The ABCs of systemic healthcare reform - Cerner Corporation

(g) Short-term Investments
The Company’s short-term investments are primarily invested in commercial paper. Refer to Note (6) and Note (7) for a
comprehensive description of these assets and their value.
(h) Long-term Investments
The Company’s long-term investments are primarily invested in auction rate securities. Refer to Note (6) and Note (7) for a
comprehensive description of these assets and their value.
(i) Inventory
Inventory consists primarily of computer hardware, sublicensed software held for resale and RxStation medication dispensing
units. Inventory is recorded at the lower of cost (first-in, first-out) or market.
(j) Property and Equipment
Property, equipment and leasehold improvements are stated at cost. Depreciation of property and equipment is computed
using the straight-line method over periods of two to 50 years. Amortization of leasehold improvements is computed using a
straight-line method over the shorter of the lease terms or the useful lives, which range from periods of two to 15 years.
(k) Earnings per Common Share
Basic earnings per share (EPS) excludes dilution and is computed by dividing income available to common shareholders by the
weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue stock were exercised or converted into common stock or resulted in the issuance
of common stock that then shared in the earnings of the Company. A reconciliation of the numerators and the denominators of
the basic and diluted per-share computations are as follows:
Options to purchase 2,336,000, 1,081,000 and 1,121,000 shares of common stock at per share prices ranging from $33.63
to $136.86, $40.84 to $136.86 and $33.86 to $136.86, were outstanding at the end of 2008, 2007 and 2006, respectively,
but were not included in the computation of diluted earnings per share because they were antidilutive.
(l) Foreign Currency
Assets and liabilities of non-U.S. subsidiaries whose functional currency is the local currency are translated into U.S. dollars at
exchange rates prevailing at the balance sheet date. Revenues and expenses are translated at average exchange rates during
the year. The net exchange differences resulting from these translations are reported in accumulated other comprehensive
income. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of
operations. The net gain resulting from foreign currency transactions is included in general and administrative expenses in the
consolidated statements of operations and amounted to $9,858,000, $3,691,000 and $3,764,000 in 2008, 2007 and 2006,
respectively.
(m) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
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