<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 MARCH 31, 1998
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 March 31,
1998 was 16,225,711
<PAGE> 2
Index to Form 10-Q
Part I - Financial Information
Item 1 - Financial Statements
Balance Sheet as of December 31, 1997 and March 31, 1998 Page 3
Statement of Income for the Three Months
ended March 31, 1997 and 1998 Page 4
Statement of Shareholders' Equity for the Three Months
ended March 31, 1997 and 1998 Page 4
Statement of Cash Flow for the Three Months
ended March 31, 1997 and 1998 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, 1997 Mar 31, 1998
<S> <C> <C>
Cash and equivalents 8,379 9,966
Marketable securities 62,349 61,033
Accounts receivable less reserve 26,360 24,671
------- -------
Current assets 97,088 95,670
Furniture and fixtures 18,506 19,196
Computer equipment 11,887 12,410
Buildings 143,126 143,126
Land 26,604 26,604
Accumulated depreciation (36,155) (38,643)
------- -------
Net property, plant and equipment 163,968 162,693
Investments 2,052 2,030
------- -------
Total assets 263,108 260,393
Accounts payable 695 2,299
Accrued taxes 1,749 7,274
Accrued expenses 15,598 6,460
Customer deposits 16,135 11,464
Note payable to a bank 18,000 18,000
------- -------
Current liabilities 52,177 45,497
Note payable to a bank 19,500 15,000
Deferred income taxes 1,900 2,050
------- -------
Total liabilities 73,577 62,547
Common stock, $.25 par value,
Authorized 17,000,000 shares,
Issued and outstanding 16,047,212
in 1997 and 16,225,711 in 1998 4,022 4,056
Additional paid-in capital 11,335 15,040
Retained earnings 174,174 178,750
------- -------
Shareholders' equity 189,531 197,846
------- -------
Total liabilities and
shareholders' equity 263,108 260,393
</TABLE>
<PAGE> 4
<TABLE>
Statement Of Income (000 omitted)
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1997 Mar 31, 1998
<S> <C> <C>
Software products 31,095 30,045
Software services 14,693 16,849
Other revenue 917 1,599
------- -------
Total revenues 46,705 48,493
Operating, development 17,457 19,963
Selling, G&A 9,938 9,774
------- -------
Total expenses 27,395 29,737
------- -------
Operating income 19,310 18,756
Other income 2,438 4,020
Other expense 1,048 2,194
------- -------
Income before taxes 20,700 20,582
State taxes 1,815 1,860
Federal taxes 6,684 6,585
------- -------
Net income 12,201 12,137
Earnings/share $0.76 $0.75
</TABLE>
<TABLE>
Statement Of Shareholders' Equity (000 omitted)
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1997 Mar 31, 1998
<S> <C> <C>
Shareholders' equity at beginning 162,468 189,531
Net income 12,201 12,137
Sale of common stock 2,613 3,739
Dividends paid (6,694) (7,561)
------- -------
Shareholders' equity at end 170,588 197,846
</TABLE>
<PAGE> 5
<TABLE>
Statement Of Cash Flow (000 omitted)
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1997 Mar 31, 1998
<S> <C> <C>
Net income 12,201 12,137
Depreciation 2,256 2,488
(Gain) on marketable securities (40) (6)
Change in accounts receivable (809) 1,689
Change in accounts payable 1,192 1,604
Change in accrued expenses (2,684) (3,613)
Change in customer deposits (45) (4,671)
Change in deferred taxes 188 150
------- -------
Net cash from operations 12,259 9,778
Purchase of property, plant
and equipment (2,191) (1,213)
Purchase of marketable securities (502) (553)
Proceeds from investment liquidation 2,907 1,897
------- -------
Net cash from investing 214 131
Payment of bank note (3,000) (4,500)
Proceeds from sale of common stock 2,612 3,739
Dividends paid (6,694) (7,561)
------- -------
Net cash used in financing (7,082) (8,322)
------- -------
Net increase in cash and equivalents 5,391 1,587
Cash and equivalents at beginning 18,063 8,379
------- -------
Cash and equivalents at end 23,454 9,966
</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, 1997 included in
the Company's Form 10K filed March 24, 1998. 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 operations.
