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FORM 10-K
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 [FEE REQUIRED]
For the Fiscal Year Ended June 30, 1995
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.
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(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Maryland 52-1101488
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<S> <C>
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
12000 Baltimore Avenue 20705-1291
Beltsville, Maryland (Zip Code)
(Address of principal executive offices)
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Registrant's telephone number, including area code: 301-210-6000
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
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(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
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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, 1995, there were issued and
outstanding 7,859,261 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 $136,845,959.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1995 Annual Meeting of
Shareholders currently scheduled to be held on November 17, 1995, are
incorporated by reference in Part III of this Form 10-K.
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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 Systems, Inc. is a 49% owned investee of Westinghouse Holdings
Corporation, a wholly-owned subsidiary of Westinghouse Electric Corporation
("Westinghouse"), after Westinghouse Holdings Corporation sold 1,000,000 shares
of the Company on July 6, 1995.
MICROS is a leading worldwide designer, manufacturer, supplier
and servicer of point-of-sale ("POS") computer systems for hospitality
providers, principally full service and fast food restaurants, including
restaurants located in hotels and other lodging establishments. MICROS POS
systems consist of terminals, display devices, printers, computers and software
which provide transaction processing, in-store control and information
management capabilities. The Company's POS systems, which are installed in
over 32,000 independent, national and international full service restaurants
and over 3,000 fast food restaurants, enable users to control operations and
inventory, enhance customer service efficiency, reduce labor costs, increase
productivity and improve planning and reporting. MICROS is a major supplier of
POS systems to full service restaurants or operators of restaurants such as
T.G.I. Friday's, Family Restaurants, Perkins, Planet Hollywood, Ruby Tuesday's,
and Whitbread; to fast food restaurants such as Arby's, Burger King and
Wendy's; and to full service restaurants in hotels such as Hilton, Hilton
International, Hyatt, Inter-Continental, Marriott, Radisson and Ritz-Carlton.
New target markets for the Company's POS systems include casinos, cruise ships,
sports arenas, theme parks, institutional food service organizations and
specialty retail shops. The Company has installed large POS systems in the
Luxor Hotel and Casino and the MGM Grand Hotel Casino and Theme Park in Las
Vegas, Nevada.
The full service restaurant POS market consists of both
stand-alone restaurants and restaurants located in lodging operations in which
servers use guest checks to take orders at tables. The Company's customers in
this market include independent restaurants, franchisees, small chains and
large national and international chains. In the fast food restaurant POS
market, the typical MICROS customer is a franchisee of a national fast food
chain operating multiple restaurants.
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The Company's POS products are sold by approximately 57
employees through a Company-owned sales distribution network consisting of 9
domestic and 4 foreign sales offices and through MICROS' Major Accounts Program
to large regional, national and international customers (the "Direct POS Sales
Channel"). The Company's POS products are also sold through an independent
sales distribution network consisting of 113 U.S. dealers and 48 foreign
distributors (the "Indirect POS Sales Channel").
The Company also markets and distributes property management
information systems ("PMS") products which provide reservation, guest
accounting and other information management capabilities to hotels and other
lodging establishments. The PMS products marketed and distributed by the
Company are supplied by Fidelio Software GmbH, a German company ("Fidelio").
MICROS owns a 30% interest in Fidelio and has an option to acquire the
remaining 70%. The Company has installed over 600 Fidelio PMS systems,
including systems installed in various Radisson Hotels, Red Roof Inns, and
Wyndham Hotels and Resorts. Fidelio products are installed in over 3,600 sites
worldwide, including certain Ciga, Forte, Hilton International,
Inter-Continental, Kempinski, Mandarin Oriental, Movenpick, Peninsula, Ramada
Europe, Shangri-La and Steigenberger locations. The Company's recently
developed POS systems, as well as many POS systems offered by other suppliers,
are compatible with Fidelio PMS products. Majority-owned subsidiaries of the
Company have the exclusive distribution rights to Fidelio products in the
Americas, the United Kingdom and France. Many of the new target markets for
the Company's POS systems, including casinos, cruise ships and theme parks, are
also new target markets for Fidelio PMS products.
MICROS also offers service and support for its POS and PMS
products, including installation, training, hardware and software maintenance,
spare parts, media supplies and consulting services. Service revenue
constituted approximately 23%, 21% and 20% of the Company's total revenue in
fiscal 1995, 1994 and 1993, respectively.
PRODUCTS
Point-of-Sale Systems
MICROS markets a wide range of POS systems capable of meeting
the functionality and cost control needs of customers in various segments of
the hospitality industry.
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The Company's POS systems consist of terminals, display devices, printers,
computers and software which provide transaction processing, in-store control
and information management capabilities. All proprietary POS hardware is
designed to withstand the elements of the restaurant environment. The
Company's principal POS products are the 8700 Hospitality Management System
("HMS"), the 2700 HMS, the 2700 HMS Keyboard and the 2700 HMS Touchscreen
System. Other products include the 4700 HMS, the 1700 HMS and the 2400 Fast
Food System ("FFS").
The 8700 HMS, introduced in September 1993, is designed for
hotels, resorts, casinos, airports, sports arenas, theme parks and large local
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. Features of
the 8700 HMS include customized workstations, including customized keyboard and
printer configurations, touchscreen capability, flexible guest check printing,
detachable raised or flat keyboards, time and attendance capability with
complete time card detail and labor scheduling, training mode by operators,
check tracking by table or check, automatic credit card authorization with
expiration date verification, extensive revenue center and system-wide
reporting which analyzes sales mix, sales balancing, serving periods, table
turns, time periods, food cost and operator accountability, the ability to
split checks into multiple checks and hardware diagnostic and software
confidence tests. The 8700 HMS POS product has been designed with an "open
system architecture," which allows its use on industry standard PCs as well as
on the Company's proprietary hardware. MICROS made a strategic decision to
offer a PC-based platform in order to complement its proprietary hardware and
to give its customers a wide range of hardware and software options for MICROS
POS systems. The 8700 HMS is operated on an Intel-based PC and utilizes the
SCO Unix operating system, which permits multi-tasking and multi-user
operations. Its architecture gives it the ability to manage any size
restaurant or food service operation.
The 2700 HMS, released in March 1989, and the 1700 HMS,
introduced in January 1990, are stand-alone intelligent terminals designed for
small to large full service restaurants and for certain fast food operations.
The 2700 HMS is available in both an entry level and premium platform, relies
on proprietary architecture and interfaces with DOS/Windows-based back office
support. The 2700 HMS
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Touchscreen System, released in September 1991, combines advanced touchscreen
technology with the Company's 2700 HMS POS system. It offers an easy-touch
electronic keypad with up to 60 entry points that can be customized according
to size and characters, dual LCD screens to speed up order entry and reduce
operator error, PC compatibility, lead-through prompting and reprogramming of
the system software and keyboards through remote communications via phone
lines.
The Company's 4700 HMS, introduced in May 1986, is a
DOS-based, PC-driven POS system for operational control of full service dining
operations. The system incorporates modular hardware components that allow for
customization and includes a number of important features to assist users with
daily operations.
The Handheld Touchscreen terminal ("HHT"), introduced in
March 1993, is a small, handheld, remote order entry touchscreen computer
device which allows a server to enter a guest's food and beverage order at the
table or seat-side. The HHT is best suited for larger operations with distant
seating locations such as sports arenas and pool-side restaurants. The HHT is
integrated with the MICROS 4700 HMS and integration with the 8700 HMS is
planned by the end of the calendar year.
In the fast food restaurant sector, MICROS markets the 2400
FFS, which is based primarily on the hardware platform used in the 2700 HMS
with fast food application software. The system, introduced in October 1991,
features a networked intelligent terminal architecture. A remote printer and
video screen subsystem accommodate a wide variety of kitchen production and
order routing schemes. The system's applications software meets fast food
requirements in the areas of order entry, drive-thru operation, inventory
tracking, employee timekeeping/labor tracking and data communications and
produces a variety of management reports through an interface with back office
PCs. The Manager Workstation ("MWS") software introduced in June 1993 is a
PC-based software product which provides for management analysis of sales and
operational trends at fast food restaurants, both at the store and corporate
levels, and permits the integration of point-of-sale functions with in-store
back office, regional and home office management information system functions.
An upgraded MWS which is currently under development is intended to broaden the
scope of information management, including multi-store database maintenance
capabilities, and to provide a migration path
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for current users of the 2400 FFS into the next generation of MICROS fast food
POS systems.
The Company's design architecture allows existing users of
many MICROS POS products to access new technologies and applications without
losing their investment in their existing MICROS POS system. In addition, many
MICROS systems interface to various back office accounting and property
management systems, including the Company's Fidelio PMS products.
Property Management Systems
For the PMS sector, MICROS markets and distributes a complete
line of PMS products supplied by Fidelio. The Front Office system, installed
worldwide in leading international hotel chains, is available in multiple
configurations covering the spectrum of hotels/resorts from the road-side hotel
to the large five-star resort. The Front Office PMS product is closely
integrated with MICROS POS systems for full service restaurants, including the
option for a Guest Folio Print & Check-out from the Company's 8700 HMS User
Work Station/3 terminal in a hotel restaurant. Other PMS software products
marketed and supported by MICROS include Food & Beverage Management, Sales and
Catering, Cruise-line operations and Casino-PMS.
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 18 years, and the Company and its dealers and distributors work closely
together in seeking to identify new customers, products, services and markets
and to serve the Company's existing customer base with enhanced products and
services in accordance with their needs.
The Company's POS products are sold by approximately 57
employees through a Company-owned Direct POS Sales Channel consisting of nine
domestic and four foreign sales offices serving Germany, Spain, Switzerland and
the United Kingdom and MICROS' Major Accounts Program for large regional,
national and international customers. The Company's POS products are also sold
through its Indirect POS Sales Channel consisting of 113 U.S. dealers, 16
non-U.S. western hemisphere distributors, 14 distributors in the Asia/Pacific
region and 18 distributors in the Europe/Africa/Middle East region. The
Company owns majority
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interests in one of its U.S. dealers and one of its international distributors
(which was a minority interest as of June 30, 1995. See Recent Developments
below).
Currently, three majority-owned subsidiaries of the Company
have the exclusive distribution rights to Fidelio PMS products in the Americas,
the United Kingdom and France.
Foreign sales accounted for approximately 33%, 29% and 26% of
the Company's total revenue in fiscal 1995, 1994 and 1993, respectively.
CUSTOMER SERVICE AND SUPPORT
The Company is committed to providing customers with superior
service and support, including installation, training, hardware and software
maintenance, spare parts, media supplies (ribbons, paper, etc.) and consulting
services.
The Company has developed a comprehensive MICROS Service
Network pursuant to contracts with its dealers and distributors with the goal
of providing its customers with uniform service in installing and maintaining
systems, on-going training, prompt field service and timely availability of
spare parts. The Company believes that services are an important competitive
factor and differentiator and has been building its service infrastructure by
adding application and technology specialists to support software and hardware
systems. Service revenue constituted approximately 23%, 21% and 20% of the
Company's total revenue in 1995, 1994 and 1993, respectively.
RESEARCH AND DEVELOPMENT
The products sold by the Company are subject to rapid and
continual technological change. The Company's product development strategy is
to provide compatible systems incorporating the newest technologies. This
strategy allows users to configure systems around various hardware and software
choices, adding new functions to their hospitality information systems that
enhance their operations. Products available from the Company, as well as its
competitors, have increasingly offered a wider range of features and
capabilities.
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The Company conducts its own product development at its
research and development facility located at its corporate headquarters in
Beltsville, Maryland. To supplement its own efforts, the Company occasionally
utilizes outside design services for product development. 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
rights to such products and designs.
The Company estimated that during fiscal 1995, 1994 and
1993, it expended approximately $5,044,300, $3,589,200 and $3,704,100,
respectively, on engineering design and development of new products and
enhancements of existing products, before the effect of the capitalization and
amortization of software development costs. The Company capitalized $286,200,
$196,900 and $802,900 during fiscal 1995, 1994 and 1993, respectively,
while amortizing $489,900, $438,800 and $140,700 to cost of sales in the
respective years in accordance with Statement of Financial Accounting Standards
No. 86.
COMPETITION
The Company believes that its competitive strengths include
its established global distribution and service network, its relationship with
Fidelio and its corporate focus on providing information systems solutions
principally to the hospitality industry.
The markets in which the Company competes are highly
competitive. There are worldwide at least 40 competitors that offer some form
of sophisticated POS system similar to the Company's and over 100 PMS
competitors. Competitors in the POS marketplace include full service providers
such as Sulcus (Squirrel POS), Sharp, Positouch, Par Technology and Panasonic
and hardware providers such as IBM and AT&T/GIS (formerly NCR) who market their
products in conjunction with independent software vendors. There are also
numerous smaller companies that market PC-based systems with POS-oriented
software.
Many of the over 100 competitors in the PMS market are small
companies with software designed to run on industry standard personal
computers. There are, however, various major competitors including Sulcus
(Lodgistix PMS), Hotel Information Systems, Encore and property management
systems developed and marketed by major hotel chains for their corporate-owned
operations and franchisees.
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MANUFACTURING
The Company's manufacturing program seeks to maintain
flexibility and reduce costs by emphasizing the strategic outsourcing of key
product components and subassemblies. All lower level assemblies such as
printed circuit assemblies, mechanical assemblies and cables are outsourced
based on competitive bidding. The outsourcing process includes evaluating
supplier processes, quality assurance, test capability and management and
technical support structures, as well as price and delivery cycle. Whenever
feasible, a second source is developed to reduce one-supplier dependence.
Outsourcing reduces requirements for manpower, capital equipment and
facilities, thus lowering overhead costs. Most outsourcing contracts are short
term (two years or less) based on quality points or strategic requirements with
key price components traced to monitor cost competitiveness. The Company
believes it maintains excellent relationships with its suppliers.
The Company's manufacturing operation is located at its
corporate headquarters in Beltsville, Maryland and consists primarily of
assembly and testing of various purchased components, parts and subassemblies.
Product reliability and quality are emphasized through stringent design
reviews, sophisticated computer testing of printed circuit assemblies, final
product testing and numerous quality control audits.
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.
EMPLOYEES
As of June 30, 1995, the Company had approximately 653
full-time employees, of whom approximately 525 were based in the U.S. and
approximately 128 were based internationally serving Europe, the Middle East,
Africa and Asia/Pacific. Approximately 72 employees are engaged in product
development, 85 in operations, 456 in marketing, sales and customer support
services and 40 in administration and finance. The Company is not a party to
any collective bargaining agreement and none of its employees is
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represented by a labor union. MICROS believes its relations with its employees
to be good.
FOREIGN SALES
The Company recorded foreign sales of approximately
$37,100,000 during fiscal 1995 to customers located primarily in Europe,
Africa, the Middle East, Australia, Asia, and Canada. Comparable sales in
fiscal 1994 were approximately $22,700,000 and in fiscal 1993 were
approximately $14,600,000. See Note 13 of Notes to Consolidated Financial
Statements.
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 products is
generally known and available to others. See Item 3 -- Legal Proceedings, for
an adverse claim.
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. Although the Company does not consider its business to be seasonal,
for a variety of reasons as noted above, certain quarters have historically
been stronger than other quarters. The Company believes that
quarter-to-quarter 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 a portion of the Company's business subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
ENVIRONMENTAL MATTERS
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
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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 less than 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,
1995 and 1994 the backlog totaled approximately $10.8 million and $7.9 million,
respectively.
OTHER
The Company has not used its revolving credit line during the
past several years due to its substantial cash balances and ability to fund the
expansion of its business through operations.
RECENT DEVELOPMENTS
On August 25, 1995, the Company purchased from Daniel
Cohen (a director of the Company) and his family (the "Cohen Family"), 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. In addition, Mr. Cohen was granted a five
year employment contract at FF 600,000 (approximately $119,000 at exchange
rates in effect at the date of purchase) per year plus a bonus based on future
operating results. Merger of D.A.C. Systemes/MICROS France and ADMI,
previously 23% owned equity investees, and Fidelio France, currently a 51%
owned consolidated subsidiary, is in the process of being consummated, after
which the Company will own 97% of the merged Fidelio/MICROS France entity, and
Fidelio GmbH, a 30% owned equity investee of the Company, will own the
remaining 3%. Fidelio/MICROS France will be consolidated into the Company's
accounts from the date of purchase. See Note 15 of Notes to Consolidated
Financial Statements.
See Part III, Item 12--Changes in Control, for additional
recent developments.
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ITEM 2. PROPERTIES
The Company's executive offices and its main administrative,
manufacturing, sales, marketing, customer service and product development
facilities are located in Beltsville, Maryland in three buildings; (i) one
building is approximately 60,000 square feet and is owned by the Company; (ii)
a second building is approximately 90,000 square feet, approximately 44,900 of
which is leased by the Company through 2009, with options to increase its
leased space during that period and an option to purchase the entire building
for ten dollars in the year 2009; and (iii) a third building of 21,600 square
feet which is leased under an operating lease by the Company through September
30, 1998.
The Company leases 9 domestic and 7 foreign sales, service and
support offices located in Boston, Chicago, Dallas, Denver, Las Vegas, Los
Angeles, Miami, Portland (Oregon), San Francisco, Dusseldorf, Frankfurt,
London, Madrid, Paris, Singapore and Zurich.
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 counsel concerning pertinent
legal matters, that any resulting liability would not have a material adverse
effect on the Company's results of operations or financial position. See Note
7 of Notes to Consolidated Financial Statements.
In December 1994, the Company received a claim that its
touchscreen product line infringes certain patents in several European
countries, including France, Germany and the United Kingdom. Preliminary
investigation indicates that the asserted patents may be unenforceable because
similar products were known and available in the market prior to the relevant
filing dates. While the ultimate outcome of this matter is uncertain, the
Company does not believe that the claim will have a material adverse effect on
its business, financial condition or results of operations.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of fiscal 1995, 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 June 30, 1995, there were approximately 491 record
holders of the Company's Common Stock, $.025 par value.
Bid and ask prices for the Company's Common Stock (symbol
"MCRS") have been quoted on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system. The following table shows the range of
closing bid prices for the period indicated, as reported by NASDAQ. The
quotations represent prices in the over-the-counter market between dealers in
securities, do not include retail markup, markdown, or commission, and may not
necessarily represent actual transactions.
On August 31, 1995 the closing bid price for the stock was
$34-1/8.
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Bid Prices
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(in dollars)
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Year Ended June 30, 1995 High Low
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7/01/94 - 9/30/94 (First Quarter) 33-1/2 26-1/4
10/01/94 - 12/31/94 (Second Quarter) 41-1/4 28-3/4
1/01/95 - 3/31/95 (Third Quarter) 38-1/8 28
4/01/95 - 6/30/95 (Fourth Quarter) 35 27-3/4
Year Ended June 30, 1994
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7/01/93 - 9/30/93 (First Quarter) 20-1/2 13-1/2
10/01/93 - 12/31/93 (Second Quarter) 26 14-3/4
1/01/94 - 3/31/94 (Third Quarter) 29-1/2 23-1/4
4/01/94 - 6/30/94 (Fourth Quarter) 27-3/4 22-1/2
</TABLE>
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<TABLE>
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Year Ended June 30, 1993
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7/01/92 - 9/30/92 (First Quarter) 10 7-1/4
10/01/92 - 12/31/92 (Second Quarter) 22-3/4 9-1/8
1/01/93 - 3/31/93 (Third Quarter) 22-3/4 11-3/4
4/01/93 - 6/30/93 (Fourth Quarter) 16 13-1/4
</TABLE>
The Company has never paid a dividend. The Company has no
current intention to pay any 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 Loan Agreement expiring December 31,
1996, which restricts the payment of dividends other than stock dividends (see
Note 4 of Notes to Consolidated Financial Statements). Future dividend policy
will be determined by the Board of Directors based on the Company's earnings,
financial condition, capital requirements and other existing conditions.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA (in thousands except per
share amounts)
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Fiscal Years Ended June 30,
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1995 1994 1993 1992 1991
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Statement of Operations Data
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Revenue $ 112,021 $79,265 $55,314 $44,328 $39,626
Income from operations $ 16,542 $12,322 $ 9,409 $ 5,784 $ 4,606
Net income $ 11,577 $ 8,687 $ 5,760 $ 4,019 $ 3,280
Net income per common and common
equivalent share $ 1.46 $ 1.10 $ 0.74 $ 0.53 $ 0.44
Cash dividends - - - - -
Balance Sheet Data
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Working capital $ 37,029 $27,126 $18,216 $18,400 $15,411
Total assets $ 89,644 $66,191 $48,207 $37,404 $30,707
Long-term debt (1) $ 5,614 $ 5,803 $ 1,780 $ 1,779 $ 1,952
Shareholders' equity $ 53,450 $39,938 $29,970 $23,559 $19,208
</TABLE>
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<TABLE>
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Book value per share $ 6.72 $ 5.05 $ 3.84 $ 3.08 $ 2.55
Additional Data
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Weighted average number of common
and common equivalent shares
outstanding 7,952 7,911 7,807 7,640 7,531
</TABLE>
(1) Including current portion.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Comparison of Fiscal 1995 to Fiscal 1994:
Revenue for fiscal year 1995 was $112.0 million, an increase
of $32.8 million, or 41.3%, compared to last year. Sales increased in every
distribution channel worldwide, with a substantial portion of the increase
attributable to the Company's 8700 HMS. Sales through the Company's direct
sales channels increased $26.7 million over fiscal 1994, including sales of POS
hardware, software and services through the Major Accounts channel which
increased $9.9 million compared to fiscal 1994 and Property Management System
sales through the Company's three Fidelio subsidiaries which increased $4.6
million. Sales by the nine North American district offices increased $6.1
million over fiscal 1994, including $1.8 million due to the addition of the
Denver and Portland district offices. Continued market share gains in the
Company's four European POS subsidiaries added $6.0 million in fiscal 1995
compared to fiscal 1994. Sales through the indirect sales channels to
independent dealers and distributors worldwide increased $6.1 million in
fiscal 1995. Hardware and software sales increased 37.6% while service
related revenues increased 55.1%.
Cost of sales, as a percentage of revenue, increased to 50.2%
for fiscal 1995 compared to 49.8% for fiscal 1994. Cost of sales for hardware
and software products, as a percentage of related revenue, decreased to 51.8%
for fiscal 1995 compared to 52.0% for fiscal 1994, primarily due to higher
software sales as a percent of total sales. Service costs, as a percentage of
related revenue, increased in fiscal 1995 to 45.0% from 41.5% in fiscal 1994.
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Such increases are primarily due to higher labor costs related to
subcontracting and training labor to meet the volume of 8700 HMS and Fidelio
installations and increased material costs to service maintenance contracts.
Selling, general and administrative expenses increased $10.0
million, or 43.6%, in fiscal 1995 compared to the prior year. As a percentage
of revenue, selling, general and administrative expenses increased to 29.3% in
fiscal 1995 compared to 28.8% in fiscal 1994. The increases are primarily the
result of the increased emphasis on the Company's sales and service
organizations, including the addition of three U.S. sales and service offices
and increased sales and service staffing worldwide. In addition, the Company
incurred approximately $437,000 or .4% of revenue in expenses due to the
Westinghouse incentive bonus payments to 11 key officers of the Company. (See
Note 11 of Notes to Consolidated Financial Statements).
Research and development expenses (exclusive of capitalized
software development costs), which consist primarily of labor costs, increased
$1.4 million, or 40.3%, in fiscal 1995 compared to fiscal 1994. Actual
research and development expenditures, including capitalized software
development costs of $286,200 in fiscal 1995 and $196,900 in fiscal 1994,
increased $1.5 million, or 40.5% in fiscal 1995 compared to fiscal 1994.
Income from operations was $16.5 million, or 14.8% of revenue
in fiscal 1995, an increase of 34.2% over the prior year when income from
operations was $12.3 million, or 15.5% of revenue. Income from operations in
fiscal 1995, as a percentage of revenue, excluding the additional $437,000 in
costs incurred due to the Westinghouse incentive bonus payments, was 15.2%.
Interest income increased $521,300 or 80.0%, in fiscal 1995 as
a result of an increase in interest rates on investments and an increase in
investment balances. Interest expense increased $180,500 to $368,800 in fiscal
1995 from $188,300 in fiscal 1994, primarily as a result of interest on the
capital lease entered into by the Company in January 1994.
The Company has recently experienced rapid revenue growth at a
rate that it believes has significantly exceeded that of the global market for
point-of-sale computer systems and property management information systems
products for the hospitality industry. Although the Company currently
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<PAGE> 18
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 increase sufficiently sales of its higher margin products,
including software and services, to prevent declines in the Company's overall
gross margin.
Comparison of Fiscal 1994 to Fiscal 1993
Revenue increased $24.0 million, or 43.3%, over fiscal 1993
with all distribution channels showing increases. Sales of POS hardware,
software and services to North American dealers grew $6.9 million and to North
American Major Account customers grew $5.2 million over fiscal 1993 on the
strength of the Company's newly introduced 8700 HMS and continued success of
the 2000 series HMS. Sales through the Company's six foreign subsidiaries
increased $5.5 million over fiscal 1993, and sales through foreign distributors
in the Europe/Africa/Middle East and Asia/Pacific regions increased $1.9
million.
Cost of sales, as a percentage of revenue, increased from
45.5% in fiscal 1993 to 49.8% in fiscal 1994. Cost of sales for hardware and
software products, as a percentage of related revenue, increased to 52.0% in
fiscal 1994 from 46.5% in fiscal 1993. The increase was due to a strategic
price reduction on certain products and an increase in volume of lower margin
products, partially offset by a favorable shift in sales distribution from the
indirect to direct sales channels. Cost of service, as a percentage of related
revenue, decreased slightly to 41.5% in fiscal 1994 from 41.6% in fiscal 1993.
Selling, general and administrative expenses increased $6.0
million, or 35.4%, in fiscal 1994 compared to fiscal 1993, primarily as a
result of increased sales and support activities, including those of the
Company's PMS subsidiaries, with the largest portion attributable to increased
staffing costs. However, as a percentage of revenue, such expenses decreased
to 28.8% in fiscal 1994 from 30.5% in fiscal 1993. The decrease was due to
effectively controlling the growth in expenses as the Company expanded its
operations.
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<PAGE> 19
Research and development expenses (exclusive of capitalized
software development costs) increased $491,100, or 16.9%, to $3.4 million in
fiscal 1994. Actual research and development expenditures decreased $114,900,
or 3.1%, in fiscal 1994. The decrease was primarily due to the higher level of
labor and material expenditures in fiscal 1993 to prepare the Company's 8700
HMS released in the first quarter of fiscal 1994.
Income from operations increased $2.9 million, or 31.0%, in
fiscal 1994 to $12.3 million. As a percentage of revenue, income from
operations decreased from 17.0% in fiscal 1993 to 15.5% in fiscal 1994 due to a
decline in hardware and related software margins offset to some extent
primarily by lower selling, general and administrative expenses as a percentage
of revenue.
Interest income increased $284,900, or 77.7%, in fiscal 1994
as a result of interest earned on a loan to Fidelio and a shift in certain
investments from those earning dividends to interest-bearing investments.
Interest expense increased to $188,300 in fiscal 1994 from $54,600 in fiscal
1993 due to the interest on the capital lease entered into by the Company in
January 1994.
Other non-operating expense, net, decreased $730,500, to
$201,100, in fiscal 1994 primarily due to foreign currency translation gains in
fiscal 1994, versus losses in fiscal 1993, from the investment in and loan to
Fidelio.
Liquidity and Capital Resources
Effective January 1, 1994, the Company had a $10.0 million
unsecured committed line of credit with its bank which expired February 9,
1995. On February 9, 1995, the Company obtained a $15.0 million unsecured
committed line of credit with its bank which expires December 31, 1996 and
which replaces the expired $10.0 million line of credit. There were no
borrowings under either line of credit facility during fiscal 1994 or fiscal
1995. The Company has generated sufficient cash flow through its operations
during these periods and has significant funds available in cash and
highly-liquid investments to meet its immediate needs.
Net cash provided by operating activities was $13.0 million
for fiscal 1995 and $4.6 million for fiscal
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<PAGE> 20
1994. Proceeds from the issuance of stock under the Company's incentive stock
option plan provided $353,400 for fiscal 1995 and $680,200 for fiscal 1994.
The income tax benefit from the exercise of disqualified stock options provided
$361,100 for fiscal 1995 and $356,700 for fiscal 1994. During fiscal
1995, the Company used cash of $11.8 million in investing activities, including
$2.6 million for the purchase of property, plant and equipment, $8.1 million
for the purchase of short-term investments, $205,700 for the purchase of net
district assets and $3.5 million primarily for the purchase of an additional
15% interest in Fidelio, offset by $3.2 million in net proceeds from the
repayment of a loan to Fidelio and $210,100 in dividends from affiliates. The
Company has the right to acquire all or part of the remaining shares of
Fidelio on or before December 31, 1999, at a price to be determined based on
an agreed upon formula. See Note 3 of Notes to Consolidated Financial
Statements. The Company used $1.2 million in fiscal 1994 for the
purchase of property, plant and equipment and $653,600 to purchase district
assets and equity interests in investees. In addition, capitalized software
development costs were $286,200 in fiscal 1995 compared to $196,900 in fiscal
1994. The Company made debt repayments of $321,600 on its building loan and
capital lease in fiscal 1995 and $257,100 during fiscal 1994. As a result,
the cash position of the Company at June 30, 1995 was $18.3 million. All
cash is being held for the operation and expansion of the business.
