-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FfFYfQVPYzuJFVqEghPYiJ00x2+4zHGLqnwRDiKVZB9T4g7cj1ROuh2NUEQysPNi Ht3f17Dq8YMYRqZWNmkXzA== 0000950133-96-000119.txt : 19960216 0000950133-96-000119.hdr.sgml : 19960216 ACCESSION NUMBER: 0000950133-96-000119 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICROS SYSTEMS INC CENTRAL INDEX KEY: 0000320345 STANDARD INDUSTRIAL CLASSIFICATION: CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS) [3578] IRS NUMBER: 521101488 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09993 FILM NUMBER: 96520369 BUSINESS ADDRESS: STREET 1: 12000 BALTIMORE AVE CITY: BELTSVILLE STATE: MD ZIP: 20705 BUSINESS PHONE: 3012016000 MAIL ADDRESS: STREET 1: 12000 BALTIMORE AVE CITY: BELTSVILLE STATE: MD ZIP: 20705-1291 10-Q 1 MICROS SYSTEMS 10-Q FOR QUARTER ENDED 12/31/95 1 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended December 31,1995 Commission file number 0-9993 MICROS SYSTEMS, INC. -------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) MARYLAND 52-1101488 - ----------------------------------------------------------------- (State of incorporation) (I.R.S. Employer Identification Number)
12000 Baltimore Avenue, Beltsville, Maryland 20705-1291 - ----------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: 301-210-6000 ------------ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such report(s)), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ----- ----- As of December 31, 1995, there were 7,890,780 shares of Common Stock, $.025 par value, outstanding. 1 2 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended December 31, 1995 PART I - Financial Information Item 1. Financial Statements. General The information contained in this report is furnished for the Registrant, MICROS Systems, Inc., and its subsidiaries (referred to collectively herein as "MICROS" or the "Company"). In the opinion of management, the information in this report contains all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the results for the interim periods presented. The financial information has been reviewed by the Company's independent accountants, Price Waterhouse LLP, and a copy of its report is attached. The financial information presented herein should be read in conjunction with the financial statements included in the Registrant's Form 10-K for the fiscal year ended June 30, 1995, as filed with the Securities and Exchange Commission. With respect to the unaudited consolidated financial information for the three and six month periods ended December 31, 1995 and 1994, Price Waterhouse LLP has reported that it has applied limited procedures in accordance with professional standards for a review of such information. However, its report dated February 13, 1996, appearing herein, states that it did not audit and it does not express an opinion on that unaudited consolidated financial information. Price Waterhouse LLP has not carried out any significant or additional audit tests beyond those which would have been necessary if its report had not been included. Accordingly, the degree of reliance on its reports on such information should be restricted in light of the limited nature of the review procedures applied. Price Waterhouse LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for its report on the unaudited consolidated financial information because such report is not a "report" within the meaning of Sections 7 and 11 of the Securities Act of 1933. 2 3 MICROS SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ($ in thousands)
December 31, June 30, 1995 1995 -------- --------- (Unaudited) ASSETS - ------ Current assets: Cash and cash equivalents $7,930 $23,215 Short term investments - 3,170 Accounts receivable, net of allowance for doubtful accounts of $1,569 at December 31, 1995 and $1,229 at June 30, 1995 46,063 25,185 Inventories 18,492 11,344 Deferred income taxes, current 1,890 1,890 Prepaid expenses and other current assets 6,303 1,820 ----- ------- Total current assets 80,678 66,624 ------ ------- Property, plant and equipment, at cost 26,968 17,512 Accumulated depreciation and amortization (12,653) (7,350) ------- ------- Net property, plant and equipment 14,315 10,162 ------- ------- Note receivable - 649 Deferred income taxes, non current 6,647 Investments in affiliates, including related goodwill 23,729 8,509 Capitalized computer software development costs, net of accumulated amortization of $2,495 at December 31, 1995 and $1,684 at June 30, 1995. 4,960 1,544 Goodwill and district intangible assets, net of accumulated amortization of $881 at December 31, 1995 and $708 at June 30, 1995 1,546 1,719 Other assets 498 437 -------- ------- Total assets $132,373 $89,644 ======== =======
The accompanying notes are an integral part of the consolidated financial statements. 3 4 MICROS SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ($ in thousands)
