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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, 2000
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, $0.50 par value, outstanding at June 30,
2000 was 16,587,566
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Index to Form 10-Q
Part I - Financial Information
Item 1 - Financial Statements
Balance Sheet as of December 31, 1999 and June 30, 2000 Page 3
Statement of Income for the Second Quarter and Six Months
ended June 30, 1999 and 2000 Page 4
Statement of Shareholders' Equity for the Six Months
ended June 30, 1999 and 2000 Page 4
Statement of Cash Flow for the Six Months ended June 30,
1999 and 2000 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
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Part I - Financial Information
Item 1 - Financial Statements
Balance Sheet (000 omitted)
Dec 31, 1999 Jun 30, 2000
Cash and equivalents 15,056 8,176
Marketable securities 85,101 92,746
Accounts receivable less reserve 30,156 25,897
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Current assets 130,313 126,819
Computer equipment 10,360 9,887
Furniture and fixtures 21,715 25,732
Buildings 143,126 139,670
Land 26,604 26,604
Accumulated depreciation (45,467) (47,820)
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Net property, plant and equipment 156,338 154,073
Investments 1,627 2,585
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Total assets 288,278 283,477
Accounts payable 401 2,339
Accrued taxes 2,816 (474)
Accrued expenses 18,411 12,320
Customer deposits 16,555 6,450
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Current liabilities 38,183 20,635
Deferred income taxes 3,400 4,120
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Total liabilities 41,583 24,755
Common stock, $0.25 par value,
Authorized 17,000,000 shares through
May 2000, thereafter, $0.50 par value,
Authorized 35,000,000 shares.
Issued and outstanding 16,417,286
in 1999 and 16,587,566 in 2000 4,114 8,294
Additional paid-in capital 21,818 21,807
Unrealized loss on securities (3,450) (4,787)
Retained earnings 224,213 233,408
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Shareholders' equity 246,695 258,722
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Total liabilities and
shareholders' equity 288,278 283,477
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Statement Of Income (000 omitted)
3 Months Ended June 30 6 Months Ended June 30
1999 2000 1999 2000
Software products 37,530 31,429 72,899 63,976
Software services 19,837 22,415 38,924 44,521
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Total revenues 57,367 53,844 111,823 108,497
Operating, development 22,257 22,513 44,164 45,268
Selling, G & A 11,614 10,607 22,454 21,304
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Total expenses 33,871 33,120 66,618 66,572
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Operating income 23,496 20,724 45,205 41,925
Other income 3,775 4,361 7,492 8,666
Other expense 1,698 1,566 3,797 3,223
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Income before taxes 25,573 23,519 48,900 47,368
State taxes 2,307 2,117 4,412 4,252
Federal taxes 7,912 7,307 15,219 14,755
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Net income 15,354 14,095 29,269 28,361
Earnings/share $0.94 $0.85 $1.79 $1.71
Statement Of Shareholders' Equity (000 omitted)
6 Months Ended 6 Months Ended
Jun 30, 1999 Jun 30, 2000
Shareholders' equity at beginning 217,271 246,695
Net income 29,269 28,361
Sale of common stock 4,396 4,169
Dividends paid (16,341) (19,166)
Unrealized loss on securities - (1,337)
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Shareholders' equity at end 234,595 258,722
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Statement Of Cash Flow (000 omitted)
6 Months Ended 6 Months Ended
Jun 30, 1999 Jun 30, 2000
Net income 29,269 28,361
Depreciation 4,069 4,056
Gain on marketable securities (27)
Change in accounts receivable (3,403) 4,260
Change in accounts payable 764 1,938
Change in accrued expenses (6,142) (9,381)
Change in customer deposits 4,621 (10,104)
Change in deferred taxes 250 720
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Net cash from operations 29,428 19,823
Purchase of property, plant
and equipment (2,618) (1,766)
Purchase of marketable securities (13,665) (13,497)
Sales of marketable securities 4,515
Increase in investments (992)
Proceeds from investment liquidation 86 34
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Net cash used in investing (16,197) (11,706)
Payment of bank note (9,000) -
Proceeds from sale of common stock 4,396 4,169
Dividends paid (16,341) (19,166)
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Net cash used in financing (20,945) (14,997)
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Net decrease in cash and
equivalents (7,714) (6,880)
Cash and equivalents at beginning 10,014 15,056
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Cash and equivalents at end 2,300 8,176
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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, 1999 included in
the Company's Form 10K filed March 14, 2000. 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, 1999 and June 30, 2000 is as follows:
Earnings per Share Calculations (in thousands where applicable)
3 Months Ended June 30 6 Months Ended June 30
1999 2000 1999 2000
Net income 15,354 14,095 29,269 28,361
Average number of
common shares 16,417 16,588 16,367 16,544
Earnings per share $0.94 $0.85 $1.79 $1.71
The average number of common shares outstanding during the period reflects the
issuance of 151,575 shares in February 1999 and 130,280 shares in February
2000.
