UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 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)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $1.00 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

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 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]

No public trading market exists for the registrant's common stock.

There were 34,830,437 shares of common stock, $1.00 par value, outstanding at
December 31, 2005.

Page 1 of 28

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|Index to Form 10-K                                                                                                    | Page
|--------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                      |     
|Part I                                                                                                                |     
|Item 1 - Business                                                                                                     | 3   
|Item 1A - Risk Factors                                                                                                | 6   
|Item 2 - Properties                                                                                                   | 6   
|Item 3 - Legal Proceedings                                                                                            | 6   
|Item 4 - Submission of Matters to a Vote of Security Holders                                                          | 6   
|Part II                                                                                                               |     
|Item 5 - Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities | 6   
|Item 6 - Selected Financial Data                                                                                      | 7   
|Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operation                         | 8   
|Item 8 - Financial Statements and Supplementary Data                                                                  | 10  
|Item 9A - Controls and Procedures                                                                                     | 23  
|Item 9B - Other Information                                                                                           | 23  
|Part III                                                                                                              |     
|Item 10 - Directors and Executive Officers of the Registrant                                                          | 24  
|Item 11 - Executive Compensation                                                                                      | 26  
|Item 12 - Security Ownership of Certain Beneficial Owners and Management                                              | 27  
|Item 13 - Certain Relationships and Related Transactions                                                              | 27  
|Item 14 - Principal Accounting Fees and Services                                                                      | 28  
|Part IV                                                                                                               |     
|Item 15 - Exhibits                                                                                                    | 28  
|Signatures                                                                                                            | 28  

Page 2 of 28

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Part I

Item 1 - Business

COMPANY OVERVIEW

Medical Information Technology, Inc. (MEDITECH) was founded in 1969 to develop
and market information system software for the hospital industry. During 2005
combined product and service revenue was $304.6M, operating income was $111.4M
and net income was $77.7M, up 8.5%, 9.1% and 8.7% compared to the prior year.
Product bookings were $214.5M and the resultant year-end product backlog was
$203.9M, up 17.2% and 36.4% compared to the prior year. By year-end MEDITECH
had over 2,300 staff members, and almost 2,000 active hospital sites throughout
the United States, Canada and the United Kingdom.

HOSPITAL SOFTWARE

Initially MEDITECH developed a software product to automate one of the main
departments in a hospital, the clinical laboratory which performs various diagnostic
tests on blood or urine specimens. Within a few years, this product became
standardized, thereby requiring minimal adaptation to meet the individual needs
of a typical customer. MEDITECH extended the concept and developed additional
software products for the rest of a hospital's clinical departments. Eventually,
it moved into the financial area by developing a hospital billing and accounts
receivable product as well as various general accounting products.

Although the individual products could be operated in a stand alone fashion, a
hospital achieved maximum effectiveness when they were used in an integrated
mode, sharing access to the common clinical and financial records of the
hospital. This concept ultimately led to MEDITECH developing the so-called
hospital information system, a cohesive set of software products designed from
the outset to work in conjunction with the overall operation of the hospital and
to minimize the need for specialized interfaces.

COMPUTER HARDWARE

Sophisticated software, such as MEDITECH's, requires extensive computer and
communication equipment to function. In spite of this, MEDITECH continues to be
a pure software company, limiting itself to specifying the aggregate components
needed as well as suggesting typical configurations from certain hardware
vendors. The responsibility is left to the hospital to purchase the requisite
hardware and secure a continuing source of maintenance service for it.

The hardware components traditionally consist of a small set of central
medium-sized computers and a large set of display terminals and printers distributed
throughout the hospital. All of these elements are interconnected by means of a
standard high speed communication network. The computers execute the software
and include large disk subsystems containing the permanent and common clinical
and financial records of the hospital.

Hardware technology evolves rapidly, and the recent trend has been to replace the
display terminals with desktop and handheld computers, thereby forming a client
server network. In this mode of operation, the central computers become the file
servers while software is executed locally on the client computer which makes
file requests to the servers.

Page 3 of 28

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LICENSED SOFTWARE

MEDITECH requires a hospital customer to sign a standard software license agreement
prior to product delivery, implementation and subsequent service of the software.
This agreement specifies a front end product fee and a front end implementation fee,
both of which are payable over the implementation process, and a monthly service
fee after the site goes live. In addition to precluding ownership and restricting
transfer, the license mandates the customer hold MEDITECH harmless from any
liability arising from incorrect operation of the software.

MEDITECH now bases its product fee on a customer's net patient revenue across
all of its sites, and sets its implementation fee on the total number of sites.
Therefore, larger hospitals pay more than small hospitals. The monthly service
fees are 1% of the product fees. A typical 200 bed acute care hospital might
incur a $1,000,000 product fee, a $100,000 implementation fee and a $10,000
monthly service fee. An order is booked when a signed software license and a
10% deposit are received.

STAFF ORGANIZATION

MEDITECH is organized into functional units grouped around product development,
sales, marketing, implementation, customer service, accounting and facility
operations. All MEDITECH staff work in five company owned facilities in the
greater Boston area.

From its inception, MEDITECH utilized communication technology which allowed
much of its business activities to be performed by remote access. MEDITECH staff
sitting at their desks may access client hospitals, both personnel and
computers. As a result, there is no need for remote offices. Although most
customer contact is through the phone or e-mail, certain of the sales and
implementation staff travel to customer sites.

PRODUCT DEVELOPMENT

Most of the product development staff is working on the incremental evolution of
the current product line, as well as the creation of new products each year.
The rest of the staff is developing a set of replacement products utilizing a
new technology. Approximately every ten years, MEDITECH introduces the next
generation of products based on the new technology and gradually updates
existing customers.

SALES AND MARKETING

Most of the direct sales staff, organized into regions, concentrate on new
prospects. In addition, some of the sales staff monitor existing customers to
expose them to MEDITECH's entire product line. Marketing activities and
promotion are low key because hospitals are easily identified, finite in number
and generally send a request for proposal to vendors when they contemplate the
purchase of a hospital information system.

During the sales process, prospects generally visit MEDITECH to talk to product
specialists and to view product demonstrations. Thereafter they are encouraged
to visit various MEDITECH customer sites to observe first hand the software in
actual operation and to discuss issues of concern with hospital personnel.

Page 4 of 28

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IMPLEMENTATION PROCESS

To ensure a successful implementation, the staff must properly train a core
group of hospital personnel about the operation of the software and how to use
it in their daily activity. To avoid interruptions from normal hospital
activities, MEDITECH requires the hospital personnel to come to its offices
in the Boston area for intensive training sessions.

As training proceeds, the implementation staff customizes certain dictionaries
to fit the specific need of the hospital's environment, provides interfaces to
non-MEDITECH systems and assists the hospital in converting data from legacy
systems. In addition, MEDITECH delivers, installs and tests the licensed software
on the customer's hardware. MEDITECH utilizes remote access communication
technology to minimize the need to travel.

CUSTOMER SERVICE

Once a hospital goes live, the responsibility of maintaining the customer is
transferred to the service staff. MEDITECH provides 24 hour a day service
coverage to these customers in order to respond to problem calls. In addition,
the staff updates customers with new releases of the software products as they
become available. To ensure the continuing education of the hospital staff,
MEDITECH runs seminars on the use of its products.

HCA-THE HEALTHCARE COMPANY

HCA-The Healthcare Company utilizes a MEDITECH clinical information system in
over 250 hospitals and has been MEDITECH's largest customer for many years.
HCA represented 9% of MEDITECH revenues in 2003, 10% in 2004 and 10% in 2005.