In connection with the Company's increase in ownership of
Fidelio in fiscal 1995 from 15% to 30%, the Company loaned Fidelio DM 900,000
(approximately $600,000), which bears interest at a variable rate, and is
obligated to
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<PAGE> 21
make additional loans of up to DM 600,000 (approximately $400,000), all of
which loans are to be repaid by December 31, 2000. The obligation of the
Company to make the further loans to Fidelio is conditioned on Fidelio's other
shareholders increasing their current loans to Fidelio from DM 2.1 million
(approximately $1.4 million) to an aggregate amount of up to DM 3.5 million
(approximately $2.3 million).
As a result of the fiscal 1993 investment in and loan to
Fidelio being realizable only in Deutsche Marks, MICROS was subject to currency
risks between the Deutsche Mark and the U.S. Dollar through September 30, 1994.
As a result of this investment and loan, a currency translation gain of
$187,800 and $446,000 were recognized as Other Income in fiscal 1995 and 1994,
respectively, and a currency translation loss of $462,200 was recognized as
Other Expense in fiscal 1993. MICROS continues to be subject to currency risks
between the Deutsche Mark and the U.S. Dollar with respect to the DM 900,000
loan which is realizable only in Deutsche Marks and which is to be repaid by
December 31, 2000. The Company does not engage in any foreign exchange hedging.
Financial indicators of the Company's liquidity and capital
resources as of June 30, 1995 and 1994 were:
<TABLE>
<CAPTION>
In thousands, except ratios 1995 1994
--------------------------- ---- ----
<S> <C> <C>
Cash and cash equivalents $18,315 $16,339
======= =======
Short term investments $ 8,070 --
======= =======
Available line of credit $15,000 $10,000
Outstanding letters of credit -- --
------- -------
Unused bank line of credit $15,000 $10,000
======= =======
Working capital $37,029 $27,126
======= =======
Long-term debt and capital lease obligation:
Current $ 363 $ 307
Non-current 5,251 5,496
------- -------
Total $ 5,614 $ 5,803
======= =======
Shareholders' equity $53,450 $39,938
======= =======
</TABLE>
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<PAGE> 22
<TABLE>
<S> <C> <C>
Current ratio 2.25 2.39
==== ====
</TABLE>
Inflation
The Company has not experienced any significant impact as a
result of inflation.
Effect of SFAS 109 - Accounting For Income Taxes
In February, 1992, the Financial Accounting Standards Board
issued its Statement No. 109 (SFAS 109), Accounting for Income Taxes. SFAS 109
changed the method of accounting for income taxes from the deferred method (APB
11) to an asset and liability approach. The asset and liability approach
requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax basis of assets and liabilities. MICROS adopted the
Statement effective for the first quarter of fiscal 1994. Adoption did not
have a material effect on the Company's consolidated financial position.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Item 14(a) 1 in Part IV.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
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<PAGE> 23
PART III
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
Name Position
---------------------------- ---------------------------------------
<S> <C>
Donny N. Anderson Vice President, Dealer
Sales-Americas
T. Paul Armstrong Senior Vice President, Research and
Development
Louis M. Brown, Jr. Director and Chairman of the Board
William N. Buckley Vice President, Manufacturing
Daniel A. Cohen Director
Kenneth M. Fisher Vice President and Product Manager,
Fast Service Products
A.L. Giannopoulos Director, President and Chief
Executive Officer
Daniel G. Interlandi Senior Vice President, Sales and
Marketing
Bernard Jammet Senior Vice President, International
Operations
Carroll H. Johnson Director (resigned as of August 23,
1995)*
Gary C. Kaufman Vice President, Finance and
Administration/Chief Financial
Officer
Ronald J. Kolson Executive Vice President/Chief
Operating Officer
Richard B. Lamy Vice President of Major Accounts
E. Michael Mahoney Vice President of Customer Service
Claudia E. Morf Director*
Fredric G. Reynolds Director*
Alan M. Voorhees Director
James T. Walsh Vice President, Quality Engineering
Roberta J. Watson Vice President and Controller
Judith F. Wilbert Corporate Secretary
Edward T. Wilson Director
</TABLE>
Directors of the Registrant are elected for a term of one year.
----------------------------------
* As of August 23, 1995, Mr. Johnson resigned as a Director of the Company.
Two new directors, Fredric G. Reynolds and Claudia E. Morf, were appointed
at a Board of Directors meeting on August 23, 1995. See Part III, Item
13 -- Certain Relationships and Related Transactions.
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<PAGE> 24
Directors and Executive Officers of the Registrant during
fiscal year 1995:
Donny N. Anderson, 50, who joined the Company in January 1984
as a District Manager. He was appointed to the position of Dealer Sales
Manager in July 1985, and was promoted to Managing Director for the Western
Region in May 1988. In July 1990, he became the Managing Director of Dealer
Sales, a position he held until May 1994, when he was promoted to the position
of Vice President, Dealer Sales--Americas. Prior to joining the Company, Mr.
Anderson was employed at Malloy Cash Register and held the position of Branch
Manager.
T. Paul Armstrong, 37, joined the Company in July, 1981 as a
software engineer. In December, 1983 he was promoted to the position of
Director, Systems Engineering until November, 1989 when he became Vice
President, Research and Development. In October, 1993, Mr. Armstrong was
promoted to Vice President and Product Manager, Full Service Products, and in
July 1995 Mr. Armstrong was made Senior Vice President, Research and
Development. Mr. Armstrong is a graduate of Cambridge University, England.
Louis M. Brown, Jr., 52, has been a Director of the Company
since 1977. Mr. Brown held the position of President/Chief Executive Officer
from January, 1986 until his appointment as Chairman of the Board in January,
1987. He is also Chairman of IDEAS, Inc., a supplier of high technology,
custom-engineered products and services with whom the Company has a product
purchasing agreement, through Granite Communications, Inc., a corporation in
which IDEAS currently holds a minority interest. Mr. Brown also serves as
President/Chief Executive Officer and as a Director of Autometric, Inc. and
Chairman of Planning Systems, Inc. Mr. Brown also serves as a board member of
Integral Systems, Inc. He is a graduate of The Johns Hopkins University
(B.E.S.-E.E.).
William N. Buckley, 53, joined the Company as Vice President,
Manufacturing, in June, 1985. Mr. Buckley previously held various
manufacturing and engineering management positions prior to joining the
Company. Mr. Buckley holds a B.S. Degree in Business Management from the State
University of New York and an A.A.S. in Electronics from Erie Community
College.
Daniel A. Cohen, 40, is Managing Director and was a principal
shareholder of D.A.C. Systemes/MICROS France, a current distributor of the
Company's products (see Part I, Item 1 -- Recent Developments) and is Managing
Director of Fidelio France S.A. In 1983, Mr. Cohen had worked for the former
MICROS distributor in France, prior to starting the representation of MICROS in
Israel. In 1986, he founded D.A.C. Systemes and took over the distribution of
MICROS products in France. In 1992, the Company acquired a 15% equity interest
in Mr. Cohen's company and the name was changed to D.A.C. Systemes/MICROS
France. An additional 8% equity interest was acquired by the Company in fiscal
1994, and the remainder of the stock acquired by the Company in
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<PAGE> 25
fiscal 1996. Mr. Cohen is a graduate of the Hotel School of Lausanne,
Switzerland, from which he holds a Masters degree in Hotel Administration.
Kenneth M. Fisher, 41, joined the Company in January, 1978 as
Director of New Product Development. In September, 1980 he was promoted to
Vice President, Research and Development, a position he held until October,
1989 when he became Vice President and Product Manager, Fast Service Products.
Mr. Fisher is a graduate of the Capitol Institute of Technology with a Bachelor
of Science degree in Electrical Engineering Technology.
A.L. Giannopoulos, 55, has been a Director since March, 1992
and was elected President and Chief Executive Officer in May, 1993. 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 Company pursuant to an
Employment Agreement to terminate December 31, 1999. In prior assignments at
Westinghouse, Mr. Giannopoulos was General Manager of the Automation Division
and National Industrial Systems Sales Force, Industries Group. Mr.
Giannopoulos is a graduate of Lamar University with a Bachelor of Science
degree in Electrical Engineering.
Daniel G. Interlandi, 42, began his career with MICROS in
1980. He has held key sales and management positions at the Company involving
district operations, distributors, major accounts, customer service, and served
as Product Manager for Full Service Products. He was promoted to Vice
President, Full Service Products in May, 1993 and to Senior Vice President,
Sales and Marketing in October, 1993. Mr. Interlandi is a 1975 graduate of
Knox College.
Bernard Jammet, 36, 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 his current position of
Senior Vice President, International Operations. Before joining MICROS, he 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.
Carroll H. Johnson, 48, had been a Director since May, 1994.
Mr. Johnson resigned as a Director of the
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<PAGE> 26
Company on August 23, 1995. Mr. Johnson is a Divisions Controller for
Westinghouse Information and Security Systems Divisions. He has been with
Westinghouse for 26 years holding positions of increasing responsibility in the
financial arena including the positions of Controller for the Commercial
Systems Divisions and the Marine & Electrical Systems Divisions. Mr. Johnson
is a graduate of the University of Baltimore and currently serves on its Alumni
Board of Governors.
Gary C. Kaufman, 45, served as a Director of the Company from
January, 1991 until May, 1994 when he was appointed to his present position of
Vice President, Finance and Administration/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.
Ronald J. Kolson, 41, joined the Company in April, 1984 as
Controller. In September, 1987 he was promoted to Vice President, Finance and
Administration/Chief Financial Officer. In 1994, he was promoted to his
present position of Executive Vice President/Chief Operating Officer. Mr.
Kolson is a graduate of The Pennsylvania State University with a Bachelor of
Science Degree in Accounting and is also a Certified Public Accountant.
Richard B. Lamy, 35, who joined the Company in November 1991 as
Director of Major Accounts. In July 1994, he was promoted to the position of
Vice President of Major Accounts. For the ten years prior to coming to MICROS,
Mr. Lamy was employed at NCR Corporation where he held various management
positions in their hospitality division. Mr. Lamy is a graduate of Providence
College with a Bachelor of Science degree in Marketing and Management.
E. Michael Mahoney, 53, joined the Company in February 1995 as
Vice President, Customer Service. Previously, Mr. Mahoney for 11 years held
various positions, including most recently that of Vice President, Open Systems
Services, with Bull Worldwide Information Systems, Inc. Mr. Mahoney attended
Delta College and completed his Masters level studies at the CEFRI School of
International Business Management, Paris, France.
Alan M. Voorhees, 72, has been a Director of the Company since
1982. He is Chairman of Summit Enterprises, Inc. of Virginia, a privately-held
investment company. Mr. Voorhees also is the Chairman of the Board of
Autometric, Inc., and a member of the Board of Directors of both Atlantic
Southeast Airlines, Inc., and IDEAS, Inc. with whom the Company has a product
purchasing agreement, through Granite Communications, Inc., a corporation in
which IDEAS currently holds a minority interest. Mr. Voorhees is a
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<PAGE> 27
graduate of Rensselaer Polytechnic Institute and holds a Masters degree from
Massachusetts Institute of Technology.
James T. Walsh, 37, joined the Company in October, 1990 as a
Dealer Maintenance Coordinator. Mr. Walsh was promoted to the position of
Director of Field Services in April, 1991 and was again promoted to Vice
President and Product Manager, Customer Service in September, 1991. Mr. Walsh
was named Vice President, Quality Engineering, in February 1995. Previously,
Mr. Walsh held the position of National Service Manager for Fasfax Corporation,
a privately-held point-of-sale manufacturer based in New Hampshire.
Roberta J. Watson, 33, who joined the Company in November 1987
as Manager of Accounting. In March 1990, she was promoted to the position of
Controller, and in November 1994, she was promoted to Vice President and
Controller. Ms. Watson holds a Bachelor of Science degree in Accounting from
the State University of New York and is a Certified Public Accountant.
Judith F. Wilbert, 50, joined the Company in May, 1987. Ms.
Wilbert is Executive Assistant to the President/CEO of MICROS. She was
appointed Assistant Corporate Secretary in November, 1988 and was promoted to
Corporate Secretary in November, 1990.
Edward T. Wilson, 54, has been a Director of the Company since
1981. He is currently a private investment advisor and President of the Fund
for Fine Arts, Inc. Previously, Mr. Wilson held senior management positions in
domestic and international banking with Riggs National Bank and The Bank of
America and in trade relations with the U.S. Chamber of Commerce and the U.S.
Commerce Department. Mr. Wilson holds a doctorate in international relations
from The Johns Hopkins University.
New Directors of the Registrant:
Claudia E. Morf, 43, has been a Director since August 1995
when she was appointed by the Board to serve as one of the two Westinghouse
representatives on the Board. Ms. Morf is Vice President and Treasurer of
Westinghouse, a position she has held since July of 1994. Before joining
Westinghouse, Ms. Morf was Assistant Treasurer and Vice President of PepsiCo,
Inc., where she worked for 12 years in the corporate finance area. Ms. Morf
holds a bachelor's degree in business administration from Bucknell University
and an MBA in finance from the Wharton Graduate School of the University of
Pennsylvania.
Fredric G. Reynolds, 44, has been a Director since August 1995
when he was appointed by the Board to serve as one of the two Westinghouse
representatives on the Board. Mr. Reynolds is Executive Vice President and
Chief Financial Officer of Westinghouse, a position he has held since
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<PAGE> 28
February of 1994. For the 12 years before joining Westinghouse, Mr. Reynolds
held senior management positions at PepsiCo, Inc., most recently as Senior Vice
President and Chief Financial Officer for PepsiCo Foods International. A
certified public accountant, Mr. Reynolds holds a BBA in accounting and
finance from the University of Miami.
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.
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<PAGE> 29
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is the number of shares of the Company's
Common Stock and the percentage of the total outstanding shares beneficially
owned by each director of the Company, the Chief Executive Officer, the four
other most highly compensated executive officers, all directors and executive
officers as a group, and all persons beneficially owning 5% or more of the
Company's Common Stock as of August 31, 1995. Also set forth below is the
address of each 5% beneficial owner.
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Beneficially Owned as
Individual or Group (1) of August 31, 1995 (2) Percent of Class
----------------------- ---------------------- -----------------
<S> <C> <C>
Louis M. Brown, Jr. 21,000 Less than 1%
Director, Chairman
of the Board
Daniel Cohen 2,400 Less than 1%
Director
Alan M. Voorhees 20,000(3) Less than 1%
Director
Edward T. Wilson 16,000(4) Less than 1%
Director
T. Paul Armstrong 16,334(5) Less than 1%
Senior Vice President,
Research and
Development
Daniel Interlandi 10,050(6) Less than 1%
Senior Vice President
Sales and Marketing
Gary C. Kaufman 600 Less than 1%
Vice President, Finance
and Administration,
Chief Financial Officer
</TABLE>
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<PAGE> 30
<TABLE>
<S> <C> <C>
Ronald J. Kolson 48,000(7) Less than 1%
Executive Vice President
Chief Operating Officer
Directors and Executive 201,999(8) 2.5%
Officers as a Group
(17 persons, including
the above-named
persons)
Westinghouse Holdings 3,849,123 49.0%
Corporation
Westinghouse Building
Gateway Center
Pittsburgh, PA 15222
</TABLE>
A.L. Giannopoulos, Director, President and Chief Executive Officer does not
beneficially own any shares of common stock at August 31, 1995.
(1) As of August 31, 1995, CEDE & Co., nominee for Stock Clearing
Corporation, Box 20, Bowling Green Station, New York, New York, a central
certificate service, held of record 3,659,304 shares (46.6%) of the
outstanding shares of Common Stock. Those shares are believed to be owned
beneficially by a large number of beneficial owners and, except as indicated in
this table, the Company is not aware of any other individual or group owning
beneficially more than 5% of the outstanding Common Stock.
(2) Information with respect to beneficial ownership is based on
information furnished by each shareholder. Sole voting and sole investing
power is exercised by each individual.
(3) Does not include 30,000 shares held by irrevocable trusts created for
the benefit of the adult children of Mr. Voorhees, with respect to which he
disclaims any beneficial interest.
(4) Mr. Wilson disclaims any beneficial interest in 23,500 shares of Common
Stock, not included here, held in custody for his dependent children.
(5) Represents options to purchase 16,334 shares exercisable within 60
days.
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<PAGE> 31
(6) Includes options to purchase 10,000 shares exercisable within 60 days.
(7) Includes options to purchase 20,500 shares exercisable within 60 days.
(8) Includes stock options for the purchase of 46,834 shares of Common
Stock which are exercisable as of or within sixty days of August 31, 1995 and
assumes 7,906,065 shares outstanding upon the exercise of such options.
Gary C. Kaufman beneficially owns 2,400 shares of Westinghouse common stock
(less than 1%).
A.L. Giannopoulos beneficially owns 1,550 shares of Westinghouse common stock
and has options, currently exercisable, to purchase 55,000 shares of
Westinghouse stock.
Changes in Control
As of June 19, 1995, Westinghouse transferred to Westinghouse
Holdings Corporation, a wholly-owned subsidiary of Westinghouse (the "Selling
Stockholder"), all 4,849,123 shares of the common stock of the Company owned by
it.
As of June 30, 1995, 4,849,123 shares of the common stock of
the Company, representing 61.7% of the outstanding common stock of the Company
as of June 30, 1995, held by the Selling Stockholder were registered under the
Securities Act of 1933, as amended, pursuant to the exercise by Westinghouse of
its rights to request such registration under a Stock Unit Purchase Agreement
dated October 30, 1986, as amended by a letter agreement dated May 2, 1995
between Westinghouse and the Company (collectively, the "Purchase Agreement").
On July 6, 1995 the Selling Stockholder sold 1,000,000 shares
of the common stock of the Company to certain underwriters and currently owns
3,849,123 shares, representing approximately 49% of the outstanding common
stock of the Company as of June 30, 1995. The remaining shares of the Company
held by the Selling
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<PAGE> 32
Stockholder may from time to time be offered and sold by the Selling
Stockholder to or through underwriters, through one or more agents or directly
to purchasers.
In addition, the Selling Stockholder has the right under the
Purchase Agreement to request an additional registration under the Securities
Act for the sale of all or a portion (subject to a minimum of 100,000 shares)
of its shares, as well as the right to include such shares in a registration
statement filed by the Company under the Securities Act for the sale of shares
by the Company. In the Purchase Agreement, the Company has agreed to indemnify
Westinghouse and the Selling Stockholder, in respect of certain liabilities,
including liabilities under the federal securities laws. Pursuant to the terms
of the Purchase Agreement, Westinghouse shall pay the expenses incurred by the
Company in connection with such registration and sale.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's President and Chief Executive Officer, Mr.
Giannopoulos, was formerly a full-time employee of Westinghouse. In connection
with his departure from Westinghouse, Mr. Giannopoulos and Westinghouse entered
into a severance agreement, which provides for, among other things, a severance
payment and continued participation in certain aspects of Westinghouse's stock
option and pension plans.
In addition, Westinghouse, as an incentive to 11 key officers
to remain with the Company for a period of two years following June 1, 1995,
agreed to make payments to such officers aggregating up to approximately $1.25
million, payable in three equal installments promptly after such date and on
the first and second anniversaries of such date (subject to the officer
remaining employed by the Company on the relevant payment date). In June 1995,
the first installment of $409,100 was paid for these key officers of the
Company. Even though such payments are entirely funded by Westinghouse and
will not require any use of the Company's cash, for accounting purposes,
one-third of such payments are required to be reflected as compensation
expense in the Company's financial statements on the first payment date with
the remainder to be reflected as compensation expense over the 24-month period
following June 1, 1995.
Pursuant to the Purchase Agreement for so long as the Selling
Stockholder holds not less than 18% of the then issued and outstanding shares
of Common Stock, the Company shall use its best efforts to cause the Board of
Directors of the Company to nominate as Directors of the Company such
-32-
<PAGE> 33
two representatives as the Selling Stockholder may designate.
During the years of its affiliation with Westinghouse, the
Company has obtained certain insurance coverage and other services through
arrangements negotiated by Westinghouse for itself and its subsidiaries and
affiliates. Many of these arrangements will be replaced by the Company with
its own contracts as and when the Company elects to do so or is no longer
eligible to participate in such arrangements. The Company has already
replaced certain of these arrangements, including the Westinghouse provided
legal services and insurance coverage. The Company estimates that the
incremental cost to it of purchasing all such services without the benefit of
participating in programs of Westinghouse could total approximately $1.0
million per year on a pre-tax basis.
The Company has purchased certain raw materials and has
contracted for certain sub-assembly operations through Westinghouse to take
advantage of more competitive pricing available through off-shore manufacturing
locations. The Company estimates that it has purchased approximately $964,700,
$1,691,200, and $1,543,000 in such materials and labor from Westinghouse during
fiscal 1995, 1994, and 1993, respectively.
During fiscal 1995, 1994, and 1993, the Company also purchased
from Westinghouse and its subsidiaries approximately $877,600, $667,400, and
$673,400, respectively, for other products and services provided to the
Company, including insurance coverage, office space, consulting, office
furniture, and telecommunications services.
During fiscal 1993, the Company sold approximately $779,200 in
products to Hugin Sweda-Austria, under the same terms and conditions offered to
other independently-owned dealers/distributors of the Company. Hugin
Sweda-Austria is owned, in part, by Peter Unterweger, a Director of the Company
until October, 1992.
During fiscal 1995, 1994, and 1993, the Company sold
approximately $1,208,200, $1,107,500, and $946,600, respectively, in products
to D.A.C. Systemes/MICROS France, under the same terms and conditions offered
to other independently-owned dealers/distributors of the Company. D.A.C.
Systemes/MICROS France was principally owned by Daniel Cohen, a Director of the
Company, as of June 30,
-33-
<PAGE> 34
1995. See Note 15 of Notes to Consolidated Financial Statements.
During fiscal 1992, the Company entered into an agreement with
Granite Communications, Inc. ("Granite") to purchase certain hardware and
communications software for the Company's handheld products to be sold in
conjunction with its internally-developed applications software. Granite is an
entity affiliated with the Chairman of the Board, Louis M. Brown, Jr., and
another Director of the Company, Alan Voorhees, since it was acquired by IDEAS,
Inc. in fiscal 1992. During fiscal 1995, after a series of transactions,
IDEAS' once majority interest in Granite was reduced to approximately a 17%
interest. In fiscal 1991, the Company had advanced the sum of $220,000 to the
predecessor of Granite for the development of a product, and advanced $150,000
in fiscal 1994 to Granite for the development of an additional product. Under
the current agreements with Granite, the crediting of the advances is being
reflected in product purchases through a reduced price for each unit purchased.
During fiscal 1995, 1994 and 1993, the Company purchased products from Granite
in the amount of $487,600, $1,301,500 and $863,500, respectively, net of
$127,500 and $92,500 in fiscal 1994 and 1993, respectively, in credits against
the advance payment made in 1991. The $150,000 advance made in fiscal 1994 will
reduce the price of products purchased subsequent to fiscal 1995. In fiscal
1995 (for a license fee payable over time in the amount of $300,000, and a
royalty payment per unit sold into certain designated markets), the Company
acquired a license for the technology to develop, manufacture and market the
products exclusively in the Hospitality Food Service field, and
non-exclusively in the Lodging field and certain Retail and General
Merchandise locations. Additionally, pursuant to an asset purchase agreement
entered into in fiscal 1995, the Company purchased from Granite $144,500 of
machinery and equipment designed for the manufacture of certain handheld
products.
During fiscal 1993, the Company assumed a liability in the
amount of $180,000 to a minority shareholder, payable in equal installments
over the next 3 fiscal years. The liability was assumed as a part of the
purchase of a majority interest in Fidelio Software Corporation. In addition,
the Company has entered into certain software licensing and royalty agreements
with
-34-
<PAGE> 35
Fidelio through the Company's majority-owned subsidiaries in the U.S.,
France and the U.K. which distribute Fidelio software products. The terms
and conditions of the licensing and royalty agreements are substantially
similar to agreements which Fidelio has with its other distributors.
MICROS owns a minority interest in Fidelio. See Note 3 of Notes to
Consolidated Financial Statements.
During fiscal 1995, 1994, and 1993, the Company compensated
Louis M. Brown, Jr., Chairman of the Board, $182,900, $154,000, and $35,000,
respectively, for consulting services provided to the Company. On June 30,
1995, the Company and Mr. Brown entered into a Consulting Agreement pursuant to
which Mr. Brown is to provide on the average 20 hours per week of consulting
services to the Company terminating on June 30, 2000 in exchange for a base
salary commencing at $150,000 plus a target bonus of $70,000, with annual
adjustments.
-35-
<PAGE> 36
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
(a) The following documents are filed as a part
of this report:
1. Financial Statements:
Report of Independent Accountants 39
Consolidated balance sheets as of
June 30, 1995 and 1994 40
Consolidated statements of operations
for the years ended June 30, 1995,
1994, and 1993 42
Consolidated statements of shareholders'
equity for the years ended June 30, 1995,
1994, and 1993 43
Consolidated statements of cash flows for
the years ended June 30, 1995, 1994, and
1993 45
Notes to consolidated financial statements 49
2. Financial Statement Schedules:
Schedule V, Property and equipment 67
Schedule VI, Accumulated depreciation,
depletion, and amortization of property
and equipment 68
Schedule VIII, Valuation and qualifying
accounts and reserves 69
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.
</TABLE>
3. Exhibits:
3(i). Articles of Incorporation 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.
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.*
------------------
* Indicates that exhibit is a management contract or compensatory plan or
arrangement.
-36-
<PAGE> 37
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (continued)
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.*
10b. 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.*
10c1. Stock Unit Purchase Agreement dated
October 30, 1986 between Westinghouse
Electric Corporation and MICROS Systems,
Inc. is incorporated herein by reference
to Exhibit 4d to the Registration
Statement on Form S-3 of the Company
filed on January 25, 1995.
10c2. Letter Agreement dated May 2, 1995
between Westinghouse Electric Corporation
and MICROS Systems, Inc. is incorporated
herein by reference to Exhibit 4e to
Amendment No. 4 to the Registration
Statement on Form S-3 of the Company
filed on May 3, 1995.
10d. Underwriting Agreement dated July 6, 1995
by and among MICROS Systems, Inc.,
Westinghouse Electric Corporation,
Westinghouse Holdings Corporation and
J.P. Morgan Securities, Inc., Morgan
Stanley & Co. Incorporated and Smith
Barney Inc.
10e. Employment Agreement dated June 1, 1995
between MICROS Systems, Inc. and A.L.
Giannopoulos.*
10f. Consulting Agreement dated June 30, 1995
between MICROS Systems, Inc. and Louis M.
Brown, Jr.*
10g. Employment Agreement dated August 25, 1995 between
MICROS Systems, Inc. and Daniel Cohen.*
10h. MICROS Systems, Inc. Bonus and Incentive Plan is
incorporated by reference to Exhibit 10 to the
Quarterly Report on Form 10-Q of the Company for the
period ended September 30, 1994.*
11. Statement Regarding Computation of
Earnings Per Share.
21. Subsidiaries of the Company.
23. Consent of Independent Accountants.
-37-
<PAGE> 38
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (continued)
24. Power of Attorney.
27. Financial Data Schedule.
(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, 1995.
The annual report will be submitted to shareholders prior to the
annual meeting scheduled for November 17, 1995.
-38-
<PAGE> 39
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) and (2) on page 36 present fairly, in all
material respects, the financial position of MICROS Systems, Inc. and its
subsidiaries at June 30, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards 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 the
opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in fiscal year 1994.
