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 MARCH 31, 20072008
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 a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non acceleratedNon-accelerated filer [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
There were 35,401,27135,687,426 shares of Common Stock, $1.00 par value, outstanding at March 31, 2007.2008.
Page 1 of 11
Index to Form 10-Q | Page |
Part I - Financial Information | |
Item 1 - Consolidated Financial Statements (Unaudited) | |
Consolidated Balance Sheet as of December 31, | 3 |
Consolidated Statement of Income for the Three Months Ended March 31, | 4 |
Consolidated Statement of Cash Flow for the Three Months Ended March 31, | 5 |
; Notes To Consolidated Financial Statements | 6 |
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations | 8 |
Item 3 - Quantitative and Qualitative Disclosures About Market Risk | 9 |
Item 4 - Controls and Procedures | 9 |
Part II - Other Information | |
Item 1 - Legal Proceedings | 10 |
Item 1A - Risk Factors | 10 |
Item 2 - Unregistered Sales of Equity Securities and Use& nbsp;of Proceeds | 10 |
Item 3 - Defaults Upon Senior Securities | 10 |
Item 4 - Submission of Matters to a Vote of Shareholders | 10 |
Item 5 - Other Information | 11 |
Item 6 - Exhibits | 11 |
Signatures | 11 |
Page 2 of 11
Part I - Financial Information
Item 1 - Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheet as of December 31, 20062007 and March 31, 20072008
Dec 31, 2006 | Mar 31, 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and equivalents | $13,660,733 | $29,520,473 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable securities | 247,407,527 | 235,710,750 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable, less reserve | 43,309,325 | 42,152,107 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current assets | 304,377,585 | 307,383,330 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computer equipment | 7,729,814 | 8,443,919 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Furniture and fixtures | 34,739,785 | 35,101,285 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Buildings | 146,934,058 | 151,212,567 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Land | 32,604,107 | 32,604,107 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated depreciation | (80,443,541) | (82,618,741) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed assets | 141,564,223 | 144,743,137 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable securities | 30,000,000 | 30,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 10,712,604 | 11,952,604 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $486,654,412 | $494,079,071 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable | $239,804 | $3,760,447 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxes payable | 2,226,632 | 9,853,416 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued expenses | 30,461,088 | 14,354,370 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Customer deposits | 23,770,417 | 22,251,628 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes and tax reserves | 16,646,168 | 18,371,122 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 73,344,109 | 68,590,983 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock $1.00 par value, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
authorized 40,000,000 shares, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
issued and outstanding 35,168,133 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
in 2006 and 35,401,271 in 2007 | 35,168,133 | 35,401,271 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional paid-in capital | 44,062,385 | 51,989,077 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retained income | 317,983,893 | 319,870,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized security gains, net of tax | 16,095,892 | 18,227,738 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholder equity | 413,310,303 | 425,488,088 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and shareholder equity | $486,654,412 | $494,079,071 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec 31, 2007 | Mar 31, 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and equivalents | $22,567,940 | $12,870,230 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable securities | 210,137,628 | 206,330,736 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable, less reserve | 37,445,841 | 39,715,391 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current assets | 270,151,409 | 258,916,357 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computer equipment | 9,361,351 | 9,863,545 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Furniture and fixtures | 38,752,354 | 40,421,792 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Building s | 175,130,131 | 178,772,239 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Land | 33,159,107 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated depreciation | (87,690,598) | (90,070,576) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed assets | 168,712,345 | 172,146,107 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable securities | 30,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other assets | 13,625,289 | 13,351,797 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $482,489,043 | $474,414,261 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable | $395,117 | $4,056,296 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxes payable | 5,377,659 | 10,649,732 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued expenses | 34,475,953 | 16,532,449 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Customer deposits | 25,604,508 | 25,048,045 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes and tax reserves | 3,171,231 | 1,114,727 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 69,024,468 | 57,401,249 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock, $1.00 par value, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
authorized 40,000,000 shares, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
issued&n bsp;and outstanding 35,481,271 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
in 2007 and 35,687,426 in 2008 | 35,481,271 | 35,687,426 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional paid-in capital | 54,869,077 | 62,290,657 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retained income | 321,703,233 | 320,824,279 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized security gains (losses), net of tax | 1,410,994 | (1,789,350) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholder equity | 413,464,575 | 417,013,012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and shareholder equity | $482,489,043 | $474,414,26 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Page 3 of 11
Consolidated Statement of Income for the Three Months Ended March 31, 20062007 and 20072008
3 months ended Mar 31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2006 | 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product revenue | $43,746,790 | $49,906,409 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service revenue | 38,442,868 | 41,776,682 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue | 82,189,658 | 91,683,091 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operations, development | 34,749,443 | 39,070,723 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selling, G & A | 18,267,154 | 19,446,065 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expense | 53,016,597 | 58,516,788 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating income | 29,173,061 | 33,166,303 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other income | 5,725,256 | 5,474,024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other expense | 2,163,903 | 1,910,617 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pretax income | 32,734,414 | 36,729,710 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
