<PAGE> 1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended September 30, 1995
Commission file number 0-9993
MICROS SYSTEMS, INC.
- ------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
MARYLAND 52-1101488
- ------------------------------------------------------------------
(State of incorporation) (I.R.S. Employer
Identification Number)
12000 Baltimore Avenue, Beltsville, Maryland 20705-1291
- ------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 301-210-6000
------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such report(s)), and (2) has been subject to
such filing requirements for the past 90 days.
YES x NO
----- -----
As of September 30, 1995, there were 7,871,280 shares of Common Stock, $.025
par value, outstanding.
1
<PAGE> 2
MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 1995
PART I - Financial Information
Item 1. Financial Statements.
General
The information contained in this report is furnished for the Registrant,
MICROS Systems, Inc., and its subsidiaries (referred to collectively herein as
"MICROS" or the "Company"). In the opinion of management, the information in
this report contains all adjustments, consisting only of normal recurring
adjustments, which are necessary for a fair statement of the results for the
interim periods presented. The financial information has been reviewed by the
Company's independent accountants, Price Waterhouse LLP, and a copy of its
report is attached.
The financial information presented herein should be read in conjunction with
the financial statements included in the Registrant's Form 10-K for the fiscal
year ended June 30, 1995, as filed with the Securities and Exchange Commission.
With respect to the unaudited consolidated financial information for the three
month periods ended September 30, 1995 and 1994, Price Waterhouse LLP has
reported that it has applied limited procedures in accordance with professional
standards for a review of such information. However, its report dated November
10, 1995, appearing herein, states that it did not audit and it does not
express an opinion on that unaudited consolidated financial information. Price
Waterhouse LLP has not carried out any significant or additional audit tests
beyond those which would have been necessary if its report had not been
included. Accordingly, the degree of reliance on its reports on such
information should be restricted in light of the limited nature of the review
procedures applied. Price Waterhouse LLP is not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for its report on the
unaudited consolidated financial information because such report is not a
"report" within the meaning of Sections 7 and 11 of the Securities Act of 1933.
2
<PAGE> 3
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
-------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $22,181 $23,215
Short term investments 2,470 3,170
Accounts receivable, net of
allowance for doubtful
accounts of $1,455 at September
30, 1995 and $1,229 at June 30,
1995 28,516 25,185
Inventories 14,136 11,344
Deferred income taxes 1,890 1,890
Prepaid expenses and other
current assets 4,199 1,820
------- -------
Total current assets 73,392 66,624
------- -------
Property, plant and equipment, at
cost 19,542 17,512
Accumulated depreciation and
amortization (8,161) (7,350)
------- -------
Net property, plant and equipment 11,381 10,162
------- -------
Note receivable 1,074 649
Investments in affiliates, including
related goodwill 8,287 8,509
Other assets:
Capitalized computer software
development costs, net of
accumulated amortization of
$1,771 at September 30, 1995 and $1,684 at
June 30, 1995. 1,607 1,544
Goodwill and district intangible
assets, net of accumulated
amortization of $812 at September 30, 1995
and $708
at June 30, 1995 2,632 1,719
Other 432 437
------- -------
Total assets $98,805 $89,644
======= =======
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
3
<PAGE> 4
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
-------------- -------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Current portion of long-term debt
and capital lease obligation $ 382 $ 363
Accounts payable 12,473 8,505
Accrued expenses and other
current liabilities 14,542 16,215
Income taxes payable 1,408 361
Deferred service revenue 5,341 4,151
------- -------
Total current liabilities 34,146 29,595
------- -------
Long-term debt, net of current
portion 2,610 1,669
Capital lease obligation, net of
current portion 3,553 3,582
Deferred income taxes payable 933 933
Minority interest 421 415
------- -------
Total liabilities 41,663 36,194
------- -------
Shareholders' equity:
Common stock, $.025 par value;
authorized 10,000,000 shares;
issued and outstanding 7,871,280
shares at September 30, 1995 and
