0000950133-01-502737.txt : 20011009
0000950133-01-502737.hdr.sgml : 20011009
ACCESSION NUMBER: 0000950133-01-502737
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20010630
FILED AS OF DATE: 20010928
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: MICROS SYSTEMS INC
CENTRAL INDEX KEY: 0000320345
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
IRS NUMBER: 521101488
STATE OF INCORPORATION: MD
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-09993
FILM NUMBER: 1748392
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-K405
1
w53571e10-k405.txt
FORM 10-K
1
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended June 30, 2001
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Transition Period From ______to________ Commission File Number 0-9993
MICROS SYSTEMS, INC.
--------------------
(Exact name of registrant as specified in its charter)
Maryland 52-1101488
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State or other jurisdiction of (I.R.S. Employer
Incorporation or organization Identification No.)
7031 Columbia Gateway Drive
Columbia, Maryland 21046-2289
------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 443-285-6000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.025 per share
---------------------------------------
(Title of Class)
Indicate by a 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 /X/
At the close of business on August 31, 2001, there were issued and
outstanding 17,500,443 shares of Registrant's Common Stock at $.025 par value.
At such time the aggregate market value of the Registrant's Common Stock held by
nonaffiliates of the Registrant was $497,012,581.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 2001 Annual Meeting of Shareholders,
currently scheduled to be held on November 19, 2001, and to be filed with the
Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934,
are incorporated by reference in Part III of this Form 10-K.
PART I
ITEM 1. BUSINESS
INTRODUCTION
MICROS Systems, Inc. was incorporated in the State of Maryland in 1977 as
Picos Manufacturing, Inc. and, in 1978, changed its name to MICROS Systems, Inc.
(References to "MICROS" or the "Company" herein include the operations of MICROS
Systems, Inc. and its subsidiaries on a consolidated basis.). MICROS is a
leading worldwide designer, manufacturer, marketer and servicer of enterprise
information solutions for the global hospitality industry. The information
solutions consist of application specific software and hardware systems,
supplemented by a wide range of services. The hospitality industry includes
numerous defined market segments such as lodging (including individual hotel
sites, hotel central reservation systems and customer information systems),
table service restaurants, quick service restaurants, entertainment venues such
as stadiums and arenas, business foodservice operations, transportation
foodservice, and cruise ships.
MICROS's enterprise solutions are comprised of two major areas: (1) hotel
information systems and (2) restaurant information systems. In addition to its
software enterprise solutions and hardware products, MICROS offers an extensive
array of support services and products for its hotel and restaurant information
systems. The hotel information systems consist of software encompassing property
management systems ("PMS"), central reservation systems ("CRS"), and customer
information systems ("CIS"). The restaurant information systems consist of
hardware and software for point-of-sale ("POS") and operational applications,
and a suite of back office applications, including inventory, labor, and finance
management.
The Company's PMS are installed worldwide in leading hotel chains such as
Marriott International, Radisson, Hilton International (United Kingdom),
Wyndham, Starwood, Four Seasons (Canada), Thistle (United Kingdom), Six
Continents (United Kingdom), Kempinski (Germany), Mandarin Oriental (Hong Kong),
Movenpick (Switzerland), Peninsula (Hong Kong), Ramada Europe, Shangri-La
International (Hong Kong), Swissotel (Switzerland) and Steigenberger (Germany).
Worldwide, there are currently over 10,200 MICROS PMS installations.
The MICROS CRS is installed in numerous hotel chains such as Best Western
International, Wyndham, Concorde (France), Equatorial (Malaysia), MacDonalds
(United Kingdom), Oberoi (India), Pan Pacific (Singapore), Rydges (Australia),
Sokos (Finland), Starhotels (Italy), Sun International (South Africa), Thistle,
Tourast (Australia) and Vagabond Inns.
The MICROS CIS is installed in numerous hotel chains such as Wyndham,
Concorde, Equatorial, First, Scandic (Sweden), Peninsula, Hilton International,
Rydges, Shangri-La, Sokos, Sorat (Germany), Starhotels, Sun International,
Tourast, Taj (India), Oberoi and Pan Pacific.
MICROS's restaurant POS systems are installed worldwide. Major table service
restaurant chain customers include T.G.I. Friday's, Cracker Barrel, Metromedia
Restaurant Group, Brinker International, Bertucci's, Perkins, Don Pablo's, La
Madeleine, El Torito, Eat 'N Park, Host Services, Aramark, Hooters, Ruby
Tuesday's, Hard Rock Cafe, Corporacion Mexicana de Restaurantes (Mexico),
Whitbread PLC (United Kingdom) and Earls (Canada). Major quick service chain
restaurant ("QSR") customers include numerous franchisees of Burger King,
Arby's, various franchisees of Tricon Global Restaurants, Inc. (Pizza Hut, KFC
International, and Taco Bell), Baja Fresh, Grandy's, Red Rooster (Australia),
Panera Bread, Subway, and Wendy's. Most of MICROS's QSR installations are
franchisees.
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MICROS's restaurant POS systems are also installed in hotel restaurants in
chains such as Marriott International, Hilton International, Starwood, Hyatt,
Six Continents, Hilton, Swissotel, Mandarin Oriental, Radisson, Delta (Canada),
and Ritz-Carlton. Additional significant markets for the Company's POS systems
include casinos, cruise ships, sports arenas, airport concourses, theme parks,
recreational centers, institutional food service organizations and specialty
retail shops. The Company has installed large POS systems in the Foxwood Hotel
and Casino (Ledyard, CT), Grand Casino (Australia), Atlantis (Bahamas), Sun City
(South Africa), Luxor Hotel and Casino, MGM Grand Hotel Casino and Theme Park,
Mirage Casino, Bellagio and The Venetian, the latter five casinos being located
in Las Vegas, Nevada.
MICROS also markets both hotel and restaurant POS systems that it acquired
via the acquisition of assets of Hospitality Solutions International, Inc.
("HSI") in October 2000. The HSI hotel and restaurant systems products are both
Windows based software products that run on personal computers (" PCs").
Additionally, MICROS is marketing and further developing a POS product that it
acquired via the stock purchase of Indatec GmbH and Co. KG ("Indatec") in
February 2001. The Indatec product is a proprietary based POS system with
embedded software. Currently, Indatec products are sold exclusively in Europe.
PRODUCTS AND SERVICES
Hotel Information Systems
For the hotel marketplace, MICROS develops, markets and distributes a
complete line of hotel software products and services. The hotel information
systems include property management systems, central reservation systems,
customer information systems, revenue management systems ("RMS"), an Internet
based hotel reservations service called hotelBANK, and installation and support
services associated with the various product sets. The PMS software provides for
reservations, guest accounting, sales and catering applications, travel agent
accounting, engineering management, and interfaces to central reservation and
global distribution systems. The CRS software allows hotels to coordinate,
process, track, and analyze hotel room reservations at a central facility for
electronic distribution to the appropriate lodging site. The CIS software allows
hotels to efficiently capture and track relevant information of guests. The RMS
software allows hotels to manage room rates, occupancy, and the mix of business
between corporate and transient customers. The software systems run on PCs.
MICROS also offers an Internet based hotel reservation service through its
subsidiary called hotelBANK. This subsidiary's service enables corporate
customers to create room reservations directly with designated hotels, thereby
bypassing third party reservation systems.
MICROS markets its hotel products under the MICROS-Fidelio brand name. The
systems run on industry standard based PCs. In June 1997, MICROS-Fidelio
introduced a version of the MICROS-Fidelio Suite, called Version 7.0, which
utilizes the Microsoft Windows 95 graphical user interface and an Oracle
database. To date, over 2,300 sites are installed with Version 7.0. A DOS-based
version of the Fidelio Front Office, Version 6.0, is still marketed and has over
7,000 sites installed. For smaller properties, MICROS markets a system called
FidelioXpress that is designed for smaller lodging sites. To date, over 400
sites are installed with FidelioXpress. MICROS has over 10,200 installations
worldwide of all versions of its PMS in both international hotel chains and
independent hotel/resort properties. The Front Office PMS product is closely
integrated with MICROS POS systems for hotel table service restaurants.
MICROS introduced a new complete hotel software suite in fiscal 2001
called Opera. The Opera suite has been in development since 1996 with extensive
beta testing which started in fiscal 1999. Opera includes modules for front
office reservations, central reservations, customer information systems, sales
and catering, materials management, yield/revenue management, and quality
management. All the products are designed to share a common Oracle database.
Modules released by June 30, 2001 include front office, sales and catering,
quality management, and Opera Xchange. The remaining modules are scheduled for
release in fiscal 2002. Opera will run under these three operating systems:
Microsoft Windows NT, IBM AIX, and Sun Solaris. The Opera software suite is
deemed an important product line for MICROS's continued growth in the hotel
information systems market. MICROS has signed three major account purchase
agreements for Opera, the roll-outs for which are currently scheduled to begin
in calendar year 2002. While MICROS has not received any notification of such,
certain roll-outs could be delayed in light of current economic uncertainty.
Opera is designed to run on PCs and large PC based servers.
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The next generation product for Fidelio Version 6.0 and 7.0 users, named
Version 8.0, is now being developed in Hamburg, Germany. This product will
contain certain web features and run on Windows NT, operating on an Oracle
database. The product is targeted for release in fiscal 2002. The product is
positioned for users of Version 6.0 and 7.0 who may not want to install the
Opera suite of products.
As part of MICROS's acquisition of the assets of Hospitality Solutions
International, Inc. ("HSI"), the Company secured a PMS product called Jaguar and
a developing product called Griffin. Jaguar is a PC based PMS system targeted at
smaller lodging sites, both independent and chains. It has an installed base of
over 500 sites. The product is in a maintenance mode with no future development
planned. Griffin is designed as the next generation PMS product for HSI
customers. It has a web based architecture where the application will reside in
a central site with an Internet connection to the hotel using thin-client PCs
for transaction processing. Griffin is scheduled for market release in fiscal
2002.
Restaurant Information Systems
MICROS's restaurant systems include POS application software encompassing
transaction control, restaurant operations, accounting data, interfaces to other
systems, communications, and hardware and support services. Depending on the
products installed, the systems run on either proprietary hardware terminals or
PCs.
The Company's restaurant POS systems for the table service/leisure and
entertainment markets are the 8700 Hospitality Management System ("HMS"), the
9700 HMS (introduced in fiscal year 2001), the 3700 POS system, the 2700 HMS and
the 2800 HMS. For the quick service market, MICROS offers the 2400 Fast Food
System ("FFS").
The Company also offers the MICROS PC Workstation ("PCWS"), named the
Eclipse, which is an Intel-based microprocessor personal computer, for sale in
both hospitality and non-hospitality markets. The Eclipse was released in June
2001 and serves as the replacement for an earlier PCWS named Ultra. The PCWS is
a specialized point-of-sale computer designed to withstand the rigors of a
restaurant environment. It is a color touchscreen based system that offers both
passive and active matrix display options. MICROS resells various hardware
products such as personal computers, printers, network cards, and other related
computer equipment. MICROS signed an agreement with Hewlett Packard Corporation
in fiscal 2000 in which Hewlett Packard was designated as a preferred provider
of personal computers, printers, and networking equipment on a global basis.
Sales under this relationship began in fiscal 2001.
The 8700 HMS, released in September 1993, and since upgraded to add new
features and functionality in subsequent releases, is designed for table service
and quick service restaurants in hotels, resorts, casinos, airports,
stadiums/arenas, theme parks and larger independent and chain restaurants. It
allows the user the flexibility to configure the system around various hardware
and software choices to control restaurant and food service operations at both
the server and management levels. The 8700 HMS product has an open systems
architecture which allows its use on a PC as the server with the order entry
terminals being either the Company's proprietary order entry POS terminal
hardware or MICROS PCWS. The 8700 HMS utilizes the SCO UNIX operating system,
which permits multi-tasking and multi-user operations. This architecture gives
it the ability to manage any size restaurant or food service operation.
The Company introduced the next generation version of the 8700 HMS in fiscal
2001, named the 9700 HMS. This product incorporates the feature set of the 8700
HMS, but runs on Microsoft's Windows NT operating system, and possesses
additional features and functionality, including additional reporting tools. The
9700 HMS enables MICROS to offer customers the application set of the 8700 HMS
on either Unix or NT operating systems.
The 3700 POS, released in October 1996, is designed for table service
restaurants. It has an open systems architecture as it operates under
Microsoft's Windows 95/NT operating systems, utilizes either Microsoft's SQL or
Sybase's relational databases, and runs on industry standard Intel-based PCs. It
utilizes a touchscreen, with the Microsoft Windows based graphical user
interface.
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The 2700 HMS, of which the first version was released in March 1989, is a
stand-alone intelligent terminal designed for table service restaurants, both
large and small. The 2700 HMS, available in both an entry level and premium
configured platform, relies on proprietary terminal architecture and interfaces
with Microsoft's DOS/Windows, PC back office software systems. The 2700 HMS
Touchscreen System, released in September 1991, combines touchscreen technology
with the Company's 2700 HMS POS system. In 1999, the 2800 HMS was released. The
2800 HMS gives the 2700 HMS system the ability to utilize the restaurant
operations software developed for the 3700 POS.
During fiscal 1999, MICROS introduced the Restaurant Enterprise Series
("RES") software suite. RES is a software suite of products that encompass
point-of-sale transaction control, restaurant operations, data analysis, and
communications. The POS software constitutes the front-end application for the
3700 and 2800 POS systems. The restaurant operations modules constitute the
Enterprise Office suite. The software modules include inventory, product
forecasting, labor management, financial management, and enterprise data
management. These modules are designed to operate at a restaurant site. For
management of multiple restaurants, the RES includes a suite of software
products called Enterprise Management. This suite allows for data to be
transmitted to a remote site (including a corporation's headquarters) for data
collection and analysis. Additionally, changes such as pricing and menus can be
made at a remote site and downloaded to specified restaurant locations. The
Restaurant Enterprise Series is an important component of MICROS's strategy to
fully integrate point-of-sale transaction processing with other restaurant
operational and management functions. In fiscal 2001, MICROS released a new
version of the RES product called the RES 3000.
For quick service restaurants, MICROS markets the 2400 FFS and the RES 3000.
The 2400 FFS, released in October 1991, features a proprietary, networked
intelligent terminal architecture. The system's application software addresses
quick service requirements in the areas of order entry, drive-thru operations,
inventory tracking, employee timekeeping/labor tracking and data communications
and produces a variety of management reports through an interface with back
office, PC based software systems. MICROS offers a back office management
information systems software package called the 2400 Manager Workstation Plus
("MWS+"). The MWS+ software is a PC-based software product that provides for
management analysis of sales and operational trends at quick service
restaurants, both at the store and corporate levels. The product also integrates
POS functions with in-store back office, regional and home office management
information system functions. The RES 3000 incorporates new software features
required by the QSR industry. The addition of the RES 3000 allows MICROS to
offer QSR customers a PC based, Windows 95/NT operating POS architecture.
In fiscal 2001, MICROS made a minority investment in Vivonet, Inc., a
Vancouver, Canada, based privately held software development company. As part of
the minority investment, MICROS secured exclusive distribution rights for the
global hospitality industry to distribute Vivonet's web-based POS system. MICROS
has consulted extensively with Vivonet as part of the investment and reseller
relationship to develop this product for market release. MICROS plans on
introducing this product, to be named iPOS, in fiscal 2002. In addition, MICROS
also plans on introducing other Internet back-office applications with portal
functionality, to be called mymicros.net, in fiscal 2002.
MICROS is marketing the HSI POS product to primarily table service customers
in North America via a direct sales force. The product's functionality is
similar to the MICROS RES 3000. MICROS plans on continuing the development of
the HSI POS product, which serves certain niches of the hospitality industry
well.
The Indatec product is being marketed to smaller table service restaurants
in Europe that do not require the higher level functionality of MICROS POS
products. These smaller restaurants require a lower cost product in terms of
purchase and installation expense, a market niche that the Indatec product is
designed to serve.
The Company's design architecture allows existing users of many MICROS POS
products to access new technologies and applications in conjunction with their
existing MICROS POS system. In addition, many MICROS products interface with
various back office accounting and property management systems, including the
Company's hotel PMS products.
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Services
MICROS provides a wide range of service products and services to its
customers. Products include spare parts, media supplies (ribbons, paper, etc.),
network products, active power-line conditioners and uninterruptable power
supplies. Services include installation, operator and manager training, on-site
hardware maintenance, customized software development, application software
support, credit card software support, systems configuration, network support
and consulting.
MICROS provides field hardware and software maintenance via a combination of
its direct and indirect (authorized U.S. dealers and international distributors)
channels. The field hardware maintenance is provided mainly to customers using
MICROS POS hardware and software systems. MICROS may contract with various PC
manufacturers to provide either first or second line support for PC servers for
both hotel and restaurant customers. Maintenance contracts are an important and
growing part of MICROS's revenue.
MICROS operates a help desk seven days a week, 24 hours per day in its
Columbia, Maryland headquarters. This central support operation receives support
calls from customers and addresses them on-line or dispatches a service call to
the appropriate local service provider. Internationally, in-country support is
provided by the local sales entity, whether it be a MICROS subsidiary or
distributor. MICROS maintains regional support centers in Neuss, Germany, Buenos
Aires, Argentina and Sydney, Australia. MICROS's corporate customer service
provides back-up support for its regional centers. Customer support for
hotelBANK is centered in Hamburg, Germany, the site of the subsidiary's
operational headquarters. MICROS's HSI division maintains a support center in
Phoenix, Arizona to support its hotel and restaurant products.
