	0.04	0.03	0.13	0.11
Adjusted diluted earnings per share (non-GAAP) 2	$ 0.67	$ 0.55	$ 2.39	$ 1.87
RECONCILIATION OF NON-GAAP FREE CASH FLOW TO GAAP OPERATING CASH FLOW 1
(In thousands)	Three Months Ended		Years Ended
	2012	2011	2012	2011
Cash flows from operating activities (GAAP)	$ 180,554	$ 168,489	$ 708,314	$ 546,294
Capital purchases	(53,463)	(29,193)	(183,429)	(104,795)
Capitalized software development costs	(27,683)	(21,115)	(100,189)	(82,942)
Free cash flow (non-GAAP) 3	$ 99,408	$ 118,181	$ 424,696	$ 358,557
Note 1: The presentation of Adjusted Diluted Earnings per Share, Adjusted Net Earnings and Free Cash Flow, non-GAAP financial measures, are not meant to be considered in isolation, nor as a substitute for, or superior to, Generally Accepted Accounting Principles (GAAP) results and investors should be aware that non-GAAP measures have inherent limitations and should be read only in conjunction with Cerner's consolidated financial statements prepared in accordance with GAAP. Adjusted Diluted Earnings per Share, Adjusted Net Earnings and Free Cash Flow may also be different from similar non-GAAP financial measures used by other companies and may not be comparable to similarly titled captions of other companies due to potential inconsistencies in the method of calculations. We believe that Adjusted Diluted Earnings per Share, Adjusted Net Earnings and Free Cash Flow are important to enable investors to better understand and evaluate our ongoing operating results and allows for more comprehensive review and understanding of our overall financial, operational and economic performance.
Note 2: Cerner provides earnings with and without share-based compensation expense because earnings excluding this expense is used by management along with GAAP results to analyze its business, make strategic decisions and for management compensation purposes.
Note 3: Cerner provides free cash flow because it takes into account the capital expenditures necessary to operate our business.

CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 29, 2012 (unaudited) and December 31, 2011
(In thousands)	2012	2011
Assets
Current assets:
Cash and cash equivalents	$ 317,120	$ 243,146
Short-term investments	719,665	531,635
Receivables, net	577,848	563,209
Inventory	23,681	23,296
Prepaid expenses and other	113,572	94,232
Deferred income taxes, net	38,620	46,795
Total current assets	1,790,506	1,502,313
Property and equipment, net	569,708	488,996
Software development costs, net	267,307	248,750
Goodwill	247,616	211,826
Intangible assets, net	132,045	75,366
Long-term investments	509,467	359,324
Other assets	187,819	113,783
Total assets	$ 3,704,468	$ 3,000,358
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$ 141,212	$ 85,545
Current installments of long-term debt and capital lease obligations	59,582	39,722
Deferred revenue	189,652	153,139
Accrued payroll and tax withholdings	125,253	109,227
Other accrued expenses	64,413	51,087
Total current liabilities	580,112	438,720
Long-term debt and capital lease obligations	136,557	86,821
Deferred income taxes and other liabilities	143,212	150,229
Deferred revenue	10,937	13,787
Total liabilities	870,818	689,557
Shareholders' Equity:
Common stock	1,721	1,696
Additional paid-in capital	842,490	723,490
Retained earnings	1,994,694	1,597,462
Accumulated other comprehensive loss, net	(5,255)	(11,967)
Total Cerner Corporation shareholders' equity	2,833,650	2,310,681
Noncontrolling interest	--	120
Total shareholders' equity	2,833,650	2,310,801
Total liabilities and shareholders' equity	$ 3,704,468	$ 3,000,358

CONTACT: Investor Contact:
         Allan Kells
         [phone]
         [e-mail]
         Media Contact: Megan Moriarty
         [phone]
         [e-mail]

         Cerner's Internet Home Page: www.cerner.com

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