<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, 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 September
30,1999 was 16,417,286
<PAGE> 2
Index to Form 10-Q
Part I - Financial Information
Item 1 - Financial Statements
Balance Sheet - December 31, 1998 and September 30, 1999 Page 3
Statement of Income for the Third Quarter and Nine Months
ended September 30, 1998 and 1999 Page 4
Statement of Shareholders' Equity for the Nine Months
ended September 30, 1998 and 1999 Page 4
Statement of Cash Flow for the Nine Months ended September 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 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 Sep 30, 1999
<S> <C> <C>
Cash and equivalents 10,014 7,764
Marketable securities 67,923 84,006
Accounts receivable less reserve 27,923 29,392
------- -------
Current assets 105,860 121,162
Computer Equipment 9,693 10,212
Furniture and Fixtures 19,976 21,372
Buildings 143,126 143,126
Land 26,604 26,604
Accumulated depreciation (40,416) (43,623)
------- -------
Net property, plant and equipment 158,983 157,691
Investments 1,757 1,648
------- -------
Total assets 266,600 280,501
Accounts payable 589 1,313
Accrued taxes 2,643 744
Accrued expenses 16,511 17,456
Customer deposits 12,086 14,755
Note payable to a bank 15,000 1,500
------- -------
Current liabilities 46,829 35,768
Deferred income taxes 2,500 3,075
------- -------
Total liabilities 49,329 38,843
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 197,015 217,006
------- -------
Shareholders' equity 217,271 241,658
------- -------
Total liabilities and
shareholders' equity 266,600 280,501
</TABLE>
<PAGE> 4
<TABLE>
Statement Of Income (000 omitted)
<CAPTION>
3 Months Ended Sep 30 9 Months Ended Sep 30
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Software products 32,173 35,857 95,470 108,757
Software services 17,749 20,615 51,878 59,539
------- ------- ------- -------
Total revenues 49,922 56,472 147,348 168,296
Operating, development 19,989 21,912 60,136 66,077
Selling, G & A 11,078 11,540 30,882 33,994
------- ------- ------- -------
Total expenses 31,067 33,452 91,018 100,071
------- ------- ------- -------
Operating income 18,855 23,020 56,330 68,225
Other income 4,132 3,979 12,001 11,471
Other expense 2,086 1,702 6,280 5,499
------- ------- ------- -------
Income before taxes 20,901 25,297 62,051 74,197
State taxes 2,022 1,946 5,709 6,358
Federal taxes 6,492 8,079 19,465 23,298
------- ------- ------- -------
Net income 12,387 15,272 36,877 44,541
Earnings/share $0.76 $0.93 $2.28 $2.72
</TABLE>
<TABLE>
Statement Of Shareholders' Equity (000 omitted)
<CAPTION>
9 Months Ended 9 Months Ended
Sep 30, 1998 Sep 30, 1999
<S> <C> <C>
Shareholders' equity at beginning 189,531 217,272
Net income 36,877 44,541
Sale of common stock 3,739 4,396
Dividends paid (22,813) (24,550)
------- -------
Shareholders' equity at end 207,334 241,659
</TABLE>
<PAGE> 5
<TABLE>
Statement Of Cash Flow (000 omitted)
<CAPTION>
9 Months Ended 9 Months Ended
Sep 30, 1998 Sep 30, 1999
<S> <C> <C>
Net income 36,877 44,541
Depreciation 7,577 6,056
Gain on marketable securities (452) 0
Change in accounts receivable 24 (1,469)
Change in accounts payable 1,527 724
Change in accrued expenses (2,176) (954)
Change in customer deposits (2,973) 2,669
Change in deferred taxes 450 575
------- -------
Net cash from operations 40,854 52,142
Purchase of property, plant
and equipment (3,036) (4,764)
Purchase of marketable securities (31,928) (16,083)
Proceeds from investment liquidation 26,400 109
------- -------
Net cash used in investing ( 8,564) (20,738)
Payment of bank note (18,000) (13,500)
Proceeds from sale of common stock 3,739 4,396
Dividends paid (22,813) (24,550)
------- -------
Net cash used in financing (37,074) (33,654)
------- -------
Net increase in cash and equivalents (4,784) (2,250)
Cash and equivalents at beginning 8,379 10,014
------- -------
Cash and equivalents at end 3,595 7,764
</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 operation.
