10-Q 1 cern-20210930.htm 10-Q cern-20210930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2021
or
☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________

Commission File Number: 0-15386

CERNER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
cern-20210930_g1.jpg
43-1196944
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer Identification No.)
2800 Rock Creek Parkway
North Kansas City,MO64117
(Address of principal executive offices)(Zip Code)

(816) 221-1024
(Registrant's telephone number, including area code)
_________________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareCERNThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class  Outstanding at October 25, 2021
Common Stock, $0.01 par value per share  294,222,760 shares


CERNER CORPORATION

TABLE OF CONTENTS
 
Part I.Financial Information:
Item 1.Financial Statements:
Item 2.
Item 3.
Item 4.
Part II.Other Information:
Item 1.
Item 2.
Item 6.
Signatures


Part I. Financial Information

Item 1. Financial Statements

CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2021 (unaudited) and December 31, 2020
(In thousands, except share data)20212020
Assets
Current assets:
Cash and cash equivalents$459,540 $615,615 
Short-term investments322,634 442,473 
Receivables, net1,219,849 1,168,712 
Inventory25,389 23,027 
Prepaid expenses and other412,744 401,160 
Total current assets2,440,156 2,650,987 
Property and equipment, net1,717,630 1,804,083 
Right-of-use assets89,619 104,536 
Software development costs, net1,008,440 1,009,349 
Goodwill1,126,843 914,520 
Intangible assets, net476,067 329,249 
Long-term investments488,454 510,220 
Other assets195,951 198,152 
Total assets$7,543,160 $7,521,096 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable$311,196 $235,755 
Current installments of long-term debt225,000 — 
Deferred revenue438,063 393,293 
Accrued payroll and tax withholdings344,879 309,814 
Other current liabilities232,187 229,764 
Total current liabilities1,551,325 1,168,626 
Long-term debt1,611,205 1,336,069 
Deferred income taxes389,843 376,035 
Other liabilities150,884 157,799 
Total liabilities3,703,257 3,038,529 
Shareholders' Equity:
Common stock, $0.01 par value, 500,000,000 shares authorized, 378,558,251 shares issued at September 30, 2021 and 373,224,832 shares issued at December 31, 2020
3,785 3,732 
Additional paid-in capital2,598,853 2,288,806 
Retained earnings6,656,679 6,475,551 
Treasury stock, 82,216,073 shares at September 30, 2021 and 67,371,686 shares at December 31, 2020
(5,289,718)(4,164,718)
Accumulated other comprehensive loss, net(129,696)(120,804)
Total shareholders' equity3,839,903 4,482,567 
Total liabilities and shareholders' equity$7,543,160 $7,521,096 

See notes to condensed consolidated financial statements (unaudited).
1
CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended September 30, 2021 and September 30, 2020
(unaudited)
 
 Three Months EndedNine Months Ended
(In thousands, except per share data)2021202020212020
Revenues$1,467,976 $1,368,673 $4,312,509 $4,110,763 
Costs and expenses:
Costs of revenue251,111 231,889 743,092 698,268 
Sales and client service651,010 625,402 2,004,263 1,907,138 
Software development (Includes amortization of $66,222 and $196,319 for the three and nine months ended September 30, 2021, respectively; and $61,578 and $183,786 for the three and nine months ended September 30, 2020, respectively)
202,663 186,826 636,590 551,101 
General and administrative121,395 116,816 390,067 391,000 
Amortization of acquisition-related intangibles16,874 12,789 45,956 43,031 
Total costs and expenses1,243,053 1,173,722 3,819,968 3,590,538 
Gain on sale of businesses— 216,869 — 216,869 
Operating earnings224,923 411,820 492,541 737,094 
Other income (loss), net(5,070)48,020 (5,542)78,247 
Earnings before income taxes219,853 459,840 486,999 815,341 
Income taxes(44,058)(103,164)(106,245)(176,758)
Net earnings$175,795 $356,676 $380,754 $638,583 
Basic earnings per share$0.59 $1.17 $1.27 $2.08 
Diluted earnings per share$0.59 $1.16 $1.25 $2.07 
Basic weighted average shares outstanding296,202 305,759 300,526 306,759 
Diluted weighted average shares outstanding298,714 308,366 303,423 309,124 
See notes to condensed consolidated financial statements (unaudited).

