MARYLAND | 52-1101488 | |
(State of incorporation) | (IRS Employer Identification Number) |
7031 Columbia Gateway Drive, Columbia, Maryland 21046-2289 | ||
(Address of principal executive offices) | (Zip code) |
443-285-6000 |
Large accelerated filer þ | Accelerated filer o |
Non-accelerated filer o | Smaller Reporting Company o |
September 30, 2013 | June 30, 2013 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 439,933 | $ | 486,023 | ||||
Short-term investments | 155,626 | 148,046 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $30,927 at September 30, 2013 and $30,418 at June 30, 2013 | 232,281 | 228,455 | ||||||
Inventory | 54,297 | 49,273 | ||||||
Income taxes receivable | 11,939 | 12,771 | ||||||
Deferred income taxes | 15,315 | 15,022 | ||||||
Prepaid expenses and other current assets | 58,772 | 44,648 | ||||||
Total current assets | 968,163 | 984,238 | ||||||
Property, plant and equipment, net | 51,729 | 44,127 | ||||||
Deferred income taxes, non-current | 48,041 | 50,186 | ||||||
Goodwill | 447,709 | 432,950 | ||||||
Intangible assets, net | 38,151 | 37,754 | ||||||
Purchased and internally developed software costs, net of accumulated amortization of $96,724 at September 30, 2013 and $93,307 at June 30, 2013 | 34,325 | 32,543 | ||||||
Other assets | 7,488 | 7,240 | ||||||
Total assets | $ | 1,595,606 | $ | 1,589,038 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Bank lines of credit | $ | — | $ | 1,757 | ||||
Accounts payable | 71,479 | 73,099 | ||||||
Accrued expenses and other current liabilities | 150,750 | 155,491 | ||||||
Income taxes payable | 12,009 | 11,002 | ||||||
Deferred revenue | 203,366 | 177,236 | ||||||
Total current liabilities | 437,604 | 418,585 | ||||||
Income taxes payable, non-current | 38,052 | 35,019 | ||||||
Deferred income taxes, non-current | 1,186 | 1,157 | ||||||
Other non-current liabilities | 16,004 | 16,007 | ||||||
Total liabilities | 492,846 | 470,768 | ||||||
Commitments and contingencies (Note 12) | ||||||||
Equity: | ||||||||
MICROS Systems, Inc. Stockholders' Equity: | ||||||||
Common stock, $0.025 par value; authorized 120,000 shares; issued and outstanding 75,283 at September 30, 2013 and 76,732 at June 30, 2013 | 1,882 | 1,918 | ||||||
Retained earnings | 1,093,614 | 1,136,763 | ||||||
Accumulated other comprehensive income (loss) | 3,903 | (23,625 | ) | |||||
Total MICROS Systems, Inc. stockholders' equity | 1,099,399 | 1,115,056 | ||||||
Noncontrolling interest | 3,361 | 3,214 | ||||||
Total equity | 1,102,760 | 1,118,270 | ||||||
Total liabilities and equity | $ | 1,595,606 | $ | 1,589,038 |
Three Months Ended September 30, | ||||||||
2013 | 2012 | |||||||
Revenue: | ||||||||
Hardware | $ | 66,532 | $ | 63,759 | ||||
Software | 34,361 | 30,778 | ||||||
Services | 213,822 | 205,314 | ||||||
Total revenue | 314,715 | 299,851 | ||||||
Cost of sales: | ||||||||
Hardware | 43,247 | 43,057 | ||||||
Software | 5,401 | 5,365 | ||||||
Services | 103,739 | 98,169 | ||||||
Total cost of sales | 152,387 | 146,591 | ||||||
Gross margin | 162,328 | 153,260 | ||||||
Selling, general and administrative expenses | 85,446 | 77,745 | ||||||
Research and development expenses | 19,365 | 16,803 | ||||||
Depreciation and amortization | 5,169 | 5,525 | ||||||
Total operating expenses | 109,980 | 100,073 | ||||||
Income from operations | 52,348 | 53,187 | ||||||
Non-operating income (expense): | ||||||||
Interest income | 987 | 1,347 | ||||||
Interest expense | (998 | ) | (171 | ) | ||||
Other income, net | 490 | (329 | ) | |||||
Total non-operating income, net | 479 | 847 | ||||||
Income before taxes | 52,827 | 54,034 | ||||||
Income tax provision | 20,496 | 12,968 | ||||||
Net income | 32,331 | 41,066 | ||||||
Less: net income attributable to noncontrolling interest | (60 | ) | (2 | ) | ||||
Net income attributable to MICROS Systems, Inc. | $ | 32,271 | $ | 41,064 | ||||
Net income per share attributable to MICROS Systems, Inc. common stockholders: | ||||||||
Basic | $ | 0.42 | $ | 0.51 | ||||
Diluted | $ | 0.42 | $ | 0.50 | ||||
Weighted-average number of shares outstanding: | ||||||||
Basic | 76,103 | 80,223 | ||||||
Diluted | 77,712 | 81,969 |
Three Months Ended September 30, | ||||||||
2013 | 2012 | |||||||
Net income | $ | 32,331 | $ | 41,066 | ||||
Other comprehensive income (loss), net of taxes: | ||||||||
Foreign currency translation adjustments, net of tax of $0 | 27,586 | 14,874 | ||||||
Change in unrealized losses on long-term investments, net of tax benefits $1 | — | (2 | ) | |||||
Change in unrealized gains related to pension plans, net of taxes of $9 | 29 | — | ||||||
Total other comprehensive income, net of taxes | 27,615 | 14,872 | ||||||
Comprehensive income | 59,946 | 55,938 | ||||||
Comprehensive income attributable to noncontrolling interest | (147 | ) | (50 | ) | ||||
Comprehensive income attributable to MICROS Systems, Inc. | $ | 59,799 | $ | 55,888 |
Three Months Ended September 30, | ||||||||
2013 | 2012 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 32,331 | $ | 41,066 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 5,169 | 5,525 | ||||||
Share-based compensation | 4,990 | 4,210 | ||||||
