UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2001
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ______________
Commission file number 0-15386
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Cerner Corporation Foundations Retirement Plan
2800 Rockcreek Parkway
Kansas City, MO 64117
B. Name of issue of the securities held pursuant to the plan and the
address of its principal executive office:
REQUIRED INFORMATION
Report of Independent Auditors' 3
Financial Statements and Schedule
Financial Statements:
Statements of Net Assets Available for Participants
at December 31, 2001 and 2000 4
Statements of Changes in Net Assets Available for Participants
for the Years ended December 31, 2001 and 2000 5
Notes to Financial Statements 6
Supplemental Schedule:
Schedule I - Schedule of Assets Held for Investment Purposes
at December 21, 2001 10
Schedule II - Schedule of Reportable Transactions
at December 31, 2001 11
Exhibit
Exhibit 23 - Consent of Independent Auditors' 12
SIGNATURE
The plan, pursuant to the requirements of the securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly casued this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
FOUNDATIONS RETIREMENT PLAN
Dated: June 28, 2002 By: \s\ Marc G. Naughton
------------- -----------------------------------
2
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cerner Corporation:
We have audited the accompanying statements of net assets available for
participants of the Cerner Corporation Foundations Retirement Plan as of
December 31, 2001 and 2000, and the related statements of changes in net assets
available for participants for the years then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts, and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for participants of the Cerner
Corporation Foundations Retirement Plan as of December 31, 2001 and 2000, and
the changes in net assets available for participants for the years then ended,
in conformity with accounting principles generally accepted in the United States
of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary schedules of assets
held for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
are the responsibility of the Plan's management. The supplemental schedules have
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
Kansas City, Missouri
May 31, 2002
3
CERNER CORPORATION FOUNDATIONS
RETIREMENT PLAN
Statements of Net Assets Available for Participants
December 31, 2001 and 2000
2001 2000
------------------- -------------------
Assets:
Investments at fair value (note 6) $ 135,394,774 118,690,457
Employer contributions receivable 297,500 --
Cash 5,211 1,562,014
------------------- -------------------
Net assets available for participants $ 135,697,485 120,252,471
=================== ===================
See accompanying notes to financial statements.
4
CERNER CORPORATION FOUNDATIONS
RETIREMENT PLAN
Statements of Changes in Net Assets Available for Participants
Years ended December 31, 2001 and 2000
2001 2000
------------------- -------------------
Additions to net assets attributed to:
Net appreciation (depreciation) in fair value of
investments (note 6) $ (135,571) 31,223,795
Interest and dividends 407,961 4,350,661
Employer contributions (note 2) 2,704,968 3,908,548
Associates contributions (note 2) 18,112,043 15,618,613
------------------- -------------------
Total additions 21,089,401 55,101,617
------------------- -------------------
Deductions from net assets attributed to:
Distributions to associates (note 3) (5,634,655) (7,707,718)
Investment expenses (9,732) (10,820)
------------------- -------------------
Total deductions (5,644,387) (7,718,538)
------------------- -------------------
Net increase 15,445,014 47,383,079
Net assets available for participants:
Balance at beginning of year 120,252,471 72,869,392
------------------- -------------------
Balance at end of year $ 135,697,485 120,252,471
=================== ===================
See accompanying notes to financial statements.
5
CERNER CORPORATION FOUNDATIONS
RETIREMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The following brief description of the Cerner Corporation Foundations
Retirement Plan (the Plan) is provided for general information purposes
only. Participants should refer to the Summary Plan Document for more
complete information.
The Plan was adopted by the board of directors of Cerner Corporation (the
Company or Employer) effective November 1, 1987. The Plan has most
recently been amended and restated to comply with certain changes in the
law since 1996. The Plan is administered by a third-party administrator.
All associates of the Company are eligible for participation in the Plan
upon attaining age eighteen except for:
- associates whose employment is governed by a collective
bargaining agreement under which retirement benefits were the
subject of good faith bargaining, unless such agreement expressly
provides for participation in the Plan;
- certain nonresident aliens who have no earned income from sources
within the United States of America;
- leased associates; or
- associates who were previously not treated as associates of the
Employer but who are reclassified as being associates.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the accrual
basis in conformity with accounting principles generally accepted in the
United States of America, and present the Plan's net assets available for
participants and changes in those net assets.
EXPENSES
Substantially all costs and expenses incurred in administering the Plan
are paid by the Company. Expenses related to issuance of loans to
participants are charged to the participant obtaining the loan.