COMPETITION

The market for health care information systems is subject to the technological
imperative. Accordingly, MEDITECH has a completely integrated set of application
products, implements them successfully, provides ongoing maintenance including
updates and continues the developmental process. The Company's competitors who make
similar claims include Siemens, McKesson, Cerner, IDX, Eclipsys, CPSI and Epic.
MEDITECH does not offer the breadth of products and services which the competition
offers to hospitals nor does MEDITECH offer the products and services which the
competition offers to related medical enterprises. Instead MEDITECH focuses
exclusively in the hospital information system software market and believes it
competes favorably in this market.

ACCESS TO SEC FILINGS

"www.meditech.com" is the Company's website address which provides access to
its annual reports on Form 10-K, quarterly reports on Form 10-Q, and current
reports on Form 8-K, and all amendments thereof just as soon as such reports
are filed with the SEC. The links so provided allow access to copies of the
reports stored on MEDITECH's website, but a link is also provided to allow
access to all of the Company's filings stored on the SEC's website as well.

"http://www.sec.gov/cgi-bin/browse-edgar?CIK=1011452&action=getcompany" may be
used to access all of the Company's filings stored on the SEC's website instead.

In addition the Company will provide paper copies of these filings free of
charge to its shareholders upon request.

Page 5 of 28

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Item 1A - Risk Factors

There are numerous risk factors which may affect future results of operations.
The health care industry is highly regulated and is subject to changing economic
and political influences. Federal and state legislatures could modify the health
care system in respect to reimbursement and financing. Hospitals may respond to
these pressures by delaying the purchase of new information systems. Previous
volatility in the market place such as that due to Y2K concerns and September 11th
could reappear and cause delays. The Health Insurance Portability and Accounting Act
of 1996 directly impacts the industry by specifying standards to protect the
security and confidentiality of patient information. It may be possible for
patients to bring claims against software providers regarding injuries due to
errors. Hospitals consolidating into an integrated health care delivery system
may be able to negotiate price reductions. Finally, the Company is dependent on
a cohesive group of long time senior managers and staff with vast experience in
the hospital industry and software technology.

Item 2 - Properties

As of December 31, 2005 the Company owned five facilities containing about 1.1
million square feet of space, all being well maintained Class A properties in
the greater Boston area. The Company occupies 60% of the space and the remaining
40% is leased to various tenants. The Company has adequate space for its
reasonable needs over the near future.

Item 3 - Legal Proceedings

On April 18, 2003, Jerome H. Grossman, 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: A. Neil Pappalardo, Edward B.
Roberts, Morton E. Ruderman, Roland L. Driscoll and Lawrence A. Polimeno. The
complaint alleges: (1) the Directors have violated a duty of good faith and
loyalty to Grossman by terminating him as a consultant to the Company in 2001,
by failing to nominate him for re-election as a Director in 2002, and by
enforcing the Company's right of first refusal against him; (2) the Directors
have "rigged" the market for the Company's common stock in favor of buyers and
against sellers by establishing an artificially low price for the stock; (3) the
Directors have established an artificially low price for the stock so Pappalardo
can purchase shares from the Company at a price less than the "fair value" of
those shares; and (4) Pappalardo, as the controlling shareholder of the Company,
has violated a fiduciary duty to shareholders by dominating the Board of
Directors, artificially depressing the price of stock, and personally benefiting
from the depressed price by purchasing tens of thousands of shares of stock from
the Company each year.

On January 6, 2006, the Grossman complaint was resolved pursuant to a "Final
Settlement Agreement and Mutual Release" which among other terms provides for
dismissal of the case with prejudice and for no payment to be made by MEDITECH
or any of the individual Defendants.

On February 10, 2005, Michael Hubert, a former Meditech employee, filed a complaint
in the United States District Court for the District of Massachusetts against the
Medical Information Technology Profit Sharing Plan, A. Neil Pappalardo, its Trustee
and Company Director, and the other five Company Directors, Lawrence A. Polimeno,
Roland L. Driscoll, Edward B. Roberts, Morton E. Ruderman and L.P. Dan Valente.
The complaint is purportedly brought on Plaintiff's own behalf and on behalf of a
purported class consisting of "all participants in the [Plan] who have received any
distribution since January 1, 1998 and who did not receive the fair value of their
benefits". The complaint alleges: (1) the Trustee and Directors are fiduciaries of the
Plan in valuing Meditech's common stock for purposes of redemption and payment of a
participant's benefits under the Plan; (2) the Directors, in connection with an annual
contribution of the Company's common stock to the Plan, have undervalued the Company's
common stock and have not paid retiring or terminating participants in the Plan the
fair value of their interests in the Plan; (3) Meditech's founders and controlling
shareholders, including some of the Directors, have been buyers of Meditech common stock
and have benefited from the low price established by Pappalardo and approved without
adequate care by the other Directors; (4) Pappalardo is not independent and that neither
he nor the other Directors have relied upon an independent appraiser; (5) by failing to
fairly value the benefits due each employee participating in the Plan upon his or her
termination, that all of the defendants violated their fiduciary duties to the participants
of the Plan and that as a result Plaintiff and members of the purported class are due
benefits from the Plan; and (6) the Directors violated fiduciary duties to the
participants of the Plan in violation of the Employee Retirement Income Security Act.
The complaint seeks certification of the case as a class action, a judgment against the
defendants, a permanent injunction ordering the Plan to consult an outside appraiser in
valuing the Plan's assets, removal of Pappalardo as the Plan Trustee, and damages,
interest, attorneys' fees and costs.

Item 4 - Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5 - Market for Registrant's Common Equity, Related Shareholder Matters
and Issuer Purchases of Equity Securities

No public trading market exists for the Company's common stock, and accordingly
no high and low bid information or quotations are available.

The sale, assignment, transfer, pledge or other disposition of any of the
Company's common stock is subject to right of first refusal restrictions set
forth in the Company's charter.

There are no shareholder agreements with the Company covering the voting or
repurchase of MEDITECH stock.

During February 2005 pursuant to the 2004 Stock Purchase Plan, the Company sold
235,893 shares of its common stock at $29 per share to certain staff members
for an aggregate consideration of $6,840,897.

During 2005 the Company did not repurchase any of its shares of common stock.

Page 6 of 28

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During the fourth quarter of 2005 the Medical Information Technology, Inc.
Profit Sharing Trust purchased 700 shares of the Company's common stock for
a total of $21,700 in individual private transactions. Below is a table
showing the purchases of common stock by the Trust during each month of the
fourth quarter of 2005.



|4th quarterof 2005 | sharespurchased | price pershare
|------------------ | --------------- | --------------
|                   |                 |               
|October            | 200             | $31           
|November           | 500             | $31           
|December           | none            | n/a           

During all of 2005 the Medical Information Technology, Inc. Profit Sharing Trust
purchased 6,020 shares of the Company's common stock for a total of $177,880
in individual private transactions.

At December 31, 2005, there were 1,388 shareholders of record of the Company's
common stock and 34,830,437 shares outstanding.

The Company has paid quarterly cash dividends continuously since 1980.
Dividends paid per share during the last five years are set forth within the
table in Item 6.

