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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, 2002
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, $1.00 par value, outstanding at June 30,
2002 was 33,797,439.
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Index to Form 10-Q
Part I - Financial Information
Item 1 - Financial Statements
Balance Sheet as of December 31, 2001 and June 30, 2002 Page 3
Statement of Income for the Three Months and Six Months
ended June 30, 2001 and 2002 Page 4
Statement of Shareholders' Equity for the Six Months
ended June 30, 2001 and 2002 Page 4
Statement of Cash Flow for the Six Months
ended June 30, 2001 and 2002 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
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Part I - Financial Information
Item 1 - Financial Statements
Balance Sheet (000 omitted)
Dec 31, 2001 Jun 30, 2002
Cash and equivalents 18,161 10,637
Marketable securities 129,027 150,079
Accounts receivable less reserve 29,648 29,071
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Current assets 176,836 189,787
Computer equipment 9,606 8,204
Furniture and fixtures 31,910 31,992
Buildings 139,670 139,670
Land 26,604 26,604
Accumulated depreciation (57,357) (58,840)
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Net property, plant and equipment 150,433 147,630
Investments 4,015 4,015
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Total assets 331,284 341,432
Accounts payable 114 2,510
Accrued taxes 2,488 1,273
Accrued expenses 18,092 14,774
Customer deposits 10,364 11,590
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Current liabilities 31,058 30,147
Deferred income taxes 4,700 5,405
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Total liabilities 35,758 35,552
Common stock, $1.00 par value,
authorized 35,000,000 shares
Issued and outstanding 33,575,556
in 2001 and 33,797,439 in 2002 33,575 33,797
Additional paid-in capital 3,483 7,477
Unrealized gain on securities 2,140 (1,456)
Retained earnings 256,328 266,062
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Shareholders' equity 295,526 305,880
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Total liabilities and
shareholders' equity 331,284 341,432
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Statement Of Income (000 omitted)
3 Months Ended June 30 6 Months Ended June 30
2001 2002 2001 2002
Software products 29,359 37,825 55,629 72,637
Software services 24,789 27,278 48,992 53,596
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Total revenues 54,148 65,103 104,621 126,233
Operating, development 23,415 27,236 46,920 53,132
Selling, G & A 10,926 13,298 21,026 25,699
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Total expenses 34,341 40,534 67,946 78,831
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Operating income 19,807 24,569 36,675 47,402
Other income 4,498 4,981 8,791 9,956
Other expense 1,595 1,568 3,293 3,224
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Pretax Income 22,710 27,982 42,173 54,134
State taxes 2,179 2,572 4,020 5,008
Federal taxes 7,033 8,495 13,010 16,485
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Net income 13,498 16,915 25,143 32,641
Statement Of Shareholders' Equity (000 omitted)
6 Months Ended June 30
2001 2002
Shareholders' equity at beginning 273,778 295,526
Net income 25,143 32,641
Sale of common stock 4,172 4,216
Dividends paid (20,694) (22,907)
Unrealized gain (loss) on securities 477 (3,596)
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Shareholders' equity at end 282,876 305,880
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Statement Of Cash Flow (000 omitted)
6 Months Ended June 30
2001 2002
Net income 25,143 32,641
Depreciation 3,951 4,443
Gain on marketable securities (73) --
Gain on return of capital on investment (17) --
Change in accounts receivable (894) 577
Change in accounts payable 1,842 2,397
Change in accrued expenses (7,693) (4,533)
Change in customer deposits 2,559 1,226
Change in deferred taxes 600 705
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Net cash from operations 25,418 37,456
Purchase of property, plant
and equipment (1,173) (1,640)
Purchase of marketable securities (20,671) (24,649)
Sales of marketable securities 9,375 --
Increase in investments (1,490) --
Proceeds from investment liquidation 37 --
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Net cash used in investing (13,922) (26,289)
Proceeds from sale of stock 4,172 4,216
Dividends paid (20,694) (22,907)
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Net cash used in financing (16,522) (18,691)
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Net decrease in cash and equivalents (5,026) (7,524)
Cash and equivalents at beginning 15,949 18,161
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Cash and equivalents at end 10,923 10,637
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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, 2001 included in
the Company's Form 10K filed March 31, 2002. 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 June 30 6 Months Ended June 30
2001 2002 2001 2002
Net income 13,498 16,915 25,143 32,641
Average number of shares 33,501 33,797 33,419 33,723
Earnings per share $0.40 $0.50 $0.75 $0.97
The average number of shares outstanding during the period reflects the
issuance of 245,424 shares in February 2001 and 221,883 shares in February 2002.
