UNITED STATES
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 QUARTER ENDED SEPTEMBER 30, 2004MARCH 31, 2005
0-28092
(Commission file number)
Medical Information Technology, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Massachusetts
(State of Incorporation)
04-2455639
(IRS Employer Identification Number)
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 [ ]
Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Exchange Act. Yes [ ] No [X]
There were 34,434,54434,750,437 shares of Common Stock, $1.00 par value, outstanding at September 30, 2004.March 31, 2005.
Page 1 of 1211
Index to Form 10-Q | Page |
Part I - Financial Information | |
Item 1 - Financial Statements (Unaudited) | |
Balance Sheet as of December 31, | 3 |
Statement of Income for the Three Months Ended March 31, 2004 and | 4 |
Statement of Cash Flow for the | 5 |
Notes To Financial Statements (Unaudited) | 6 |
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Item 4 - Controls and Procedures | |
Part II - Other Information | |
Item 1 - Legal Proceedings | |
Item 2 - | |
Item 4 - Submission of Matters to a Vote of Shareholders | |
Item 6 - Exhibits | |
Signatures |
Page 2 of 1211
Part I - Financial Information
Item 1 - Financial Statements (Unaudited)
Balance Sheet as of December 31, 20032004 and September 30, 2004March 31, 2005
(000 omitted)
Dec 31, 2003 | Sep 30, 2004 | |||
Cash and equivalents | $18,691 | $6,121 | ||
Marketable securities | 204,192 | 229,535 | ||
Accounts receivable less reserve | 30,720 | 33,656 | ||
Current assets | 253,603 | 269,312 | ||
Computer equipment | 8,710 | 7,720 | ||
Furniture & fixtures | 29,948 | 28,529 | ||
Buildings | 139,670 | 139,670 | ||
Land | 26,604 | 26,604 | ||
Accumulated depreciation | (64,861) | (66,636) | ||
Fixed assets | 140,071 | 135,887 | ||
Investments | 8,733 | 8,553 | ||
Total assets | $402,407 | $413,752 | ||
Accounts payable | $158 | $3,070 | ||
Accrued taxes | 2,600 | 565 | ||
Accrued expenses | 24,066 | 23,552 | ||
Customer deposits | 12,016 | 13,662 | ||
Current liabilities | 38,840 | 40,849 | ||
Deferred taxes | 11,869 | 11,500 | ||
Total liabilities | 50,709 | 52,349 | ||
Temporary equity consisting of | ||||
redeemable common stock $1.00 | ||||
par value, issued and outstanding | ||||
1,789,593 shares in 2003 and 2004 | 26,080 | 24,838 | ||
Common stock $1.00 par value, | ||||
authorized 40,000,000 shares, | ||||
issued and outstanding 32,431,730 | ||||
in 2003 and 32,644,951 in 2004 | 24,840 | 31,625 | ||
Retained income | 288,576 | 294,995 | ||
Unrealized gain on securities | 12,202 | 9,945 | ||
Shareholder equity | 325,618 | 336,565 | ||
Total liabilities and equity | $402,407 | $413,752 | ||
Dec 31, 2004 | Mar 31, 2005 | |||
Cash and equivalents | $14,566 | $21,512 | ||
Marketable securities | 192,701 | 177,122 | ||
Accounts receivable less reserve | 32,082 | 30,798 | ||
Current assets | 239,349 | 229,432 | ||
Computer equipment | 7,797 | 8,046 | ||
Furniture & fixtures | 28,960 | 29,005 | ||
Buildings | 139,670 | 139,670 | ||
Land | 26,604 | 26,604 | ||
Accumulated depreciation | (68,558) | (70,448) | ||
Fixed assets | 134,473 | 132,877 | ||
Marketable securities | 45,000 | 54,990 | ||
Investments | 8,493 | 8,433 | ||
Total assets | $427,315 | $425,732 | ||
Accounts payable | $282 | $2,711 | ||
Taxes payable | 3,134 | 10,491 | ||
Accrued expenses | 25,272 | 11,035 | ||
Customer deposits | 14,585 | 12,925 | ||
Deferred taxes & tax reserves | 13,992 | 12,387 | ||