INVESTMENTS
The Plan's investments and earnings thereon are held in a bank trust
account. The fair values of investments are based principally on
quotations from national securities exchanges. Purchases and sales of
securities are recorded on a trade-date basis.
LOANS TO PARTICIPANTS
At the discretion of the Company, loans may be made to participants in an
amount that is the lesser of (1) 50% of the participant's vested account
balance at the time the loan is initially requested, or (2) $50,000 minus
the excess of the participant's highest outstanding loan balance during
the twelve-month period ending on the date the loan is initially
requested over the outstanding loan balance. Generally, the loan period
may not exceed five years and the interest rate is prime plus 1%. Loans
may not be taken from a participant's Employer matching contribution
account.
6
CERNER CORPORATION FOUNDATIONS
RETIREMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
USE OF ESTIMATES
The Plan utilizes a number of estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these financial statements in
conformity with accounting principles generally accepted in the United
States of America. Actual results could differ from those estimates.
(2) CONTRIBUTIONS
Participating associates may elect to make pretax contributions from 1%
to 20% of their compensation to the Plan, subject to annual limits
imposed by the Internal Revenue Service. Participants may direct
contributions into nine different investment funds. These funds include
investments in the Company common stock, the American Century Ultra Fund,
the American Century Growth Fund, the American Century Select Fund, the
American Century Balanced Fund, the American Century Value Fund, the
American Century International Growth Fund, the American Century Stable
Asset Fund, and the Charles B. Schwab Personal Choice Account. The
Company generally will make matching contributions in an amount equal to
33% of the participant's annual contribution, not to exceed 6% of the
participant's annual compensation. All Company contributions are directed
to the Company common stock fund.
During 2001, the Company made an additional matching voluntary
contribution of $1,077,560, which represented 0.75% of eligible
associate's compensation based on the Company's 2000 financial
performance. No such contribution was made by the Company in 2000. In
2000, the Company funded $1,500,000 of contributions related to 2001
matching contributions.
(3) DISTRIBUTIONS AND TRANSFERS
Upon normal retirement, retirement for permanent disability, or death, a
participant is entitled to the full value of the assets attributable to
his or her contributions and Company contributions made on his or her
behalf. Upon termination for any other reason, a participant is entitled
to 100% of his or her contributions and the vested portion of Company
contributions. Company contributions vest 20% after one year of service
and 20% for each additional year of service until a participant is 100%
vested upon completing five years of service. Through December 31, 2000,
forfeitures of nonvested contributions were allocated to all Plan
participants as of the Plan year-end on a pro rata basis according to
individual participant annual earnings. Effective January 1, 2001,
forfeitures of nonvested contributions are used first to reduce the
Plan's ordinary and necessary administrative expenses and, to the extent
any forfeitures remain, to offset any Employer matching contributions.
To the extent a participant's account balance is invested in Company
common stock, participants receive distributions of such stock in shares
of the Company's common stock, except that cash is distributed for
fractional shares. Participants may also elect to receive cash for
distributions with a value less than $1,000. During the years ended
December 31, 2001 and 2000, 48,843 and 97,988 shares of the Company's
common stock, respectively, were distributed to withdrawing participants.
Participants receive distributions from all other funds in cash.
7
CERNER CORPORATION FOUNDATIONS
RETIREMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
Associate dollars invested in Company stock are allowed to be transferred
out once per quarter with a 25% limit. Transfer elections are restricted
for six months until the next option to transfer. Effective August 1,
2002, associates will be able to make up to twelve transfers out of
Company stock per calendar year, with no limit to the amount of stock an
associate can move in any one transfer. These transfer provisions relate
to associate-owned Company stock only. Transfers out of Company stock
contributed to a participant's account by the Company are prohibited
except in the event of termination of employment with the Company.
(4) TAX STATUS
The Plan received a favorable determination letter, dated August 25,
1994, from the Internal Revenue Service confirming the tax-exempt status
of the Plan under Section 401(a) of the Internal Revenue Code. The
Company is not aware of any activity or transactions that may adversely
affect the qualified status of the Plan.
(5) PLAN PARTICIPANTS
The following summarizes the number of participants by fund as of
December 31:
2001 2000
------------------ -------------------
Company common stock 3,803 3,111
American Century Mutual Funds:
Ultra 2,341 2,099
Growth 2,122 1,853
Select 1,491 1,252
Balanced 959 751
Value 859 416
International Growth 1,032 777
Stable Asset 819 627
Charles B. Schwab Personal Choice Account 65 49
Because associates may invest in more than one fund, the number of
associate participants above exceeds the total number of associate
participants.