Amortization of capitalized software | 1,517 | 972 | ||||||
Provision for losses on accounts receivable | 600 | 1,306 | ||||||
Litigation reserve, including interest expense | 3,700 | — | ||||||
Net gains on disposal of property, plant and equipment | — | (41 | ) | |||||
Changes in operating assets and liabilities (net of impact of acquisitions): | ||||||||
Decrease (increase) in accounts receivable | 144 | (5,957 | ) | |||||
Increase in inventory | (4,082 | ) | (3,828 | ) | ||||
Increase in prepaid expenses and other assets | (12,851 | ) | (9,033 | ) | ||||
Decrease in accounts payable | (2,803 | ) | (7,327 | ) | ||||
Decrease in accrued expenses and other current liabilities | (10,074 | ) | (30,379 | ) | ||||
Increase (decrease) in income tax assets and liabilities | 7,863 | (8,954 | ) | |||||
Increase in deferred revenue | 22,503 | 18,462 | ||||||
Net cash flows provided by operating activities | 49,007 | 6,022 | ||||||
Cash flows from investing activities: | ||||||||
Proceeds from maturities of investments | 39,369 | 16,553 | ||||||
Purchases of investments | (46,375 | ) | (4,029 | ) | ||||
Purchases of property, plant and equipment | (10,968 | ) | (3,796 | ) | ||||
Internally developed software costs | (2,028 | ) | (850 | ) | ||||
Other | — | (86 | ) | |||||
Net cash flows (used in) provided by investing activities | (20,002 | ) | 7,792 | |||||
Cash flows from financing activities: | ||||||||
Repurchases of common stock | (91,603 | ) | (13,165 | ) | ||||
Proceeds from stock option exercises | 10,137 | 4,364 | ||||||
Principal payments on lines of credit | (1,795 | ) | — | |||||
Realized tax benefits from stock option exercises | 886 | 1,370 | ||||||
Other | (33 | ) | (26 | ) | ||||
Net cash flows used in financing activities | (82,408 | ) | (7,457 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 7,313 | 4,885 | ||||||
Net (decrease) increase in cash and cash equivalents | (46,090 | ) | 11,242 | |||||
Cash and cash equivalents at beginning of period | 486,023 | 562,786 | ||||||
Cash and cash equivalents at end of period | $ | 439,933 | $ | 574,028 |
MICROS Systems, Inc. Stockholders | |||||||||||||||||||||||
Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Non- controlling Interest | Total | ||||||||||||||||||||
Common Stock | |||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||
Balance, June 30, 2013 | 76,732 | $ | 1,918 | $ | 1,136,763 | $ | (23,625 | ) | $ | 3,214 | $ | 1,118,270 | |||||||||||
Net income | — | — | 32,271 | — | 60 | 32,331 | |||||||||||||||||
Foreign currency translation adjustments, net of tax of $0 | — | — | — | 27,499 | 87 | 27,586 | |||||||||||||||||
Change in unrealized gains related to pension plans, net of taxes of $9 | — | — | — | 29 | — | 29 | |||||||||||||||||
Share-based compensation | — | — | 4,990 | — | — | 4,990 | |||||||||||||||||
Stock issued upon exercise of options | 401 | 10 | 10,127 | — | — | 10,137 | |||||||||||||||||
Repurchases of stock | (1,850 | ) | (46 | ) | (91,557 | ) | — | — | (91,603 | ) | |||||||||||||
Income tax benefit from options exercised | — | — | 1,020 | — | — | 1,020 | |||||||||||||||||
Balance, September 30, 2013 | 75,283 | $ | 1,882 | $ | 1,093,614 | $ | 3,903 | $ | 3,361 | $ | 1,102,760 |
MICROS Systems, Inc. Stockholders | |||||||||||||||||||||||||||
Common Stock | Capital in Excess of Par | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Non- controlling Interest | |||||||||||||||||||||||
Shares | Amount | Total | |||||||||||||||||||||||||
Balance, June 30, 2012 | 80,309 | $ | 2,008 | $ | 107,662 | $ | 1,000,822 | $ | (17,847 | ) | $ | 3,486 | $ | 1,096,131 | |||||||||||||
Net income | — | — | — | 41,064 | — | 2 | 41,066 | ||||||||||||||||||||
Foreign currency translation adjustments, net of tax of $0 | — | — | — | — | 14,826 | 48 | 14,874 | ||||||||||||||||||||
Changes in unrealized losses on long-term investments, net of tax benefits of $1 | — | — | — | — | (2 | ) | — | (2 | ) | ||||||||||||||||||
Share-based compensation | — | — | 4,210 | — | — | — | 4,210 | ||||||||||||||||||||
Stock issued upon exercise of options | 201 | 5 | 4,359 | — | — | — | 4,364 | ||||||||||||||||||||
Repurchases of stock | (276 | ) | (7 | ) | (13,158 | ) | — | — | — | (13,165 | ) | ||||||||||||||||
Income tax benefit from options exercised | — | — | 1,407 | — | — | — | 1,407 | ||||||||||||||||||||
Balance, September 30, 2012 | 80,234 | $ | 2,006 | $ | 104,480 | $ | 1,041,886 | $ | (3,023 | ) | $ | 3,536 | $ | 1,148,885 |
1. | BASIS OF PRESENTATION |
2. | INVENTORY |
As of | ||||||||
(in thousands) | September 30, 2013 | June 30, 2013 | ||||||
Raw materials | $ | 1,502 | $ | 1,065 | ||||
Finished goods | 52,795 | 48,208 | ||||||
Total inventory | $ | 54,297 | $ | 49,273 |
3. | FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS |
As of September 30, 2013 | As of June 30, 2013 | |||||||||||||||
(in thousands) | Amortized Cost Basis | Aggregate Fair Value | Amortized Cost Basis | Aggregate Fair Value | ||||||||||||
Time deposit – U.S. | $ | 76,763 | $ | 76,763 | $ | 53,862 | $ | 53,862 | ||||||||
Time deposit - international | 43,688 | 43,688 | 28,832 | 28,832 | ||||||||||||