2
CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three and nine months ended September 30, 2021 and September 30, 2020
(unaudited)
 
 Three Months EndedNine Months Ended
(In thousands)2021202020212020
Net earnings$175,795 $356,676 $380,754 $638,583 
Foreign currency translation adjustment and other (net of taxes (benefit) of $(151) and $(580) for the three and nine months ended September 30, 2021, and $351 and $688 for the three and nine months ended September 30, 2020, respectively)
(13,259)9,611 (17,764)(1,738)
Unrealized gain (loss) on cash flow hedge (net of taxes (benefit) of $748 and $2,993 for the three and nine months ended September 30, 2021, and $745 and $(5,937) for the three and nine months ended September 30, 2020, respectively)
2,273 2,265 9,099 (18,050)
Unrealized holding gain (loss) on available-for-sale investments (net of taxes (benefit) of $5 and $(75) for the three and nine months ended September 30, 2021, and $(73) and $142 for the three and nine months ended September 30, 2020, respectively)
17 (220)(227)433 
Comprehensive income$164,826 $368,332 $371,862 $619,228 

See notes to condensed consolidated financial statements (unaudited).

3
CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2021 and September 30, 2020
(unaudited)
 Nine Months Ended
(In thousands)20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings$380,754 $638,583 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization535,816 518,987 
Share-based compensation expense157,165 110,500 
Provision for deferred income taxes3,582 21,554 
Gain on sale of businesses— (216,869)
Investment gains— (75,834)
Asset impairments117,739 — 
Changes in assets and liabilities (net of businesses acquired):
Receivables, net(33,948)(78,695)
Inventory(2,360)8,206 
Prepaid expenses and other(2,091)(36,664)
Accounts payable27,467 (60,808)
Accrued income taxes13,100 33,005 
Deferred revenue11,053 (32,071)
Other accrued liabilities46,113 94,151 
Net cash provided by operating activities1,254,390 924,045 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital purchases(246,813)(238,053)
Capitalized software development costs(242,677)(224,710)
Purchases of investments(607,390)(511,378)
Sales and maturities of investments753,347 213,309 
Purchase of other intangibles(23,197)(29,698)
Acquisition of businesses, net of cash acquired(348,179)(35,766)
Sale of businesses— 229,471 
Disposition of assets held for sale9,349 — 
Net cash used in investing activities(705,560)(596,825)
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt issuance500,000 300,000 
Repayment of long-term debt— (2,500)
Proceeds from exercise of stock options214,577 202,680 
Payments to taxing authorities in connection with shares directly withheld from associates(62,159)(22,623)
Treasury stock purchases(1,125,000)(650,000)
Dividends paid(202,054)(166,277)
Other(18,441)(6,807)
Net cash used in financing activities(693,077)(345,527)
Effect of exchange rate changes on cash and cash equivalents(11,828)(4,382)
Net decrease in cash and cash equivalents(156,075)(22,689)
Cash and cash equivalents at beginning of period615,615 441,843 
Cash and cash equivalents at end of period$459,540 $419,154 
See notes to condensed consolidated financial statements (unaudited).
4
CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the three and nine months ended September 30, 2021 and September 30, 2020
(unaudited)
Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Loss, Net
(In thousands)SharesAmount
Balance at December 31, 2020373,225 $3,732 $2,288,806 $6,475,551 $(4,164,718)$(120,804)
Exercise of stock options and vests of restricted shares and share units824 8 31,471 — — — 
Employee share-based compensation expense— — 47,950 — — — 
Other comprehensive income (loss)— — — — — (4,620)
Treasury stock purchases— — — — (350,000)— 
Cash dividends declared ($0.22 per share)— — — (67,191)— — 
Net earnings— — — 172,252 — — 
Balance at March 31, 2021374,049 3,740 2,368,227 6,580,612 (4,514,718)(125,424)
Exercise of stock options and vests of restricted shares and share units2,887 29 87,377 — — — 
Employee share-based compensation expense— — 53,941 — — — 
Other comprehensive income (loss)— — — — — 6,697 
Treasury stock purchases— — — — (400,000)— 
Cash dividends declared ($0.22 per share)— — — (66,704)— — 
Net earnings— — — 32,707 — — 
Balance at June 30, 2021376,936 3,769 2,509,545 6,546,615 (4,914,718)(118,727)
Exercise of stock options and vests of restricted shares and share units1,622 16 34,034 — — — 
Employee share-based compensation expense— — 55,274 — — — 
Other comprehensive income (loss)— — — — — (10,969)
Treasury stock purchases— — — — (375,000)— 
Cash dividends declared ($0.22 per share)— — — (65,731)— — 
Net earnings— — — 175,795 — — 
Balance at September 30, 2021378,558 3,785 2,598,853 6,656,679 (5,289,718)(129,696)

See notes to condensed consolidated financial statements (unaudited).