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
profit 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,
1999 and one such item for the six months ended June 30, 2000, an unrealized
holding loss on marketable securities, totaling $4.8 million.
4. The Company adopted Statement of Financial Accounting Standards No. 131
(SFAS 131), Disclosure About Segments 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 2000, 87% of our operating revenue was derived from the United
States, 11% from Canada and 2% from other countries.
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Item 2 - Management's Discussion and Analysis of Financial
Condition and Operating Results
Comparison of 2nd Quarter 2000 with 2nd Quarter 1999 (in thousands where
applicable)
3 Months Ended 3 Months Ended Change
Jun 30, 1999 Jun 30, 2000
Revenues 57,367 53,844 (6.1%)
Operating income 23,496 20,724 (11.8%)
Net income 15,354 14,095 (8.2%)
Average number of common shares 16,417 16,588 1.0%
Earnings per average common share $0.94 $0.85 (9.1%)
Cash dividends per common share $0.50 $0.58 16.0%
Revenues decreased by $3.5 million or 6% due to a $6.1 million reduction in
products provided to customers, partially offset by a $2.6 million increase in
services provided to customers.
Expenses decreased by $0.8 million or 2% due to a reduction in staff size and a
decrease in associated costs. The 2% decrease in expenses was disproportionate
to the 6% decrease in revenues and thereby resulted in a $2.8 million or 12%
reduction in operating income.
Other income, net of other expenses, increased by $0.7 million. The primary
factor was an increase in dividend and interest income. Net income decreased
by $1.3 million or 8%.
Comparison of 1st Half 2000 with 1st Half 1999 (in thousands where applicable)
6 Months Ended 6 Months Ended Change
Jun 30, 1999 Jun 30, 2000
Revenues 111,823 108,497 (3.0%)
Operating income 45,205 41,925 (7.3%)
Net income 29,269 28,361 (3.1%)
Average number of common shares 16,367 16,544 1.0%
Earnings per average common share $1.79 $1.71 (4.1%)
Cash dividends per common share $1.00 $1.16 16.0%
Revenues decreased by $3.3 million or 3% due to an $8.9 million reduction in
products provided to customers, partially offset by a $5.6 million increase in
services provided to customers.
Expenses were unchanged, resulting in a disproportionate $3.3 million or 7%
reduction in operating income.
Other income, net of other expenses, increased by $1.7 million. The primary
factor was an increase in dividend and interest income. Net income decreased
by $0.9 million or 3%.
Liquidity And Capital Resources (in thousands where applicable)
Dec 31, 1999 Jun 30, 2000
Cash and cash equivalents 15,056 8,176
Total assets 288,278 283,477
Total liabilities 41,583 24,755
Shareholders' equity 246,695 258,722
Common shares outstanding 16,457 16,588
Book value per share $14.99 $15.60
As presented in the Statement of Cash Flow, net cash provided by operating
activities was $19.8 million during the first six months of fiscal 2000. Net
cash used in investing activities was $11.7 million. The payment of $19.2
million in dividends to shareholders constituted the most significant use of
cash during the first six months of 2000. The net decrease in cash and cash
equivalents was $6.9 million for the six months ended June 30, 2000.
Working capital requirements as well as projected capital expenditures for the
remainder of fiscal 2000 are expected to be provided by cash generated from
operations.
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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 24, 2000, the
shareholders voted as follows, in each case by a total of 13,460,625 shares in
favor and none opposed.
i) To elect as directors Roland L. Driscoll, Jerome H. Grossman, A. Neil
Pappalardo, Lawrence A. Polimeno, Edward B. Roberts, Morton E. Ruderman and
Louis P. Valente until the 2001 Annual Meeting of Shareholders and thereafter
until their successors are chosen and qualified.
ii) To ratify the selection of Arthur Andersen, LLP as auditors of the
Corporation for the current fiscal year.
iii) To amend the Articles of Organization of the Corporation to increase the
authorized common stock from 17,000,000 shares, par value $0.25 per share, to
35,000,000 shares, par value $0.50 per share.
iv) To direct the Executive Compensation Committee of the Board of Directors to
determine the compensation of the Chief Executive Officer for the calendar year
2000 based upon the attainment of performance goals established by said
committee.
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, 2000.
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 8, 2000
(Date)
Barbara A. Manzolillo, Chief Financial Officer and Treasurer
(Signature)