3. The Company adopted Statement of Financial Accounting Standards No. 130
(SFAS 130), Reporting Comprehensive Income, effective January 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 an unrealized holding gain on marketable securities totaling
$477 thousand for the six months ended June 30, 2001 and an unrealized holding
loss of $3,596 thousand for the six months ended June 30, 2002.
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 2002, 88% of our operating revenue was derived from the United States,
11% from Canada and 1% from other countries.
5. The Company adopted the Emerging Issues Task Force's (EITF) announcement
that reimbursements received for out-of-pocket expenses be characterized as
revenue with offsetting expenses in the income statement, effective January 1,
2002. Comparative financial statements for prior periods are reclassified to
comply with this announcement. For the first six months of 2001 $2,944
thousand in reimbursables are reclassified in the income statement. For the
first six months of 2002 $2,764 thousand in reimbursables are included in the
income statement.
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Item 2 - Management's Discussion and Analysis of Financial
Condition and Operating Results
Comparison of 2nd Quarter 2001 with 2002 (in thousands where applicable)
3 Months Ended June 30 Change
2001 2002
Revenues 54,148 65,103 20.2%
Operating income 19,807 24,569 24.0%
Net income 13,498 16,915 25.3%
Average number of shares 33,501 33,797 0.9%
Earnings per share $0.40 $0.50 25.0%
Cash dividends per common share $0.31 $0.34 9.7%
Revenues increased by $11.0 million or 20% due to increased products and
services provided to both new and existing customers.
Expenses increased by $6.2 million or 18% due primarily to an increase in staff
size and associated costs. The higher growth rate of revenues over expenses
resulted in a $4.8 million or 24% increase in operating income.
Other income, net of other expenses, increased by a $510 thousand or 18%. As
a result, net income increased by $3.4 million or 25%.
Comparison of 1st Half 2001 with 2002 (in thousands where applicable)
6 Months Ended June 30 Change
2001 2002
Revenues 104,621 126,233 20.7%
Operating income 36,675 47,402 29.2%
Net income 25,143 32,641 29.8%
Average number of shares 33,419 33,723 0.9%
Earnings per share $0.75 $0.97 28.6%
Cash dividends per share $0.62 $0.68 9.7%
Revenues increased by $21.6 million or 21% due to increased products and
services provided to both new and existing customers.
Expenses increased by $10.9 million or 16% due primarily to an increase in staff
size and associated costs. The higher growth rate of revenues over expenses
resulted in a $10.7 million or 29% increase in operating income.
Other income, net of other expenses, increased by $1.2 million or 22%. As
a result, net income increased by $7.5 million or 30%.
Liquidity And Capital Resources (in thousands where applicable)
Dec 31, 2001 Jun 30, 2002
Cash and cash equivalents 18,161 10,637
Total assets 331,284 341,432
Total liabilities 35,757 35,552
Shareholders' equity 295,526 305,880
Outstanding number of shares 33,576 33,797
Book value per share $8.80 $9.05
As presented in the Statement of Cash Flow, net cash provided by operating
activities was $37.5 million during the first six months of 2002. Net cash
used in investing activities was $26.3 million. The payment of $22.9 million
in dividends to shareholders constituted the most significant use of cash
during the first six months of 2002. The resultant net decrease in cash and
cash equivalents was $7.5 million for the six months ended June 30, 2002.
At June 30, 2002, the Company's cash, cash equivalents and marketable
securities totaled $160.7 million. The marketable securities consist primarily
of preferred and common equities which can quickly be converted to cash.
MEDITECH has no long-term debt. Shareholders' equity at June 30, 2002 was
$305.9 million. Additions to property, plant and equipment will continue,
including new facilities and computer systems for product development, sales
and marketing, implementation, service and administrative staff. Management
believes existing cash, cash equivalents and marketable securities together
with funds generated from operations will be sufficient to meet future
operating requirements.
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Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
There were no reports filed on Form 8-K during the quarter ended June 30, 2002.
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)
July 26, 2002
(Date)
Barbara A. Manzolillo, Chief Financial Officer and Treasurer
(Signature)