U.S. government debt securities | 35,175 | 35,175 | 65,352 | 65,352 | ||||||||||||
Total investments | $ | 155,626 | $ | 155,626 | $ | 148,046 | $ | 148,046 |
• | Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
• | Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; inputs that are derived principally from or corroborated by observable market data or other means. |
• | Level 3 - Measured based on prices or valuation models using unobservable inputs to the extent relevant observable inputs are not available (i.e., where there is little or no market activity for the asset or liability). |
(in thousands) | Level 1 | Level 2 | Total | |||||||||
Balance, September 30, 2013: | ||||||||||||
Short-term investments: | ||||||||||||
Time deposit – U.S. | $ | — | $ | 76,763 | $ | 76,763 | ||||||
Time deposit - international | — | 43,688 | 43,688 | |||||||||
U.S. government debt securities | 35,175 | — | 35,175 | |||||||||
Total investments | $ | 35,175 | $ | 120,451 | $ | 155,626 | ||||||
Balance, June 30, 2013: | ||||||||||||
Short-term investments: | ||||||||||||
Time deposit – U.S. | $ | — | $ | 53,862 | $ | 53,862 | ||||||
Time deposit - international | — | 28,832 | 28,832 | |||||||||
U.S. government debt securities | 60,352 | 5,000 | 65,352 | |||||||||
Total investments | $ | 60,352 | $ | 87,694 | $ | 148,046 |
4. | GOODWILL AND INTANGIBLE ASSETS |
5. | CREDIT AGREEMENTS |
6. | SHARE-BASED COMPENSATION |
Three Months Ended September 30, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Selling, general and administrative | $ | 4,404 | $ | 3,700 | ||||
Research and development | 487 | 437 | ||||||
Cost of sales | 99 | 73 | ||||||
Total non-cash share-based compensation expense | 4,990 | 4,210 | ||||||
Income tax benefit | (1,558 | ) | (1,264 | ) | ||||
Total non-cash share-based compensation expense, net of tax benefit | $ | 3,432 | $ | 2,946 | ||||
Impact on diluted net income per share attributable to MICROS Systems, Inc. common stockholders | $ | 0.04 | $ | 0.04 |
7. | Net income per share attributable to MICROS Systems, Inc. common stockholders |
Three Months Ended September 30, | ||||||||
(in thousands, except per share data) | 2013 | 2012 | ||||||
Net income attributable to MICROS Systems, Inc. | $ | 32,271 | $ | 41,064 | ||||
Weighted-average common shares outstanding | 76,103 | 80,223 | ||||||
Dilutive effect of outstanding stock options | 1,609 | 1,746 | ||||||
Weighted-average common shares outstanding assuming dilution | 77,712 | 81,969 | ||||||
Basic net income per share attributable to MICROS Systems, Inc. common stockholders | $ | 0.42 | $ | 0.51 | ||||
Diluted net income per share attributable to MICROS Systems, Inc. common stockholders | $ | 0.42 | $ | 0.50 | ||||
Anti-dilutive weighted shares excluded from reconciliation | 2,248 | 1,687 |
8. | INCOME TAXES |
9. | RECENT ACCOUNTING GUIDANCE |
10. | SEGMENT INFORMATION |
Three Months Ended September 30, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Revenues (1): | ||||||||
U.S./Canada | $ | 142,173 | $ | 129,288 | ||||
International | 185,668 | 181,808 | ||||||
Intersegment eliminations (2) | (13,126 | ) | (11,245 | ) | ||||
Total revenues | $ | 314,715 | $ | 299,851 | ||||
Income before taxes (1): | ||||||||
U.S./Canada | $ | 29,476 | $ | 34,853 | ||||
International | 33,626 | 27,480 | ||||||
Intersegment eliminations (2) | (10,275 | ) | (8,299 | ) | ||||
Total income before taxes | $ | 52,827 | $ | 54,034 |
As of | ||||||||
(in thousands) | September 30, 2013 | June 30, 2013 | ||||||
Identifiable assets (3): | ||||||||
U.S./Canada | $ | 599,298 | $ | 664,607 | ||||
International | 996,308 | 924,431 | ||||||
Total identifiable assets | $ | 1,595,606 | $ | 1,589,038 |
(1) | Amounts based on the location of the selling entity. |
(2) | Amounts primarily represent elimination of U.S./Canada and Ireland’s intercompany business. |
(3) | Amounts based on the physical location of the assets. |
11. | STOCKHOLDERS’ EQUITY |
(in thousands, except per share data) | Number of Shares | Average Purchase Price per Share | Total Purchase Value | ||||||||
Total shares purchased: | |||||||||||
As of June 30, 2013 | 18,417 | $ | 28.49 | $ | 524,669 | ||||||
Three months ended September 30, 2013 | 1,850 | $ | 49.52 | 91,603 | |||||||
As of September 30, 2013 | 20,267 | $ | 30.41 | $ | 616,272 |
12. | COMMITMENTS AND CONTINGENCIES |
• | our expectations regarding the effects of current economic conditions on our customers, our distributors, and our business generally; |
• | our expectations about the adequacy of our cash flows and our available borrowing capacity to meet our working capital needs, and our ability to raise additional funds if and when needed; |
• | our expectations regarding the impact of recently adopted accounting standards; |
• | our expectations regarding our ability to negotiate a new line of credit agreement to replace our current line of credit agreements, and our borrowing capacity under any new line of credit we may enter into; |
• | our expectations regarding future expenditures on property, plant, and equipment. |
• | our belief that, except as noted, existing legal claims or proceedings will not have a material adverse effect on our results of operations or financial position; |
