CERNER CORPORATION (Exact Name of Registrant As Specified in Its Charter)
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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2005 OR o 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 (I.R.S. Employer Incorporation or organization) Identification No.) 2800 Rockcreek Parkway North Kansas City, MO 64117 (Address of principal executive offices) (Zip Code) (816) 221-1024 (Registrant’s telephone number, including area code) None (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value per share Preferred Stock Voting Rights (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No o 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 o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer o Non-accelerated filer o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No As of July 2, 2005, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $2,063,790,353 based on the closing sale price as reported on the NASDAQ Stock Market. 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 February 25, 2006 [Common Stock, $.01 par value per share] 78,649,164 shares DOCUMENTS INCORPORATED BY REFERENCE Document Parts Into Which Incorporated Proxy Statement for the Annual Meeting of Shareholders to be Part III held May 26, 2006 (Proxy Statement) TABLE OF CONTENTS Item 1. Business Item 1A. Risk Factors Item 2. Properties Item 3. Legal Proceedings Item 4. Submission of Matters to a Vote of Security Holders Item 4A. Executive Officers of the Company PART II Item 5. Market for the Registrant’s Common Stock and Related Security Holder Matters Item 6. Selected Financial Data Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Item 7A. Quantitative and Qualitative Disclosures about Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9.A. Controls and Procedures Item 9.B. Other Information PART III Item 10. Directors and Executive Officers of the Registrant Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management Item 13. Certain Relationships and Related Transactions Item 14. Principal Accountant Fees and Services PART IV Item 15. Exhibits and Financial Statement Schedules SIGNATURES Subsidiaries of Registrant Consent of Independent Registered Public Accounting Firm Certification of Neal L. Patterson Pursuant to Section 302 Certification of Marc G. Naughton Pursuant to Section 302 Certification Pursuant to 18 U.S.C. Section 1350 Certification Pursuant to 18 U.S.C. Section 1350 Table of Contents Item 1. Business Overview Cerner Corporation (“Cerner” or the “Company”) is a Delaware business incorporated in 1980. The Company’s corporate headquarters are located at 2800 Rockcreek Parkway, North Kansas City, Mo. 64117. Its telephone number is (816) 221-1024. The Company’s Web site address is www.cerner.com. The Company makes available free of charge, on or through its Web site, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. Cerner is taking the paper out of healthcare, eliminating error, variance and waste from the care process. With more than 1,500 clients worldwide, Cerner is a leading supplier of healthcare information technology (HIT) and healthcare devices that uniquely connect physician offices, hospitals, clinics, laboratories, pharmacies and consumers’ homes to timely, relevant healthcare information. Cerner’s unified architecture, end-to-end solution and service portfolio and proven results, combined with its commitment to forming long-term, aligned client relationships, are central to optimizing healthcare outcomes. All together, the Company’s 6,830 associates, including almost 900 clinicians, help client organizations of every size increase safety, improve efficiency and impact the bottom line via HIT. Cerner® solutions are designed to improve the safety, quality and efficiency of healthcare delivery by providing the right information to the right person at the right time and place to achieve the optimal health outcome. With an electronic medical record at the core of solutions created to meet specific needs across the continuum of care, Cerner solutions provide secure access to clinical, administrative and financial data in real time. Cerner services enable clients to streamline information technology management and maintenance to realize the greatest returns on their HIT investments. Cerner solutions are designed and developed on the unified, person-centric Cerner Millennium® architecture. The Cerner Millennium architecture is a state-of-the-art technology infrastructure that seamlessly combines clinical, financial and management information systems. It provides access to an individual’s electronic medical record at the point of care and organizes and proactively delivers information to meet the specific needs of the physician, nurse, laboratory technician, pharmacist or other care provider, front- and back-office professionals, and even consumers. The Cerner Vision Cerner’s vision has evolved from a fundamental thought: Healthcare should not be organized around an encounter; it should revolve around the individual. This concept led to Cerner’s Community Health Model and the creation of the person-centric Cerner Millennium architecture—a truly unified, enterprise-wide architecture. The Community Health Model encompasses four steps: • Automate the Care Process Cerner offers a longitudinal, person-centric electronic medical record, giving clinicians fingertip access to the right information at the right time and place to achieve the optimal health outcome. • Connect the Person Cerner is dedicated to building a personal health system. Medical information and care regimens accessible from home empower consumers to effectively manage their conditions and adhere to treatment plans, creating a new medium between physicians and individuals. • Structure the Knowledge Cerner is dedicated to building systems that bring the best science to every medical decision by structuring, storing and studying the content surrounding each care episode to achieve optimal clinical and financial outcomes. • Close the Loop Today, the gap between medical discovery and its incorporation into daily practice can be as long as 10 years. Cerner is dedicated to building systems that implement evidence-based medicine, reducing the average time from the discovery of an improved method to the change in the standard of care. 2 Table of Contents The Cerner Strategy Key elements of the Company’s business strategy include: • Leverage the proven Cerner Millennium architecture and the depth and breadth of Cerner solutions to continue expanding market share in the United States and abroad o Increase penetration of both large health systems and independent hospitals o Further penetrate existing client base by cross-selling additional Cerner solutions and services o Increase penetration of physician practices by offering a high-value suite of solutions with low upfront and recurring costs • Continue to develop innovative solutions and services that leverage the Company’s existing technology and human capital expertise and that drive continued organic revenue growth o State and regional community health record initiatives o Healthcare device innovation o Clinical process optimization o More efficient methods of transacting healthcare • Offer more efficient and predictable implementations and