December 31, June 30, 1995 1995 -------------- ------------- (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Bank lines of credit $27,141 - Current portion of long-term debt and capital lease obligation 1,417 $ 363 Accounts payable 10,210 8,505 Accrued expenses and other current liabilities 23,430 16,215 Income taxes payable 3,507 361 Deferred service revenue 3,755 4,151 ------- ------- Total current liabilities 69,460 29,595 ------- ------- Long-term debt, net of current portion 5,004 1,669 Capital lease obligation, net of current portion 3,524 3,582 Deferred income taxes payable 933 933 Minority interests 1,015 415 ------- ------- Total liabilities 79,936 36,194 ------- ------- Shareholders' equity: Common stock, $.025 par value; authorized 10,000,000 shares; issued and outstanding 7,890,780 shares at December 31, 1995 and 7,859,095 shares at June 30, 1995 197 196 Capital in excess of par 15,155 14,883 Retained earnings 35,568 37,402 Accumulated foreign currency translation adjustments 1,517 969 ------- ------- Total shareholders' equity 52,437 53,450 ------- ------- Total liabilities and shareholders' equity $132,373 $89,644 ======== =======
The accompanying notes are an integral part of the consolidated financial statements. 4 5 MICROS SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited - in thousands, except per share data)
Three Months Ended --------------------------------- December 31, December 31, 1995 1994 -------- -------- Revenue: Hardware and related software $29,646 $20,858 Service 13,242 6,264 ------- ------- Total revenue 42,888 27,122 Costs and expenses: Cost of sales Hardware and related software 16,207 11,026 Service 5,491 2,748 ------- ------- Total cost of sales 21,698 13,774 Selling, general and administrative expenses 13,293 7,308 Research and development expenses 1,673 1,215 Purchased incomplete software technology 14,770 - Depreciation and amortization 867 358 ------- ------- Total costs and expenses 52,301 22,655 ------- ------- Income (loss) from operations (9,413) 4,467 Non-operating income (expense): Interest income 263 220 Interest expense (365) (107) Other income (expense), net 46 (128) ------- -------- Income (loss) before taxes and equity in net earnings of affiliates (9,469) 4,452 Income taxes (benefit) (4,575) 1,570 ------- ------- Income (loss) before equity in net earnings of affiliates (4,894) 2,882 Equity in net earnings (loss) of affiliates (194) (2) -------- -------- Net income (loss) $(5,088) $ 2,880 ======== ======= Net income (loss) per common and common equivalent share $ (0.63) $ 0.36 ======== ======= Weighted-average number of common and common equivalent shares outstanding 8,015 7,957 ======== =======
The accompanying notes are an integral part of the consolidated financial statements. 5 6 MICROS SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited - in thousands, except per share data)
Six Months Ended --------------------------------- December 31, December 31, 1995 1994 -------- -------- Revenue: Hardware and related software $54,410 $40,141 Service 20,838 11,455 ------- ------- Total revenue 75,248 51,596 Costs and expenses: Cost of sales Hardware and related software 28,950 20,752 Service 9,147 5,103 ------- ------- Total cost of sales 38,097 25,855 Selling, general and administrative expenses 22,853 14,291 Research and development expenses 3,041 2,177 Purchased incomplete software technology 14,770 - Depreciation and amortization 1,386 702 ------- ------- Total costs and expenses 80,147 43,025 ------- ------- Income (loss) from operations (4,899) 8,571 Non-operating income (expense): Interest income 602 481 Interest expense (453) (191) Other income (expense), net (128) 131 ------- ------- Income (loss) before taxes and equity in net earnings of affiliates (4,878) 8,992 Income taxes (benefit) (2,948) 3,078 ------- ------- Income (loss) before equity in net earnings of affiliates (1,930) 5,914 Equity in net earnings of affiliates 96 2 -------- -------- Net income (loss) $ (1,834) $ 5,916 ========= ======== Net income (loss) per common and common equivalent share $ (0.23) $ 0.74 ========= ======== Weighted-average number of common and common equivalent shares outstanding 7,998 7,950 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 6 7 MICROS SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed and unaudited - $ in thousands)
Six Months Ended --------------------------------- December 31, December 31, 1995 1994 -------- -------- Net cash flows provided by (used in) operating activities $(8,854) $ 3,092 -------- ------- Cash flows from investing activities: Purchases of property, plant and equipment (2,472) (1,395) Capitalized software development costs (430) - Sale of short term investments 3,170 - Dividends received from affiliates 581 210 Purchase of affiliates, net of cash received (27,036) - Purchase of equity interest in investees - (3,418) Proceeds from loan to investee - 3,223 Loan to affiliate (2,347) (605) ------- ------- Net cash used in investing activities (28,534) (1,985) ------- ------- Cash flows from financing activities: Proceeds from issuance of stock 273 615 Principal payments on long-term debt (214) (227) Proceeds from line of credit and long term debt 22,044 - ------- ------ Net cash provided by financing activities 22,103 388 -------- ------ Net (decrease) increase in cash and cash equivalents (15,285) 1,495 Cash and cash equivalents at beginning of period 23,215 16,339 ------- ------- Cash and cash equivalents at end of period $ 7,930 $17,834 ======= ======= Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 337 $ 204 ======= ======= Income taxes $ 3,244 $ 3,380 ======= =======