MICROS believes that its services are an important competitive factor and
differentiator in customer purchasing decisions. Service revenue constituted
approximately 48% of MICROS's total revenues in fiscal year 2001, 40% in fiscal
year 2000 and 35% for fiscal year 1999.
SALES, MARKETING AND DISTRIBUTION
The Company considers its direct and indirect global distribution network a
major strength. This network has been built over the past 24 years. The Company,
its U.S. based dealers, and international distributors work closely together in
seeking to identify new customers, products, services and markets, as well as to
serve the Company's existing customer base with enhanced products and services.
The Company's products are sold primarily through three channels: (i) the
Direct Sales Channel, comprised of the Company's sales distribution network
consisting of approximately 43 wholly or majority owned subsidiaries and sales
offices, (ii) the MICROS Major Accounts program directed to designated regional,
national, and international customers; and (iii) the Indirect Sales Channel, an
independent sales distribution network consisting of approximately 63 domestic
dealers and 65 international distributors.
Foreign sales, including export sales from the United States, accounted for
approximately 48%, 53%, and 51%, of the Company's total revenue in fiscal years
2001, 2000 and 1999, respectively.
RESEARCH AND DEVELOPMENT
The products sold by the Company are subject to rapid and continual
technological change. Accordingly, the Company must continually develop
innovative systems incorporating the newest technologies. Products available
from the Company, as well as those from its competitors, have increasingly
offered a wider range of features and capabilities.
The Company conducts its core POS product software and hardware development
at its Columbia, Maryland corporate headquarters. To facilitate rapid responses
for various regional application needs outside the United States, MICROS also
conducts POS software development in its subsidiaries located in Neuss and
Hamburg, Germany, Singapore, and Sydney, Australia and its U.S. division located
in Scottsdale, Arizona. In addition, the Company continually examines and
evaluates software and hardware products and designs created by third parties
and has acquired and may in the future acquire ownership
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or licensing rights to such products and designs.
In fiscal 1998, MICROS started using the hardware design services of SCI
Systems, Inc. ("SCI"). This outsourcing allowed the Company to reduce its
internal staff of designers while increasing its capacity to design new hardware
platforms. MICROS still retains an in-house design capability in Columbia,
Maryland. See also Manufacturing in Part I of this Form 10-K.
MICROS-Fidelio's hotel PMS, CRS, and CIS development is primarily conducted
in Naples, Florida. This office has a staff of approximately 114 employees and
22 consultants. The office became the primary development center upon the 1998
closure of MICROS's former hotel development center in Munich, Germany. MICROS
maintains close relationships with major software operating and database
companies such as Oracle, Novell, Sybase, and Microsoft. These relationships are
important to MICROS so it can readily incorporate software changes from these
companies into its products. MICROS's international offices may also conduct
specific product enhancement activities to meet specific interface needs, local
requirements, and customer requests.
Product development for MICROS's hotelBANK subsidiary is conducted in
Hamburg, Germany. The operational headquarters for hotelBANK resides in
Stockholm, Sweden.
Research and development expenses (exclusive of capitalized software
development costs), which consist primarily of labor costs, amounted to $19.7
million, $17.6 million, and $14.4 million for fiscal years 2001, 2000 and 1999,
respectively. Actual research and development expenditures, including
capitalized software development costs of $8.9 million, $8.2 million, and $7.9
million for fiscal years 2001, 2000 and 1999, respectively, amounted to $28.6
million, $25.8 million, $22.3 million for fiscal years 2001, 2000 and 1999,
respectively.
COMPETITION
The Company believes that its competitive strengths include its established
global distribution and service network, its ability to offer a broad array of
hardware, software and service products to the hospitality industry and its
corporate focus on providing information systems solutions principally to the
hospitality industry.
The markets in which the Company operates are highly competitive. MICROS
competes on the basis of various factors, including product functionality,
service capabilities, price and geography. There are at least 40 competitors
worldwide that offer some form of sophisticated POS system similar to the
Company's and over 100 hotel systems competitors. Competitors in the POS
marketplace include full service providers such as Aloha, Infogenesis, NCR
(Compris POS), Par Technology, Panasonic, POSitouch, Radiant Systems, Sharp,
Squirrel, Tridex (Progressive POS), Vectron, and hardware providers such as IBM,
NCR, and Aspeon, who market their products in conjunction with independent
software vendors. There are also numerous companies that license their
POS-oriented software with PC-based systems in regional markets around the
world.
Many of the over 100 competitors in the hotel systems market are companies
with software designed to run on industry standard PCs. These companies may have
several hotel related software products, or simply one product for a particular
niche. These competitors include Daylight Software, MAI Systems, Multi-Systems,
Newmarket, Pegasus, Springer-Miller, and property management systems developed
and marketed by major hotel chains for their corporate-owned operations and
franchisees. Internationally, MICROS generally faces smaller, regionally
oriented competitors.
The CRS market is highly fragmented, with most central reservation systems
being customized systems for each hotel chain or allied reservation group. The
competitors in this market consist of in-house development efforts by chains,
property management competitors such as Pegasus and Springer-Miller, and
specialized central reservation providers such as Lexington Services and WizCom
International. The market for central reservation systems is highly competitive.
MICROS believes that the CIS market has various competitors. Those that
offer such a product are generally smaller companies targeting specialized
segments of the market. However, most of the systems in place today are
customized solutions developed by specific chains for their own use. These
customized systems are thus not
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marketed to other hotel chains. The CIS market is relatively new, and thus the
future growth and direction of such is uncertain.
MANUFACTURING
The Company's manufacturing program seeks to maintain flexibility and reduce
costs by emphasizing the strategic outsourcing of key products and
subassemblies. Pursuant to an agreement with SCI Systems, Inc. ("SCI"), of
Huntsville, Alabama, MICROS contracts to have its POS terminals, PCWS terminals,
and certain communication boards manufactured by SCI. The Company entered into
this non-exclusive agreement in order to lower its manufacturing costs, expand
the availability of POS and PCWS terminals, and improve product quality.
The decision to outsource the Company's manufacturing was based upon an
extensive analysis of projected long-term product costs, current and projected
terminal demand relative to internal manufacturing capacity, targeted product
quality levels, and internal design and manufacturing capabilities. The analysis
indicated that MICROS could potentially obtain desired products from SCI at a
lower cost than the Company could produce. SCI also had sufficient assembly
capacity to meet MICROS's forecasted sales demand, and was capable of achieving
targeted product quality levels. MICROS retains a limited manufacturing
capability of certain products. While MICROS believes that there are entities
other than SCI that could provide manufacturing capabilities, any default by SCI
or disruption in its manufacturing process could have a material short-term
adverse impact on the operations of MICROS.
Material sourcing is based on availability, service, cost, delivery and
quality of the purchased items from domestic and international suppliers. Some
items are custom manufactured to the Company's design specifications. MICROS
believes that the loss of its current sources for components would not have a
material adverse effect on the Company's business since other sources of supply
are generally available. The Company believes it maintains good relationships
with its suppliers.
In July 2001, MICROS moved its logistics operations from a building in
Beltsville, Maryland to a new facility in Hanover, Maryland. This facility
serves as MICROS's main distribution center for filling customer orders as well
as light assembly and product configuration services.
EMPLOYEES
As of June 30, 2001, the Company had approximately 2,586 full-time
employees. Approximately 1,399 or 54% of these employees are based in North
America (United States and Canada), with the majority of the US-based employees
located in the Company's Columbia, Maryland headquarters. The balance of this
group is employed principally at the Company's regional district offices and its
product development subsidiaries in Naples, Florida, and Portsmouth, New
Hampshire. Approximately 828, or 32%, of the Company's employees are employed in
the Europe/Africa/Middle East region, 292 employees, or 11% of total employees,
are employed in the Asia/Pacific region, and 67 employees, or 3% of total
employees, are located in the Latin America region. On an aggregate basis, the
Company had approximately 2,234 employees in sales/marketing, customer support
services and administration and finance; 291 employees in product development;
and 61 employees in operations. The Company is not a party to any collective
bargaining agreements. None of the Company's employees are represented by a
labor union, except in Germany and France, as mandated by law. MICROS does use
certain suppliers whose employees may be represented by labor unions. MICROS
believes it maintains good relations with its employees.
FOREIGN SALES AND FOREIGN MARKET RISK
The Company recorded foreign sales, including exports from the United
States, of approximately $154.7 million during fiscal 2001 to customers located
primarily in Europe, Africa, the Middle East, Australia, Asia, Latin America and
Canada. Comparable sales in fiscal 2000 were $190.9 million and in fiscal 1999
were $171.6 million. See Note 14 of Notes to Consolidated Financial Statements
for additional geographic data.
MICROS's significant international business and presence expose the Company
to certain market risks, such as currency, interest rate and political risks.
With respect to currency risk, the Company transacts business in 28
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different currencies through its foreign subsidiaries. The fluctuation of
currencies impacts sales and profitability. Frequently, sales and the costs
associated with such sales are not always denominated in the same currency.
Given the fact that the Company transacts business in many different currencies,
adverse declines in certain currencies can be offset by favorable advances in
other currencies.
Additionally, the Company is subject to interest rate fluctuations in
foreign countries to the extent that the Company elects to borrow in the local
foreign currency. In the past, this has not been an issue of concern as the
Company has the capacity to elect to borrow in other currencies with more
favorable interest rates. While the Company has not to date invested in
financial instruments designed to protect against interest rate fluctuations,
the Company will continue to evaluate the need to do so in the future.
Further, the Company is subject to political risk, especially in developing
countries with uncertain or unstable political structures or regimes.
Contributing to this risk factor is the adverse impact that political
instability has on the travel and tourism industries. The Company is also
subject to the effects of, and changes in, laws and regulations, other
activities of governments, agencies and similar organizations.
Finally, the Company's committed line of credit bears interest at a floating
rate of interest. It does not invest in financial instruments designed to
protect against interest rate fluctuations, although it will continue to
evaluate the need to do so in the future.
PATENTS
The Company holds no patents and believes that its competitive position is
not materially dependent upon patent protection. The technology used in the
design and manufacture of most of the Company's hardware products is generally
known and available to others. With respect to the Company's software products,
it relies on nondisclosure agreements, and an array of U.S. and foreign
copyright and trademark laws for protection. In the U.S. and in most countries,
it is believed that both statutory and common law provides the Company with a
certain level of protection. Notwithstanding the above, there is a risk that
third party entities, including competitors, could attempt to misappropriate the
Company's intellectual property. Given this potential risk, the Company has
implemented certain procedures to monitor misappropriation of its intellectual
property.
FLUCTUATIONS AND CUSTOMERS
The Company's quarterly operating results have varied in the past and may
vary in the future depending upon such factors as the timing of new product
introductions, changes in the pricing and promotion policies of the Company and
its competitors, market acceptance of new products and enhanced versions of
existing products and the capital expenditure budgets of its customers.
Political uncertainty and world turmoil, such as the terrorist attack in the
U.S. on September 11, 2001, will adversely impact travel and tourism and
therefore the Company's quarterly operating results. Moreover, the Company has
experienced increased seasonality of its business, given the significant volume
of international sales. In particular, with the European summer holiday, the
Company generally experiences lower sales volume in the first fiscal quarter
relative to other quarters. Additionally, with the relative slowdown in
corporate buying at the beginning of the calendar year, which is MICROS's third
fiscal quarter, seasonal weakness for the third quarter ending March 31 has been
experienced. Nonetheless, the Company believes that quarter-to-quarter historic
comparisons of its results are not necessarily meaningful or indicative of
future performance.
No single customer accounts for 10% or more of the Company's consolidated
revenues, nor is any portion of the Company's business subject to renegotiation
of profits at the election of the U.S. Federal Government. In fiscal year 2001,
the Company did participate, directly and indirectly, in certain contracts with
the U.S. Federal Government, which such contracts contained standard termination
for convenience clauses. The Company would not anticipate any material adverse
financial impact in the event that the U.S. Government elected to exercise a
termination for convenience clause.
ENVIRONMENTAL MATTERS
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The Company believes that it is in compliance in all material respects with
all applicable environmental laws and does not anticipate that such compliance
will have a material effect on its future capital expenditures, earnings or
competitive position with respect to any of its operations.
BACKLOG
The Company generally has a backlog of approximately one month's revenue,
substantially all of which is cancelable at any time prior to shipment, although
historically few orders have been canceled. As of June 30, 2001, 2000, and 1999,
the backlog totaled approximately $59.4 million, $43.0 million, and $44.3
million, respectively.
OTHER
The Company currently has a $45.0 million multi-currency committed line of
credit expiring on December 31, 2001. The financing agreement was amended on
April 30, 2001, to include a security interest in inventory and receivables
located in the United States. Prior to this upcoming expiration date, the
Company anticipates that it will renew this line of credit for an additional
one-year period. The Company has the one-time option to convert the line of
credit into a three-year secured term loan upon expiration of the line of
credit. Interest due under the line of credit will be calculated as follows: (i)
in the event the advance is in U.S. dollars, at the option of the Company,
either the bank's prime rate minus an additional prime rate percentage, or the
LIBOR rate plus an additional LIBOR rate percentage per annum; or (ii) in the
event the advance is made in a currency other than the U.S. dollar, the LIBOR
rate for the applicable denominated currency selected, plus an additional LIBOR
rate percentage per annum. Interest due under the three-year secured term loan
shall be, at the option of the Company, the prime rate plus one quarter of one
percent (0.25%) or the floating LIBOR rate option. Under the terms of the
current loan agreement, the Company may borrow up to $45.0 million less the
amount of outstanding letters of credit and a fixed amount equal to $1.5 million
if the Company enters into any exchange contracts. As of June 30, 2001, there is
a balance outstanding of US $3.0 million, SEK 3.5 million (approximately $0.3
million at the June 30, 2001 exchange rate) and ZAR 10.6 million (approximately
$1.3 million at the June 30, 2001 exchange rate) under this line of credit.
There is approximately $1.2 million outstanding in letters of credit as well as
outstanding exchange contracts. The agreement requires the Company to satisfy
certain financial covenants. In addition, the agreement limits the assumption of
additional indebtedness and restricts the Company's payment of dividends other
than stock dividends.
In addition, the Company also has a credit relationship with a European bank
in the amount of DM 15.0 million (approximately $6.5 million at the June 30,
2001 exchange rate). Under the terms of this facility, the Company may borrow in
the form of either a line of credit or term debt. Under the credit facility, the
Company has a balance of DM 5.0 million (approximately $2.2 million at the June
30, 2001 exchange rate) in the form of balloon debt and has no line of credit
borrowings (see Notes 5 and 6 of Notes to Consolidated Financial Statements). As
the Company has significant international operations, its DM-denominated
borrowings do not represent a significant foreign exchange risk. On an overall
basis, the Company monitors its cash and debt positions in each currency in an
effort to reduce its foreign exchange risk.
Also, due to an acquisition in January 2001, the Company had a line of
credit from several European banks in the amount of DM 1.6 million
(approximately $0.7 million at the June 30, 2001 exchange rate). However, the
lines were cancelled when the debt was paid in full in April 2001.
In May 2000, the Company signed a $1.2 million promissory note with the
Maryland Department of Business and Economic Development. The loan is for ten
years at an interest rate of two percent per annum. As of June 30, 2001, the
outstanding loan balance is $1.1 million (see Note 6 of Notes to Consolidated
Financial Statements).
In summary, as of June 30, 2001, the Company has borrowed approximately $7.9
million, has $1.2 million outstanding in letters of credits, has $1.1 million
outstanding in a promissory note, and has approximately $42.0 million available
to borrow. There was a balance outstanding of US $3.0 million, SEK 3.5 million
(approximately $0.3 million at the June 30, 2001 exchange rate) and ZAR 10.6
million (approximately $1.3 million at the June 30, 2001 exchange rate)
outstanding under the lines of credit. The Company's DM-denominated borrowings
under these credit facilities amounted to DM 5.0 million (approximately $2.2
million at the June 30, 2001 exchange rate). The amount available to borrow was
also reduced by $1.5 million for exchange contracts per the amended financing
agreement.
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Certain MICROS foreign subsidiaries maintain additional lines of credit,
none of which is considered material.
RECENT DEVELOPMENTS
None.
BUSINESS AND INVESTMENT RISKS; INFORMATION RELATING TO FORWARD-LOOKING
STATEMENTS
In light of current market conditions, there is uncertainty as to whether
the Company can enjoy revenue or profitability growth in the next year.
Accordingly, there can be no assurance that any particular level of growth is
reasonable or 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 product and service
margins to decline. There can be no assurance that the Company will be able to
increase sufficiently sales of its higher margin products, including software,
to prevent future declines in the Company's overall gross margin.
Moreover, MICROS's financial results in any single quarter are dependent
upon the timing and size of customer orders and the shipment of products for
large orders. Large software orders from customers may account for more than an
insignificant portion of earnings in any quarter. The customers with whom MICROS
does the largest amount of business are expected to vary from year to year as a
result of the timing for the roll-out of each customer's system. Furthermore, if
a customer delays or accelerates its delivery requirements or a product's
completion is delayed or accelerated, revenues expected in a given quarter may
be deferred or accelerated into subsequent or earlier quarters.