Item 6 - Selected Financial Data

For the Five Years Ended December 31, 2005 (in thousands where applicable)



|                           | 2001     | 2002     | 2003     | 2004     | 2005    
|-------------------------- | -------- | -------- | -------- | -------- | --------
|                           |          |          |          |          |         
|Full Year Operations:      |          |          |          |          |         
|Total revenue              | $223,831 | $256,197 | $270,781 | $280,762 | $304,568
|Operating income           | 81,565   | 94,907   | 99,685   | 102,125  | 111,420 
|Net income                 | 56,841   | 63,871   | 67,424   | 71,441   | 77,676  
|Average shares outstanding | 33,460   | 33,760   | 34,097   | 34,381   | 34,737  
|Net income per share       | $1.70    | $1.89    | $1.98    | $2.08    | $2.24   
|Year End Position:         |          |          |          |          |         
|Total assets               | $331,284 | $354,809 | $402,407 | $427,315 | $449,571
|Total liabilities          | 35,758   | 36,813   | 50,709   | 57,265   | 65,559  
|Total equity               | 295,526  | 317,996  | 351,698  | 370,050  | 384,012 
|Shares outstanding         | 33,576   | 33,877   | 34,221   | 34,514   | 34,830  
|Total equity per share     | $8.80    | $9.39    | $10.28   | $10.72   | $11.03  
|Other Financial Data:      |          |          |          |          |         
|Working capital            | $145,778 | $165,613 | $179,764 | $196,076 | $217,500
|Cash flow from operations  | 66,253   | 81,967   | 83,228   | 85,922   | 93,283  
|Depreciation expense       | 8,257    | 8,634    | 8,422    | 7,707    | 7,654   
|Cash dividends per share   | $1.24    | $1.36    | $1.56    | $1.80    | $2.00   

Page 7 of 28

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Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations

Comparison of Fiscal Years ended December 31, 2004 and 2005:

Total revenue from both existing and new customers increased 8.5% from
$280.8 million in 2004 to $304.6 million in 2005.
It was composed of a $11.8 million increase in product revenue and a $12.0 million
increase in service revenue.

Operating expenses increased 8.1% from $178.6 million in 2004 to $193.1 million in 2005
due to an overall increase in staff and additional bonus expense accruals.
The resultant operating income increased 9.1% from $102.1 million in 2004 to $111.4 million in 2005.

Other income increased from $23.0 million in 2004 to $23.7 million in 2005
due primarily to $1.0 million realized gains from the redemption and sale of marketable securities.
Other expense increased from $7.8 million in 2004 to $9.3 million in 2005
due primarily to increased lawsuit related legal expenses and higher charitable donations.
The resultant pretax income increased 7.3% from $117.3 million in 2004 to $125.9 million in 2005.

The Company's effective tax rate decreased from 39.1% in 2004 to 38.3% in 2005
due primarily to legislated reductions in taxable income for domestic manufacturers.
Net income increased 8.7% from $71.4 million in 2004 to $77.7 million in 2005
due primarily to the greater increase in revenue compared to expense.

Comparison of Fiscal Years ended December 31, 2003 and 2004:

Total revenue from both existing and new customers increased 3.7% from
$270.8 million in 2003 to $280.8 million in 2004.
It was composed of a $12.7 million increase in service revenue offset
by a $2.7 million decrease in product revenue.
The decrease in product revenue is due primarily to extended implementation
schedules in the product backlog.

Operating expenses increased 4.4% from $171.1 million in 2003 to $178.6 million
in 2004 due primarily to an increase in sales and marketing efforts and to higher
client service staff levels along with their associated costs.
The resultant operating income increased 2.4% from $99.7 million in 2003 to
$102.1 million in 2004.

Other income increased from $18.8 million in 2003 to $23.0 million in 2004
due primarily to a $2.0 million increase in dividend and interest income, and
no write-downs in 2004.
Other expense increased from $7.4 million in 2003 to $7.8 million in 2004
due to additional professional fees incurred in connection with a
one-time recision offer to certain purchasers of the Company's shares.
The resultant pretax income increased 5.7% from $111.0 million in 2003 to
$117.3 million in 2004.

The Company's effective tax rate decreased from 39.3% in 2003 to 39.1% in 2004.
Net income increased 6.0% from $67.4 million in 2003 to $71.4 million in 2004
due primarily to the disproportionate increase in other income, net of other expenses.

Financial Condition:

Customer deposits increased 44.0% from $14.6 million on December 31, 2004, to
$21.0 million on December 31, 2005, due to higher product bookings which
resulted in a higher product backlog.

Page 8 of 28

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Liquidity and Capital Resources:

At December 31, 2005, the Company's cash, cash equivalents and marketable
securities totaled $273.7 million. The marketable securities consisted of
preferred or common equities and government notes which can easily be converted
to cash. Cash flows from operations were $93.3 million in fiscal 2005, an
increase of $7.4 million from the prior year. The increase was primarily
attributable to the growth in revenue and other changes in working capital.
The payment of $69.4 million in dividends to shareholders constituted the
primary use of cash generated by operating activities during 2005.

MEDITECH has no long-term debt. Shareholder equity at December 31, 2005 was $384
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 operating and capital expense
requirements.

Recision Offer:

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. During the 4th quarter of 2004 the Company made a recision offer
to these individuals so as to extinguish its liability, if any, for these potential
securities law violations. None of these individuals accepted the recision offer.

Prior to the 4th quarter of 2004 the shares subject to recision rights were
considered and treated as redeemable common stock for financial accounting purposes
until such time as the recision rights terminated or were exercised. Therefore the
recision amount and the related shares were classified as Temporary Equity. In late
December, when the recision offer expired, the Company transferred the recision
amount and related shares from Temporary Equity to Shareholder Equity.

Critical Accounting Policies:

All of our significant accounting policies are described in the notes to the
financial statements included in Item 8 of this report. We believe four of
these constitute our most critical policies requiring estimates and judgments
by management which are significant in terms of materiality. Reference Note
1(a) for revenue recognition, Note 2 for marketable securities, Note 3 for
allowance for doubtful accounts and Note 9 for taxes.

Page 9 of 28

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Item 8 - Financial Statements and Supplementary Data

MEDICAL INFORMATION TECHNOLOGY, INC.

Financial Statements
As of December 31, 2003, 2004 and 2005
Together with Report of Independent Registered Public Accounting Firm



|Index to Financial Statements                                                         | Page 
|------------------------------------------------------------------------------------- | -----
|                                                                                      |      
|Report of Independent Registered Public Accounting Firm                               | 11   
|Balance Sheets as of December 31, 2003, 2004 and 2005                                 | 12   
|Statements of Income for the Years Ended December 31, 2003, 2004 and 2005             | 13   
|Statements of Shareholder Equity for the Years Ended December 31, 2003, 2004 and 2005 | 14   
|Statements of Cash Flows for the Years Ended December 31, 2003, 2004 and 2005         | 15   
|Notes to Financial Statements                                                         | 16-24

Page 10 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Medical Information Technology, Inc.:

We have audited the accompanying balance sheets of Medical Information Technology,
Inc. (a Massachusetts corporation) as of December 31, 2003, 2004 and 2005, and the
related statements of income, shareholder equity and cash flows for each of the
three years in the period ended December 31, 2005. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes consideration of
internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Medical Information Technology, Inc.
as of December 31, 2003, 2004 and 2005, and the results of its operations and its
cash flows for each of the three years in the period ended December, 31, 2005, in
conformity with accounting principles generally accepted in the United States.

Ernst & Young LLP

Boston, Massachusetts
January 27, 2006

Page 11 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.



|Balance Sheets                                   | As of December 31,
|------------------------------------------------ | ------------------
|                                                 | 2003              
|                                                 |                   
|                                                 |                   
|Cash and equivalents (Note 1)                    | $18,690,986       
|Marketable securities (Note 2)                   | 169,192,366       
|Accounts receivable, less reserve of $800,000    |                   
|in 2003, 2004 and 2005                           | 30,720,136        
|                                                 |                   
|Current assets                                   | 218,603,488       
|                                                 |                   
|Property, plant and equipment, at cost (Note 1): |                   
|Computer equipment                               | 8,709,930         
|Furniture and fixtures                           | 29,948,576        
|Buildings                                        | 139,669,962       
|Land                                             | 26,603,703        
|Accumulated depreciation                         | (64,861,487)      
|                                                 |                   
|Fixed assets                                     | 140,070,684       
|                                                 |                   
|Marketable securities (Note 2)                   | 35,000,000        
|Investments (Note 1)                             | 8,732,604         
|                                                 |                   
|Total assets                                     | $402,406,776      
|                                                 |                   
|                                                 |                   
|Accounts payable                                 | $158,214          
|Taxes payable                                    | 2,599,821         
|Accrued expenses (Note 4)                        | 24,065,768        
|Customer deposits                                | 12,015,644        
|Deferred taxes & tax reserves (Note 9)           | 11,869,316        
|                                                 |                   
|Total liabilities                                | 50,708,763        
|                                                 |                   
|Temporary equity: redeemable common stock,       |                   
|$1.00 par value, issued and outstanding          |                   
|1,789,593 shares in 2003 (Note 6)                | 26,079,769        
|                                                 |                   
|Common stock, $1.00 par value, authorized        |                   
|40,000,000 shares, issued and outstanding        |                   
|32,431,730 shares in 2003, 34,514,544 shares     |                   
|in 2004 and 34,830,437 shares in 2005            | 24,839,834        
|Additional paid-in capital                       | -                 
|Retained earnings                                | 288,575,951       
|Unrealized security gains, net of tax            | 12,202,459        
|                                                 |                   
|Shareholder equity                               | 325,618,244       
|                                                 |                   
|Total liabilities and equity                     | $402,406,776      
|                                                 |                   

The accompanying notes are an integral part of these financial statements.