Price Waterhouse LLP
Baltimore, Maryland
August 21, 1995
-39-
<PAGE> 40
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
as of June 30, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $18,315,400 $16,339,100
Short term investments 8,070,000 -
Accounts receivable, net of allowance
for doubtful accounts of $1,229,200
in 1995 and $764,300 in 1994 25,184,900 17,690,200
Inventories 11,343,500 10,186,800
Deferred income taxes 1,890,100 1,393,200
Prepaid expenses and other
current assets 1,820,300 1,090,000
------------ ------------
Total current assets 66,624,200 46,699,300
------------ ------------
Property, plant and equipment:
Land 1,582,700 1,582,700
Buildings 4,820,600 4,820,600
Building improvements 320,300 320,300
Machinery and equipment 7,577,900 5,687,200
Furniture and fixtures 2,871,900 2,293,300
Leasehold improvements 338,800 236,700
------------ ------------
17,512,200 14,940,800
Accumulated depreciation
and amortization (7,350,400) (6,176,600)
------------ ------------
Net property, plant and equipment 10,161,800 8,764,200
------------ ------------
Note receivable 649,400 3,151,500
Investments in affiliates, including
related goodwill 8,508,600 4,205,100
Other assets:
Capitalized computer software develop- 1,544,300 1,748,000
ment costs, net of accumulated
amortization of $1,684,400 in 1995 and
$1,371,900 in 1994
Goodwill and district intangible 1,719,100 1,395,300
assets, net of accumulated amortization
of $707,600 in 1995 and $472,400 in 1994
Other 436,300 227,200
------------ ------------
Total assets $89,643,700 $66,190,600
============ ============
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-40-
<PAGE> 41
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
as of June 30, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
debt $ 257,900 $ 218,900
Current portion of capital lease
obligation 105,600 88,400
Accounts payable 8,504,500 5,864,400
Accrued expenses and other current
liabilities 16,214,700 10,583,200
Income taxes payable 361,500 412,800
Deferred service revenue 4,150,600 2,405,500
------------ ------------
Total current liabilities 29,594,800 19,573,200
------------ ------------
Long-term debt, net of current
portion 1,668,800 1,807,800
Capital lease obligation, net of
current portion 3,582,100 3,687,700
Deferred income taxes payable 932,500 952,200
Minority interest 415,300 231,800
------------ ------------
Total liabilities 36,193,500 26,252,700
------------ ------------
Commitments and contingencies
Shareholders' equity:
Common stock, $.025 par; authorized
10,000,000 shares; issued and
outstanding 7,859,095 shares in
1995 and 7,787,577 shares in 1994 196,500 194,700
Capital in excess of par 14,882,600 13,760,800
Retained earnings 37,402,000 25,825,200
Accumulated foreign currency
translation adjustments 969,100 157,200
------------ ------------
Total shareholders' equity 53,450,200 39,937,900
------------ ------------
Total liabilities and shareholders'
equity $ 89,643,700 $ 66,190,600
============ ============
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-41-
<PAGE> 42
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended June 30, 1995, 1994, and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Hardware and related
software $ 85,928,800 $ 62,440,700 $ 44,214,500
Service 26,091,900 16,823,800 11,099,100
------------ ------------ ------------
112,020,700 79,264,500 55,313,600
------------ ------------ ------------
Costs and expenses:
Cost of sales
Hardware and related
software 44,513,100 32,466,600 20,574,200
Service 11,750,100 6,980,900 4,617,400
------------ ------------ ------------
56,263,200 39,447,500 25,191,600
Selling, general and
administrative expenses 32,817,000 22,858,800 16,880,600
Research and development
expenses 4,758,100 3,392,300 2,901,200
Depreciation and
amortization 1,640,300 1,244,000 931,100
------------ ------------ ------------
95,478,600 66,942,600 45,904,500
------------ ------------ ------------
Income from operations 16,542,100 12,321,900 9,409,100
Non-operating
income (expense):
Interest income 1,172,700 651,400 366,500
Interest expense (368,800) (188,300) (54,600)
Minority interest (146,500) (12,700) (41,600)
Other income (expense),
net 475,600 (201,100) (931,600)
------------ ------------ ------------
Income before taxes and
equity in net earnings
of affiliates 17,675,100 12,571,200 8,747,800
Income taxes 6,175,000 3,982,200 3,033,900
------------ ------------ ------------
Income before equity in
net earnings of affiliates 11,500,100 8,589,000 5,713,900
Equity in net earnings of
affiliates 76,700 98,300 46,000
------------ ------------ ------------
Net income $ 11,576,800 $ 8,687,300 $ 5,759,900
============ ============ ============
Net income per common and
common equivalent share $ 1.46 $ 1.10 $ 0.74
============ ============ ============
Weighted-average number of
common and common equivalent
shares outstanding 7,951,593 7,910,619 7,806,773
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-42-
<PAGE> 43
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended June 30, 1995, 1994, and 1993
<TABLE>
<CAPTION>
Common Stock Capital Accum. Foreign
-------------------------- in Excess Retained Currency
Shares Amount of Par Earnings Transl. Adjust. Total
---------- ---------- ----------- ------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance,
June 30, 1992 7,479,070 $ 187,000 $11,993,800 $11,378,000 $ - $23,558,800
Stock issued upon
exercise of options 175,391 4,400 439,100 - - 443,500
Income tax
benefit from
stock options
exercised - - 294,300 - - 294,300
Net income for
the year - - - 5,759,900 - 5,759,900
Accumulated for-
eign currency
translation
adjustment - - - - (86,100) (86,100)
---------- ---------- ----------- ----------- ------------- -----------
Balance,
June 30, 1993 7,654,461 191,400 12,727,200 17,137,900 (86,100) 29,970,400
Stock issued upon
exercise of options 133,116 3,300 676,900 - - 680,200
Income tax
benefit from
stock options
exercised - - 356,700 - - 356,700
Net income for
the year - - - 8,687,300 - 8,687,300
Accumulated for-
eign currency
translation
adjustment - - - - 243,300 243,300
---------- ---------- ----------- ----------- ------------- -----------
Balance,
June 30, 1994 7,787,577 $ 194,700 $13,760,800 $25,825,200 $ 157,200 $39,937,900
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-43-
<PAGE> 44
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (continued)
for the years ended June 30, 1995, 1994, and 1993
<TABLE>
<CAPTION>
Common Stock Capital Accum. Foreign
-------------------------- in Excess Retained Currency
Shares Amount of Par Earnings Transl. Adjust. Total
---------- ---------- ----------- ------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance,
June 30, 1994 7,787,577 $ 194,700 $13,760,800 $25,825,200 $ 157,200 $39,937,900
Stock issued upon
exercise of options 71,518 1,800 351,600 - - 353,400
Income tax
benefit from
stock options
exercised - - 361,100 - - 361,100
Net income for
the year - - - 11,576,800 - 11,576,800
Accumulated for-
eign currency
translation
adjustment - - - - 811,900 811,900
Capital contribution
from Westinghouse - - 409,100 - - 409,100
---------- ---------- ----------- ----------- ------------ -----------
Balance,
June 30, 1995 7,859,095 $ 196,500 $14,882,600 $37,402,000 $ 969,100 $53,450,200
========== ========== =========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-44-
<PAGE> 45
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended June 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $11,576,800 $8,687,300 $5,759,900
----------- ---------- ----------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 1,640,300 1,244,000 931,100
Amortization of capitalized
software 489,900 438,800 140,700
Provision for losses on accounts
receivable 697,000 273,700 240,100
Provision for inventory
obsolescence 502,400 564,200 150,000
Provision for loss on short-term
investment - - 148,400
Undistributed earnings from equity
investment (76,700) (98,300) (46,000)
Provision for deferred income
taxes (260,600) (398,500) 368,500
Currency (gain)/loss on equity
investment and loan receivable (187,800) (446,000) 462,200
Changes in assets and liabilities:
(Increase) in accounts
receivable (8,240,000) (5,837,100) (2,378,300)
(Increase) in inventories (1,528,600) (3,633,100) (2,241,500)
(Increase) decrease in prepaid
expenses and other assets (1,066,400) 407,300 (115,000)
Increase in accounts payable 2,612,200 605,300 1,338,200
Increase in accrued expenses
and other current liabilities 5,471,700 2,732,900 1,105,800
(Decrease) in income taxes
payable (314,400) (653,200) (176,500)
Increase (decrease) in deferred
service revenue 1,660,400 680,400 (485,100)
----------- ---------- ----------
Total adjustments 1,399,400 (4,119,600) (557,400)
----------- ---------- ----------
Net cash provided by operating
activities 12,976,200 4,567,700 5,202,500
----------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-45-
<PAGE> 46
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
for the years ended June 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from investing activities:
Purchases of property, plant and
equipment (2,588,800) (1,224,900) (653,400)
Dispositions of property,
plant and equipment 2,000 87,600 (400)
Capitalized software development
costs (286,200) (196,900) (802,900)
Purchase of net district assets (205,700) (245,300) -
Purchase of equity interest in
investees (3,481,700) (408,300) (3,374,500)
(Purchase) sale of short-term investments (8,070,000) - 5,846,600
Sale of long-term investments - - 1,000,100
Proceeds from loan to affiliates 3,223,000 - -
Loan to investee (604,600) - (3,159,600)
Dividends received from affiliates 210,100 31,500 -
Proceeds from sale of affiliate stock - 108,500 -
Net cash received in acquisitions - - 262,100
----------- ---------- ----------
Net cash used in investing
activities (11,801,900) (1,847,800) (882,000)
----------- ---------- ----------
Cash flows from financing
activities:
Principal payments on long-term
debt (233,200) (186,600) (130,000)
Principal payments on capital
lease obligation (88,400) (70,500) (48,900)
Proceeds from issuance of stock 353,400 680,200 443,500
Income tax benefit from stock
options exercised 361,100 356,700 294,300
Capital contribution from
Westinghouse 409,100
----------- ---------- ----------
Net cash provided by
financing activities 802,000 779,800 558,900
----------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-46-
<PAGE> 47
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
for the years ended June 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Net increase in cash and cash
equivalents $ 1,976,300 $ 3,499,700 $ 4,879,400
Cash and cash equivalents at
beginning of year 16,339,100 12,839,400 7,960,000
------------ ------------ ------------
Cash and cash equivalents at
end of year $ 18,315,400 $ 16,339,100 $ 12,839,400
============ ============ ============
</TABLE>
Supplemental disclosures of cash flow information:
<TABLE>
<S> <C> <C> <C>
Cash paid during the year for:
Interest $ 367,500 $ 171,100 $ 46,100
=========== =========== ============
Income taxes $ 6,470,100 $ 4,729,400 $ 2,534,100
=========== =========== ============
</TABLE>
Supplemental schedule of noncash financing and investing activities:
The purchase of district assets during 1995 included cash payments of
$205,700 and the issuance of a promissory note in the amount of
$235,300, with annual payments through April 1999. The unamortized
discount on the note, based on an imputed annual interest rate of
8.75%, is $40,800 at June 30, 1995.
The purchase of district assets in September 1993 included a cash
payment of $245,300 and the issuance of a promissory note in the
amount of $500,000. Payments in the amount of $100,000 are due
beginning September 30, 1994, and on the same day of each succeeding
year thereafter through September 30, 1998. The unamortized discount
on the note, based on an imputed annual interest rate of 5.75% is
$36,500 at June 30, 1995.
In fiscal 1993, the Company acquired majority interests in Fidelio
Software Corporation, Fidelio Software U.K. Limited, and Fidelio
France S.A. for an aggregate purchase price of $1,737,700. The
fair value of assets acquired of $4,187,900 included cash of
$1,999,800. Liabilities assumed as part of the acquisitions were
$2,419,000.
A capital lease obligation of $3,837,800 was incurred in January 1994
when the Company entered into a lease for office space.
-47-
<PAGE> 48
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
for the years ended June 30, 1995, 1994 and 1993
Disclosure of accounting policy:
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
Short term investments are those with maturities in excess of 3
months, but less than 1 year from the date of purchase. These
interest bearing investments are readily convertible to cash, and are
valued at cost which approximates fair value.
The accompanying notes are an integral part of the
consolidated financial statements.
-48-
<PAGE> 49
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of business and summary of significant accounting
policies:
Description of business
MICROS Systems, Inc. is a worldwide designer, manufacturer,
supplier and servicer of point-of-sale (POS) and property management
systems, related peripheral equipment and software. (References to
"MICROS" or the "Company" herein include the operations of MICROS
Systems, Inc. and its subsidiaries on a consolidated basis.) MICROS'
customers are principally hospitality providers operating full service
and fast food restaurants, including restaurants located in hotels
and other lodging establishments.
On January 25, 1995, the Company filed with the Securities and
Exchange Commission a Registration Statement on Form S-3 ("Registration
Statement") for the sale of up to 4,849,123 shares of Common Stock of
the Company held directly or indirectly by Westinghouse, with all
of the proceeds going to Westinghouse. On May 2, 1995, the Company
filed an amendment to the Registration Statement to permit the
delayed offering of the shares of Common Stock owned by Westinghouse.
As of June 19, 1995, Westinghouse transferred to Westinghouse Holdings
Corporation, a wholly-owned subsidiary of Westinghouse (the "Selling
Stockholders") all 4,849,123 shares of the Common Stock of the
Company owned by it. At June 30, 1995, the Selling Stockholder owned
4,849,123 shares of Common Stock, representing 61.7% of the
outstanding Common Stock. If all of the shares of Common Stock to
which the Registration Statement relates are sold, Westinghouse and
the Selling Stockholder will not own any shares of Common Stock (see
Note 15).
Principles of consolidation
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries. Investments in 20%-
through 50%-owned affiliated companies are included under the equity
method where the Company exercises significant influence over
operating and financial affairs. Otherwise, investments are included
at cost. Differences between the carrying amounts of equity
investments and the Company's interest in underlying net assets are
amortized over periods benefited. All significant intercompany
accounts and transactions have been eliminated.
Minority Interest
The Company owns 60% of the capital stock of Micros Systems AG (Ltd.),
a company organized under the laws of Switzerland. On May 12, 1993,
MICROS acquired a majority interest in three subsidiaries of Fidelio
Software GmbH ("Fidelio GmbH"), a supplier of hotel property
management systems, which control the distribution rights of Fidelio
GmbH products in North, South and Central America, France and the
United Kingdom. The total purchase price, including net liabilities
assumed and capitalized expenses, was $1,926,900, of which $1,226,100
represents goodwill which is being amortized over 10 years, for 90% of
the capital stock of Fidelio Software Corporation, a Delaware
corporation, 80% of Fidelio France S.A. ("Fidelio France"), a company
organized under the laws of France, and 80% of Fidelio Software UK
Limited, a company organized under the laws of England and Wales.
-49-
<PAGE> 50
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of business and summary of significant accounting policies
(continued):
Minority Interest (continued)
In October, 1993, the Company sold a 29% interest in Fidelio France to
an affiliate. At June 30, 1995 and 1994, the Company owns 51% of the
stock of Fidelio France directly, and has additional interests of
9.67% indirectly through affiliate investments (see Note 15). In
addition, a capital contribution of $296,800 was made in fiscal 1994
to Fidelio France by an affiliate.
Foreign currency translation
The financial statements of MICROS' 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
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 product sales is recognized at the time of shipment with
a provision for estimated returns and allowances. Revenue from the
installation of products is recognized upon the completion of the
installation of the product as acknowledged by the customer. 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, which is generally one year.
Short term investments
Short term investments are comprised of tax-free and taxable variable
rate bonds that can be readily purchased or sold using established
markets. Short term investments are stated at cost, which
approximates fair value.
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 betterments 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.
-50-
<PAGE> 51
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of business and summary of significant accounting policies
(continued):
Property, plant and equipment (continued)
Leasehold improvements are amortized over the terms of the respective
leases or useful lives of the improvements, whichever is shorter.
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 computer software development costs
The Company capitalizes software development costs in accordance with
Statement of Financial Accounting Standards No. 86. Software
development costs 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.
The total computer software development costs capitalized in fiscal
1995, 1994, and 1993 were $286,200, $196,900 and $802,900,
respectively. The total costs amortized and charged to operations in
fiscal 1995, 1994, and 1993 were $489,900, $438,800 and $140,700,
respectively.
Research and development costs
Expenditures for research and development not capitalized as described
above are charged to operations as incurred.
Goodwill
The excess of cost over fair market value of net assets acquired is
amortized on a straight-line basis over periods ranging from three to
ten years.
-51-
<PAGE> 52
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Description of business and summary of significant accounting policies
(continued):
Financing costs related to long-term debt
Costs associated with financing long-term debt are amortized over the
term of the related debt.
Advertising costs
The Company's policy for accounting for advertising is to expense
costs as incurred. Advertising expenses for fiscal 1995, 1994, and
1993, were $1,600,500, $1,224,800, and $820,100, respectively.
Income taxes
Deferred taxes have been provided to reflect temporary differences
between the financial statement and the tax return recognition of
certain items.
Financial Accounting Standards Board Statement No. 109 (SFAS 109),
Accounting for Income Taxes is an asset and liability approach that
requires the recognition of deferred tax liabilities and assets for
the expected future tax consequences of temporary differences between
the carrying amounts and the tax basis of assets and liabilities.
MICROS adopted the Statement effective for the first quarter of fiscal
1994. Adoption did not have a material effect on the Company's
consolidated financial position or results of operations.
Net income per common and common equivalent share
Net income per common and common equivalent share is computed based on
the weighted-average number of common and common equivalent shares
outstanding during each year. For purposes of this computation, the
Company's outstanding stock options are considered common stock
equivalents.
Reclassifications
Certain prior year reclassifications have been made to conform to 1995
classifications.
2. Inventories:
The components of inventories are as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Raw materials $ 2,533,500 $ 1,915,700
Work-in-process 2,784,600 1,319,400
Finished goods 6,025,400 6,951,700
----------- -----------
$11,343,500 $10,186,800
=========== ===========
</TABLE>
-52-
<PAGE> 53
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Investments and note receivable:
In fiscal 1992 the Company purchased a 15% interest in D.A.C. Systemes
of Paris, France (now D.A.C. Systemes/MICROS France), a MICROS
distributor marketing and maintaining hospitality related products to
hotels and restaurants throughout France. An additional 8% interest
was purchased in October, 1993. The equity interests were acquired at
an aggregate cost of $628,300, of which $383,300 represents goodwill
which is being amortized over 10 years. The total goodwill amortized
in fiscal years 1995, 1994, and 1993 was $38,100, $32,300, and
$15,100, respectively (see Note 15).
In fiscal 1993, MICROS GmbH purchased 15% of the capital stock of
Fidelio Software GmbH ("Fidelio GmbH") of Munich, Germany for
$3,374,500 and received an option to buy an additional 15% interest
from individual shareholders for a fixed amount of DM 5,000,000,
which was exercised on October 4, 1994. Additionally, the Company has
the right to acquire all or part of the remaining shares of Fidelio
GmbH on or before December 31, 1999, at a price to be determined
based on an agreed upon formula. MICROS had accounted for its 15%
investment as of September 30, 1994 under the cost method. However,
effective October 4, 1994, the 30% investment is accounted for under
the equity method. Included in the aggregate purchase price of the
Company's 30% investment in Fidelio GmbH is approximately $5.7
million representing goodwill at October 4, 1994, which is being
amortized over 10 years beginning on that date. The investment was
not restated since it would not have produced a materially different
result.
Additionally, in fiscal 1993, MICROS granted a loan to Fidelio GmbH in
the amount of DM 5,000,000. The loan bore interest at 7% per annum
and was repaid upon exercise of the option to acquire the additional
15% interest in Fidelio GmbH. In connection with its increase in
ownership of Fidelio GmbH in October 1994 from 15% to 30%, the Company
loaned Fidelio GmbH DM 900,000, which bears interest at a variable
rate, and is obligated to make additional loans of up to DM 600,000,
all of which are to be repaid by December 31, 2000. The obligation of
the Company to make the further loans to Fidelio GmbH is conditioned
on Fidelio GmbH's other shareholders increasing their current loans to
Fidelio GmbH from DM 2.1 million to an aggregate amount of up to DM 3.5
million. The Company received dividends from Fidelio GmbH of $384,800
in fiscal 1995.
As a result of the fiscal 1993 DM 10.0 million combined investment and
loan being realizable only in Deutsche Marks, MICROS was subject to
currency risks between the Deutsche Mark and U.S. dollar through
September 30, 1994. MICROS continues to be subject to currency risks
between the Deutsche Mark and U.S. dollar with respect to the DM
900,000 loan which is realizable only in Deutsche Marks and which must
be repaid by December 31, 2000. As a result of the investment and
loans, a foreign currency translation gain of $187,800 and $446,000
and a loss of $462,200 were recognized in fiscal 1995, 1994, and 1993,
respectively. The Company has not engaged in any foreign exchange
hedging.
-53-
<PAGE> 54
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Line of credit:
The Company has a $15 million unsecured committed line of credit,
effective February 9, 1995, at the bank's prime rate minus one quarter
of one percent, which expires December 31, 1996. Prior to February 9,
1995, the Company had a similar line of credit with the same bank with
a borrowing capacity of $10 million. There were no borrowings under
the $10 million line of credit during fiscal 1994 or subsequent
thereto. There have been no borrowings under the current line of
credit. Under the terms of the current loan agreement, the Company
may borrow up to $15 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 maintain certain levels of working capital and tangible
net worth and a minimum debt to tangible net worth ratio. In
addition, the agreement limits the incurrence of additional
indebtedness and restricts the Company's payment of dividends other
than stock dividends.
5. Long-term debt:
The components of long-term debt are as follows:
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
Note payable to bank $1,331,000 $1,461,000
Notes payable for net district
assets 534,600 442,400
Obligation to minority share-
holder (Note 11) 61,100 123,300
---------- ----------
1,926,700 2,026,700
Less current portion 257,900 218,900
---------- ----------
$1,668,800 $1,807,800
========== ==========
</TABLE>
In June, 1989, the Company refinanced its Industrial Revenue Bond
(IRB) obligation. Variable Rate Revenue Refunding Bonds were issued
by Prince George's County, Maryland in the amount of $2,111,000, the
then outstanding principal balance of the IRB, and were sold to a bank
who acts as the remarketing agent of the bonds. The interest rate on
the debt is a variable rate set weekly by the bank based on prevailing
market conditions with a maximum rate of 15%. On June 30, 1995, the
effective interest rate was approximately 5.60%. The Company is
repaying the debt in equal monthly principal payments plus interest
through January, 2006. The loan, which is collateralized by property,
plant and equipment, is subject to certain debt covenants similar to
those contained in the line of credit agreement (see Note 4).
In September, 1993, as part of the purchase of district assets, the
Company issued a promissory note in the amount of $500,000. Payments
in the amount of $100,000 are due on September 30 of each year through
September 30, 1998. The unamortized discount on the note, based on an
imputed annual interest rate of 5.75%, is $36,500 at June 30, 1995.
-54-
<PAGE> 55
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Long-term debt (continued):
In April, 1995, as part of the purchase of district assets, the
Company issued a promissory note in the amount of $235,300, payable in
annual installments through April, 1999. The unamortized discount on
the note, based on an imputed annual interest rate of 8.75%, is $40,800
at June 30, 1995.
Annual maturities of long-term debt, are as follows:
<TABLE>
<CAPTION>
Year ending June 30, Amount
-------------------- ----------
<S> <C>
1996 $ 257,900
1997 258,700
1998 271,300
1999 262,800
2000 130,000
2001 and thereafter 746,000
----------
$1,926,700
==========
</TABLE>
6. Accrued expenses and other current liabilities:
The components of accrued expenses and other current liabilities are
as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Compensation and related taxes $ 3,707,600 $ 2,868,400
Commissions 2,199,100 1,895,900
Quantity discounts and credits
due customers 2,782,300 2,291,800
Deposits received from customers 2,809,200 1,091,700
Other 4,716,500 2,435,400
----------- -----------
$16,214,700 $10,583,200
=========== ===========
</TABLE>
7. Commitments and contingencies:
Leases
The Company and its subsidiaries lease office space and equipment
under operating leases expiring at various dates through 2004. Rent
expense under these leases for fiscal 1995, 1994, and 1993 was
$1,348,000, $1,170,700, and $777,100, respectively.
The Company leases office and warehouse space under a 15 year capital
lease beginning January, 1994. The cost of the asset is included in
land and building at $1,000,000 and $2,837,800, respectively, at June
30, 1995 and 1994. Accumulated depreciation on the building at June
30, 1995 and 1994 was $106,400 and $35,400, respectively.
-55-
<PAGE> 56
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Commitments and contingencies (continued):
Future minimum lease commitments at June 30, 1995, are as follows:
<TABLE>
<CAPTION>
Operating Capital
Year ending June 30, Leases Leases
-------------------- ---------- ----------
<S> <C> <C>
1996 $1,681,700 $ 360,500
1997 1,437,800 371,300
1998 1,161,600 382,400
1999 628,300 393,900
2000 383,300 405,700
2001 and thereafter 1,151,400 3,976,800
---------- -----------
$6,444,100 5,890,600
==========
Less amount representing
interest at 7% 2,202,900
-----------
3,687,700
Current portion 105,600
-----------
Long-term obligations under
capital leases $ 3,582,100
===========
</TABLE>
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 would not have a
material effect on the Company's results of operations or financial
position.
In December 1994, the Company received a claim that its touchscreen
product line infringes certain patents in several European countries,
including France, Germany and the United Kingdom. Preliminary
investigation indicates that the asserted patents may be unenforceable
because similar products were known and available in the market prior
to the relevant filing dates. While the ultimate outcome of this
matter is uncertain, the Company does not believe that the claim will
have a material adverse effect on its business, financial condition or
results of operations.
8. Stock options:
The Company has incentive stock options outstanding which were granted
to a director, officers and other key 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. The options
granted are exercisable one year from date of grant, vest over a
three-year period, and expire five years from date of grant. The
Company has reserved 349,691 shares for exercise pursuant to these
options.
A summary of changes in outstanding stock options follows:
-56-
<PAGE> 57
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Stock options (continued):
<TABLE>
<CAPTION>
Incentive Option Price
Stock Options per Share
------------- --------------
<S> <C> <C>
Balance, June 30, 1992 397,384 $ 1.375- 7.125
Options granted 117,000 $ 8.625-12.125
Options cancelled (10,334) $ 5.875- 8.625
Options exercised (175,391) $ 1.375- 6.875
------- ---------------
Balance, June 30, 1993 328,659 $ 1.75 -12.125
Options granted -
Options cancelled -
Options exercised (133,116) $ 1.75 - 8.625
------- ---------------
Balance, June 30, 1994 195,543 $ 3.00 -12.125
Options granted 216,000 $29.75 -31.50
Options cancelled (3,334) $ 5.875- 8.625
Options exercised (71,518) $ 3.00 -12.125
------- --------------
Balance, June 30, 1995 336,691 $ 3.00 -31.50
======= ==============
Options exercisable at
June 30, 1995 97,524 $ 3.00 -12.125
======= ==============
</TABLE>
On June 2, 1995, pursuant to the Company's 1991 Stock Option Plan,
the Company granted options to purchase an aggregate of 186,000
shares of Common Stock at an exercise price equal to the closing sale
price of the Common Stock on the date of grant to certain plan
participants.
9. Income taxes:
The components of income tax expense are:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal $5,206,900 $3,200,700 $2,112,500
State 654,400 719,700 465,800
Foreign 574,300 460,300 87,100
---------- ---------- ----------
6,435,600 4,380,700 2,665,400
---------- ---------- ----------
Deferred:
Federal (220,400) (366,900) 307,100
State (40,200) (31,600) 61,400
Foreign - - -
---------- ---------- ----------
(260,600) (398,500) 368,500
---------- ---------- ----------
$6,175,000 $3,982,200 $3,033,900
========== ========== ==========
</TABLE>
-57-
<PAGE> 58
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Income taxes (continued):
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:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
At statutory rate 35.0% 35.0% 34.0%
Increase (decrease)
resulting from:
U.S. federal surtax reduction (.6) (.9) -
State taxes, net of
federal tax benefit 2.4 3.8 4.0
Research tax credits (1.5) (2.9) -
Foreign Sales Corporation
tax benefit (1.6) (1.2) (.9)
Effect of tax rates in
foreign jurisdictions 1.1 1.6 1.3
Other .1 (3.7) (3.9)
------ ------ ------
Effective tax rate 34.9% 31.7% 34.5%
====== ======= ======
</TABLE>
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, 1995 and 1994, the Company had potential tax
benefits of $386,700 related to U.S. net operating loss carryforwards
for income tax purposes. The tax loss carryforwards (if not utilized
against taxable income) expire beginning 2005 and continue through
2009. A valuation allowance of $386,700 has been provided at June 30,
1995 and 1994 to offset the related deferred tax assets due to
uncertainty of realizing the benefit of the loss carryforwards. The
operating loss carryforwards were acquired as part of a purchase of a
subsidiary, and any realization of the operating loss carryforwards
will result in a reduction of goodwill recorded as part of that
acquisition. The following summarizes the significant components of
the Company's deferred tax assets and liabilities:
-58-
<PAGE> 59
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Income taxes (continued):
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Bad debt $ 441,100 $ 266,500
Accruals not deductible for tax 615,700 479,500
Inventory 724,500 468,400
Net operating loss carryforward 386,700 386,700
Other 233,000 263,600
------------ -----------
Total deferred tax assets 2,401,000 1,864,700
------------ -----------
Depreciation (392,100) (357,000)
Capitalized software development costs (600,800) (680,000)
Other (63,800) -
------------ -----------
Total deferred tax liabilities (1,056,700) (1,037,000)
------------ -----------
Net operating loss carryforward
valuation allowance (386,700) (386,700)
------------ -----------
Net deferred tax asset $ 957,600 $ 441,000
============ ===========
</TABLE>
-59-
<PAGE> 60
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Other income (expense) net:
Other income (expense) is comprised of the following items:
<TABLE>
<CAPTION>
1995 1994 1993
-------- --------- ---------
<S> <C> <C> <C>
Service charges on accounts
receivable $336,100 $ 269,500 $ 253,500
Prompt payment discounts (466,300) (422,100) (287,200)
Foreign exchange gain (loss) 327,700 402,500 (633,300)
Legal settlements - - (157,000)
Other, net 278,100 (451,000) (107,600)
-------- ---------- ---------
$475,600 $(201,100) $(931,600)
======== ========= =========
</TABLE>
-60-
<PAGE> 61
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Related party transactions:
Westinghouse, as an incentive to 11 key officers to remain with the
Company for a period of two years following June 1, 1995, the effective
date of the Registration Statement, has agreed to make payments to such
officers aggregating up to approximately $1.25 million, payable in
three equal installments promptly after the effective date of the
Registration Statement and on the first and second anniversaries of the
effective date (subject to the officer remaining employed by the
Company on the relevant payment date). In June 1995, the first
installment of $409,100 was paid for these key officers of the Company.
Even though such payments will be entirely funded by Westinghouse and
will not require any use of the Company's cash, for accounting
purposes, one-third of such payments are required to be reflected
as compensation expense in the Company's financial statements on the
first payment date with the remainder to be reflected as compensation
expense over the 24-month period following June 1, 1995.