2. The earnings per share calculation for the Three Months and Nine Months
ended September 30, 1998 and 1999 is as follows:
<TABLE>
Earnings per Share Calculations (in thousands where applicable)
<CAPTION>
3 Months Ended Sep 30 9 Months Ended Sep 30
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Net income 12,387 15,272 36,877 44,541
Average number of
common shares 16,226 16,417 16,195 16,384
Earnings per share $0.76 $0.93 $2.28 $2.72
</TABLE>
The average number of common shares outstanding during the period reflects the
new 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 third quarter and nine
months ended September 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 nine months of 1999, 86% of our operating revenue was
derived from the United States, 13% 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 3rd Quarter 1999 to 3rd Quarter 1998
(in thousands where applicable)
<CAPTION>
1998 1999 Change
<S> <C> <C> <C>
Revenues 49,922 56,472 13%
Operating income 18,855 23,020 22%
Net income 12,387 15,272 23%
Earnings per common share $0.76 $0.93 22%
Cash dividends per common share $0.47 $0.50 6%
</TABLE>
Revenues increased by $6.6 million or 13% due to increased orders received
from both new and existing customers.
Expenses increased by $2.4 million or 8% due primarily to higher staffing
levels and associated costs. The higher growth rate of revenues over expenses
resulted in a $4.2 million or 22% increase in operating income.
Other income, net of other expenses, increased by $0.2 million. Net income
increased by $2.9 million or 23%.
<TABLE>
Comparison of 1st Nine Months 1999 to 1st Nine Months 1998
(in thousands where applicable)
<CAPTION>
1998 1999 Change
<S> <C> <C> <C>
Revenues 147,348 168,296 14%
Operating income 56,330 68,225 21%
Net income 36,877 44,541 21%
Earnings per average common share $2.28 $2.72 19%
Cash dividends per common share $1.41 $1.50 6%
</TABLE>
Revenues increased by 20.9 million or 14% due to increased orders received
from both new and existing customers.
Expenses increased by $9.1 million or 10% due primarily to higher staffing
levels and associated costs. The higher growth rate of revenues over expenses
resulted in a $11.9 million or 21% increase in operating income.
Other income, net of other expenses, increased by $0.3 million. Net Income
increased by $7.7 million or 19%.
<PAGE> 8
<TABLE>
Liquidity And Capital Resources (in thousands where applicable)
<CAPTION>
Dec 31, 1998 Sep 30, 1999
<S> <C> <C>
Cash and cash equivalents 10,014 7,764
Total assets 266,600 280,501
Total liabilities 49,329 38,843
Shareholders' equity 217,271 241,658
Common shares outstanding 16,266 16,417
Book value per share $13.36 $14.72
</TABLE>
As presented in the Statement of Cash Flow, net cash from operations was $52.1
million during the first nine months of fiscal 1999. $20.8 million was used in
investing to increase our holdings in marketable securities and for the
purchase of additional equipment. The payment of $24.6 million in dividends to
shareholders and repayment of $13.5 million of debt to a bank constituted the
most significant use of cash during the first nine months of fiscal 1999. The
resultant net decrease in cash and equivalents was $2.3 million for the nine
months ended September 30, 1999.
At September 30, 1999 the Company's total debt was $1.5 million as compared to
$15.0 million at December 31, 1998.
Working capital requirements for the remainder of fiscal 1999 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, 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)
November 9, 1999
(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-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 7,764
<SECURITIES> 84,006
<RECEIVABLES> 28,246
<ALLOWANCES> 330
<INVENTORY> 0
<CURRENT-ASSETS> 121,162
<PP&E> 201,314
<DEPRECIATION> 43,623
<TOTAL-ASSETS> 280,501
<CURRENT-LIABILITIES> 35,768
<BONDS> 0
0
0
<COMMON> 4,104
<OTHER-SE> 237,554
<TOTAL-LIABILITY-AND-EQUITY> 280,501
<SALES> 108,757
<TOTAL-REVENUES> 168,296
<CGS> 0
<TOTAL-COSTS> 100,071
<OTHER-EXPENSES> 5,037
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 462
<INCOME-PRETAX> 74,197
<INCOME-TAX> 29,656
<INCOME-CONTINUING> 44,541
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,541
<EPS-BASIC> 2.72
<EPS-DILUTED> 2.72
</TABLE>