Page 12 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.



|Statements of Income                   | For the Years Ended December 31,
|-------------------------------------- | --------------------------------
|                                       | 2003                            
|                                       |                                 
|                                       |                                 
|Product revenue                        | $151,001,866                    
|Service revenue                        | 119,778,837                     
|                                       |                                 
|Total revenue                          | 270,780,703                     
|                                       |                                 
|                                       |                                 
|Operating, development                 | 114,933,942                     
|Selling, G & A                         | 56,162,058                      
|                                       |                                 
|Operating expenses                     | 171,096,000                     
|                                       |                                 
|Operating income                       | 99,684,703                      
|                                       |                                 
|Other income (Note 8)                  | 18,753,624                      
|Other expense (Note 8)                 | 7,410,608                       
|                                       |                                 
|Pretax income                          | 111,027,719                     
|                                       |                                 
|State income tax                       | 9,901,578                       
|Federal income tax                     | 33,702,545                      
|                                       |                                 
|Income tax (Note 9)                    | 43,604,123                      
|                                       |                                 
|Net income                             | $67,423,596                     
|                                       |                                 
|Shares used in computing basic and     |                                 
|diluted net income per share           | 34,097,342                      
|Basic and diluted net income per share | $1.98                           
|                                       |                                 

The accompanying notes are an integral part of these financial statements.

Page 13 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.



|Statements of Shareholder Equity       | Common Stock | Retained        | Shareholder 
|-------------------------------------- | ------------ | --------------- | ------------
|                                       | # of Shares  | Paid-in Capital | Earnings    
|                                       |              |                 |             
|Balance, December 31, 2002             | 32,351,730   | $21,599,615     | $274,309,904
|Decrease in recision amount            |              |                 |             
|related to redeemable                  |              |                 |             
|common stock                           | -            | 1,160,219       | -           
|Issuance of 80,000 shares of           |              |                 |             
|common stock to qualified              |              |                 |             
|profit sharing plan                    | 80,000       | 2,080,000       | -           
|Net income                             | -            | -               | 67,423,596  
|Unrealized security gains, net of tax  | -            | -               | -           
|Dividends paid                         | -            | -               | (53,157,549)
|                                       |              |                 |             
|Balance, December 31, 2003             | 32,431,730   | $24,839,834     | $288,575,951
|Issuance of 213,221 shares of          |              |                 |             
|common stock pursuant to               |              |                 |             
|the 2004 Stock Purchase Plan           | 213,221      | 5,543,746       | -           
|Transfer of recision amount and        |              |                 |             
|related shares as a result of          |              |                 |             
|expiration of recision offer           | 1,789,593    | 26,079,769      | -           
|Issuance of 80,000 shares of           |              |                 |             
|common stock to qualified              |              |                 |             
|profit sharing plan                    | 80,000       | 2,320,000       | -           
|Net income                             | -            | -               | 71,441,090  
|Unrealized security gains, net of tax  | -            | -               | -           
|Dividends paid                         | -            | -               | (61,886,229)
|                                       |              |                 |             
|Balance, December 31, 2004             | 34,514,544   | $58,783,349     | $298,130,812
|Issuance of 235,893 shares of          |              |                 |             
|common stock pursuant to               |              |                 |             
|the 2004 Stock Purchase Plan           | 235,893      | 6,840,897       | -           
|Issuance of 80,000 shares of           |              |                 |             
|common stock to qualified              |              |                 |             
|profit sharing plan                    | 80,000       | 2,560,000       | -           
|Net income                             | -            | -               | 77,675,858  
|Unrealized security losses, net of tax | -            | -               | -           
|Dividends paid                         | -            | -               | (69,382,928)
|                                       |              |                 |             
|Balance, December 31, 2005             | 34,830,437   | $68,184,246     | $306,423,742
|                                       |              |                 |             

The accompanying notes are an integral part of these financial statements.

Page 14 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.



|Statements of Cash Flows                               | For the Years Ended December 31,
|------------------------------------------------------ | --------------------------------
|                                                       | 2003                            
|                                                       |                                 
|Cash Flows from Operating Activities:                  |                                 
|Net income                                             | $67,423,596                     
|Depreciation expense                                   | 8,421,929                       
|Write-down of marketable security costs                | 1,462,074                       
|Net gains on sale of securities                        | (233,088)                       
|Stock contributions to qualified profit sharing plan   | 2,080,000                       
|Allowance for doubtful accounts                        | 100,000                         
|Allowance for investment valuations                    | 217,784                         
|Deferred taxes on unrealized securities (gains) losses | (7,700,421)                     
|Change in accounts receivable                          | (2,439,613)                     
|Change in accounts payable                             | 68,431                          
|Change in accrued expenses                             | 2,239,166                       
|Change in taxes payable                                | 452,012                         
|Change in customer deposits                            | 2,066,427                       
|Change in deferred taxes and tax reserves              | 9,069,316                       
|                                                       |                                 
|Net cash provided by operating activities              | 83,227,613                      
|                                                       |                                 
|Cash Flows from Investing Activities:                  |                                 
|Purchases of property, plant and equipment             | (2,499,881)                     
|Purchases of marketable securities                     | (49,082,494)                    
|Sales of marketable securities                         | 17,251,000                      
|Mortgage payment received from related party           | 240,000                         
|                                                       |                                 
|Net cash used in investing activities                  | (34,091,375)                    
|                                                       |                                 
|Cash Flows from Financing Activities:                  |                                 
|Sales of common stock                                  | 5,805,448                       
|Dividends paid                                         | (53,157,549)                    
|                                                       |                                 
|Net cash used in financing activities                  | (47,352,101)                    
|                                                       |                                 
|Net Change in Cash and Cash Equivalents                | 1,784,137                       
|Cash and Cash Equivalents, beginning of year           | 16,906,849                      
|                                                       |                                 
|Cash and Cash Equivalents, end of year                 | $18,690,986                     
|                                                       |                                 
|Supplemental Disclosure:                               |                                 
|Cash paid for Income taxes                             | $42,161,306                     
|Cash paid for Interest                                 | $0                              

The accompanying notes are an integral part of these financial statements.

Page 15 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.

Notes to Financial Statements December 31, 2005

(1) Operations and Accounting Policies

Medical Information Technology, Inc. (the Company) is engaged in the
development, manufacture and licensing of computer software products and related
services used in the medical field. The principal market for the Company's
products consists of health care providers primarily located in the United
States and Canada.