Total liabilities | 57,265 | 49,549 | ||
Common stock $1.00 par value, | ||||
authorized 40,000,000 shares, | ||||
issued and outstanding 34,514,544 | ||||
in 2004 and 34,750,437 in 2005 | 34,514 | 34,750 | ||
Additional paid-in capital | 24,269 | 30,874 | ||
Retained income | 298,131 | 299,830 | ||
Net unrealized gain on securities | 13,136 | 10,729 | ||
Shareholder equity | 370,050 | 376,183 | ||
Total liabilities and shareholder equity | $427,315 | $425,732 | ||
Page 3 of 1211
Statement of Income for the Three Months Ended March 31, 2004 and Nine Months Ended September 30, 2003 and 20042005
(000 omitted)
3 months ended Sep 30 | 9 months ended Sep 30 | |||||||
2003 | 2004 | 2003 | 2004 | |||||
Product revenue | $37,290 | $36,947 | $113,741 | $110,280 | ||||
Service revenue | 30,396 | 33,390 | 88,737 | 98,186 | ||||
Total revenue | 67,686 | 70,337 | 202,478 | 208,466 | ||||
Operating, development | 28,764 | 29,364 | 86,130 | 88,020 | ||||
Selling, G & A | 13,983 | 15,778 | 41,281 | 45,245 | ||||
Operating expense | 42,747 | 45,142 | 127,411 | 133,265 | ||||
Operating income | 24,939 | 25,195 | 75,067 | 75,201 | ||||
Other income | 5,003 | 5,475 | 14,291 | 17,025 | ||||
Other expense | 2,037 | 1,890 | 5,501 | 5,604 | ||||
Pretax income | 27,905 | 28,780 | 83,857 | 86,622 | ||||
State income tax | 2,396 | 2,544 | 7,360 | 7,635 | ||||
Federal income tax | 8,302 | 8,636 | 25,082 | 26,178 | ||||
Income tax | 10,698 | 11,180 | 32,442 | 33,813 | ||||
Net income | $17,207 | $17,600 | $51,415 | $52,809 | ||||
3 months ended Mar 31 | ||||||||
2004 | 2005 | |||||||
Product revenue | $36,876 | $38,650 | ||||||
Service revenue | 31,924 | 34,872 | ||||||
Total revenue | 68,800 | 73,522 | ||||||
Operations, development | 29,197 | 30,216 | ||||||
Selling, G & A | 14,697 | 16,162 | ||||||
Operating expense | 43,894 | 46,378 | ||||||
Operating income | 24,906 | 27,144 | ||||||
Other income | 5,149 | 6,481 | ||||||
Other expense | 1,892 | 2,281 | ||||||
Pretax income | 28,163 | 31,344 | ||||||
State income tax | 2,489 | 2,883 | ||||||
Federal income tax | 8,626 | 9,505 | ||||||
Income tax | 11,115 | 12,388 | ||||||
Net income | $17,048 | $18,956 | ||||||
Page 4 of 1211
Statement of Cash Flow for the NineThree Months Ended September 30, 2003March 31, 2004 and 20042005
(000 omitted)
9 months ended Sep 30 | ||||||
2003 | 2004 | |||||
Net income | $51,415 | $52,809 | ||||
Change in accounts receivable | 390 | (2,936) | ||||
Depreciation expense | 6,416 | 5,784 | ||||
Change in accounts payable | 2,529 | 2,911 | ||||
Change in accrued taxes | (820) | (2,035) | ||||
Change in accrued expenses | 23 | (514) | ||||
Change in customer deposits | (1,369) | 1,647 | ||||
Gain on sales of marketable securities | (233) | -- | ||||
Net effect of non-cash adjustments | 1,717 | 1,136 | ||||
Net cash from operations | 60,068 | 58,802 | ||||
Purchases of marketable securities | (49,082) | (29,104) | ||||
Sales of marketable securities | 17,251 | -- | ||||
Purchases of equipment, furniture & fixtures | (1,932) | (1,601) | ||||
Proceeds from mortgage note receivable | 180 | 180 | ||||
Net cash used in investing | (33,583) | (30,525) | ||||
Sales of common stock | 5,805 | 5,544 | ||||
Dividends paid | (39,842) | (46,391) | ||||
Net cash used in financing | (34,037) | (40,847) | ||||
Net change in cash | (7,552) | (12,570) | ||||
Cash and equivalents at beginning | 16,907 | 18,691 | ||||
Cash and equivalents at end | $9,355 | $6,121 | ||||
Supplemental disclosure | ||||||