Supplemental schedule of non-cash financing and investing activities: In August 1995, the Company purchased the remaining 77% of D.A.C. Systemes/MICROS France and AD-Maintenance Informatique ("ADMI") for FF 14.0 million (approximately $2.8 million at exchange rates in effect at the date of purchase), payable FF 8.0 million at closing and FF 6.0 million over the next four years, plus potential additional payments based on earnings over the next four years. The accompanying notes are an integral part of the consolidated financial statements. 7 8 MICROS SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS six months ended December 31, 1995 (unaudited) 1. Inventories The components of inventories are as follows (in thousands):
December 31, June 30, 1995 1995 ------------ ------------ Raw materials $ 3,874 $ 2,534 Work-in-process 3,121 2,785 Finished goods 11,497 6,025 ------------ ------------ $ 18,492 $ 11,344 ============ ============
2. Purchase of Fidelio Software GmbH On November 30, 1995, the Company acquired the remaining 70% of Fidelio Software GmbH ("Fidelio") for $28.5 million in a transaction which has been accounted for under the purchase method (the acquisition). In fiscal 1993, 15% of the capital stock of Fidelio had been acquired and an additional 15% in October 1994; the carrying value of this 30% investment at the date of the acquisition was $7.7 million. The Company engaged a nationally recognized, independent appraisal firm to express an opinion on the fair market value of the Fidelio assets acquired to serve as a basis for allocation of the purchase price for the remaining 70% to various classes of assets. The appraisal included identifiable intangible assets as well as software technology. After the Company's allocation of the purchase price for the acquisition, including $1.7 million of acquisition liabilities incurred, and elimination of the carrying value of the initial 30% investment, Fidelio's assets and liabilities were recorded on a consolidated basis at the date of acquisition (in millions): Tangible net assets (liabilities) $(3.2) Identifiable intangible assets 2.0 Current software products 3.8 Purchased incomplete software technology 14.8 Goodwill (excess of purchase price over fair value of net assets acquired) 20.5 ----- $37.9 =====
The tangible net assets (liabilities) consist primarily of cash, accounts receivable, inventory, property and equipment and liabilities assumed. The identifiable intangible assets are being amortized on a straight-line basis over periods ranging from seven to nine years. All goodwill related to Fidelio, including approximately $5 million remaining from the initial 30% purchase, is being amortized over nine years. The software technology valuation was accomplished through the application of an income approach. Projected debt-free income, revenue net of provision for operating expenses, income taxes and returns on requisite assets were discounted to a present value. This approach was used for each of the Fidelio product lines. Software technology was divided into two categories: 1. "Current products", representing software products currently in the marketplace as of the acquisition date, and software still in the development stage and technologically feasible. 8 9 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended December 31, 1995 PART I - Financial Information 2. "Purchased incomplete software technology", representing products still in the development stage but not considered to have reached technological feasibility. The fair market value of the purchased current products was determined to be $3.8 million. This amount was recorded as an asset and is being amortized over a maximum of four years based on the greater of the ratio of the current gross revenues from the product bear to the total of current and anticipated future gross revenues for that product or straight-line amortization. Purchased incomplete software technology included the value of products still in the development stage and not considered to have reached the technological feasibility stage. As a result of the valuation, the fair market value of the purchased incomplete software technology was determined to be $14.8 million. In accordance with the applicable accounting rules, this amount was expensed upon acquisition in the second quarter of fiscal 1996. Unaudited proforma information for the six-month periods ended December 31, 1995 and 1994, as if the acquisition had occurred on the first day of those periods, but excluding the one-time write-off of the purchased incomplete software technology discussed above, is shown below. Such proforma information also reflects the proforma effects of Fidelio's acquisition of 100% of the common stock of Executive Technologies of South Florida, Inc. in October 1995 for $4 million.