The accompanying financial statements reflect the application of certain
accounting policies discussed below. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

(a) Revenue Recognition

The Company follows the provisions of the American Institute of Certified
Public Accountants (AICPA) Statement of Position (SOP) 97-2, Software Revenue
Recognition. The Company enters into perpetual software license contracts which
provide for a customer deposit upon contract execution, milestone billings and
fixed monthly service fees thereafter. The Company classifies product and
related implementation fees together as product revenue in the statement
of income and recognizes these fees as revenue upon completion of each contract
milestone, which approximates the percentage-of-completion method prescribed by
SOP 81-1, Accounting for Performance of Construction-type and Certain
Production-type Contracts. Software services represent post-implementation
support services, which are recognized as the related services are rendered.

The Company follows the provisions of Emerging Issues Task Force's No. 01-14
(EITF 01-14), which requires reimbursements received for out-of-pocket expenses
to be characterized as revenue with offsetting operating expenses in the income
statement.

(b) Software Development Costs

In accordance with Statement of Financial Accounting Standards (SFAS) No. 86,
Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise
Marketed, the Company is required to capitalize software development costs
incurred after technological feasibility of the software development projects
is established and the realizability of such capitalized costs through future
operations is expected, if such costs become material. To date, development
costs incurred by the Company after technological feasibility has been
established have been immaterial and as such have been charged to operations as
incurred.

Page 16 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.

Notes to Financial Statements December 31, 2005

(c) Property, Plant and Equipment

The Company carries all property, plant and equipment on a cost basis and
provides for depreciation in amounts estimated to allocate the costs thereof
under the following depreciation methods and estimated useful lives:



|Description            | Method | Useful Life  
|---------------------- | ------ | -------------
|                       |        |              
|Computer equipment     | MACRS  | 3-5 years    
|Furniture and fixtures | MACRS  | 7 years      
|Furniture and fixtures | SL     | 10 years     
|Buildings              | SL     | 31.5-40 years

Maintenance costs are expensed as incurred. Improvements are capitalized and
depreciated over the asset's useful life.

(d) Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original
maturities of 90 days or less to be cash equivalents.

(e) Fair Value of Financial Instruments and Concentration of Credit Risk

The carrying value of the Company's cash and cash equivalents, accounts receivable
and accounts payable approximates their fair value due to the short-term nature of
these financial instruments. The Company's marketable securities are carried at
fair value and its US government debt securities are carried at cost (see Note 2).
The Company's long-term investments are carried at cost, less a valuation reserve,
which approximates fair value based on management's assessment.

Financial instruments that potentially subject the Company to concentrations of
credit risk are principally cash, cash equivalents, marketable securities and
accounts receivable. The Company places its cash and cash equivalents in
highly rated institutions. Concentration of credit risk with respect to
accounts receivable is limited to certain customers to whom the Company makes
substantial sales. To reduce risk, the Company routinely assesses the
financial strength of its customers and, as a result, believes that its
accounts receivable credit risk exposure is limited. The Company maintains an
allowance for potential credit losses but historically has not experienced any
significant credit losses related to an individual customer or groups of
customers. As of December 31, 2003 and 2004 no individual customers accounted for
greater than 10% of the outstanding accounts receivable. At December 31, 2005
one customer accounted for 10.8% of the outstanding accounts receivable.

(f) Investments

The Company accounts for its equity investments in Patient Care Technologies
Inc., LSS Data Systems 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 is a collaterized mortgage
with LSS Data Systems Inc. The Company believes the fair value of these investments
approximates its carrying value of $8,252,604 at December 31, 2005.

(g) Net Income per Common Share

In accordance with SFAS No. 128, Earnings per Share, the Company reports both
basic and diluted earnings per share (EPS). The Company has no common stock
equivalents, thus both basic EPS and diluted EPS are computed by dividing net
income by the weighted-average number of common shares outstanding during the
year.

Page 17 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.

Notes to Financial Statements December 31, 2005

(h) Comprehensive Income

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
unrealized gains (losses), net of tax, on securities classified as available
for sale, foreign currency translation adjustments and minimum pension
liability adjustments. The Company's comprehensive income for the years ended
December 31, 2003, 2004 and 2005 includes net unrealized gains (losses) on
marketable securities and is as follows:



|                              | 2003        | 2004        | 2005       
|----------------------------- | ----------- | ----------- | -----------
|                              |             |             |            
|Net income                    | $67,423,596 | $71,441,090 | $77,675,858
|Net unrealized gains (losses) | 11,550,631  | 933,502     | (3,731,677)
|                              |             |             |            
|Comprehensive income          | $78,974,227 | $72,374,592 | $73,944,181
|                              |             |             |            

(i) Segment, Geographic and Enterprise-Wide Reporting

SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, requires certain financial and supplementary information to be
disclosed on an annual and interim basis for each reportable operating segment
of an enterprise, as defined. Based on the criteria set forth in SFAS No. 131,
the Company currently operates in one operating segment, medical software and
services.

SFAS No. 131 also requires that certain enterprise-wide disclosures be made
related to products and services, geographic areas and major customers. 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 2003, 2004 and 2005, the
Company derived its operating revenue from the following countries, based on
location of customer (as a percentage of total operating revenue):



|              | 2003 | 2004 | 2005
|------------- | ---- | ---- | ----
|              |      |      |     
|United States | 88%  | 86%  | 87% 
|Canada        | 10%  | 12%  | 11% 
|Other         | 2%   | 2%   | 2%  
|              |      |      |     
|              | 100% | 100% | 100%
|              |      |      |     

During the years ended December 31, 2003, 2004 and 2005, one customer accounted
for approximately 9%, 10% and 10% of total revenue, respectively.

Page 18 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.

Notes to Financial Statements December 31, 2005

(2) MARKETABLE SECURITIES

The Company accounts for its marketable securities in accordance with SFAS No.
115, Accounting for Certain Investments in Debt and Equity Securities. SFAS No.
115 requires companies to classify their investments as trading,
available-for-sale or held-to-maturity. The Company'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
shareholder equity. In addition the Company 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 of marketable securities was determined based on
quoted market prices. At December 31, 2003, 2004 and 2005, the cost basis net
of write-downs, unrealized gains, unrealized losses and fair market value of
the Company's holdings are as follows:



|                      | 2003         | 2004         | 2005        
|--------------------- | ------------ | ------------ | ------------
|                      |              |              |             
|Net cost of equities  | $148,854,935 | $160,808,264 | $171,281,515
|Unrealized Gains      | 20,762,666   | 22,915,338   | 17,700,139  
|Unrealized Losses     | (425,235)    | (1,022,069)  | (2,026,331) 
|Cost of agency issues | 35,000,000   | 54,999,775   | 69,990,000  
|                      |              |              |             
|Fair Market Value     | $204,192,366 | $237,701,308 | $256,945,323
|                      |              |              |             

SFAS No. 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. During the year ended December 31, 2003,
the Company determined that the decline in value for certain securities was
other than temporary. Accordingly, the Company recorded a write-down related to
these securities in the accompanying statements of income of $1,462,074.

The unrealized loss at December 31, 2005, is attributable to 9 equities, none of which
has been in loss status for more than 10% of cost for longer than 1 month. The Company considered
the effect of rising interest rates during 2005 and the issuer's current financial
position in order to reach its conclusion that these impairments are temporary in
nature at December 31, 2005. The details are as follows:



|                  | 9 Equities  
|----------------- | ------------
|                  |             
|Original Cost     | $53,310,566 
|Fair Market Value | $51,284,235 
|                  |             
|Unrealized Loss   | ($2,026,331)
|

Page 19 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.