State income tax | 2,824,000 | 3,081,930 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal income tax | 9,710,000 | 10,660,792 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax | 12,534,000 | 13,742,722 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $20,200,414 | $22,986,988 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 months | ended on | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mar 31, 2007 | Mar 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product revenue | $49,906,409 | $47,848,208 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service revenue | 41,776,682 | 48,908,919 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue | 91,683,091 | 96,757,127 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operations, development | 39,070,723 | 44,823,827 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selling, G & A | 19,446,065 | 20,838,156 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expense | 58,516,788 | 65,661,983 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating income | 33,166,303 | 31,095,144 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other income | 5,474,024 | 5,409,167 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other expense | 1,910,617 | 2,033,011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pretax income | 36,729,710 | 34,471,300 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
State income tax | 3,081,930 | 2,632,014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal income tax | 10,660,792 | 10,365,044 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax | 13,742,722 | 12,997,058 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $22,986,988 | $21,474,242 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Page 4 of 11
Consolidated Statement of Cash Flow for the Three Months Ended March 31, 20062007 and 20072008
3 months ended Mar 31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2006 | 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $20,200,414 | $22,986,988 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation expense | 2,022,162 | 2,175,200 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on sales of marketable securities | (8,230) | (2,141) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes on unrealized securities gains | (265,992) | (1,421,232) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in accounts receivable | 2,306,814 | 1,157,218 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in accounts payable | 2,692,833 | 3,520,643 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in taxes payable | 7,058,355 | 7,626,784 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in accrued expenses | (15,165,310) | (16,106,717) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in customer deposits | 1,052,597 | (1,518,789) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in deferred taxes and tax reserves | 315,992 | 1,724,954 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash from operations | 20,209,635 | 20,142,908 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases of marketable securities | (13,340,510) | (11,253,004) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales of marketable securities | 23,000,000 | 26,505,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases of fixed assets | (4,166,726) | (5,354,114) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Increase in investments | (1,000,000) | (1,300,000) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from mortgage note receivable | 60,000 | 60,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash from investing | 4,552,764 | 8,657,882 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales of common stock | 8,246,272 | 8,159,830 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid | (18,808,436) | (21,100,880) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash used in financing | (10,562,164) | (12,941,050) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net change in cash and equivalents | 14,200,235 | 15,859,740 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and equivalents at beginning | 16,749,452 | 13,660,733 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and equivalents at end | $30,949,687 | $29,520,473 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 months | ended on | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mar 31, 2007 | Mar 31, 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $22,986,988 | $21,474,242 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation expense | 2,175,200 | 2,379,978 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expense | 0 | 213,492 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on sales of marketable securities | (2,141) | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes on unrealized securities (gains) losses | (1,421,232) | 2,133,561 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in accounts receivable | 1,157,218 | (2,269,550) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in accounts payable | 3,520,643 | 3,661,179 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in taxes payable | 7,626,784 | 5,272,073 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in accrued expenses | (16,106,717) | (17,943,504) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in customer deposits | (1,518,789) | (556,463) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in deferred taxes and tax reserves | 1,724,954 | (2,056,503) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash from operations | 20,142,908 | 12,308,505 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases of marketable securities | (11,253,004) | (21,527,010) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales of&nb sp;marketable securities | 26,505,000 | 20,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases of fixed assets | (5,354,114) | (5,813,740) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in other assets | (1,240,000) | 60,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash from (used in) investing | 8,657,882 | (7,280,750) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales of common stock | 8,159,830 | 7,627,735 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid | (21,100,880) | (22,353,200) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash used in financing | (12,941,050) | (14,725,465) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net change in cash and equivalents | 15,859,740 | (9,697,710) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and equivalents at beginning | 13,660,733 | 22,567,940 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and equivalents at end | $29,520,473 | $12,870,230 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Page 5 of 11
Notes To Consolidated Financial Statements
1. The unaudited consolidated 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, 20062007 included in the Company'sMEDITECH's Form 10-K filed on January 31, 2007.2008. The unaudited financial statements presented herein have not been audited by our Independent Registered Public Accounting Firm in accordance with the standards of the Public Company Accounting Oversight Board (United States), but in the opinion of management such financial statements include all normal recurring adjustments necessary to present fairly the Company'sMEDITECH's financial position, results of operations and cash flow.