Change in temporary equity | $4,935 | $(1,242) | 3 months ended Mar 31 | |||
2004 | 2005 | |||||
Net income | $17,048 | $18,956 | ||||
Gain on sales of marketable securities | -- | (929) | ||||
Depreciation expense | 1,916 | 1,890 | ||||
Change in accounts receivable | 2,188 | 1,284 | ||||
Change in accounts payable | 2,650 | 2,429 | ||||
Change in taxes payable | 5,873 | 7,357 | ||||
Change in accrued expenses | (14,012) | (14,237) | ||||
Change in customer deposits | 926 | (1,660) | ||||
Net effect of non-cash adjustments | 397 | -- | ||||
Net cash from operations | 16,986 | 15,090 | ||||
Purchases of marketable securities | (2,662) | (11,240) | ||||
Sales of marketable securities | -- | 13,746 | ||||
Purchases of equipment, furniture & fixtures | (364) | (294) | ||||
Proceeds from mortgage note receivable | 60 | 60 | ||||
Net cash (used in) from investing | (2,966) | 2,272 | ||||
Sales of common stock | 5,544 | 6,841 | ||||
Dividends paid | (15,400) | (17,257) | ||||
Net cash used in financing | (9,856) | (10,416) | ||||
Net change in cash and equivalents | 4,164 | 6,946 | ||||
Cash and equivalents at beginning | 18,691 | 14,566 | ||||
Cash and equivalents at end | $22,855 | $21,512 | ||||
Page 5 of 1211
Notes To Financial Statements (Unaudited)(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, 20032004 included in the Company's Form 10-K filed March 11, 2004.January 31, 2005. The unaudited financial statements presented herein have not been audited by independent accountants in accordance with generally accepted auditing standards, but in the opinion of management such financial statements include all normal recurring adjustments necessary to summarize fairly the Company's financial position and results of operations.
2. During the quarter new GAAP interpretations on the classification of deferred taxes were adopted. The underlying assets or liabilities associated with deferrals are considered current in nature. Thus, the March 31, 2005 deferred taxes and tax reserves of $12,387 thousand are now recorded as current and the corresponding amount of $13,992 thousand at December 31, 2004 has been reclassified for comparative purposes.
3. The Company follows the provisions of Statement of Financial Accounting Standards No. 128 (SFAS 128), Earnings per Share. SFAS 128 requires reporting both basic and diluted earnings per share (EPS). The Company has no common share equivalents such as preferred stock, warrants or stock options which would dilute EPS. Thus, EPS is computed by dividing net income by the weighted average number of common shares outstanding during the applicable period.
Earnings per Share Calculations for the Three Months Ended March 31, 2004 and Nine Months Ended September 30, 2003 and 20042005
(in thousands where applicable)
3 months ended Sep 30 | 9 months ended Sep 30 | |||||||
2003 | 2004 | 2003 | 2004 | |||||
Net income | $17,207 | $17,600 | $51,415 | $52,809 | ||||
Average number of shares | 34,141 | 34,435 | 34,083 | 34,363 | ||||
Earnings per share | $0.50 | $0.51 | $1.51 | $1.54 | 3 months ended Mar 31 | |||
2004 | 2005 | |||||||
Net income | $17,048 | $18,956 | ||||||
Average number of shares | 34,221 | 34,593 | ||||||
Earnings per share | $0.50 | $0.55 |
The average number of shares outstanding during the periodperiods reflects the issuance of 263,884 shares in February 2003 and 213,221 shares in March 2004.2004 and 235,893 shares in February 2005 pursuant to the 2004 Stock Purchase Plan.
