<PAGE> 1
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, 1996
Commission file number 0-28092
Medical Information Technology, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Massachusetts
(State or Other Jurisdiction of Incorporation or Organization)
04-2455639
(I.R.S. Employer Identification No.)
Meditech Circle, Westwood, MA
(Address of Principal Executive Offices)
02090
(Zip Code)
617-821-3000
(Registrant's Telephone Number)
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 X No _
The number of shares of Common Stock, $.25 par value, outstanding at October 31,
1996 was 15,822,965
<PAGE> 2
Index to Form 10-Q
Part I - Financial Information
Item 1 - Financial Statements
Balance Sheet - December 31, 1995 and September 30, 1996 Page 3
Statement of Income for the Third Quarters and Nine Months
ended September 30, 1995 and 1996 Page 4
Statement of Shareholders' Investment for the Nine Months
ended September 30, 1995 and 1996 Page 4
Statement of Cash Flow for the Nine Months ended September
30, 1995 and 1996 Page 5
Notes To Financial Statements (Unaudited) Page 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Operating Results Page 7
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K Page 9
Signatures Page 9
<PAGE> 3
Part I - Financial Information
Item 1 - Financial Statements
<TABLE>
Balance Sheet (000 omitted)
<CAPTION>
Dec 31, 1995 Sep 30, 1996
<S> <C> <C>
Current Assets:
Cash and equivalents 6,512 7,198
Marketable securities 54,072 61,142
Accounts receivable less reserve 20,286 21,111
Total current 80,870 89,451
Property, Plant And Equipment:
Land and improvements 20,500 20,404
Building and improvements 98,825 98,692
Computer equipment 8,571 10,090
Office furniture and equipment 10,533 12,700
Accumulated depreciation (23,811) (27,236)
Net property, plant and equipment 114,618 114,650
Investments 2,511 2,511
Total 197,999 206,612
Current Liabilities:
Current maturities of note payable 12,000 12,000
Accounts payable 321 1,928
Accrued taxes 1,688 1,270
Accrued expenses 11,401 12,446
Customer deposits 7,887 8,254
Total current 33,297 35,898
Note Payable To A Bank 26,000 17,000
Deferred Federal And State Income Taxes 874 1,724
Shareholders' Investment:
Common stock, $.25 par value,
Authorized 17,000,000 shares,
Issued and outstanding 15,831,402
in 1995 and 15,938,365 in 1996 3,958 3,984
Additional paid-in capital 5,221 7,334
Retained earnings 128,649 143,095
Treasury Stock, 115,400 shares (2,423)
Total shareholders' investment 137,828 151,990
Total 197,999 206,612
</TABLE>
<PAGE> 4
<TABLE>
Statement Of Income (000 omitted)
<CAPTION>
3 Months Ended Sep 30 9 Months Ended Sep 30
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Revenue:
Software products 22,188 27,000 68,253 78,532
Software services 11,434 13,227 33,026 38,347
Other Revenue 1,128 1,629 2,895 4,129
Total Revenues 34,750 41,856 104,174 121,008
Expenses:
Operating,development 13,319 15,521 38,570 45,143
Selling, G & A 7,956 9,057 23,568 26,849
Total Expenses 21,275 24,578 62,138 71,992
Income From Operations 13,475 17,278 42,036 49,016
Other Income 1,793 2,235 5,601 7,463
Other Expense 1,390 1,120 3,931 4,332
Income Before Taxes 13,878 18,393 43,706 52,147
Provision For Taxes:
State 930 1,568 2,809 4,716
Federal 4,312 5,699 13,657 16,328
Net Income 8,636 11,126 27,240 31,103
Earnings/share $0.55 $0.70 $1.73 $1.96
</TABLE>
<TABLE>
Statement Of Shareholders' Investment (000 omitted)
<CAPTION>
9 Months Ended 9 Months Ended
Sep 30, 1995 Sep 30, 1996
<S> <C> <C>
Shareholders' Investment at beginning 117,749 137,828
Net Income 272404 31,103
Sale of Common Stock 1,952 2,139
Purchase of Treasury Stock (2,423)
Dividends Paid (14,659) (16,657)
Shareholders' Investment at end 132,282 151,990
</TABLE>
<PAGE> 5
<TABLE>
Statement Of Cash Flow (000 omitted)
<CAPTION>
9 Months Ended 9 Months Ended
Sep 30, 1995 Sep 30, 1996
<S> <C> <C>
Cash Flow from Operations:
Net income 27,240 31,103
Depreciation 3,369 4,744
Change in accounts receivable 918 (825)
Change in accounts payable 1,404 1,607
Change in accrued expenses (545) 627
Change in customer deposits 386 367
Change in deferred taxes 850
Net cash from operations 32,772 38,473
Cash Flow from Investing:
Purchase of property, plant
and equipment (63,549) (4,776)
Purchase of marketable securities (2,376) (11,822)
Proceeds from investment liquidation 394 4,752
Net cash used by investing (65,531) (11,846)
Cash Flow from Financing:
Proceeds from bank note 50,000
Payment of bank note (9,000) (9,000)
Proceeds from sale of common stock 1,952 2,139
Purchase of treasury stock, net (2,423)
Dividends paid (14,659) (16,657)
Net cash from (used in) financing 28,293 (25,941)
Net (Decrease) Increase in Cash
and Equivalents (4,466) 686
Cash and Equivalents at beginning
of period 12,907 6,512
Cash and Equivalents at end of period 8,441 7,198
</TABLE>
<PAGE> 6
Notes To Financial Statements (Unaudited)
1. The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 1995 included in
the Company's Form 10 filed in March 1996. The accompanying financial
statements have not been examined by independent accountants in accordance with
generally accepted auditing standards, but in the opinion of management such
financial statements include all adjustments necessary to summarize fairly the
Company's financial position and results of operation.