2. The CompanyMEDITECH 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. The CompanyMEDITECH has no common share equivalents such as preferred stock, warrants or stock options which would dilute earnings per share. Thus, earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the applicable period.
3 months ended Mar 31 | ||||||||||||||||||||
2006 | 2007 | |||||||||||||||||||
Net income | $20,200,414 | $22,986,988 | ||||||||||||||||||
Average number of shares | 34,988,901 | 35,323,558 | ||||||||||||||||||
Earnings per share | $0.58 | $0.65 | 3 months | ended on | ||||||||||||||||
Mar 31, 2007 | Mar 31, 2008 | |||||||||||||||||||
Net income | $22,986,988 | $21,474,242 | ||||||||||||||||||
Average number of shares | 35,323,558 | 35,618,708 | ||||||||||||||||||
Earnings per share | $0.65 | $0.60 |
The average number of shares outstanding during the periods reflects the issuance of 257,696 shares in February/March 2006 and 233,138 shares in February 2007 and 206,155 shares in February 2008 pursuant to the 2004 Stock Purchase Plan.
3. The CompanyMEDITECH 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/reclassifications on marketable securities classified as available for sale, foreign currency translation adjustments and minimum pension liability adjustments.
3 months ended Mar 31 2006 2007 Net income $20,200,414 $22,986,988 Net unrealized security gains 398,989 2,131,847 Comprehensive income $20,599,403 $25,118,835
Page 6 of 11
3 months | ended on | |
Mar 31, 2007 | Mar 31, 2008 | |
Net income | $22,986,988 | $21,474,242 |
Net unrealized security gains (losses) | 2,131,847 | (3,200,344) |
Comprehensive income | $25,118,835 | $18,273,898 |
4. The CompanyMEDITECH follows the provisions of Statement of Financial Accounting Standards No. 115 (SFAS 115), Accounting for Certain Investments in Debt and Equity Securities. SFAS 115 requires companies to classify their investments as trading, available-for-sale or held-to-maturity. The Company'sMEDITECH's marketable securities consist of common and preferred equities which have been classified as available-for-sale. These are recorded in the financial statements at fair market value and any unrealized gains (losses) are reported as a component of deferred taxes and shareholder equity. The fair market value of marketable securities was determined based on quoted prices in active markets. In addition the CompanyMEDITECH holds short and long term U.S. government agency issues which have been classified as held-to-maturity. These are recorded in the financial statements at their cost which approximates their fair value. The fair market value
Page 6 of marketable securities was determined based on quoted market prices. At December 31, 2006 and March 31, 2007 the cost basis net of write-downs, unrealized gains, unrealized losses and fair market value of the Com pany's holdings are as follows:11
Dec 31, 2006 Mar 31, 2007 Net cost of equities $190,591,039 $185,341,184 Unrealized Gains 26,840,480 30,379,566 Unrealized Losses (13,992) -- Cost of agency issues 59,990,000 49,990,000 Fair Market Value $277,407,527 $265,710,750
SFAS 115 requires that for each individual security classified as available-for-sale, a company shall determine whether a decline in fair value below the cost basis is other than temporary. If the decline in fair value is judged as such, the cost basis of the individual security shall be written down to fair value as a new cost basis and the amount of the write-down shall be reflected in earnings. At March 31, 2007 the Company's2008 MEDITECH's marketable securities had a fair market value of $265,710,750$236,330,736 which included onlya gross unrealized gains as there were nogain of $13,352,517 and a gross unrealized losses.loss of $16,334,765. The gross unrealized loss was composed of 15 equities with an original cost of $137,669,817 and a fair market value of $121,335,052. None of these equities had been in loss status for more than 5% of cost for longer than 77 consecutive days. MEDITECH considered the effect of fluctuating interest rates, current economic and industry conditions, and the issuers' current financial position in order to reach its conclusion that these impairments are temporary at March 31, 2008. However, the recovery of these investments is based upon market factors which are not within MEDITECH's control. MEDITECH will continue to evaluate whether the impairments are temporary.