Six Months Ended December 31, ---------------------------- 1995 1994 ---- ---- ($ in thousands, except per share data) Revenue $99,910 $72,770 Net Income 6,055 5,987 Net income per share 0.76 0.75
3. Line of Credit The Company has a $25.0 million multi-currency unsecured committed line of credit with NationsBank, N.A., effective November 21, 1995, and expiring on December 31, 1996. 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 shall be: (i) in the event the advance is in U.S. dollars, at the option of the Company, either the bank's prime rate minus one half of one percent (.50%) per annum, or the LIBOR rate plus one and one eighth percent (1.125%) 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 one and one eighth percent (1.125%) per annum. Interest due under the three-year secured term loan shall be, at the option of the Company, the prime rate or the treasury bill rate (adjusted to a constant maturity of three years) plus two and one quarter percent (2.25%). Under the existing line of credit, the Company has drawn DM 30.0 million (approximately $20.7 million), which was utilized to acquire the remaining stock in Fidelio. Prior to November 21, 1995, the Company had another line of credit with the same bank with a borrowing capacity of $15.0 million. There were no borrowings under the $15.0 million line of credit as of November 21, 1995. 9 10 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended December 31, 1995 PART I - Financial Information Under the terms of the current loan agreement, the Company may borrow up to $25.0 million less the amount of outstanding letters of credit. Amounts outstanding under the line are payable on demand and are not secured by the assets of the Company. The agreement requires the Company to satisfy certain financial covenants. In addition, the agreement limits the incurrence of additional indebtedness and restricts the Company's payment of dividends other than stock dividends. Further, Fidelio maintains three unsecured committed lines of credit with BHF Bank, Hypobank and Commerzbank. DM 13.0 million (approximately $9.0 million)is available in the aggregate under these lines of credit. As of December 31, 1995, Fidelio had drawn approximately DM 9.26 million (approximately $6.4 million) which was utilized for general corporate purposes. Additionally, Fidelio has a 1.5 year term loan with BHF in the amount of DM 1.85 million (approximately $1.3 million). Proceeds of this term loan were used to acquire Fidelio Nordic Holding. Certain Fidelio subsidiaries maintain additional lines of credit, none of which are material. 4. Accounting for Stock-Based Compensation The Company has not elected early adoption of Financial Accounting Standards Board Statement No. 123 (SFAS 123), Accounting for Stock-Based Compensation, issued in October 1995. Adoption of SFAS 123 is required for the fiscal 1997 financial statements. Under SFAS 123, the Company will continue to measure compensation expense for its stock-based compensation plans using the intrinsic value method prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees. Beginning with financial statements for fiscal 1997, the Company will provide proforma disclosures of net income and earnings per share as if the fair value based method of accounting defined in SFAS 123 had been applied to the Company's stock option grants made subsequent to fiscal 1995. The impact of SFAS 123 on the Company's proforma information to be provided has not been determined. 5. Reclassifications Certain prior year reclassifications have been made to conform to fiscal 1996 classifications. Item 2. Management's discussion and analysis of financial condition and results of operations Liquidity and Capital Resources The Company has a $25.0 million multi-currency line of credit facility effective November 21, 1995, and expiring on December 31, 1996. An additional DM 13.0 million (approximately $9.0 million) is available to Fidelio through three additional lines of credit. The Company has borrowed approximately DM 39.26 million (approximately $27.1 million) from these lines of credit to fund the acquisition of Fidelio and for working capital. The Company is investigating its options with respect to long-term financing of the debt associated with the Fidelio acquisition. 10 11 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended December 31, 1995 PART I - Financial Information Net cash used in operating activities for the six months ended December 31, 1995 was $8.9 million, primarily due to increased inventory as a result of increased sales volume and preparation for a new product introduction. The Company also used cash of $27.0 million primarily for the purchase of Fidelio and DAC/ADMI, net of cash received. In addition, the Company used $2.5 million for the purchase of property, plant and equipment and $2.3 million for loans to an affiliate, which is offset by proceeds of $3.2 million from the sale of short-term investments. Financing activities for the first six months of fiscal 1996 provided $22.1 million, primarily from borrowings against the line of credit to finance the acquisition of Fidelio. 