<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 JUNE 30, 1999
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 June 30,
1999 was 16,417,286.
<PAGE> 2
Index to Form 10-Q
Part I - Financial Information
Item 1 - Financial Statements
Balance Sheet as of December 31, 1998 and June 30, 1999 Page 3
Statement of Income for the Second Quarter and Six Months
ended June 30, 1998 and 1999 Page 4
Statement of Shareholders' Equity for the Six Months
ended June 30, 1998 and 1999 Page 4
Statement of Cash Flow for the Six Months ended June 30,
1998 and 1999 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 4 - Submission of Matters to a Vote of Shareholders Page 8
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, 1998 Jun 30, 1999
<S> <C> <C>
Cash and equivalents 10,014 2,300
Marketable securities 67,923 81,588
Accounts receivable less reserve 27,923 31,326
------- -------
Current assets 105,860 115,214
Computer equipment 9,693 9,923
Furniture and fixtures 19,976 19,515
Buildings 143,126 143,126
Land 26,604 26,604
Accumulated depreciation (40,416) (41,636)
------- -------
Net property, plant and equipment 158,983 157,532
Investments 1,757 1,671
------- -------
Total assets 266,600 274,417
Accounts payable 589 1,353
Accrued taxes 2,643 418
Accrued expenses 16,511 12,594
Customer deposits 12,086 16,707
Note payable to a bank 15,000 6,000
------- -------
Current liabilities 46,829 37,072
Deferred income taxes 2,500 2,750
------- -------
Total liabilities 49,329 39,822
Common stock, $.25 par value,
Authorized 17,000,000 shares,
Issued and outstanding 16,265,711
in 1998 and 16,417,286 in 1999 4,066 4,104
Additional paid-in capital 16,190 20,548
Retained earnings 197,015 209,943
------- -------
Shareholders' equity 217,271 234,595
------- -------
Total liabilities and
shareholders' equity 266,600 274,417
</TABLE>
<PAGE> 4
<TABLE>
Statement Of Income (000 omitted)
<CAPTION>
3 Months Ended June 30 6 Months Ended June 30
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Software products 31,653 37,530 63,297 72,899
Software services 17,280 19,837 34,129 38,924
------- ------- ------- -------
Total revenues 48,933 57,367 97,426 111,823
Operating, development 20,184 22,167 40,147 44,164
Selling, G & A 10,030 11,614 19,804 22,454
------- ------- ------- -------
Total expenses 30,214 33,781 59,951 66,618
------- ------- ------- -------
Operating income 18,719 23,496 37,475 45,205
Other income 3,849 3,775 7,869 7,492
Other expense 2,000 1,698 4,194 3,797
------- ------- ------- -------
Income before taxes 20,568 25,573 41,150 48,900
State taxes 1,827 2,307 3,687 4,412
Federal taxes 6,388 7,912 12,973 15,219
------- ------- ------- -------
Net income 12,353 15,354 24,490 29,269
Earnings/share $0.76 $0.94 $1.51 $1.79
</TABLE>
<TABLE>
Statement Of Shareholders' Equity (000 omitted)
<CAPTION>
6 Months Ended 6 Months Ended
Jun 30, 1998 Jun 30, 1999
<S> <C> <C>
Shareholders' equity at beginning 189,531 217,271
Net income 24,490 29,269
Sale of common stock 3,739 4,396
Dividends paid (15,187) (16,341)
------- -------
Shareholders' equity at end 202,573 234,595
</TABLE>
<PAGE> 5
<TABLE>
Statement Of Cash Flow (000 omitted)
<CAPTION>
6 Months Ended 6 Months Ended
Jun 30, 1998 Jun 30, 1999
<S> <C> <C>
Net income 24,490 29,269
Depreciation 5,046 4,069
Gain on marketable securities (117)
Change in accounts receivable (14) (3,403)
Change in accounts payable 1,498 764
Change in accrued expenses (6,783) (6,142)
Change in customer deposits (3,559) 4,621
Change in deferred taxes 300 250
------- -------
Net cash from operations 20,861 29,428
Purchase of property, plant
and equipment (2,311) (2,618)
Purchase of marketable securities (1,676) (13,665)
Proceeds from investment liquidation 8,568 86
------- -------
Net cash from (used in) investing 4,581 (16,197)
Payment of bank note (9,000) (9,000)
Proceeds from sale of common stock 3,739 4,396
Dividends paid (15,187) (16,341)
------- -------
Net cash used in financing (20,448) (20,945)
------- -------
Net increase (decrease) in cash
and equivalents 4,994 (7,714)
Cash and equivalents at beginning 8,379 10,014
------- -------
Cash and equivalents at end 13,373 2,300
</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, 1998 included in
the Company's Form 10K filed March 24, 1999. 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 Three Months and Six Months ended
June 30, 1998 and June 30, 1999 is as follows:
<TABLE>
Earnings per Share Calculations (in thousands where applicable)
<CAPTION>
3 Months Ended June 30 6 Months Ended June 30
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Net income 12,353 15,354 24,490 29,269
Average number of
common shares 16,226 16,417 16,180 16,367
Earnings per share $ .76 $ .94 $1.51 $1.79
</TABLE>
The average number of common shares outstanding during the period reflects the
issuance of 138,499 shares in February 1998 and 151,575 shares in February
1999.