5. As of March 31, 2008 MEDITECH had capitalized $6,000,404 in land costs, $2,582,640 in architectural and engineering fees, and $32,564,915 in construction costs for a facility under development to be used for MEDITECH's ongoing operations.
6. MEDITECH follows the provisions of Financial Accounting Standards Board Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities and as such, accounts for the equity investments in LSS Data Systems Inc. and MEDITECH South Africa in accordance with the cost method. Both companies license MEDITECH's software technology and re-license it to their respective customers. Each serves a market niche which is part of the overall medical market but is outside of the hospital market which MEDITECH serves. Included in these investments is the $2,320,000 balance on a mortgage note from LSS Data Systems Inc. which is fully collateralized by land and buildings owned and occupied as corporate headquarters by the borrower. MEDITECH believes the fair value of these investments which are included in other assets approximates its carrying value of $6,375,702 at March 31, 2008.
Other assets also include both tangible and intangible net assets associated with the 2nd quarter 2007 acquisition of Patient Care Technologies Inc. Refer to Part II Item 5 for more disclosure regarding the acquisition. MEDITECH accounted for this acquisition under the purchase method of accounting in accordance with FASB Statement No. 141, Business Combinations. MEDITECH has completed its final purchase price allocation. The Companyvalues of assets acquired and liabilities assumed, including the identified intangibles, such as developed technology and backlog, are based upon management's estimates of fair value as of the date of acquisition. These identified intangibles are valued at $5,977,801 and are being amortized over their 7 year useful lives. A deferred tax liability was recognized to reflect the tax effect of these identified intangibles as such amounts are not deductible for tax purposes. An acquired deferred tax asset was also recognized to reflect the carryforward of net operating losses expected to be realized.
7. MEDITECH follows the provisions of Financial Accounting Standards Board Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, which applies to all tax positions related to income taxes subject to SFAS 109, Accounting for Income Taxes. Based on the criteria set forth in FIN 48, MEDITECH's tax reserves amounted to potential tax assessments of $6,410,803 plus interest and penalties of $8,008,180 at December 31, 2007 and $6,369,813 plus interest and penalties of $8,274,170 at March 31, 2008. These reserves relate to the research tax credit, domestic production activities deduction, and state nexus. The years 2005 through 2007 are subject to examination by the IRS and various years are subject to examination by state tax authorities. Should these tax reserves be reversed in their entirety, the 2008 estimated tax rate of 38% would drop to 28%.
8. MEDITECH 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 CompanyMEDITECH currently operates in one operating segment, medical software and services. The CompanyMEDITECH derives substantially all of its operating revenue from the sale and support of one group of similar products and services. All of the Company'sMEDITECH's assets are located within the United States. The following table indicates the source of operating revenue.
3 months ended Mar 31 Country 2006 2007 United States 83% 86% Canada 16% 11% All others 1% 3%
6. The Company accounts for its equity investments in LSS Data Systems Inc., Patient Care Technologies Inc. and MEDITECH South Africa in accordance with the cost method. All three companies license the Company's software technology and re-license it to their respective customers. Each serves a market niche which is part of the overall medical market but is outside of the hospital market which the Company serves. Included in these investments are the $2,560,000 balance on a mortgage note from LSS Data Systems Inc. and the $4,000,000 balance on a mortgage note due from Patient Care Technologies Inc. Both of these mortgage notes are fully collateralized by land and buildings owned and occupied as corporate headquarters by the respective borrowers. The Company believes the fair value of these investments approximates its carrying value of $11,952,604 at March 31, 2007. Refer to Part II Item 5 for disclosure regarding subsequent events concerning Patient Care Technologies Inc.
Page 7 of 11
3 months ended on Country Mar 31, 2007 Mar 31, 2008 United States 86% 90% Canada 11% 9% All others 3% 1%
7. As of March 31, 2007 the Company had capitalized $6,000,404 in land costs, $2,316,534 in architectural and engineering fees, and $9,226,072 in construction costs for a facility under development to be used for the Company's ongoing operations.