3.4. The Company follows the provisions of Statement of Financial Accounting Standards No. 130 (SFAS 130), Reporting Comprehensive Income. 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 non-owner changes in equity including items such as net unrealized gains/losses on securities classified as available for sale, foreign currency translation adjustments and minimum pension liability adjustments. The Company had anFor the three months ended March 31, 2004 and 2005, the Company's net unrealized gain on marketable securities totaling $9,050increased by $2,753 thousand and decreased by $2,407 thousand repectively.
Comprehensive Income for the nine months ended September 30, 2003Three Months Ended March 31, 2004 and an unrealized loss on marketable securities totaling $2,257 thousand for the nine months ended September 30, 2004.2005
(in thousands where applicable)
3 months ended Mar 31 2004 2005 Net income $17,048 $18,956 Net unrealized gains (losses) 2,753 (2,407) Comprehensive income $19,801 $16,549
Page 6 of 11
5. At September 30, 2004March 31, 2005 the Company's marketable securities had a fair market value of $229,534,752$232,112,315 which includes a gross unrealized gain of $18,262,597$19,294,202 and a gross unrealized loss of $1,687,508.$1,412,339. The gross unrealized loss is composed of 5 equities with an original cost of $23,726,288$25,180,664 and a fair market value of $22,038,780.$23,768,325. These 5 equities have been in an unrealized loss status for less than 123 months. The Company considered the effect of rising interest rates and the issuer's current financial position in order to reach its conclusion that these impairments are temporary at September 30, 2004.March 31, 2005. The details are as follows:
Description of Securities | Fair Market Value | Unrealized Loss | ||
1 common equity | $6,173,280 | $715,115 | ||
4 preferred equities | $15,865,500 | $972,393 | Fair Market Value | Unrealized Loss |
1 common equity | $6,579,360 | $309,035 | ||
4 preferred equities | $17,188,965 | $1,103,304 |
Page 6 of 12
4.6. The Company follows the provisions of Statement of Financial Accounting Standards No. 131 (SFAS 131), Disclosure About Segments of an Enterprise and Related Information. 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 ninethree months of 2004, 87%2005, 89% of our operating revenue was derived from the United States, 11%10% from Canada and 2%1% from other countries.
5.7. During the month of February from 1997 through 2003, the Company offered and sold shares of its common stock to its staff members in a manner which may not have complied with the registration requirements of certain federal and state securities laws. Assuming such sales did not comply with those requirements,During the individuals who purchased such shares in those offerings would currently have the right to return the shares to4th quarter of 2004 the Company and obtain a refund equal to the recision amount, as defined below, or if they have sold the stock, to seek from the Company damages, if any, resulting from their purchases.
The recision amount payable to an individual would be equal to the original purchase price, plus 6% interest per annum, less cash dividends received for such shares. Because the dividends received have always exceeded the amount of the interest, the recision amount is less than the original purchase price. In addition, each year since 1997 the sale price for the Company's common stock has increased over that for the prior year. Accordingly, the Company expects none of these individuals to seek recision or damages with respect to such purchases.
The Company intends to makemade a recision offer to the shareholders described above. The Company has filed a registration statement under the Securities Act of 1933 registering the recision offer, but the recision offer has not yet commenced. The Company expects the recision offer, once commenced, will last approximately 30 days. For the reasons discussed above, the Company expects none of the shareholdersthese individuals so as to accept the recision offer. The Company believes the recision offer will extinguish its liability, if any, to shareholders for thethese potential securities law violations described above.
Pending the completionviolations. None of these individuals accepted the recision offer,offer.