• | our intention to continue to evaluate the need to invest in financial instruments designed to protect against interest rate fluctuations; |
• | our expectations regarding effective tax rates in future periods, changes in unrecognized income tax benefits, and the risks of incurring related liabilities; |
• | our statements regarding the effects of foreign currency rate fluctuations (in particular, the Euro and British Pound Sterling) and changes in interest rates on our financial performance; and |
• | our expectations relating to any possible future repatriation of foreign earnings. |
Three Months Ended September 30, | ||||||||||||||||||||||||
U.S./Canada | International | Total | ||||||||||||||||||||||
(in thousands) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Hardware | $ | 30,865 | $ | 27,474 | $ | 35,667 | $ | 36,285 | $ | 66,532 | $ | 63,759 | ||||||||||||
Software | 12,561 | 9,755 | 21,799 | 21,023 | 34,361 | 30,778 | ||||||||||||||||||
Service | 86,172 | 81,134 | 127,651 | 124,180 | 213,822 | 205,314 | ||||||||||||||||||
Total Revenue | $ | 129,598 | $ | 118,363 | $ | 185,117 | $ | 181,488 | $ | 314,715 | $ | 299,851 |
Three Months Ended September 30, | ||||||
(in thousands) | 2013 | 2012 | ||||
Hardware | 21.1 | % | 21.3 | % | ||
Software | 10.9 | % | 10.2 | % | ||
Service | 68.0 | % | 68.5 | % | ||
Total | 100.0 | % | 100.0 | % |
• | Hardware, software and service revenue increased by 4.4%, 11.6% and 4.1%, respectively, compared to the same period last year. |
• | The increase in hardware revenue was largely attributable to increases in the sales of our hardware products, mainly our newer products, the mTablet, the mStation and also our more traditional Workstation products, which were partially offset by a decrease in the sales of third party hardware products. |
• | The increase in software revenue was primarily due to an increase in sales of our Opera suite software products, partially offset by a decrease in sales of our retail software products. |
• | The increase in service revenue was primarily due to increases in professional services, recurring maintenance services, and hosting services. |
• | Current global economic uncertainty continued to have an adverse impact on revenues. |
• | Foreign currency exchange fluctuations negatively impacted total revenue by approximately $0.3 million, which consisted of unfavorable foreign currency exchange rate fluctuations totaling approximately $5.0 million, primarily with respect to the Australian Dollar and British Pound Sterling, substantially offset by favorable foreign currency exchange rate fluctuations totaling approximately $4.7 million, primarily with respect to the Euro, which represented approximately $4.0 million of the offsetting benefit. |
• | Hardware revenue decreased by 1.7% compared to the same period last year and software and service revenue increased by 3.7% and 2.8%, respectively, compared to the same period last year. |
• | The decrease in hardware revenue was primarily due to a decrease in sales of third party hardware products, substantially offset by an increase in the sales of our Workstation products. |
• | The increase in software revenue was primarily due to an increase in sales of our Opera suite software products, partially offset by a decrease in sales of our retail software products. |
• | The increase in services revenue was primarily due to an increase in recurring maintenance services and hosting services. |
• | Unfavorable foreign currency exchange rate fluctuations, primarily with respect to the Australian Dollar and British Pound Sterling, substantially offset by favorable foreign currency exchange rate fluctuation, primarily with respect to the Euro, negatively impacted revenue by approximately $0.1 million. |
• | Hardware, software and service revenue increased by 12.3%, 28.8% and 6.2%, respectively, compared to the same period last year. |
• | The increase in hardware revenue was largely attributable to increases in the sales of our proprietary hardware products, mainly our newer products, the mTablet, the mStation and also our more traditional Workstation products. |
• | The increase in software revenue was primarily due to increases in the sales of our Simphony and Opera suite products. |
• | The increase in service revenue was primarily due to increases in professional services, recurring maintenance services and hosting services. |
• | Unfavorable foreign currency exchange rate fluctuations, primarily with respect to the Canadian Dollar negatively impacted revenue by approximately $0.2 million |
Three Months Ended September 30, | ||||||||||||||
2013 | 2012 | |||||||||||||
(in thousands) | Cost of Sales | % of Related Revenue | Cost of Sales | % of Related Revenue | ||||||||||
Hardware | $ | 43,247 | 65.0 | % | $ | 43,057 | 67.5 | % | ||||||
Software | 5,401 | 15.7 | % | 5,365 | 17.4 | % | ||||||||
Service | 103,739 | 48.5 | % | 98,169 | 47.8 | % | ||||||||
Total Cost of Sales | $ | 152,387 | 48.4 | % | $ | 146,591 | 48.9 | % |
Three Months Ended September 30, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