5
CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (continued)
For the three and nine months ended September 30, 2021 and September 30, 2020
(unaudited)
Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Loss, Net
(In thousands)SharesAmount
Balance at December 28, 2019367,635 $3,676 $1,905,171 $5,934,909 $(3,407,768)$(118,660)
Exercise of stock options and vests of restricted shares and share units2,543 26 114,050 — — — 
Employee share-based compensation expense— — 35,031 — — — 
Cumulative effect of accounting change (ASU 2016-13)— — — (4,606)— — 
Other comprehensive income (loss)— — — — — (40,703)
Treasury stock purchases— — — — (650,000)— 
Cash dividends declared ($0.18 per share)— — — (55,206)— — 
Net earnings— — — 147,159 — — 
Balance at March 31, 2020370,178 3,702 2,054,252 6,022,256 (4,057,768)(159,363)
Exercise of stock options and vests of restricted shares and share units1,009 10 28,540 — — — 
Employee share-based compensation expense— — 37,549 — — — 
Other comprehensive income (loss)— — — — — 9,692 
Cash dividends declared ($0.18 per share)— — — (55,602)— — 
Net earnings— — — 134,748 — — 
Balance at June 30, 2020371,187 3,712 2,120,341 6,101,402 (4,057,768)(149,671)
Exercise of stock options and vests of restricted shares and share units1,086 11 37,866 — — — 
Employee share-based compensation expense— — 37,920 — — — 
Other comprehensive income (loss)— — — — — 11,656 
Cash dividends declared ($0.18 per share)— — — (55,858)— — 
Net earnings— — — 356,676 — — 
Balance at September 30, 2020372,273 $3,723 $2,196,127 $6,402,220 $(4,057,768)$(138,015)

See notes to condensed consolidated financial statements (unaudited).
6
CERNER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
(1) Interim Statement Presentation

Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Cerner Corporation ("Cerner," the "Company," "we," "us" or "our") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our latest annual report on Form 10-K.
In management's opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position and the results of operations and cash flows for the periods presented. Our interim results as presented in this quarterly report on Form 10-Q are not necessarily indicative of the operating results for the entire year.

The condensed consolidated financial statements were prepared using GAAP. These principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from those estimates.

All references to quarters or nine month periods ended 2021 and 2020 in these notes to condensed consolidated financial statements refer to the respective three and nine month periods ended September 30, 2021 and September 30, 2020, unless otherwise noted.

Employee Separation Costs

In connection with involuntary separation benefits, we recognized less than $1 million and $6 million of expenses in the third quarters of 2021 and 2020, respectively; and $46 million and $21 million of expenses during the first nine months of 2021 and 2020, respectively.

In connection with voluntary separation benefits, we recognized $24 million and $2 million of expenses in the third quarters of 2021 and 2020, respectively; and $51 million and $18 million of expenses during the first nine months of 2021 and 2020, respectively.

Such employee separation costs are included in "General and administrative" expense in our condensed consolidated statements of operations.

At September 30, 2021, a liability of $19 million for such obligations is included in "Accrued payroll and tax withholdings" in our condensed consolidated balance sheets.

Real Estate Held For Sale

In connection with our operational improvement initiatives, during the nine months ended September 30, 2021, we made certain decisions regarding the continued use of certain of our owned real estate. As a result of those decisions, on July 9, 2021, we sold office space located in Kansas City, Missouri (known as our Oaks Campus), in April 2021 began the process of marketing office space located in Kansas City, Missouri (known as our Riverport Campus), in June 2021 began the process of marketing office space located in Kansas City, Kansas (known as our Continuous Campus), and in September 2021 began the process of marketing a portion of our office space located in Malvern, Pennsylvania. At September 30, 2021, these long-lived assets aggregating $101 million were held for sale and presented within our condensed consolidated balance sheets in "Property and equipment, net." In connection with the designation as held for sale, during the second quarter of 2021, we recorded a pre-tax charge of $68 million to reduce the amount of such long-lived assets to fair value, less estimated costs to sell. Such charge is included in "Sales and client service" expense in our condensed consolidated statements of operations.

7

Software Development Costs

In the second and third quarters of 2021, we recorded pre-tax charges of $48 million and $2 million, respectively, to reduce the carrying amount of certain capitalized software development costs to estimated net realizable value. Such charges are included in "Software development" expense in our condensed consolidated statements of operations.