8. Accounting for Uncertainty in Income Taxes
9. Effective January 1, 20072008, MEDITECH adopted the Company adoptedprovisions of Statement of Financial InterpretationAccounting Standards No. 48 (FIN 48)157 (SFAS 157), AccountingFair Value Measurements. SFAS 157 provides for Uncertainty in Income Taxes, whichexpanded disclosure and guidelines to determine fair market value of assets and liabilities. SFAS 157 applies to all tax positions related to income taxes subject to SFAS 109, Accounting for Income Taxes. FIN 48 requires a new evaluation process for all tax positions taken. If the probability for sustaining said tax position is greater than 50%, then the tax position is warrantedwhenever other standards require or permit assets and recognition should be at the highest amount which would be expectedliabilities to be realized upon ultimate settlement.
The December 31, 2006 tax reservesmeasured at fair value, but does not expand the use of $13,379,901 have been reevaluated accordinglyfair value in any new circumstances. MEDITECH's marketable securities represent assets measured at fair value on a recurring basis, and the adoption of FIN 48 had no material impact. No changes have been made to the Company's policy on classification of related interest and penalties in our financial statements. Such interest and penalties are included in our income tax expense and $7,412,140 of tax reserves are related to interest and penalties. The years 2004 through 2006 are subject to examination by the U.S. Government, and various years are subject to examination by states. The tax positions provide for research credit, domestic production activities deduction, and state nexus. With each year our tax exposure rolls forward with incremental increases expected based on continued growth and no changes are foreseen to this trend at present. Should the tax reserves be reversed in its entirety during 2007, the effective tax rate of 37% would drop to 28%.full quantitative disclosure is provided under footnote 4.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
MEDITECH acquired Patient Care Technologies, Inc. in the 2nd quarter of 2007. The following table does not include their operating results for the 1st quarter of 2007.Results of Operations 3 months ended Mar 31 2006 2007 Change Total revenue $82,189,658 $91,683,091 11.6% Operating income 29,173,061 33,166,303 13.7% Net income 20,200,414 22,986,988 13.8% Average number of shares 34,988,901 35,323,558 1.0% Earnings per share $0.58 $0.65 12.7% Cash dividends per share $0.54 $0.60 11.1%
Results of 3 months ended on Percent Operations Mar 31, 2007 Mar 31, 2008 Change Total revenue $91,683,091 $96,757,127 5.5% Operating income 33,166,303 31,095,144 (6.2%) Net income 22,986,988 21,474,242 (6.6%) Average number of shares 35,323,558 35,618,708 0.8% Earnings per share $0.65 $0.60 (7.4%) Cash dividends per ;share $0.60 $0.63 5.0%
Total revenue from both existing and new customers increased by $9.5$5.1 million. It was composed of a $6.2$2.0 million increasedecrease in product revenue and a $3.3$7.1 million increase in service revenue.
Operating expense increased by $5.5$7.1 million or 10.4%12.2% due primarily to an overall increase inadditional staff and additional bonus expense accruals.members. The resultant operating income increaseddecreased by $4.0$2.1 million.
Other income decreased by $0.3$0.1 million due primarily to reduced rentalinvestment income. Other expense decreasedincreased by $0.3$0.1 million due primarily to reducedadditional rental expenses. The resultant pretax income increaseddecreased by $4.0$2.3 million or 12.2%6.1%.
The Company'sMEDITECH's effective tax rate decreasedincreased from 38.3%37.4% to 37.4%37.7% due primarily to a higherthe discontinuance of the research tax deduction for domestic manufacturing.credit. Net income increaseddecreased by $2.8$1.5 million due primarily to the greater increase in revenueexpense compared to expense.revenue.
Financial Condition Dec 31, 2007 Mar 31, 2008 Cash and equivalents $22,567,940 $12,870,230 Total assets 482,489,043 474,414,261 Total liabilities 69,024,468 57,401,249 Shareholder equity 413,464,575 417,013,012 Outstanding number of shares 35,481,271 35,687,426 Shareholder equity per share $11.65 $11.69
Page 8 of 11
Financial Condition Dec 31, 2006 Mar 31, 2007 Cash and equivalents $13,660,733 $29,520,473 Total assets 486,654,412 494,079,071 Total liabilities 73,344,109 68,590,983 Shareholder equity 413,310,303 425,488,088 Outstanding number of shares 35,168,133 35,401,271 Shareholder equity per share $11.75 $12.02
At December 31, 2006Accounts payable increased by $3.7 million during the Company hadquarter primarily because no payroll tax withholding was outstanding at December 31, 2007 while $2.6$2.7 million was outstanding at March 31, 2007. This is the primary reason accounts payable increased by $3.5 million during the quarter.2008.