R&D labor and other costs | $ | 21,393 | $ | 17,653 | ||||
Capitalized software development costs | (2,028 | ) | (850 | ) | ||||
Total R&D expenses | $ | 19,365 | $ | 16,803 | ||||
% of Revenue | 6.2 | % | 5.6 | % |
Three Months Ended September 30, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Selling, general and administrative | $ | 4,404 | $ | 3,700 | ||||
Research and development | 487 | 437 | ||||||
Cost of sales | 99 | 73 | ||||||
Total non-cash share-based compensation expense | 4,990 | 4,210 | ||||||
Income tax benefit | (1,558 | ) | (1,264 | ) | ||||
Total non-cash share-based compensation expense, net of tax benefit | $ | 3,432 | $ | 2,946 | ||||
Impact on diluted net income per share attributable to MICROS Systems, Inc. common stockholders | $ | 0.04 | $ | 0.04 |
Three Months Ended September 30, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Interest income | $ | 987 | $ | 1,347 | ||||
Interest expense | (998 | ) | (171 | ) | ||||
Foreign currency exchange loss | (94 | ) | (716 | ) | ||||
Gain from auction rate securities settlement | 338 | — | ||||||
Other | 246 | 387 | ||||||
Total non-operating income, net | $ | 479 | $ | 847 |
1) | The changes in our uncertain tax positions increased the effective tax rate and income tax expense for the three months ended September 30, 2013 by 12.9% and approximately $6.9 million, respectively, as compared to the same period last year. This increase primarily reflected the tax benefit of the expiration of statutes of limitation recorded during the three months ended September 30, 2012. |
2) | The effects of the reduction in the U.K. tax rate from 23% to 20% increased the effective tax rate and income tax expense for the three months ended September 30, 2013 by 4.6% and approximately $3.6 million, respectively, as compared to the same period last year. The rate reduction caused the effective tax rate to increase by reducing the carrying value of our U.K. deferred tax assets. |
• | Revenue recognition; |
• | Allowance for doubtful accounts; |
• | Inventory; |
• | Capitalized software development costs; |
• | Valuation of long-lived assets and intangible assets; |
• | Goodwill and indefinite-lived intangible assets; |
• | Share-based compensation; |
• | Income taxes. |
Three Months Ended September 30, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | 49,007 | $ | 6,022 | ||||
Investing activities | (20,002 | ) | 7,792 | |||||
Financing activities | (82,408 | ) | (7,457 | ) |
As of | ||||||||
(in thousands, except ratios) | September 30, 2013 | June 30, 2013 | ||||||
Cash and cash equivalents and short-term investments | $ | 595,559 | $ | 634,069 | ||||
Available credit facilities | $ | 1,352 | $ | 51,301 | ||||
Outstanding credit facilities | — | (1,757 | ) | |||||
Outstanding guarantees | (553 | ) | (1,125 | ) | ||||
Unused credit facilities | $ | 799 | $ | 48,419 | ||||
Working capital (1) | $ | 530,559 | $ | 565,653 | ||||
MICROS Systems, Inc.’s stockholders’ equity | $ | 1,099,399 | $ | 1,115,056 | ||||
Current ratio (2) | 2.21 | 2.35 |
(1) | Current assets less current liabilities. |
(2) | Current assets divided by current liabilities. The Company does not have any long-term debt. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
% of Reported Revenues | Exchange Rates to U.S. Dollar as of September 30, | |||||||||||
Three Months Ended September 30, | ||||||||||||
Revenues by currency (1) | 2013 | 2012 | 2013 | 2012 | ||||||||
United States Dollar | 43 | % | 41 | % | 1.0000 | 1.0000 | ||||||
Euro | 22 | % | 23 | % | 1.3526 | 1.2859 | ||||||
British Pound Sterling | 14 | % | 14 | % | 1.6185 | 1.6163 | ||||||
Singapore Dollar | 3 | % | 2 | % | 0.7964 | 0.8147 | ||||||
Australian Dollar | 2 | % | 3 | % | 0.9321 | 1.0379 | ||||||
Norwegian Krone | 2 | % | 1 | % | 0.1663 | 0.1746 | ||||||
Canadian Dollar | 1 | % | 1 | % | 0.9703 | 1.0167 | ||||||
Swiss Franc | 1 | % | 1 | % | 1.1053 | 1.0640 | ||||||
Swedish Krona | 1 | % | 1 | % | 0.1555 | 0.1523 | ||||||
All Other Currencies (2) | 11 | % | 13 | % | 0.1578 | 0.1592 | ||||||
Total | 100 | % | 100 | % |
(1) | Calculated using weighted-average exchange rates for the fiscal period. |
(2) | The “% of Reported Revenue” is calculated based on the weighted-average three month exchange rates for all other currencies. The “Exchange Rates to U.S. Dollar” represents the weighted-average September 30, 2013 and 2012 exchange rates for all other currencies. Weighting is based on the three month fiscal period revenue for each country or region whose currency is included in the “All Other Currencies” category. Revenues from each currency included in "All Other Currencies" were less than 1% of our total revenues for the three months ended September 30, 2013. |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Amount that May Yet be Purchased Under the Plans or Programs | |||||||||||
07/01/13 – 07/31/13 | 127,700 | $ | 47.17 | 127,700 | $ | 201,205,773 | ||||||||
08/01/13 – 08/31/13 | 1,002,300 | $ | 49.40 | 1,002,300 | $ | 151,695,457 | ||||||||
09/01/13 – 09/30/13 | 720,000 | $ | 50.10 | 720,000 | $ | 115,626,615 | ||||||||
1,850,000 | 1,850,000 |