Supplemental Disclosures of Cash Flow Information
 Nine Months Ended
(In thousands)20212020
Cash paid during the period for:
Interest (including amounts capitalized of $8,308 and $12,040, respectively)
$41,918 $31,661 
Income taxes, net of refunds95,065 78,519 
Non-cash items:
Lease liabilities recorded upon the commencement of operating leases9,062 24,499 
Financed capital purchases7,255 17,395 

Recently Issued Accounting Pronouncements

Reference Rate Reform. The Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting in March 2020 and ASU 2021-01, Reference Rate Reform (Topic 848): Scope in January 2021. Such guidance provides optional financial reporting alternatives to reduce the cost and complexity associated with the accounting for contracts and hedging relationships affected by reference rate reform, such as the upcoming discontinuance of the London Interbank Offered Rate ("LIBOR"). The accommodations within this guidance may be applied prospectively from the beginning of our 2020 first quarter through December 31, 2022. We are currently evaluating the effect that this guidance may have on our contracts that reference LIBOR, specifically, our Third Amended and Restated Credit Agreement (as amended, the "Credit Agreement") and related interest rate swap. As of the date of this filing, we have not elected to apply any of the provisions of this guidance.

8
(2) Business Acquisition

On April 1, 2021, we acquired Kantar Health, a division of Kantar Group. Kantar Health provides data, analytics, commercial research, and consulting services to the life sciences industry. We believe this acquisition complements our existing Data-as-a-Service efforts as it provides a meaningful entry into the pharmaceutical market through Kantar Health's existing clients and their leadership team with important industry experience and relationships. These factors, combined with the synergies and economies of scale expected, are the basis for the acquisition and comprise the resulting goodwill recorded.

Consideration for the acquisition was a base cash purchase price of $375 million. The base purchase price is subject to post-closing adjustments for working capital and certain other adjustments, as specified in the Securities Purchase Agreement dated December 16, 2020, as amended.

Our acquisition of Kantar Health is being treated as a purchase in accordance with Accounting Standards Codification Topic ("ASC") 805, Business Combinations, which requires allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed in the transaction. The allocation of purchase price is based on management's judgment after evaluating several factors, including a preliminary valuation assessment. The allocation of purchase price is preliminary and subject to changes, as appraisals of intangible assets are finalized, working capital and certain other adjustments are agreed upon, and additional information becomes available. The following is a summary of the preliminary allocation of purchase price:
(In thousands)Allocation Amount
Cash and cash equivalents$14,992 
Receivables, net31,952 
Prepaid expenses and other11,776 
Property and equipment, net1,147 
Right-of-use assets1,680 
Goodwill217,608 
Intangible assets, net:
Customer relationships143,100 
Existing technologies39,700 
Trade names10,200 
Other assets26 
Accounts payable(36,143)
Deferred revenue(35,640)
Accrued payroll and tax withholdings(11,031)
Other current liabilities(3,777)
Deferred income taxes(10,169)
Other liabilities(10,250)
Total purchase price$365,171 

The fair values of the acquired intangible assets were estimated by applying the income approach. Such estimations required the use of inputs that were unobservable in the marketplace (Level 3), including a discount rate that we estimated would be used by a market participant in valuing these assets, projections of revenues and cash flows, and client attrition rates, among others. The acquired intangible assets are being amortized over a weighted-average period of 13 years. Refer to Note (7) for further information about the fair value level hierarchy.

The goodwill of $218 million was allocated among our Domestic and International operating segments, as shown below, with approximately $160 million of such goodwill expected to be deductible for tax purposes.


9
The changes in the carrying amounts of goodwill for the nine months ended September 30, 2021 were as follows:
(In thousands)DomesticInternationalTotal
Beginning balance at December 31, 2020$854,188 $60,332 $914,520 
Goodwill recorded in connection with the Kantar Health acquisition117,047 100,561 217,608 
Foreign currency translation adjustment and other— (5,285)(5,285)
Ending balance at September 30, 2021$971,235 $155,608 $1,126,843 

Our condensed consolidated statements of operations for the three and nine months ended September 30, 2021 include revenues of $45 million and $90 million, respectively, attributable to the acquired business since the April 1, 2021 acquisition date. The earnings contribution from the acquired business for the three and nine months ended September 30, 2021 was not material to our condensed consolidated financial statements. Pro forma results of operations, assuming the acquisition was made at the beginning of the earliest period presented, have not been presented because the effect of this acquisition was not material to our results.

