The ABCs of systemic healthcare reform - Cerner Corporation

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Item 9A. Controls and Procedures a) Evaluation of disclosure controls and procedures. The Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO) have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by the Annual Report (the “Evaluation Date”). They have concluded that, as of the Evaluation Date, these disclosure controls and procedures were effective to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them by others within those entities and would be disclosed on a timely basis. The CEO and CFO have concluded that the Company’s disclosure controls and procedures are designed, and are effective, to give reasonable assurance that the information required to be disclosed by the Company in reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the SEC. They have also concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act are accumulated and communicated to the Company’s management, including the CEO and CFO, to allow timely decisions regarding required disclosure. b) There were no changes in the Company’s internal controls over financial reporting during the three months ended January 3, 2009, that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting. c) The Company’s management, including its Chief Executive Officer and Chief Financial Officer, have concluded that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at that reasonable assurance level. However, the Company’s management can provide no assurance that our disclosure controls and procedures or our internal control over financial reporting can prevent all errors and all fraud under all circumstances. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been or will be detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Management’s Report on Internal Control over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of January 3, 2009. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in its Internal Control-Integrated Framework. The Company’s management has concluded that, as of January 3, 2009, the Company’s internal control over financial reporting is effective based on these criteria. The Company’s independent registered public accounting firm that audited the consolidated financial statements included in the annual report has issued an audit report on the effectiveness of the Company’s internal control over financial reporting, which is included herein under “Report of Independent Registered Public Accounting Firm”. Item 9B. Other Information N/A 50
PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this Item 10 regarding our Directors will be set forth under the caption “Election of Directors” in our Proxy Statement in connection with the 2009 Annual Shareholders’ Meeting scheduled to be held May 22, 2009, and is incorporated in this Item 10 by reference. The information required by this Item 10 concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 will be set forth under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in our Proxy Statement in connection with the 2009 Annual Shareholders’ Meeting scheduled to be held May 22, 2009, and is incorporated in this Item 10 by reference. The information required by this Item 10 concerning our Code of Business Conduct and Ethics will be set forth under the caption “Code of Business Conduct and Ethics” in our Proxy Statement in connection with the 2009 Annual Shareholders’ Meeting scheduled to be held May 22, 2009, and is incorporated in this Item 10 by reference. The information required by this Item 10 concerning our Audit Committee and our Audit Committee financial expert will be set forth under the caption “Audit Committee” in our Proxy Statement in connection with the 2009 Annual Shareholders’ Meeting scheduled to be held May 22, 2009, and is incorporated in this Item 10 by reference. There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors since our last disclosure thereof. The following table sets forth the names, ages, positions and certain other information regarding the Company’s executive officers as of February 27, 2009. Officers are elected annually and serve at the discretion of the Board of Directors. Name Age Positions Neal L. Patterson 59 Chairman of the Board of Directors and Chief Executive Officer Clifford W. Illig 58 Vice Chairman of the Board of Directors Earl H. Devanny, III 57 President Marc G. Naughton 53 Senior Vice President and Chief Financial Officer Michael R. Nill 44 Executive Vice President and Chief Engineering Officer Randy D. Sims 48 Vice President, Chief Legal Officer and Secretary Jeffrey A. Townsend 45 Executive Vice President Mike Valentine 40 Executive Vice President and General Manager, U.S. Julia M. Wilson 46 Senior Vice President and Chief People Officer Neal L. Patterson has been Chairman of the Board of Directors and Chief Executive Officer of the Company for more than five years. Mr. Patterson also served as President of the Company from March of 1999 until August of 1999. Clifford W. Illig has been a Director of the Company for more than five years. He also served as Chief Operating Officer of the Company for more than five years until October 1998 and as President of the Company for more than five years until March of 1999. Mr. Illig was appointed Vice Chairman of the Board of Directors in March of 1999. Earl H. Devanny, III joined the Company in August of 1999 as President. Mr. Devanny also served as interim President of Cerner Southeast from January 2003 through July 2003. Prior to joining the Company, Mr. Devanny served as president of ADAC Healthcare Information Systems, Inc. Prior to joining ADAC, Mr. Devanny served as a Vice President of the Company from 1994 to 1997. Prior to that he spent 17 years with IBM Corporation. Marc G. Naughton joined the Company in November 1992 as Manager of Taxes. In November 1995 he was named Chief Financial Officer and in February 1996 he was promoted to Vice President. He was promoted to Senior Vice President in March 2002. Michael R. Nill joined the Company in November, 1996. Since that time he has held several positions in the Technology, Intellectual Property and CernerWorks client hosting organizations. He was promoted to Vice President in January 2000, promoted to Senior Vice President in April 2006 and promoted to Executive Vice President and named Chief Engineering Officer in February 2009. 51
Page 1 and 2: The ABCs of systemic healthcare ref
Page 3: ANNUAL REPORT 2008 1
Page 6 and 7: Board of Directors Neal L. Patterso
Page 8 and 9: To Cerner’s Shareholders, Clients
Page 10 and 11: As we have communicated, our long-t
Page 12 and 13: Key provisions of the ARRA designat
Page 14 and 15: most of our healthcare spending rel
Page 16 and 17: Appendix: Cerner’s Business Model
Page 18 and 19: that have allowed us to continue me
Page 20 and 21: A key point regarding our margin ex
Page 23 and 24: ANNUAL REPORT 2008 FORM 10-K 21
Page 25 and 26: PART I Item 1. Business Overview Ce
Page 27 and 28: total hours of effort needed to imp
Page 29 and 30: warranties concerning material erro
Page 31 and 32: known and unknown liabilities; 7) w
Page 33 and 34: Certain of our competitors have gre
Page 35 and 36: In July 2007, we entered into a lea
Page 37 and 38: Item 6. Selected Financial Data (1)
Page 39 and 40: Results Overview In a challenging e
Page 41 and 42: dispensing devices. Included in 200
Page 43 and 44: London which significantly enhances
Page 45 and 46: Net interest income was $1,269,000
Page 47 and 48: Liquidity and Capital Resources The
Page 49 and 50: The effects of inflation on the Com
Page 51: interest rates regularly reset ever
Page 55 and 56: PART IV Item 15. Exhibits and Finan
Page 57 and 58: 10(r) 10(s) 10(t) 10(u) Cerner Corp
Page 59 and 60: Report of Independent Registered Pu
Page 65 and 66: (1) Summary of Significant Accounti
Page 67 and 68: Deferred revenue is comprised of de
Page 69 and 70: (n) Goodwill and Other Intangible A
Page 71 and 72: amounts that include the amounts at
Page 73 and 74: The Company performs ongoing credit
Page 75 and 76: The aggregate maturities for the Co
Page 77 and 78: Concurrently with the recognition o
Page 79 and 80: exercise and associate departure be
Page 81 and 82: own directly or indirectly, or hold
Page 83 and 84: The effective income tax rates for
Page 85 and 86: Accounting policies for each of the
Page 87 and 88: Stock Price Performance The followi
Page 92: World Headquarters Cerner Worldwide

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