The market price of MICROS Common Stock is volatile, and may be subject to
significant fluctuations in response to variations in MICROS's quarterly
operating results and other factors such as announcements of technological
developments or new products by MICROS, customer roll-outs, technological
advances by existing and new competitors, and general market conditions in the
hospitality industry. In addition, conditions in the stock market in general and
shares of technology companies in particular have experienced significant price
and volume fluctuations which have at times been unrelated to the operating
performance of companies.
The statements contained herein not based on historic facts are
forward-looking statements, within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, 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, projections, or
forward-looking statements made by, or on behalf of, MICROS. Primary risks are
disclosed in the Company's press releases and periodic SEC filings. Some of the
additional risks and uncertainties include the following:
-- Weakness in the hospitality and tourism industries as a result of the
terrorist attacks in the U.S. on September 11, 2001, and armed conflicts arising
therefrom;
-- Given the adverse impact on the travel and hospitality industry as a result
of the terrorist attacks of September 11, 2001, MICROS has experienced a delay
in certain purchases. There can be no guarantee that this slow-down will be only
short-term.
-- MICROS's actions in connection with continued and increasing price and
product competition in many product areas, including but not limited to newly
introduced Eclipse PC Workstations, and the impact on sales margins for those
items;
-- Difficulties or delays in the development, production, testing and marketing
of products, including a failure to deliver new products and technologies when
scheduled, announced or generally anticipated; the failure of customers to
accept these products or technologies when planned; any defects in products;
MICROS's inability to differentiate its products; and a failure of manufacturing
efforts, whether internal or through MICROS's third party manufacturing
entities;
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-- The inherent difficulties in accurately forecasting buying patterns
(especially since more than an insignificant portion of the business is "street"
business that cannot be easily predicted), and appropriately staffing and
preparing for fluctuations in buying demand;
-- Implementation of a cost-effective service structure capable of servicing
increasingly complex software systems in increasingly more remote locations;
additional costs and expenses associated with servicing and supporting open
systems, which generally incorporate third party software products (the support
and service of which may be more difficult and costly);
-- Unanticipated manufacturing, supply, service or labor difficulties
experienced by certain large MICROS vendors, including SCI Systems, Inc.,
resulting in a disruption or discontinuation of the services or products
provided to MICROS;
-- The technological risks of large customer roll-outs, especially where the
contracts involve new technology such as the MICROS-Fidelio integrated hotel
information system known as Opera, or third party software; and installation of
which the customer contracts with MICROS to provide;
-- The ability to respond quickly and cost-effectively to the introduction of
new technologies, including Internet-based technologies;
-- Because almost half of MICROS's sales are outside the U.S., MICROS's results
could be significantly affected by weak economic conditions in countries in
which it does business, and emerging markets in which there tend to be
significant growth, and by changes in foreign currency exchange rates affecting
those countries;
-- The ability of MICROS to recruit and retain engineers and other
highly-skilled personnel;
-- Although MICROS attempts to protect its proprietary technology through a
combination of trade secrets, and copyright, and trademark law, nondisclosure
agreements and technical measures, such protection may not preclude competitors
from developing products with features similar to MICROS's products;
-- The costs and other effects of legal and administrative cases and
proceedings, settlements and investigations, claims, and changes in those items,
and developments or assertions by or against MICROS relating to intellectual
property rights and intellectual property licenses;
-- The effects of, and changes in, laws and regulations, other activities of
governments, agencies and similar organizations, insofar as legislative change
can affect local operations and the features that may have to be incorporated
into the Company's software sets;
-- Unanticipated impact of issues relating to the adoption and implementation of
a common currency, the Euro, by the European Economic and Monetary Union;
unanticipated litigation expenses relating to the adoption and implementation of
the Euro, including suits where MICROS is named as a result of MICROS products
interfacing to third party non-compliant products.
ITEM 2. PROPERTIES
The Company's worldwide corporate headquarters are located in Columbia,
Maryland. Pursuant to the terms of a 10-year lease agreement (the "Orix
Agreement"), MICROS leases the entire five story structure, consisting of
247,624 square feet, from Orix Columbia, Inc., a wholly-owned subsidiary of
Orix USA Corporation (MICROS is currently subleasing one of the five floors to
an independent local company pursuant to a 2 year sub-lease agreement). The
Orix Agreement also provides MICROS with the right to demand the construction
of a new building adjacent to the new corporate headquarters building, thereby
providing MICROS with expansion space, if subsequently required. The Company's
executive offices are located at the Columbia facility. The Company also
conducts sales, marketing, customer support, and product development activities
at this location.
Effective August 1, 2001, and as a replacement to its former
warehouse/staging facility in Beltsville, Maryland,
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MICROS leases approximately 75,600 square foot facility in Hanover, Maryland.
MICROS conducts light assembly, manufacturing, repair and configuration in this
facility. MICROS leases the Hanover facility pursuant to a lease expiring July
31, 2009, with a termination right in July 2006.
The Company's European headquarters facility, in which the Company conducts
certain sales, marketing, development and customer support activities for
Europe, is located in Neuss, Germany. Currently, the Company leases
approximately 42,000 square feet in a Neuss office building pursuant to a lease
agreement expiring in May 2002, with an option to renew for an additional
five-year term.
Further, the Company leases approximately 33,000 square feet of office space
in Naples, Florida, where the Company develops software, including the Opera
suite of products, for the hotel industry.
To satisfy other sales, service and support, and product development needs,
the Company leases space in 23 cities domestically, including Boston, Chicago,
Los Angeles and other major metropolitan areas, and in over 32 cities
internationally, including London, Paris, Stockholm, Sydney and Hong Kong.
In general, the Company believes that additional space will be available as
needed.
ITEM 3. 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 litigation 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of fiscal 2001, no matters were submitted to a
vote of security holders.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Price Range of Common Stock
As of August 31, 2001, there were approximately 354 record holders of the
Company's Common Stock, $.025 par value.
The Company's Common Stock (symbol "MCRS") is traded on the National
Association of Securities Dealers Automated Quotation ("NASDAQ") system. The
following table shows the range of trading prices for the period indicated, as
reported by NASDAQ.
On August 31, 2001, the closing price for the stock was $28.40.
Price Range
-----------
(in dollars)
------------
High Low
-------- -------
Year Ended June 30, 2001
7/01/00 - 9/30/00 (First Quarter) 26.00 14.69
10/01/00 - 12/31/00 (Second Quarter) 23.50 14.88
1/01/01- 3/31/01 (Third Quarter) 21.94 16.31
4/01/01 - 6/30/01 (Fourth Quarter) 24.68 16.81
Year Ended June 30, 2000
7/01/99 - 9/30/99 (First Quarter) 40.50 32.50
10/01/99 - 12/31/99 (Second Quarter) 76.25 38.88
1/01/00 - 3/31/00 (Third Quarter) 67.75 51.09
4/01/00 - 6/30/00 (Fourth Quarter) 56.19 15.75
Year Ended June 30, 1999
7/01/98 - 9/30/98 (First Quarter) 38.88 23.94
10/01/98 - 12/31/98 (Second Quarter) 32.88 22.06
1/01/99 - 3/31/99 (Third Quarter) 33.31 27.63
4/01/99 - 6/30/99 (Fourth Quarter) 35.00 29.50
The Company has never paid a cash dividend and has no current intention to
pay any cash dividends. Its current policy is to retain earnings and use funds
for the operation and expansion of its business. In addition, certain
indebtedness restricts the amount of cash dividends which may be payable. The
Company is a party to a line of credit agreement expiring December 31, 2001,
which restricts the payment of dividends other than stock dividends (see Note 5
of Notes to Consolidated Financial Statements). Future cash dividend policy will
be determined by the Board of Directors based on the Company's earnings,
financial condition, capital requirements and other existing conditions.
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA (in thousands except per share
amounts)
Fiscal Years Ended June 30,
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Statement of Operations Data
Revenue $325,394 $359,651 $335,094 $280,245 $228,169
Income from operations $3,999 $29,470 $48,645 $34,077 $27,836
Net (loss) income $(704) $16,204 $27,294 $19,641 $16,332
Basic net (loss) income per common share (1) $(0.04) $0.96 $1.69 $1.23 $1.03
Diluted net (loss) income per common share (1) $(0.04) $0.91 $1.60 $1.18 $1.01
Cash dividends -- -- -- -- --
Balance Sheet Data
Working capital $60,645 $93,535 $75,301 $45,399 $27,838
Total assets $274,456 $278,977 $232,130 $204,611 $161,605
Long-term debt and capital leases (2) $3,679 $4,519 $6,148 $9,790 $10,135
Shareholders' equity $158,848 $163,621 $119,273 $91,733 $71,727
Book value per share $9.09 $9.44 $7.36 $5.70 $4.49
Additional Data
Weighted average number of common
shares
Outstanding-basic 17,377 16,796 16,140 16,027 15,918
- diluted 17,377 17,892 17,034 16,690 16,101
(1) Included in fiscal 1998 net income per share is a charge relating to the
closure of the Company's Munich, Germany headquarters in the amount of $0.08
per share (basic) and $0.07 per share (diluted). Also included in fiscal
1998 net income per share is a charge for a change in accounting principle
in the amount of $0.02 per share.
(2) Including current portion.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Comparison of Fiscal 2001 to Fiscal 2000:
The Company recorded a diluted net loss of $0.04 per common share in fiscal
2001, compared with diluted net income of $0.91 per common share in fiscal 2000.
The decreased net income was primarily due to lower sales volumes as a result of
market conditions and higher operating expenses both in absolute dollars and as
a percentage of revenue.
Revenue of $325.4 million for fiscal 2001 decreased $34.3 million, or 9.5%,
compared to the same period last year. A comparison of the sales mix for fiscal
years 2001 and 2000 is as follows:
Year Ended June 30,
--------------------
Percent of total revenue 2001 2000
---- ----
Hardware 35.2% 41.7%
Software 17.2% 18.4%
Service 47.6% 39.9%
----- -----
100.0% 100.0%
====== ======
Both hardware and software sales decreased as a percentage of total revenue
in fiscal 2001 in comparison to fiscal 2000 primarily due to the continued
slowdown in information technology purchases by the hospitality industry.
Service sales increased in comparison to fiscal 2000, primarily due to support
revenues earned on a larger customer base, partially offset by a decreased
volume of installation revenue.
Combined hardware and software revenues for fiscal 2001 decreased $45.8
million, or 21.2%, while service revenues increased $11.5 million or 8.0%, over
the same period a year earlier.
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The Company's revenue for fiscal 2001 was transacted in approximately
twenty-eight currencies, while in fiscal years 2000 and 1999, the Company's
revenue was transacted in approximately twenty-eight and twenty-four currencies,
respectively. The relative mix over the past three years is as follows:
Year Ended June 30,
Revenues by currency (1) 2001 2000 1999
---- ---- ----
United States Dollar 59% 57% 57%
German Mark 12% 13% 15%
British Pound Sterling 7% 9% 8%
Australian Dollar 3% 4% 2%
French Franc 3% 3% 4%
Swedish Krona 2% 2% 3%
Italian Lira 2% 1% 1%
Chinese Renminbi 1% 1% 1%
Singapore Dollar 1% 1% 1%
Spanish Peseta 1% 1% 1%
All Other Currencies(2) 9% 8% 7%
-- -- --
Total 100% 100% 100%
==== ==== ====
(1) Calculated using average month end exchange rates for the year.
(2) Represents approximately 18 currencies in fiscal 2001, 18 currencies in
fiscal 2000 and approximately 14 currencies in fiscal year 1999.
Cost of sales, as a percentage of revenue, decreased to 49.6% from 51.5% for
fiscal 2001 compared to fiscal 2000. Cost of sales for hardware and software
products, as a percentage of related revenue, was 48.8% and 52.5% in fiscal 2001
and 2000, respectively. The decrease as a percentage of revenue is primarily due
to the reduction of hardware sales as a percentage of total hardware and
software sales. Also, included in the fiscal year 2000 software cost of sales
figure is approximately $1.0 million for the discontinuance of the 3400 product
line.
Service costs, as a percentage of service revenue, increased to 50.4% in
fiscal 2001 compared to 50.0% in fiscal 2000. The increased costs in comparison
to fiscal 2000 were primarily due to a lower number of installations performed
in fiscal 2001 resulting in lower labor utilization rates for service personnel,
partially offset by the continued expansion of the Company's customer base.
Selling, general and administrative expenses increased $9.8 million, or
8.4%, in fiscal 2001 compared to fiscal 2000. As a percentage of revenue,
selling, general and administrative expenses increased to 38.7% in fiscal 2001
compared to 32.3% in fiscal 2000. The increase is due primarily to decreased
revenue and additional expenses related to acquisitions, partially offset by
cost reductions.
Research and development expenses (exclusive of capitalized software
development costs), which consist primarily of labor costs, increased $2.1
million, or 12.0%, in fiscal 2001 compared to fiscal 2000. As a percentage of
revenue, research and development expenses (exclusive of capitalized software
development costs) increased to 6.1% in fiscal 2001 compared to 4.9% in fiscal
2000. Capitalized software development costs were $8.9 million in fiscal 2001
compared to $8.2 million in fiscal 2000. Total research and development
expenditures, including capitalized software development costs, increased 10.9%
from $25.8 million in fiscal 2000 to $28.6 million in fiscal 2001. As a
percentage of revenue, research and development expenditures (inclusive of
capitalized software development costs) amounted to 8.8% in fiscal 2001 compared
to 7.2% in fiscal 2000. The increase in absolute dollars is primarily due to
increased expenditures in the Company's hotel business.
Depreciation and amortization increased $3.1 million, or 27.4%, in fiscal
2001 compared to fiscal 2000. As a percentage of revenue, depreciation and
amortization increased to 4.4% in fiscal 2001 compared to 3.1% in fiscal 2000.
The increase is due primarily to additional amortization relating to
acquisitions made over the prior twenty months.
Income from operations for fiscal 2001 was $4.0 million, or 1.2% of revenue,
compared to income of $29.5 million in fiscal 2000, or 8.2% of revenue. The
Company's lower income from operations is primarily due to a lower volume of
sales in fiscal 2001 and higher operating expenses due to acquisitions.
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Other expense for 2001 increased $2.7 million, or 242.9%, compared to fiscal
2000. The increase is primarily due to the write down of a cost investment of
$1.2 million. The increase is also due to a foreign currency translation loss of
$1.2 million in fiscal 2001 compared to a foreign currency translation loss of
$0.7 million in fiscal 2000.
The effective tax rate for fiscal 2001 was 291.9% compared to 40.3% for fiscal
2000. The increase was due to both a shift in earnings towards countries with
higher tax rates with offsetting net operating losses being incurred in
countries with lower tax rates and changes in tax rates in foreign
jurisdictions.
The European Union ("EU") filed a challenge against the U.S. Foreign Sales
corporation ("FSC") tax provisions with the World Trade Organization ("WTO"). On
July 23, 2001, the WTO issued a final decision upholding this challenge.
Officials representing the United States on trade issues continue to seek
resolution through a negotiated settlement and have until September 2001 to
appeal the ruling. It is currently not possible to predict what impact, if any,
this issue will have on future earnings pending final resolution of the matter
with the WTO, EU, and the United States.
Comparison of Fiscal 2000 to Fiscal 1999:
For the first three quarters of fiscal 2000, net income was higher than
fiscal 1999 primarily due to higher sales volumes. However, due to market
conditions in the fourth quarter of fiscal 2000, the sales volume was
significantly lower than fiscal 1999. Market conditions that adversely impacted
the Company's financial performance in fiscal 2000 included: (i) slowdown in
information technology purchases due to Year 2000 driven purchases in calendar
1999; (ii) longer and delayed sales cycles due to the introduction of new and/or
untested technologies, such as Internet-based technologies; and (iii) European
currency weakness relative to the dollar. Therefore, operating expenses as a
percentage of sales increased primarily due to the Company not achieving the
anticipated sales growth in the fourth quarter. As a result, the Company
recorded diluted net income of $0.91 per common share in fiscal 2000, compared
with diluted net income of $1.60 per common share in fiscal 1999.
Revenue of $359.7 million for fiscal 2000 increased $24.6 million, or 7.3%,
compared to the same period for fiscal 1999. A comparison of the sales mix for
fiscal years 2000 and 1999 was as follows:
Year Ended June 30,
-------------------
Percent of total revenue 2000 1999
---- ----
Hardware 41.7% 46.0%
Software 18.4% 18.7%
Service 39.9% 35.3%
----- -----
100.0% 100.0%
====== ======
Both hardware and software sales decreased as a percentage of total revenue
in fiscal 2000 in comparison to fiscal 1999 primarily due to the continued
growth of the Company's service business. Service sales increased in comparison
to fiscal 1999, primarily due to increased installation and support revenues.
Combined hardware and software revenues for fiscal 2000 decreased $0.3
million, or 0.1%, while service revenues increased $24.9 million or 21.0%, over
the same period a year earlier.
The Company's revenue for fiscal 2000 was transacted in approximately
twenty-eight currencies, while in fiscal years 1999 and 1998, the Company's
revenue was transacted in approximately twenty-four and twenty-five currencies,
respectively. The relative mix over the prior three years was as follows:
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Year Ended June 30,
Revenues by currency(1) 2000 1999 1998
---- ---- ----
United States Dollar 57% 57% 56%
German Mark 13% 15% 15%
British Pound Sterling 9% 8% 8%
Australian Dollar 4% 2% 2%
French Franc 3% 4% 4%
Swedish Krona 2% 3% 4%
Chinese Renminbi 1% 1% 2%
Italian Lira 1% 1% 1%
Singapore Dollar 1% 1% 1%
All Other Currencies (2) 9% 8% 7%
-- -- --
Total 100% 100% 100%
==== ==== ====
(1) Calculated using average month end exchange rates for the year.