Taxes payable increased by $7.6$5.3 million during the quarter primarily as a result of the federal tax payment schedule which calls for payment of both the first and second quarter's estimated tax expense during the second quarter.
Accrued expenses decreased by $16.1$17.9 million during the quarter primarily as a result of the payment of $26.2$27.3 million in bonuses applicable to 2006,2007, offset by the accrual of $8.7$8.4 million in bonus expenses applicable to 2007.
Liquidity and Capital Resources:2008.
At March 31, 2007 the Company's2008 MEDITECH's cash, cash equivalents and marketable securities totaled $295.2$249.2 million. Marketable securities consisted of preferred equities, common equities and government notes which can easily be converted to cash. For the first three months of 20072008 cash flow from operations was $20.1$12.3 million, cash flow fromused in investing was $8.7$7.3 million and cash flow used in financing was $12.9$14.7 million. The payment of $21.1$22.4 million in dividends to shareholders was the primary use of cash generated by operating activities during the quarter.
MEDITECH has no long-term debt. Shareholder equity at March 31, 20072008 was $425.5$417.0 million. Management anticipates additions to fixed assets 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 operating and capital expense requirements for the foreseeable future.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
None.
Item 4 - Controls and Procedures
An evaluation was conducted under the supervision and with the participation of the Company'sMEDITECH's management, including the Chief Executive Officer and Chief Financial Officer, on the effectiveness of the Company'sMEDITECH'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, our Chief Executive Officer and Chief Financial Officer have concluded the Company'sMEDITECH's disclosure controls and procedures are, to the best of their knowledge, effective to ensure information requiring disclosure by the CompanyMEDITECH 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'sMEDITECH'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'sMEDITECH's internal control over financial reporting.
Page 9 of 11
Part II - Other Information
Item 1 - Legal Proceedings
During February 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'sMEDITECH's Directors. The complaint was subsequently amended to add the CompanyMEDITECH as a defendant. During March 2006 the court dismissed the breach of fiduciary duty claims brought against the individual defendants. The remaining claim is an ERISA benefits claim against the Plan, the Plan's trustee, and the Company.MEDITECH. The substancecomplaint seeks certification of the complaint is summarizedcase as a class action, a judgment against the defendants, a permanent injunction ordering the Plan to consult an outside appraiser in valuing the 2006 Annual Report on Form 10-K.Plan's assets, removal of the Plan Trustee, and damages, interest, attorneys' fees and costs. During March 2007 the court denied the plaintiff's motion for the complaint to be certified as a class action. Subsequently the plaintiff requested reconsideration of the decision, which was also denied. The plaintiff then soug ht permission to appeal the decision in the United States Court of Appeals for the First Circuit. In July 2007 this was also denied. Discovery was closed on November 27, 2007. In March 2008 plaintiffs filed an amended motion for class certification, which defendants have opposed. In April 2008 defendants filed a motion for summary judgment, which plaintiffs are expected to oppose. A hearing on the class certification and summary judgment motions is scheduled for June 17, 2008.
Item 1A - Risk Factors
No material changes from risk factors as previously disclosed in the prior Form 10-K.
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
The CompanyMEDITECH did not repurchase any of its shares of common stock during the first quarter of 2007.2008. However, during the first quarter the Medical Information Technology, Inc. Profit Sharing Trust purchased 7,70728,123 shares of the Company'sMEDITECH's common stock for a total of $269,745$1,040,551 in individual private transactions. Below is a table showing the purchases of common stock by the Trust during each month of the first quarter of 2007.2008.
1st quarter of 2007 | shares purchased | price per share | ||||||||||||||
January | 50 | $35.00 | ||||||||||||||
February | 5,192 | $35.00 | ||||||||||||||
March | 2,465 | $35.00 | ||||||||||||||
1st quarter | shares | price per | ||||||||||||||
of 2008 | purchased | share | ||||||||||||||
January | 0 | |||||||||||||||
February | 5,540 | $37.00 | ||||||||||||||
March | 22,583 | $37.00 |
Item 3 - Defaults Upon Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Shareholders
The Annual Meeting of Shareholders of Medical Information Technology, Inc. was held at its corporate offices, 7 Blue Hill River Road, Canton, Massachusetts, on Monday, April 23, 2007.28, 2008. The meeting was convened at 9am with the Chairman, A. Neil Pappalardo, presiding and the Clerk, Barbara A. Manzolillo, keeping the minutes.