3. The Company adopted Statement of Financial Accounting Standards No. 130
(SFAS 130), Reporting Comprehensive Income, effective Jan 1, 1998. SFAS
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 six months ended June 30,
1998 and 1999 and therefore comprehensive income and net income are the same.
4. The Company adopted Statement of Financial Accounting Standards No. 131
(SFAS 131), Disclosure About Segements of an Enterprise and Related
Information, effective December 31, 1998. Based on the criteria set forth in
SFAS 131 the company currently operates in one operating segment, medical
software and services. The Company derives substantially all of its operating
revenue from the sale and support of one group of similar products and
services. All of the Company's assets are located within the United States.
During the first six months of 1999, 87% of our operating revenue was
derived from the United States, 12% from Canada and 1% from other countries.
<PAGE> 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Operating Results
<TABLE>
Comparison of 2nd Quarter 1998 to 2nd Quarter 1999:
(in thousands where applicable)
<CAPTION>
3 Months Ended 3 Months Ended Change
Jun 30, 1998 Jun 30, 1999
<S> <C> <C> <C>
Revenues 48,933 57,367 17%
Operating income 18,719 23,496 25%
Net income 12,353 15,354 24%
Average number of common shares 16,180 16,367 1%
Earnings per average common share $0.76 $0.94 24%
Cash dividends per common share $0.47 $0.50 6%
</TABLE>
Revenues increased by $8.4 million or 17% due to increased services provided to
both existing and new customers.
Expenses increased by $3.7 million or 12% due primarily to higher staffing
costs. The higher growth rate of revenues over expenses resulted in a $4.8
million or 25% increase in operating income.
Other Income, net of other expenses, increased $228 thousand. The primary
factor was a decrease in interest expense. Net Income increased by $3.0
million or 24%.
<TABLE>
Liquidity And Capital Resources (in thousands where applicable)
<CAPTION>
Dec 31, 1998 Jun 30, 1999
<S> <C> <C>
Cash and cash equivalents 10,014 2,300
Total assets 266,600 274,417
Total liabilities 49,329 39,822
Shareholders' equity 217,271 234,595
Common shares outstanding 16,266 16,417
Book value per share $13.36 $14.29
</TABLE>
As presented in the Statement of Cash Flow, net cash provided by operating
activities was $29.4 million during the first six months of fiscal 1999. Net
cash used in investing activities was $16.2 million. The payment of $16.3
million in dividends to shareholders constituted the most significant use of
cash during the first six months of 1999. The net decrease in cash and cash
equivalents was $7.7 million for the six months ended June 30, 1999.
At June 30, 1999 the Company's total debt was $6.0 million as compared to
$15.0 million at December 31, 1998.
Working capital requirements as well as projected capital expenditures for the
remainder of fiscal 1999 are expected to be provided by cash generated from
operations.
<PAGE> 8
Part II - Other Information
Item 4 - Submission of Matters to a Vote of Shareholders
At the Company's Annual Meeting of Shareholders held on April 26, 1999, the
shareholders voted as follows, in each case by a total of 13,094,761 shares
in favor and none opposed.
i) To fix the number of directors of the corporation at eight.
ii) To elect as directors A. Neil Pappalardo, Roland L. Driscoll, Jerome H.
Grossman, Lawrence A. Polimeno, Edward B. Roberts, Morton E. Ruderman and
Louis P. Valente until the 2000 Annual Meeting of Shareholders and thereafter
until their successors are chosen and qualified.
iii) To ratify the selection of Messrs. Arthur Andersen, LLP as auditors of the
Corporation for the current fiscal year.
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 June 30, 1999.
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)
August 5, 1999
(Date)
Barbara A. Manzolillo, Chief Financial Officer and Treasurer
(Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,300
<SECURITIES> 81,588
<RECEIVABLES> 29,143
<ALLOWANCES> 310
<INVENTORY> 0
<CURRENT-ASSETS> 115,214
<PP&E> 199,168
<DEPRECIATION> 41,636
<TOTAL-ASSETS> 274,417
<CURRENT-LIABILITIES> 37,072
<BONDS> 0
0
0
<COMMON> 4,104
<OTHER-SE> 230,491
<TOTAL-LIABILITY-AND-EQUITY> 274,417
<SALES> 72,899
<TOTAL-REVENUES> 111,823
<CGS> 0
<TOTAL-COSTS> 66,618
<OTHER-EXPENSES> 3,417
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 381
<INCOME-PRETAX> 48,900
<INCOME-TAX> 19,631
<INCOME-CONTINUING> 29,269
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,269
<EPS-BASIC> 1.79
<EPS-DILUTED> 1.79
</TABLE>