(2) Represents approximately 19 currencies in fiscal 2000, approximately 15
currencies in fiscal year 1999, and approximately 16 currencies in fiscal year
1998.
Cost of sales, as a percentage of revenue, increased to 51.5% from 51.0% for
fiscal 2000 compared to fiscal 1999. Cost of sales for hardware and software
products, as a percentage of related revenue, was 52.5% in fiscal 2000 and in
fiscal 1999. Included in the fiscal year 2000 software cost of sales figure was
approximately $1.0 million for the discontinuance of the 3400 product line,
which occurred in the fourth quarter of fiscal 2000.
Service costs, as a percentage of service revenue, increased to 50.0% in
fiscal 2000 compared to 48.2% in fiscal 1999. The increased costs in comparison
to fiscal 1999 were primarily due to service costs increasing at a rate in
excess of service revenues and due to additional expenses incurred in the second
quarter to resolve potential Year 2000 issues.
Selling, general and administrative expenses increased $25.4 million, or
28.0%, in fiscal 2000 compared to fiscal 1999. As a percentage of revenue,
selling, general and administrative expenses increased to 32.3% in fiscal 2000
compared to 27.1% in fiscal 1999. The increase was due primarily to
acquisitions, additional bad debt expense, and additional rent expense for the
new corporate headquarters building in fiscal 2000 compared to fiscal 1999. The
increase was also due to increased personnel costs to meet current and
anticipated sales growth that did not occur in the fourth quarter of fiscal
2000.
Research and development expenses (exclusive of capitalized software
development costs), which consist primarily of labor costs, increased $3.2
million, or 22.0%, in fiscal 2000 compared to fiscal 1999. As a percentage of
revenue, research and development expenses (exclusive of capitalized software
development costs) increased to 4.9% in fiscal 2000 compared to 4.3% in fiscal
1999. Actual research and development expenditures, including capitalized
software development costs of $8.2 million in fiscal 2000 and $7.9 million in
fiscal 1999, increased $3.4 million, or 15.2%, compared to the same period a
year earlier. As a percentage of revenue, research and development expenditures
(inclusive of capitalized software development costs) amounted to 7.2% in fiscal
2000 compared to 6.7% in fiscal 1999. The increase in absolute dollars was
primarily due to increased expenditures for the Company's restaurant business.
Office closure costs of $0.4 million in fiscal 1999 related to charges
recorded in connection with the permanent closure of the Company's Munich,
Germany facility in the fourth quarter of fiscal 1998. The costs in fiscal 1999
related to the relocation of former Munich employees to their new places of
employment within the Company.
Depreciation and amortization increased $1.4 million, or 14.1%, in fiscal
2000 compared to fiscal 1999. As a percentage of revenue, depreciation and
amortization increased to 3.1% in fiscal 2000 compared to 2.9% in fiscal 1999.
The increase was due primarily to the acquisitions that were made in fiscal
2000.
Income from operations for fiscal 2000 was $29.5 million, or 8.2% of
revenue, compared to income of $48.6 million in fiscal 1999, or 14.5% of
revenue. The Company's lower income from operations was primarily due to higher
operating expenses as a percentage of sales as a result of the Company not
achieving the anticipated sales growth in the fourth quarter.
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Interest income for 2000 increased $0.4 million, or 82.5%, compared to
fiscal 1999. The increase was due primarily to the Company's higher average cash
balance during fiscal year 2000 compared to fiscal year 1999. Interest expense
decreased $1.9 million, or 72.9%, compared to fiscal 1999. The decrease in
interest expense for the period was primarily due to the Company's lower average
debt level during fiscal 2000 in comparison to the same period a year earlier.
The effective tax rate for fiscal 2000 was 40.3% compared to 40.8% for
fiscal 1999.
Euro Conversion
On January 1, 1999, certain member nations of the European Economic and
Monetary Union ("EMU") adopted a common currency, the Euro. For a three-year
transition period, both the Euro and individual participants' currencies will
remain in circulation. After June 30, 2002, the Euro will be the sole legal
tender for EMU countries. The adoption of the Euro will affect a multitude of
financial systems and business applications as the commerce of these nations
will be transacted in the Euro and the existing national currency during the
transition period. As of June 30, 2001, of the twelve countries currently
admitted to the EMU, the Company has subsidiary operations in six of those
countries and distributor relationships in the remaining six countries.
MICROS is currently addressing Euro related issues and its impact on
information systems, currency exchange rate risk, taxation, contracts,
competition, and pricing. Action plans currently being implemented are expected
to result in compliance with all laws and regulations; however, there can be no
certainty that such plans will be successfully implemented or that external
factors will not have an adverse effect on the Company's operations. Moreover,
there is still some uncertainty with respect to the interpretation of certain
Euro regulations, and the impact of the regulations on the Company's Euro
implementation. Any costs associated with the adoption of the Euro will be
expensed as incurred. The Company currently does not expect these costs to be
material to its results of operations, financial condition or liquidity.
Liquidity and Capital Resources
The Company currently has a $45.0 million multi-currency committed line of
credit expiring on December 31, 2001. The financing agreement was amended on
April 30, 2001, to include a security interest in inventory and receivables
located in the United States. Prior to this upcoming expiration date, the
Company anticipates that it will renew this line of credit for an additional
one-year period. The Company has the one-time option to convert the line of
credit into a three-year secured term loan upon expiration of the line of
credit. Interest due under the line of credit will be calculated as follows: (i)
in the event the advance is in U.S. dollars, at the option of the Company,
either the bank's prime rate minus an additional prime rate percentage, or the
LIBOR rate plus an additional LIBOR rate percentage per annum; or (ii) in the
event the advance is made in a currency other than the U.S. dollar, the LIBOR
rate for the applicable denominated currency selected, plus an additional LIBOR
rate percentage per annum. Interest due under the three-year secured term loan
shall be, at the option of the Company, the prime rate plus one quarter of one
percent (0.25%) or the floating LIBOR rate option. Under the terms of the
current loan agreement, the Company may borrow up to $45.0 million less the
amount of outstanding letters of credit and a fixed amount equal to $1.5 million
if the Company enters into any exchange contracts. As of June 30, 2001, there is
a balance outstanding of US $3.0 million, SEK 3.5 million (approximately $0.3
million at the June 30, 2001 exchange rate) and ZAR 10.6 million (approximately
$1.3 million at the June 30, 2001 exchange rate) under this line of credit.
There is approximately $1.2 million in outstanding letters of credit as well as
outstanding exchange contracts. The agreement requires the Company to satisfy
certain financial covenants. In addition, the agreement limits the assumption of
additional indebtedness and restricts the Company's payment of dividends other
than stock dividends.
In addition, the Company also has a credit relationship from a European bank
in the amount of DM 15.0 million (approximately $6.5 million at the June 30,
2001 exchange rate). Under the terms of this facility, the Company may borrow in
the form of either a line of credit or term debt. Under the credit facility, the
Company has a balance of DM 5.0 million (approximately $2.2 million at the June
30, 2001 exchange rate) in the form of balloon debt and has no line of credit
borrowings (see Notes 5 and 6 of Notes to Consolidated Financial Statements). As
the Company has significant international operations, its DM-denominated
borrowings do not represent a significant foreign
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exchange risk. On an overall basis, the Company monitors its cash and debt
positions in each currency in an effort to reduce its foreign exchange risk.
Also, due to an acquisition in January 2001, the Company had a line of
credit from several European banks in the amount of DM 1.6 million
(approximately $0.7 million at the June 30, 2001 exchange rate). However, the
lines were cancelled when the debt was paid in full in April 2001.
In May 2000, the Company signed a $1.2 million promissory note with the
Maryland Department of Business and Economic Development. The loan is for ten
years at an interest rate of two percent per annum. As of June 30, 2001, the
outstanding loan balance is $1.1 million (see Note 6 of Notes to Consolidated
Financial Statements).
In summary, as of June 30, 2001, the Company has borrowed approximately $7.9
million, has $1.2 million outstanding in letters of credits, has $1.1 million
outstanding in a promissory note and has approximately $42.0 million available
to borrow. There was a balance outstanding of US $3.0 million, SEK 3.5 million
(approximately $0.3 million at the June 30, 2001 exchange rate) and ZAR 10.6
million (approximately $1.3 million at the June 30, 2001 exchange rate)
outstanding under the lines of credit. The Company's DM-denominated borrowings
under these credit facilities amounted to DM 5.0 million (approximately $2.2
million at the June 30, 2001 exchange rate). The amount available to borrow was
also reduced by $1.5 million for exchange contracts per the amended financing
agreement.
Net cash provided by operating activities for fiscal 2001 was $26.6 million
versus $23.3 million for fiscal 2000. The income tax benefit from the exercise
of disqualified and non-qualified stock options provided $0.2 million in fiscal
2001 and $12.2 in fiscal 2000. The Company used $31.2 million for investing
activities in fiscal 2001, including $16.9 million for the purchase of property,
plant, and equipment and internally developed software and $14.3 million for
business acquisitions, purchase of district assets and equity interests. Net
financing activities for fiscal 2001 provided $4.8 million, primarily stemming
from the line of credit. Proceeds from the issuance of stock provided $1.3
million for fiscal 2001 and $18.8 million for fiscal 2000. Proceeds of $17.0
million was provided by borrowings on the line of credit and long term debt
during fiscal 2001 which was offset by $13.5 million in repayments on the lines
of credit, long term debt and capital lease obligations.
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 or converted into
term debt, are sufficient to provide the working capital needs of the Company
for the foreseeable future. The Company anticipates that its rate of property,
plant and equipment expenditures for fiscal 2002 will be approximately the same
as fiscal 2001 expenditures.
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21
Financial indicators of the Company's liquidity and capital resources as of
June 30, 2001 and 2000 were:
In thousands, except ratios 2001 2000
-------------------------------- ---- ----
Cash and cash equivalents $26,456 $26,211
======= =======
Available credit facilities $51,500 $53,000
Outstanding credit facilities 6,800 3,000
Outstanding letters of credit 1,200 7,800
Exchange contracts 1,500 0
----- -
Unused credit facilities $42,000 $42,200
======= =======
Working capital $60,645 $93,535
======= =======
Long-term debt and capital lease
obligations:
Current $2,448 $460
Non-current 1,231 4,059
----- -----
Total $3,679 $4,519
====== ======
Shareholders' equity $158,848 $163,621
======== ========
Current ratio 1.62 1.96
==== ====
Inflation
The Company has not experienced any significant impact as a result of
inflation.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See Part I, Item I, Foreign Sales and Foreign Market Risks, and Part II,
Item 7. Additionally, MICROS's committed line of credit bears interest at a
floating rate. MICROS does not invest in financial instruments designed to
protect against interest rate fluctuations, although it will continue to
evaluate the need to do so in the future.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Part IV, Item 14(a) 1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Name Position
---------------- -------------------------
T. Paul Armstrong Executive Vice President, New Technologies
Louis M. Brown, Jr. Director and Vice Chairman of the Board
A. L. Giannopoulos Chairman, President and Chief Executive Officer
Daniel Interlandi Executive Vice President, North American Sales
Bernard Jammet Executive Vice President, Latin American Sales
F. Suzanne Jenniches Director
Gary C. Kaufman Executive Vice President, Finance and Administration and Chief Financial Officer
Thomas L. Patz Executive Vice President, Strategic Initiatives and General Counsel
John G. Puente Director
Cynthia A. Russo Vice President and Corporate Controller
Dwight S. Taylor Director
William S. Watson Director
Directors of the Registrant are elected for a term of one year.
--------------------------------------
Directors and Executive Officers of the Registrant during fiscal 2001:
T. Paul Armstrong, 44, joined the Company in July 1981 as a software
engineer. In December 1983, he was promoted to the position of Director, Systems
Engineering. In November 1989 he was promoted to Vice President, Research and
Development. In October 1993, Mr. Armstrong was named Vice President and Product
Manager, Full Service Products. In July 1995, Mr. Armstrong was promoted to
Senior Vice President, Research and Development, in April 1996, he was made
Senior Vice President and General Manager for the Table Service Restaurant
Group, and in April 1997 was named Senior Vice President and General Manager for
the Strategic Account Group. In June 2000, Mr. Armstrong was promoted to his
current position of Executive Vice President, New Technologies. Mr. Armstrong is
a graduate of Cambridge University, England.
Louis M. Brown, Jr., 58, has been a Director of the Company since 1977. Mr.
Brown held the position of President and Chief Executive Officer from January
1986 until his appointment as Chairman of the Board in January 1987. In April
2001, Mr. Brown tendered his resignation as Chairman, and was appointed Vice
Chairman. He also serves as Chief Executive Officer of Precision Auto Care,
Inc., a franchise company for the auto care industry. Additionally, Mr. Brown
serves as President and a director of IDEAS, Inc., a supplier of high
technology, custom-engineered products and services. Formerly, Mr. Brown served
as Chairman of Autometric, Inc. and of Planning Systems, Inc. He is a graduate
of the Johns Hopkins University (B.E.S.-E.E.).
A. L. Giannopoulos, 61, has been a Director since March 1992 and was elected
President and Chief Executive Officer in May 1993. In April 2001, Mr.
Giannopoulos was appointed Chairman of the Company's Board of Directors.
Effective as of June 1, 1995, Mr. Giannopoulos resigned as General Manager of
the Westinghouse Information and Security Systems Divisions, having been with
Westinghouse for 30 years, and was hired by the
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Company pursuant to an Employment Agreement to terminate December 31, 1999,
subsequently amended to terminate on June 30, 2005. In prior assignments at
Westinghouse, Mr. Giannopoulos was General Manager of the Automation Division
and National Industrial Systems Sales Force, Industries Group. Mr. Giannopoulos
currently serves as a Trustee of Capitol College. Mr. Giannopoulos is a graduate
of Lamar University with a Bachelor of Science degree in Electrical Engineering.
Daniel Interlandi, 48, began his career with MICROS in 1980, and has held
key sales and management positions with the Company involving districts
operations, distributors, major accounts, customer service, research and
development, and marketing. He was promoted to Vice President, Full Service
Products in May 1993 and to Senior Vice President, Sales and Marketing in
September 1993. In April 1996, he was appointed Senior Vice President and
General Manager, Leisure and Entertainment Group, and in April 1997, he assumed
additional responsibility for the Table Service Restaurant Group. In fiscal year
2000, Mr. Interlandi had oversight responsibility for EAME operations, and in
January 2001, Mr. Interlandi was appointed to his current position, Executive
Vice President, North American Sales. Mr. Interlandi is a 1975 graduate of Knox
College.
Bernard Jammet, 42, joined the Company in July 1984 as European Sales
Manager. In 1988, he was named Managing Director for Europe/Africa/Middle East
Operations and was promoted to Vice President in November 1990. In November
1994, he was promoted to the position of Senior Vice President, International
Operations. In October 1998, he was appointed Executive Vice President, Product
Development, and in January 2001, Mr. Jammet was appointed to his current
position of Executive Vice President, Latin America Sales. Before joining
MICROS, Mr. Jammet was employed with the former MICROS distributor for France.
Mr. Jammet is a graduate of the Hotel School of Lausanne, Switzerland, with a
Masters degree in Hotel Administration.
F. Suzanne Jenniches, 53, has been a Director of the Company since October
1996. She is Vice President of Communications Systems for the Electronic Sensors
and Systems Sector of Northrop Grumman, which designs and develops advanced
communications systems for both government and commercial applications. Ms.
Jenniches is past President of the national Society of Women Engineers, has
served on the Board of Governors for the American Association of Engineering
Societies, and is currently a board member of the State of Maryland's Greater
Baltimore Committee Technology Council. Ms. Jenniches is a graduate of Clarion
College and holds a Masters degree in Environmental Engineering from the Johns
Hopkins University.
Gary C. Kaufman, 51, served as a Director of the Company from January 1991
until May 1994 when he was appointed to Vice President, Finance and
Administration and Chief Financial Officer. Subsequent to June 30, 1996, he was
promoted to Senior Vice President, Finance and Administration and Chief
Financial Officer, and in September 1999, was promoted to Executive Vice
President, Finance and Administration and Chief Financial Officer. Previously,
Mr. Kaufman was Division Controller for Westinghouse Security and Network
Services Divisions, having been with Westinghouse for 20 years in various
financial positions. Mr. Kaufman is a graduate of the University of Dayton with
a Bachelor of Science degree in Accounting and is also a Certified Public
Accountant.
Thomas L. Patz, 41, joined the Company in August 1995 as General Counsel. In
November 1996, he was promoted to the position of Vice President and General
Counsel. In September 1999, Mr. Patz was promoted to the position of Sr. Vice
President and General Counsel, and in January 2000, Mr. Patz was promoted to his
present position of Executive Vice President, Strategic Initiatives, and General
Counsel. Previously, Mr. Patz was Assistant General Counsel of Westinghouse
Electric Corporation. Mr. Patz is a 1982 graduate of Brown University, and a
1985 graduate of the University of Virginia School of Law with a degree of Juris
Doctor. Mr. Patz is a member of the Maryland State Bar.
