<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, 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, $.25 par value, outstanding at March 31,
2000 was 16,587,566.
<PAGE> 2
Index to Form 10-Q
Part I - Financial Information
Item 1 - Financial Statements
Balance Sheet as of December 31, 1999 and March 31, 2000 Page 3
Statement of Income for the Three Months
ended March 31, 1999 and 2000 Page 4
Statement of Shareholders' Equity for the Three Months
ended March 31, 1999 and 2000 Page 4
Statement of Cash Flow for the Three Months
ended March 31, 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 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, 1999 Mar 31, 2000
<S> <C> <C>
Cash and equivalents 15,056 19,743
Marketable securities 85,101 86,415
Accounts receivable less reserve 30,156 26,813
------- -------
Current assets 130,313 132,971
Computer equipment 10,360 10,425
Furniture and fixtures 21,715 21,962
Buildings 143,126 143,126
Land 26,604 26,604
Accumulated depreciation (45,467) (47,508)
------- -------
Net property, plant and equipment 156,338 154,609
Investments 1,627 1,614
------- -------
Total assets 288,278 289,194
Accounts payable 401 3,023
Accrued taxes 2,816 7,318
Accrued expenses 18,411 7,669
Customer deposits 16,555 12,663
------- -------
Current liabilities 38,183 30,673
Deferred income taxes 3,400 3,760
------- -------
Total liabilities 41,583 34,433
Common stock, $.25 par value,
Authorized 17,000,000 shares,
Issued and outstanding 16,417,286
in 1999 and 16,587,566 in 2000 4,114 4,147
Additional paid-in capital 21,818 25,954
Unrealized loss on securities (3,450) (4,273)
Retained earnings 224,213 228,933
------- -------
Shareholders' equity 246,695 254,761
------- -------
Total liabilities and
shareholders' equity 288,278 289,194
</TABLE>
<PAGE> 4
<TABLE>
Statement Of Income (000 omitted)
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1999 Mar 31, 2000
<S> <C> <C>
Software products 35,370 32,547
Software services 19,086 22,106
------- -------
Total revenues 54,456 54,653
Operating, development 21,907 22,755
Selling, G&A 10,840 10,697
------- -------
Total expenses 32,747 33,452
------- -------
Operating income 21,709 21,201
Other income 3,718 4,306
Other expense 2,100 1,658
------- -------
Income before taxes 23,327 23,849
State taxes 2,105 2,135
Federal taxes 7,307 7,448
------- -------
Net income 13,915 14,266
Earnings/share $0.85 $0.86
</TABLE>
<TABLE>
Statement Of Shareholders' Equity (000 omitted)
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1999 Mar 31, 2000
<S> <C> <C>
Shareholders' equity at beginning 217,271 246,695
Net income 13,915 14,266
Sale of common stock 4,396 4,169
Unrealized loss on securities -- (823)
Dividends paid (8,132) (9,546)
------- -------
Shareholders' equity at end 227,450 254,761
</TABLE>
<PAGE> 5
<TABLE>
Statement Of Cash Flow (000 omitted)
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1999 Mar 31, 2000
<S> <C> <C>
Net income 13,915 14,266
Depreciation 2,035 2,041
Change in accounts receivable (890) 3,343
Change in accounts payable 973 2,622
Change in accrued expenses (4,256) (6,241)
Change in customer deposits 7,049 (3,892)
Change in deferred taxes 125 360
------- -------
Net cash from operations 18,951 12,499
Purchase of property, plant
and equipment (1,725) (312)
Purchase of marketable securities (5,592) (2,137)
Proceeds from investment liquidation 18 13
------- -------
Net cash used in investing (7,299) (2,436)
Payment of bank note (4,500) --
Proceeds from sale of common stock 4,396 4,169
Dividends paid (8,133) (9,545)
------- -------
Net cash used in financing (8,237) (5,376)
------- -------
Net increase in cash and equivalents 3,415 4,687
Cash and equivalents at beginning 10,014 15,056
------- -------
Cash and equivalents at end 13,429 19,743
</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, 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 Quarters ended March 31, 1999 and
March 31, 2000 are as follows:
<TABLE>
Earnings per Share Calculations (in thousands where applicable)
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1999 Mar 31, 2000
<S> <C> <C>
Net Income 13,915 14,266
Average number of common shares 16,316 16,501
Earnings per share $0.85 $0.86
</TABLE>
The average number of common shares outstanding during the period reflects the
issuance of 151.6 thousand shares in February 1999 and 130.3 thousand 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 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, 1999 and one such item for the three months ended March 31, 2000, an
unrealized holding loss on marketable securities, totaling $823 thousand.