During the years of its affiliation with Westinghouse, the Company has
obtained certain insurance coverage and other services through
arrangements negotiated by Westinghouse for itself and its subsidiaries
and affiliates. Many of these arrangements will be replaced by the
Company with its own contracts as and when the Company elects to do so
or is no longer eligible to participate in such arrangements. The
Company has already replaced certain of these arrangements, including
the Westinghouse provided legal services and insurance coverage. The
Company estimates that the incremental cost to it of purchasing all such
services without the benefit of participating in programs of
Westinghouse could total approximately $1.0 million per year on a
pre-tax basis.
The Company has purchased certain raw materials and has contracted for
certain sub-assembly operations through Westinghouse to take
advantage of more competitive pricing available through off-shore
manufacturing locations. The Company estimates that it has purchased
approximately $964,700, $1,691,200, and $1,543,000 in such materials
and labor from Westinghouse during fiscal 1995, 1994, and 1993,
respectively.
During fiscal 1995, 1994, and 1993, the Company also purchased from
Westinghouse and its subsidiaries approximately $877,600, $667,400, and
$673,400, respectively, for other products and services provided to the
Company, including insurance coverage, office space, consulting,
office furniture, and telecommunications services.
During fiscal 1993, the Company sold approximately $779,200 in products
to Hugin Sweda-Austria, under the same terms and conditions offered to
other independently-owned dealers/distributors of the Company. Hugin
Sweda-Austria is owned, in part, by Peter Unterweger, a Director of the
Company until October, 1992.
-61-
<PAGE> 62
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Related party transactions (continued):
During fiscal 1995, 1994, and 1993, the Company sold approximately
$1,208,200, $1,107,500, and $946,600, respectively, in products to
D.A.C. Systemes/MICROS France, under the same terms and conditions
offered to other independently-owned dealers/distributors of the
Company. D.A.C. Systemes/MICROS France was principally owned by Daniel
Cohen, a Director of the Company, as of June 30, 1995 (see
Note 15).
During fiscal 1992, the Company entered into an agreement with Granite
Communications, Inc. ("Granite") to purchase certain hardware and
communications software for the Company's handheld products to be sold
in conjunction with its internally-developed applications software.
Granite is an entity affiliated with the Chairman of the Board, Louis
M. Brown, Jr., and another Director of the Company, Alan Voorhees,
since it was acquired by IDEAS, Inc. in fiscal 1992. During fiscal
1995, after a series of transactions, IDEAS' once majority interest in
Granite was reduced to approximately a 17% interest. In fiscal 1991,
the Company had advanced the sum of $220,000 to the predecessor of
Granite for the development of a product, and advanced $150,000 in
fiscal 1994 to Granite for the development of an additional product.
Under the current agreements with Granite, the crediting of the
advances is being reflected in product purchases through a reduced
price for each unit purchased. During fiscal 1995, 1994, and 1993, the
Company purchased products from Granite in the amount of $487,600,
$1,301,500, and $863,500, respectively, net of $127,500 and $92,500 in
fiscal 1994 and 1993, respectively, in credits against the advance
payment made in 1991. The $150,000 advance made in fiscal 1994 will
reduce the price of products purchased subsequent to fiscal 1995. In
fiscal 1995 (for a license fee payable over time in the amount of
$300,000, and a royalty payment per unit sold into certain designated
markets), the Company acquired a license for the technology to
develop, manufacture and market the products exclusively in the
Hospitality Food Service field, and nonexclusively in the lodging
field and certain Retail and General Merchandise locations.
Additionally, pursuant to an asset purchase agreement entered into in
fiscal 1995, the Company purchased from Granite $144,500 of machinery
and equipment designed for the manufacture of certain handheld products.
During fiscal 1993, the Company assumed a liability in the amount of
$180,000 to a minority shareholder, payable in equal installments over
the next 3 fiscal years. The liability was assumed as part of the
purchase of a majority interest in Fidelio Software Corporation. In
addition, the Company has entered into certain software licensing and
royalty agreements with Fidelio GmbH through the Company's
majority-owned subsidiaries in the U.S., France and the U.K. which
distribute Fidelio GmbH software products. The terms and conditions of
the licensing and royalty agreements are substantially similar to
agreements which Fidelio GmbH has with its other distributors.
MICROS owns a minority interest in Fidelio GmbH (see Note 3).
-62-
<PAGE> 63
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
11. Related party transactions (continued):
During fiscal 1995, 1994, and 1993, the Company compensated Louis M.
Brown, Jr., Chairman of the Board, $182,900, $154,000, and $35,300,
respectively, for consulting services provided to the Company.
12. 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 and allows employees to
voluntarily defer a certain percentage of their income through
contributions to the Plan. Prior to January 1, 1995, the Company
elected to contribute to the Plan at its discretion. Effective January
1, 1995, the Company changed its policy to guarantee a contribution of
one percent of the salary of all eligible, non-highly compensated
employees and to match fifty percent of the first five percent of each
participating employee's voluntary contributions. The Company may
elect to make additional contributions, at its discretion. Company
contributions were made during the years ended June 30, 1995, 1994, and
1993 totalling $346,100, $241,200, and $163,800, respectively.
The Company does not have any obligations to past or present employees
related to post employment benefits.
13. Geographic information:
The Company develops, manufactures, sells and services point-of-sale
computer systems and distributes property management system software
products for the hotel/lodging industry. Foreign sales aggregated
approximately 33%, 29%, and 26% of revenue in fiscal 1995, 1994, and
1993, respectively. MICROS products are distributed in the U.S. and
internationally, primarily in Europe, through independent
Dealer/Distributors and company-owned sales and service offices. The
Company's principal customers are lodging and food service-related
businesses. Economic risks are similar for these businesses in that
consumers generally spend more time lodging and dining away from home
in robust economies and less time in slow or recessionary economies.
The Company's experience with the collections of trade receivables and
the sales growth pattern follow general economic conditions. No
significant concentration of credit risk exists within any geographic
area.
-63-
<PAGE> 64
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Geographic information (continued):
Operations in different geographic areas are as follows:
<TABLE>
<CAPTION>
Net Revenue (1)
----------------------------------------------------------
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
United States $ 78,310,800 $59,640,800 $43,117,700
International (2) 33,709,900 19,623,700 12,195,900
------------ ----------- -----------
Net revenue $112,020,700 $79,264,500 $55,313,600
============ =========== ===========
<CAPTION>
Income From Operations
----------------------------------------------------------
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
United States $ 13,271,500 $10,604,100 $ 8,338,200
International (2) 3,270,600 1,717,800 1,070,900
------------ ----------- -----------
Income from operations $ 16,542,100 $12,321,900 $ 9,409,100
============ =========== ===========
<CAPTION>
Identifiable Assets
----------------------------------------------------------
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
United States $ 74,418,500 $55,904,800 $41,617,800
International (2) 15,225,200 10,285,800 6,588,900
------------ ----------- -----------
Total assets $ 89,643,700 $66,190,600 $48,206,700
============ =========== ===========
</TABLE>
(1) Included in United States Net Revenue are export sales amounting
to $3,419,600, $3,076,300, and $2,404,100, for each of the
respective years.
(2) The International geographic area is principally comprised of
European operations.
-64-
<PAGE> 65
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Quarterly financial information (unaudited):
Quarterly financial information for fiscal 1995 and 1994 is presented
in the following tables:
<TABLE>
<CAPTION>
First Second Third Fourth
1995 Quarter Quarter Quarter Quarter
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $24,474,400 $27,121,600 $25,186,200 $35,238,500
=========== =========== =========== ===========
Gross margin $12,393,000 $13,348,200 $12,636,200 $17,380,100
=========== =========== =========== ===========
Income from
operations $ 4,104,300 $ 4,466,400 $ 3,086,600 $ 4,884,800
=========== =========== =========== ===========
Net income $ 3,035,700 $ 2,879,900 $ 2,223,800 $ 3,437,400
=========== =========== =========== ===========
Net income per
common and
common equiv-
alent share $ 0.38 $ 0.36 $ 0.28 $ 0.43
=========== =========== =========== ===========
Stock Prices
------------ ----------- ----------- ----------- -----------
High 33-1/2 41-1/4 38-1/8 35
Low 26-1/4 28-3/4 28 27-3/4
===================================================================================================
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
1994 Quarter Quarter Quarter Quarter
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $16,395,600 $19,318,900 $19,281,000 $24,269,000
=========== =========== =========== ===========
Gross margin $ 8,470,700 $ 9,484,900 $ 9,615,000 $12,246,400
=========== =========== =========== ===========
Income from
operations $ 2,427,600 $ 2,932,400 $ 2,877,800 $ 4,084,100
=========== =========== =========== ===========
Net income $ 2,014,800 $ 1,803,800 $ 2,000,000 $ 2,868,700
=========== =========== =========== ===========
Net income per
common and
common equiv-
alent share $ 0.26 $ 0.23 $ 0.25 $ 0.36
=========== =========== =========== ===========
Stock Prices
------------- ----------- ----------- ---------- -----------
High 20-1/2 26 29-1/2 27-3/4
Low 13-1/2 14-3/4 23-1/4 22-1/2
==================================================================================================
</TABLE>
-65-
<PAGE> 66
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Quarterly financial information (unaudited) (continued):
The Company has never paid a 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 dividends
which may be payable. The Company is a party to a Loan and Security
Agreement expiring December 31, 1996, which restricts the payment of
dividends, other than stock dividends.
15. Subsequent events (unaudited):
On July 6, 1995, 1 million shares of the Company's stock were sold by
the Selling Stockholder under the Registration Statement, at a price
of $30.70 per share. As a result of the sale, the Selling Stockholder
owns 3,849,123 shares of Common Stock, representing 49% of the
outstanding Common Stock as of July 6, 1995.
On August 25, 1995, the Company purchased from Daniel Cohen (a director
of the Company) and his family, 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. In addition, Mr. Cohen was
granted a five year employment contract at FF 600,000 (approximately
$119,000 at exchange rates in effect at the date of purchase) per year
plus a bonus based on future operating results. Merger of D.A.C.
Systemes/MICROS France and ADMI, previously 23% owned equity
investees, and Fidelio France, currently a 51% owned consolidated
subsidiary, is in the process of being consummated, after which the
Company will own 97% of the merged Fidelio/MICROS France entity, and
Fidelio GmbH, a 30% owned equity investee of the Company will
own the remaining 3%. Fidelio/MICROS France will be consolidated into
the Company's accounts from the date of purchase.
Assuming the purchase and merger had occurred on July 1, 1994, revenue
and net income for fiscal 1995 on a pro forma basis are $119.0 million
and $11.8 million ($1.49 per share), respectively.
-66-
<PAGE> 67
MICROS SYSTEMS, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY AND EQUIPMENT
for the years ended June 30, 1995, 1994, and 1993
<TABLE>
<CAPTION>
Balance at Balance at
beginning Additions Other end of
Description of period at cost Retirements changes period
------------------------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Year ended June 30, 1995:
Land $ 1,582,700 $ - $ - $ - $ 1,582,700
Building 4,820,600 - - - 4,820,600
Building improvements 320,300 - - - 320,300
Machinery and equipment 5,687,200 1,946,200 (85,800) 30,300 7,577,900
Furniture and fixtures 2,293,300 576,900 (9,200) 10,900 2,871,900
Leasehold improvements 236,700 102,100 - - 338,800
----------- ---------- ----------- ---------- -----------
$14,940,800 $2,625,200 $ (95,000) $ 41,200 $17,512,200
=========== ========== =========== ========== ===========
Year ended June 30, 1994:
Land $ 582,700 $1,000,000 $ - $ - $ 1,582,700
Building 1,980,600 2,840,000 - - 4,820,600
Building improvements 320,300 - - - 320,300
Machinery and equipment 4,951,800 799,400 (60,100) (3,900) 5,687,200
Furniture and fixtures 2,057,600 346,200 (151,500) 41,000 2,293,300
Leasehold improvements 153,200 87,400 (3,900) - 236,700
----------- ---------- ----------- ---------- -----------
$10,046,200 $5,073,000 $ (215,500) $ 37,100 $14,940,800
=========== ========== =========== ========== ===========
Year ended June 30, 1993:
Land $ 582,700 $ - $ - $ - $ 582,700
Building 1,980,600 - - - 1,980,600
Building improvements 320,300 - - - 320,300
Machinery and equipment 4,158,300 791,200 (5,100) 7,400 4,951,800
Furniture and fixtures 1,943,400 127,500 - (13,300) 2,057,600
Leasehold improvements 132,400 20,800 - - 153,200
---------- ---------- ----------- ---------- -----------
$ 9,117,700 $ 939,500 $ (5,100) $ (5,900) $10,046,200
=========== ========== =========== ========== ===========
</TABLE>
-67-
<PAGE> 68
MICROS SYSTEMS, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION
OF PROPERTY AND EQUIPMENT
for the years ended June 30, 1995, 1994, and 1993
<TABLE>
<CAPTION>
Additions
Balance at charged to Balance at
beginning costs and Other end of
Description of period expenses Retirements changes period
------------------------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended June 30, 1995:
Building $ 480,800 $ 120,500 $ - $ - $ 601,300
Building improvements 35,500 9,200 - - 44,700
Machinery and equipment 4,267,100 870,800 (68,900) 9,700 5,078,700
Furniture and fixtures 1,311,500 200,000 (8,200) 4,200 1,507,500
Leasehold improvements 81,700 36,500 - - 118,200
---------- ---------- ----------- ---------- ----------
$6,176,600 $1,237,000 $ (77,100) $ 13,900 $7,350,400
========== ========== =========== ========== ==========
Year ended June 30, 1994:
Building $ 395,900 $ 84,900 $ - $ - $ 480,800
Building improvements 26,300 9,200 - - 35,500
Machinery and equipment 3,713,600 521,400 (13,600) 45,700 4,267,100
Furniture and fixtures 1,197,600 241,500 (113,200) (14,400) 1,311,500
Leasehold improvements 56,200 28,400 (1,100) (1,800) 81,700
---------- ---------- ----------- ---------- ----------
$5,389,600 $ 885,400 $ (127,900) $ 29,500 $6,176,600
========== ========== =========== ========== ==========
Year ended June 30, 1993:
Building $ 346,400 $ 49,500 $ - $ - $ 395,900
Building improvements 17,200 9,100 - - 26,300
Machinery and equipment 3,247,900 469,700 (4,000) - 3,713,600
Furniture and fixtures 985,800 213,300 (1,500) - 1,197,600
Leasehold improvements 31,200 25,000 - - 56,200
---------- ---------- ----------- ---------- ----------
$4,628,500 $ 766,600 $ (5,500) $ -0- $5,389,600
========== ========== =========== ========== ==========
</TABLE>
-68-
<PAGE> 69
MICROS SYSTEMS, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
for the years ended June 30, 1995, 1994, and 1993
<TABLE>
<CAPTION>
Balance at Charged Charges Balance
beginning to to other at end
Description of period expenses accounts Deductions of period
--------------------------------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended June 30, 1995:
Allowance for doubtful accounts $ 764,300 $ 697,000 $ - $ 232,100 $1,229,200
Reserve for inventory
obsolescence 973,300 502,400 - 158,100(1) 1,317,600
---------- ---------- -------- ---------- ----------
$1,737,600 $1,199,400 $ -0- $ 390,200 $2,546,800
========== ========== ======== ========== ==========
Year ended June 30, 1994:
Allowance for doubtful accounts $ 696,200 $ 273,700 $ - $ 205,600 $ 764,300
Reserve for inventory
obsolescence 475,800 564,200 - 66,700(1) 973,300
---------- ---------- -------- ---------- ----------
$1,172,000 $ 837,900 $ -0- $ 272,300 $1,737,600
========== ========== ======== ========== ==========
Year ended June 30, 1993:
Allowance for doubtful accounts $ 705,400 $ 244,200 $ - $ 253,400 $ 696,200
Reserve for inventory
obsolescence 486,700 150,000 - 160,900(1) 475,800
---------- ---------- -------- ---------- ----------
$1,192,100 $ 394,200 $ -0- $ 414,300 $1,172,000
========== ========== ======== ========== ==========
</TABLE>
(1) Material scrapped or otherwise disposed.
-69-
<PAGE> 70
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.
<TABLE>
<S> <C>
MICROS SYSTEMS, INC.
Date: 9-15-95 By: s/Gary C. Kaufman
-------------------- -----------------------
Gary C. Kaufman
Vice President, Finance and
Administration/Chief Financial
Officer
</TABLE>
-70-
<PAGE> 71
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.
<TABLE>
<CAPTION>
Name Title
------------------------ ---------------------------- -----------
<S> <C> <C>
s/Louis M. Brown, Jr. 9-15-95
------------------------ Director and -----------
Louis M. Brown, Jr. Chairman of the Board
s/A. L. Giannopoulos Director and President 9-15-95
------------------------ Chief Executive Officer -----------
A. L. Giannopoulos
s/Ronald J. Kolson Executive Vice President 9-15-95
------------------------ Chief Operating Officer -----------
Ronald J. Kolson
s/Gary C. Kaufman Vice President 9-15-95
------------------------ Finance and Administration -----------
Gary C. Kaufman Chief Financial Officer
s/Daniel Cohen 9-15-95
------------------------ Director -----------
Daniel Cohen
s/Claudia E. Morf 9-15-95
------------------------ Director -----------
Claudia E. Morf
s/Frederic G. Reynolds 9-15-95
------------------------ Director -----------
Frederic G. Reynolds
s/Alan M. Voorhees 9-15-95
------------------------ Director -----------
Alan M. Voorhees
s/Edward T. Wilson 9-15-95
------------------------ Director -----------
Edward T. Wilson
</TABLE>
-71-
<PAGE> 72
EXHIBIT INDEX
10d. Underwriting Agreement dated July 6, 1995
by and among MICROS Systems, Inc.,
Westinghouse Electric Corporation,
Westinghouse Holdings Corporation and
J.P. Morgan Securities, Inc., Morgan
Stanley & Co. Incorporated and Smith
Barney Inc.
10e. Employment Agreement dated June 1, 1995
between MICROS Systems, Inc. and A.L.
Giannopoulos.
10f. Consulting Agreement dated June 30, 1995
between MICROS Systems, Inc. and Louis M.
Brown, Jr.
10g. Management Agreement dated August 25, 1995 between
MICROS Systems, Inc. and Daniel Cohen.
11. Statement Regarding Computation of
Earnings Per Share.
21. Subsidiaries of the Company.
23. Consent of Independent Accountants.
24. Power of Attorney.
27. Financial Data Schedule.
72
<PAGE> 1
EXHIBIT 10d
UNDERWRITING AGREEMENT
MICROS Systems, Inc.
Common Stock
(Par Value $.025 Per Share)
Dated the date set forth on
the signature page hereto
To the Underwriter or Underwriters
listed in Schedule I hereto
Ladies and Gentlemen:
Westinghouse Electric Corporation, a Pennsylvania corporation
("Westinghouse"), or Westinghouse Holdings Corporation, a Delaware corporation
and a wholly-owned subsidiary of Westinghouse ("Transferee") (Westinghouse or,
if the Transferee has executed the signature page hereto, the Transferee being
hereinafter referred to as the "Selling Stockholder"), proposes to sell to the
underwriter or underwriters listed in Schedule I hereto (the "Underwriters"),
for whom the representative or representatives designated on Schedule I hereto,
if any, are acting as representatives (in such capacity, the
"Representatives"), and the Underwriters propose to purchase from the Selling
Stockholder, the number of shares (the "Underwritten Securities") of common
stock, par value $.025 per share (the "Common Stock"), of MICROS Systems, Inc.,
a Maryland corporation (the "Company"), set forth in Schedule I hereto as the
Total Number of Underwritten Securities. In addition, if a number of shares of
Common Stock is set forth on Schedule I hereto as the Total Number of Option
Securities, then, for the sole purpose of covering over-allotments in
connection with the sale of the Underwritten Securities, the Selling
Stockholder proposes to sell to the Underwriters, at the option of the
Underwriters, up to such number of shares of Common Stock (the "Option
Securities"). The Underwritten Securities and any Option Securities purchased
by the Underwriters are herein referred to as the "Securities." If the
Securities have been transferred to Transferee prior to the execution of this
Agreement, then Transferee shall execute this Agreement in addition
<PAGE> 2
-2-
to Westinghouse. If no Representatives are designated as such on Schedule I
hereto, then the term "Representatives" as used herein shall mean the
Underwriters.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission"), in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form S-3 (File No. 33-88768), including a prospectus, relating to
the Securities, which has become effective. The registration statement as
amended at the time when it became effective, or, if post-effective amendments
are filed with respect thereto, as amended by such post-effective amendments at
the time of their effectiveness, is hereinafter referred to as the
"Registration Statement"; the prospectus in the form in which it appears in the
Registration Statement is hereinafter referred to as the "Basic Prospectus";
the supplement thereto prepared by the Company relating to the Securities and
the plan of distribution thereof, to be filed pursuant to Rule 424(b) under the
Securities Act, is hereinafter referred to as the "Prospectus Supplement"; and
the Basic Prospectus, as supplemented by the Prospectus Supplement, in the form
first used to confirm sales of Securities is hereinafter referred to as the
"Prospectus." The term "preliminary prospectus" means a preliminary prospectus
supplement specifically relating to the Securities, together with the Basic
Prospectus. Any reference in this Agreement to the Registration Statement, the
Basic Prospectus, any preliminary prospectus, the Prospectus Supplement or the
Prospectus shall be deemed to refer to and include the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the Securities Act,
as of the effective date of the Registration Statement, or the date of the
Basic Prospectus, such preliminary prospectus or the Prospectus Supplement, as
the case may be, and any reference to "amend," "amendment" or "supplement" with
respect to the Registration Statement, the Basic Prospectus, any preliminary
prospectus, the Prospectus Supplement or the Prospectus shall be deemed to
refer to and include any documents filed after such date under the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Exchange Act") that are deemed to be
incorporated by reference therein.
1. Agreements to Sell and Purchase. The Selling Stockholder hereby
agrees to sell the Underwritten Securities to the several Underwriters as
hereinafter provided, and each
<PAGE> 3
-3-
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to
purchase, severally and not jointly, from the Selling Stockholder the
respective number of shares of Common Stock constituting Underwritten
Securities set forth opposite such Underwriter's name in Schedule I hereto (or
such number of Underwritten Securities increased as set forth in Section 13
hereof, subject to such adjustments to eliminate any fractional interests as
the Representatives in their sole discretion shall make) at the price per share
of Common Stock set forth on Schedule I hereto (the "Purchase Price").
In addition, if a Total Number of Option Securities is set forth on
Schedule I hereto, the Selling Stockholder agrees to sell the Option Securities
to the several Underwriters as hereinafter provided, and the Underwriters,
upon the basis of the representations and warranties herein contained, but
subject to the conditions hereinafter stated, shall have the option to
purchase, severally and not jointly, from the Selling Stockholder up to such
number of shares of Common Stock at the Purchase Price, for the sole purpose of
covering over-allotments (if any) in connection with the sale of the
Underwritten Securities by the several Underwriters.
If any Option Securities are to be purchased, the number of Option
Securities to be purchased by each Underwriter shall be the number of Option
Securities which bears the same ratio to the aggregate number of Option
Securities being purchased as the number of Underwritten Securities set forth
opposite the name of such Underwriter in Schedule I hereto bears to the
aggregate number of Underwritten Securities, subject, however, to such
adjustments to eliminate any fractional interests as the Representatives in
their sole discretion shall make.
The Underwriters may exercise the option to purchase the Option
Securities at any time (but not more than once) on or before the last day of
the period indicated on Schedule I hereto as the period for exercise of such
option, by written notice from the Representatives to the Company and the
Selling Stockholder. Such notice shall set forth the aggregate number of
Option Securities as to which the option is being exercised and the date and
time when such Option Securities are to be delivered and paid for, which may be
the same date and time as the Closing Date (as hereinafter defined) but shall
not be earlier than the Closing Date or later than the tenth full Business Day
(as hereinafter defined) after the date of such notice (unless such date and
time are postponed in accordance with the
<PAGE> 4
-4-
provisions of Section 13 hereof). Any such notice shall be given at least two
Business Days prior to the date and time of delivery specified therein.
2. Terms of Public Offering. Each of the Company, Westinghouse
and, if Transferee is a party hereto, Transferee understands that the
Underwriters intend (i) to make a public offering of the Securities as soon as
the Representatives deem advisable after this Agreement has become effective and
the Prospectus Supplement has been filed and (ii) initially to offer the
Securities upon the terms set forth in the Prospectus.
3. Delivery of the Securities and Payment Therefor. Payment for
the Securities shall be made to the Selling Stockholder by certified or official
bank check or checks payable in New York Clearing House or other next-day funds
at the offices of Cahill Gordon & Reindel, 80 Pine Street, New York, New York
at 10:00 A.M., New York City time, (i) in the case of the Underwritten
Securities, on the date set forth on Schedule I hereto as the Closing Date, or
at such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Underwriters, the Selling Stockholder and the
Company may agree upon in writing, or (ii) in the case of the Option
Securities, on the date and time specified by the Representatives in the
written notice of the Underwriters' election to purchase such Option
Securities. The time and date of such payment for the Underwritten Securities
are referred to herein as the "Closing Date," and the time and date of such
payment for the Option Securities, if other than the Closing Date, are herein
referred to as the "Additional Closing Date." As used herein, the term
"Business Day" means any day other than a day on which banks are permitted or
required to be closed in New York City.
Payment for the Securities to be purchased on the Closing Date or
the Additional Closing Date, as the case may be, shall be made against
delivery to the Underwriters of the certificates for the Securities to be
purchased on such date, in the case of certificates representing the
Securities currently registered in the name of Westinghouse or Transferee,
endorsed in blank or with blank stock powers attached, and, in the case of the
replacement certificates referred to below, registered in such names and in
such denominations as the Underwriters shall request in writing not later than
two full Business Days prior to the Closing Date or the Additional Closing
Date, as the case may be. The certificates for the
<PAGE> 5
-5-
Securities will be made available by the Selling Stockholder for inspection
and packaging by the Underwriters in New York, New York not later than
1:00 P.M., New York City time, on the Business Day prior to the Closing Date
or the Additional Closing Date, as the case may be. For purposes of expediting
the foregoing matters, the Company agrees to make available certificates
representing shares of Common Stock in replacement of the certificate(s)
representing the Securities currently registered in the name of Westinghouse
or Transferee to be delivered by or on behalf of the Selling Stockholder on
the Closing Date and the Additional Closing Date, as the case may be.
The Selling Stockholder will pay all applicable transfer taxes, if
any, involved in the transfer to the Underwriters of the Securities.