(6) INVESTMENTS
The following presents investments that represent 5% or more of the
Plan's net assets:
2001 2000
------------------- -------------------
Company common stock $ 85,039,764 73,455,862
American Century:
Ultra Fund 16,271,494 15,925,168
Growth Fund 12,082,300 12,010,999
Select Fund 6,924,310 6,980,968
Other 15,076,906 10,317,460
------------------- -------------------
$ 135,394,774 118,690,457
=================== ===================
8
CERNER CORPORATION FOUNDATIONS
RETIREMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
During 2001 and 2000, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
appreciated (depreciated) in value as follows:
2001 2000
------------------- -------------------
Mutual funds $ (6,660,373) (10,943,376)
Company common stock 6,524,802 42,167,171
------------------- -------------------
$ (135,571) 31,223,795
=================== ===================
(7) NONPARTICIPANT DIRECTED INVESTMENT
As described in note 2, Company contributions are invested exclusively in
Company common stock. Information about the net assets and significant
components of the changes in net assets relating to the nonparticipant
directed investment at December 31, 2001 and 2000 is as follows:
2001 2000
------------------ ------------------
Net assets available for participants:
Company common stock $ 85,039,764 73,455,862
Changes in net assets available for participants:
Contributions $ 8,162,494 6,543,869
Dividends 6,120 1,765
Transfers out (244,478) (673,964)
Net appreciation 6,524,802 42,167,171
Distributions (2,865,036) (4,345,183)
------------------ ------------------
$ 11,583,902 43,693,658
================== ==================
(8) TRANSACTIONS WITH PARTIES-IN-INTEREST
Transactions with parties-in-interest during the years ended December 31,
2001 and 2000 were as follows:
DESCRIPTION OF TRANSACTION COST
-------------------------------------------- ------------------
2001:
Purchased 280,854 shares of
Company common stock $ 8,162,494
2000:
Purchased 207,598 shares of
Company common stock $ 6,543,869
9
SCHEDULE 1
CERNER CORPORATION FOUNDATIONS
RETIREMENT PLAN
Schedule of Assets Held for Investment Purposes
December 31, 2001
FAIR
ASSET DESCRIPTION COST VALUE
--------------------------- --------------------------------------------------------------- --------------- --------------
Cerner Corporation* 1,703,180 shares of common stock $ 33,087,551 85,039,764
American Century* Ultra Investors Mutual Fund, 588,694 shares (1) 16,271,494
American Century* Growth Investors Mutual Fund, 618,970 shares (1) 12,082,300
American Century* Select Investors Mutual Fund, 187,144 shares (1) 6,924,310
American Century* Balanced Investors Mutual Fund, 260,142 shares (1) 3,839,696
American Century* Value Mutual Fund, 406,432 shares (1) 2,845,024
American Century* International Growth Mutual Fund, 281,881 shares (1) 2,246,590
American Century* Stable Asset Fund, 3,579,025 units of participation (1) 3,579,025
Charles B. Schwab Schwab Personal Choice Account, 773,762 shares (1) 773,762
Loans to participants* Loans to participants (bearing interest from 6.0% to 10.5%) (1) 1,792,809
--------------
$ 135,394,774
==============
(1) In accordance with instructions to the Form 5500, the Plan is no longer
required to disclose the cost component of participant directed
investments.
* Party-in-interest.
See accompanying independent auditors' report.
10
SCHEDULE 2
CERNER CORPORATION FOUNDATIONS
RETIREMENT PLAN
Schedule of Reportable Transactions
Year ended December 31, 2001
IDENTITY OF PARTY DESCRIPTION PURCHASE SELLING ORIGINAL NET GAIN
INVOLVED OF ASSET PRICE PRICE COST (LOSS)
-------------------------- ------------------- ------------------- --------- ---------------- -------------
Cerner Corporation Common stock $ 8,162,494 -- 8,162,494 --
=================== ========= ================ =============
NOTES:
A reportable transaction is defined by the Department of Labor as:
- A single transaction in excess of 5% of the fair value of plan assets.
- A series of transactions with or in conjunction with the same person,
involving property other than securities, which amounts in the
aggregate to more than 5% of the fair value of the plan assets.
- A series of transactions with respect to securities of the same issue
which amounts in the aggregate to more than 5% of the fair value of
the total plan assets.
- Any transaction with or in conjunction with a person if a prior or
subsequent single transaction has occurred with respect to securities
with or in conjunction with the same person in an amount in excess of
5% of the fair value of plan assets.
A reportable transaction is identified by comparing the fair value of the
transaction at the transaction date with the fair value of the plan assets
at the beginning of the year ended December 31, 2001.
See accompanying independent auditors' report.
11