Notes to Financial Statements December 31, 2005

(3) ALLOWANCE FOR DOUBTFUL ACCOUNTS

A summary of the allowance for doubtful accounts activity for the years ended
December 31, 2003, 2004 and 2005 is as follows:



|                           | 2003     | 2004     | 2005    
|-------------------------- | -------- | -------- | --------
|                           |          |          |         
|Balance, beginning of year | $700,000 | $800,000 | $800,000
|Amounts charged to expense | 100,000  | 17,279   | 19,421  
|Amounts written off        | -        | (17,279) | (19,421)
|                           |          |          |         
|Balance, end of year       | $800,000 | $800,000 | $800,000
|                           |          |          |         

(4) ACCRUED EXPENSES

Accrued expenses consist of the following at December 31, 2003, 2004 and 2005:



|                 | 2003        | 2004        | 2005       
|---------------- | ----------- | ----------- | -----------
|                 |             |             |            
|Accrued bonuses  | $20,000,000 | $21,300,000 | $23,600,000
|Accrued vacation | 2,175,000   | 2,275,000   | 2,400,000  
|Other accrued    | 1,890,768   | 1,697,308   | 1,789,307  
|                 |             |             |            
|                 | $24,065,768 | $25,272,308 | $27,789,307
|                 |             |             |            

(5) COMMON STOCK DIVIDEND POLICY

The Company's Board of Directors has full discretion regarding the timing and
amounts of dividends paid on common stock. During the years ended December 31,
2003, 2004, and 2005, the annual dividend rate per share was $1.56, $1.80 and
$2.00, respectively, paid quarterly on shares then outstanding.

(6) REDEEMABLE COMMON STOCK

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. During the 4th quarter of 2004 the Company made a recision offer
to these individuals so as to extinguish its liability, if any, for these potential
securities law violations. None of these individuals accepted the recision offer.

Prior to the 4th quarter of 2004 the shares subject to recision rights were
considered and treated as redeemable common stock for financial accounting purposes
until such time as the recision rights terminated or were exercised. Therefore the
recision amount and the related shares were classified as Temporary Equity. In late
December, when the recision offer expired, the Company transferred the recision
amount and related shares from Temporary Equity to Shareholder Equity.

Page 20 of 28

---

MEDICAL INFORMATION TECHNOLOGY, INC.

Notes to Financial Statements December 31, 2005

(7) QUALIFIED PROFIT SHARING PLAN

The Company has no obligation for post-employment or post-retirement benefits.
The Company maintains a qualified profit sharing plan that provides deferred
compensation to substantially all of its employees. Contributions to the plan
are at the discretion of the Board of Directors and may be in the form of
cash or Company stock. A summary of year-end contributions made during the
years ended December 31, 2003, 2004 and 2005 is as follows:



|                           | 2003       | 2004       | 2005      
|-------------------------- | ---------- | ---------- | ----------
|                           |            |            |           
|Cash                       | $2,020,000 | $1,980,000 | $2,940,000
|Company common stock:      |            |            |           
|80,000 shares at $26/share | 2,080,000  | -          | -         
|80,000 shares at $29/share | -          | 2,320,000  | -         
|80,000 shares at $32/share | -          | -          | 2,560,000 
|                           |            |            |           
|                           | $4,100,000 | $4,300,000 | $5,500,000
|                           |            |            |           

(8) OTHER INCOME AND EXPENSE

The Company sold certain available-for-sale securities resulting in realized
gains of $233,088 during 2003, $117,500 during 2004 and $989,543 during 2005.

Other Income consists of rents, dividends, interest income and realized/unrealized
marketable security gains (losses):



|               | 2003        | 2004        | 2005       
|-------------- | ----------- | ----------- | -----------
|               |             |             |            
|Rents          | $10,029,758 | $10,728,321 | $9,735,148 
|Dividends      | 8,792,134   | 10,053,939  | 9,882,855  
|Interest       | 1,378,502   | 2,129,812   | 3,139,610  
|Gains (losses) | (1,446,770) | 117,500     | 989,543    
|               |             |             |            
|Other Income   | $18,753,624 | $23,029,572 | $23,747,156
|               |             |             |            

Other Expense consists of rental costs, charitable contributions, certain
professional fees and interest expense:



|                         | 2003       | 2004       | 2005      
|------------------------ | ---------- | ---------- | ----------
|                         |            |            |           
|Rental costs             | $6,390,608 | $6,469,282 | $6,789,238
|Charitable contributions | 520,000    | 600,000    | 835,000   
|Professional fees        | 500,000    | 750,000    | 1,660,000 
|Interest                 | -          | -          | 15,589    
|                         |            |            |           
|Other Expense            | $7,410,608 | $7,819,282 | $9,299,827
|                         |            |            |           

Page 21 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.

Notes to Financial Statements December 31, 2005

(9) TAXES

The Company follows the provisions of SFAS No. 109, Accounting for Income Taxes.
The components of deferred taxes, including reserves which provide for Federal
and State income and sales taxes, are as follows:



|                                        | 2003        | 2004        | 2005       
|--------------------------------------- | ----------- | ----------- | -----------
|                                        |             |             |            
|Tax reserves                            | $8,521,028  | $10,663,662 | $12,136,288
|Unrealized tax on marketable securities | 5,225,201   | 5,847,537   | 3,359,752  
|Customer deposits over 1 year           | (686,913)   | (1,289,547) | (1,342,543)
|Non-deductible expenses                 | (1,190,000) | (1,230,000) | (1,280,000)
|                                        |             |             |            
|Deferred taxes and tax reserves         | $11,869,316 | $13,991,652 | $12,873,497
|                                        |             |             |            

The components of the provision for income taxes shown in the accompanying
statements of income consist of the following:



|                 | 2003        | 2004        | 2005       
|---------------- | ----------- | ----------- | -----------
|                 |             |             |            
|State Current    | $7,634,249  | $9,834,398  | $11,430,916
|State Deferred   | 2,267,329   | 530,584     | (279,539)  
|                 |             |             |            
|                 | $9,901,578  | $10,364,982 | $11,151,377
|                 |             |             |            
|Federal Current  | $26,900,558 | $33,937,194 | $37,878,727
|Federal Deferred | 6,801,987   | 1,591,752   | (838,616)  
|                 |             |             |            
|                 | $33,702,545 | $35,528,946 | $37,040,111
|                 |             |             |            

The effective income tax rate varies from the amount computed using the
statutory U.S. income tax rate as follows:



|                                              | 2003  | 2004  | 2005 
|--------------------------------------------- | ----- | ----- | -----
|                                              |       |       |      
|Statutory tax rate                            | 35.0% | 35.0% | 35.0%
|Increase in taxes resulting from state income |       |       |      
|taxes, net of federal income tax benefit      | 5.8   | 5.7   | 5.8  
|Dividend income exclusion                     | (1.9) | (2.1) | (1.9)
|Other                                         | 0.4   | 0.5   | (0.6)
|                                              |       |       |      
|                                              | 39.3% | 39.1% | 38.3%
|                                              |       |       |      

Page 22 of 28

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MEDICAL INFORMATION TECHNOLOGY, INC.

Notes to Financial Statements December 31, 2005

(10) SUPPLEMENTARY DATA

Unaudited operating results by quarter for the two years ended December 31, 2005
(in thousands where applicable)



|                     | 1st Q   | 2nd Q   | 3rd Q   | 4th Q   | Year    
|-------------------- | ------- | ------- | ------- | ------- | --------
|                     |         |         |         |         |         
|2004:                |         |         |         |         |         
|Total revenue        | $68,800 | $69,329 | $70,337 | $72,296 | $280,762
|Operating income     | 24,906  | 25,100  | 25,195  | 26,924  | 102,125 
|Net income           | 17,048  | 18,161  | 17,600  | 18,632  | 71,441  
|Net income per share | $0.50   | $0.53   | $0.51   | $0.54   | $2.08   
|2005:                |         |         |         |         |         
|Total revenue        | $73,522 | $75,654 | $75,935 | $79,456 | $304,568
|Operating income     | 27,144  | 27,815  | 27,731  | 28,730  | 111,420 
|Net income           | 18,956  | 19,167  | 18,678  | 20,875  | 77,676  
|Net income per share | $0.55   | $0.55   | $0.54   | $0.60   | $2.24   

Item 9A - 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, the 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 period covered by this report which have materially
affected or are reasonably likely to materially affect the Company's internal
control over financial reporting.