4. Representations and Warranties of the Company. The Company
hereby represents and warrants to each of the Underwriters, to Westinghouse
and, if Transferee is a party hereto, to Transferee that:
(a) no order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission, and each
preliminary prospectus filed as part of the Registration Statement, as
originally filed or as part of any amendment thereto, or filed pursuant
to Rule 424 under the Securities Act, complied when so filed in all
material respects with the Securities Act;
(b) the Registration Statement has become effective under the
Securities Act; no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose
has been instituted or, to the knowledge of the Company, threatened by
the Commission; the Registration Statement and the Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto to the Underwriters) comply, or will comply, as the
case may be, in all material respects with the Securities Act; the
Registration Statement, as of the date of the original filing thereof and
as of the applicable effective date as to the Registration Statement and
any amendment thereto, did not and will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; and the Prospectus, as of the date of the Prospectus
Supplement, as of the date of any
<PAGE> 6
-6-
amendment or further supplement thereto and as amended or supplemented
at the Closing Date and the Additional Closing Date, if applicable, did
not and will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that the foregoing
representations and warranties shall not apply to statements or omissions
in the Registration Statement or the Prospectus made in reliance upon and
in conformity with (i) information relating to any Underwriter furnished
to the Company in writing by such Underwriter through the Representatives
expressly for use therein or (ii) information relating to Westinghouse
and, if Transferee is a party hereto, Transferee furnished to the Company
in writing by Westinghouse and, if Transferee is a party hereto,
Transferee expressly for use therein. For purposes of this paragraph
(b), the only written information furnished by Westinghouse and, if
Transferee is a party hereto, Transferee to the Company expressly for use
in the Registration Statement and the Prospectus is the information in
the second sentence of the first paragraph and the first sentence of the
second paragraph under the caption "Management Compensation and Changes"
and the first paragraph and the last sentence of the second paragraph
under the caption "Principal and Selling Stockholder" in the Basic
Prospectus (it being understood and agreed that the reference herein to
the last sentence of the second paragraph should not be deemed to be an
indication of the ability of Westinghouse to establish new service
arrangements or its ability to minimize any incremental costs thereof)
and the information referred to on Schedule I hereto under the heading
"Information Provided by Westinghouse and Transferee";
(c) the Company and the offering of the Securities contemplated
hereby meet all conditions and requirements for registration on a Form
S-3 registration statement under the Securities Act;
(d) the documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act; none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the
<PAGE> 7
-7-
circumstances under which they were made, not misleading; and any
further documents so filed and incorporated by reference in the
Prospectus, when such documents are filed by the Company with the
Commission, will conform in all material respects to the requirements of
the Exchange Act and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(e) Price Waterhouse LLP, who are reporting upon the audited
consolidated financial statements of the Company and its subsidiaries
and the related schedules included or incorporated by reference in the
Registration Statement, are independent public accountants as required by
the Securities Act;
(f) the financial statements and related notes thereto included or
incorporated by reference in the Registration Statement and the
Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries taken as a whole as of the dates indicated
and the consolidated results of their operations and changes in their
consolidated shareholders' equity and cash flows for the periods
specified; the financial statement schedules included or incorporated by
reference in the Registration Statement and the Prospectus present fairly
the information required to be included therein; the financial statements
of the Company (including the related notes and schedules) included or
incorporated by reference in the Registration Statement and the
Prospectus have been prepared in accordance with the applicable
accounting requirements of Regulation S-X under the Securities Act and
the Exchange Act ("Regulation S-X") and with generally accepted
accounting principles in the United States of America ("GAAP") applied on
a consistent basis throughout the periods included (subject in the case
of interim statements to normal year end adjustments), except as stated
therein or in the reports related thereto;
(g) the statistical and market-related data included or
incorporated by reference in the Registration Statement and the
Prospectus are based on or derived from sources which are believed by
the Company to be reliable and accurate;
<PAGE> 8
-8-
(h) there are no contracts or other documents that are required
to be described or referred to in the Registration Statement or the
Prospectus, or to be filed as exhibits to the Registration Statement,
that are not described, referred to or filed as required;
(i) since the date of the latest consolidated financial statements
included or incorporated by reference in the Registration Statement and
the Prospectus, except as disclosed or contemplated therein, there has
not been (i) any change in the Company's issued capital stock or options
except pursuant to the terms of the instruments governing the same or
pursuant to the exercise of such options, or (ii) any material adverse
change in the general affairs, business, prospects, management,
operations or condition, financial or otherwise, of the Company and its
subsidiaries (the "Subsidiaries," the names of which are listed on Annex
A hereto) taken as a whole (a "Material Adverse Change") or any
development involving an event or state of facts which could reasonably
be expected to result in a Material Adverse Change (a "Prospective
Material Adverse Change");
(j) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as disclosed or
contemplated therein, (i) there have been no transactions entered into by
the Company or any of the Subsidiaries, whether or not in the ordinary
course of business, which are material to the Company and the
Subsidiaries taken as a whole, and (ii) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock;
(k) each of the Company and the Subsidiaries has been duly
organized under the laws of its jurisdiction of incorporation; and each
of the Company and the Subsidiaries is a validly existing corporation in
good standing under the laws of its jurisdiction of incorporation, has
full corporate power and authority to own its properties and conduct its
business and is duly qualified to do business as a foreign corporation
and is in good standing in all other jurisdictions where the ownership
of its property or the conduct of its business requires such
qualification, except where the failure so to qualify or be in good
standing would not, individually or in the aggregate, have a material
adverse effect on the general affairs,
<PAGE> 9
-9-
business, prospects, management, operations or condition, financial or
otherwise, of the Company and the Subsidiaries taken as a whole (a
"Material Adverse Effect");
(l) all of the issued and outstanding shares of Common Stock
(including the Securities) have been duly authorized by the Company,
are validly issued and are fully paid and nonassessable and are not
subject to any preemptive or other similar rights other than those
contained in the Company's charter as amended and in effect on the date
hereof (the "Charter"); the authorized capital stock of the Company
consists solely of the Common Stock, which Common Stock conforms as to
legal matters to the description thereof contained in the Registration
Statement and the Prospectus;
(m) this Agreement has been duly authorized, executed and
delivered by the Company;
(n) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
and the consummation by the Company of the transactions contemplated
herein, (i) have been duly authorized by all necessary corporate action
on the part of the Company, (ii) do not and will not result in any
violation of the Charter or the Company's by-laws as amended and in
effect on the date hereof (the "By-laws") and (iii) do not and will not
conflict with, or result in a breach or violation of, any of the terms
or provisions of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
give rise to any right to accelerate the maturity or require the
prepayment of any indebtedness or any right of termination under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any material property or assets of the Company or any Subsidiary
under, (A) any material indenture, mortgage, loan agreement, note,
lease, partnership agreement or other agreement or instrument to which
the Company or any Subsidiary is a party or by which any of them may be
bound or to which any of their properties or assets may be subject, (B)
any existing applicable law, rule or regulation (subject to obtaining
such approvals as may be required under the securities or Blue Sky laws
of the various states and other jurisdictions of the United States of
America) or (C) any judgment, order or decree of any government,
governmental instrumentality or court,
<PAGE> 10
-10-
domestic or foreign, having jurisdiction over the Company or any
Subsidiary or any of their respective properties or assets;
(o) no authorization, approval, consent or license of, or filing
with, any government, governmental instrumentality or court, domestic
or foreign (other than as have been made and obtained and are in full
force and effect under the Securities Act or as may be required under the
securities or Blue Sky laws of the various states and other jurisdictions
of the United States of America), is required for the performance by the
Company of its obligations under this Agreement and the provisions of
Section 3-602 of the Maryland General Corporation Law are not currently
applicable to the Company;
(p) (i) the Company is not in violation of the Charter or the
By-laws nor is any Subsidiary in violation of its charter or by-laws or
other organizational documents and (ii) neither the Company nor any
Subsidiary is or with notice or lapse of time or both would be in breach
or violation of, or in default under, any obligation, agreement, covenant
or condition contained in any indenture, mortgage, loan agreement, note,
lease, partnership agreement or other agreement or instrument to which it
is a party or by which it may be bound or to which any of its properties
or assets may be subject or affected or of any permit, order, decree,
judgment, statute, rule or regulation applicable to the Company or any
Subsidiary, except for such breaches, violations or defaults that,
individually or in the aggregate, would not have a Material Adverse
Effect;
(q) except as described in the Registration Statement and the
Prospectus, there is no investigation, action, suit or proceeding
before or by any government, governmental instrumentality or court,
domestic or foreign, now pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary that (i) if
determined adversely to the Company or such Subsidiary, could
individually or in the aggregate reasonably be expected to have a
Material Adverse Effect or a material adverse effect on the consummation
of the transactions contemplated in this Agreement or (ii) is required to
be described in the Registration Statement or the Prospectus and is not
so described;
<PAGE> 11
-11-
(r) except as set forth on Annex B hereto, the Company owns,
beneficially and of record, free and clear of any mortgage, pledge,
security interest, lien, claim or other encumbrance or restriction on
transferability or voting, directly or indirectly, the percentage of the
outstanding equity securities of each of the Subsidiaries as listed on
Annex A hereto, which constitute all of the subsidiaries of the Company;
the Subsidiaries not marked with an asterisk on Annex A hereto (other
than Fidelio Software Corporation ("Fidelio U.S.") and MSI Delaware, Inc.
("MSI")), when considered in the aggregate a single subsidiary, do not
constitute a "significant subsidiary" within the meaning of Regulation
S-X; all of the outstanding capital stock of each Subsidiary owned by the
Company has been duly authorized and validly issued and is fully paid and
nonassessable; and there are no outstanding (i) securities or obligations
convertible into or exchangeable for any shares of capital stock of the
Company or any Subsidiary, (ii) rights, warrants or options to acquire or
purchase any shares of capital stock of the Company or any Subsidiary
(except for options to purchase Common Stock outstanding under the
Company's 1991 Stock Option Plan and 1981 Stock Option Plan as disclosed
in its most recent annual proxy statement filed pursuant to Regulation
14A under the Exchange Act (the "Proxy Statement") or in the Registration
Statement and the Prospectus) or any such convertible or exchangeable
securities or obligations or (iii) obligations or understandings of the
Company or any Subsidiary to issue or sell any shares of capital stock of
the Company or any Subsidiary, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options
(except as set forth on Annex B hereto);
(s) each of the Company and the Subsidiaries has good and
marketable title to all properties and assets described in the
Registration Statement and the Prospectus as owned by it, free and clear
of all liens, charges, encumbrances or restrictions, except (i) as
described or reflected in the Registration Statement and the Prospectus
or (ii) for such liens, charges, encumbrances or restrictions which,
individually or in the aggregate, would not be material to the Company
and the Subsidiaries taken as a whole; all of the leases and subleases
material to the business of the Company and the Subsidiaries are in full
force and effect, with such exceptions as, individually or
<PAGE> 12
-12-
in the aggregate, would not be material to the Company and the
Subsidiaries taken as a whole;
(t) each of the Company and the Subsidiaries owns, possesses or
has obtained all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations
and filings with, all federal, state, local and other governmental
authorities (including foreign regulatory agencies), all self-regulatory
organizations and all courts and other tribunals, domestic or foreign,
necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date
hereof, except, in each case, where the failure to obtain licenses,
permits, certificates, consents, orders, approvals and other
authorizations, or to make all declarations and filings, would not have a
Material Adverse Effect, and neither the Company nor any Subsidiary has
received any actual notice of any proceeding relating to revocation or
modification of any such license, permit, certificate, consent, order,
approval or other authorization, except as described in the Registration
Statement and the Prospectus and except, in each case, where such
revocation or modification would not have a Material Adverse Effect; and
each of the Company and the Subsidiaries is in compliance with all laws
and regulations relating to the conduct of its business as conducted as
of the date hereof, except where noncompliance with such laws or
regulations would not have a Material Adverse Effect;
(u) each of the Company and the Subsidiaries owns, possesses or
has the right to use the trademarks, service marks, trade names,
copyrights and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) (collectively, the "Intellectual Property") employed by it in
connection with the business conducted by it as of the date hereof,
except to the extent that the failure to own, possess or have the right
to use such Intellectual Property would not have a Material Adverse
Effect, and except as described in the Registration Statement and the
Prospectus, neither the Company nor any Subsidiary has received any
actual notice of infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or patent, except where
such infringement or conflict would not have a Material Adverse Effect;
<PAGE> 13
-13-
(v) there are no labor disputes with the employees of the
Company or any of the Subsidiaries which are likely to have a Material
Adverse Effect;
(w) each of the Company and the Subsidiaries is in compliance with
all applicable existing federal, state, local and foreign laws and
regulations relating to protection of human health or the environment or
imposing liability or standards of conduct concerning any Hazardous
Material (as hereinafter defined) (collectively, the "Environmental
Laws"), except, in each case, where noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect. The term "Hazardous
Material" means (i) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (ii) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, and (iii) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other
Environmental Law. There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of the Subsidiaries under any Environmental
Law which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect;
(x) no authorization, approval or consent of any governmental
authority or agency is required (other than those which have already
been obtained) under the laws of any jurisdiction in which the Company
and the Subsidiaries conduct their respective businesses in connection
with the ownership by the Company of capital stock of any Subsidiary, any
foreign exchange controls or the repatriation of any amount from or to
the Company and the Subsidiaries, except to the extent that the failure
to obtain such authorization, approval or consent will not have a
Material Adverse Effect;
(y) the Company and the Subsidiaries have filed all federal,
state, local and material foreign tax returns which have been required
to be filed and have paid all taxes shown thereon and all assessments
received by them or any of them to the extent that such taxes have
become due and are not being contested in good faith; and there is no
tax deficiency which has been or might reasonably be expected to be
asserted or threatened against the Company
<PAGE> 14
-14-
or any Subsidiary which could have a Material Adverse Effect;
(z) the Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended, or a holding
company under the Public Utility Holding Company Act of 1935;
(aa) the Company does not know of any outstanding claims for
services, either in the nature of a finder's fee or origination fee,
with respect to any of the transactions contemplated hereby;
(bb) the Company has not taken nor will it take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Common Stock, and the Company has not distributed nor will it distribute
any prospectus or other offering material in connection with the
offering and sale of the Securities other than any preliminary
prospectus filed with the Commission, the Basic Prospectus or the
Prospectus;
(cc) neither the filing of the Registration Statement or any
amendment thereto nor the offer or sale of the Securities as
contemplated by this Agreement gives rise to any rights for or relating
to the registration under the Securities Act of any securities of the
Company or any Subsidiary; and
(dd) the Company has delivered to the Underwriters written
agreements, in form and substance satisfactory to the Underwriters, of
each of its directors and principal executive officers, pursuant to
which each has agreed not to, directly or indirectly, offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock or any
securities exercisable for or convertible into Common Stock for the
period of days set forth on Schedule I hereto as the Lock-up Period,
without the prior written consent of the Underwriter or Representative,
as the case may be, executing this Agreement on behalf of the Under-
writers.
5. Representations and Warranties of Westinghouse and
Transferee. Westinghouse, as to itself and each of Westinghouse and
Transferee, as to Transferee if Transferee is
<PAGE> 15
-15-
a party hereto, represents and warrants to each of the Underwriters and to the
Company that:
(a) such entity has been duly organized and is validly existing
as a corporation in good standing under the laws of its jurisdiction of
incorporation;
(b) this Agreement has been duly authorized, executed and
delivered by such entity;
(c) Westinghouse, or, if Transferee has executed this Agreement,
Transferee, is the beneficial and lawful owner of all of the Securities
and has valid and marketable title to the Securities, and upon delivery of
and payment for the Securities, the Underwriters will acquire valid and
marketable title to the Securities, free and clear of any mortgage,
pledge, security interest, lien, claim or other encumbrance or
restriction on transferability or any adverse claim within the meaning of
Section 8-302 of the Uniform Commercial Code in effect in the State of
New York (the "UCC");
(d) the execution and delivery by such entity of, and the
performance by it of its obligations under, this Agreement, and the
consummation of the transactions contemplated herein, (i) have been duly
authorized by all necessary corporate action on its part, (ii) do not and
will not result in any violation of its articles of incorporation or
by-laws and (iii) do not and will not conflict with, or result in a
breach or violation of, any of the terms or provisions of, or constitute
a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or give rise to any right to
accelerate the maturity or require the prepayment of any indebtedness
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of its material property or assets under, (A) any
material indenture, mortgage, loan agreement, note, lease, partnership
agreement or other agreement or instrument to which it is a party or by
which it may be bound or to which any of its properties or assets may be
subject, (B) any existing applicable law, rule or regulation (subject to
obtaining such approvals as may be required under the securities or Blue
Sky laws of the various states and other jurisdictions of the United
States of America) or (C) any judgment, order or decree of any
government, governmental
<PAGE> 16
-16-
instrumentality or court, domestic or foreign, having jurisdiction over
it or any of its properties or assets;
(e) no authorization, approval, consent or license of, or filing
with, any government, governmental instrumentality or court, domestic or
foreign (other than as have been made and obtained and are in full force
and effect under the Securities Act or as may be required under the
securities or Blue Sky laws of the various states and other
jurisdictions of the United States of America), is required for the sale
and delivery of the Securities by such entity or the performance by it
of its obligations under this Agreement;
(f) such entity has not taken nor will it take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Common Stock, and it has not distributed nor will it distribute any
prospectus or other offering material in connection with the offering and
sale of the Securities other than any preliminary prospectus filed with
the Commission, the Basic Prospectus or the Prospectus; and
(g) to the extent that any statements or omissions in the
Registration Statement or the Prospectus are made in reliance upon and
in conformity with information relating to such entity furnished to the
Company in writing by it expressly for use therein, the Registration
Statement, as of the date of the original filing thereof and as of the
applicable effective date as to the Registration Statement and any
amendment thereto, did not and will not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and the Prospectus, as of its date, as of the date of any
amendment or supplement thereto and as amended or supplemented at the
Closing Date and the Additional Closing Date, if applicable, did not and
will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading. For purposes of this paragraph (g), the
only written information furnished by Westinghouse and, if Transferee is
a party hereto, Transferee to the Company expressly for use in the
Registration Statement and the Prospectus is
<PAGE> 17
-17-
the information in the second sentence of the first paragraph and the
first sentence of the second paragraph under the caption "Management
Compensation and Changes" and the first paragraph and the last sentence
of the second paragraph under the caption "Principal and Selling
Stockholder" in the Basic Prospectus (it being understood and agreed that
the reference herein to the last sentence of the second paragraph should
not be deemed to be an indication of the ability of Westinghouse to
establish new service arrangements or its ability to minimize any
incremental costs thereof) and the information referred to on Schedule I
hereto under the heading "Information Provided by Westinghouse and
Transferee."
(h) If on the date hereof Westinghouse owns, directly or
indirectly (whether through Transferee or otherwise), more than 50% of
the then outstanding shares of Common Stock as indicated on the
signature page hereto, Westinghouse, as to itself, and each of
Westinghouse and Transferee, as to Transferee if Transferee is a party
hereto, also represents and warrants to each of the Underwriters and to
the Company that, other than statements or omissions in the Registration
Statement or the Prospectus related to information furnished by
Westinghouse and, if Transferee is a party hereto, Transferee referred to
in the foregoing paragraph (g), to the best knowledge of such entity, the
Registration Statement, as of the date of the original filing thereof and
as of the applicable effective date as to the Registration Statement and
any amendment thereto, did not and will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and the Prospectus, as of the date of the Prospectus
Supplement, as of the date of any amendment or supplement thereto and as
amended or supplemented at the Closing Date and the Additional Closing
Date, if applicable, did not and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that
the foregoing representations and warranties shall not apply to
statements or omissions in the Registration Statement or the Prospectus
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Under-
<PAGE> 18
-18-
writer through the Representatives expressly for use therein.
6. Covenants of the Company. The Company covenants and agrees
with the several Underwriters and with Westinghouse and, if Transferee is a
party hereto, with Transferee as follows:
(a) to use its best efforts to cause any amendment
to the Registration Statement to become effective at the earliest
possible time, and to file the Prospectus Supplement and, if not
previously so filed, the Basic Prospectus with the Commission within the
time period specified by Rule 424(b) under the Securities Act;
(b) to deliver to each Representative and to Cahill
Gordon & Reindel, counsel for the Underwriters, a signed copy of the
Registration Statement (as originally filed) and each amendment thereto,
in each case including exhibits and all documents incorporated by
reference therein, and to each other Underwriter a conformed copy of the
Registration Statement (as originally filed) and each amendment thereto,
in each case without exhibits but including the documents incorporated by
reference therein and, during the period mentioned in paragraph (e)
below, to each of the Underwriters and to dealers effecting transactions
in the Common Stock as many copies of the Prospectus (including all
amendments and supplements thereto) and documents incorporated by
reference therein as the Underwriters and such dealers may reasonably
request;
(c) prior to the termination of the public offering
of the Securities, before filing any Prospectus Supplement or any
amendment or supplement to the Registration Statement, the Basic
Prospectus or the Prospectus, to furnish to the Representatives and the
Selling Stockholder a copy of the proposed amendment or supplement for
review and not to file any such proposed Prospectus Supplement, amendment
or supplement to which the Representatives or the Selling Stockholder
reasonably objects;
(d) to advise the Representatives and the Selling
Stockholder promptly, and to confirm such advice in writing, (i) when
the Prospectus Supplement shall have been filed pursuant to Rule 424(b)
under the Securities Act and (ii) prior to the termination of the public
offering of the Securities, (A) when any amendment to the Registration
<PAGE> 19
-19-
Statement shall have become effective, (B) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for any additional
information, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation or threatening of any proceeding for that purpose and (D) of
the receipt by the Company of any notification with respect to any
suspension of the qualification of the Securities for offer and sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and to use its reasonable best efforts to prevent the
issuance of any such stop order or notification and, if issued, to obtain
as soon as practicable the withdrawal thereof;
(e) if, during such period of time after the first
date of the public offering of the Securities as in the opinion of
counsel for the Underwriters a prospectus relating to the Securities is
required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with law, forthwith to
prepare and furnish, at the expense of the Selling Stockholder, to the
Underwriters and to the dealers (whose names and addresses the
Representatives will furnish to the Company) to which Securities may have
been sold by the Underwriters and to any other dealers upon written
request, such amendments or supplements to the Prospectus as may be
necessary so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law;
(f) to use its reasonable best efforts to register
or qualify the Securities for offer and sale under the securities or
Blue Sky laws of such jurisdictions as the Representatives shall
reasonably request and to continue such registration or qualification in
effect so long as reasonably required for distribution of the Securities;
provided that the Company shall not be required to qualify the Securities
in any jurisdiction where, as a result of such qualification, the Company
would be required to
<PAGE> 20
-20-
qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(g) to make generally available to its security
holders and to the Underwriters as soon as practicable an earning
statement covering a period of at least twelve months beginning with the
first fiscal quarter of the Company occurring after the effective date of
the Registration Statement (as such effective date is determined pursuant
to Rule 158 of the Commission), which shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Commission
promulgated thereunder;
(h) for a period of four years after the date hereof, to furnish
to the Representatives copies of all reports or other communications
(financial or other) furnished to holders of the Common Stock, and
copies of any reports and financial statements furnished to or filed
with the Commission, the National Association of Securities Dealers, Inc.
(the "NASD") or any national securities exchange;
(i) for the period of days set forth on Schedule I
hereto as the Lock-up Period, without the prior written consent of the
Underwriter or Representative, as the case may be, executing this
Agreement on behalf of the Underwriters, not to, directly or indirectly,
offer, sell, contract to sell or otherwise dispose of any shares of
Common Stock or any securities convertible into or exchangeable or
exercisable for shares of Common Stock (except for shares issuable upon
the exercise of currently outstanding options under the Company's 1981
Stock Option Plan or its 1991 Stock Option Plan and the grant of options
pursuant to the Company's 1991 Stock Option Plan); and
(j) if, in connection with the purchase of the Securities, any
Underwriter could own 10% or more of the outstanding Common Stock
(including, but not limited to, after giving effect to any purchase of
Option Securities pursuant hereto) then, for a period of 90 days
following the date hereof or, if earlier, until no Underwriter
individually owns or could so own 10% or more of the outstanding Common
Stock, not to, directly or indirectly, take any action or omit to take
any action the effect of which act or omission would be to make the
provisions of Section 3-602 of the Maryland General Corporation Law
applicable to the Company.
<PAGE> 21
-21-
7. Covenants of Westinghouse and Transferee. Each of
Westinghouse and, if Transferee is a party hereto, Transferee covenants and
agrees with the several Underwriters that for the period of days set forth on
Schedule I hereto as the Lock-up Period, without the prior written consent of
the Underwriter or Representative, as the case may be, executing this
Agreement on behalf of the Underwriters, it will not, directly or indirectly,
offer, sell, contract to sell or otherwise dispose of any shares of Common
Stock or any securities convertible into or exchangeable or exercisable for
shares of Common Stock (except for the Securities).
8. Expenses. Westinghouse agrees with each Under-writer and
with the Company to pay all costs and expenses incident to the performance of
the obligations of the Company, Westinghouse and, if Transferee is a party
hereto, Transferee hereunder, including, without limiting the generality of the
foregoing, all costs and expenses (i) incident to the preparation, transfer,
execution and delivery of the Securities referred to in Section 3, (ii)
incident to the preparation, printing and filing under the Securities Act of
the Registration Statement, the Basic Prospectus, the Prospectus Supplement,
the Prospectus and any preliminary prospectus (including in each case all
exhibits, amendments and supplements thereto), (iii) incurred in connection
with the registration or qualification of the Securities under the laws of such
jurisdictions as the Representatives may designate (including reasonable fees
of counsel for the Underwriters and their disbursements related to such
registration or qualification), (iv) related to any filing with, and review by,
the NASD and (v) in connection with the printing (including word processing and
duplication costs) and delivery of this Agreement, all other agreements
relating to underwriting and syndication arrangements, the Blue Sky Survey and
the furnishing to the Underwriters and dealers of copies of the Registration
Statement and the Prospectus, including mailing and shipping, as herein
provided.
9. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters hereunder to purchase the Underwritten
Securities are subject to the performance by each of the Company, Westinghouse
and, if Transferee is a party hereto, Transferee of its obligations hereunder
and to the following additional conditions:
(a) If any post-effective amendment to the Registration
Statement shall not have been declared effective prior to the execution
hereof, such post-effective
<PAGE> 22
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amendment shall have become effective not later than 5:00 P.M., New
York City time, on the date hereof; no stop order suspending the
effectiveness of the Registration Statement shall be in effect, and no
proceedings for such purpose shall be pending before or threatened by the
Commission; and any requests for additional information by the Commission
shall have been complied with to the satisfaction of the Representatives.
(b) The representations and warranties of the Company,
Westinghouse and, if Transferee is a party hereto, Transferee contained
herein shall be true and correct on and as of the Closing Date as if
made on and as of the Closing Date, and each of the Company,
Westinghouse and, if Transferee is a party hereto, Transferee shall have
complied with all agreements and all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date.
(c) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall not have
been any Material Adverse Change or any development involving a
Prospective Material Adverse Change, other than as set forth or
contemplated in the Registration Statement and the Prospectus, the
effect of which in the judgment of the Representatives makes it
impracticable to proceed with the public offering or the delivery of the
Underwritten Securities on the terms and in the manner contemplated in
the Registration Statement and the Prospectus.
(d) The Underwriters shall have received on and as of the
Closing Date a certificate of an executive officer of the Company
reasonably satisfactory to the Representatives to the effect set
forth in subsections (a) and (b) (insofar as subsection (b) pertains to
the Company) of this Section 9 and to the further effect that since the
respective dates as of which information is given in the Registration
Statement and the Prospectus there has not occurred any Material Adverse
Change or any development involving a Prospective Material Adverse
Change, other than as set forth or contemplated in the Registration
Statement and the Prospectus.
(e) The Underwriters shall have received on and as of the
Closing Date a certificate of an executive officer of each of
Westinghouse and, if Transferee is a party
<PAGE> 23
-23-
hereto, Transferee reasonably satisfactory to the Representatives to
the effect set forth in subsection (b) (insofar as subsection (b)
pertains to such entity) of this Section 9.
(f) The Underwriters shall have received on the Closing Date a
signed opinion of Ballard Spahr Andrews & Ingersoll, Maryland counsel
for the Company, dated the Closing Date, addressed to the Underwriters
and satisfactory to Cahill Gordon & Reindel, counsel for the
Underwriters, to the effect that:
(i) the Company has been duly organized and is validly
existing under the laws of the State of Maryland, is in good
standing with the State Department of Assessments and Taxation
of Maryland and has the corporate power to own, lease and operate
its properties and to conduct its business substantially as
described in the Registration Statement and the Prospectus;
(ii) each of Fidelio U.S. and MSI has been duly organized
and is validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and corporate
authority to own, lease and operate its properties and to conduct
its business;
(iii) all of the issued and outstanding shares of Common
Stock (including the Securities) have been duly authorized by the
Company, are validly issued and are fully paid and nonassessable
and are not subject to any preemptive or, so far as is known to
such counsel, other similar rights other than those contained in
the Charter;
(iv) (1) except for the items listed on Annex B attached
hereto and so far as is known to such counsel, all of the
outstanding shares of capital stock of the Subsidiaries owned by
the Company are owned free and clear of any mortgage, pledge,
security interest, lien, claim or other encumbrance or restriction
on transfer; (2) all of the outstanding capital stock of each of
Fidelio U.S. and MSI has been duly authorized and validly issued
and is fully paid and nonassessable; and (3) so far as is known to
such counsel, there are no outstanding (a) securities
<PAGE> 24
-24-
or obligations convertible into or exchangeable for any shares
of capital stock of the Company, Fidelio U.S. or MSI, (b) rights,
warrants or options to acquire or purchase from the Company,
Fidelio U.S. or MSI any shares of capital stock of the Company,
Fidelio U.S. or MSI (except for outstanding options under the
Company's 1991 Stock Option Plan and 1981 Stock Option Plan as
disclosed in the Proxy Statement or in the Registration Statement
and the Prospectus) or any such convertible or exchangeable
securities or obligations or (c) obligations or understandings of
the Company, Fidelio U.S. or MSI to issue or sell any shares of
capital stock of the Company, Fidelio U.S. or MSI, any such
convertible or exchangeable securities or obligations, or any such
rights, warrants or options, except as set forth on Annex B;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this
Agreement, and the consummation by the Company of the transactions
contemplated herein, do not and will not (a) result in any
violation of any provision of the Charter, the By-laws or the
certificate of incorporation or by-laws of Fidelio U.S. or MSI; (b)
contravene any provision of any applicable law, rule or regulation
of the State of Maryland, except such as would not have a Material
Adverse Effect; (c) contravene any judgment, order or decree known
to such counsel by which the Company or Fidelio U.S. or MSI is
bound or by which their properties or assets may be affected; or
(d) require any authorization, approval, consent or license of, or
filing with, any government, governmental instrumentality or court
of the State of Maryland or the State of Delaware, except such as
may be required under the securities or Blue Sky laws of the State
of Maryland or the State of Delaware;
(vii) the issued and outstanding stock of the Company is as
set forth on the signature page hereto; and
(viii) the statements under the caption "Description of
Capital Stock" in the Registration Statement
<PAGE> 25
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and the Prospectus, insofar as such statements constitute a
summary of the legal matters or documents referred to therein,
fairly present in all material respects the information required by
the Securities Act with respect to such legal matters or documents.
In rendering such opinions, such counsel may rely, as
to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and each of its
Subsidiaries and certificates or other written statements of officials of
jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company, Fidelio U.S. and MSI.
