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2019 Annual Report

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2019 Annual Report 2019 ANNUAL REPORT 2019 ANNUAL REPORT or more than 40 years, Cerner has played a leadership role in digitizing health, an F important step toward improving the standard of living of the world’s population. As we enter the cognitive era of health care, Cerner is leading, alongside our clients, health care’s ever-quickening transformation. The opportunities in front of Cerner are massive, as we expect the foundational work from digitization to begin harvesting its true potential – to encourage health and wellness, to shift to preventative care and to reduce costs that have yet to be contained. It’s why we believe that, in a seamless and connected world, everyone thrives. Table of Contents: Annual Report 2019 Board of Directors ................................................................................................................................................................................ 2 Leadership ................................................................................................................................................................................................3 Cerner’s long-term performance ..................................................................................................................................................4 A letter to our shareholders, clients and associates ...........................................................................................................5 Appendix: Reconciliation of GAAP results to Non-GAAP results ..............................................................................13 Corporate responsibility .................................................................................................................................................................. 14 Form 10-K ............................................................................................................................................................................................... 19 Business and Industry Overview ......................................................................................................................................... 22 Risk Factors .................................................................................................................................................................................... 29 Properties........................................................................................................................................................................................44 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...................................................................................................................... 45 Selected Financial Data ...........................................................................................................................................................46 Management’s Discussion and Analysis of Financial Condition and Results of Operations ............... 47 Quantitative and Qualitative Disclosures about Market Risk .................................................................................57 Controls and Procedures ....................................................................................................................................................... 58 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ................................................................................................................................................ 59 Exhibits and Financial Statement Schedules ...............................................................................................................60 Reports of Independent Registered Public Accounting Firm ..............................................................................66 Consolidated Balance Sheets ..............................................................................................................................................69 Consolidated Statements of Operations . ...................................................................................................................... 70 Consolidated Statements of Comprehensive Income ............................................................................................. 71 Consolidated Statements of Cash Flows ........................................................................................................................72 Consolidated Statements of Changes in Shareholders’ Equity. .......................................................................... 73 Notes to Consolidated Financial Statements ................................................................................................................74 Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies ..74 Revenue Recognition ..........................................................................................................................................................77 Receivables............................................................................................................................................................................... 81 Investments ............................................................................................................................................................................. 82 Property and Equipment ..................................................................................................................................................84 Leases .........................................................................................................................................................................................84 Software Development .....................................................................................................................................................86 Business Acquisition. .......................................................................................................................................................... 87 Goodwill and Other Intangible Assets ....................................................................................................................... 88 Long-term Debt ....................................................................................................................................................................89 Fair Value Measurements .................................................................................................................................................. 91 Contingencies. ....................................................................................................................................................................... 92 Other Income ......................................................................................................................................................................... 93 Income Taxes ..........................................................................................................................................................................94 Earnings Per Share ..............................................................................................................................................................96 Share-Based Compensation and Equity ..................................................................................................................96 Foundations Retirement Plan.......................................................................................................................................100 Purchase Obligations .......................................................................................................................................................100 Segment Reporting .............................................................................................................................................................101 Quarterly Results ................................................................................................................................................................ 102 Stock price performance graph ............................................................................................................................................... 103 Corporate information ..................................................................................................................................................................104 1 Board of Directors Brent Shafer Gerald E. Bisbee Jr., Ph.D., M.B.A. Chairman of the Board and Chief Executive Officer Co-founder and Executive Chairman Cerner Corporation The Health Management Academy Mitchell E. Daniels Jr., J.D. Linda M. Dillman President Former Chief Information Officer Purdue University QVC, Inc. Julie L. Gerberding, M.D., M.P.H. John J. Greisch, M.B.A. Executive Vice President and Chief Patient Officer, Former President and Chief Executive Officer Strategic Communications, Global Public Policy and Hill-Rom Holdings, Inc. Population Health, Merck & Co., Inc. Melinda J. Mount, M.B.A. George A. Riedel, M.B.A. Former President Former Chairman and Chief Executive Officer AliphCom, Inc. (d/b/a Jawbone) Cloudmark, Inc. R. Halsey Wise, M.B.A. William D. Zollars Founder and Chief Executive Former Chairman, Chief Executive Officer and President Lime
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