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, are sufficient to provide the working capital needs of the Company for the foreseeable future. Results of Operations - Second Quarter and Six Month Comparisons The Company recorded a loss of $.63 per common share in the second quarter of fiscal 1996, compared with net income of $.36 per common share in the second quarter of fiscal 1995. The net loss for the six months ended December 31, 1995, was $.23 per common share compared with net income of $.74 per common share for the first six months of fiscal 1995. The second quarter and first six months of fiscal 1996 results include a one-time after tax charge of $8.1 million, or $1.01 per common share, for the write-off of purchased incomplete software technology acquired in the acquisition of Fidelio. Revenue for the second quarter of fiscal 1996 increased $15.8 million, or 58.1%, compared to the same period last year. For the first six months of fiscal 1996, revenue increased $23.7 million, or 45.8%, over the same period in fiscal 1995. Sales increased in every distribution channel worldwide for both periods. For the second quarter, Property Management System ("PMS") sales increased $9.9 million in fiscal 1996 over the second quarter of fiscal 1995, due to the acquisition of Fidelio on November 30, 1995 and continued market penetration by the Company's three PMS distribution offices. Sales of Point of Sale ("POS") hardware, software and related services increased $5.9 million in the second quarter of fiscal 1996 compared to the same period a year earlier primarily due to increased sales in the Company's direct sales offices in the U.S. and Europe. For the first six months of fiscal 1996, sales of hardware, software and related services for PMS and POS increased $12.6 million and $11.1 million, respectively, over the same period a year earlier. For the second quarter of fiscal 1996, hardware and software sales increased $8.8 million, or 42.1%, while service revenues increased $7.0 million, or 111.4% over the same period a year earlier. For the first six months of fiscal 1996, hardware and software sales increased $14.3 million, or 35.6%, and service revenues increased $9.4 million, or 81.9%. Cost of sales, as a percentage of revenue, decreased to 50.6% from 50.8% for the second quarter of fiscal 1996 compared to the second quarter of fiscal 1995. For the first six months of fiscal 1996, cost of sales, as a percentage of revenue, increased to 50.6% from 50.1% for the same period a year earlier. Cost of sales for hardware and software products, as a percentage of related revenue, was 54.7% in the second quarter of fiscal 1996 compared to 52.9% for 11 12 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended December 31, 1995 PART I - Financial Information Item 2. Management's discussion and analysis of financial condition and results of operations. (continued) the same quarter a year earlier. For the first six months of fiscal 1996, cost of sales for hardware and software products, as a percentage of related revenue, was 53.2% compared to 51.7% for the same period in fiscal 1995. The cost increases were primarily due to an increase in volume of lower margin products and certain strategic selling price decreases on hardware products, partially offset by a favorable shift in sales distribution from the indirect to direct sales channels. Service costs, as a percentage of service revenue, decreased to 41.5% in the second quarter of fiscal 1996 compared to 43.9% in the same quarter in fiscal 1995. Service costs, as a percentage of service revenue, decreased to 43.9% in the first six months of fiscal 1996 compared to 44.6% for the same period in fiscal 1995. The decreased costs were primarily due to incremental software support revenue from Fidelio, which have lower service costs, and were partially offset by the costs of training new service employees. Selling, general and administrative expenses increased $6.0 million, or 81.9%, in the second quarter of fiscal 1996 compared to the same period last year. Selling, general and administrative expenses for the first six months of fiscal 1996 increased $8.6 million, or 59.9%, compared to the same period in fiscal 1995. As a percentage of revenue, selling, general and administrative expenses increased to 31.0% in the second quarter of fiscal 1996 compared to 26.9% in the second quarter of fiscal 1995. For the first six months of fiscal 1996, selling, general and administrative expenses, as a percentage of revenue, were 30.4% compared to 27.7% for the same period a year earlier. The increases are primarily the result of the continued expansion of the Company's infrastructure, especially an increased emphasis on the sales and service organizations, including the addition of Fidelio in December 1995, three U.S. sales and service offices, D.A.C. Systemes/MICROS France and AD-Maintenance Informatique in August 1995 and increased sales and service staffing worldwide. In