(g) The Underwriters shall have received on the Closing Date a
signed opinion of Chadbourne & Parke, counsel for the Company, dated the
Closing Date, addressed to the Underwriters and satisfactory to Cahill
Gordon & Reindel, counsel for the Underwriters, to the effect that:
(i) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this
Agreement, and the consummation by the Company of the transactions
contemplated herein, do not and will not (a) conflict with, or
result in a breach or violation of, any terms or provisions of or
constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or give rise to
any right to accelerate the maturity or require the prepayment of
any indebtedness or any right of termination under, or result in
the creation or imposition of any lien, charge or encumbrance upon
any properties or assets of the Company, Fidelio U.S. and MSI
pursuant to the terms of, any document filed as an exhibit to the
Registration Statement or to any document incorporated by
reference therein or any other material agreement known to such
counsel to which the Company, Fidelio U.S. or MSI is a party or by
which any of their properties or assets may be subject; (b)
contravene any provision of any applicable law, rule or regulation
(the "Applicable Laws") (subject to obtaining such approvals as
may be required under the securities or Blue Sky laws of the
various states and other jurisdictions of the United States of
America), except such as would not have a Material
<PAGE> 26
-26-
Adverse Effect; (c) contravene any judgment, order or decree
known to such counsel by which the Company, Fidelio U.S. or MSI is
bound or by which their properties or assets may be affected; or
(d) require any authorization, approval, consent or license of, or
filing with, any government, governmental instrumentality or court,
domestic or foreign, except such as have been obtained and are in
full force and effect under the Securities Act or as may be
required under the securities or Blue Sky laws of the various
states and other jurisdictions of the United States;
(ii) except as described in the Registration Statement and
the Prospectus, to such counsel's knowledge, there is no (A)
investigation, action, suit or proceeding before or by any
government, governmental instrumentality or court now pending or
threatened against or affecting the Company, Fidelio U.S. or MSI
or any of their respective properties or assets that is required
by the Securities Act to be described in the Registration
Statement or the Prospectus and is not so described or (B) contract
or other document that is required by the Securities Act to be
described in or referred to in the Registration Statement or the
Prospectus, or to be filed as an exhibit to the Registration
Statement, that is not described, referred to or filed as required;
(iii) to such counsel's knowledge, neither the filing of the
Registration Statement nor the offer or sale of the Securities to
the Underwriters in the manner contemplated in this Agreement
gives rise to any rights for or relating to the registration under
the Securities Act of any other securities of the Company, Fidelio
U.S. or MSI;
(iv) the Registration Statement and the Prospectus and all
amendments and supplements thereto (except for the financial
statements, schedules and other financial and statistical data
included or incorporated by reference in the Registration
Statement and the Prospectus, as to which counsel need not express
an opinion) comply as to form in all material respects with the
requirements of the Securities Act, and each document filed
pursuant to the Exchange Act and incorporated by reference in
the Registration Statement and the Prospectus (except for the
<PAGE> 27
-27-
financial statements, schedules and other financial and
statistical data included therein, as to which counsel need not
express an opinion) complied as to form in all material respects
with the requirements of the Exchange Act when filed with the
Commission;
(v) the Company is not an "investment company" as such term
is defined in the Investment Company Act of 1940, as amended, or a
holding company under the Public Utility Holding Company Act of
1935; and
(vi) each of the Company, Fidelio U.S. and MSI is qualified
to do business and is in good standing as a foreign corporation
under the laws of each jurisdiction of the United States in which
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or to be
in good standing, individually or in the aggregate, would not have
a Material Adverse Effect.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of the laws of the State of
Maryland, to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon the opinion of Ballard Spahr
Andrews & Ingersoll rendered pursuant to paragraph (f) of this Section 9;
and (B) as to matters of fact, to the extent such counsel deems proper,
on certificates of responsible officers of the Company and each of its
Subsidiaries and certificates or other written statements of officials of
jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company, Fidelio U.S. and MSI. The
opinion of such counsel for the Company shall state that the opinion of
any such other counsel is in form satisfactory to such counsel and, in
such counsel's opinion, the Underwriters and they are justified in
relying thereon.
Such counsel shall also state that it has been advised by the
Commission that the Registration Statement became effective under the
Securities Act; that any required filings of the Prospectus pursuant to
Rule 424(b) have been made in the manner and within the time period
required by Rule 424(b); and that, to its knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that
<PAGE> 28
-28-
purpose have been instituted, are pending or threatened under the
Securities Act.
Such counsel shall also state that, although such counsel does not
assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the
Prospectus, no facts have come to such counsel's attention which would
lead such counsel to believe that the Registration Statement (including
the documents incorporated by reference therein), at the time it became
effective, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus
(including the documents incorporated by reference therein), as of the
date of the Prospectus Supplement and as of the Closing Date, contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (but such counsel need not comment with respect to the
financial statements, schedules and other financial and statistical data
included or incorporated by reference in the Registration Statement and
the Prospectus).
(h) The Underwriters shall have received on the Closing Date
signed opinions (in form and substance satisfactory to Cahill Gordon &
Reindel, counsel for the Underwriters), as to such matters as the
Representatives may reasonably request involving the Subsidiaries marked
with an asterisk on Annex A hereto, of additional counsel reasonably
acceptable to Cahill Gordon & Reindel, counsel for the Underwriters,
familiar with the applicable laws.
(i) The Underwriters shall have received on the Closing Date a
signed opinion of Louis J. Briskman, Esq., General Counsel of
Westinghouse, or other counsel reasonably acceptable to the Underwriters,
dated the Closing Date, addressed to the Underwriters and satisfactory
to Cahill Gordon & Reindel, counsel for the Underwriters, to the effect
that:
(i) each of Westinghouse and, if Transferee is a party
hereto, Transferee has been duly organized and is validly existing
and in good standing under the laws of its jurisdiction of
incorporation;
<PAGE> 29
-29-
(ii) this Agreement has been duly authorized, executed and
delivered by each of the entities comprising the Selling
Stockholder, and each of Westinghouse and, if Transferee is
a party hereto, Transferee has the corporate power and authority to
sell, transfer and deliver the Underwritten Securities in the
manner provided in this Agreement; and
(iii) the execution and delivery by each of Westinghouse and,
if Transferee is a party hereto, Transferee of, and the
performance by it of its obligations under, this Agreement, and
the consummation by it of the transactions contemplated herein, do
not and will not (a) result in any violation of any provision of
its articles of incorporation or by-laws; (b) conflict with, or
result in a breach or violation of, any terms or provisions of, or
constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or give rise to
any right to accelerate the maturity or require the prepayment of
any indebtedness under, or result in the creation or imposition of
any lien, charge or encumbrance upon any of its properties or
assets pursuant to the terms of, any material agreement known to
such counsel to which it is a party or by which any of its
properties or assets may be subject; (c) contravene any Applicable
Laws (subject to obtaining such approvals as may be required under
the securities or Blue Sky laws of the various states and other
jurisdictions of the United States of America); (d) contravene any
judgment, order or decree known to such counsel by which such
entity is bound or by which its properties or assets may be
affected; or (e) require any authorization, approval, consent or
license of, or filing with, any government, governmental
instrumentality or court, domestic or foreign, except such as have
been obtained and are in full force and effect under the Securities
Act or as may be required under the securities or Blue Sky laws of
the various states and other jurisdictions of the United States.
(j) The Underwriters shall have received on the Closing Date a
signed opinion of Cravath, Swaine & Moore, counsel for the Selling
Stockholder, dated the Closing Date, addressed to the Underwriters and
satisfactory to Cahill Gordon & Reindel, counsel for the Underwriters, to
<PAGE> 30
-30-
the effect that upon delivery of the certificates for the Underwritten
Securities to the Underwriters endorsed to them or in blank and payment
therefor by the Underwriters in accordance with the terms of this
Agreement, each Underwriter will acquire beneficial ownership of the
Underwritten Securities being purchased by it free of any adverse claim
within the meaning of Section 8-302 of the UCC, assuming that such
Underwriter is acting in good faith and has no notice of any adverse
claim. Such counsel may state that, although each Underwriter will
acquire beneficial ownership of the Underwritten Securities being
purchased by it as described in the immediately preceding sentence, such
Underwriter will not acquire record title to such Underwritten Securities
until such Underwritten Securities are registered in the share records of
the Company in the name of such Underwriter (or a nominee thereof).
(k) At the time this Agreement is executed and also
on the Closing Date, Price Waterhouse LLP shall have furnished to the
Underwriters letters, dated the respective dates of delivery thereof, in
form and substance satisfactory to the Representatives, containing
statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to certain
financial information relating to the Company and the Subsidiaries
contained in the Registration Statement and the Prospectus or
incorporated by reference therein; such letters shall also be addressed
and delivered to the Selling Stockholder.
(l) The Underwriters shall have received on the Closing Date an
opinion of Cahill Gordon & Reindel, counsel for the Underwriters, with
respect to the Registration Statement, the Prospectus and other related
matters as the Representatives may reasonably request, and such counsel
shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters.
(m) The Securities shall continue to be qualified for quotation
on the Nasdaq National Market.
(n) On or prior to the Closing Date, the Company shall have
furnished to the Representatives such further certificates and documents
as the Representatives shall reasonably request.
<PAGE> 31
-31-
The several obligations of the Underwriters to purchase Option
Securities hereunder are subject to satisfaction of the conditions set forth in
paragraphs (a) through (g) and (i) through (n) above on and as of the
Additional Closing Date, except that the certificates called for by paragraphs
(d) and (e), the opinions called for by paragraphs (f), (g), (i), (j) and (l)
and the letter called for by paragraph (k) shall be dated the Additional
Closing Date and any reference to Underwritten Securities shall be deemed to be
a reference to Option Securities.
10. Indemnification and Contribution. The Company and, if on the
date hereof Westinghouse owns, directly or indirectly (whether through
Transferee or otherwise), more than 50% of the then outstanding shares of
Common Stock as indicated on the signature page hereto, Westinghouse agree,
jointly and severally, to indemnify and hold harmless each Underwriter, its
officers and directors, and each person, if any, who controls such Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable legal fees and other
expenses incurred in connection with any suit, action or proceeding or any
claim asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto to the Underwriters) or any preliminary prospectus, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representatives expressly for use therein; provided that the foregoing
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) from whom the person asserting any such losses, claims, damages or
liabilities purchased Securities if such untrue statement or omission or
alleged untrue statement or omission made in such preliminary prospectus is
eliminated or remedied in the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto to the
Underwriters) and, if required by law to be furnished, a copy of the Prospectus
(as
<PAGE> 32
-32-
so amended or supplemented) shall not have been furnished to such person at or
prior to the written confirmation of the sale of such Securities to such person.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the
Registration Statement, each person who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act and
Westinghouse to the same extent as the foregoing indemnity from the Company and
Westinghouse to each Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any
preliminary prospectus. For purposes of this Section 10, the only written
information furnished by the Underwriters to the Company expressly for use in
the Registration Statement and the Prospectus is the information referred to on
Schedule I hereto under the heading "Information Provided by the Underwriters."
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of
the two preceding paragraphs, such person (the "Indemnified Person") shall
promptly notify in writing the person or persons against whom such indemnity
may be sought (each an "Indemnifying Person"), and such Indemnifying Person,
upon request of the Indemnified Person, shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may designate in such proceeding and shall
pay the reasonable fees and expenses incurred by such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) such Indemnifying
Person and such Indemnified Person shall have mutually agreed to the contrary,
(ii) such Indemnifying Person has failed within a reasonable time to retain
counsel reasonably satisfactory to such Indemnified Person or (iii) the named
parties in any such proceeding (including any impleaded parties) include both
an Indemnifying Person and an Indemnified Person and representation of each
such party by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that an
Indemnifying Person shall not, in connection with any proceeding or related
<PAGE> 33
-33-
proceedings in the same jurisdiction, be liable for (a) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Underwriters, their officers and directors and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, (b) the reasonable fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company, its directors, its officers who sign the Registration Statement
and each person, if any, who controls the Company within the meaning of either
such Section and (c) the reasonable fees and expenses of more than one separate
firm (in addition to any local counsel) for the Selling Stockholder, and that
all such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Underwriters and such control persons of the Underwriters
shall be designated in writing by the Underwriter or Representative, as the
case may be, executing this Agreement on behalf of the Underwriters; any such
separate firm for the Company, its directors, its officers who sign the
Registration Statement and such control persons of the Company (other than
Westinghouse and, if Transferee is a party hereto, Transferee) shall be
designated in writing by the Company; and any such separate firm for
Westinghouse shall be designated in writing by Westinghouse. No Indemnifying
Person shall be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, such Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested an Indemnifying Person to reimburse
the Indemnified Person for reasonable fees and expenses incurred by counsel as
contemplated by the third sentence of this paragraph, such Indemnifying Person
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Person of the aforesaid request and
(ii) such Indemnifying Person shall not have reimbursed the Indemnified Person
in accordance with such request prior to the date of such settlement; provided,
however, that such Indemnified Person shall not have the right to enter into
such settlement if there is a good faith dispute between such Indemnified
Person and such Indemnifying Person regarding such Indemnifying Person's
obligation to reimburse such Indemnified Person for such fees and expenses of
counsel. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person, effect any settlement of any pending
<PAGE> 34
-34-
or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
If the indemnification provided for in the first, second and third
paragraphs of this Section 10 is unavailable to an Indemnified Person in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and Westinghouse in the aggregate on the one
hand and the Underwriters on the other hand from the offering of the Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company and Westinghouse in the aggregate on the one hand and the
Underwriters on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and Westinghouse in the aggregate on the one hand and the Underwriters
on the other hand shall be deemed to be in the same respective proportions as
the net proceeds from the offering (before deducting expenses) received by the
Selling Stockholder and the total underwriting discounts received by the
Underwriters, in each case as set forth on the cover of the Prospectus, bear to
the aggregate public offering price of the Securities. The relative fault of
the Company and Westinghouse in the aggregate on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company, Westinghouse or Transferee or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
Each of the Company, Westinghouse and the Underwriters agrees that
it would not be just and equitable if contribution pursuant to this Section 10
were determined by pro rata
<PAGE> 35
-35-
allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 10 are several in proportion
to the respective number of shares of Common Stock constituting Underwritten
Securities set forth opposite their names in Schedule I hereto, and not joint.
The indemnity and contribution agreements contained in this
Section 10 are in addition to any liability which any Indemnifying Person may
otherwise have to any other Indemnifying Person or any Indemnified Person,
including pursuant to the Stock Unit Purchase Agreement between the Company and
Westinghouse, dated as of October 30, 1986, as amended by that certain letter
agreement dated May 2, 1995 between the Company and Westinghouse (which
agreement, as so amended, shall not be deemed or considered amended or
superseded by this Section 10). The Company and Westinghouse agree that any
indemnity or contribution payments made by Westinghouse to any Indemnified
Person pursuant to this Section 10 will be treated by the Company and
Westinghouse as liabilities of Westinghouse that are subject to the Company's
indemnification contained in Section 7.04 of such Stock Unit Purchase Agreement
(subject to the limitation contained in the proviso to the first paragraph of
clause (d) thereof), and any indemnity or contribution payments made by the
Company to any Indemnified Person pursuant to this Section 10 will be treated
by Westinghouse and the Company as liabilities of the Company that are subject
to Westinghouse's indemnification contained in Section 7.04 of such Stock Unit
<PAGE> 36
-36-
Purchase Agreement (subject to the limitation contained therein with respect
to written information furnished to the Company by Westinghouse and, if
Transferee is a party hereto, Transferee).
The indemnity and contribution agreements contained in this
Section 10 and the representations and warranties of the Company, Westinghouse
and, if Transferee is a party hereto, Transferee as set forth in this
Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or
on behalf of the Company, Westinghouse or Transferee or the officers or
directors or any other person controlling the Company, Westinghouse or
Transferee and (iii) acceptance of and payment for any of the Securities.
11. Termination of This Agreement. Notwithstanding anything
herein contained, this Agreement (or the obligations of the several
Underwriters with respect to the Option Securities) may be terminated in the
absolute discretion of the Representatives, by notice given to the Company and
Westinghouse, if after the execution and delivery of this Agreement and prior
to the Closing Date (or, in the case of the Option Securities, prior to the
Additional Closing Date) (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, either the New York Stock
Exchange or the Nasdaq National Market, (ii) trading of any securities of the
Company shall have been suspended or materially limited on any exchange or in
any over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by Federal or New York State
authorities, or (iv) there shall have occurred an outbreak of hostilities or
an escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the reasonable judgment of the Representatives,
is material and adverse and which, in the reasonable judgment of the
Representatives, makes it impracticable to market the Securities on the terms
and in the manner contemplated in the Prospectus.
12. Reimbursement upon Occurrence of Certain Events. If this
Agreement shall be terminated by the Representatives because of any failure or
refusal on the part of the Company, Westinghouse or Transferee (if it is a
party hereto) to comply with the terms or to fulfill any of the conditions of
this Agreement, or if for any reason any of the Company, Westinghouse or
Transferee (if it is a party hereto) shall be unable to perform its obligations
under this Agreement or any
<PAGE> 37
-37-
condition of the Underwriters' obligations cannot be fulfilled, Westinghouse
agrees to reimburse the Underwriters for all out-of-pocket expenses (including
the fees and expenses of their counsel) incurred by the Underwriters in
connection with this Agreement or the offering contemplated hereunder.
13. Effectiveness of This Agreement; Additional Obligations of
the Underwriters. This Agreement shall become effective upon the later of (x)
the execution and delivery hereof by the parties hereto and (y) release of
notification by the Commission of the effectiveness of the most recent
post-effective amendment to the Registration Statement filed prior to the
Closing Date.
If, on the Closing Date or the Additional Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase the Securities which it or they have agreed to purchase hereunder on
such date, and the aggregate number of Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not
more than one-tenth of the number of Securities to be purchased on such date,
the other Underwriters, if any, shall be obligated severally in the proportions
that the number of Underwritten Securities set forth opposite their respective
names in Schedule I hereto bears to the aggregate number of Underwritten
Securities set forth opposite the names of all such nondefaulting Underwriters,
or in such other proportions as the Representatives may specify, to purchase
the Securities which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
number of Securities that any Underwriter has agreed to purchase pursuant to
Section 1 be increased pursuant to this Section 13 by an amount in excess of
one-ninth of the number of shares of Common Stock constituting Securities which
such Underwriter is obligated to purchase hereunder without the written consent
of such Underwriter. If, on the Closing Date or the Additional Closing Date,
as the case may be, any Underwriter or Underwriters shall fail or refuse to
purchase Securities which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Securities with respect to which such default
occurs is more than one-tenth of the aggregate number of Securities to be
purchased on such date, and arrangements satisfactory to the Representatives
and the Selling Stockholder for the purchase of such Securities are not made
within 36 hours after such default, this Agreement (or the obligations of the
several Underwriters to purchase the Option Securities, as the case may be)
shall terminate without
<PAGE> 38
-38-
liability on the part of any non-defaulting Underwriter, the Company or
the Selling Stockholder. In any such case the Representatives, the Company or
the Selling Stockholder shall have the right to postpone the Closing Date (or,
in the case of the Option Securities, the Additional Closing Date), but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents
or arrangements may be effected. Any action taken under this paragraph shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
14. Notice. Any action by the Underwriters or the Representatives
hereunder may be taken by the Representatives jointly or by the Underwriter or
Representative, as the case may be, executing this Agreement acting alone on
behalf of the Underwriters or the Representatives, as the case may be, and any
such action taken by the Representatives jointly or by such Underwriter or
Representative alone shall be binding upon the Underwriters and the
Representatives. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall be
given to the Representatives at the address set forth on Schedule I hereto.
Notices to the Company shall be given to it at 12000 Baltimore Avenue,
Beltsville, Maryland 20705-1291, Attention: President (facsimile (301)
210-3334). Notices to Westinghouse or the Selling Stockholder shall be given
to it at Westinghouse Building, Gateway Center, Pittsburgh, Pennsylvania 15222,
Attention: Louis J. Briskman, Esq., General Counsel (facsimile (412)
642-5224).
15. Miscellaneous. This Agreement shall inure to the benefit of
and be binding upon the Underwriters, the Company, Westinghouse and, if
Transferee is a party hereto, Transferee and any controlling person referred
to herein and their respective successors, heirs and legal representatives.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters,
the Company, Westinghouse and, if Transferee is a party hereto, Transferee and
their respective successors, heirs and legal representatives and the controlling
persons and officers and directors referred to in Section 10 and their heirs
and legal representatives, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No
purchaser of
<PAGE> 39
-39-
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
16. Counterparts; Applicable Law. This Agreement may be signed in
counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
giving effect to the conflicts of laws provisions thereof.
<PAGE> 40
If the foregoing is in accordance with your understanding, please
sign and return six counterparts hereof.
Very truly yours,
MICROS SYSTEMS, INC.
By: /s/ Ronald J. Kolson
-----------------------------------
Name: Ronald J. Kolson
Title: Executive Vice President
and Chief Operating Officer
WESTINGHOUSE ELECTRIC CORPORATION
By: /s/ Claudia E. Morf
-----------------------------------
Name: Claudia E. Morf
Title: Treasurer
WESTINGHOUSE HOLDINGS CORPORATION
By: /s/ Claudia E. Morf
-----------------------------------
Name: Claudia E. Morf
Title: Treasurer
Number of shares of Common Stock
owned by the Selling
Stockholder: 4,849,123
-----------
Number of shares of Common Stock
outstanding: 7,859,095
-----------
<PAGE> 41
Accepted: July 6, 1995
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
SMITH BARNEY INC.
By: J.P. MORGAN SECURITIES INC.
By: /s/ Michael Tiedemann
--------------------------------
Name: Michael Tiedemann
Title: Vice President
<PAGE> 42
SCHEDULE I
<TABLE>
<CAPTION>
Number of Shares of
Common Stock Constituting
Underwritten Securities
<S> <C>
Underwriter(1) To Be Purchased
----------- ---------------
J.P. Morgan Securities Inc. 700,000
Morgan Stanley & Co. Incorporated 150,000
Smith Barney Inc. 150,000
---------
Total Number of Underwritten
Securities................... 1,000,000
=========
Total Number of Option Securities, if any... 0
=========
</TABLE>
Purchase Price per share: $ 30.07
-----
Period for Exercise of Option to Purchase
Option Securities: n/a
Lock-up Period: 60 days following the date
of the Prospectus Supplement
Closing Date: July 11, 1995
Information Provided by the Underwriters: The information in the last
paragraph on the outside front cover page of the Prospectus Supplement, the
stabilization legend in the forepart of the Prospectus Supplement and the third
paragraph under the caption "Underwriting" in the Prospectus Supplement.
Information Provided by Westinghouse and Transferee: The information in the
last sentence of the first paragraph of the Prospectus Supplement.
--------------------------
(1) The notice address for the Underwriters is as follows:
J.P. Morgan Securities Inc.
Morgan Stanley & Co. Incorporated
Smith Barney Inc.
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
<PAGE> 43
ANNEX A
SUBSIDIARIES
<TABLE>
<CAPTION>
Percentage Owned
by Immediate
Parent Entity
----------------
<S> <C>
MICROS Canada Inc. (Ontario) 100%
MICROS Foreign Sales Corporation (Barbados) 100%
MICROS of South Florida, Inc. (Maryland) 100%
MICROS POS Pty. Limited (Australia) 100%
*MICROS Systems (U.K.) Ltd. (United Kingdom) 100%
*MICROS Systems Hispania, S.L. (Spain) 100%
MSI Delaware, Inc. (Delaware) 100%
MICROS of Delaware, Inc. (Delaware) 100%
*MICROS Systems Holding GmbH (Germany) 100%
*MICROS Systems Deutschland GmbH (Germany) 100%
*MICROS Systems Services GmbH (Germany) 100%
Fidelio Software Corporation (Delaware) 90%
Marblehead Systems International, Inc. (Delaware) 50%
*Fidelio Software U.K. Limited (England and Wales) 80%
*MICROS System AG (Ltd.) (Switzerland) 60%
*Fidelio France S.A. (France) 51%
(direct)
12.67%
(indirect)
Merchants Information Systems, Inc. (Maryland) 49%
(direct)
24.48%
(indirect)
</TABLE>
<PAGE> 44
ANNEX B
MICROS Canada Inc.:
1. The Articles of Incorporation require transfers of stock
of MICROS Canada Inc. to be approved by the directors of MICROS Canada Inc. or
to be approved by the holders of at least 51% of the outstanding common shares
of MICROS Canada Inc.
2. A Management Agreement, dated February 12, 1993, among
David Quinn and others (referred to therein as the "Management Group"), the
Company and MICROS Canada Inc., provides that the Management Group would earn
shares of common stock of MICROS Canada Inc. (referred to as "Performance
Shares" therein) based upon the realization of certain goals relating to the
sales and income of MICROS Canada Inc. The Management Agreement further
provides that within 60 days following the occurrence of a Triggering Event (as
defined in the Management Agreement), the Management Group may request the
Company to redeem the Performance Shares for cash or, if the Company agrees,
for stock of the Company. An officer of MICROS Canada Inc. and an officer of
the Company have certified that the sales and income of MICROS Canada Inc. have
never been at a level which would require MICROS Canada Inc. to issue
Performance Shares pursuant to the Management Agreement, that no Performance
Shares have ever been issued by MICROS Canada Inc. and that, other than David
Quinn, there are no other parties entitled to Performance Shares pursuant to
this Management Agreement.
MICROS Foreign Sales Corporation:
1. The Articles of Incorporation provide that no shares of
MICROS Foreign Sales Corporation may be transferred without the approval of the
directors of MICROS Foreign Sales Corporation or a committee of such directors.
The Articles of Association also provide that the directors may, in their
absolute discretion and without assigning any reason therefor, decline to
register any transfer of any share.
MICROS of Delaware, Inc.:
1. A Subscription Agreement, dated February 5, 1993, between
MICROS of Delaware, Inc. and the Company, provides that stock of MICROS of
Delaware, Inc. purchased by the Company pursuant to this Subscription Agreement
may not
<PAGE> 45
be offered, sold, pledged or otherwise disposed of, except pursuant to
(i) an effective registration statement under the Securities Act of 1933 (the
"1933 Act") and qualification under applicable state and foreign securities
laws, or (ii) an opinion of counsel satisfactory to MICROS of Delaware, Inc.
that such registration and qualification are not required.
MICROS of South Florida, Inc.:
1. A Management Agreement, dated April 1993 (the "Williams
Management Agreement"), among Thomas S. Williams ("Williams") and others
(referred to therein as the "Management Group"), the Company and MICROS of
South Florida, Inc. ("MSF"), provides that the Management Group would earn
shares of common stock of MSF (referred to as "Performance Shares" therein)
based upon the realization of certain goals relating to the sales and income
of MSF. The Williams Management Agreement further provides that within 60 days
following the occurrence of a Triggering Event (as defined in the Williams
Management Agreement), the Management Group may request the Company to redeem
the Performance Shares for cash or, if the Company agrees, for stock of the
Company. An officer of MSF and an officer of the Company have certified (a)
that as of July 11, 1995, no such Triggering Event has occurred, (b) that the
sales and income of MSF have never been at a level which would require MSF to
issue Performance Shares pursuant to the Williams Management Agreement, other
than sales for the fiscal year 1993 which required MSF to issue 16 Performance
Shares to Williams pursuant to the Williams Management Agreement, (c) that no
Performance Shares have ever been issued by MSF, other than such 16 Performance
Shares and other than as set forth in paragraph 2 below and (d) that, other
than Williams and Read Kirkpatrick, there are no other parties entitled to
Performance Shares pursuant to the Williams Management Agreement.
2. A Management Agreement, dated July 1, 1992 (the
"Kirkpatrick Management Agreement"), among Read Kirkpatrick ("Kirkpatrick")and
others (referred to therein as the "Management Group"), the Company and MICROS
of South Florida, Inc.("MSF"), provides that the Management Group would earn
shares of common stock of MSF (referred to as "Performance Shares" therein)
based upon the realization of certain goals relating to the sales and income of
MSF The Kirkpatrick Management Agreement further provides that within 60 days
following the occurrence of a Triggering Event (as defined in the Kirkpatrick
Management Agreement), the Management Group may request the Company to redeem
the
2
<PAGE> 46
Performance Shares for cash or, if the Company agrees, for stock of the
Company. An officer of MSF and an officer of the Company have certified (a)
that as of July 11, 1995, no such Triggering Event has occurred, (b) that the
sales and income of MSF have never been at a level which would require MSF to
issue Performance Shares pursuant to the Kirkpatrick Management Agreement,
other than sales for the fiscal year 1993 which required MSF to issue 24
Performance Shares to Kirkpatrick pursuant to the Kirkpatrick Management
Agreement, (c) that no Performance Shares have ever been issued by MSF, other
than such 24 Performance Shares and other than as set forth in paragraph 1
above, (d) that such 24 Performance Shares have been redeemed for cash, (e)
that as of July 11, 1995, there are no outstanding Performance Shares issued
pursuant to the Kirkpatrick Management Agreement and (f) that, other than
Thomas S. Williams and Kirkpatrick, there are no other parties entitled to
Performance Shares pursuant to the Kirkpatrick Management Agreement.
MICROS POS Pty. Limited:
1. The Articles of Association provide that the directors of
MICROS POS Pty. Limited may decline to register any transfer of shares of
MICROS POS Pty. Limited to any person of whom they do not approve and shall
not be called upon to assign any reason for such refusal.
2. The Articles of Association of MICROS POS Pty. Limited
provide the following:
"89. (a) The Company shall have a first and paramount lien upon
every share (whether fully paid or not) for all moneys
whether presently payable or not or payable at a fixed
time with interest and expenses owing to the Company in
respect of that share but the Directors may at any time
declare any share to be wholly or in part exempt from the
provisions of this Article.
"(b) The Company shall have a first and paramount lien for
unpaid calls and installments upon the specific shares in
respect of which such moneys are due and unpaid. Such lien
shall extend to all dividends from time to time declared
in respect of such shares. If the Company shall register a
transfer of any share upon which it has a claim without
first giving to the
3
<PAGE> 47
transferee a notice of the claim that share shall be freed
and discharged from the lien.