Item 9B - Other Information

During its regular January 2006 meeting the Board of Directors approved the issuance
of up to 260,000 shares of common stock to be sold to staff members at $32.00 per share
pursuant to the MEDITECH 2004 Stock Purchase Plan.

Page 23 of 28

---

PART III

Item 10 - Directors and Executive Officers of the Registrant

All Directors are elected each year at the Annual Meeting of Shareholders. All
Officers are elected at the first meeting of the Board following the Annual
Meeting of Shareholders and hold office for one year. The positions held by each
Director and Officer of the Company on December 31, 2005, are shown below. There
are no family relationships among the following persons.



|Director or Officer   | Age | Position with the Company                     
|--------------------- | --- | ----------------------------------------------
|                      |     |                                               
|A. Neil Pappalardo    | 63  | Chairman, Chief Executive Officer and Director
|Lawrence A. Polimeno  | 64  | Vice Chairman and Director                    
|Roland L. Driscoll    | 76  | Director                                      
|Edward B. Roberts     | 70  | Director                                      
|Morton E. Ruderman    | 69  | Director                                      
|L. P. Dan Valente     | 75  | Director                                      
|Howard Messing        | 53  | President and Chief Operating Officer         
|Barbara A. Manzolillo | 53  | Treasurer, Chief Financial Officer and Clerk  
|Edward G. Pisinski    | 62  | Senior Vice President, Sales and Marketing    
|Christopher Anschuetz | 52  | Vice President, Technology                    
|Robert G. Gale        | 58  | Vice President, Product Development           
|Joanne Wood           | 51  | Vice President, Client Service                
|Steven B. Koretz      | 53  | Vice President, Implementation                
|Stuart N. Lefthes     | 52  | Vice President, Sales                         
|Hoda Sayed-Friel      | 47  | Vice President, Marketing                     

The following is a description of the business experience during the past five
years of each Director and Officer.

A. Neil Pappalardo, founder of the Company, is the Chairman and Chief Executive
Officer, and has been a Director since 1969. He is also a Director of Palomar
Medical Technologies, Inc.

Lawrence A. Polimeno has been the Vice Chairman since 2002, was President and
Chief Operating Officer prior to that, has been a Director since 1985, and has
been with the Company since 1969.

Roland L. Driscoll, retired Chief Financial Officer of the Company, has been a
Director since 1985.

Edward B. Roberts, co-founder of the Company, is a Sloan School Professor at the
Massachusetts Institute of Technology, and has been a Director since 1969. He is
also a Director of Advanced Magnetics Inc. and Sohu.com Inc.

Morton E. Ruderman, co-founder of the Company, is Chief Executive Officer of
CRES Development, a real estate developer, and has been a Director since 1969.

L. P. Dan Valente is Chairman of Palomar Medical Technologies, Inc., and has
been a Director since 1972. He is also a Director of MKS Instruments and
SurgiLight Inc.

Howard Messing has been the President and Chief Operating Officer since 2002,
was the Executive Vice President prior to that, and has been with the Company
since 1974.

Barbara A. Manzolillo has been the Treasurer, Chief Financial Officer and Clerk
since 1996, was the Treasurer prior to that, and has been with the Company
since 1975.

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Edward G. Pisinski has been the Senior Vice President of Sales and Marketing since
1997, was a Vice President prior to that, and has been with the Company since 1973.

Christopher Anschuetz has been the Vice President of Technology since 1995, was a
Senior Manager prior to that, and has been with the Company since 1975.

Robert G. Gale has been the Vice President of Product Development since 1995, was a
Senior Manager prior to that, and has been with the Company since 1976.

Joanne Wood has been the Vice President of Client Service since 1995, was a
Senior Manager prior to that, and has been with the Company since 1983.

Steven B. Koretz has been the Vice President of Implementation since 1997, was a
Senior Manager prior to that, and has been with the company since 1982.

Stuart N. Lefthes has been the Vice President of Sales since 1997, was a
Senior Manager prior to that, and has been with the company since 1983.

Hoda Sayed-Friel has been the Vice President of Marketing since 2003, was a
Senior Manager prior to that, and has been with the Company since 1986.

The address of all Officers and Directors is in care of the Company, MEDITECH
Circle, Westwood, MA 02090.

THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors oversees the Company's business affairs and monitors the
performance of management, but is not involved in the day-to-day operations. The
Directors meet regularly with the CEO, the COO, the CFO, other officers and
our independent registered public accounting firm; read reports and other
materials; and participate in Board and committee meetings. The Board currently
consists of 6 members. During 2005 the Board held 4 regularly scheduled quarterly
meetings and each of the Directors attended all meetings. Messrs. Driscoll,
Roberts, Ruderman and Valente are "independent" as defined by the rules of the
NYSE and NASDAQ.

The Board of Directors has an Audit Committee, an Executive Compensation Committee
and a Charitable Contribution Committee. During 2005 each committee member
attended all committee meetings. The following is a description of the committees.

The Audit Committee consists of Messrs. Driscoll and Valente. Both members
are former CPAs and audit committee financial experts within the meaning
of applicable rules under the Securities Exchange Act of 1934, as amended.
The committee met 6 times in 2005 to review accounting practices and advise
the Company's CFO. In addition, the committee met with the Company's
Independent Registered Public Accounting firm and reviewed the Company's
business operations, industry, financial performance, business and
financial risks, processes and controls, key policies, legal and regulatory
requirements, code of ethical conduct and new or unusual transactions. The
Committee does not have a written charter. The Committee submits its annual
report to the Board of Directors each April.

The Executive Compensation Committee consists of Messrs. Ruderman and Roberts.
This committee met once in 2005 to recommend the Chairman and Chief Executive
Officer's annual salary, the criteria and amount for his bonus. The full Board
of Directors annually approves the salary and bonus amount for each of the officers.

The Charitable Contribution Committee consists of Messrs. Ruderman, Polimeno,
Pappalardo and Messing. This committee meets at least 6 times a year to review
the criteria for the year's charitable contribution program, meets and evaluates
each organization under consideration and determines the amount to be contributed
to each organization for the year.

The Board of Directors does not have a nominating committee. Instead, the full
Board, because of its small size, carries out the duties of a nominating committee.
The Board has not adopted written guidelines regarding nominees for Director.

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Item 11 - Executive Compensation

There are no employment contracts providing for continued compensation in effect
for any Officer of the Company. The following table sets forth the compensation
received by the Company's Chief Executive Officer and the four most highly compensated
other Officers for the 3 fiscal years ended December 31, 2003, 2004 and 2005.



|Name and Position     | Year | Salary   | Bonus    | Deferred*
|--------------------- | ---- | -------- | -------- | ---------
|                      |      |          |          |          
|A. Neil Pappalardo    | 2005 | $360,000 | $675,139 | 0        
|Chairman and Chief    | 2004 | 360,000  | 673,811  | 0        
|Executive Officer     | 2003 | 360,000  | 723,965  | 0        
|                      |      |          |          |          
|Lawrence A. Polimeno  | 2005 | $180,000 | $475,139 | $5,378   
|Vice Chairman         | 2004 | 180,000  | 473,811  | 4,271    
|                      | 2003 | 180,000  | 473,965  | 4,255    
|                      |      |          |          |          
|Howard Messing        | 2005 | $240,000 | $525,139 | $5,378   
|President and Chief   | 2004 | 240,000  | 473,811  | 4,271    
|Operating Officer     | 2003 | 240,000  | 473,965  | 4,255    
|                      |      |          |          |          
|Barbara A. Manzolillo | 2005 | $204,000 | $325,139 | $5,378   
|Treasurer and Chief   | 2004 | 204,000  | 298,811  | 4,271    
|Financial Officer     | 2003 | 204,000  | 273,965  | 4,255    
|                      |      |          |          |          
|Edward G. Pisinski    | 2005 | $204,000 | $225,139 | $5,378   
|Senior Vice President | 2004 | 204,000  | 298,811  | 4,271    
|Sales and Marketing   | 2003 | 204,000  | 273,965  | 4,255    

*Represents contributions by the Company to the MEDITECH Profit Sharing Plan.

