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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 SEPTEMBER 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, $.50 par value, outstanding at September
30,2000 was 16,587,566
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Index to Form 10-Q
Part I - Financial Information
Item 1 - Financial Statements (Unaudited)
Balance Sheet as of December 31, 1999 and September 30, 2000 Page 3
Statement of Income for the Third Quarter and Nine Months
ended September 30, 1999 and 2000 Page 4
Statement of Shareholders' Equity for the Nine Months
ended September 30, 1999 and 2000 Page 4
Statement of Cash Flow for the Nine Months
ended September 30, 1999 and 2000 Page 5
Notes to Financial Statements 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
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Part I - Financial Information
Item 1 - Financial Statements (Unaudited)
Balance Sheet (000 omitted)
Dec 31, 1999 Sep 30, 2000
Cash and equivalents 15,056 8,924
Marketable securities 85,101 103,858
Accounts receivable less reserve 30,156 24,890
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Current assets 130,313 137,672
Computer equipment 10,360 10,117
Furniture and fixtures 21,715 26,415
Buildings 143,126 139,670
Land 26,604 26,604
Accumulated depreciation (45,467) (49,724)
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Net property, plant and equipment 156,338 153,082
Investments 1,627 2,564
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Total assets 288,278 293,318
Accounts payable 401 2,433
Accrued taxes 2,816 (661)
Accrued expenses 18,411 16,153
Customer deposits 16,555 6,793
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Current liabilities 38,183 24,718
Deferred income taxes 3,400 3,140
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Total liabilities 41,583 27,858
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 16,457,286
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) (556)
Retained earnings 224,213 235,915
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Shareholders' equity 246,695 265,460
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Total liabilities and
shareholders' equity 288,278 293,318
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Statement of Income (000 omitted)
3 Months Ended Sep 30 9 Months Ended Sep 30
1999 2000 1999 2000
Software products 35,857 26,307 108,757 90,283
Software services 20,615 22,743 59,539 67,264
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Total revenues 56,472 49,050 168,296 157,547
Operating, development 21,912 22,047 66,077 67,315
Selling, G & A 11,540 9,779 33,994 31,083
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Total expenses 33,452 31,826 100,071 98,398
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Operating income 23,020 17,224 68,225 59,149
Other income 3,979 4,426 11,471 13,093
Other expense 1,702 1,613 5,499 4,837
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Income before taxes 25,297 20,037 74,197 67,405
State taxes 1,946 1,847 6,358 6,099
Federal taxes 8,079 6,062 23,298 20,817
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Net income 15,272 12,128 44,541 40,489
Statement of Shareholders' Equity (000 omitted)
9 Months Ended Sep 30
1999 2000
Shareholders' equity at beginning 217,272 246,695
Net income 44,541 40,489
Sale of stock 4,396 4,169
Dividends paid (24,550) (28,787)
Unrealized gain on securities - 2,894
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Shareholders' equity at end 241,659 265,460
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Statement of Cash Flow (000 omitted)
9 Months Ended Sep 30
1999 2000
Net income 44,541 40,489
Depreciation 6,056 5,960
Gain on marketable securities 0 (22)
Change in accounts receivable (1,469) 5,266
Change in accounts payable 724 2,032
Change in accrued expenses (954) (5,735)
Change in customer deposits 2,669 (9,762)
Change in deferred taxes 575 (260)
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Net cash from operations 52,142 37,968
Purchase of property, plant
and equipment (4,764) (2,704)
Purchase of marketable securities (16,083) (23,508)
Sales of marketable securities 0 7,667
Increase in investments 0 (992)
Proceeds from investment liquidation 109 55
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Net cash used in investing (20,738) (19,482)
Payment of bank note (13,500) 0
Proceeds from sale of stock 4,396 4,169
Dividends paid (24,550) (28,787)
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Net cash used in financing (33,654) (24,618)
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Net decrease in cash and equivalents (2,250) (6,132)
Cash and equivalents at beginning 10,014 15,056
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Cash and equivalents at end 7,764 8,924
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Notes To Financial Statements
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 10-K 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 operation.
2. Earnings per Share Calculations (in thousands where applicable)
3 Months Ended Sep 30 9 Months Ended Sep 30
1999 2000 1999 2000
Net income 15,272 12,128 44,541 40,489
Average number of shares 16,417 16,588 16,384 16,559
Earnings per share $0.93 $0.73 $2.72 $2.45
The average number of shares outstanding during the period reflects the new
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 income and all other nonowner changes in equity including items such as
unrealized 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, 1999. There were unrealized gains on marketable
securities totaling $4.2 million and $3.0 million for the third quarter and
nine months ended September 30, 2000 respectively.
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 nine 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 3rd Quarter 2000 with 1999 (in thousands where applicable)
3 Months Ended Sep 30
1999 2000 Change
Revenues 56,472 49,050 (13.1%)
Operating income 23,020 17,224 (25.2%)
Net income 15,272 12,128 (20.6%)
Average number of shares 16,417 16,588 1.0%
Earnings per share $0.93 $0.73 (21.4%)
Cash dividends per share $0.50 $0.58 16.0%
Revenues decreased by $7.4 million or 13% due to a $9.5 million reduction in
products provided to customers, partially offset by a $2.1 million increase in
services provided to customers.
Expenses decreased by $1.6 million or 5% due primarily to a reduction in staff
size and a decrease in associated costs. The 5% decrease in expenses was
disproportionate to the 13% decrease in revenues and resulted in a $5.8 million
or 21% decrease in operating income.
Other income, net of other expenses, increased by $0.5 million due primarily to
increased dividend and interest income. The resultant net income decreased by
$3.1 million or 21%.
Comparison of 1st Nine Months 2000 with 1999 (in thousands where applicable)
9 Months Ended Sep 30
1999 2000 Change
Revenues 168,296 157,547 (6.4%)
Operating income 68,225 59,149 (13.3%)
Net income 44,541 40,489 (9.1%)
Average number of shares 16,384 16,559 1.1%
Earnings per share $2.72 $2.45 (10.1%)
Cash dividends per share $1.50 $1.74 16.0%
Revenues decreased by $10.7 million or 6% due to an $18.4 million reduction in
products provided to customers, partially offset by a $7.7 million increase in
services provided to customers.
Expenses decreased by $1.7 million or 2% due primarily 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 resulted in a $9.1 million
or 13% decrease in operating income.
Other income, net of other expenses, increased by $2.3 million due primarily to
increased dividend and interest income. The resultant net income decreased by
$4.1 million or 9%.
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Liquidity And Capital Resources (in thousands where applicable)
Dec 31, 1999 Sep 30, 2000
Cash and cash equivalents 15,056 8,924
Total assets 288,278 293,318
Total liabilities 41,583 27,858
Shareholders' equity 246,695 265,460
Outstanding number of shares 16,457 16,588
Book value per share $14.99 $16.00
As presented in the Statement of Cash Flow, net cash from operations was $38.0
million during the first nine months of fiscal 2000. The payment of $28.8
million in dividends to shareholders constituted the most significant use of
cash during the first nine months of fiscal 2000. $18.5 million was used in
investing to increase our holdings in marketable securities and for the
purchase of additional equipment. The resultant net decrease in cash and
equivalents was $6.1 million for the nine months ended September 30, 2000.
Working capital requirements for the remainder of fiscal 2000 are expected to
be provided by cash generated from operations.
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, 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)
November 15, 2000
(Date)
Barbara A. Manzolillo, Chief Financial Officer and Treasurer
(Signature)
