-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GEl/7CRWeOZdzvvVzBdVq0RIwY96RRAW9Y9Qmzif/M9QtIizCMzDrPxwHM3mV61F tsG4vl+4GNEqV1AG9QNKgg== 0000950133-97-003978.txt : 19971117 0000950133-97-003978.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950133-97-003978 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICROS SYSTEMS INC CENTRAL INDEX KEY: 0000320345 STANDARD INDUSTRIAL CLASSIFICATION: CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS) [3578] IRS NUMBER: 521101488 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09993 FILM NUMBER: 97720749 BUSINESS ADDRESS: STREET 1: 12000 BALTIMORE AVE CITY: BELTSVILLE STATE: MD ZIP: 20705 BUSINESS PHONE: 3012016000 MAIL ADDRESS: STREET 1: 12000 BALTIMORE AVE CITY: BELTSVILLE STATE: MD ZIP: 20705-1291 10-Q 1 MICROS SYSTEMS, INC. FORM 10-Q 1 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended September 30, 1997 Commission file number 0-9993 MICROS SYSTEMS, INC. ----------------------------------------------------------------- (Exact name of Registrant as specified in its charter) MARYLAND 52-1101488 ----------------------------------------------------------------- (State of incorporation) (I.R.S. Employer Identification Number) 12000 Baltimore Avenue, Beltsville, Maryland 20705-1291 ----------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: 301-210-6000 ------------ 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 report(s)), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ----- ----- As of September 30, 1997, there were 8,006,763 shares of Common Stock, $.025 par value, outstanding. 1 2 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended September 30, 1997 PART I - Financial Information Item 1. Financial Statements. General The information contained in this report is furnished for the Registrant, MICROS Systems, Inc., and its subsidiaries (referred to collectively herein as "MICROS" or the "Company"). In the opinion of management, the information in this report contains all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the results for the interim periods presented. The financial information presented herein should be read in conjunction with the financial statements included in the Registrant's Form 10-K for the fiscal year ended June 30, 1997, as filed with the Securities and Exchange Commission. 2 3 MICROS SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except per share data)
September 30, June 30, 1997 1997 ---- ---- ASSETS - ------ Current assets: Cash and cash equivalents $ 9,366 $ 10,864 Accounts receivable, net of allowance for doubtful accounts of $1,898 at September 30, 1997 and $2,508 at June 30, 1997 61,482 64,541 Inventories 25,031 23,855 Deferred income taxes 3,437 3,437 Prepaid expenses and other current assets 7,524 5,053 ----- ----- Total current assets 106,840 107,750 Property, plant and equipment, net of accumulated depreciation and amortization of $15,987 at September 30, 1997 and $15,303 at June 30, 1997 20,395 19,297 Deferred income taxes, non-current 5,026 5,026 Goodwill and intangible assets, net of accumulated amortization of $6,384 at September 30, 1997 and $5,731 at June 30, 1997 19,390 20,806 Purchased and internally developed software, net of accumulated amortization of $5,203 at September 30, 1997 and $4,825 at June 30, 1997 10,359 9,872 Other assets 757 799 --- --- Total assets $ 162,767 $ 163,550 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Bank lines of credit $ 11,059 $ 11,740 Current portion of long-term debt 2,619 2,846 Current portion of capital lease obligation 203 210 Accounts payable 18,224 16,797 Accrued expenses and other current liabilities 21,738 30,567 Income taxes payable 7,116 5,182 Deferred service revenue 17,388 12,570 ------ ------ Total current liabilities 78,347 79,912 Long-term debt, net of current portion 2,356 3,368 Capital lease obligation, net of current portion 3,568 3,711 Deferred income taxes 3,321 3,321 Minority interests 1,554 1,511 ------ ------ Total liabilities 89,146 91,823 ------ ------ Commitments and contingencies Shareholders' equity: Common stock, $.025 par; authorized 10,000 shares; issued and outstanding 8,007 at September 30, 1997 and 7,992 at June 30, 1997 200 200 Capital in excess of par 18,482 18,103 Retained earnings 59,141 56,126 Accumulated foreign currency translation adjustments (4,202) (2,702) ------ ------ Total shareholders' equity 73,621 71,727 ------ ------ Total liabilities and shareholders' equity $ 162,767 $ 163,550 ========= =========
The accompanying notes are an integral part of the consolidated financial statements. 3 4 MICROS SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share data)
Three Months Ended September 30, -------------------------------- 1997 1996 -------- -------- Revenue: Hardware and software $ 37,412 $ 30,961 Service 22,176 16,555 ------ ------ Total revenue 59,588 47,516 ------ ------ Costs and expenses: Cost of sales Hardware and software 18,422 14,969 Service 11,879 8,403 ------ ----- Total cost of sales 30,301 23,372 Selling, general and administrative expenses 18,859 15,992 Research and development expenses 3,158 1,946 Depreciation and amortization 1,882 1,806 ----- ----- Total costs and expenses 54,200 43,116 ------ ------ Income from operations 5,388 4,400 Non-operating income (expense): Interest income 68 106 Interest expense (300) (412) Other income, net 78 41 -- -- Income before taxes and minority interest and equity in net earnings of affiliates 5,234 4,135 Income tax expense 2,096 1,654 ----- ----- Income before minority interest and equity in net earnings of affiliates 3,138 2,481 Minority interest and equity in net earnings of affiliates (123) (154) ---- ---- Net income $ 3,015 $ 2,327 ======= ======= Net income per common and common equivalent share $ 0.37 $ 0.29 ======= ======= Weighted-average number of common and common equivalent shares outstanding 8,245 7,971 ===== =====