ITEM 6. | EXHIBITS |
3(a) | Restated Articles of Incorporation of the Company (filed herewith as Exhibit 3(a)). |
3(b) | By-laws of the Company, as amended, are incorporated herein by reference to Exhibit 99.2 to the Form 8-K filed on September 18, 2013. |
31(a) | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 (filed herewith) |
31(b) | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 (filed herewith) |
32(a) | Certification of Principal Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. 1350 (furnished herewith) |
32(b) | Certification of Principal Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. 1350 (furnished herewith) |
101 | The following materials from MICROS Systems, Inc.’s quarterly report on Form 10-Q for the quarter ended September 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, 2013 and June 30, 2013, (ii) Condensed Consolidated Statements of Operations for |
MICROS SYSTEMS, INC. | |
(Registrant) | |
Date: October 24, 2013 | /s/ Cynthia A. Russo |
Cynthia A. Russo | |
Executive Vice President and | |
Chief Financial Officer | |
Date: October 24, 2013 | /s/ Michael P. Russo |
Michael P. Russo | |
Vice President, Corporate Controller | |
and Principal Accounting Officer |
(a) | To manufacture, assemble produce, distribute and sell electronic computerized control systems. |
(b) | To engage in the manufacture, assembly and distribution of electronic circuitry and electric hardware. |
(c) | To sell and merchandise all products as may be manufactured or assembled by the Corporation to private business firms and state, federal, local and foreign governments. |
(d) | To guarantee the payment of dividends upon any shares of stock of, or the performance of any contract by, any other corporation or association in which the Corporation has an interest, and to endorse or otherwise guarantee the payment of the principal and interest, or either, of any bonds, debentures, notes, securities, or other evidences of indebtedness created or issued by any such other corporation or association. |
(e) | To loan or advance money with or without security, without limit as to amount; and to borrow or raise money for any of the purposes of the Corporation, and to issue bonds, debentures, notes or other obligations of any nature, and in manner permitted by law, for money so borrowed or in payment for property purchased, or for any other lawful consideration, and to secure the payment thereof and of the interest thereon, by mortgage upon, or pledge or conveyance or assignment in trust of, the whole or any part of the property or the Corporation, real or personal, including contract rights, whether at the time owned or thereafter acquired; and to sell, pledge, discount, or otherwise dispose of such bonds, notes or other obligations of the Corporation for its corporate purpose. |
(f) | To purchase or otherwise acquire, hold, and reissue shares of its capital stock of any class; and to purchase, hold, sell, assign, transfer, exchange, lease, mortgage, pledge or otherwise dispose of any shares of stock of, or voting trust certificates for any shares of stock of, or any bonds or other securities or evidence of indebtedness issued or created by any other securities or evidence of indebtedness issued or created by any other corporation or association organized under the laws of the State of Maryland or of any other state, territory, district, colony, or dependency of the United States of America, or of any foreign country; and while the owner or holder of any such shares of stock, voting trust certificates, bonds, or other obligations, to possess and exercise in respect thereof any and all rights, powers, and privileges of ownership, including the right to vote on any shares of stock held or owned; and upon distribution of the assets or a division of the profits of this Corporation, to distribute any such shares of stock, voting trust certificates, bonds or other obligations, or the proceeds thereof, among stockholders of the Corporation. |
(g) | To guarantee the payment of dividends upon any shares of the stock of, or the performance of any contract by, any other corporation or association in which the Corporation has an interest, and to endorse or otherwise guarantee the payment of the principal and interest, or either of any bonds, debentures, notes, securities or other evidences of indebtedness created or issued by any such other corporation or association. |
(h) | To carry on any of the business hereinbefore enumerated for itself, or for account of others, or through others for its own account, and to carry on any other business which may be deemed by it to calculated, directly or indirectly, to effectuate or facilitate the transaction of the aforesaid objects or business, or any of them, or any part thereof, or to enhance the value of its property, business or rights. The aforegoing enumeration of the purposes, objects and business of the Corporation is made in furtherance and not in limitation, of the powers conferred upon the Corporation by law, and is not intended, by the mention or any particular purpose, object or business, in any manner to limit or restrict the generality of any of the powers of the Corporation. The Corporation is formed upon the articles, conditions, and provisions herein expressed, and subject in all particulars to the limitations relative to corporations, which are contained in the general laws of this State. |