(3) Revenue Recognition

Disaggregation of Revenue

The following tables present revenues disaggregated by our business models:

Three Months Ended
20212020
(In thousands)Domestic
Segment		International
Segment		TotalDomestic
Segment		International
Segment		Total
Licensed software$186,106 $13,073 $199,179 $159,327 $12,367 $171,694 
Technology resale35,206 2,378 37,584 45,217 1,896 47,113 
Subscriptions87,490 4,281 91,771 87,878 5,529 93,407 
Professional services472,387 79,361 551,748 433,127 46,768 479,895 
Managed services286,038 37,094 323,132 280,827 31,017 311,844 
Support and maintenance210,864 46,161 257,025 219,682 40,296 259,978 
Reimbursed travel7,397 140 7,537 4,711 31 4,742 
Total revenues$1,285,488 $182,488 $1,467,976 $1,230,769 $137,904 $1,368,673 

Nine Months Ended
20212020
(In thousands)Domestic
Segment		International
Segment		TotalDomestic
Segment		International
Segment		Total
Licensed software$492,847 $43,109 $535,956 $444,774 $37,114 $481,888 
Technology resale124,777 15,339 140,116 126,042 14,675 140,717 
Subscriptions277,095 12,925 290,020 260,095 19,749 279,844 
Professional services1,364,450 218,798 1,583,248 1,295,759 156,564 1,452,323 
Managed services852,872 108,413 961,285 836,242 92,114 928,356 
Support and maintenance640,349 139,675 780,024 663,399 144,296 807,695 
Reimbursed travel22,117 (257)21,860 19,086 854 19,940 
Total revenues$3,774,507 $538,002 $4,312,509 $3,645,397 $465,366 $4,110,763 


10
The following tables present our revenues disaggregated by timing of revenue recognition:

Three Months Ended
20212020
(In thousands)Domestic
Segment		International
Segment		TotalDomestic
Segment		International
Segment		Total
Revenue recognized over time$1,200,015 $175,440 $1,375,455 $1,143,515 $132,891 $1,276,406 
Revenue recognized at a point in time85,473 7,048 92,521 87,254 5,013 92,267 
Total revenues$1,285,488 $182,488 $1,467,976 $1,230,769 $137,904 $1,368,673 

Nine Months Ended
20212020
(In thousands)Domestic
Segment		International
Segment		TotalDomestic
Segment		International
Segment		Total
Revenue recognized over time$3,542,178 $507,714 $4,049,892 $3,410,827 $437,791 $3,848,618 
Revenue recognized at a point in time232,329 30,288 262,617 234,570 27,575 262,145 
Total revenues$3,774,507 $538,002 $4,312,509 $3,645,397 $465,366 $4,110,763 

Transaction Price Allocated to Remaining Performance Obligations

As of September 30, 2021, the aggregate amount of transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) for executed contracts approximates $13.12 billion of which we expect to recognize approximately 30% of the revenue over the next 12 months and the remainder thereafter.

Contract Liabilities

Customer payments received in advance of satisfaction of the related performance obligations are deferred as contract liabilities. Such amounts are classified in our condensed consolidated balance sheets as "Deferred revenue". During the nine months ended September 30, 2021, we recognized $340 million of revenues that were included in our contract liability balance at the beginning of such period.

Significant Customers

Revenues attributable to our relationships (as the prime contractor or a subcontractor) with U.S. government agencies, within our Domestic segment, comprised 21% and 19% of our consolidated revenues for the third quarters of 2021 and 2020, respectively; and 20% and 17% for the first nine months of 2021 and 2020, respectively. Amounts due in connection with these relationships comprised 17% and 13% of client receivables as of September 30, 2021 and December 31, 2020, respectively.

11
(4) Receivables

A summary of net receivables is as follows:
(In thousands)September 30, 2021December 31, 2020
Client receivables$1,380,794 $1,322,278 
Less: Provision for expected credit losses160,945 153,566 
Total receivables, net$1,219,849 $1,168,712 

In addition to the client receivables presented above, at September 30, 2021 and December 31, 2020, we had $19 million and $17 million of non-current net client receivables, respectively, which are presented in "Other assets" in our condensed consolidated balance sheets.

A reconciliation of the beginning and ending amount of our provision for expected credit losses is as follows:

(In thousands)CurrentNon-currentTotal
Provision for expected credit losses - balance at December 31, 2020$153,566 $38,564 $192,130 
Additions charged to costs and expenses20,251 — 20,251 
Deductions, foreign currency and other2,278 — 2,278 
Provision for expected credit losses - balance at March 31, 2021