The accompanying notes are an integral part of the consolidated financial statements. 4 5 MICROS SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed and unaudited - in thousands)
Three Months Ended September 30, 1997 1996 Net cash flows from operating activities: $ 3,234 $ 6,328 ------- ------- Cash flows from investing activities: Purchases of property, plant and equipment (2,266) (1,563) Proceeds on dispositions of property, plant and equipment --- 113 Purchased and internally developed software (1,143) (1,151) Net cash paid for acquisitions and minority interests (238) (96) ---- --- Net cash used in investing activities (3,647) (2,697) ------ ------ Cash flows from financing activities: Principal payments on line of credit --- (1,947) Principal payments on long-term debt and capital lease obligations (1,098) (2,146) Proceeds from issuance of stock 316 100 Income tax benefit from stock options exercised 63 25 -- -- Net cash used in financing activities (719) (3,968) ---- ------ Effect of exchange rate changes on cash (366) --- ---- --- Net decrease in cash and cash equivalents (1,498) (337) Cash and cash equivalents at beginning of period 10,864 15,231 ------ ------ Cash and cash equivalents at end of period $ 9,366 $ 14,894 ======= ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 367 $ 548 ===== ===== Income taxes $ 188 $ 471 ===== =====
The accompanying notes are an integral part of the consolidated financial statements. 5 6 MICROS SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Quarter Ended September 30, 1997 (Unaudited) 1. Inventories The components of inventories are as follows (in thousands):
September 30, June 30, 1997 1997 ----------------- --------------- Raw materials $ 8,146 $ 7,594 Work-in-process 3,131 3,515 Finished goods 13,754 12,746 ----------------- --------------- $ 25,031 $ 23,855 ================= ===============
2. Legal proceedings MICROS is and has been involved in legal proceedings arising in the normal course of business. The Company is of the opinion, based upon presently available information and the advice of counsel concerning pertinent legal matters, that any resulting liability should not have a material adverse effect on the Company's results of operations or financial position. On March 25, 1997, Budgetel Inns, Inc. ("Budgetel") filed suit against MICROS in the United States Federal District Court in the Eastern District of Wisconsin. Budgetel alleges, among other things, that MICROS breached a March 1993 software support agreement by failing to provide full support to this software package licensed to Budgetel in 1993. MICROS will defend against Budgetel's allegations, and has moved to have certain of the causes of action dismissed. While the ultimate outcome of litigation is uncertain, and while litigation is inherently difficult to predict, the Company is of the opinion, based upon presently available information and the advice of counsel concerning pertinent legal matters, that any resulting liability should not have a material adverse effect on the Company's results of operations or financial position. 6 7 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended September 30, 1997 Item 2. Management's discussion and analysis of financial condition and results of operations Liquidity and Capital Resources The Company has a $25.0 million unsecured committed line of credit which was renewed December 31, 1996 for an additional one year period, expiring on December 31, 1997. Prior to this upcoming expiration date, the Company anticipates that it will renew this line of credit for an additional one year period. In addition, the Company has an additional line of credit from one European bank aggregating DM 7.0 million (approximately $3.9 million at the September 30, 1997 exchange rate) as a result of its November 1995 acquisition of Fidelio. As of September 30, 1997, there were no borrowings against this line of credit. For both of these lines of credit, at September 30, 1997, the Company had borrowed approximately $11.1 million and has approximately $17.8 million available. As the Company has significant international operations, its DM-denominated borrowings do not represent a significant foreign exchange risk. The Company does not engage in any foreign exchange hedging. In addition, the Company has long-term debt, both current and non-current, of approximately $5.0 million as of September 30, 1997. The majority of this debt stems from the Fidelio acquisition. Net cash provided by operating activities for the three months ended September 30, 1997 was $3.2 million. In addition, the Company used $3.6 million, primarily for the purchase of property, plant and equipment and internally developed software. Net financing activities for the first three months of