"90. Whenever any law imposes a liability or possible liability
upon the Company to make any payment whether in respect of
dividends or in respect of the member's ownership of shares in
the Company in consequence of his death non-payment of income tax
or other tax or estate Probate death or succession duties the
Company in every such case shall be fully indemnified by the
member or his executor or administrator from all liabilities and
shall have a lien for all moneys and liabilities due or
chargeable in respect of any such law together with interest at
the rate of 10% per annum to the same extent as for other moneys
payable at a fixed time in respect of the member's shares. The
provisions of this Article shall not prejudice any right or
remedy conferred on the Company as between the Company and every
such member his executors administrators or estate.
"91. The Company may sell in such manner as the Directors think
fit any shares on which the Company has a lien but no sale shall
be made unless some sum in respect of which the lien exists is
presently payable nor until the expiration of 14 days after a
notice in writing stating and demanding payment of such part of
the amount in respect of which the lien exists as is presently
payable has been given to the registered holder for the time
being of the share or the persons entitled thereto by reason of
his death or bankruptcy.
* * *
"94. The Directors may from time to time make calls upon the
members in respect of any money unpaid on their shares (whether
on account of the nominal value of the shares or by way of
premium) and not by the conditions of allotment thereof made
payable at fixed times and each member shall pay the amount
called on his shares to the Company at the times specified by the
Directors. A call may be revoked or postponed as the Directors
may determine."
MICROS Systems (U.K.) Limited:
4
<PAGE> 48
1. Section 3 of the Articles of Association of MICROS Systems
(U.K.) Limited ("MICROS-U.K.") states "The lien conferred by Clause 8 in [Table
A in the Schedule to the Companies (Tables A to F) Regulations 1985 as amended
by the Companies (Tables A to F) (Amendment) Regulations 1985 ("Table A")]
shall attach also to fully paid-up shares, and [MICROS-U.K.] shall also have a
first and paramount lien on all shares, whether fully paid or not, standing
registered in the name of any person indebted or under liability to
[MICROS-U.K.], whether he shall be the sole registered holder thereof or shall
be one of two or more joint holders, for all monies presently payable by him
or his estate to [MICROS-U.K.]. Clause 8 in Table A shall be modified
accordingly."
2. The Articles of Association provide that the directors of
MICROS-U.K. may, in their absolute discretion and without assigning any reason
therefor, decline to register the transfer of a share, whether or not such
share is fully paid.
MSI Delaware, Inc.:
1. A Subscription Agreement, dated February 5, 1993, between
MSI Delaware, Inc. and the Company, provides that stock of MSI Delaware, Inc.
may not be offered, sold, pledged or otherwise disposed of, except pursuant to
(i) an effective registration statement under the Securities Act of 1933 (the
"1933 Act") and qualification under the applicable state and foreign securities
laws, or (ii) an opinion of counsel satisfactory to MSI Delaware, Inc. that
such registration and qualification are not required.
MICROS Systems Deutschland GmbH:
1. The Articles of Association require that a quotaholder who
desires to transfer his or her shares in MICROS Systems Deutschland GmbH must
obtain the written consent of the other quotaholders of MICROS Systems
Deutschland GmbH and the consent of the Executive Board of MICROS Systems
Deutschland GmbH prior to such transfer. The Articles of Association provide an
exception from this consent requirement if a transfer is made (i) to another
existing quotaholder of MICROS Systems Deutschland GmbH or (ii) to a related
party of the transferring quotaholder.
MICROS Systems Services GmbH:
1. Article 6.1 of the Articles Association of MICROS Systems
Services GmbH provides that a quota in MICROS
5
<PAGE> 49
Systems Services GmbH may not be transferred or made subject to a lien or any
similar third-party interest without the prior written consent of a majority
of quotaholders who hold greater than a 50% interest in the share capital of
MICROS Systems Services GmbH. Such consent is not required if the parties to
the quota transfer are either other quotaholders of MICROS Systems Services
GmbH or related companies, as defined in the German Stock Corporation Statute
(Aktiengesetz). Article 6.2 of the Articles of Association of MICROS Systems
Services GmbH provides that (i) a transfer of a quota in MICROS Systems
Services GmbH and (ii) an encumbrance of a lien or a similar third-party
interest upon a quota to the benefit of a non-quotaholder or an unrelated
party must be approved by a majority of votes cast at a duly convened
quotaholders' meeting. Article 6.3 of the Articles of Association of MICROS
Systems Services GmbH provides for a preemption right in the case of an
increase in the number of outstanding quotas in MICROS Systems Services GmbH.
Fidelio Software U.K. Limited:
1. Section 6 of the Articles of Association states "In
regulation 8 of Table A, the words '(not being a fully paid share)' shall be
omitted. The Company shall have a first and paramount lien on all shares
standing registered in the name of any person (whether he be the sole
registered holder thereof or one of two or more joint holders) for all moneys
presently payable by him or his estate to the Company."
2. The Articles of Association provide that the directors of
Fidelio Software U.K. Limited may, in their sole discretion and without
assigning any reason therefor, decline to register the transfer of any share of
Fidelio Software U.K. Limited, whether or not such share is fully paid.
MICROS Systems AG:
1. A Joint Venture Contract between the Company and Host AG,
Zurich, an entity not yet formed as of the time of the execution of the Joint
Venture Contract, requires that a shareholder of MICROS Systems AG obtain the
consent of the other shareholders prior to the transfer of stock of MICROS
Systems AG.
Fidelio France SA:
1. The Articles of Association/By-laws of Fidelio France SA
provide for a right of first refusal to
6
<PAGE> 50
the non-transferring shareholders prior to transfer of stock of Fidelio France
SA.
Marblehead Systems International, Inc.:
1. A Shareholders' Agreement, dated February 22, 1994,
between Fidelio Software Corporation and Joseph A. Marko provides a right of
first refusal to non-transferring shareholders prior to transfer of stock.
Merchants Information Systems, Inc.:
1. A Shareholders' Agreement, dated July 30, 1993, between
the Company and Merchants Systems, Inc., a Washington State corporation,
provides a right of first refusal to the non-transferring shareholders prior to
a transfer of stock of Merchants Information Systems, Inc.
7
<PAGE> 1
EXHIBIT 10e
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made this 1st day of June,
1995, by and between MICROS SYSTEMS, INC., a Maryland corporation,
with offices located at 12000 Baltimore Avenue, Greenbelt, Maryland 20705
(hereinafter referred to as the "Company"), and A. L. GIANNOPOULOS, whose
address is 6125 Wooded Run Drive, Columbia, Maryland 21044 (hereinafter
referred to as the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive and the Executive
desires to accept such employment;
WHEREAS, the Executive possesses skills and experience which the Company
believes are of substantial value and importance to the success of the Company's
business operations;
WHEREAS, the Executive is willing to make his services available to the
Company on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and the
conditions and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which hereby is acknowledged, the
parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth.
<PAGE> 2
2. Duties. During the term of employment, the Executive shall serve
as the President and Chief Executive Officer of the Company and as such, he
shall have general responsibility for the management and direction of the
business of the Company in all departments and he shall perform such other
reasonable duties as the Board of Directors may assign, from time to time.
3. Term. The term of this Agreement shall commence upon the day and
year first above written ("Commencement Date") and shall continue until
December 31, 1999, unless sooner terminated, as provided herein.
4. Salary. The Executive's salary for the term of this Agreement
shall be in the amounts set forth below, payable in equal bi-weekly
installments:
<TABLE>
<CAPTION>
Period Salary
------ ------
<S> <C>
Commencement Date through June 30, 1995 $ 32,170
July 1, 1995 through June 30, 1996 $203,000
July 1, 1996 through June 30, 1997 $213,000
July 1, 1997 through June 30, 1998 $223,000
July 1, 1998 through June 30, 1999 $233,000
July 1, 1999 through December 31, 1999 $121,500
</TABLE>
5. Bonuses. In addition to his salary, the Executive shall be entitled
to receive a bonus for each fiscal year of the Company (July 1 - June 30). The
Executive's bonus for each fiscal year, or portion of a fiscal year, during the
term hereof shall be in the amounts set forth below ("Target Bonus") if the
fiscal year bonus
2
<PAGE> 3
objectives of the Executive ("Objectives"), as determined by the Board of
Directors prior to the commencement of each such fiscal year, are met;
provided, that, consistent with the Company's executive bonus plan, the bonus
may be increased for any fiscal year in which the Company performance exceeds
Objectives or decreased for any fiscal year in which the Company performance
falls below Objectives, and provided further that in no event shall the bonus
paid to the Executive for any fiscal year of the Company exceed 200% of Target
Bonus:
<TABLE>
<CAPTION>
Fiscal Year Ending Target Bonus
------------------ ------------
<S> <C>
June 30, 1995 $110,000
June 30, 1996 $120,000
June 30, 1997 $130,000
June 30, 1998 $140,000
June 30, 1999 $150,000
June 30, 2000 $ 80,000
</TABLE>
Any bonus required to be paid pursuant to this Section 5 shall be paid by
the Company to the Executive within ninety (90) days following the close of the
fiscal year of the Company to which such bonus applies, except that the bonus
due for the period ending December 31, 1999 shall be paid on or before March
31, 2000.
6. Stock Option. Upon the Commencement Date, the Executive shall
be granted the unrestricted right to acquire up to twenty-two thousand (22,000)
shares of the Company's common stock ("Option"). The Company and the Executive
shall enter into a stock option
3
<PAGE> 4
agreement evidencing the grant of said Option, which agreement shall contain
such other terms and provisions as are customarily contained in the Company's
executive employee Incentive Stock Option Agreement ("Company Plan").
In addition to the Option granted above, within ninety (90) days
following the commencement of each fiscal year of the Term, the Company shall
grant to the Executive the right to purchase additional common stock of the
Company ("Common Stock") for such consideration and in such amounts as is
consistent with the terms of the Company Plan or a successor employee stock
option plan. Notwithstanding the right herein granted, the Executive
acknowledges that, except for the Common Stock exercisable under the Option, no
additional Common Stock is currently available to the Company to issue under
the Company Plan. In recognition thereof, the Company's obligation to grant to
the Executive the right to purchase the additional Common Stock shall not arise
until such time as the shares of Common Stock become available under the
Company Plan or a successor employee stock option plan. The Company agrees to
use its best efforts to take such steps or cause the required steps to be taken
which will enable the Common Stock to become available for option grants.
7. Expenses. The Company shall reimburse the Executive for all expenses
incurred in connection with the performance of his duties on behalf of the
Company, provided that the Executive shall keep, and present to the Company,
records and receipts relating to
4
<PAGE> 5
reimbursable expenses incurred by him. Such records and receipts shall be
maintained and presented in a format, and with such regularity, as the Company
reasonably may require in order to substantiate the Company's right to claim
income tax deductions for such expenses. Without limiting the generality of
the foregoing, the Executive shall be entitled to reimbursement for any
business-related travel, business-related entertainment whether at his
residence or otherwise, and other costs and expenses reasonably incident to the
performance of his duties on behalf of the Company.
8. Fringe Benefits. During the term of this Agreement, the Executive
shall be entitled to participate in any and all fringe benefit plans, programs
and practices sponsored by the Company for the benefit of its executive
employees, and shall be furnished with other services and perquisites
appropriate to his position. Without limiting the generality of the foregoing,
the Executive shall be entitled to the following benefits (regardless of
whether such benefits are provided to other executives):
(a) Comprehensive medical insurance for the Executive, his spouse,
and his dependent children.
(b) Dental insurance for the Executive, his spouse, and his
dependent children.
(c) Group term life insurance.
(d) Long-term disability insurance.
5
<PAGE> 6
9. Vacation Leave, etc.
(a) Vacation Leave. The Executive shall be entitled to a total of
four (4) weeks of vacation each year. Unused vacation time shall not
accumulate from year to year. The Executive may take his vacation at such time
or times as shall not interfere with the performance of his duties under this
Agreement.
(b) Sick Leave and Holidays. The Executive shall be entitled to
paid sick leave and holidays in accordance with the Company's announced policy
for executive employees, as in effect from time to time.
10. Restrictive Covenant. The Executive agrees that during his
employment with the Company, and for a period of one (1) year following the
termination of his employment for any reason whatsoever, he shall not (a)
engage, directly or indirectly, in any computer hardware or computer software
business which is competitive with the business now, or at any time during the
term of the Executive's employment, conducted by the Company; or (b) solicit
(directly or indirectly, for his own account, or for the account of others)
orders for services or products of a kind or nature like or similar to services
performed or products sold by the Company during the term of the Executive's
employment with the Company, from any party that was a client (or customer) of
the Company, or which the Company was soliciting to be its client (or customer)
during the twelve (12) month period preceding the date of the Executive's
termination of employment. The Executive further
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<PAGE> 7
agrees that he shall not, at any time, directly or indirectly, urge any client
(or customer) of the Company to discontinue business, in whole or in part, or
not to do business, with the Company.
For the purposes of this Section 10, the Executive will be deemed
directly or indirectly engaged in a business if he participates in such
business as proprietor, partner, joint venturer, stockholder, director,
officer, lender, manager, employee, consultant, advisor or agent or if he
controls such business. The Executive shall not for purposes of this Section
10 be deemed a stockholder or lender if he holds less than two percent (2%) of
the outstanding equity or debt of any publicly owned corporation engaged in the
same or similar business to that of the Company, provided that the Executive
shall not be in a control position with regard to such corporation.
11. Maintaining Confidential Information.
(a) Company Information. The Executive agrees at all times during
the term of his employment and for a period of one (1) year thereafter to hold
in strictest confidence, and not to use, or to disclose to any person, firm or
corporation, without the written authorization of the Board of Directors of the
Company except if such is to be used or disclosed for the benefit of the
Company, any trade secrets, confidential knowledge, data or other proprietary
information of the Company. By way of illustration and not limitation, such
shall include information relating to products, processes, know-how, designs,
formulas, methods, developmental or
7
<PAGE> 8
experimental work, improvements, discoveries, plans for research, new products,
marketing and selling, business plans, budgets and unpublished financial
statements, licenses, prices and costs, suppliers and customers, and
information regarding the skills and compensation of other employees of the
Company.
(b) Third Party Information. The Executive recognizes that the
Company has received and in the future will receive from third parties their
confidential or proprietary information subject to a duty on the Company's part
to maintain the confidentiality of such information and, in some cases, to use
it only for certain limited purposes. The Executive agrees that he owes the
Company and such third parties, both during the term of his employment and
thereafter, a duty to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation (except in a manner that is consistent with the Company's agreement
with the third party) or use it for the benefit of anyone other than the
Company or such third party (consistent with the Company's agreement with the
third party).
12. Prior Employees. For a period of one (1) year following the
termination of the Executive's employment with the Company for any reason
whatsoever, with or without cause, the Executive shall not, whether as an
individual or as a proprietor, stockholder, partner, officer, director,
employer, employee, agent, consultant, independent contractor or otherwise,
recruit or employ, directly or
8
<PAGE> 9
indirectly, for his own business or any business in which he has an ownership
interest, is employed with, or is otherwise affiliated with, any individual who
was an employee of the Company within the period of twelve (12) months
preceding the effective date of termination of the employment of the Executive.
13. Overbreadth of Restrictive Covenant. It is the intention of the
parties that if any restrictive covenant contained in this Agreement is
determined by a court of competent jurisdiction to be overly broad, then the
court should enforce such restrictive covenant to the maximum extent permitted
under the law as to scope, geographic area and duration.
14. Other Employment. For valuable consideration received by the
Executive (without regard to his continued employment by the Company), the
Executive agrees that during the period of his employment by the Company he
will devote his full time and energy to the performance of his duties under
this Agreement, and will not, without the Company's express written consent,
engage in any other employment or business activity directly related to the
business in which the Company is now involved, or becomes involved, nor will he
engage in any other activities which directly conflict with his obligations to
the Company.
15. Prior Agreements. The Executive warrants that he is not prohibited
from performing any of the services required by his employment with the Company
under the terms of any prior employment agreement or restrictive covenant.
9
<PAGE> 10
16. Termination of Employment.
(a) Certain Defined Terms.
(1) "Disability" shall mean the continuous and uninterrupted
inability of the Executive to perform his duties hereunder due to the sickness
or injury of the Executive which persists for a period of one hundred eighty
(180) days or more.
(2) "Good Cause" shall mean (i) the criminal acts of the
Executive which result in the Executive being charged with and convicted of a
felony and which are intended to result directly or indirectly in substantial
gain or personal enhancement of the Executive at the expense of the Company, or
(ii) the determination by a court of competent jurisdiction that there has been
a willful or intentional breach by the Executive of either Section 10 hereof
(restrictive covenant) or Section 11 hereof (maintaining confidential
information) in a manner which results in material and substantial direct
economic harm or damage to the Company.
(3) "Good Reason" shall mean:
a) An assignment by the Company to the Executive,
without his express written consent, of any material duties which are
inconsistent with his position, duties, responsibilities and status as
President and Chief Executive Officer of the Company;
b) Any action taken by the Company or its Board of
Directors to reduce the Executive's salary, Target Bonus
10
<PAGE> 11
(if inconsistent with the terms of Section 5 above) or fringe benefits, without
the express written consent of the Executive;
c) The Company's failure to obtain the agreement of any
successor in interest of the Company to assume the obligations of the Company
under this Agreement; or
d) A change in control of the Company such that any
person, firm or group (other than Westinghouse Electric Corporation, or any of
its affiliates, or another person, firm or group approved by Executive) , by
virtue of his or their acquisition or ownership of at least twenty percent
(20%) of the Common Stock of the Company, shall have the power to control and
direct the management and business affairs of the Company.
(b) Termination Events.
(1) Death. The Executive's employment shall be terminated
upon his death.
(2) Disability. The Executive's employment shall be
terminated upon his Disability.
(3) By the Company for Good Cause or Other Reasons. The
Executive's employment may be terminated by the Company for (i) Good Cause or
(ii) upon fifteen (15) days written notice, for any other reason.
(4) By the Executive for Good Reason or Other Reasons. The
Executive may terminate this Agreement (i) for Good Reason or (ii) upon fifteen
(15) days prior written notice, for any other reason.
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<PAGE> 12
(c) Termination Payments.
(1) Payment Upon Death. Upon the termination of employment of
the Executive due to his death, the Company shall cause to be paid over to the
designated beneficiary or to the personal representative of the estate of the
Executive, any and all proceeds of life insurance policies maintained by the
Company for the benefit of the Executive. Any and all salary and Target Bonus
payments shall thereupon cease and terminate.
(2) Payment Upon Disability. Upon the termination of
employment of the Executive due to his Disability, the Executive shall be
entitled to the payments paid pursuant to the disability insurance policies
maintained by the Company for the benefit of the Executive. Any and all salary
and Target Bonus payments shall thereupon cease and terminate.
(3) Payment Upon Termination By The Company. If the Company
terminates the Executive's employment for any reason other than Good Cause, the
Executive shall be entitled to receive from the Company and the Company shall
pay to the Executive in one lump sum, within fifteen (15) days following the
Executive's termination of employment, all of the salary and Target Bonus
payments provided for in Sections 4 and 5 of this Agreement for the period
beginning on the date of the Executive's termination of employment and ending
on December 31, 1999.
If the Company terminates Executive's employment for Good
Cause, the Executive shall be entitled to
12
<PAGE> 13
salary through the date of termination. Any and all salary and Target Bonus
payments shall thereupon cease and terminate.
(4) Payment Upon Termination By The Executive. If the
Executive terminates his employment with the Company for Good Reason, other
than Good Reason described in Section 16(a)(3)a), he shall be entitled to
receive from the Company and the Company shall pay to the Executive in one lump
sum, within fifteen (15) days following the date of the Executive's termination
of employment, all of the salary and Target Bonus payments provided for in
Sections 4 and 5 of this Agreement for the period beginning on the date of the
Executive's termination and ending on December 31, 1999. If the Executive
terminates his employment with the Company for the Good Reason described in
Section 16(a)(3)a), then and in such event, he shall be entitled to receive
from the Company and the Company shall pay to the Executive in one lump sum,
within fifteen (15) days following the date of the Executive's termination of
employment, an amount equal to the lesser of (i) all of the salary and Target
Bonus payments provided for in Sections 4 and 5 of this Agreement for the
period beginning on the date of the Executive's termination and ending on
December 31, 1999, or (ii) all of the salary and Target Bonus payments provided
for in Sections 4 and 5 of this Agreement for the period commencing on the date
of the Executive's termination and ending on the third anniversary of the date
of the Executive's termination.
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<PAGE> 14
If the Executive terminates this Agreement for any reason
other than Good Reason, he shall be entitled to salary through the date of
termination. Any and all salary and Target Bonus payments shall thereupon
cease and terminate.
17. Remedies. The parties hereto acknowledge that a breach of any
of the terms of the provisions set forth in this Agreement may not be fully or
adequately compensable by the award or payment of monetary damages and may
cause immediate, substantial and irreparable injury to the non-breaching party.
The parties hereto therefore agree and consent that in addition to any award of
damages that the non-breaching party may be entitled to recover, the
non-breaching party shall also be entitled to such ex parte, preliminary,
interlocutory, temporary or permanent injunctive, or any other equitable
relief, including the entry of a decree of specific performance, or any other
applicable order, which shall require performance and/or limit activities in
accordance with the terms of this Agreement. The Executive expressly
acknowledges and agrees: (a) that the restrictions set forth in this Agreement
are reasonable, in terms of scope, duration, and otherwise, (b) that the
protections afforded to the Company in this Agreement are necessary to protect
its legitimate business interest, (c) that the restrictions set forth in this
Agreement will not adversely affect the Executive's ability to obtain gainful
employment in his field of expertise or other related employment comparable to
the Executive's employment with the Company, and (d) that this
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<PAGE> 15
agreement to observe such restrictions forms a material part of the
consideration for this Agreement and his employment by the Company.
18. Notices. Any notice required or permitted to be given hereunder
shall be deemed sufficient if in writing, and if delivered personally or sent
by registered or certified mail, return receipt requested, to the addresses of
the respective parties set forth herein, or such other address as either party
so notifies the other of in writing from time to time.
19. Waiver of Breach. The waiver of any breach of any provision
hereunder by either party shall not be construed or operate as a waiver of any
subsequent breach.
20. Benefits and Burdens. This Agreement shall inure to the
benefit of and be binding upon the Company, its successors and assigns, and the
Executive, his heirs, personal representatives, successors and assigns.
Because the duties of the Executive hereunder are special, personal and unique
in nature, the Executive may not transfer, sell or otherwise assign his
obligations under this Agreement.
21. Governing Law. This Agreement shall be construed in accordance
with and be governed by the laws of the State of Maryland, excepting the
conflict of law rules of the State of Maryland, as if this contract were made
and to be performed entirely within the State of Maryland.
22. Entire Agreement. This Agreement contains the entire agreement
of the parties and may not be amended, modified or
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<PAGE> 16
terminated except by a written instrument executed by both parties hereto.
23. Captions. Paragraph captions shall be used exclusively for
purposes of reference and shall not be considered part of the substantive
agreement of the parties.
24. Severability. The restrictions and the rights and remedies
contained in this Agreement are cumulative and severable. If any term or
provision of this Agreement shall to any extent be invalid or unenforceable,
the remainder of this Agreement shall not be affected thereby, and each term
and provision of this Agreement shall be enforced to the fullest extent
permitted by law.
25. Costs of Breach. The parties hereto agree that in the event of
any breach by either the Company or the Executive of any covenant, agreement,
term, condition or obligation contained in this Agreement, the non-breaching
party shall be entitled to all attorneys' fees, court costs and other
litigation expenses incurred by the non-breaching party as a result of such
breach.
26. Notice of Employment. During the period of restraint imposed
by this Agreement, the Executive shall provide immediate written notice to the
Company of each instance of employment, agency or consultancy in which the
Executive becomes involved, including, but not limited to, the location and
nature of the services rendered and the identity of the person or entity on
whose behalf the services are rendered.
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<PAGE> 17
27. Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which shall together constitute
but one document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first written above.
COMPANY:
ATTEST: MICROS SYSTEMS, INC.
/s/ JUDITH F. WILBERT By: /s/ LOUIS M. BROWN, JR. (SEAL)
--------------------- ----------------------------
Louis M. Brown, Jr.
Chairman
[Corporate Seal]
EXECUTIVE:
WITNESS:
/s/ JUDITH F. WILBERT /s/ A. L. GIANNOPOULOS (SEAL)
--------------------- -------------------------------
A. L. GIANNOPOULOS
17
<PAGE> 1
EXHIBIT 10f
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made this 30th day of June,
1995, by and between MICROS SYSTEMS, INC., a Maryland corporation with offices
located at 12000 Baltimore Avenue, Greenbelt, Maryland 20705 (hereinafter
referred to as the "Company"), and LOUIS M. BROWN, JR., whose address is 1665
Kenwood Avenue, Alexandria, Virginia 22312 (hereinafter referred to as the
"Consultant").
W I T N E S S E T H:
WHEREAS, the Company and the Consultant desire that Consultant be appointed
and engaged to provide services as described in this Agreement;
WHEREAS, the Consultant possesses skills and experience which the Company
believes are of substantial value and importance to the success of the Company's
business operations;
WHEREAS, the Consultant is willing to make his services available to the
Company on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and the conditions
and agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which hereby is acknowledged, the parties hereto
agree as follows:
1. Consulting Services.
(a) The Company hereby appoints and engages Consultant, and
Consultant hereby accepts this appointment and engagement, to provide services
as described in this Agreement.
<PAGE> 2
(b) Consultant agrees to provide consultation and advice to the
Company on matters of operations, administration, and other matters important
to the functioning and business of the Company, as requested by the Company's
President and Chief Executive Officer or his designee.
(c) Consultant agrees to provide, on the average, approximately 20
hours per week of consulting services at the Company and/or devoted to Company
business and the Company will exercise its best efforts to ensure that the
services he is asked to provide do not require him to devote more than 20 hours
per week. As set forth in Section 2(b) Consultant will control the manner,
methods and details of performance of his services.
(d) The Company acknowledges that Consultant's availability for
consultation is valuable, even during periods in which Consultant is not
actually called on for such consultation. Accordingly, the amount of
compensation Consultant will receive under Section 4 of this Agreement is
independent of the amount of time Consultant is actually required to devote in
rendering consulting services.
2. Independent Contractor Relationship.
(a) Consultant agrees to provide these consulting services as an
independent contractor to the Company. Consultant will not be, and will not be
deemed to be, an employee of the Company.
(b) Consultant will control the manner, methods and details of
performance of his services.
2
<PAGE> 3
(c) Consultant will not be entitled to any benefits the Company may
provide for its employees.
(d) Consultant will not be an agent of the Company for any purpose
and will not have any authority to bind or commit the Company in any way unless
and to the extent expressly authorized in writing by the Company's President
and Chief Executive Officer.
(e) Consultant will be responsible for reporting his income and
paying any applicable taxes (including but not limited to federal, state, and
local income taxes, Social Security and Medicare taxes, and unemployment taxes)
to federal, state, and local taxing agencies, as required by law.
(f) Consultant may perform consulting services for or accept
employment with other persons during the term of this Agreement, provided that
Consultant shall not permit such other services or employment to conflict or
interfere unreasonably with his performance of services under this Agreement.
This provision includes, but is not limited to, any engagement or employment
whose time or effort requirements would interfere unreasonably with
Consultant's performance of services for the Company, and any engagement or
employment that would raise an actual or potential conflict of interest. It is
acknowledged and agreed that simultaneously herewith Consultant is performing
duties for other companies as set forth on page 4 of the Company's Proxy
Statement dated October 24, 1994 and, that such duties will not interfere
unreasonably with Consultant's performance of services for the Company.
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<PAGE> 4
3. Term. The term of this Agreement shall commence on July 1, 1995
("Commencement Date") and shall continue until June 30, 2000, unless sooner
terminated, as provided herein.
4. Compensation. The Consultant's compensation for the term of this
Agreement shall be in the amounts set forth below, payable in bi-weekly
installments:
<TABLE>
<CAPTION>
Period Compensation
------ ------------
<S> <C>
July 1, 1995 through June 30, 1996 $150,000
July 1, 1996 through June 30, 1997 $160,000
July 1, 1997 through June 30, 1998 $170,000
July 1, 1998 through June 30, 1999 $180,000
July 1, 1999 through June 30, 2000 $190,000
</TABLE>
5. Bonuses. In addition to the above compensation, the Consultant shall
be entitled to receive a bonus for each fiscal year of the Company (July 1 -
June 30). The Consultant's bonus for each fiscal year, or portion of a fiscal
year, during the term hereof shall be in the amounts set forth below ("Target
Bonus") if the fiscal year bonus objectives of the Consultant ("Objectives"),
as determined by the Board of Directors prior to the commencement of each such
fiscal year, are met; provided, that, consistent with the Company's standard
bonus plan in effect during fiscal 1995, the bonus may be increased for any
fiscal year in which the Company performance exceeds Objectives or decreased
for any fiscal year in which the Company performance falls below Objectives,
and provided further that in no event shall the bonus paid to the Consultant
for any fiscal year of the Company exceed 200% of Target Bonus:
4
<PAGE> 5
<TABLE>
<CAPTION>
Fiscal Year Ending Target Bonus
------------------ ------------
<S> <C>
June 30, 1996 $70,000
June 30, 1997 $80,000
June 30, 1998 $90,000
June 30, 1999 $100,000
June 30, 2000 $110,000
</TABLE>
Any bonus required to be paid pursuant to this Section 5 shall be
paid by the Company to the Consultant within ninety (90) days following the
close of the fiscal year of the Company to which such bonus applies.
