<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, 1997
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)
781-821-3000
(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,
1997 was 16,047,212
<PAGE> 2
Index to Form 10-Q
Part I - Financial Information
Item 1 - Financial Statements
Balance Sheet - December 31, 1996 and September 30, 1997 Page 3
Statement of Income for the Three Months and Nine Months
ended September 30, 1996 and 1997 Page 4
Statement of Shareholders' Investment for the Nine Months
ended September 30, 1996 and 1997 Page 4
Statement of Cash Flow for the Nine Months ended
September 30, 1996 and 1997 Page 5
Notes to Financial Statements 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, 1996 Sep 30, 1997
<S> <C> <C>
Current Assets:
Cash and equivalents 18,063 8,790
Marketable securities 61,142 62,512
Accounts receivable less reserve 21,906 25,866
Total current 101,111 97,168
Property, Plant And Equipment:
Land and improvements 20,404 26,604
Building and improvements 99,655 145,396
Computer equipment 10,927 11,533
Office furniture and equipment 12,779 15,474
Accumulated depreciation (28,648) (33,942)
Net property, plant and equipment 115,117 165,065
Investments 2,111 2,067
Total 218,339 264,300
Current Liabilities:
Current maturities of note payable 12,000 18,000
Accounts payable 838 2,115
Accrued taxes 2,455 1,001
Accrued expenses 13,609 16,119
Customer deposits 11,837 13,414
Total current 40,739 50,649
Note Payable To A Bank 14,000 28,500
Deferred Federal And State Income Taxes 1,132 1,699
Shareholders' Investment:
Common stock, $.25 par value,
Authorized 17,000,000 shares,
Issued and outstanding 15,938,365
in 1996 and 16,047,212 in 1997 3,985 4,012
Additional paid-in capital 7,680 10,265
Retained earnings 150,803 169,175
Total shareholders' investment 162,468 183,452
Total 218,339 264,300
</TABLE>
<PAGE> 4
<TABLE>
Statement of Income (000 omitted)
<CAPTION>
3 Months Ended Sep 30 9 Months Ended Sep 30
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Revenue:
Software products 27,000 34,331 78,532 98,355
Software services 13,227 15,771 38,347 45,692
Other Revenue 1,629 1,082 4,129 3,304
Total Revenues 41,856 51,184 121,008 147,351
Expenses:
Operating,development 15,521 18,989 45,143 55,115
Selling, G & A 9,057 11,197 26,849 31,480
Total Expenses 24,578 30,186 71,992 86,595
Income From Operations 17,278 20,998 49,016 60,756
Other Income 2,235 3,020 7,463 7,917
Other Expense 1,120 1,476 4,332 3,663
Income Before Taxes 18,393 22,542 52,147 65,010
Provision For Taxes:
State 1,568 1,289 4,716 5,011
Federal 5,699 7,746 16,328 21,453
Net Income 11,126 13,507 31,103 38,546
Earnings/share $0.70 $0.84 $1.96 $2.41
</TABLE>
<TABLE>
Statement Of Shareholders' Investment (000 omitted)
<CAPTION>
9 Months Ended 9 Months Ended
Sep 30, 1996 Sep 30, 1997
<S> <C> <C>
Shareholders' Investment at beginning 137,828 162,468
Net Income 31,103 38,546
Sale of Common Stock 2,139 2,612
Purchase of Treasury Stock (2,423)
Dividends Paid (16,657) (20,174)
Shareholders' Investment at end 151,990 183,452
</TABLE>
<PAGE> 5
<TABLE>
Statement Of Cash Flow (000 omitted)
<CAPTION>
9 Months Ended 9 Months Ended
Sep 30, 1996 Sep 30, 1997
<S> <C> <C>
Cash Flow from Operations:
Net income 31,103 38,546
Depreciation 4,744 6,871
Change in accounts receivable (825) (3,960)
Change in accounts payable 1,607 1,278
Change in accrued expenses 627 1,056
Change in customer deposits 367 1,577
Change in deferred taxes 850 566
Marketable securities loss 51
Net cash from operations 38,473 45,985
Cash Flow from Investing:
Purchase of property, plant
and equipment (4,776) (56,819)
Purchase of marketable securities (11,822) (13,441)
Sale of marketable securities 4,752 12,064
Net cash used in investing (11,846) (58,196)
Cash Flow from Financing:
Proceeds from bank note 43,000
Payment of bank note (9,000) (22,500)
Sale of common stock 2,139 2,612
Purchase of treasury stock, net (2,423)
Dividends paid (16,657) (20,174)
Net cash (used in) from financing (25,941) 2,938
Net Increase (Decrease) in Cash
and Equivalents 686 (9,273)
Cash and Equivalents at beginning
of period 6,512 18,063
Cash and Equivalents at end of period 7,198 8,790
</TABLE>
<PAGE> 6
Notes to Financial Statements
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, 1996 included in
the Company's Form 10-K filed in 1997. 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, 1996 and 1997 is as follows:
<TABLE>
Earnings per Share Calculations (in thousands where applicable)
<CAPTION>
3 Months Ended Sep 30 9 Months Ended Sep 30
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Net Income 11,126 13,507 31,103 38,546
Average number of
common shares 15,876 16,047 15,876 16,023
Earnings per share $0.70 $0.84 $1.96 $2.41
</TABLE>
The average number of common shares outstanding during the period reflects
issuance of 106,963 shares in February 1996 and 108,847 shares in February
1997. It also reflects the purchase of 230,400 treasury shares and the resale
of 115,000 treasury shares in June 1996.