Prior to the right4th quarter of shareholders to seek recision and receive the recision amount is not completely within the control of the Company. As a result,2004 the shares subject to recision rights arewere considered and treated as redeemable common stock for financial accounting purposes until such time as the recision rights lapseterminated or arewere exercised. Therefore the recision amount and the related shares were removed from Shareholder Equity and are currently classified as Temporary Equity.
The shares of MEDITECH common stock rescinded pursuant to this In late December, when the recision offer if any, will be cancelled. Onexpired, the day thisCompany transferred the recision offer expires MEDITECH intends to transferamount and related shares from Temporary Equity to Shareholder Equity and then to account for any shares so rescinded by reducing the amount so paid from Shareholder Equity.
Page 7 of 12
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
ComparisonResults of Operations for 3 Months Ended September 30, 2003March 31, 2004 and 20042005
(in thousands where applicable)
3 months ended Sep 30 | ||||||
2003 | 2004 | Change | ||||
Total revenue | $67,686 | $70,337 | 3.9% | |||
Operating income | 24,939 | 25,195 | 1.0% | |||
Net income | 17,207 | 17,600 | 2.3% | |||
Average number of shares | 34,141 | 34,435 | 0.9% | |||
Earnings per share | $0.50 | $0.51 | 1.4% | |||
Cash dividends per share | $0.39 | $0.45 | 15.4% | 3 months ended Mar 31 | ||
2004 | 2005 | Change | ||||
Total revenue | $68,800 | $73,522 | 6.9% | |||
Operating income | 24,906 | 27,144 | 9.0% | |||
Net income | 17,048 | 18,956 | 11.2% | |||
Average number of shares | 34,221 | 34,593 | 1.1% | |||
Earnings per share | $0.50 | $0.55 | 10.0% | |||
Cash dividends per share | $0.45 | $0.50 | 11.1% |
Page 7 of 11
Total revenue from both existing and new customers increased by $2,651 thousand.$4.7 million. It was composed of a $2,994 thousand$1.8 million increase in product revenue and a $2.9 million increase in service revenue offset by a $343 thousand decrease in product revenue. The decrease in product revenue is due to extended implementation schedules in the product backlog.
Operating Expenseexpense increased by $2,395 thousand$2.5 million or 5.6%5.7% due primarily to an increase in product development, sales and marketing efforts and to higher software service staff levels along with their associated costs. The result was a $256 thousand increase inresultant operating income.income increased by $2.2 million.
Other income net of other expense, increased by $619 thousand. This is$1.3 million or 25.9% due primarily to a $376 thousand increase in dividend$0.9 million marketable securities gain. Other expense increased by $0.4 million or 20.6% due primarily to higher rental costs and interestincreased lawsuit related legal expenses. The resultant pretax income offsetincreased by a $175 thousand decrease in certain legal expenses incurred in relation to a lawsuit.$3.2 million or 11.3%.
The Company's effective tax rate remained at 39.5%. Net income increased by $393 thousand as a result of$1.9 million due primarily to the disproportionategreater increase in other income, netrevenue compared to expense.
Financial Condition as of other expense, during the third quarter of 2004.
Page 8 of 12
Comparison of 9 Months Ended September 30, 2003December 31, 2004 and 2004March 31, 2005
(in thousands where applicable)
9 months ended Sep 30 2003 2004 Change Total revenue $202,478 $208,466 3.0% Operating income 75,067 75,201 0.2% Net income 51,415 52,809 2.7% Average number of shares 34,083 34,363 0.8% Earnings per share $1.51 $1.54 1.9% Cash dividends per share $1.17 $1.35 15.4%
Total revenue from both existing and new customers increased by $5,988 thousand. It was composed of a $9,449 thousand increase in service revenue offset by a $3,461 thousand decrease in product revenue. The decrease in product revenue is due to extended implementation schedules in the product backlog.
Operating expense increased by $5,854 thousand or 4.6% due primarily to an increase in sales and marketing efforts and to higher software service staff levels along with their associated costs. The result was a $134 thousand increase in operating income.