On the March 23, 200728, 2008 record date there were outstanding a total of 35,401,27135,687,426 shares of Common Stock, par value $1.00 per share.share outstanding. A total of 33,597,25832,151,131 shares or 94.9%90.1% of the outstanding shares, constituting a quorum, were represented at the meeting by proxy or by ballot.
The following six directors of the CompanyMEDITECH were elected to serve until the 20082009 Annual Meeting of Shareholders and thereafter until their successors are chosen and qualified, with votes cast as follows:
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in favor shares
withheld A. Neil Pappalardo 31,721,489 1,875,769 Lawrence A. Polimeno 31,721,489 1,875,769 Roland L. Driscoll 31,721,489 1,875,769 Edward B. Roberts 31,721,489 1,875,769 Morton E. Ruderman 31,721,339 1,875,919 L. P. Dan Valente 31,721,489 1,875,769
shares shares in favor withheld A. Neil Pappalardo 32,131,246 19,885 Lawrence A. Polimeno 32,131,146 19,985 Roland L. Driscoll 32,131,246 19,885 Edward B. Roberts 32,131,246 19,885 Morton E. Ruderman 32,131,246 19,885 L. P. Dan Valente 32,131,246 19,885
A proposal to ratify the selection of Ernst &and Young LLP as the Company'sMEDITECH's Independent Registered Public Accounting Firm for the fiscal year ending December 31, 20072008 was approved, with 32,758,70732,082,768 shares in favor, 23,66525,690 shares against and 814,88642,673 shares abstaining.
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Item 5 - Other Information
Acquisition of Patient Care Technologies, Inc.
Patient Care Technologies, Inc. (PtCT) is(PtCT of Georgia) was engaged in the development, manufacture and licensing of computer software products and their support for the home health care industry. Before April 12,Prior to the 2nd quarter 2007 MEDITECH ownedpaid $3,315,000 for approximately 43.5% of the outstanding capital stock of PtCT.PtCT of Georgia. On April 12, 2007 MEDITECH paid $2,326,443 and acquired additional shares from certain PtCT of Georgia shareholders, thereby increasing its ownership to 90.2%.
On May 31, 2007 PtCT of Georgia was merged with and into PtCT forof Massachusetts, a wholly-owned subsidiary of MEDITECH and subsequently MEDITECH paid an aggregate purchase price of $2,326,443 paid in cash. As a result of these purchases, MEDITECH now owns approximately 90.2% of PtCT. MEDITECH expectsadditional $784,907 to acquire the remaining 9.8%PtCT of Georgia shareholders. MEDITECH's total cash investment in PtCT for approximately $800 thousand duringwas $6,426,350. At the 2nd quartertime of 2007.
Subject to a final audit,the merger PtCT had approximately $6.4 million$6,433,833 in totaltangible assets and approximately $8.9 million$8,882,848 in total liabilities at March 31, 2007. Through the remaindertangible liabilities. The difference of 2007,$2,449,015 increased MEDITECH's effective investment in PtCT to $8,875,365. MEDITECH anticipates PtCT's operations will generate approximately $3 million in pretax losses. Meditech's financial statements for the 2nd quarter and thereafter will be presented onpreviously recorded a consolidated basis.writedown of this investment.
Item 6 - Exhibits
Exhibit 3.1: MEDITECH's Restated Articles of Organization, as amended to date, are appendedincorporated by reference to this report.an exhibit to the quarterly report on Form 10-Q for the quarter ended March 31, 2007.
Exhibit 3.2: MEDITECH's By-laws, as amended to date, are incorporated by reference to an exhibit to the annual report on Form 10-K for the year ended December 31, 2001.
Exhibit 31: Rule 13a-14(a) Certifications and Exhibit 32: Section 1350 Certifications are appended to this report.
There were no reports filed on Form 8-K during the quarter ended March 31, 2007.2008.
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)
April 30, 20072008
(Date)
By: Barbara A. Manzolillo, Chief Financial Officer and Treasurer
(Signature)
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