<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, 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 March 31,
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 March 31, 1999 Page 3
Statement of Income for the Three Months
ended March 31, 1998 and 1999 Page 4
Statement of Shareholders' Equity for the Three Months
ended March 31, 1998 and 1999 Page 4
Statement of Cash Flow for the Three Months
ended March 31, 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 8
Signatures Page 8
<PAGE> 3
Part I - Financial Information
Item 1 - Financial Statements
<TABLE>
Balance Sheet (000 omitted)
<CAPTION>
Dec 31, 1998 Mar 31, 1999
<S> <C> <C>
Cash and equivalents 10,014 13,429
Marketable securities 67,923 73,516
Accounts receivable less reserve 27,923 28,813
------- -------
Current assets 105,860 115,758
Computer equipment 9,693 10,079
Furniture and fixtures 19,976 21,315
Buildings 143,126 143,126
Land 26,604 26,604
Accumulated depreciation (40,416) (42,451)
------- -------
Net property, plant and equipment 158,983 158,673
Investments 1,757 1,739
------- -------
Total assets 266,600 276,170
Accounts payable 589 1,563
Accrued taxes 2,643 7,306
Accrued expenses 16,511 7,591
Customer deposits 12,086 19,135
Note payable to a bank 15,000 10,500
------- -------
Current liabilities 46,829 46,095
Deferred income taxes 2,500 2,625
------- -------
Total liabilities 49,329 48,720
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 197,015 202,798
------- -------
Shareholders' equity 217,271 227,450
------- -------
Total liabilities and
shareholders' equity 266,600 276,170
</TABLE>
<PAGE> 4
<TABLE>
Statement Of Income (000 omitted)
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1998 Mar 31, 1999
<S> <C> <C>
Software products 31,644 35,370
Software services 16,849 19,086
------- -------
Total revenues 48,493 54,456
Operating, development 19,963 21,907
Selling, G&A 9,774 10,840
------- -------
Total expenses 29,737 32,747
------- -------
Operating income 18,756 21,709
Other income 4,020 3,718
Other expense 2,194 2,100
------- -------
Income before taxes 20,582 23,327
State taxes 1,860 2,105
Federal taxes 6,585 7,307
------- -------
Net income 12,137 13,915
Earnings/share $0.75 $0.85
</TABLE>
<TABLE>
Statement Of Shareholders' Equity (000 omitted)
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1998 Mar 31, 1999
<S> <C> <C>
Shareholders' equity at beginning 189,531 217,271
Net income 12,137 13,915
Sale of common stock 3,739 4,396
Dividends paid (7,561) (8,132)
------- -------
Shareholders' equity at end 197,846 227,450
</TABLE>
<PAGE> 5
<TABLE>
Statement Of Cash Flow (000 omitted)
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1998 Mar 31, 1999
<S> <C> <C>
Net income 12,137 13,915
Depreciation 2,488 2,035
Gain on marketable securities (6) --
Change in accounts receivable 1,689 (890)
Change in accounts payable 1,604 973
Change in accrued expenses (3,613) (4,256)
Change in customer deposits (4,671) 7,049
Change in deferred taxes 150 125
------- -------
Net cash from operations 9,778 18,951
Purchase of property, plant
and equipment (1,213) (1,725)
Purchase of marketable securities (553) (5,592)
Proceeds from investment liquidation 1,897 18
------- -------
Net cash from (used in) investing 131 (7,299)
Payment of bank note (4,500) (4,500)
Proceeds from sale of common stock 3,739 4,396
Dividends paid (7,561) (8,133)
------- -------
Net cash used in financing (8,322) (8,237)
------- -------
Net increase in cash and equivalents 1,587 3,415
Cash and equivalents at beginning 8,379 10,014
------- -------
Cash and equivalents at end 9,966 13,429
</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 Quarter ended March 31, 1998 and
March 31, 1999 is as follows:
<TABLE>
Earnings per Share Calculations (in thousands where applicable)
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1998 Mar 31, 1999
<C> <C>
Net Income 12,137 13,915
Average number of common shares 16,133 16,316
Earnings per share $0.75 $0.85
</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 three months ended March
31, 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 quarter ended March 31, 1999, 88% of our operating revenue was
derived from the United States, 10% from Canada and 2% from other countries.
<PAGE> 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Operating Results
<TABLE>
Comparison of 1st Quarter 1998 to 1st Quarter 1999:
(in thousands where applicable)
<CAPTION>
3 Months Ended 3 Months Ended Change
Mar 31, 1998 Mar 31, 1999
<S> <C> <C> <C>
Revenues 48,493 54,456 12%
Operating income 18,756 21,709 16%
Net income 12,137 13,915 15%
Average number of common shares 16,133 16,316 1%
Earnings per average common share $0.75 $0.85 13%
Cash dividends per common share $0.47 $0.50 6%
</TABLE>
Revenues increased by $6.0 million or 12% due to increased services provided to
both existing and new customers.
Expenses increased by $3.0 million or 10% due primarily to higher staffing
costs. The higher growth rate of revenues over expenses resulted in a $3.0
million or 16% increase in operating income.
Other Income, net of other expenses, decreased $208 thousand. The primary
factor was an increase in general overhead expenses associated with other
income and expense administration. Net Income increased by $1.8 million or
16%.
<TABLE>
Liquidity And Capital Resources (in thousands where applicable)
<CAPTION>
Dec 31, 1998 Mar 31, 1999
<S> <C> <C>
Cash and cash equivalents 10,014 13,429
Total assets 266,600 276,170
Total liabilities 49,329 48,720
Shareholders' equity 217,271 227,450
Common shares outstanding 16,266 16,417
Book value per share $13.36 $13.85
</TABLE>
As presented in the Statement of Cash Flow, net cash provided by operating
activities was $19.0 million during the first three months of fiscal 1999. Net
cash used in investing activities was $7.3 million. The payment of $8.1
million in dividends to shareholders constituted the most significant use of
cash during the first three months of 1999. The resultant net increase in cash
and cash equivalents was $3.4 million for the three months ended March 31,1999.
At March 31, 1999 the Company's total debt was $10.5 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 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, 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)
May 4, 1999
(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-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 13,429
<SECURITIES> 73,516
<RECEIVABLES> 27,204
<ALLOWANCES> 290
<INVENTORY> 0
<CURRENT-ASSETS> 115,758
<PP&E> 201,124
<DEPRECIATION> 42,451
<TOTAL-ASSETS> 276,170
<CURRENT-LIABILITIES> 46,095
<BONDS> 0
0
0
<COMMON> 4,104
<OTHER-SE> 223,346
<TOTAL-LIABILITY-AND-EQUITY> 276,170
<SALES> 35,370
<TOTAL-REVENUES> 54,456
<CGS> 0
<TOTAL-COSTS> 32,747
<OTHER-EXPENSES> 1,872
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 228
<INCOME-PRETAX> 23,327
<INCOME-TAX> 9,412
<INCOME-CONTINUING> 13,915
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,915
<EPS-PRIMARY> 0.85
<EPS-DILUTED> 0.85
</TABLE>