(a) | The Board of Directors of the Corporation is hereby empowered to authorize issuance, from time to time, of shares of its stock for such considerations as said Board of Directors may deem advisable, irrespective of the value or amount of such considerations, but subject to such limitations and restrictions, if any, as may be set forth in the By-Laws of the Corporation. |
(b) | No contract or other transaction between the Corporation and any other Corporation and no act of this Corporation shall in any way be affected or invalidated by the fact that any of the directors of this Corporation are pecuniarily or otherwise interested in, any contract or transaction of this Corporation provided that the fact that he or such firm is so interested shall be disclosed or shall have been known to the Board of Directors or a majority thereof; and any Director of this Corporation who is so interested may be counted in determining the existence of a quorum at any meeting of the Board of Directors of this Corporation, which shall authorize any such contract or transaction, and may vote thereat to authorize any such contract or transaction, with like force and effect as if he were not such director or officer of such other corporation or not so interested. |
(c) | The Board of Directors shall have power, from time to time, to fix and determine and to vary the amount of working capital of the Corporation; to determine whether any, and if any, what part of the surplus of the Corporation or of the net profits arising from its business shall be declared in dividends and paid to the stockholders, subject, however, to the provisions of the charter, and to direct and determine the use and disposition of any such surplus or net profits. The Board of Directors may, in its discretion, use and apply any of such surplus or net profits in purchasing or acquiring any of the shares of the stock of the Corporation, or any of its bonds, or other evidences of indebtedness, to such extent and in such manner and upon such lawful terms as the Board of Directors shall deem expedient. |
(d) | The Corporation reserves the right to make, from time to time, any amendments of its charter which may now or hereafter be authorized by law, including any amendments changing the terms of any class of its stock by classification, reclassification or otherwise, but no such amendment which changes the terms of any of the outstanding stock shall be valid unless such change of terms shall have been authorized by the holders of four-fifths of all such stock at the time outstanding, by vote at a meeting or in writing with or without a meeting. |
(e) | No holders of stock of the Corporation, of whatever class, shall have any preferential right of subscription to any shares of any class or to any securities convertible into shares of stock of the Corporation, nor any right of subscription to any thereof other than such, if any, as the Board of Directors in its discretion may fix; and any shares of convertible securities which the Board of Directors may determine to offer for the subscription to the holders of stock may, as said Board of Directors shall determine, be offered to holders of any class or classes of stock at the time existing to the exclusion of holders of any or all other classes at the time existing. |
(f) | Notwithstanding any provision of law requiring any action to be taken or authorized by the affirmative vote of the holders of a designated proportion of the shares of stock of the Corporation, or to be otherwise taken or authorized by vote of the stockholders, a vote on a consolidation, merger, sale or transfer of assets, dissolution of the Corporation, partial liquidation of the Corporation, amendment of these Articles of Incorporation or reinstatement and extension of the Corporation’s charter should expire, shall be effective and valid if taken or authorized by the affirmative vote of a majority of the total number of votes entitled to be cast thereon, except as otherwise provided in this charter. |
(g) | The Board of Directors shall have the power to declare and authorize the payment of stock dividends, whether or not payable in stock of one class to holders of stock of another class or classes, and shall have authority to exercise, without a vote of stockholders, all powers of the Corporation, whether conferred by law or by these articles, to purchase, lease or otherwise acquire the business, assets or franchises, in whole or in part, of other corporations or unincorporated business entities. |
(a) | The Corporation shall indemnify its directors and officers, whether serving the Corporation or at its request any other entity, to the fullest extent required or permitted by the general laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures provided by such laws. |