addition, certain costs have increased as a result of the Company no longer being a subsidiary of Westinghouse Electric Corporation. Research and development expenses (exclusive of capitalized software development costs), which consist primarily of labor costs, increased $458,000, or 37.7%, in the second quarter of fiscal 1996 and $864,000, or 39.7%, for the first six months of fiscal 1996 compared to the same periods a year earlier. Actual research and development expenditures, including capitalized software development costs of $278,000 in the second quarter of fiscal 1996, increased $736,000, or 60.6%, compared to the same period a year earlier. Actual research and development expenditures for the first six months of fiscal 1996, including capitalized development costs of $430,000, increased $1,294,000, or 59.4%, compared to the same period a year earlier. Purchased incomplete software technology was a result of the one-time $14.8 million charge taken in the second quarter of fiscal 1996 associated with the acquisition of Fidelio. Loss from operations for the second quarter of fiscal 1996 was $9.4 million compared to income of $4.5 million in the same period a year earlier. Excluding the $14.8 million charge for the purchase of incomplete software technology in the quarter, fiscal 1996 second quarter income from operations would have been $5.4 million, or 12.5% of revenue, compared to $4.5 million, 12 13 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended December 31, 1995 PART I - Financial Information or 16.5% of revenue, for the second quarter of fiscal 1995. For the first six months of fiscal 1996, loss from operations was $4.9 million compared to income of $8.6 million a year earlier. Excluding the one-time expense of $14.8 million mentioned previously, income from operations for the first six months of fiscal 1996 was $9.9 million, or 13.1% of revenue, compared to income of $8.6 million, or 16.6% of revenue, for the same period of fiscal 1995. Higher selling, general and administrative expenses and lower gross margins have impacted income from operations in the quarter and six month periods. Interest income for the second quarter of fiscal 1996 increased $43,000 to $263,000, or 19.5%, compared to $220,000 for the second quarter of fiscal 1995. Interest income for the first six months in fiscal 1996 was $602,000 compared to $481,000, an increase of 25.2%, for the comparable period in fiscal 1995 as a result of an increase in interest rates on investments and an increase in the average investment balances for the periods. Interest expense increased $258,000 to $365,000 for the second quarter of fiscal 1996 from $107,000 for the same period a year ago. Interest expense increased $262,000 to $453,000 for the six months ended December 31, 1995 compared to the first six months of fiscal 1995, primarily due to the bank lines of credit borrowings outstanding in December 1995. The effective tax rate for the second quarter of fiscal 1996 is a benefit of 48.3% compared to a tax rate of 35.3% for the same quarter a year earlier. Excluding the one-time expense for the purchase of incomplete software technology and the related tax benefit, the second quarter's effective tax rate would have been 39.1%. For the first six months of fiscal 1996, the effective tax rate is a benefit of 60.4%. Excluding the effect for the purchase of incomplete software technology expense and the related tax benefit, the six month tax rate would have been 37.4% which reflects management's current estimate of its effective tax rate on ordinary income for the year. The primary reason for the increase is due to the mix of earnings and the corresponding weighting of tax rates on a country-by-country basis. The Company has recently experienced rapid revenue growth at a rate that it believes has significantly exceeded that of the global market for POS computer systems and property management information systems products for the hospitality industry. Although the Company currently anticipates continued revenue growth at a rate in excess of such market, and therefore an increase in its overall market share, it does not expect to maintain growth at recent levels and there can be no assurance that any particular level of growth can be achieved. In addition, due to the competitive nature of the market, the Company recently has experienced greater gross margin pressure on its products than it has in the past, and the Company expects this trend to continue. There can be no assurance that the Company will be able to sufficiently increase sales of its higher margin products, including software and services, to prevent declines in the Company's overall gross margin. 13 14 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of MICROS Systems, Inc. We have reviewed the accompanying consolidated balance sheet of MICROS Systems, Inc. and subsidiaries as of December 31, 1995, and the related consolidated statements of operations and cash flows for the three and six month periods ended December 31, 1995 and December 31, 1994. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. We previously audited in accordance with generally accepted auditing standards, the consolidated balance sheet as of June 30, 1995, and the related consolidated statements of operations, cash flows and shareholders' equity for the year then ended (not presented herein), and in our report dated August 21, 1995 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the accompanying consolidated balance sheet information as of June 30, 1995, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. PRICE WATERHOUSE LLP Baltimore, Maryland February 13, 1996 THE ABOVE REPORT IS NOT A "REPORT" WITHIN THE MEANING OF SECTIONS 7 AND 11 OF THE SECURITIES ACT OF 1933 AND THE INDEPENDENT ACCOUNTANTS LIABILITY PROVISIONS OF SECTION 11 OF THE ACT DO NOT APPLY. 14 15 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended December 31, 1995 Part II - Other Information Items 1 through 4. No events occurred during the quarter covered by the report that would require a response to any of these items. Item 5. Other Information On January 29, 1996, Dietmar Mueller-Elmau accepted the position of Chairman of Fidelio Software GmbH and resigned as its president. Pursuant to a Consulting Agreement dated January 29, 1996, Mr. Mueller-Elmau has agreed to provide consulting services to Fidelio for a two-year period. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 2 - Purchase and Transfer Agreement dated November 30, 1995 (incorporated by reference) Exhibit 11 - Computation of Earnings Per Share Exhibit 15 - Letter Regarding Unaudited Interim Financial Information Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K - The Company filed a Current Report on Form 8-K dated December 14, 1995, items 2 and 7. The Company filed an Amended Current Report on Form 8-K/A dated February 13, 1996, items 2 and 7. 15 16 MICROS SYSTEMS, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended December 31, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MICROS SYSTEMS, INC. ------------------------- (Registrant) February 14, 1996 S/Gary C. Kaufman - ------------------ -------------------------- Gary C. Kaufman Vice President, Finance and Administration/Chief Financial Officer 16 17 EXHIBIT INDEX
Sequentially Exhibit Numbered Page - ------- ------------- 11. Computation of Earnings Per Share 15. Letter regarding Unaudited Interim Financial Information 27. Financial Data Schedule N/A
17 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 MICROS SYSTEMS, INC. AND SUBSIDIARIES three months ended December 31, 1995 and 1994 Exhibit 11 - Computation of Earnings Per Share (Unaudited - in thousands, except per share data)
Three Months Ended ------------------------------------- December 31, December 31, 1995 1994 ------------- ------------- Weighted-average number of common shares 7,882 7,839 Dilutive effect of outstanding stock options 133 118 ------------- ------------- Weighted-average number of common and common equivalent shares outstanding 8,015 7,957 ------------- ------------- Net income (loss) per statements of operations $ (5,088) $ 2,880 ============= ============= Net income (loss) per common and common equivalent share $ (0.63) $ 0.36 ============= =============
18 2 MICROS SYSTEMS, INC. AND SUBSIDIARIES six months ended December 31, 1995 and 1994 Exhibit 11 - Computation of Earnings Per Share (Unaudited - in thousands, except per share data)
Six Months Ended -------------------------------------- December 31, December 31, 1995 1994 ------------- ------------- Weighted-average number of common shares 7,872 7,820 Dilutive effect of outstanding stock options 126 130 ------------- ------------- Weighted-average number of common and common equivalent shares outstanding 7,998 7,950 ============= ============= Net income (loss) per statements of operations $ (1,834) $ 5,916 ============= ============= Net income (loss) per common and common equivalent share $ (0.23) $ 0.74 ============= =============
19 EX-15 3 LETTER REG. UNAUDITED INT. FINANCIAL INFORMATION 1 Exhibit No. 15 February 13, 1996 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: We are aware that MICROS Systems, Inc. has incorporated by reference our report dated February 13, 1996 (issued pursuant to the provisions of Statement on Auditing Standards No. 71) in the Prospectus constituting part of its Registration Statements on Forms S-8, (No. 33-69782, No. 33-44481 and No. 33-33535). We are also aware of our responsibilities under the Securities Act of 1933. Yours very truly, PRICE WATERHOUSE LLP 20 EX-27 4 FINANCIAL DATA SCHEDULE
5 This Financial Data Schedule contains summary financial information extracted from the Condensed Consolidated Balance Sheet and Related Statement of Income as of December 31, 1995 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS JUN-30-1996 DEC-31-1995 7,930 0 47,632 1,569 18,492 80,678 26,968 12,653 132,373 69,460 8,528 0 0 197 52,240 132,373 54,410 75,248 28,950 51,197 0 0 453 (4,878) (2,948) (1,834) 0 0 0 (1,834) (0.23) (0.23)
-----END PRIVACY-ENHANCED MESSAGE-----