Other income, net of other expense, increased by $2,631 thousand. This is due primarily to $1,078 thousand in cumulative dividends due since 2001 from Pacific Gas and Electric being paid during the second quarter of 2004 upon emergence from Chapter 11. In addition, in 2003 we incurred a $1,000 thousand writedown of impaired marketable securities offset by a $233 thousand realized gain on marketable securities, while no such impairments occurred in 2004.
Net income increased by $1,394 thousand as a result of the disproportionate increase in other income, net of other expense, during the first nine months of 2004.
Changes in Financial Condition for Nine Months Ended September 30, 2004: Dec 31, 2004 Mar 31, 2005 Cash and equivalents $14,566 $21,512 Total assets 427,315 425,732 Total liabilities 57,265 49,549 Shareholder equity 370,050 376,183 Outstanding number of shares 34,514 34,750 Shareholder equity per share $10.72 $10.83
At December 31, 2003 the Company reported the net book value of fixed assets to be $140,071 thousand. During the 2nd quarter the Company retired $4,010 thousand of fully depreciated assets and their accumulated depreciation.
At December 31, 20032004 the Company had no payroll tax withholding outstanding while $2,195 thousand$2.2 million was outstanding at September 30, 2004.March 31, 2005. This is the primary reason accounts payable increased by $2,911$2.4 million during the quarter.
Taxes payable increased by $7,357 thousand during the quarter primarily as a result of the federal tax payment schedule which calls for payment of both the first nine monthsand second quarter's tax expense during the second quarter.
Accrued expenses decreased by $14.2 million during the quarter as a result of 2004.the payment of $21.3 million in bonuses applicable to 2004, offset by the accrual of $6.9 million in bonus expenses applicable to 2005.
Page 98 of 1211
Liquidity and Capital Resources:
Comparison as of DecemberAt March 31, 2003 and September 30, 2004(in thousands where applicable)
Dec 31, 2003 Sep 30, 2004 Cash and equivalents $18,691 $6,121 Total assets 402,407 413,752 Total liabilities 50,709 52,349 Total equity 351,698 361,403 Outstanding number of shares 34,221 34,435 Total equity per share $10.28 $10.50
At September 30, 2004,2005 the Company's cash, cash equivalents and marketable securities totaled $235.7$253.6 million. The marketableMarketable securities consisted of preferred orequities, common equities and government notes which can easily be converted to cash. CashFor the first three months of 2005 cash flow from operations for the first nine months of 2004 was $58.8$15.1 million, a decrease of $1.3cash flow from investing was $2.3 million from the first nine months of 2003. The decreaseand cash flow used in financing was primarily attributable to changes in working capital.$10.4 million. The payment of $46.4$17.3 million in dividends to shareholders constitutedwas the primary use of cash generated by operating activities during the first nine months.quarter.
MEDITECH has no long-term debt. TotalShareholder equity at September 30, 2004 totaled $361.4March 31, 2005 was $376.2 million. AdditionsManagement anticipates additions to property, plant and equipment are expected towill 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 operating and capital expense requirements.requirements for the foreseeable future.
Item 4 - Controls and Procedures
An evaluation was conducted under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, on the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)14(c) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, theour Chief Executive Officer and Chief Financial Officer have concluded the Company's disclosure controls and procedures are, to the best of their knowledge, effective to ensure information requiring disclosure by the Company in reports which it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
There were no changes in the Company's internal control over financial reporting occurring during the fiscal quarter covered by this report which have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.
Page 10 of 12
Part II - Other Information
Item 1 - Legal Proceedings
On April 18, 2003, a shareholder and former Director of the Company filed a complaint in the Suffolk County, Massachusetts Superior Court against the Company and five of its six Directors. The complaint is summarized in the 2003 annual report2004 Annual Report on Form 10-K.