6. Stock Option. Upon the Commencement Date, the Consultant shall be
granted the unrestricted right to acquire up to fifteen thousand (15,000)
shares of the Company's common stock ("Option"). The Company and the
Consultant shall enter into a stock option agreement evidencing the grant of
said Option, which agreement shall contain such other terms and provisions as
are customarily contained in the Company's executive employee Incentive Stock
Option Agreement ("Company Plan"). Consultant acknowledges receipt of said
Option on June 2, 1995.
In addition to the Option granted above, within ninety (90) days
following the commencement of each fiscal year of the Term, the Company shall
grant to the Consultant the right to purchase additional common stock of the
Company ("Common Stock") for such consideration and in such amounts as is
consistent with the terms of the Company Plan or a successor employee stock
option plan. Notwithstanding the right herein granted, the Consultant
acknowledges that, except for the Common Stock exercisable under
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<PAGE> 6
the Option, no additional Common Stock is currently available to the Company to
issue under the Company Plan. In recognition thereof, the Company's obligation
to grant to the Consultant the right to purchase the additional Common Stock
shall not arise until such time as the shares of Common Stock become available
under the Company Plan or a successor employee stock option plan. The Company
agrees to use its best efforts to take such steps or cause the required steps
to be taken which will enable the Common Stock to become available for option
grants.
7. Expenses. The Company shall reimburse the Consultant for all
expenses incurred in connection with the performance of his duties on behalf of
the Company, provided that the Consultant shall keep, and present to the
Company, records and receipts relating to reimbursable expenses incurred by
him. Such records and receipts shall be maintained and presented in a format,
and with such regularity, as the Company reasonably may require in order to
substantiate the Company's right to claim income tax deductions for such
expenses. Without limiting the generality of the foregoing, the Consultant
shall be entitled to reimbursement for any business-related travel,
business-related entertainment whether at his residence or otherwise, and other
costs and expenses reasonably incident to the performance of his duties on
behalf of the Company.
8. Restrictive Covenant. The Consultant agrees that during the term of
this Agreement, and for a period of one (1) year following the termination of
this Agreement for any reason whatsoever, he shall not (i) engage, directly or
indirectly, in any
6
<PAGE> 7
computer hardware or computer software business which is competitive with the
business now, or at any time during the Term of this Agreement, conducted by
the Company; or (ii) solicit (directly or indirectly, for his own account, or
for the account of others) orders for services or products of a kind or nature
like or similar to services performed or products sold by the Company during
the term of this Agreement, from any party that was a client (or customer) of
the Company, or which the Company was soliciting to be its client (or customer)
during the twelve (12) month period preceding the date of the termination of
this Agreement. The Consultant further agrees that he shall not, at any time,
directly or indirectly, urge any client (or customer) of the Company with whom
the Company is desirous of doing business to discontinue business, in whole or
in part, or not to do business, with the Company.
For the purposes of this Section 8, the Consultant will be deemed
directly or indirectly engaged in a business if he participates in such
business as proprietor, partner, joint venturer, stockholder, director,
officer, lender, manager, employee, consultant, advisor or agent or if he
controls such business. The Consultant shall not for purposes of this Section
8 be deemed a stockholder or lender if he holds less than two percent (2%) of
the outstanding equity or debt of any publicly owned corporation engaged in the
same or similar business to that of the Company, provided that the Consultant
shall not be in a control position with regard to such corporation.
7
<PAGE> 8
Provided, however, that (a) it is acknowledged and agreed that, in his
various other capacities as referenced in paragraph 2(f) above, Consultant has
directly or indirectly participated in certain transactions as set forth on
page 10 of such Proxy Statement, it being contemplated that any further such
transactions, if entered into, will be pursuant to the law of the State of
Maryland, and will be similarly disclosed in future proxy statements of the
Company; and (b) Consultant may invest in equity securities of any Competitive
Business (but without participating in such Competitive Business) if (i) such
equity securities are listed on any recognized securities exchange or are
registered under Section 12(g) of the Securities Exchange Act of 1934; and (ii)
the total number of such shares owned or controlled, directly or indirectly, by
Consultant, his spouse and his minor children does not exceed in total an
amount equal to 2% of the outstanding shares of such class of equity securities
of any such Competitive Business.
9. Maintaining Confidential Information.
(a) Company Information. The Consultant agrees at all times during
the term of this Agreement and for a period of one (1) year thereafter to hold
in strictest confidence, and not to use, or to disclose to any person, firm or
corporation, without the written authorization of the Board of Directors of the
Company except if such is to be used or disclosed for the benefit of the
Company, any trade secrets, confidential knowledge, data or other proprietary
information of the Company. By way of illustration and not
8
<PAGE> 9
limitation, such shall include information relating to products, processes,
know-how, designs, formulas, methods, developmental or experimental work,
improvements, discoveries, plans for research, new products, marketing and
selling, business plans, budgets and unpublished financial statements,
licenses, prices and costs, suppliers and customers, and information regarding
the skills and compensation of other employees of the Company.
(b) Third Party Information. The Consultant recognizes that the
Company has received and in the future will receive from third parties their
confidential or proprietary information subject to a duty on the Company's part
to maintain the confidentiality of such information and, in some cases, to use
it only for certain limited purposes. The Consultant agrees that he owes the
Company and such third parties, both during the term of his employment and
thereafter, a duty to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation (except in a manner that is consistent with the Company's agreement
with the third party) or use it for the benefit of anyone other than the
Company or such third party (consistent with the Company's agreement with the
third party).
10. Prior Employees. For a period of one (1) year following the
termination of this Agreement for any reason whatsoever, with or without cause,
the Consultant shall not, whether as an individual or as a proprietor,
stockholder, partner, officer, director, employer, employee, agent, consultant,
independent
9
<PAGE> 10
contractor or otherwise, recruit or employ, directly or indirectly, for his own
business or any business in which he has an ownership interest, is employed
with, or is otherwise affiliated with, any individual who was an employee of
the Company within the period of twelve (12) months preceding the termination
of this Agreement.
11. Overbreadth of Restrictive Covenant. It is the intention of the
parties that if any restrictive covenant contained in this Agreement is
determined by a court of competent jurisdiction to be overly broad, then the
court should enforce such restrictive covenant to the maximum extent permitted
under the law as to scope, geographic area and duration.
12. Prior Agreements. The Consultant warrants that he is not prohibited
from performing any of the services required by this Agreement under the terms
of any prior employment agreement or restrictive covenant.
13. Termination Agreement.
(a) Certain Defined Terms.
(1) "Disability" shall mean the continuous and uninterrupted
inability of the Consultant to perform his duties hereunder due to the sickness
or injury of the Consultant which persists for a period of one hundred eighty
(180) days or more.
(2) "Good Cause" shall mean (i) the criminal acts of the
Consultant which result in the Consultant being charged with and convicted of a
felony and which are intended to result directly or indirectly in substantial
gain or personal enhancement of the
10
<PAGE> 11
Consultant at the expense of the Company, or (ii) the determination by a court
of competent jurisdiction that there has been a willful or intentional breach
by the Consultant of either Section 8 hereof (restrictive covenant) or Section
9 hereof (maintaining confidential information) in a manner which results in
material and substantial direct economic harm or damage to the Company.
(3) "Good Reason" shall mean:
a) An assignment by the Company to the Consultant, without
his express written consent, of any material duties which are inconsistent with
this Agreement;
b) Any action taken by the Company or its Board of
Directors to reduce the Consultants compensation or Target Bonus (if
inconsistent with the terms of Section 5 above) without the express written
consent of the Consultant;
c) The Company's failure to obtain the agreement of any
successor in interest of the Company to assume the obligations of the Company
under this Agreement.
(b) Termination Events.
(1) Death. This Agreement shall be terminated upon Consultant's
death.
(2) Disability. This Agreement shall be terminated upon
Consultant's Disability.
(3) By the Company for Good Cause or Other Reasons. This
Agreement may be terminated by the Company for (i) Good Cause or (ii) upon
fifteen (15) days written notice, for any other reason.
11
<PAGE> 12
(4) By the Consultant for Good Reason or Other Reasons. The
Consultant may terminate this Agreement (i) for Good Reason or (ii) upon
fifteen (15) days prior written notice, for any other reason.
(c) Termination Payments.
(1) Payment Upon Death. Upon the termination of this Agreement
due to Consultant's death, the Company shall cause to be paid over to the
designated beneficiary or to the personal representative of the estate of the
Consultant, all compensation provided hereunder through the date of death, any
Target Bonus payments then due and any Target Bonus, prorated to the date of
death with respect to the period in which the death occurs. All such payments
shall thereupon cease and terminate.
(2) Payment Upon Disability. Upon the termination of this
Agreement due to Consultant's Disability, the Consultant shall be entitled to
all compensation provided hereunder through the date of Disability, any Target
Bonus payments then due and any Target Bonus, prorated to the date of
Disability with respect to the period in which Disability occurs. All such
payments shall thereupon cease and terminate.
(3) Payment Upon Termination By The Company. If the Company
terminates this Agreement for any reason other than Good Cause, the Consultant
shall be entitled to receive from the Company and the Company shall pay to the
Consultant in one lump sum, within fifteen (15) days following the termination
of this Agreement, all of the compensation and Target Bonus payments
12
<PAGE> 13
provided for in Sections 4 and 5 of this Agreement for the period beginning on
the date of the termination of the Agreement and ending on June 30, 2000.
If the Company terminates this Agreement for Good Cause, the
Consultant shall be entitled to compensation through the date of termination and
any due, but unpaid, Target Bonus. Any and all compensation and Target Bonus
payments with respect to subsequent periods shall thereupon cease and
terminate.
(4) Payment Upon Termination By The Consultant. If the
Consultant terminates this Agreement for Good Reason, other than Good Reason
described in Section 13(a)(3)a), he shall be entitled to receive from the
Company and the Company shall pay to the Consultant in one lump sum, within
fifteen (15) days following the date of the Consultant's termination of this
Agreement, all of the salary and Target Bonus payments provided for in Sections
4 and 5 of this Agreement for the period beginning on the date of the
Consultant's termination and ending on June 30, 2000. If the Consultant
terminates this Agreement for the Good Reason described in Section 13(a)(3)a),
then and in such event, he shall be entitled to receive from the Company and
the Company shall pay to the Consultant in one lump sum, within fifteen (15)
days following the date of the Consultant's termination of this Agreement, an
amount equal to the lesser of (i) all of the salary and Target Bonus payments
provided for in Sections 4 and 5 of this Agreement for the period beginning on
the date of the Consultant's termination and ending on June 30, 2000, or (ii)
all of the salary and Target Bonus
13
<PAGE> 14
payments provided for in Sections 4 and 5 of this Agreement for the period
commencing on the date of the Consultant's termination and ending on the third
anniversary of the date of the Consultant's termination.
If the Consultant terminates this Agreement for any reason
other than Good Reason, he shall be entitled to compensation through the date of
termination and any due, but unpaid, Target Bonus. Any and all compensation and
Target Bonus payments with respect to subsequent periods shall thereupon cease
and terminate.
14. Arbitration. Except as set forth in paragraph 15, any dispute
arising under this Agreement or the termination of this Agreement shall be
resolved by arbitration in the District of Columbia, in accordance with the
then prevailing rules of the American Arbitration Association, before an
arbitrator or arbitrators appointed pursuant to such rules, and the
determination of such arbitrator or arbitrators shall be final, binding and
conclusive on the parties.
15. Remedies. The parties hereto acknowledge that a breach of certain
terms of this Agreement may not be fully or adequately compensable by the award
or payment of monetary damages and may cause immediate, substantial and
irreparable injury to the non-breaching party. The parties therefore agree and
consent that in addition to any award of damages that the non-breaching party
may be entitled to recover, the non-breaching party shall also be entitled to
such ex parte, preliminary, interlocutory, temporary or
14
<PAGE> 15
permanent injunctive, or any other equitable relief, including the entry of a
decree of specific performance, or any other applicable order, which shall
require performance and/or limit activities in accordance with the terms of
this Agreement. The Consultant expressly acknowledges and agrees: (a) that the
restrictions set forth in this Agreement are reasonable, in terms of scope,
duration, and otherwise, (b) that the protections afforded to the Company in
this Agreement are necessary to protect its legitimate business interest, (c)
that the restrictions set forth in this Agreement will not adversely affect the
Consultant's ability to obtain gainful employment in his field of expertise or
other related employment comparable to that provided for herein, and (d) that
this agreement to observe such restrictions forms a material part of the
consideration for this Agreement and his services provided to the Company.
16. Notices. Any notice required or permitted to be given hereunder
shall be deemed sufficient if in writing, and if delivered personally or sent by
registered or certified mail, return receipt requested, to the addresses of the
respective parties set forth herein, or such other address as either party so
notifies the other of in writing from time to time.
17. Waiver of Breach. The waiver of any breach of any provision
hereunder by either party shall not be construed or operate as a waiver of any
subsequent breach.
18. Benefits and Burdens. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and
15
<PAGE> 16
assigns, and the Consultant, his heirs, personal representatives, successors
and assigns. Because the duties of the Consultant hereunder are special,
personal and unique in nature, the Consultant may not transfer, sell or
otherwise assign his obligations under this Agreement.
19. Governing Law. This Agreement shall be construed in accordance with
and be governed by the laws of the State of Maryland, excepting the conflict of
law rules of the State of Maryland, as if this contract were made and to be
performed entirely within the State of Maryland.
20. Entire Agreement. This Agreement contains the entire agreement of the
parties and may not be amended, modified or terminated except by a written
instrument executed by both parties hereto.
21. Captions. Paragraph captions shall be used exclusively for purposes
of reference and shall not be considered part of the substantive agreement of
the parties.
22. Severability. The restrictions and the rights and remedies contained
in this Agreement are cumulative and severable. If any term or provision of
this Agreement shall to any extent be invalid or unenforceable, the remainder
of this Agreement shall not be affected thereby, and each term and provision of
this Agreement shall be enforced to the fullest extent permitted by law.
23. Costs of Breach. The parties hereto agree that in the event of any
breach by either the Company or the Consultant of any covenant, agreement, term,
condition or obligation contained in
16
<PAGE> 17
this Agreement, the non-breaching party shall be entitled to all attorneys'
fees, court costs and other litigation expenses incurred by the non-breaching
party as a result of such breach.
24. Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which shall together constitute but one
document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the day and year first written above.
COMPANY:
ATTEST: MICROS SYSTEMS, INC.
By (SEAL)
------------------------- -----------------------
[Corporate Seal]
WITNESS: CONSULTANT:
/s/ LOUIS M. BROWN, JR. (SEAL)
------------------------- -------------------------
Louis M. Brown, Jr.
17
<PAGE> 1
EXHIBIT 10g
MANAGEMENT AGREEMENT
BETWEEN THE UNDERSIGNED:
(1) MICROS SYSTEMS, INC., a Maryland corporation having its principal office
at 12000 Baltimore Avenue, Beltsville, MD 20705, U.S.A. (hereinafter
referred to as "Micros"),
AND
(2) MR. DANIEL COHEN, a French citizen having his business address c/o DAC
SYSTEMES Micros FRANCE, 18/20, rue des Bas Rogers, 92800 Puteaux, France
(hereinafter referred to as the "Manager").
WHEREAS:
Subject to the terms and conditions of the Share Purchase Agreement of even
date between the Manager and Micros, Micros has agreed to acquire from the
Manager 77% of the issued and outstanding shares of DAC SYSTEMES Micros FRANCE
("DSMF") and of AD-Maintenance Informatique ("ADMI"), French corporations
controlled by the Manager (the "Change of Control"). DSMF in turn owns 725 out
of 2,500 shares of Fidelio France, a French corporation ("Fidelio France").
DSMF, ADMI and Fidelio France are hereinafter collectively referred to as the
"Companies."
The Manager currently serves as the President-Directeur General (Chairman and
Chief Executive Officer) of DSMF and Fidelio France, and the Gerant (Managing
Director) of ADMI.
Micros and the Manager wish to define the terms of the Manager's continued
participation in the management of the Companies, which shall be subject to the
terms and conditions of this Agreement.
NOW THEREFORE, IT HAS BEEN AGREED AS FOLLOWS:
ARTICLE 1 - MANAGEMENT
1.1 Following the Change of Control, the Manager shall continue to serve as
the President-Directeur General (Chairman and Chief Executive Officer) of
DSMF and Fidelio France, and the Gerant (Managing Director) of ADMI.
1.2 Subject to Articles 3 and 4 herein, Micros shall cause the Manager to be
re-elected annually to the positions referred to in Article 1.1 above.
<PAGE> 2
2
ARTICLE 2 - COMPENSATION AND EXPENSES
2.1 Micros shall cause the Manager to be compensated as Chairman and Chief
Executive Officer of DSMF and Fidelio France and Managing Director of ADMI
an aggregate amount equal to 7% of the Companies' Net Income Before Taxes
(as hereinafter defined), plus six hundred thousand French francs (600,000
FF) per year.
2.2 For purposes of this Agreement, the term "Net Income Before Taxes" means
the accounting post "Resultat Courant Avant Impots", as set forth in the
audited accounts of each of the Companies (or their respective successors)
for the fiscal years most recently concluded at the time that each of such
additional payments is to be made, and as determined in accordance with
generally accepted accounting principles in effect in the French Republic
applied on a consistent basis.
2.3 The Manager is authorized to incur reasonable expenses in performing
services under this Agreement and for promoting the business of Micros,
including expenses for entertainment, travel and similar items, consistent
with such policies as may from time to time be established by Micros.
ARTICLE 3 - TERMINATION INDEMNITIES
3.1 Micros is free at any time in its sole discretion to cause the Manager to
be dismissed from or not be re-elected to one or more of his posts as
Chairman and Chief Executive Officer / Managing Director of the Companies.
In such event, except for termination for the reasons provided in Article
3.3 below, Micros shall pay the Manager liquidated damages equivalent to
one million French francs (1,000,000 FF) per year, pro rata temporis from
the date such dismissal or non re-election occurs to the fifth anniversary
of the Closing Date (as defined in Article 4.1 below). Thereafter, any
dismissal or failure to re-elect shall continue to be at Micros' sole
discretion without indemnities or any damages, liquidated or others, to
the Manager.
3.2 The Manager is free at any time in his sole discretion to resign from his
post as Chairman and Chief Executive Officer / General Manager of the
Companies. In such event, no indemnities shall be due by either of the
Parties hereto to the other. In such case, the obligations under Article
5 of this Agreement shall remain in effect as provided therein.
3.3 If Micros decides to terminate the Manager's employment for cause, this
Agreement shall terminate and the Manager shall no longer be employed by
Micros effective on the date Micros notifies the Manager of such
termination. For purposes of this Agreement, the term "cause" shall mean
any of the following:
(i) the Manager has been convicted or pleaded guilty or no contest to
any felony involving monies, securities or any other property;
(ii) Micros proves that the Manager has committed a willful or grossly
negligent act which causes material harm to Micros or any of its
affiliates or subsidiaries;
<PAGE> 3
3
(iii) Micros proves that the Manager has committed fraud or
embezzlement affecting Micros or any of its property.
Upon any termination pursuant to this Section 3.3, all rights of the Manager
under this Agreement shall cease to be effective as the date of the
termination, the Manager shall no longer be manager of Micros, and, to the
extent permitted by law, the Manager shall have no right to receive any
payments or benefits hereunder, including under Section 3.1 above.
ARTICLE 4 - TERM
4.1 Subject to Article 4.2 below, this Agreement shall enter into effect upon
the occurrence of the Change of Control (such date being hereinafter
referred to as the "Closing Date"), and shall continue until the fifth
anniversary of the Closing Date.
4.2 This Agreement shall automatically terminate upon the occurrence of either
of the events referred to in Articles 3.1 and 3.2 above. The payment
obligations of Micros pursuant to Article 3.1 shall survive such
termination and remain subject to the terms of Article 5 as provided
below.
ARTICLE 5 - NON-COMPETITION / CONFIDENTIALITY
5.1 The Manager agrees and undertakes not to, either directly or indirectly,
as an individual or under the veil of a company, manage or carry or
otherwise conduct any business in competition with the business of DSMF
and/or Fidelio France and/or ADMI during the term of this Agreement and
for a period of two years from the moment at which he ceases to serve as
the Chairman and Chief Executive Officer of DSMF and/or Fidelio France
and/or the Gerant (Managing Director) of ADMI.
5.2 The Manager acknowledges that the services to be rendered by him are of a
special, unique and extraordinary character and, in connection with such
services, the Manager will have access to confidential information vital
to Micros' and DSMF's and Fidelio France's businesses. By reason of this,
the Manager consents and agrees that if the Manager breaches any of the
provisions of this Section 5.2, Micros would sustain irreparable harm and,
therefore, in addition to any other right or remedy available to Micros,
Micros shall be entitled to an injunction restraining the Manager from
committing or continuing any such breach. The Manager acknowledges that a
violation of this Section 5.2 could not adequately be compensated by
money, damages, and the Manager therefore agrees that the provisions of
this Section 5.2 may be specifically enforced against the Manager in any
court of competent jurisdiction, irrespective of the arbitration
provisions contained herein. No bond or other security shall be required
of Micros. Nothing herein shall be construed as prohibiting Micros from
pursuing any other remedies available to Micros for such breach, including
the recovery of damages from the Manager in accordance with Article 6
hereof. The provisions of this Section 5.2 shall survive the termination
of this Agreement, irrespective of the reason therefor, for a period of
five (5) years.
<PAGE> 4
4
ARTICLE 6 - APPLICABLE LAW; ARBITRATION
6.1 This Agreement shall be governed by, and construed in accordance with, the
laws of the state of New York, U.S.A., without giving effect to the
conflict of laws principles thereof, and in accordance with the United
States Arbitration Act, 9 U.S.C. Sections 1 et seq.
6.2 Any dispute, controversy or claim arising out of or relating to this
contract, or the breach, termination or invalidity thereof, shall be
finally settled by arbitration in accordance with the UNCITRAL Arbitration
Rules as at present in force. The number of arbitrators shall be three.
One arbitrator shall be appointed by each of the Parties hereto and the
third by agreement of the aforesaid two arbitrators or, failing such
agreement, the president of the arbitration tribunal shall be designated
by the International Chamber of Commerce as appointing authority.
ARTICLE 7 - RESIDENCY / LEAVE OF ABSENCE
7.1 Manager agrees to remain a legal resident of France during the term of this
Agreement.
7.2 Micros agrees to allow Manager a period of up to three (3) consecutive
months leave without pay during the term of this Agreement to attend a
college or university level course of his choosing.
ARTICLE 8 - MISCELLANEOUS
8.1 Any notices under this Agreement shall be deemed to be sufficiently given
if hand-delivered in person and/or sent by telefax followed by certified
airmail with return receipt requested addressed to the Parties at their
respective addresses set forth at the head of this Agreement. Either
Party may change its address for receipt of notices by notice duly given
to the other Party.
8.2 Except as otherwise expressly provided herein, each of the Parties shall
pay its own expenses resulting herefrom.
8.3 This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns, and all successors to
Micros shall be jointly and severally liable for the obligations
hereunder.
8.4 No change in, addition to, or waiver of the terms and provisions of this
Agreement shall be binding unless approved in writing by the Parties.
8.5 If at any time any part, any article, or any part of such article of this
Agreement is adjudged invalid, unenforceable or illegal by any court,
public authority, governmental department or agency, or other forum, such
adjudication shall not effect the remaining portions of this Agreement,
and the Agreement shall be construed as if such invalid, enforceable or
illegal provision had never been contained herein.
<PAGE> 5
5
8.6 The descriptive words or phrases at the head of the various Articles of
this Agreement are inserted only as a convenience and for reference and
are in no way intended to be a part or this Agreement, or in any way
define, limit or describe the scope or intent of the particular Article to
which they refer.
8.7 Except as otherwise required by law, this Agreement shall be held in
confidentiality by the Parties hereto. The nature and timing of any
public announcements concerning the transactions contemplated in this
Agreement shall be subject to prior agreement between the Parties.
IN WITNESS WHEREOF, the Parties have signed this Agreement in 2 originals in the
place and on the date set out below.
Beltsville, Maryland, U.S.A.
Date: August 25, 1995
DANIEL COHEN MICROS SYSTEMS, INC.
/s/ Daniel Cohen By: /s/ Ronald J. Kolson
------------------------- -----------------------------------
Name: Ronald J. Kolson
Title: Executive Vice President
Witnessed by: Witnessed by:
/s/ A. L. Giannopoulos /s/ Deana Angelastro
------------------------- ----------------------
Name: A. L. Giannopoulos Name: Deana Angelastro
Title: President & CEO Title: Executive Assistant
<PAGE> 1
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
MICROS SYSTEMS, INC. AND SUBSIDIARIES
years ended June 30, 1995, 1994, and 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Weighted-average number of
common shares 7,835,147 7,734,667 7,554,223
Dilutive effect of outstanding
stock options 116,446 175,952 252,550
----------- ---------- ----------
Weighted-average number of
common and common equivalent
shares outstanding 7,951,593 7,910,619 7,806,773
=========== ========== ==========
Net income $11,576,800 $8,687,300 $5,759,900
=========== ========== ==========
Net income per common and
common equivalent share $ 1.46 $ 1.10 $ 0.74
=========== ========== ==========
</TABLE>
-49-
<PAGE> 1
EXHIBIT 21 - SUBSIDIARIES
MICROS SYSTEMS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Jurisdiction
of
Name of Subsidiary Incorporation
------------------ -------------
<S> <C>
Fidelio France S.A. France
Fidelio Software Delaware
Corporation
Fidelio Software U.K. England & Wales
Limited
MICROS of Delaware, Inc. Delaware
MICROS Foreign Sales Barbados
Corporation
MICROS of South Florida, Inc. Maryland
MICROS Systems AG Switzerland
(Ltd.)
MICROS Systems Federal Republic
Deutschland GmbH of Germany
MICROS Systems Hispania Spain
MICROS Systems Holdings Federal Republic
GmbH of Germany
MICROS Systems (U.K.) United Kingdom
Ltd.
MICROS Systems Services Federal Republic
GmbH of Germany
MSI Delaware, Inc. Delaware
</TABLE>
The Company has additional subsidiaries, which considered in the aggregate as a
single subsidiary, do not constitute a significant subsidiary.
-50-
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (No. 33-69782, No. 33-44481 and No. 33-33535) and in
the Prospectus constituting part of the Registration Statement on Form S-3
(No. 33-88768) of MICROS Systems, Inc. of our report dated August 21, 1995,
appearing on page 39 of this Form 10-K.
Price Waterhouse LLP
Baltimore, Maryland
August 21, 1995
<PAGE> 1
EXHIBIT 24
MICROS SYSTEMS, INC.
12000 BALTIMORE AVENUE
BELTSVILLE, MD 20705
POWER OF ATTORNEY
The undersigned, acting in the capacity or capacities with respect to
MICROS Systems, Inc. stated with their respective names below, hereby
constitute and appoint JOHN T. CONNOR, JR., RONALD J. KOLSON and GARY C.
KAUFMAN, and each of them severally, the attorneys-in-fact of the undersigned
with full power to them and each of them to sign for and in the name of the
undersigned in the capacities indicated below the Annual Report of MICROS
Systems, Inc. on Form 10-K for fiscal year 1995 and (b) any and all amendments
and supplements thereto;
NAME TITLE
/s/ LOUIS M. BROWN, JR. Director and Chairman of the Board
----------------------------------
Louis M. Brown, Jr.
/s/ A.L. GIANNOPOULOS Director, President and Chief
---------------------------------- Executive Officer
A.L. Giannopoulos
/s/ DANIEL A. COHEN Director
----------------------------------
Daniel A. Cohen
/s/ CLAUDIA E. MORF Director
----------------------------------
Claudia E. Morf
/s/ FREDRIC G. REYNOLDS Director
----------------------------------
Fredric G. Reynolds
/s/ ALAN M. VOORHEES Director
----------------------------------
Alan M. Voorhees
/s/ EDWARD T. WILSON Director
----------------------------------
Edward T. Wilson
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AND RELATED STATEMENT OF INCOME AS
OF JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,881,100
<SECURITIES> 24,504,300
<RECEIVABLES> 26,414,100
<ALLOWANCES> 1,229,200
<INVENTORY> 11,343,500
<CURRENT-ASSETS> 66,624,200
<PP&E> 17,512,200
<DEPRECIATION> 7,350,400
<TOTAL-ASSETS> 89,643,700
<CURRENT-LIABILITIES> 29,594,800
<BONDS> 5,250,900
<COMMON> 196,500
0
0
<OTHER-SE> 53,253,700
<TOTAL-LIABILITY-AND-EQUITY> 89,643,700
<SALES> 85,928,800
<TOTAL-REVENUES> 112,020,700
<CGS> 44,513,100
<TOTAL-COSTS> 50,965,500
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 368,800
<INCOME-PRETAX> 17,675,100
<INCOME-TAX> 6,175,000
<INCOME-CONTINUING> 11,576,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,576,800
<EPS-PRIMARY> 1.46
<EPS-DILUTED> 1.46
</TABLE>
