The ABCs of systemic healthcare reform - Cerner Corporation

(5) Indebtedness
The following is a summary of indebtedness outstanding:
In November 2005, the Company completed a £65,000,000 ($94,556,000 at January 3, 2009) private placement of debt at
5.54% pursuant to a Note Agreement. The Note Agreement is payable in seven equal annual installments beginning in
November 2009. The proceeds were used to repay the outstanding amount under the Company’s credit facility and for general
corporate purposes. The Note Agreement contains certain net worth and fixed charge coverage covenants and provides certain
restrictions on the Company’s ability to borrow, incur liens, sell assets and pay dividends. The Company was in compliance with
all covenants at January 3, 2009.
In December 2002, the Company completed a $60,000,000 private placement of debt pursuant to a Note Agreement. The
Series A Senior Notes, with a $21,000,000 principal amount at 5.57% were paid in full in 2008. The Series B Senior notes, with
a $39,000,000 principal amount at 6.42%, are payable in four equal annual installments beginning December 2009. The
proceeds were used to repay the outstanding amount under the Company’s credit facility and for general corporate purposes.
The Note Agreement contains certain net worth and fixed charge coverage covenants and provides certain restrictions on the
Company’s ability to borrow, incur liens, sell assets and pay dividends. The Company was in compliance with all covenants at
January 3, 2009.
In May 2002, the Company expanded its credit facility by entering into an unsecured credit agreement with a group of banks led
by US Bank. This agreement was amended and restated on November 30, 2006 and provides for a current revolving line of
credit for working capital purposes. The current revolving line of credit is unsecured and requires monthly payments of interest
only. Interest is payable at the Company’s option at a rate based on prime (3.25% at January 3, 2009) or LIBOR (1.41% at
January 3, 2009) plus 1.55%. The interest rate may be reduced by up to 1.15% if certain net worth ratios are maintained. The
agreement contains certain net worth, current ratio, and fixed charge coverage covenants and provides certain restrictions on
the Company’s ability to borrow, incur liens, sell assets, and pay dividends. A commitment fee of .2% is payable quarterly based
on the usage of the revolving line of credit. The revolving line of credit matures on May 31, 2010. As of January 3, 2009, the
Company had no outstanding borrowings under this agreement and had $90,000,000 available for working capital purposes.
The Company was in compliance with all covenants at January 3, 2009.
In April 1999, the Company completed a $100,000,000 private placement of debt pursuant to a Note Agreement. The Series A
Senior Notes, with a $60,000,000 principal amount at 7.14% were paid in full in 2006. The Series B Senior Notes, with a
$40,000,000 principal amount at 7.66%, are payable in six equal annual installments which commenced in April 2004. The
proceeds were used to retire the Company’s existing $30,000,000 of debt, and the remaining funds were used for capital
improvements and to strengthen the Company’s cash position. The Note Agreement contains certain net worth, current ratio,
and fixed charge coverage covenants and provides certain restrictions on the Company’s ability to borrow, incur liens, sell
assets and pay dividends. The Company was in compliance with all covenants at January 3, 2009.
In March 2004, the Company issued a $7,500,000 promissory note to Cedars-Sinai Medical Center of which $2,500,000 was
repaid in October 2004. The balance of the note was paid on April 30, 2007.
The Company also has capital lease obligations amounting to $191,000, payable over the next two years.
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