On February 10, 2005, a former employee filed a complaint in the United States District Court for the District of Massachusetts against the Medical Information Technology Profit Sharing Plan and all six of the Company's Directors. The complaint is summarized in the 2005 Definitive Proxy Statement on Schedule 14A.
Page 9 of 11
Item 2 - Changes inUnregistered Sales of Equity Securities and Use of Proceeds and Issuer Purchases of Equity Securities
The Company did not repurchase any of its shares of common stock during the thirdfirst quarter of 2004.2005. However, during the quarter the Medical Information Technology, Inc. Profit Sharing Trust purchased 4,9903,470 shares of the Company's common stock for a total of $135,455$100,630 in individual private transactions. Below is a table showing the purchases of common stock by the Trust during each month of the thirdfirst quarter of 2004.2005.
3rd quarter
of 2004shares
purchasedprice per
shareJuly 3,600 $27.00 August 665 $27.00 September 725 $28.00 1st quarter
of 2005shares
purchasedprice per
shareJanuary none -- February 2,050 $29.00 March 1,420 $29.00
Item 4 - Submission of Matters to a Vote of Shareholders
A SpecialThe Annual Meeting of Shareholders of Medical Information Technology, Inc. was held at its corporate offices, 7 Blue Hill River Road, Canton, Massachusetts, on Monday, September 20, 2004.April 25, 2005. The meeting was convened at 9am with the Chairman, A. Neil Pappalardo, presiding and the Clerk, Barbara A. Manzolillo, keeping the minutes.
ThereOn the March 25, 2004 record date there were outstanding a total of 34,434,54434,750,437 shares of Common Stock, par value $1.00 per share. A total of 24,864,43033,435,266 shares or 72.21%96.2% of the outstanding shares, constituting a quorum, were represented at the meeting in personby proxy or by proxy. Ballotsballot.
The following six directors of the Company were distributed for voting.elected to serve until the 2006 Annual Meeting of Shareholders and thereafter until their successors are chosen and qualified, with votes cast as follows:
shares
in favor shares
withheld A. Neil Pappalardo 31,653,042 1,782,224 Lawrence A. Polimeno 31,653,042 1,782,224 Roland L. Driscoll 31,653,042 1,782,224 Edward B. Roberts 31,653,042 1,782,224 Morton E. Ruderman 31,653,042 1,782,224 L. P. Dan Valente 31,653,042 1,782,224
Page 10 of 11
A proposal to amend MEDITECH's Articlesratify the selection of Organization to increaseErnst & Young LLP as the authorized common stock, par value $1.00 per share, from 35,000,000 to 40,000,000 sharesCompany's Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2005 was approved, with 24,858,08033,343,001 shares in favor, 3,45036,750 shares against and 2,90055,515 shares abstaining.
A shareholder proposal relating to amend MEDITECH's Articlesthe valuation of Organization to eliminate the authorized Class A and Class B preferredCompany's common stock was approved,defeated, with 24,864,4303,188,384 shares in favor, 029,912,720 shares against and 0334,162 shares abstaining.
Page 11 of 12
Item 6 - Exhibits and Reports
Exhibit 3.1: MEDITECH's Articles of Organization, as amended to date, is incorporated by reference to an exhibit to the Form 10 filed with the SEC on March 28, 1996, an exhibit to the annual report on Form 8-K10-K for the year ended December 31, 2001 and an exhibit to the quarterly report on Form 10-Q for the quarter ended September 30, 2004.
Exhibit 3 (An Amendment3.2: MEDITECH's By-laws, as amended to date, is incorporated by reference to an exhibit to the Articles of Organization), annual report on Form 10-K for the year ended December 31, 2001.
Exhibit 31, (RuleRule 13a-14(a) Certifications),Certifications, and Exhibit 32, (SectionSection 1350 Certifications)Certifications, are appended to this report.
There were no reports filed on Form 8-K during the quarter ended September 30, 2004.March 31, 2005.
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)
OctoberApril 29, 20042005
(Date)
By: Barbara A. Manzolillo, Chief Financial Officer and Treasurer
(Signature)
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