John G. Puente, 71, has been a Director since May 1996. He is the Chairman
of E-Cargo (Internet Cargo Services, Inc.), a company that coordinates product
shipments over the Internet. Until August 1999, Mr. Puente served as Chairman of
Telogy Networks, Inc., a developer of communications software products, at which
time it was acquired by Texas Instruments. Mr. Puente is on the Board of
Directors of Primus Telecommunications, a long distance telecommunications
service provider, and VIA NET.WORKS, Inc. an international provider of Internet
access and services in Europe and Latin America. Previously, he was Chairman and
Chief Executive Officer of Orion Network Systems, a company that provides
satellite services and facilities. Prior to joining Orion, Mr. Puente was Vice
Chairman of M/A-Com, a supplier of microwave components and systems to the
telecommunications
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industry. He was a founder and Chairman of Digital Communications Corporation
(now Hughes Network Systems) and SouthernNet, a fiber optic long distance
company that merged to form Telecom USA and was later acquired by MCI. Mr.
Puente is a graduate of Polytechnic Institute of New York and now serves on the
Board of Trustees of that institution, and he holds a Masters degree from
Stevens Institute of Technology. He is Chairman of the Board of Trustees of
Capitol College.
Cynthia A. Russo, 31, joined the Company in January 1996 as a Senior
Accountant. In October 1996, she was promoted to Manager of Accounting, in March
1999, she was promoted to Director of Financial Reporting and Services, in
February 2000 she was promoted to Director of Corporate Reporting and
Accounting, and in May 2001 she was promoted to her current position, Vice
President and Corporate Controller. Ms. Russo holds a Bachelor of Science degree
in Accounting from James Madison University. She is a Certified Public
Accountant and a Certified Internal Auditor.
Dwight S. Taylor, 56, has been a Director of the Company since 1997. He is
President of Corporate Development Services, LLC ("CDS"), a commercial real
estate development firm with offices in Columbia, Maryland, and a subsidiary of
Corporate Offices Properties Trust (NYSE: OFC). Mr. Taylor has been employed by
CDS (or Constellation Real Estate, Inc., an entity with which CDS merged in
1998) in various capacities since 1984. Mr. Taylor is also President of the
Maryland Chapter of the National Association of Industrial and Office Properties
("NAIOP"), and a member of the NAIOP National Board. Mr. Taylor currently serves
on the Trustee Boards of the Baltimore Polytechnic Institute Foundation, Capitol
College, and Lincoln University. Mr. Taylor is a 1968 graduate of Lincoln
University with a Bachelor of Arts degree in Economics.
William S. Watson, 57, currently serves as the Managing Director of The
Prism Partnership LLC, a consulting practice that provides strategic planning
and implementation consulting with a specialty in the hospitality and travel
industry. Mr. Watson also serves as Chairman and Executive Vice President of
TLX, Inc., a provider of logistics solutions to the airline industry, based in
Scottsdale, Arizona. During his career, Mr. Watson also served as Vice President
of Strategic Marketing for ITT-Sheraton Hotels, and Executive Vice President,
Chief Operating Officer of Best Western International. Mr. Watson is a 1964
graduate of Croydon Polytechnic, with a degree in Mechanical Engineering.
Information relating to filings made pursuant to Section 16 of the
Securities Exchange Act of 1934 will be set forth in the Company's Proxy
Statement, and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION AND TRANSACTIONS
The information required by Item 11 will be set forth in the Company's Proxy
Statement under the caption "Executive Compensation", and such information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 will be set forth in the Company's Proxy
Statement under the caption "Security Ownership of Certain Beneficial Owners and
Management", and such information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 2001 and 2000, the Company compensated Louis M. Brown, Jr.,
Vice-Chairman of the Board, $209,231 and $255,000, respectively, for consulting
services provided to the Company. Effective June 30, 1995, and amended February
1, 1999, and April 26, 2001, the Company and Mr. Brown entered into a Consulting
Agreement terminating June 30, 2005, pursuant to which Mr. Brown is to provide
on the average 20 hours per week of consulting services to the Company in
exchange for a base consulting fee plus a target bonus.
24
25
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Page
No.
----
(a) The following documents are filed as a part of this report:
1. Financial Statements:
Report of Independent Accountants 28
Consolidated balance sheets as of June 30, 2001 and 2000 29
Consolidated statements of operations for the years ended June 30, 2001, 2000
and 1999 30
Consolidated statements of shareholders' equity for the years ended June 30,
2001, 2000 and 1999 31
Consolidated statements of cash flows for the years ended June 30, 2001, 2000
and 1999 32-33
Notes to consolidated financial statements 34
2. Financial Statement Schedules:
Schedule II, Valuation and qualifying accounts and reserves 51
All other schedules are omitted because they are not applicable, or not
required, or the required information is included in the financial
statements or notes thereto.
3. Exhibits:
3(i). Articles of Incorporation of the Company are incorporated
herein by reference to Exhibit 3 to the Annual Report on Form
10-K of the Company for the Fiscal Year ended June 30, 1990.
3(i)(a). Articles of Amendment to Articles of Incorporation are
incorporated herein by reference to Exhibit 3(i) to the
Quarterly Report on Form 10-Q of the Company for the period
ended December 31, 1997.
3(i)(b). Articles of Amendment to Articles of Incorporation are
incorporated herein by reference to Exhibit 3(i) to the
Quarterly Report on Form 10-Q of the Company for the period
ended December 31, 1998.
3(ii). By-laws of the Company as in effect on the date hereof is
incorporated herein by reference to Exhibit 3 to the Annual
Report on Form 10-K of the Company for the Fiscal Year ended
June 30, 1990.
10a1. Amendment and Restatement of MICROS Systems, Inc. Stock Option
Plan is incorporated herein by reference to Exhibit 4.1 to the
Registration Statement on Form S-8 of the Company filed on
February 16, 1990.
10a2. First Amendment to the Amendment and Restatement of MICROS
Systems, Inc. Stock Option Plan constituting Exhibit 10a1
hereto is incorporated herein by reference to Exhibit 4.2 to
the Registration Statement on Form S-8 of the Company filed on
February 16, 1990.
10b1. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1993 Annual Meeting of
Shareholders.
10b2. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1995 Annual Meeting of
Shareholders.
25
26
10b3. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1996 Annual Meeting of
Shareholders.
10b4. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1997 Annual Meeting of
Shareholders.
10b5. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1998 Annual Meeting of
Shareholders.
10b6. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1999 Annual Meeting of
Shareholders.
10c. Underwriting Agreement dated July 6, 1995 by and among MICROS
Systems, Inc., Westinghouse Electric Corporation, Westinghouse
Holdings Corporation, J.P. Morgan Securities, Inc., Morgan
Stanley & Co. Incorporated and Smith Barney, Inc. is
incorporated herein by reference to Exhibit 10d to the Annual
Report on Form 10-K of the Company for the Fiscal Year ended
June 30, 1995.
10d. Employment Agreement dated June 1, 1995 between MICROS
Systems, Inc. and A. L. Giannopoulos is incorporated herein
by reference to Exhibit 10e to the Annual Report on Form 10-K
of the Company for the Fiscal Year ended June 30, 1995.
10e. First Amendment to Employment Agreement dated February 6, 1997
between MICROS Systems, Inc. and A. L. Giannopoulos is
incorporated herein by reference to Exhibit 10 to the Quarterly
Report on Form 10-Q of the Company for the period ended
December 31, 1996.
10f. Second Amendment to Employment Agreement dated February 1,
1998 between MICROS Systems, Inc. and A. L. Giannopoulos is
incorporated herein by reference to Exhibit 10 to the Quarterly
Report on Form 10-Q of the Company for the period ended
December 31, 1997.
10g. Third Amendment to Employment Agreement dated September 8,
1999 between MICROS Systems, Inc. and A. L. Giannopoulos is
incorporated herein by reference to Exhibit 10g to the Annual
Report on Form 10-K of the Company for the Fiscal Year ended
June 30, 1999.
10h. Consulting Agreement dated June 30, 1995 between MICROS
Systems, Inc. and Louis M. Brown, Jr. is incorporated herein by
reference to Exhibit 10 to the Annual Report on Form 10-K of
the Company for the Fiscal Year ended June 30, 1995.
10i. First Amendment to Consulting Agreement dated February 1, 1999
between MICROS Systems, Inc. and Louis M. Brown, Jr. is
incorporated herein by reference to Exhibit 10 to the Quarterly
Report on Form 10-Q of the Company for the period ended
December 31, 1998.
10j. Second Amendment to Consulting Agreement dated April 26, 2001
between MICROS Systems, Inc. and Louis M. Brown, Jr. is
incorporated herein by reference to Exhibit 10 to the Quarterly
Report on Form 10-Q of the Company for the period ended March
31, 2001.
10k. MICROS Systems, Inc. Bonus and Incentive Plan is incorporated
herein by reference to Exhibit 10 to the Quarterly Report on
Form 10-Q of the Company for the period ended September 30,
1994.
10l. Employment Agreement dated May 28, 1997 between MICROS Systems,
Inc. and Gary C. Kaufman is incorporated herein by reference to
Exhibit 10 to the Annual Report on Form 10-K of the Company for
the Fiscal Year ended June 30, 1997.
26
27
10m. First Amendment to Employment Agreement dated October 1, 1998
between MICROS Systems, Inc. and Gary C. Kaufman is
incorporated herein by reference to Exhibit 10 to the Quarterly
Report on Form 10-Q of the Company for the period ended
December 31, 1998.
10n. Employment Agreement dated May 28, 1997 between MICROS Systems,
Inc. and Thomas L. Patz is incorporated herein by reference to
Exhibit 10 to the Annual Report on Form 10-K of the Company for
the Fiscal Year ended June
30, 1997 (see 10l above)
10o. First Amendment to Employment Agreement dated October 1, 1998
between MICROS Systems, Inc. and Thomas L. Patz is incorporated
herein by reference to Exhibit 10 to the Quarterly Report on
Form 10-Q of the Company for the period ended December 31, 1998
(see 10m above).
21. Subsidiaries of the Company.
23. Consent of Independent Accountants.
(b) Reports on form 8-K:
No reports on Form 8-K have been filed during the fourth quarter of the
fiscal year ended June 30, 2001.
The annual report will be mailed to shareholders prior to the annual meeting
scheduled for November 19, 2001.
27
28
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of MICROS Systems, Inc.
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 25 present fairly, in all material
respects, the financial position of MICROS Systems, Inc. and its subsidiaries at
June 30, 2001 and 2000, and the results of their operations and their cash flows
for each of the three years in the period ended June 30, 2001, in conformity
with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statement schedule listed in the
index appearing under Item 14(a)(2) on page 25 presents fairly, in all material
aspects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and the
financial statement schedule are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States of America, which 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 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.
PricewaterhouseCoopers LLP
McLean, Virginia
August 28, 2001
29
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
as of June 30, 2001 and 2000
(in thousands, except per share data)
2001 2000
-------- ---------
ASSETS
Current assets:
Cash and cash equivalents $26,456 $26,211
Accounts receivable, net of allowance for
doubtful accounts of $7,508 in 2001 and $7,791
in 2000 84,779 98,917
Inventories 28,547 34,292
Deferred income taxes 6,955 15,575
Prepaid expenses and other current assets 11,032 16,098
------ ------
Total current assets 157,769 191,093
Property, plant and equipment, net 23,553 24,332
Deferred income taxes, non-current 23,573 9,840
Goodwill and intangible assets, net of
accumulated amortization of $18,483 in 2001 and
$12,963 in 2000 35,182 26,750
Purchased and internally developed software
costs, net of accumulated amortization of $12,699
in 2001 and $11,191 in 2000 31,529 24,604
Other assets 2,850 2,358
----- -----
Total assets $274,456 $278,977
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank lines of credit $4,659 $522
Current portion of long-term debt 2,317 397
Current portion of capital lease obligations 131 63
Accounts payable 21,980 21,145
Accrued expenses and other current
liabilities 35,417 39,809
Income taxes payable 5,200 15,021
Deferred income taxes 547 475
Deferred service revenue 26,874 20,126
------ ------
Total current liabilities 97,125 97,558
Long-term debt, net of current portion 979 3,729
Capital lease obligations, net of current portion 252 330
Deferred income taxes, non-current 14,213 11,138
Other non-current liabilities 936 5
Commitments and contingencies
Minority interests 2,103 2,596
Shareholders' equity:
Common stock, $0.025 par; authorized 50,000
shares; issued and outstanding 17,475 in
2001 and 17,336 shares in 2000 437 433
Capital in excess of par 56,515 54,225
Retained earnings 118,360 119,064
Accumulated other comprehensive income (16,464) (10,101)
-------- --------
Total shareholders' equity 158,848 163,621
------- -------
Total liabilities and shareholders' equity $274,456 $278,977
======== ========
The accompanying notes are an integral part of the consolidated
financial statements.
29
30
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended June 30, 2001, 2000 and 1999
(in thousands, except per share data)
2001 2000 1999
-------- --------- --------
Revenue:
Hardware and software $170,521 $216,273 $216,569
Service 154,873 143,378 118,525
------- ------- -------
Total revenue 325,394 359,651 335,094
------- ------- -------
Costs and expenses:
Cost of sales
Hardware and software 83,262 113,463 113,761
Service 78,104 71,636 57,158
------ ------ ------
Total cost of sales 161,366 185,099 170,919
Selling, general and administrative
expenses 126,013 116,259 90,845
Research and development expenses 19,697 17,583 14,406
Office closure costs -- -- 427
Depreciation and amortization 14,319 11,240 9,852
------ ------ -----
Total costs and expenses 321,395 330,181 286,449
------- ------- -------
Income from operations 3,999 29,470 48,645
Non-operating (expense) income:
Interest income 1,011 969 531
Interest expense (966) (690) (2,545)
Other expense, net (3,810) (1,111) 690
------- ------- ---
Income before taxes, minority interests
and equity in net earnings of affiliates 234 28,638 47,321
Income tax expense 683 11,527 19,307
--- ------ ------
(Loss) income before minority interests
and equity in net earnings of affiliates (449) 17,111 28,014
Minority interests and equity in net
earnings of affiliates (255) (907) (720)
----- ----- -----
Net (loss) income ($704) $16,204 $27,294
====== ======= =======
Net (loss) income per common share:
Basic $(0.04) $ 0.96 $ 1.69
======= ====== ======
Diluted $(0.04) $ 0.91 $ 1.60
======= ====== ======
Weighted-average number of shares outstanding:
Basic 17,377 16,796 16,140
====== ====== ======
Diluted 17,377 17,892 17,034
====== ====== ======
The accompanying notes are an integral part of the consolidated
financial statements.
30
31
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended June 30, 2001, 2000 and 1999
(in thousands)
Accumulated
Common Stock Capital Other
--------------- in Excess Retained Comprehensive
Shares Amount of Par Earnings Income Total
-------- ------ --------- -------- ------------- -------
Balance, June 30, 1998 16,101 $403 $20,097 $75,566 $(4,333) $91,733
Comprehensive income
Net income -- -- -- 27,294 -- 27,294
Foreign currency translation
adjustments -- -- -- -- (1,957) (1,957)
-------
Total comprehensive income 25,337
Stock issued upon exercise of
options 106 2 1,758 -- -- 1,760
Income tax benefit from stock
options Exercised -- -- 443 -- -- 443
-- -- --- -- -- ---
Balance, June 30, 1999 16,207 405 22,298 102,860 (6,290) 119,273
Comprehensive income
Net income -- -- -- 16,204 -- 16,204
Foreign currency translation
adjustments -- -- -- -- (3,811) (3,811)
-------
Total comprehensive income 12,393
Stock issued upon exercise of
options 1,104 27 18,726 -- -- 18,753
Stock issued for business
acquisition 25 1 997 -- -- 998
Income tax benefit from stock
options exercised -- -- 12,204 -- -- 12,204
-- -- ------ -- -- ------
Balance, June 30, 2000 17,336 433 54,225 119,064 (10,101) 163,621
Comprehensive loss
Net loss -- -- -- (704) -- (704)
Foreign currency translation
adjustments -- -- -- -- (6,363) (6,363)
-------
Total comprehensive (loss) (7,067)
Stock issued upon exercise of
options 94 3 1,320 -- -- 1,323
Stock issued to third party 45 1 799 -- -- 800
Income tax benefit from stock
options exercised -- -- 171 -- -- 171
-- -- --- -- -- ---
Balance, June 30, 2001 17,475 $437 $56,515 $118,360 $(16,464) $158,848
====== ==== ======= ======== ========= ========
The accompanying notes are an integral part of the consolidated
financial statements.