7,859,095 shares at June 30, 1995 197 196
Capital in excess of par 15,031 14,883
Retained earnings 40,656 37,402
Accumulated foreign currency
translation adjustments 1,258 969
------- -------
Total shareholders' equity 57,142 53,450
------- -------
Total liabilities and
shareholders' equity $98,805 $89,644
======= =======
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
4
<PAGE> 5
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
September 30, September 30,
1995 1994
-------- ---------
<S> <C> <C>
Revenue:
Hardware and related software $24,764 $19,283
Service 7,596 5,191
------- -------
Total revenue 32,360 24,474
Costs and expenses:
Cost of sales
Hardware and related software 12,743 9,726
Service 3,656 2,355
------- -------
Total cost of sales 16,399 12,081
Selling, general and administrative
expenses 9,560 6,983
Research and development expenses 1,368 962
Depreciation and amortization 519 344
------ ------
Total costs and expenses 27,846 20,370
------ ------
Income from operations 4,514 4,104
Non-operating income (expense):
Interest income 339 261
Interest expense (88) (84)
Other income (expense), net (174) 259
------ -------
Income before taxes and equity in
net earnings of affiliates 4,591 4,540
Income taxes 1,627 1,508
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Income before equity in net
earnings of affiliates 2,964 3,032
Equity in net earnings of affiliates 290 4
------- -------
Net income $ 3,254 $ 3,036
======= =======
Net income per common and
common equivalent share $ 0.41 $ 0.38
======= =======
Weighted-average number of
common and common equivalent
shares outstanding 7,978 7,942
======= =======
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
5
<PAGE> 6
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed and unaudited - $ in thousands)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
September 30, September 30,
1995 1994
-------- --------
<S> <C> <C>
Net cash flows from operating
activities $ 300 $ 1,731
------- -------
Cash flows from investing activities:
Purchases of property, plant and
equipment (1,208) (480)
Capitalized software development
costs (149) -
Sale of short term investments 700 -
Dividends received from affiliates 581 -
Purchase of affiliates,
net of cash received (821) -
Loan to affiliate (425) -
------ --------
Net cash used in investing
activities (1,322) (480)
------ -------
Cash flows from financing activities:
Proceeds from issuance of stock 83 184
Principal payments on long-term
debt (161) (161)
Income tax benefit from stock
options exercised 66 272
------- -------
Net cash (used in) provided by
financing activities (12) 295
------- -------
Net (decrease) increase in cash and
cash equivalents (1,034) 1,546
Cash and cash equivalents
at beginning of period 23,215 16,339
------- -------
Cash and cash equivalents at end of
period $22,181 $17,885
======= =======
Supplemental disclosure of cash
flow information:
Cash paid during the period for:
Interest $ 99 $ 101
======= =======
Income taxes $ 648 $ 666
======= =======
</TABLE>
Supplemental schedule of noncash financing and investing
activities:
In August 1995, the Company purchased the remaining 77% of D.A.C.
Systemes/MICROS France and AD- Maintenance Informatique ("ADMI") for FF
14.0 million (approximately $2.8 million at exchange rates in effect at the
date of purchase), payable FF 8.0 million at closing FF 6.0 million over
the next four years, plus potential additional payments based on earnings
over the next four years.
The accompanying notes are an integral part of the
consolidated financial statements.
6
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MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
three months ended September 30, 1995 (unaudited)
1. Inventories
The components of inventories are as follows (in thousands):
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
------------ ------------
<S> <C> <C>
Raw materials $ 3,115 $ 2,534
Work-in-process 3,226 2,785
Finished goods 7,795 6,025
------------ ------------
$ 14,136 $ 11,344
============ ============
</TABLE>
2. Note Receivable
Under the terms of a loan agreement with Fidelio Software GmbH which
obligated MICROS to loan up to DM 1.5 million, the Company's loan of
DM 900,000 as of June 30, 1995 was increased to DM 1,487,000 in the
first quarter of fiscal 1996. The note bears interest at a variable
rate and must be repaid by December 31, 2000.
3. Subsequent Event
On November 10, 1995, the Company announced that it had exercised its
right to acquire the remaining 70% interest in Fidelio Software GmbH
("Fidelio"), a German company based in Munich, that MICROS currently
does not own. MICROS currently owns 30% of Fidelio. MICROS
anticipates that the acquisition will be completed within the next 90
days.