2. The earnings per share calculation for the Three Months and Nine Months ended
Sep 30, 1995 and 1996 is as follows:
<TABLE>
Earnings per Share Calculations (in thousands where applicable)
<CAPTION>
3 Months Ended Sep 30 9 Months Ended Sep 30
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Net Income 8,636 11,126 27,240 31,103
Average number of
common shares 15,776 15,876 15,776 15,876
Earnings per share $0.55 $0.70 $1.73 $1.96
</TABLE>
The average number of common shares outstanding during the period reflects the
new issuance of 114,858 shares on February 28, 1995 and 106,963 shares on
February 29, 1996 and the repurchase of 230,400 shares and the resale of
115,000 treasury shares during the last week of June 1996.
<PAGE> 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Operating Results
<TABLE>
Comparison of 3rd Quarter 1996 to 3rd Quarter 1995
(in thousands where applicable)
<CAPTION>
1995 1996 Change
<S> <C> <C> <C>
Revenues 34,750 41,856 20%
Operating income 13,475 17,278 28%
Net income 8,636 11,126 29%
Earnings per common share $0.55 $0.70 27%
Cash dividends per common share $0.31 $0.35 13%
</TABLE>
Revenues increased by $7.1 million or 20% due to increased orders received from
both existing and new customers.
Expenses increased by $3.3 million or 15% primarily due to a 14% increase in
staff levels and related costs to accommodate increased orders received.
The Company's effective tax rate increased from 38% to 40%. This differential
is the result of an investment tax credit in 1995 on real property purchased
that year.
<TABLE>
Comparison of 1st Nine Months 1996 to 1st Nine Months 1995
(in thousands where applicable)
<CAPTION>
1995 1996 Change
<S> <C> <C> <C>
Revenues 104,174 121,008 16%
Operating income 42,036 49,016 17%
Net income 27,240 31,103 14%
Earnings per common share $1.73 $1.96 14%
Cash dividends per common share $0.93 $1.05 13%
</TABLE>
Revenues increased by $16.8 million or 16% due to increased orders received from
both existing and new customers.
Expenses increased by $9.8 million or 16% primarily due to two factors: first,
operating expenses incurred on the new facility purchased during 1995 for which
there were no operating expenses incurred during the first quarter of 1995 and
second, staff levels and related costs were up 14% to accommodate increased
orders received.
The Company's effective tax rate increased from 38% to 40%. This differential
is primarily the result of an investment tax credit in 1995 on real property
purchased that year.
While Operating Income is up by 17% for the first nine month of 1996, Net Income
is up by only 14%. This 3% differential is primarily the net effect of the
one-time gain from the sale of our Cambridge real property and the increase in
our effective tax rate from 1995 to 1996.
<PAGE> 8
<TABLE>
Liquidity And Capital Resources
<CAPTION>
Dec 31, 1995 Sep 30, 1996
<S> <C> <C>
Cash and cash equivalents 6,512 7,198
Total assets 197,998 206,612
Total liabilities 60,170 54,622
Shareholders' equity 137,828 151,990
Book value per share $8.71 $9.61
Common shares outstanding 15,831 15,823
</TABLE>
As presented in the Statement of Cash Flow, net cash provided by operating
activities was $38.5 million during the first nine months of fiscal 1996. Net
cash absorbed by investing activities was $11.8 million, the majority of which
was invested in marketable securities. The payment of $16.7 million in
dividends to shareholders and repaid debt of $9 million constituted the most
significant use of cash during the first nine months of 1996. The resultant
net increase in cash and cash equivalents was $.7 million for the nine months
ended September 30, 1996.
At September 30, 1996 the Company's total debt was $29 million as compared to
$38 million at December 31, 1995.
Working capital requirements as well as projected capital expenditures for the
remainder of fiscal 1996 are expected to be provided by cash generated from
operations.
<PAGE> 9
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
A Financial Data Schedule is appended as an exhibit to this document. There
were no reports filed on Form 8-K during the quarter ended September 30, 1996.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Medical Information Technology, Inc.
(Registrant)
Nov 5, 1996
(Date)
Barbara A. Manzolillo, Chief Financial Officer and Treasurer
(Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,198
<SECURITIES> 61,142
<RECEIVABLES> 19,103
<ALLOWANCES> 160
<INVENTORY> 0
<CURRENT-ASSETS> 89,451
<PP&E> 141,886
<DEPRECIATION> 27,236
<TOTAL-ASSETS> 206,612
<CURRENT-LIABILITIES> 35,898
<BONDS> 17,000
0
0
<COMMON> 3,984
<OTHER-SE> 148,006
<TOTAL-LIABILITY-AND-EQUITY> 206,612
<SALES> 78,532
<TOTAL-REVENUES> 121,008
<CGS> 0
<TOTAL-COSTS> 71,992
<OTHER-EXPENSES> 2,189
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,143
<INCOME-PRETAX> 52,147
<INCOME-TAX> 21,044
<INCOME-CONTINUING> 31,103
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,103
<EPS-PRIMARY> 1.96
<EPS-DILUTED> 1.96
</TABLE>