31
32
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended June 30, 2001, 2000 and 1999
(in thousands)
2001 2000 1999
---- ---- ----
Cash flows from operating activities:
Net (loss) income $(704) $16,204 $27,294
------ ------- -------
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization 14,319 11,240 9,852
Amortization of capitalized software 1,766 3,025 2,150
Provision for losses on accounts receivable 4,198 5,646 2,577
Provision for inventory obsolescence 614 1,816 2,870
Undistributed earnings from equity investment and
minority interests 255 907 720
Provision for deferred income taxes (9,828) (913) 1,662
Gain on sale of assets and investment, net -- -- (137)
Loss on other than temporary decline in investments 1,200 -- --
Income tax benefit from stock options exercised 171 12,204 443
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 10,503 (3,683) (20,441)
Decrease (increase) in inventories 7,042 (468) (4,036)
Decrease (increase) in prepaid expenses and
other assets 3,745 (4,285) (3,574)
(Decrease) increase in accounts payable (247) (6,547) 9,648
(Decrease) increase in accrued expenses and
other current liabilities (8,142) (634) 9,646
(Decrease) increase in income taxes payable (2,861) (11,011) 4,955
Increase (decrease) in deferred service
revenue 4,602 (199) 4,407
----- ----- -----
Net cash provided by operating activities 26,633 23,302 48,036
------ ------ ------
Cash flows from investing activities:
Purchases of property, plant and equipment (8,056) (13,640) (6,204)
Proceeds from dispositions of property, plant and
equipment 59 164 3,289
Internally developed software (8,866) (8,177) (7,949)
Purchase of third party software -- -- (880)
Dividends to minority owners -- (135) (101)
Proceeds from sale of affiliates 54 -- --
Purchase of net district assets -- (1,372) --
Purchase of equity interest in investee (429) (2,000) --
Net cash paid for acquisitions, minority interests
and contingent earn-out payments (13,938) (11,541) (1,675)
-------- -------- -------
Net cash used in investing activities (31,176) (36,701) (13,520)
-------- -------- --------
Cash flows from financing activities:
Principal payments on line of credit (12,652) (14,108) (30,893)
Proceeds from line of credit 17,037 14,113 3,898
Principal payments on long-term debt (418) (2,874) (2,854)
Proceeds from issuance of long-term debt -- 1,206 2,995
Principal payments on capital lease obligations (450) (142) (193)
Proceeds from issuance of stock 1,322 18,753 1,760
----- ------ -----
Net cash provided by (used in) financing
activities 4,839 16,948 (25,287)
----- ------ --------
Effect of exchange rate changes on cash $(51) $(144) $(15)
----- ------ -----
Net increase in cash and cash equivalents 245 3,405 9,214
Cash and cash equivalents at beginning of year 26,211 22,806 13,592
------ ------ ------
Cash and cash equivalents at end of year $26,456 $26,211 $22,806
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $1,132 $593 $2,377
====== ==== ======
Income taxes $14,034 $12,798 $9,159
======= ======= ======
The accompanying notes are an integral part of the consolidated
financial statements.
32
33
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
for the years ended June 30, 2001, 2000 and 1999
(in thousands, except per share data)
Supplemental schedule of noncash financing and investing activities (in
thousands):
In February 2001, the Company purchased the outstanding stock of the
minority shareholder in hotelBANK, Inc. for total consideration in the
amount of $800. Simultaneous with the purchase of the stock in hotelBANK,
Inc., the Company sold to the minority shareholder, 44,216 shares (in
whole shares) of restricted MICROS common stock, for total consideration
in the amount of $800.
In June 2000, the Company acquired all of the stock of Frontier Business
Technologies, Inc. ("FBTI"), Frontier infoSystems of North America, Inc.
("FIS") and Frontier Business Technologies of Canada, Inc. ("FBTC"). All
three companies were owned by the same shareholder. The purchase price
for all three companies combined was $1,925, which was accrued in June
2000 and paid in July 2000 (See Note 2 of Notes to Consolidated Financial
Statements). Additionally, the selling shareholder may earn five earn-out
payments over a 60-month period. The payment, if any, and the amount
shall be determined by an earn-out formula, based on FBTI, FIS and FBTC
revenues. The pro forma effects of this acquisition are immaterial and
are not presented.
In October 1999, the Company acquired all of the stock of OPUS 2 Revenue
Technologies, Inc. ("OPUS"), pursuant to the terms of a stock purchase
agreement. Based in Portsmouth, New Hampshire, OPUS engages in the
development, marketing and sale of yield and revenue management software
systems designed for the hospitality industry. The purchase price of
$4,800 for OPUS consists of an up-front payment of both cash of $3,800
and MICROS stock valued at approximately $1,000. The Company issued
24,510 shares (in whole shares) of restricted common stock to the former
owners. Additional payments of $450 and $2,000 were paid in January 2000
and May 2001, respectively, for the purchase of OPUS. Goodwill related to
this acquisition was $8,230 at June 30, 2001, and is being amortized over
seven years. In addition, the former shareholders have the right to earn:
(i) three earn-out payments based on OPUS revenues for the three periods
ending 9 months, 21 months (for which no earn-out payment was due or paid
as of June 30, 2000 and 2001, respectively) and 33 months after the
closing of the transaction; and (ii) a performance payment based on the
completion of the development of certain new software, which was paid in
May 2001. The pro forma effects of this acquisition are immaterial and
are not presented.
In February 1999, MICROS entered into an amendment to a capital lease for
one of the corporate headquarters buildings. In connection with this
transaction, the carrying values of the combined land and building of
$3,470 along with the capital lease obligation of $3,205 were removed
from the balance sheet.
The accompanying notes are an integral part of the consolidated
financial statements.
33
34
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
1. Description of business and summary of significant accounting policies:
Description of business
MICROS Systems, Inc. is a leading worldwide designer, manufacturer,
marketer, and servicer of enterprise information solutions for the
global hospitality industry. The information solutions consist of
application specific software and hardware systems, supplemented by a
wide range of services. The hospitality industry includes numerous
defined market segments such as lodging (including individual hotel
sites, hotel central reservation systems and customer information
systems), table service restaurants, quick service restaurants,
entertainment venues such as stadiums and arenas, business foodservice
operations, transportation foodservice, and cruise ships. (References to
"MICROS" or the "Company" herein include the operations of MICROS
Systems, Inc. and its subsidiaries on a consolidated basis.)
Basis of preparation
The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of
America. Inherent in this process are estimates and assumptions made by
management that affect the amounts reported in the Company's financial
statements and accompanying notes. Although these estimates are based on
management's knowledge of current events and actions it may undertake in
the future, actual results may ultimately differ from estimates.
Principles of consolidation
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries. The earnings in
consolidated MICROS subsidiaries are recorded net of minority interests.
Investments in 20%- through 50%-owned affiliated companies in which the
Company exercises significant influence over operating and financial
affairs are included under the equity method. Otherwise, investments are
included at cost. All significant intercompany accounts and transactions
have been eliminated.
Foreign currency translation
The financial statements of MICROS's non-U.S. operations are translated
into U.S. dollars for financial reporting purposes. The assets and
liabilities of non-U.S. operations whose functional currencies are other
than the U.S. dollar are translated at rates of exchange at fiscal
year-end, and revenues and expenses are translated at average month-end
exchange rates for the fiscal year. The cumulative translation effects
are reflected in shareholders' equity. Gains and losses on transactions
denominated in other than the functional currency of an operation are
reflected in other income (expense).
Revenue recognition
Revenue from hardware sales is recognized at the time of shipment with a
provision for estimated returns and allowances. Revenue from licensed
software sales is recognized when shipped, with an appropriate deferral
for any undelivered software contract elements, in accordance with
Statement of Position ("SOP") 97-2, "Software Revenue Recognition". This
deferral is earned when significant obligations no longer exist. Revenue
from the installation of products is recognized as the installation of
the product is performed. Service contract revenue is initially recorded
as deferred service revenue and is reflected in operating income on a
pro rata basis over the contract term.
34
35
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
1. Description of business and summary of significant accounting policies,
continued:
Cash equivalents
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined principally by the first-in, first-out method.
Property, plant and equipment
Property, plant and equipment are stated at cost. Maintenance and
repairs are charged to expense as incurred, and the costs of additions
and improvements are capitalized. Depreciation is provided in amounts
which amortize costs over the useful lives of the related assets,
generally three to ten years for equipment and forty years for building
and building improvements, utilizing the straight-line method. Leasehold
improvements are amortized over the terms of the respective leases or
useful lives of the improvements, whichever is shorter.
Internally used computer software is capitalized according to Statement
of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". The costs capitalized are
amortized on a straight-line basis over the estimated life of the
software.
Depreciation expense for fiscal 2001, 2000 and 1999, was $8,053, $6,669
and $6,458, respectively.
Warranties
A majority of the Company's products are under warranty for defects in
material and workmanship for a one-year period. The Company establishes
an accrual for estimated warranty costs at the time of sale.
Capitalized software development costs
Software development costs, for software products to be licensed to
others, incurred prior to establishing technological feasibility are
charged to operations and included in research and development costs.
Software development costs incurred after establishing technological
feasibility, and purchased software costs, are capitalized and amortized
on a product-by-product basis when the product is available for general
release to customers. Annual amortization, charged to cost of sales, is
the greater of the amount computed using the ratio that current gross
revenues for a product bear to the total of current and anticipated
future gross revenues for that product, or the straight-line method over
the remaining estimated economic life of the product. Amortization
expense for fiscal 2001, 2000 and 1999, was $1,766, $3,025 and $2,150,
respectively.
Research and development costs
Expenditures for research and development not capitalized as described
above are charged to operations as incurred.
35
36
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
1. Description of business and summary of significant accounting policies,
continued:
Goodwill and intangible assets
Goodwill represents the excess of purchase price over the fair value of
the net assets of acquired subsidiaries and investees. Goodwill and
intangible assets are stated on the basis of cost and are amortized on a
straight-line basis over their estimated periods of benefit, none of
which exceeds 10 years. Recoverability is assessed whenever adverse
events and changes in circumstances indicate that undiscounted cash
flows previously anticipated warrant reassessment.
Financing costs related to long-term debt
Costs associated with obtaining long-term debt are deferred and
amortized over the term of the related debt.
Advertising costs
Advertising costs are charged to expense as incurred. Advertising
expenses for fiscal 2001, 2000 and 1999, were $3,474, $2,660 and $1,948,
respectively.
Income taxes
Deferred tax liabilities and assets are recognized for the expected
future tax consequences of temporary differences between the carrying
amounts and the tax basis of assets and liabilities.
Net (loss) income per share
Basic net (loss) income per common share is computed by dividing net
(loss) income by the weighted-average number of shares outstanding.
Diluted net (loss) income per share includes the dilutive effect of
stock options.
A reconciliation of the weighted-average number of common shares
outstanding assuming dilution is as follows:
2001 2000 1999
---- -------- --------
Average common shares outstanding 17,377 16,796 16,140
Dilutive effect of outstanding stock options -- 1,096 894
-- ----- ---
Average common shares outstanding assuming dilution 17,377 17,892 17,034
====== ====== ======
As of June 30, 2001, 2,570 stock options were excluded in the above
reconciliation, as these options were anti-dilutive. In fiscal year 2000
and 1999, 414, and 0 stock options were excluded, respectively.
Stock-based compensation
Stock-based compensation is recognized using the intrinsic value method.
For disclosure purposes, pro forma net (loss) income and net (loss)
income per share impacts are provided as if the fair value method had
been applied.
36
37
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
1. Description of business and summary of significant accounting policies,
continued:
Fair value of financial instruments
The carrying amounts of the Company's financial instruments reflected in
the consolidated balance sheet at June 30, 2001 approximate their
respective fair values.
New accounting standards
In June 2001, the Financial Accounting Standards Board voted to adopt
FAS 141, "Business Combinations" and FAS 142, "Goodwill and Other
Intangible Assets." FAS 141 eliminates the pooling of interest method of
accounting for business combinations. The statement also includes
certain transition provisions for intangible assets acquired in a
business combination completed prior to July 1, 2001. The provisions of
the final statement will apply to all business combinations initiated
after June 30, 2001.
FAS 142 will apply to all acquired intangible assets whether acquired
singly, in a group, or in a business combination. Under the new
statement, goodwill will no longer be amortized but will be evaluated
for impairment annually. Goodwill will not be tested for impairment in
accordance with FAS 121, "Accounting for Long-Lived Assets and
Long-Lived Assets to be Disposed of" but will be tested using an
approach prescribed in the statement. The provisions of the final
statement will be applied to fiscal years beginning after December 15,
2001. The Company is currently reviewing the provisions of the
Statement.
In July 2000, the Emerging Issues Task Force issued EITF 00-15,
"Classification in the Statement of Cash Flows of the Income Tax Benefit
Realized by a Company upon Employee Exercise of a Nonqualified Stock
Option". EITF 00-15 states that the income tax benefit realized by the
company upon employee exercise should be classified in the operating
section of the statement of cash flows. The Company has adopted EITF
00-15 as of June 2000. All comparative financial statements have been
restated to reflect the change in classification within the Statements
of Cash Flows from financing activities to operating activities.
In March 2000, the Emerging Issues Task Force issued EITF 00-03,
"Application of Statement of Position 97-2 in Hosting Arrangements". The
software element covered by SOP 97-2 is only present in a hosting
arrangement if the customer has a contractual right to take possession
of the software at any time during the hosting period. Arrangements that
do not give the customer such an option are service contracts outside
the scope of SOP 97-2. This statement will not have an impact on the
Company's consolidated financial position, results of operation or cash
flows.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial
Statements" to provide guidance regarding the recognition, presentation
and disclosure of revenue in the financial statements. In March 2000,
the SEC released SAB 101A, which delayed the implementation date of SAB
101 for registrants with fiscal years that begin between December 16,
1999 and March 15, 2000. Subsequently, the SEC released SAB 101B which
further delays the implementation date of SAB 101 until no later than
the fourth fiscal quarter of fiscal years beginning after December 15,
1999. This statement did not have an impact on the Company's
consolidated financial position, results of operations or cash flows.
Reclassifications
Certain balances have been reclassified to conform to fiscal 2001
presentation.
37
38
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
2. Acquisitions:
In fiscal 2001 and 2000 the Company acquired the stock of nine
companies. The Company also purchased assets and equity interests during
fiscal 2001 and 2000. The most significant acquisitions are described
below:
Indatec
In January 2001, the Company acquired the stock of Indatec GmbH and Co.
KG ("Indatec"). Based in Bernau am Chiemsee, Germany, Indatec is one of
Germany's top developers of point-of-sale solutions for the independent
restaurant industry. Indatec's products include a range of point-of-sale
terminals, peripherals and associated software for independent
restaurants and other catering facilities. The purchase price of DM
10,706 (approximately $5,100 at the exchange rate as of the date of
acquisition) was paid in February 2001. Goodwill related to this
acquisition was DM 11,866 (approximately $5,158 at the exchange rate at
June 30, 2001) at June 30, 2001, and is being amortized over seven
years. The pro forma effects of this acquisition are immaterial and are
not presented.
Hospitality Solutions International
In October 2000, the Company purchased the assets of the hospitality
division of Hospitality Solutions International, Inc. ("HSI"). Based in
Scottsdale, Arizona, HSI's hospitality division is a top developer of
technology solutions for the hospitality industry. HSI's products
include the point-of-service and enterprise systems for restaurants, as
well as hotel management software. The purchase price for the assets of
$3,900 was paid in November 2000. As part of the acquisition, certain
liabilities of HSI were assumed. Goodwill related to this acquisition
was $6,356 at June 30, 2001 and is being amortized over ten years. The
pro forma effects of this acquisition are immaterial and are not
presented.
Frontier Business Technologies, Inc., Frontier infoSystems of North
America, Inc. and Frontier Business Technologies of Canada, Inc.
In June 2000, the Company acquired all of the stock of Frontier Business
Technologies, Inc. ("FBTI"), Frontier infoSystems of North America, Inc.
("FIS") and Frontier Business Technologies of Canada, Inc. ("FBTC"). All
three companies were owned by the same shareholder. The purchase price
for all three companies combined was $1,925, which was accrued in June
2000 and paid in July 2000. The goodwill related to this acquisition was
$2,363 as of June 30, 2001, and is being amortized over seven years.
Additionally, the selling shareholder may earn five earn-out payments
over a 60-month period. The payments, if any, and the amount shall be
determined by an earn-out formula, based on FBTI, FIS and FBTC revenues.
Stanley Hayman and Company, Inc. and Micros of South Florida, Inc.
In December 1999, the Company acquired all of the stock of Stanley
Hayman and Company, Inc. ("Hayman") and Micros of South Florida, Inc.
("MSF"). Hayman and MSF are affiliate companies with substantially
similar shareholders. The purchase price for both companies was $5,000,
which was paid in January 2000. Additional payments of $252, $248 and
$196 were made in July 2000, December 2000, and April 2001,
respectively. The goodwill related to this acquisition was $4,761 as of
June 30, 2001, and is being amortized over seven years. Additionally,
and in consideration for the release of any claims or rights to the six
additional earn-out payments that could have been earned over a 60-month
period, the Company made a final payment to the former shareholders in
the amount of $3,433 in September 2001. The pro forma effects of this
acquisition are immaterial and are not presented.
38
39
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
2. Acquisitions, continued:
OPUS 2 Revenue Technologies, Inc.
In October 1999, the Company acquired all of the stock of OPUS 2 Revenue
Technologies, Inc. ("OPUS"), pursuant to the terms of a stock purchase
agreement. Based in Portsmouth, New Hampshire, OPUS engages in the
development, marketing and sale of yield and revenue management software
systems designed for the hospitality industry. The purchase price of
$4,800 for OPUS consists of an up-front payment of both cash of $3,800
and MICROS stock valued at approximately $1,000. The Company issued
24,510 shares (in whole shares) of restricted common stock to the former
owners. Additional payments of $450 and $2,000 were paid in January 2000
and May 2001, respectively, for the purchase of OPUS. Goodwill related
to this acquisition was $8,230 at June 30, 2001, and is being amortized
over seven years. In addition, the former shareholders have the right to
earn: (i) three earn-out payments based on OPUS revenues, for the three
periods ending 9 months, 21 months (for which no earn-out payment was
due or paid as of June 30, 2000 and 2001, respectively) and 33 months
after the closing of the transaction; and (ii) a performance payment
based on the completion of the development of certain new software,
which was paid in May 2001. The pro forma effects of this acquisition
are immaterial and are not presented herein.