Profit Sharing Plan: The Company maintains a qualified defined contribution
plan for all of the Company's staff known as the Medical Information Technology,
Inc. Profit Sharing Plan. All of the staff who have completed one year of
service participate in the Plan. The Board of Directors sets the annual
contribution which is allocated in proportion to total compensation (capped at
$100,000) of all eligible members for the Plan year. No allocation is allowable
under this Plan to owners of 10% or more of the Company's common stock.
Contributions by members are not permitted. Benefits under the Plan are
considered deferred compensation and become fully vested after five years of
continuous service with the Company. Members who have at least 20 years of
service or who have incurred financial hardship may make in service withdrawals.
Lump sum cash payment is made upon retirement, death, disability or termination
of employment.

Compensation of Directors: The members of the Board of Directors who are not
Officers of the Company currently receive a fee of $8,000 for each quarterly
meeting fully attended, with such fee being deemed to also cover any special
meetings, conference or committee time, and incidental expenses expended by
such directors on behalf of the Company during the year.

CODE OF ETHICAL CONDUCT

During 2005 a Code of Ethical Conduct was created by management and adopted by the
Board of Directors in an effort to outline the principles established at MEDITECH
which help guide the actions of its staff, Officers and Directors. This Code sets
forth ethical standards of conduct for all to follow and provides a framework for
decision-making. This Code is intended to promote proper conduct at all levels
of business in compliance with all applicable laws and regulations as well as
to deter wrongdoing. These guiding principles propel MEDITECH forward towards
future success in a continued tradition of "ingenuity delivered with integrity"
in all of our business relationships. The Code of Ethical Conduct is available
on MEDITECH's web site and any waiver for senior management will be disclosed there
as well.

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Item 12 - Security Ownership of Certain Beneficial Owners and Management

The following table provides information as of December 31, 2005 with respect to
the shares of common stock beneficially owned by each person known by the Company
to own more than 5% of the Company's outstanding common stock, each Director of
the Company, each Executive Officer named in the Compensation Table and by all
Directors and Officers of the Company as a group. The number of shares beneficially
owned is determined according to rules of the Securities and Exchange Commission.
Under such rules, a person's beneficial ownership includes any shares as to which
such person has sole or shared voting power or investment power.



|Name of                               | Number of Shares   | Percentage  
|------------------------------------- | ------------------ | ------------
|Shareholder,                          | of Common Stock    | of Shares of
|Director or Officer                   | Beneficially Owned | Common Stock
|                                      |                    |             
|A. Neil Pappalardo*                   | 13,022,382         | 37.39%      
|Morton E. Ruderman                    | 5,494,469          | 14.33%      
|MEDITECH Profit Sharing Trust*        | 4,077,382          | 11.71%      
|Curtis W. Marble                      | 3,500,000          | 10.05%      
|Grossman Group                        | 2,061,144          | 5.92%       
|Lawrence A. Polimeno                  | 1,056,116          | 3.03%       
|Edward B. Roberts                     | 965,230            | 2.77%       
|Roland L. Driscoll                    | 528,000            | 1.52%       
|Howard Messing                        | 315,000            | 0.90%       
|Edward G. Pisinski                    | 300,000            | 0.86%       
|Barbara A. Manzolillo                 | 210,000            | 0.60%       
|L. P. Dan Valente                     | 85,000             | 0.24%       
|15 Directors and Officers as a Group* | 21,845,932         | 62.72%      

*The number of shares indicated for Mr. Pappalardo includes the shares owned
by the MEDITECH Profit Sharing Trust. Mr. Pappalardo is the sole Trustee of the
MEDITECH Profit Sharing Trust and therefore is entitled to vote its shares in
addition to his own 8,945,000 shares. Likewise the number of shares indicated
for the 15 Directors and Officers as a Group includes the shares owned by the
MEDITECH Profit Sharing Trust.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

On January 27, 2006, the Medical Information Technology, Inc. Profit Sharing
Trust, which owns more than 10% of the Company's common stock, filed a late
Form 3 initial report of beneficial ownership with the Securities and Exchange
Commission. Beginning in 2001, the Trust failed to file any Forms 4 for its
transactions in Company stock, all of which were acquisitions. To the Company's
knowledge, based solely on a review of the reports given to the Company, all
other Section 16(a) filing requirements applicable to its executive officers,
Directors and greater-than-10% shareholders were satisfied in 2005.

Item 13 - Certain Relationships and Related Transactions

A. Neil Pappalardo, Chairman, Chief Executive Officer and Director of the
Company, purchased for cash from the Company 25,000 shares of common stock
at $29 per share in February 2005.

Howard Messing, President and Chief Operating Officer of the Company, purchased
for cash from the Company 15,000 shares of common stock at $29 per share in
February 2005.

Barbara A. Manzolillo, Treasurer, Chief Financial Officer and Clerk of the
Company, purchased for cash from the Company 5,000 shares of common stock at
$29 per share in February 2005.

Edward G. Pisinski, Senior Vice President of the Company, purchased for cash
from the Company 1,000 shares of common stock at $29 per share in February 2005.

On December 31, 2005, the Company contributed 80,000 shares of common stock
at $32 per share to the MEDITECH Profit Sharing Trust.

Philip Polimeno, a son of a Director, is employed as a senior manager of the
Company and received W-2 compensation of $102,665 in 2005. Tony Polimeno, a son
of a Director, is employed as a manager of the Company and received W-2 compensation
of $77,464 in 2005.

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Item 14 - Principal Accounting Fees and Services

During 2005, Ernst & Young LLP's services included auditing the Company's
financial statements, reviewing unaudited quarterly financial information and
discussing various accounting, tax, and regulatory matters. Fees paid for audit
services rendered by Ernst & Young LLP are as follows:



|                                      | 2003     | 2004     | 2005    
|------------------------------------- | -------- | -------- | --------
|                                      |          |          |         
|Annual audit and quarterly reviews    | $142,500 | $204,000 | $127,000
|Audit related to Profit Sharing Trust | 10,000   | 11,000   | 11,000  
|Tax or all other matters              | -        | -        | -       
|                                      |          |          |         
|                                      | $152,500 | $215,000 | $138,000
|                                      |          |          |         

It is the policy of the Audit Committee to pre-approve all audit and non-audit
services to be provided to the Company by the Company's Independent Registered
Public Accounting Firm.

PART IV

Item 15 - Exhibits

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
10-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 3.2: MEDITECH's By-laws, as amended to date, is incorporated by
reference to an exhibit to the annual report on Form 10-K for the year
ended December 31, 2001.

Exhibit 10: MEDITECH 2004 Stock Purchase Plan is incorporated by reference
to the annual report on Form 10-K for the year ended December 31, 2003.

Exhibit 23: Consent of Independent Registered Public Accounting Firm,
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 December 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)

By: Barbara A. Manzolillo, Chief Financial Officer and Treasurer
(Signature)

January 31, 2006
(Date)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on January 31, 2006.

A. Neil Pappalardo, Chief Executive Officer, Chairman and Director
(Signature)

Lawrence A. Polimeno, Vice Chairman and Director
(Signature)

Roland L. Driscoll, Director
(Signature)

Edward B. Roberts, Director
(Signature)

Morton E. Ruderman, Director
(Signature)

L. P. Dan Valente, Director
(Signature)

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