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 quarters ended March 31, 1999 and March 31, 2000 the Company derived
its operating revenues from the following countries, as a % of total operating
revenues.
<TABLE>
Operating Revenue Percentage by Country
<CAPTION>
3 Months Ended 3 Months Ended
Mar 31, 1999 Mar 31, 2000
<S> <C> <C>
United States 88% 86%
Canada 10% 12%
Other 2% 2%
</TABLE>
5. The Company accounts for its investments in accordance with Statement of
Financial Accounting Standards No. 115 (SFAS 115), Accounting for Certian
Investments in Debt and Equity Securities. The Company's marketable securities
consist of common and preferred equity securities and have been classified as
available-for-sale and acccordingly should be recorded at fair value. At
quarter end March 31, 1999 and March 31, 2000, the cost basis and net after tax
aggregate fair value and unrealized gains or losses are as follows:
<TABLE>
Marketable Securities
<CAPTION>
Unrealized
After-tax
Cost Gain/(Loss) Fair Value
<S> <C> <C> <C>
March 31, 1999 73,516 2,258 75,774
March 31, 2000 90,688 (4,273) 86,415
</TABLE>
<PAGE> 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Operating Results
<TABLE>
Comparison of 1st Quarter 2000 with 1st Quarter 1999
(in thousands where applicable)
<CAPTION>
3 Months Ended 3 Months Ended Change
Mar 31, 1999 Mar 31, 2000
<S> <C> <C> <C>
Revenues 54,456 54,653 0%
Operating income 21,709 21,201 (2%)
Net income 13,915 14,266 2%
Average number of common shares 16,316 16,501 1%
Earnings per average common share $0.85 $0.86 2%
Cash dividends per common share $0.50 $0.58 16%
</TABLE>
Revenues increased by $197 thousand or less than 1% due to lack of growth in
services provided to both existing and new customers.
Expenses increased by $705 thousand or 2% due primarily to higher staffing
costs. The higher growth rate of expenses over revenues resulted in a $508
thousand or 2% decrease in operating income.
Other Income, net of other expenses, increased $1.0 million. This is the
results of a combination of factors. No interest expense and lower rental
property expenses were coupled with higher dividend and interest income due to
higher market rates. The resultant Net Income increased by $351 thousand or
2%.
<TABLE>
Liquidity And Capital Resources (in thousands where applicable)
<CAPTION>
Dec 31, 1999 Mar 31, 2000
<S> <C> <C>
Cash and cash equivalents 15,056 19,743
Total assets 288,278 289,194
Total liabilities 41,583 34,433
Shareholders' equity 246,695 254,761
Common shares outstanding 16,457 16,588
Book value per share $14.99 $15.36
</TABLE>
As presented in the Statement of Cash Flow, net cash provided by operating
activities was $12.5 million during the first three months of fiscal 2000. Net
cash used in investing activities was $2.4 million. The payment of $9.5
million in dividends to shareholders constituted the most significant use of
cash during the first three months of 2000. The resultant net increase in cash
and cash equivalents was $2.4 million for the three months ended March 31,2000.
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.
<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, 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)
May 10, 2000
(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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 19,743
<SECURITIES> 86,415
<RECEIVABLES> 24,403
<ALLOWANCES> 380
<INVENTORY> 0
<CURRENT-ASSETS> 132,971
<PP&E> 202,117
<DEPRECIATION> 47,508
<TOTAL-ASSETS> 289,194
<CURRENT-LIABILITIES> 30,673
<BONDS> 0
0
0
<COMMON> 4,147
<OTHER-SE> 254,877
<TOTAL-LIABILITY-AND-EQUITY> 289,194
<SALES> 32,547
<TOTAL-REVENUES> 54,653
<CGS> 0
<TOTAL-COSTS> 33,452
<OTHER-EXPENSES> 1,658
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 23,849
<INCOME-TAX> 9,583
<INCOME-CONTINUING> 14,266
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,266
<EPS-BASIC> 0.86
<EPS-DILUTED> 0.86
</TABLE>