2. The earnings per share calculation for the Quarter ended March 31, 1997 and
March 31, 1998 is as follows:
<TABLE>
Earnings per Share Calculations (in thousands where applicable)
<CAPTION>
3 Months Ended March 31
1997 1998
<C> <C>
Net Income 12,201 12,137
Average number of common shares 15,975 16,133
Earnings per share $0.76 $0.75
</TABLE>
The average number of common shares outstanding during the period reflects the
new issuance of 108,847 shares in February 1997 and 138,499 shares in February
1998.
3. The Company adopted Statement of Financial Accounting Standards No. 130
("SFAS No. 130"), Reporting Comprehensive Income, effective Jan 1, 1998. SFAS
No. 130 establishes standards for reporting and display of comprehensive income
and its components in financial statements. Comprehensive income is the total
of net income and all other nonowner changes in equity including items such as
unrealized holding gains/losses on securities classified as available for sale,
foreign currency translation adjustments and minimum pension liability
adjustments. The Company had no such items for the three months ended Mar 31,
1997 and 1998 and therefore comprehensive income and net income are the same.
<PAGE> 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Operating Results
<TABLE>
Comparison of 1st Quarter 1997 to 1st Quarter 1998:
(in thousands where applicable)
<CAPTION>
1997 1998 Change
<S> <C> <C> <C>
Revenues 46,705 48,493 4%
Operating income 19,310 18,756 (3%)
Net income 12,201 12,137 (1%)
Earnings per average common share $0.76 $0.75 (1%)
Cash dividends per common share $0.42 $0.47 12%
</TABLE>
Revenues increased by $1.8 million or 4% due to increased services provided to
both existing and new customers.
Expenses increased by $2.3 million or 8% due primarily to higher staffing
costs. The higher growth rate of expenses over revenues resulted in a $554
thousand or 3% decrease in operating income.
Other Income, net of other expenses, increased $436 thousand. The primary
factor is the additional rental revenues received from property purchased
during the third quarter of 1997. Net Income decreased $64 thousand or 1%.
<PAGE> 8
<TABLE>
Liquidity And Capital Resources
<CAPTION>
Dec 31, 1997 Mar 31, 1998
<S> <C> <C>
Cash and cash equivalents 8,379 9,966
Total assets 263,108 260,393
Total liabilities 73,577 62,547
Shareholders' equity 189,531 197,846
Book value per share $11.78 $12.19
Common shares outstanding 16,087 16,226
</TABLE>
As presented in the Statement of Cash Flow, net cash provided by operating
activities was $9.8 million during the first three months of fiscal 1998. Net
cash provided by investing activities was not significant. The payment of $7.6
million in dividends to shareholders and repaid debt of $4.5 million
constituted the most significant use of cash during the first three months of
1998. The resultant net increase in cash and cash equivalents was $1.6 million
for the three months ended March 31, 1998.
At March 31, 1998 the Company's total debt was $33 million as compared to $37.5
million at December 31, 1997.
Working capital requirements as well as projected capital expenditures for the
remainder of fiscal 1998 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 March 31, 1998.
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)
May 14, 1998
(Date)
Barbara A. Manzolillo, Chief Financial Officer and Treasurer
(Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,966
<SECURITIES> 61,033
<RECEIVABLES> 22,969
<ALLOWANCES> 270
<INVENTORY> 0
<CURRENT-ASSETS> 95,670
<PP&E> 201,336
<DEPRECIATION> 38,643
<TOTAL-ASSETS> 260,393
<CURRENT-LIABILITIES> 45,497
<BONDS> 15,000
0
0
<COMMON> 4,056
<OTHER-SE> 193,790
<TOTAL-LIABILITY-AND-EQUITY> 260,393
<SALES> 30,045
<TOTAL-REVENUES> 48,493
<CGS> 0
<TOTAL-COSTS> 29,737
<OTHER-EXPENSES> 1,519
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 674
<INCOME-PRETAX> 20,582
<INCOME-TAX> 8,445
<INCOME-CONTINUING> 12,137
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,137
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.75
</TABLE>
