The ABCs of systemic healthcare reform - Cerner Corporation

Item 6. Selected Financial Data
(1) Includes share-based compensation expense recognized in accordance with Statement of Financial Accounting
Standards No. 123R. The impact of including this expense is a $9.5 million decrease, net of $5.6 million tax
benefit, in net earnings and a decrease to diluted earnings per share of $.11 in 2008, a $10.2 million decrease,
net of $6.0 million tax benefit, in net earnings and a decrease to diluted earnings per share of $.12 in 2007 and
a $11.7 million decrease, net of $7.3 million tax benefit, in net earnings and a decrease to diluted earnings per
share of $.14 in 2006.
(2) Includes expense related to a settlement with a third party provider of software related to the use of the third
party’s software in the Company’s remote hosting business. The settlement included compensation for the use of
the software for periods prior to 2008 as well as compensation for licenses of the software for future use for
existing and additional clients through January 2009. Of the total settlement amount, the Company determined
that $5.0 million should have been recorded in prior periods, primarily 2005 through 2007. Based on this
valuation, 2008 results include an increase of $8.0 million to sales and client service expense, a decrease of
$5.0 million to net earnings, and a decrease of $.06 to diluted earnings per share that are attributable to prior
periods.
(3) Includes a research and development write-off related to the RxStation medication dispensing devices. In
connection with production and delivery of the RxStation medication dispensing devices, the Company reviewed
the accounting treatment for the RxStation line of devices and determined that $8.6 million of research and
development activities for the RxStation medication dispensing devices that should have been expensed was
incorrectly capitalized. The impact of this charge is a $5.4 million decrease, net of $3.2 million tax benefit, in net
earnings and a decrease to diluted earnings per share of $.06 in the year ended December 29, 2007. $2.1
million of this $5.4 million after tax amount recorded in 2007 related to periods prior to 2007.
(4) Includes a $3.1 million tax benefit recorded in 2007 related to periods prior to 2007. The tax benefit relates to
the over-expensing of state income taxes, which resulted in an increase to diluted earnings per share of $.04 in
the year ended December 29, 2007.
(5) Includes an adjustment to correct the amounts previously reported for the second quarter of 2007 for a
previously disclosed out-of-period tax item relating to foreign net operating losses. The effect of this adjustment
increases tax expense for the year ended December 29, 2007, by $4.2 million and increases January 1, 2005
retained earnings (Shareholders’ Equity) by the same amount.
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