(b) | The Corporation shall indemnify other employees or agents, whether serving the Corporation or at its request any other entity, to such extent as shall be authorized by the Board of Directors or the By-laws and as permitted by law. |
(c) | The foregoing rights of indemnification shall not be exclusive of any other rights to which those seeking indemnification may be entitled. |
(d) | The Board of Directors may take such action as is necessary to carry out these indemnification provisions and is expressly empowered to adopt, approve and amend from time to time such by-laws, resolutions or contracts implementing such provisions or such further indemnification arrangements as may be permitted by law. |
(e) | No amendment or repeal of this Article Eighth of the Corporation’s Charter shall apply to or have any effect on any right to indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal. |
1. | I have reviewed this Quarterly Report on Form 10-Q of MICROS Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: October 24, 2013 | /s/ Peter A. Altabef |
Peter A. Altabef | |
President and | |
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of MICROS Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: October 24, 2013 | /s/ Cynthia A. Russo |
Cynthia A. Russo | |
Executive Vice President and | |
Chief Financial Officer |
(1) | The Form 10-Q fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 24, 2013 | /s/ Peter A. Altabef |
Peter A. Altabef |
(1) | The Form 10-Q fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 24, 2013 | /s/ Cynthia A. Russo |
Cynthia A. Russo |
INCOME TAXES
|
3 Months Ended |
---|---|
Sep. 30, 2013
|
|
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The effective tax rate for the three months ended September 30, 2013 and 2012 was 38.8% and 24.0%, respectively. The effective tax rate for the three months ended September 30, 2013 is more than the 35% U.S. statutory federal income tax rate for corporations primarily due to the effects of the reduction in the U.K. tax rate (described below) partially offset by decreases in taxes due to earnings in jurisdictions which have a lower rate than the U.S. The increase in effective tax rate for the three months ended September 30, 2013 compared to the same period last year was primarily attributable to an increases resulting from the following: 1) The changes in the uncertain tax positions increased the effective tax rate and income tax expense for the three months ended September 30, 2013 by 12.9% and approximately $6.9 million, respectively, as compared to the same period last year. This increase primarily reflected the tax benefit of the expiration of statutes of limitation recorded during the three months ended September 30, 2012. 2) The effects of the reduction in the U.K. tax rate to 20% increased the effective tax rate and income tax expense for the three months ended September 30, 2013 by 4.6% and approximately $3.6 million, respectively, as compared to the same period last year. The rate reduction caused the effective tax rate to increase by reducing the carrying value of our U.K. deferred tax assets. The above increases were partially offset by a decrease in taxes due to changes in earnings mix among jurisdictions. The Company estimates that, within the next 12 months, its unrecognized income tax benefits will decrease by between approximately $2.8 million and approximately $4.8 million due to the expiration of statutes of limitations and expected settlements with tax authorities. However, audit outcomes and the timing of audit settlements are subject to significant uncertainty. Over the next 12 months, it is reasonably possible that the Company’s tax positions will continue to generate liabilities related to uncertain tax positions. The Company currently has no plans to repatriate to the U.S. its cumulative unremitted foreign earnings, as it intends to permanently reinvest such earnings internationally. If the Company changes its strategy in the future and repatriates such funds, the amount of any taxes, which could be significant, and the application of any tax credits, would be determined based on the appropriate jurisdictional income tax laws at the time of such repatriation. Due to the extent of uncertainty as to which remittance structure would be used should a decision be made in the future to repatriate, the availability and the complexity of calculating foreign tax credits, and the implications of indirect taxes, including withholding taxes, determination of the unrecognized deferred income tax liability related to these unremitted earnings is not practicable. The Company’s income tax returns are no longer subject to examination by the U.S. tax authorities for tax years ending before June 2011, by the U.K. tax authorities for tax years ending before June 2010, by the German tax authorities for tax years ending before June 2006 and the Irish tax authorities for tax years ending before June 2009. Certain periods prior to these dates, however, could be subject to adjustment as a result of the competent authority process, or due to the impact of items such as carryback or carryforward claims. |
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