On March 31, 1997, The Financial Accounting Standards Board issued SFAS #128,
Earning Per Share, which establishes standards for computing and presenting
earnings per share and requires restatement of the prior year's results. The
Company will adopt SFAS #128 for the fiscal year ending December 31, 1997 and
believes such adjustments will have no material effect on its financial
statements.
3. In August 1997, the Company purchased real estate consisting of 287,000
square feet of office space located on 37 acres in Westwood, Massachusetts,
for $51,700,000.
4. The Company's largest customer, Columbia/HCA, is undergoing leadership
changes which create uncertainty and impede scheduled product implementations.
They provided 28% of revenues in 1996 and 21% of revenues to date in 1997.
<PAGE> 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Operating Results
<TABLE>
Comparison of 3rd Quarter 1997 to 3rd Quarter 1996
(in thousands where applicable)
<CAPTION>
1996 1997 Change
<S> <C> <C> <C>
Revenues 41,856 51,184 22%
Operating income 17,278 20,998 22%
Net income 11,126 13,507 21%
Earnings per common share $0.70 $0.84 20%
Cash dividends per common share $0.35 $0.42 20%
</TABLE>
Revenues increased by $9.3 million or 22% due to increased orders received from
both existing and new customers.
Expenses increased by $5.6 million or 23% primarily due to a 15% increase in
staff levels and related costs to accommodate increased orders received.
The Company's effective tax rate remained unchanged at 40%.
<TABLE>
Comparison of 1st Nine Months 1997 to 1st Nine Months 1996
(in thousands where applicable)
<CAPTION>
1996 1997 Change
<S> <C> <C> <C>
Revenues 121,008 147,351 22%
Operating income 49,016 60,756 24%
Net income 31,103 38,546 24%
Earnings per common share $1.96 $2.41 22%
Cash dividends per common share $1.05 $1.26 20%
</TABLE>
Revenues increased by $26.3 million or 22% due to increased orders received from
both existing and new customers.
Expenses increased by $14.6 million or 20% primarily due to a 15% increase in
staff levels and related costs to accommodate increased orders received.
The Company's effective tax rate increased from 40% to 41%.
<PAGE> 8
<TABLE>
Liquidity And Capital Resources
<CAPTION>
Dec 31, 1996 Sep 30, 1997
<S> <C> <C>
Cash and cash equivalents 18,063 8,790
Total assets 218,339 264,300
Total liabilities 55,871 80,847
Shareholders' equity 162,468 183,452
Book value per share $10.19 $11.43
Common shares outstanding 15,938 16,047
</TABLE>
As presented in the Statement of Cash Flow, net cash provided by operating
activities was $46 million during the first nine months of fiscal 1997. Net
cash used in investing activities was $58.2 million, the majority of which
was invested in the purchase of real estate at a cost of $51.7 million. This
purchase, along with the payment of $20.2 million in dividends to shareholders
and repaid debt of $22.5 million constituted the most significant use of cash
during the first nine months of 1997.
At September 30, 1997 the Company's total debt was $46.5 million as compared
to $26 million at December 31, 1996. Working capital requirements as well as
projected capital expenditures for the remainder of fiscal 1997 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, 1997.
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 10, 1997
(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-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 8,790
<SECURITIES> 62,512
<RECEIVABLES> 24,308
<ALLOWANCES> 240
<INVENTORY> 0
<CURRENT-ASSETS> 97,168
<PP&E> 199,007
<DEPRECIATION> 33,942
<TOTAL-ASSETS> 264,300
<CURRENT-LIABILITIES> 50,649
<BONDS> 28,500
0
0
<COMMON> 4,012
<OTHER-SE> 179,440
<TOTAL-LIABILITY-AND-EQUITY> 264,300
<SALES> 98,355
<TOTAL-REVENUES> 147,351
<CGS> 0
<TOTAL-COSTS> 86,595
<OTHER-EXPENSES> 2,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,563
<INCOME-PRETAX> 65,010
<INCOME-TAX> 26,464
<INCOME-CONTINUING> 38,546
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,546
<EPS-PRIMARY> 2.41
<EPS-DILUTED> 2.41
</TABLE>