Retail Business Systems, Inc.
In September 1998, the Company acquired all of the stock of Retail
Business Systems, Inc. ("RBS") by exercising its right under a Call
Option Agreement entered into on July 24, 1998. The consideration paid
for this right of $750 was applied to the purchase price under the
purchase agreement. The purchase price for RBS outlined in the purchase
agreement, including exclusivity and earn-out payments, could range from
$750 to $8,000. As of June 30, 2001, $1,750 has been paid under the
purchase agreement. Goodwill related to this acquisition is $1,745 at
June 30, 2001, and is being amortized over five years. The pro forma
effects of this acquisition are immaterial and are not presented herein.
Minority interest
During fiscal 2001, the Company increased its interest in Fidelio India
Private Ltd. from 50% to 100% at no additional cost to the Company.
3. Inventories:
The components of inventories are as follows:
2001 2000
---- ----
Raw materials $3,736 $4,573
Work-in-process 445 576
Finished goods 24,366 29,143
------ ------
$28,547 $34,292
====== ======
39
40
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
4. Property, plant and equipment:
The components of property, plant and equipment are as follows:
2001 2000
---- ----
Buildings and leasehold improvements $2,997 $2,462
Machinery and equipment 6,396 7,293
Furniture and fixtures 12,632 10,706
Computer hardware and software 36,895 33,671
------ ------
58,920 54,132
Accumulated depreciation and amortization (35,367) (29,800)
-------- --------
Net property, plant and equipment $23,553 $24,332
======= =======
5. Line of credit:
The Company currently has a $45.0 million multi-currency committed line
of credit expiring on December 31, 2001. The financing agreement was
amended on April 30, 2001, to include a security interest in inventory
and receivables located in the United States. Prior to this upcoming
expiration date, the Company anticipates that it will renew this line of
credit for an additional one-year period. The Company has the one-time
option to convert the line of credit into a three-year secured term loan
upon expiration of the line of credit. Interest due under the line of
credit will be calculated as follows: (i) in the event the advance is in
U.S. dollars, at the option of the Company, either the bank's prime rate
minus an additional prime rate percentage, or the LIBOR rate plus an
additional LIBOR rate percentage per annum; or (ii) in the event the
advance is made in a currency other than the U.S. dollar, the LIBOR rate
for the applicable denominated currency selected, plus an additional
LIBOR rate percentage per annum. Interest due under the three-year
secured term loan shall be, at the option of the Company, the prime rate
plus one quarter of one percent (0.25%) or the floating LIBOR rate
option. Under the terms of the current loan agreement, the Company may
borrow up to $45.0 million less the amount of outstanding letters of
credit and a fixed amount equal to $1.5 million if the Company enters
into any exchange contracts. As of June 30, 2001, there is a balance
outstanding of US $3.0 million, SEK 3.5 million (approximately $0.3
million at the June 30, 2001 exchange rate) and ZAR 10.6 million
(approximately $1.3 million at the June 30, 2001 exchange rate) under
this line of credit. There is approximately $1.2 million in outstanding
letters of credit as well as outstanding exchange contracts. The
agreement requires the Company to satisfy certain financial covenants.
In addition, the agreement limits the assumption of additional
indebtedness and restricts the Company's payment of dividends other than
stock dividends.
In addition, the Company also has a credit relationship from a European
bank in the amount of DM 15.0 million (approximately $6.5 million at the
June 30, 2001 exchange rate). Under the terms of this facility, the
Company may borrow in the form of either a line of credit or term debt.
Under the credit facility, the Company has a balance of DM 5.0 million
(approximately $2.2 million at the June 30, 2001 exchange rate) in the
form of balloon debt and has no line of credit borrowings (see Note 6
to Consolidated Financial Statements). As the Company has significant
international operations, its DM-denominated borrowings do not represent
a significant foreign exchange risk. On an overall basis, the Company
monitors its cash and debt positions in each currency in an effort to
reduce its foreign exchange risk.
Also, due to an acquisition in January 2001, the Company had a line of
credit from several European banks in the amount of DM 1.6 million
(approximately $0.7 million at the June 30, 2001 exchange rate).
40
41
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
5. Line of credit, continued:
However, the lines were cancelled when the debt was paid in full in
April 2001.
In summary, as of June 30, 2001, the Company has borrowed approximately
$6.8 million, has $1.2 million outstanding in letters of credits, and
has approximately $42.0 million available to borrow. There was a balance
outstanding of US $3.0 million, SEK 3.5 million (approximately $0.3
million at the June 30, 2001 exchange rate) and ZAR 10.6 million
(approximately $1.3 million at the June 30, 2001 exchange rate)
outstanding under the lines of credit. The Company's DM-denominated
borrowings under these credit facilities amounted to DM 5.0 million
(approximately $2.2 million at the June 30, 2001 exchange rate). The
amount available to borrow was also reduced by $1.5 million for exchange
contracts per the amended financing agreement. The weighted average
interest rates for all borrowings above during fiscal year 2001 was
6.98%.
Certain MICROS foreign subsidiaries maintain additional lines of credit,
none of which is considered material.
6. Long-term debt:
The components of long-term debt are as follows:
June 30, 2001
Interest Rates Maturities 2001 2000
-------------- ---------- ---- ----
Balloon loan 4.7% Sep 2001 $2,174 $2,441
Note payable 2.0% Apr 2010 1,091 1,206
Term loans - 2002-2007 - 76
Notes payable 2.9% 2001-2003 31 403
--- ---
3,296 4,126
Less current portion 2,317 397
------ ---
$979 $3,729
==== ======
On September 1, 1998, the Company acquired an additional balloon loan in
the amount of DM 5,000 (approximately $2,174 at the June 30, 2001
exchange rate) from Commerzbank. Under the loan, payments of interest at
a fixed rate of 4.7% are due at the beginning of each quarter, beginning
September 1998, for the next 12 quarters. The full amount of the
principal is due September 28, 2001. The Company used the full proceeds
to reduce its DM-denominated borrowings under the Bank of America line
of credit.
On May 1, 2000, the Company signed a promissory note with the Maryland
Department of Business and Economic Development. The note proceeds were
used to purchase furniture for the new corporate office in Columbia,
Maryland. The loan is for ten years and matures on April 30, 2010. Under
the loan, payments of interest at a fixed rate of 2.0% and principal are
due each quarter. As of June 30, 2001, the outstanding loan balance is
$1.1 million.
41
42
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
6. Long-term debt, continued:
On June 30, 2000, the Company purchased Frontier Business Technologies,
Inc. Due to the acquisition the Company acquired three term loans. The
loans had interest rates of 9.16%, 10.5% and 10.5%. The loans had
maturity dates of December 2002, January 2007 and March 2007. Payments
of principal and interest were made monthly. The loans were paid in full
in September 2000.
The notes payable relate to obligations incurred by the Company in
connection with various strategic acquisitions. They also relate to
notes that were acquired with the acquisition of Frontier Business
Technologies, Inc. and Frontier Business Technologies of Canada, Inc. on
June 30, 2000. As of June 2001, the notes carry an interest rate of
2.9%. Payments of principal and interest are made monthly through April
2003.
Annual maturities of all long-term debt are as follows:
Year ended June 30,
2002 $2,317
2003 139
2004 120
2005 120
2006 and thereafter 600
----------
$3,296
==========
7. Accrued expenses and other current liabilities:
The components of accrued expenses and other current liabilities are as
follows:
2001 2000
---- ----
Compensation and related taxes $11,405 $10,379
Commissions 2,450 4,240
Volume rebates and credits due customers 2,140 3,391
Deposits received from customers 7,691 9,864
VAT and sales taxes 2,236 2,248
Payments due for acquisitions 279 2,025
Accrued payables and other 9,216 7,662
----- -----
35,417 $39,809
====== =======
8. Commitments and contingencies:
Leases
The Company and its subsidiaries lease office space and equipment under
operating leases expiring at various dates through 2015. Rent expense
under these leases for fiscal 2001, 2000 and 1999 was $13,283, $8,433
and $5,329, respectively.
42
43
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
8. Commitments and contingencies, continued:
Future minimum lease commitments at June 30, 2001 for those leases
having an initial or remaining non-cancelable lease term in excess of
one year are as follows:
Operating Capital
Year ending June 30, Leases Leases
-------------------- -------- -------
2002 $9,944 $131
2003 8,296 96
2004 6,896 55
2005 5,150 33
2006 4,055 26
2007 and thereafter 13,864 42
------ --
$48,205 383
=======
Current portion 131
---
Long-term obligation under capital lease $252
====
The Company's worldwide corporate headquarters are located in Columbia,
Maryland. Pursuant to the terms of a 10-year lease agreement (the "Orix
Agreement"), MICROS leases the entire five story structure (and
currently sub-leases one of the five floors), consisting of
approximately 248 thousand square feet, from Orix Columbia, Inc., a
wholly-owned subsidiary of Orix USA Corporation. Included in the above
table, this lease commitment is expected to be approximately $31,000
over the remaining life of the lease. The Orix Agreement provides MICROS
with the right to demand the construction of a new building adjacent to
the new corporate headquarters building, thereby providing MICROS with
expansion space, if subsequently required. MICROS has not exercised that
option as of the date hereof.
Effective August 1, 2001, MICROS leased approximately 76 thousand square
foot facility in Hanover, Maryland as a replacement to its former
warehouse/staging facility in Beltsville, Maryland. The Company
conducts light assembly, manufacturing, repair and configuration in this
facility. The lease expires in July 2009. However, there is a
termination right in July 2006.
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.
9. Stock options:
The Company has incentive and non-qualified stock options outstanding
that were granted to a director, officers, and other employees pursuant
to authorization by the Board of Directors. The exercise price of all
options equals the market value on the date of the grant. Substantially
all of the options granted are exercisable pursuant to a three-year
vesting schedule whereby one-third of the options vest upon the first
anniversary of the grant, the second third of the options vest upon the
second anniversary of the grant, and the final third of the options vest
upon the third anniversary of the grant. All options expire either five
or ten years from the date of grant. As of June 30, 2001, the Company
has 275 authorized options available to grant. The Company applies the
intrinsic value based method of accounting prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," in accounting for the stock option awards. Accordingly, the
Company has not recognized any related compensation expense in the
consolidated statements of operations.
43
44
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
9. Stock options, continued:
The following table summarizes the status of, and changes in, the
Company's stock option plans during the past three years:
Stock Weighted-average Options Weighted-average
Options Exercise Price Exercisable Exercise Price
--------- -------------- ----------- ----------------
Balance, June 30, 1998 2,604 17.92 803 $15.22
Options granted 1,010 26.49
Options canceled (64) 22.24
Options exercised (105) 16.59
-----
Balance, June 30, 1999 3,445 20.40 1,525 $16.92
Options granted 918 46.87
Options canceled (367) 27.28
Options exercised (1,111) 17.21
-------
Balance, June 30, 2000 2,885 $29.17 1,407 $19.75
Options granted 1,060 19.10
Options canceled (301) 33.24
Options exercised (94) 14.05
----
Balance, June 30, 2001 3,550 $26.24 1,906 $25.25
-----
Additional information regarding stock options outstanding at June 30,
2001 is as follows:
Options Outstanding Options Exercisable
---------------------------------- -------------------
Weighted
Average
Weighted Remaining Weighted
Average Contractual Average
Range of Exercise Prices Shares Price Life (in years) Shares Price
------------------------ ------ ----- --------------- ------ ---------
$11.81250 to $16.87500 711 $14.99 6.19 525 $14.64
$17.18750 to $20.84375 935 19.78 8.50 116 20.28
$21.22500 to $26.81250 1,152 24.85 7.01 959 24.64
$27.81250 to $48.87500 717 46.68 8.37 294 47.01
$52.68750 to $56.34375 35 55.10 8.63 12 55.10
-- --
$11.81250 to $56.34375 3,550 26.24 7.53 1,906 25.25
===== =====
SFAS No. 123, "Accounting for Stock-Based Compensation," requires the
Company to make certain disclosures as if the fair value based method of
accounting had been applied to the Company's stock option grants made
subsequent to fiscal 1995. Accordingly, the Company estimated the
grant-date fair value of each option awarded in fiscal years 2001, 2000
and 1999 using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
2001 2000 1999
-------- -------- --------
Risk-free interest rate 5.6% 6.1% 4.8%
Expected life 5.2 years 5.8 years 7.0 years
Expected volatility 55% 52% 47%
Expected dividend yield 0% 0% 0%
44
45
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
9. Stock options, continued:
Had fiscal 2001, 2000 and 1999 compensation cost been determined
including the weighted-average estimate of the fair value of each option
granted of $10.35, $26.14 and $14.71 in fiscal 2001, 2000 and 1999,
respectively, the Company's net income would be reduced to pro forma
amounts as follows:
Year ended June 30,
-------------------
2001 2000 1999
-------- ---------- --------
Net (loss) income
As reported $(704) $16,204 $27,294
Pro forma $(9,616) $6,803 $19,666
Basic net (loss) income per share
As reported $(0.04) $0.96 $1.69
Pro forma $(0.55) $0.41 $1.22
Diluted net (loss) income per
share
As reported $(0.04) $0.91 $1.60
Pro forma $(0.55) $0.38 $1.15
10. Income taxes:
Pretax accounting income for the years ended June 30 was taxed under the
following jurisdictions:
2001 2000 1999
--------- -------- ---------
United States $(19,382) $(761) $18,083
Non-U.S. 19,616 29,399 29,238
-------- ------ ------
$234 $28,638 $47,321
==== ======= =======
The components of income tax expense are:
2001 2000 1999
-------- ------- --------
Current:
Federal - $(581) $5,692
State 364 370 584
Foreign 10,147 12,651 11,369
------ ------ ------
10,511 12,440 17,645
------ ------ ------
Deferred:
Federal (8,762) (339) 461
State - (22) 87
Foreign (1,066) (552) 1,114
------- ----- -----
(9,828) (913) 1,662
------- ----- -----
$683 $11,527 $19,307
==== ======= =======
The total tax provision is different from the amount that would have
been recorded by applying the U.S. statutory federal income tax rate to
income before taxes. The reconciliation of these differences is as
follows:
45
46
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
10. Income taxes, continued:
2001 2000 1999
---- ---- ----
At statutory rate 35.0% 35.0% 35.0%
Increase (decrease) resulting from:
U.S. federal surtax reduction -- -- (0.2)
State taxes, net of federal tax benefit (434.7) (0.1) 1.0
Research tax credits (2,563.9) (1.3) (1.1)
Foreign Sales Corporation tax benefit -- -- (1.6)
Effect of tax rates in foreign jurisdictions 419.7 6.7 4.8
Permanent differences 2,835.8 (0.3) 1.7
Other -- 0.3 1.2
-- --- ---
Effective tax rate 291.9% 40.3% 40.8%
====== ===== =====
Appropriate U.S. taxes have been provided for earnings of subsidiary
companies that are expected to be remitted to the parent company. The
cumulative amount of unremitted earnings from international subsidiaries
that is expected to be indefinitely reinvested is approximately $48,289
and $43,732 at June 30, 2001 and 2000 respectively.
The following summarizes the significant components of the Company's
deferred tax assets and liabilities:
2001 2000
-------- --------
Bad debt $1,802 $2,729
Accruals not currently deductible for tax 4,047 4,036
Inventory 1,328 1,297
Net operating loss carryforwards 12,890 13,218
Tax credit carryforward 6,170 187
Purchased in-development software technology write-off 4,006 4,555
Other 1,599 879
----- ---
Total deferred tax assets 31,842 26,901
------ ------
Depreciation (657) (333)
Capitalized software development costs (13,276) (10,828)
Other (827) (452)
----- -----
Total deferred tax liabilities (14,760) (11,613)
-------- --------
Net operating loss carryforward valuation
allowance (1,314) (1,486)
------- -------
Net deferred tax asset $15,768 $13,802
======= =======
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. At June 30, 2001 and 2000, the Company had potential tax
benefits of $12,890 and $13,218, respectively, related to U.S. and
foreign net operating loss carryforwards for income tax purposes.
The tax losses and tax credit carryforwards (if not utilized against
taxable income) expire beginning 2005 with many having an indefinite
expiration. A valuation allowance of $1,314 and $1,486 has been provided
at June 30, 2001 and 2000, respectively, to offset the related deferred
tax assets due to uncertainty of realizing the benefit of the loss
carryforwards and tax credits.
46
47
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
11. Other (expense) income, net:
Other (expense) income is comprised of the following items:
2001 2000 1999
-------- -------- --------
Foreign exchange (loss) gain, net $(1,213) $(691) $1,047
Gain on sale of investment -- -- --
Gain on sale of land & building -- -- 137
Loss on cost invesment (1,200) -- --
Other, net (1,397) (420) (494)
-------- -------- --------
Total other (expense) income, net $(3,810) $(1,111) $690
======== ======== ====
12. Related party transactions:
During fiscal 2001 and 2000, the Company compensated Louis M. Brown,
Jr., Vice-Chairman of the Board, $209 and $255, respectively, for
consulting services provided to the Company. Effective June 30, 1995,
and amended February 1, 1999, and April 26, 2001, the Company and Mr.
Brown entered into a Consulting Agreement terminating June 30, 2005,
pursuant to which Mr. Brown is to provide, on the average, 20 hours per
week of consulting services to the Company in exchange for a base
consulting fee plus a target bonus.