fiscal 1998 used $0.7 million, primarily for debt repayment. The Company anticipates that its cash flow from operations along with available lines of credit, in conjunction with other lines of credit for which the Company may be eligible or lines of credit to be renewed, are sufficient to provide the working capital needs of the Company for the foreseeable future. The Company anticipates that its property, plant and equipment expenditures for fiscal 1998 will continue to increase for the remainder of the fiscal year and will approximately equal fiscal 1997 expenditures of $8.1 million. Results of Operations - First Quarter Comparison The Company recorded net income of $.37 per common share in the first quarter of fiscal 1998, compared with net income of $.29 per common share in the first quarter of fiscal 1997. For the quarter, the increased net income was primarily due to higher sales volumes and lower operating expenses as a percentage of sales, partially offset by a decrease in gross margins. Revenue of $59.6 million for the first quarter of fiscal 1998 increased $12.1 million, or 25.4%, compared to the same period last year. A comparison of the sales mix for fiscal years 1998 and 1997 is as follows:
Three Months Ended September 30, 1997 1996 ---- ---- Hardware 44.7% 44.9% Software 18.1% 20.3% Service 37.2% 34.8% ------ ------ 100.0% 100.0% ====== ======
7 8 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended September 30, 1997 Results of Operations - First Quarter Comparison, Continued Both hardware and software sales increased in absolute dollars in fiscal 1998 in comparison to the prior year, but declined as a percentage of total revenue as their absolute increases were less than the increase in service sales. Service sales increased in absolute dollars and as a proportion of total sales for the first quarter in comparison to the prior year due to increases in both the POS and hotel businesses. Combined hardware and software revenues for the first quarter of fiscal 1998 increased $6.5 million, or 20.8%, while service revenues increased $5.6 million, or 34.0%, over the same period a year earlier. Cost of sales, as a percentage of revenue, increased to 50.9% from 49.2% for the first quarter of fiscal 1998 compared to the first quarter of fiscal 1997. Cost of sales for hardware and software products, as a percentage of related revenue, was 49.2% in the first quarter of fiscal 1998 compared to 48.4% for the same quarter a year earlier. This increase was the result of a greater increase in hardware sales, which generally have lower gross margins, relative to the increase in software sales. Service costs, as a percentage of service revenue, increased to 53.6% in the first quarter of fiscal 1998 compared to 50.8% in the same quarter in fiscal 1997. The first quarter increase in comparison to the prior year was due to expansion of the Company's service organization and the initial costs associated with adding additional personnel. Selling, general and administrative expenses increased $2.9 million, or 17.9%, in the first quarter of fiscal 1998 compared to the same period last year. As a percentage of revenue, selling, general and administrative expenses decreased to 31.7% in the first quarter of fiscal 1998 compared to 33.7% in the first quarter of fiscal 1997 as sales grew at a rate in excess of these expenses. Research and development expenses (exclusive of capitalized software development costs), which consist primarily of labor costs, increased $1.2 million, or 62.2%, in the first quarter of fiscal 1998 compared to the same period a year earlier. Actual research and development expenditures, including capitalized software development costs of $1.1 million in the first quarter of fiscal 1998 and $1.2 million in the first quarter of fiscal 1997, increased $1.2 million, or 38.9%, compared to the same period a year earlier. The increase in absolute dollars for the three-month period is due to increased expenditures in both the POS and hotel businesses. Income from operations for the first quarter of fiscal 1998 was $5.4 million, or 9.0% of revenue, compared to income of $4.4 million, or 9.3% of revenue, in the same period a year earlier. For the first quarter of fiscal 1998, the Company's higher dollar income from operations is primarily due to higher sales and lower operating expenses as a percentage of sales, partially offset by a decrease in the gross margin percentage. Interest income for the first quarter of fiscal 1998 decreased $38,000 to $68,000, or 35.8%, compared to $106,000 for the first quarter of fiscal 1997. The decrease in interest income for the period is primarily due to a reduction in the Company's average cash balance during the first quarter of fiscal 1998 compared to the first quarter of fiscal 1997 in order to meet working capital needs. Interest expense decreased $112,000 to $300,000, or 27.2%, for the first quarter of fiscal 1998 from $412,000 for the same period a year ago as the Company reduced its debt obligations. 