cern-20220331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2022

☐ 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 of
incorporation or organization)

(I.R.S. Employer Identification No.)

2800 Rock Creek Parkway

North Kansas City,

64117

(Address of principal executive offices)

(Zip Code)

(816) 221-1024

(Registrant's telephone number, including area code)

_________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	CERN	The Nasdaq Stock Market LLC

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), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


Class						Outstanding at April 26, 2022
Common Stock, $0.01 par value per share						294,098,094 shares

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CERNER CORPORATION

TABLE OF CONTENTS


Part I.	Financial Information:

Item 1.	Financial Statements:

	Condensed Consolidated Balance Sheets as of March 31, 202 2 (unaudited) and December 31, 20 21	1

	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 202 2 and March 31, 202 1 (unaudited)	2

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 202 2 and March 31, 202 1 (unaudited)	3

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 202 2 and March 31, 202 1 (unaudited)	4

	Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended March 31, 202 2 and March 31, 202 1 (unaudited)	5

	Notes to Condensed Consolidated Financial Statements (unaudited)	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26

Item 4.	Controls and Procedures	26

Part II.	Other Information:

Item 1.	Legal Proceedings	26

Item 6.	Exhibits	27

Signatures

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

CERNER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2022 (unaudited) and December 31, 2021


(In thousands, except share data)	2022		2021

Assets
Current assets:
Cash and cash equivalents	$	709,532	$	589,847
Short-term investments	171,180		252,622
Receivables, net	1,178,037		1,161,361
Inventory	27,704		28,159
Prepaid expenses and other	381,404		417,465
Total current assets	2,467,857		2,449,454

Property and equipment, net	1,610,496		1,656,171
Right-of-use assets	76,474		82,940
Software development costs, net	1,003,806		1,000,357
Goodwill	1,129,539		1,131,121
Intangible assets, net	434,900		458,482
Long-term investments	456,398		461,984
Other assets	194,761		193,649

Total assets	$	7,374,231	$	7,434,158

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable	$	359,562	$	329,582
Current installments of long-term debt	—		225,000
Deferred revenue	456,929		531,234
Accrued payroll and tax withholdings	284,145		317,092
Other current liabilities	278,236		223,350
Total current liabilities	1,378,872		1,626,258

Long-term debt	1,611,303		1,611,256
Deferred income taxes	362,236		395,177
Other liabilities	113,301		121,005
Total liabilities	3,465,712		3,753,696

Shareholders' Equity:
Common stock, $0.01 par value, 500,000,000 shares authorized, 381,357,862 shares issued at March 31, 2022 and 380,232,975 shares issued at December 31, 2021	3,814		3,802
Additional paid-in capital	2,811,612		2,717,244
Retained earnings	6,877,111		6,751,692
Treasury stock, 87,383,166 shares at March 31, 2022 and December 31, 2021	(5,664,718)		(5,664,718)
Accumulated other comprehensive loss, net	(119,300)		(127,558)
Total shareholders' equity	3,908,519		3,680,462

Total liabilities and shareholders' equity	$	7,374,231	$	7,434,158

See notes to condensed consolidated financial statements (unaudited).

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CERNER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three months ended March 31, 2022 and March 31, 2021

(unaudited)


	Three Months Ended
(In thousands, except per share data)	2022		2021

Revenues	$	1,429,801	$	1,387,778
Costs and expenses:
Costs of revenue	243,848		230,656
Sales and client service	612,997		622,176
Software development (Includes amortization of $65,206 and $64,850, respectively)	195,091		192,327
General and administrative	109,279		112,365
Amortization of acquisition-related intangibles	16,602		12,196

Total costs and expenses	1,177,817		1,169,720

Operating earnings	251,984		218,058

Other income, net	26		1,206

Earnings before income taxes	252,010		219,264
Income taxes	(45,881)		(47,012)

Net earnings	$	206,129	$	172,252

Basic earnings per share	$	0.70	$	0.57
Diluted earnings per share	$	0.70	$	0.56
Basic weighted average shares outstanding	293,412		304,731
Diluted weighted average shares outstanding	296,336		308,031

See notes to condensed consolidated financial statements (unaudited).

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CERNER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three months ended March 31, 2022 and March 31, 2021

(unaudited)


	Three Months Ended
(In thousands)	2022		2021

Net earnings	$	206,129	$	172,252
Foreign currency translation adjustment and other (net of tax benefit of $237 and $679, respectively)	(3,424)		(8,991)
Unrealized gain (loss) on cash flow hedge (net of taxes of $3,906 and $1,509, respectively)	12,060		4,588
Unrealized holding gain (loss) on available-for-sale investments (net of tax benefit of $125 and $71, respectively)	(378)		(217)

Comprehensive income	$	214,387	$	167,632

See notes to condensed consolidated financial statements (unaudited).

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CERNER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2022 and March 31, 2021

(unaudited)


			Three Months Ended

SEC Form 10-Q filed by Cerner Corporation