13. Employee benefit plan:
The Company sponsors an employee savings plan, which conforms to the
provisions of Section 401(k) of the Internal Revenue Code. The Plan
covers substantially all full-time employees in the United States and
allows employees to voluntarily defer a certain percentage of their
income through contributions to the Plan. The Plan for corporate
employees matches fifty percent of the first five percent of each
participating employee's voluntary contributions. Furthermore, the
Company may elect to make additional contributions, at its discretion.
Due to the acquisitions in fiscal 2000 there remain two small additional
401(k) plans within the United States. The Company plans to consolidate
the plans and combine them into the corporate plan within the next
fiscal year. Company contributions made during the years ended June 30,
2001, 2000 and 1999 totaled $1,048, $850 and $725, respectively.
The Company does not have any material obligations to past or present
employees related to post employment benefits.
47
48
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
14. Segment reporting data:
The Company develops, manufactures, sells and services point-of-sale
computer systems, property management systems, central reservation and
central information systems products for the hospitality industry.
MICROS is organized and operates in two segments: U.S. and
International. The International segment is primarily in Europe, the
Pacific Rim and Latin America. For purposes of applying SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information",
management views the U.S. and International segments separately in
operating the business,although the products and services are similar
for each segment.
A summary of the Company's operating segments is as follows:
Year Ended June 30,
---------------------------------------------
2001 2000 1999
--------- --------- ---------
Revenues (1):
United States $185,618 $179,335 $170,294
International 185,297 230,288 208,419
Intersegment eliminations (45,521) (49,972) (43,619)
-------- -------- --------
Total revenues $325,394 $359,651 $335,094
======== ======== ========
Income before taxes, minority
interests, equity in net
earnings of
affiliates (1):
United States $(17,944) $(3,561) $13,648
International 44,705 65,259 62,927
Intersegment eliminations (26,527) (33,060) (29,254)
-------- -------- --------
Total income before taxes
minority interests, equity
in net earnings of affiliates $234 $28,638 $47,321
==== ======= =======
Identifiable assets (2):
United States $145,568 $158,552 $122,588
International 128,888 120,425 109,542
Intersegment eliminations -- -- --
-- -- --
Total identifiable assets $274,456 $278,977 $232,130
======== ======== ========
Capital expenditures (2):
United States $4,955 $8,489 $4,357
International 3,101 5,151 1,847
Intersegment eliminations -- -- --
-- -- --
Total capital expenditures $8,056 $13,640 $6,204
====== ======= ======
Depreciation and amortization (2):
United States $8,874 $6,535 $5,370
International 5,445 4,705 4,482
Intersegment eliminations -- -- --
-- -- --
Total depreciation and amortization $14,319 $11,240 $9,852
======= ======= ======
(1) Amounts based on the location of the customer.
(2) Amounts based on the location of the selling entity.
48
49
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
14. Segment reporting data, continued:
MICROS products are distributed in the U.S. and internationally,
primarily in Europe, the Pacific Rim and Latin America, through
subsidiaries, independent Dealers/Distributors and Company-owned sales
and service offices. The Company's principal customers are lodging, food
service-related businesses, and entertainment venues. No single customer
accounts for 10% or more of the Company's consolidated revenues.
Geographic revenue information for the three years ended June 2001 is
based on the location of the selling entity. Long-lived assets shown by
geographic location represent property, plant, and equipment and are
based on the physical location of the assets at the end of each fiscal
year. Substantially all intangible assets do not have a physical or
geographic location; therefore, intangible assets are not included
below.
Revenues from unaffiliated customers by geographic location are as
follows:
2001 2000 1999
--------- --------- ---------
United States $174,555 $175,759 $169,222
International 150,839 183,892 165,872
------- ------- -------
Net revenue $325,394 $359,651 $335,094
======== ======== ========
Significant countries included above:
Germany $53,114 $45,709 $50,559
United Kingdom 22,043 30,441 24,439
Australia 11,167 12,972 5,244
France 4,322 11,151 11,640
Long-lived assets by geographic location are as follows:
2001 2000 1999
--------- --------- ---------
United States $17,099 $16,468 $12,211
International 6,453 7,864 3,476
----- ----- -----
Total long-lived assets $23,552 $24,332 $15,687
======= ======= =======
Significant countries included above:
Sweden $1,852 $2,229 $174
Germany 1,136 1,356 866
United Kingdom 486 616 338
France 148 175 93
49
50
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
15. Quarterly financial information (unaudited):
Quarterly financial information for fiscal 2001 and 2000 is presented in
the following tables:
First Second Third Fourth
2001 Quarter Quarter Quarter Quarter
---- ------- ------- ------- -------
Revenue $74,009 $80,097 $81,134 $90,154
======= ======= ======= =======
Gross margin $35,865 $40,335 $40,993 $46,835
======= ======= ======= =======
Income (loss) from operations ($1,510) $61 $272 $5,176
======== === ==== ======
Net income (loss) ($919) ($964) $69 $1,110
====== ====== === ======
Basic net income (loss) per common
share ($0.05) ($0.06) $0.00 $0.06
======= ======= ===== =====
Diluted net income (loss) per common
share ($0.05) ($0.06) $0.00 $0.06
======= ======= ===== =====
Stock Prices (in dollars)
-------------------------
High 26.00 23.50 21.94 24.68
Low 14.69 14.88 16.31 16.81
================================================================================
First Second Third Fourth
2000 Quarter Quarter Quarter Quarter
---- ------- ------- ------- -------
Revenue $87,427 $102,749 $91,953 $77,522
======= ======== ======= =======
Gross margin $41,308 $49,504 $51,962 $31,778
======= ======= ======= =======
Income (loss) from operations $10,009 $14,749 $16,979 $(12,267)
======= ======= ======= =========
Net income (loss) $5,138 $8,570 $10,224 $(7,728)
====== ====== ======= ========
Basic net income (loss) per common
share $0.32 $0.52 $0.60 $(0.45)
===== ===== ===== =======
Diluted net income (loss) per common
share $0.30 $0.48 $0.56 $(0.45)
===== ===== ===== =======
Stock Prices (in dollars)
-------------------------
High 40.50 76.25 67.75 56.19
Low 32.50 38.88 51.09 15.75
================================================================================
The Company has never paid a cash dividend. Its current policy is to retain
earnings and use funds for the operation and expansion of its business. In
addition, certain indebtedness restricts the amount of cash dividends which may
be payable.
50
51
MICROS SYSTEMS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
for the years ended June 30, 2001, 2000 and 1999 (in thousands)
Balance at Charged Balance
beginning to at end
Description of period expenses Deductions Other (1) of period
-------------------------- ------------ ---------- ----------- --------- ---------
Year ended June 30, 2001:
Allowance for doubtful
accounts $7,791 $4,198 $4,010 $(471) $7,508
Reserve for inventory
obsolescence 3,799 614 530 (2) 353 4,236
----- --- --- --- -----
$11,590 $4,812 $4,540 $(118) $11,744
======= ====== ====== ====== =======
Year ended June 30, 2000:
Allowance for doubtful
accounts $3,618 $5,646 $1,260 $(213) $7,791
Reserve for inventory
obsolescence 4,289 1,816 2,301 (2) (5) 3,799
----- ----- ----- --- -----
$7,907 $7,462 $3,561 $(218) $11,590
====== ====== ====== ====== =======
Year ended June 30, 1999:
Allowance for doubtful
accounts $2,298 $2,577 $633 $(624) $3,618
Reserve for inventory
obsolescence 2,099 2,870 834 (2) 154 4,289
----- ----- --- --- -----
$4,397 $5,447 $1,467 $(470) $7,907
====== ====== ====== ====== ======
(1) Primarily related to foreign currency translation.
(2) Material scrapped or otherwise disposed.
51
52
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: 9-28-01 By: /s/ GARY C. KAUFMAN
------- -----------------------
Gary C. Kaufman
Executive Vice President,
Finance and
Administration/Chief Financial
Officer
Date: 9-28-01 By: /s/ CYNTHIA A. RUSSO
------- ------------------------
Cynthia A. Russo
Vice President and Corporate
Controller
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 and on the dates indicated.
Name Title
----------------------- ----------------------------
/s/ A. L. GIANNOPOULOS Chairman, President and 9-28-01
------------------------ Chief Executive Officer -------
A. L. Giannopoulos
/s/ GARY C. KAUFMAN Executive Vice President 9-28-01
------------------------ Finance and Administration -------
Gary C. Kaufman Chief Financial Officer
/s/ LOUIS M. BROWN, JR. Director and 9-28-01
------------------------ Vice Chairman of the Board -------
Louis M. Brown, Jr.
/s/ F. SUZANNE JENNICHES Director 9-28-01
------------------------ -------
F. Suzanne Jenniches
/s/ JOHN G. PUENTE Director 9-28-01
---------------------- -------
John G. Puente
/s/ DWIGHT S. TAYLOR Director 9-28-01
------------------------ -------
Dwight S. Taylor
/s/ WILLIAM S. WATSON Director 9-28-01
------------------------ -------
William S. Watson
52
53
EXHIBIT INDEX
3(i). Articles of Incorporation of the Company are incorporated
herein by reference to Exhibit 3 to the Annual Report on Form
10-K of the Company for the Fiscal Year ended June 30, 1990.
3(i)(a). Articles of Amendment to Articles of Incorporation are
incorporated herein by reference to Exhibit 3(i) to the
Quarterly Report on Form 10-Q of the Company for the period
ended December 31, 1997.
3(i)(b). Articles of Amendment to Articles of Incorporation are
incorporated herein by reference to Exhibit 3(i) to the
Quarterly Report on Form 10-Q of the Company for the period
ended December 31, 1998.
3(ii). By-laws of the Company as in effect on the date hereof is
incorporated herein by reference to Exhibit 3 to the Annual
Report on Form 10-K of the Company for the Fiscal Year ended
June 30, 1990.
10a1. Amendment and Restatement of MICROS Systems, Inc. Stock Option
Plan is incorporated herein by reference to Exhibit 4.1 to the
Registration Statement on Form S-8 of the Company filed on
February 16, 1990.
10a2. First Amendment to the Amendment and Restatement of MICROS
Systems, Inc. Stock Option Plan constituting Exhibit 10a1
hereto is incorporated herein by reference to Exhibit 4.2 to
the Registration Statement on Form S-8 of
the Company filed on February 16, 1990.
10b1. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1993 Annual Meeting of
Shareholders.
10b2. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1995 Annual Meeting of
Shareholders.
10b3. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1996 Annual Meeting of
Shareholders.
10b4. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1997 Annual Meeting of
Shareholders.
10b5. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1998 Annual Meeting of
Shareholders.
10b6. MICROS Systems, Inc. 1991 Stock Option Plan as amended, is
incorporated herein by reference to Exhibit A to the Proxy
Statement of the Company for the 1999 Annual Meeting of
Shareholders.
10c. Underwriting Agreement dated July 6, 1995 by and among MICROS
Systems, Inc., Westinghouse Electric Corporation, Westinghouse
Holdings Corporation, J.P. Morgan Securities, Inc., Morgan
Stanley & Co. Incorporated and Smith Barney, Inc. is
incorporated herein by reference to Exhibit 10d to the Annual
Report on Form 10-K of the Company for the Fiscal Year ended
June 30, 1995.
10d. Employment Agreement dated June 1, 1995 between MICROS Systems,
Inc. and A. L.
53
54
Giannopoulos is incorporated herein by reference to Exhibit 10e
to the Annual Report on Form 10-K of the Company for the Fiscal
Year ended June 30, 1995.
10e. First Amendment to Employment Agreement dated February 6, 1997
between MICROS Systems, Inc. and A. L. Giannopoulos is
incorporated herein by reference to Exhibit 10 to the Quarterly
Report on Form 10-Q of the Company for the period ended
December 31, 1996.
10f. Second Amendment to Employment Agreement dated February 1,
1998 between MICROS Systems, Inc. and A. L. Giannopoulos is
incorporated herein by reference to Exhibit 10 to the
Quarterly Report on Form 10-Q of the Company for the period
ended December 31, 1997.
10g. Third Amendment to Employment Agreement dated September 8,
1999 between MICROS Systems, Inc. and A. L. Giannopoulos is
incorporated herein by reference to Exhibit 10g to the Annual
Report on Form 10-K of the Company for the Fiscal Year ended
June 30, 1999.
10h. Consulting Agreement dated June 30, 1995 between MICROS
Systems, Inc. and Louis M. Brown, Jr. is incorporated herein
by reference to Exhibit 10 to the Annual Report on Form 10-K
of the Company for the Fiscal Year ended June 30, 1995.
10i. First Amendment to Consulting Agreement dated February 1, 1999
between MICROS Systems, Inc. and Louis M. Brown, Jr. is
incorporated herein by reference to Exhibit 10 to the
Quarterly Report on Form 10-Q of the Company for the period
ended December 31, 1998.
10j. Second Amendment to Consulting Agreement dated April 26, 2001
between MICROS Systems, Inc. and Louis M. Brown, Jr. is
incorporated herein by reference to Exhibit 10 to the Quarterly
Report on Form 10-Q of the Company for the period ended March
31, 2001.
10k. MICROS Systems, Inc. Bonus and Incentive Plan is incorporated
herein by reference to Exhibit 10 to the Quarterly Report on
Form 10-Q of the Company for the period ended September 30,
1994.
10l. Employment Agreement dated May 28, 1997 between MICROS Systems,
Inc. and Gary C. Kaufman is incorporated herein by reference to
Exhibit 10 to the Annual Report on Form 10-K of the Company for
the Fiscal Year ended June
30, 1997.
10m. First Amendment to Employment Agreement dated October 1, 1998
between MICROS Systems, Inc. and Gary C. Kaufman is
incorporated herein by reference to Exhibit 10 to the Quarterly
Report on Form 10-Q of the Company for the period ended
December 31, 1998.
10n. Employment Agreement dated May 28, 1997 between MICROS Systems,
Inc. and Thomas L. Patz is incorporated herein by reference to
Exhibit 10 to the Annual Report on Form 10-K of the Company for
the Fiscal Year ended June 30, 1997 (see 10l above)
10o. First Amendment to Employment Agreement dated October 1, 1998
between MICROS Systems, Inc. and Thomas L. Patz is incorporated
herein by reference to Exhibit 10 to the Quarterly Report on
Form 10-Q of the Company for the period ended December 31, 1998
(see 10m above).
21. Subsidiaries of the Company.
23. Consent of Independent Accountants.
54
EX-21
3
w53571ex21.txt
SUBSIDIARIES OF THE COMPANY
1
EXHIBIT 21 - SUBSIDIARIES
MICROS SYSTEMS, INC. SUBSIDIARIES
Jurisdiction
Of
Name of Subsidiary Incorporation
------------------ -------------
Hospitality Technologies, S.A. Argentina
HotelBANK Asia Pacific Pty Ltd. Australia
MICROS-Fidelio Australia Pty Ltd. Australia
MICROS Foreign Sales Corporation Barbados
Merchants Information Solutions, Ltd. Canada
MICROS-Fidelio Information Systems
(Shanghai) Co. Ltd. China
Fidelio Software (China) Ltd. China
MSI Delaware, Inc. Delaware
MICROS-Fidelio Software Deutschland GmbH Federal Republic of Germany
MICROS Systems Holding GmbH Federal Republic of Germany
Fidelio Cruise GmbH Federal Republic of Germany
MICROS-Fidelio Software GmbH & Co.KG Federal Republic of Germany
Indatec GmbH and Co.KG Federal Republic of Germany
Fidelio Nordic Oy Finland
Fidelio Cruise, Inc. Florida
MICROS-Fidelio France, S.A. France
Fidelio Software Ltd. Hong Kong
Fidelio India Private Ltd. India
MICROS-Fidelio Italia S.r.l. Italy
MICROS-Fidelio Japan Ltd. Japan
MICROS-Fidelio Southeast, Inc. Maryland
MICROS-Fidelio Mexico S.A. de C.V. Mexico
MICROS-Fidelio Worldwide, Inc. Nevada
OPUS 2 Revenue Technologies, Inc. New Hampshire
Micros-Fidelio Direct North/Central, Inc. New York
Fidelio Nordic Norway A/S Norway
MICROS-Fidelio Software Portugal, ULDA Portugal
MICROS-Fidelio Singapore Pte Ltd. Singapore
MICROS Fidelio South Africa (Pty) Ltd. South Africa
MICROS-Fidelio Hispania S.L. Spain
Fidelio Nordic Sweden A.B. Sweden
Hotelbk A.B. Sweden
MICROS-Fidelio Software (Thailand) Co. Ltd. Thailand
MICROS-Fidelio U.K. Ltd. United Kingdom
The Company has additional subsidiaries, which considered in the aggregate as a
single subsidiary, do not constitute a significant subsidiary.
55
EX-23
4
w53571ex23.txt
CONSENT OF INDEPENDENT ACCOUNTANTS
1
EXHIBIT 23 - CONSENT OF INDEPENDENT ACCOUNTANTS
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (No. 333-95615, No. 333-17725, No. 333-05125, No.
33-69782, No. 33-44481, No. 33-33535, No.333-52844, and No. 333-55816) of MICROS
Systems, Inc. of our report dated August 28, 2001 relating to the financial
statements and financial statement schedule, which appear in this Form 10K.
PricewaterhouseCoopers LLP
McLean, Virginia
September 27, 2001
56