8 9 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended September 30, 1997 Results of Operations - First Quarter Comparison, Continued The effective tax rate for the both the first quarter of fiscal years 1998 and 1997 is 40.0%. The Company has not experienced any significant shift in its mix of earnings that would require a change in its effective tax rate. Summary The Company has recently experienced rapid revenue growth at a rate that it believes has significantly exceeded that of the global market for point-of-sale computer systems and property management information systems products for the hospitality industry, fueled in part by the acquisitions consummated in calendar year 1995. Although the Company currently anticipates continued revenue growth at a rate in excess of such market, and therefore an increase in its overall market share, it does not expect to maintain growth at recent levels and there can be no assurance that any particular level of growth can be achieved. In addition, due to the competitive nature of the market, the Company continues to experience gross margin pressure on its products and service offerings, and the Company expects this to continue. There can be no assurance that the Company will be able to continue to increase sufficiently sales of its higher margin products, including software and services, to prevent future declines in the Company's overall gross margin. Moreover, some of the statements contained herein not based on historic facts are forward looking statements that involve risks and uncertainties. Past performance is not necessarily a strong or reliable indicator of future performance. Actual results could differ materially from past results, estimates or projections. Some of the additional risks and uncertainties are: product demand and market acceptance, including demand and acceptance for the new 3400 QSA and the new 3700 POS systems; implementation of a cost-effective service structure capable of servicing increasingly complex software systems in increasingly more remote locations; achieving increased sales of higher margin software products; hiring and retention of qualified employees with sufficient technical expertise; adverse economic or political conditions; unexpected currency fluctuations; impact of competitive products and pricing on margins; product development delays; technological difficulties associated with new product releases, including those with respect to the Fidelio next generation integrated property management and central reservation system technologies; and controlling expenses. Other risks are disclosed in the Company's releases and SEC filings. 9 10 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended September 30, 1997 Part II - Other Information Item 1. Legal Proceedings. On March 25, 1997, Budgetel Inns, Inc. ("Budgetel") filed suit against MICROS in the United States Federal District Court in the Eastern District of Wisconsin. Budgetel alleges, among other things, that MICROS breached a March 1993 software support agreement by failing to provide full support to this software package licensed to Budgetel in 1993. MICROS will defend against Budgetel's allegations, and has moved to have certain of the causes of action dismissed. While the ultimate outcome of litigation is uncertain, and while litigation is inherently difficult to predict, the Company is of the opinion, based upon presently available information and the advice of counsel concerning pertinent legal matters, that any resulting liability should not have a material adverse effect on the Company's results of operations or financial position. Items 2 through 4. No events occurred during the quarter covered by the report that would require a response to any of these items. Item 5. Other Information None. 10 11 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended September 30, 1997 Part II - Other Information, continued Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 11 - Computation of Earnings Per Share Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K - None 11 12 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended September 30, 1997 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. MICROS SYSTEMS, INC. ----------------------------- (Registrant) November 14, 1997 s/ Gary C. Kaufman - ----------------- ------------------ Gary C. Kaufman Senior Vice President, Finance and Administration/Chief Financial Officer November 14, 1997 s/ Roberta J. Watson - ---------------- -------------------- Roberta J. Watson Vice President and Controller 12 13 EXHIBIT INDEX
Sequentially Exhibit Numbered Page - ------- ------------- 11. Computation of Earnings Per Share 14 27. Financial Data Schedule N/A
13 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE MICROS SYSTEMS, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Unaudited - in thousands, except per share data)
Three Months Ended September 30, 1997 1996 ---- ---- Weighted-average number of common shares 7,999 7,946 Dilutive effect of outstanding stock options 246 25 --- -- Weighted-average number of common and common equivalent shares outstanding 8,245 7,971 ===== ===== Net income $3,015 $2,327 ====== ====== Net income per common and common equivalent share $ 0.37 $ 0.29 ====== ======
14 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND RELATED STATEMENT OF INCOME AS OF SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-30-1998 SEP-30-1997 9,366 0 63,380 1,898 25,031 106,840 36,382 15,987 162,767 78,347 8,745 0 0 200 73,422 162,767 37,412 59,588 18,422 35,778 0 0 300 5,234 2,096 3,015 0 0 0 3,015 0.37 0.37
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