Fidelio revenues for calendar 1994 were approximately DM 50,000,000,
and revenues for the first nine months of calendar 1995 were
approximately DM 60,000,000. The purchase price for the remaining 70%
interest in Fidelio is DM 40,000,000. The Company anticipates that it
will pay for the Fidelio stock through its cash reserves and available
lines of credit.
4. Reclassifications
Certain prior year reclassifications have been made to conform to
fiscal 1996 classifications.
7
<PAGE> 8
MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 1995
PART I - Financial Information
Item 2. Management's discussion and analysis of financial
condition and results of operations.
Liquidity and Capital Resources
There have been no borrowings under the Company's $15.0 million line
of credit facility during the first quarter of fiscal 1996. The
Company has generated sufficient cash flow through its operations
during this period and has significant funds available in cash and
highly-liquid investments.
For the first three months of fiscal 1996, net cash provided by
operating activities was $300,000. The sale of stock issued to
employees under the Company's incentive stock option plan provided
$83,000, while $66,000 was provided by the income tax benefit from the
exercise of non-qualified stock options. During this period, the
Company used cash of $1,322,000 in investing activities, including
$1,208,000 for the purchase of property, plant and equipment, $821,000
for the purchase of an equity interest in an affiliate (net of cash
received) and $425,000 loaned to an affiliate. Cash used in investing
activites was offset by $700,000 from the sale of short term
investments and $581,000 from dividends received from affiliates. The
Company also made debt repayments of $161,000 on its building loan and
capital lease. As a result, the cash position during the first three
months of fiscal 1996 decreased $1,034,000, or 4.5%, to $22,181,000.
The cash is being held for the operation and expansion of the
business. See Note 3 of Notes to Consolidated Financial Statements.
Results of Operations - First Quarter Comparisons
Revenue for the quarter ended September 30, 1995 was $32.4 million, an
increase of $7.9 million, or 32.2%, compared to the same quarter last
year. Sales through the Company's direct sales channel increased $4.7
million over the same period last year, including Property Management
System (PMS) sales through the Company's three Fidelio subsidiaries
which increased $2.7 million and increased sales of Point of Sale
(POS) hardware and software to Whitbread PLC of $1.3 million. Sales
through the Company's indirect sales channel to independent dealers
and distributors worldwide increased $3.1 million in the first quarter
of fiscal 1996 compared to the same period last year. Hardware and
software sales increased $5.5 million, or 28.4%, while service
revenues increased $2.4 million, or 46.3%.
Cost of sales, as a percentage of revenue, increased to 50.7% for the
first quarter of fiscal 1996 compared to 49.4% for the same period in
fiscal 1995. Cost of sales for hardware and software products, as a
percentage of related revenue, was 51.5% in the first quarter of
fiscal 1996 compared to 50.4% for the same quarter a year earlier,
primarily due to certain strategic selling price decreases on hardware
products. Service costs, as a percentage of related revenue,
increased in the first quarter of fiscal 1996 to 48.1% compared to
45.4% for the first quarter last year, primarily due to higher labor
costs related to the training of new service employees and increased
material costs and support fees related to service maintenance
contracts.
Selling, general and administrative expenses increased $2.6 million,
or 36.9% in the first quarter of fiscal 1996 compared to the same
quarter in the prior
8
<PAGE> 9
MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 1995
PART I - Financial Information
Item 2. Management's discussion and analysis of financial
condition and results of operations. (continued)
year. As a percentage of revenue, selling, general and administrative
expenses increased to 29.6% in the first quarter of fiscal 1996
compared to 28.5% in the first quarter of fiscal 1995. The increases
are primarily the result of the continued expansion of the Company's
infrastructure, especially an 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, certain costs have increased as a result of
the Company no longer being a subsidiary of Westinghouse Electric
Corporation.
Research and development expenses (exclusive of capitalized software
development costs), which consist primarily of labor costs, increased
$406,000, or 42.2%, in the first quarter of fiscal 1996 compared to
the same quarter in fiscal 1995. Actual research and development
expenditures, including capitalized software development costs of
$149,000 in the first quarter of fiscal 1996, increased $555,000, or
57.7%, compared to the first quarter of fiscal 1995.
Interest income for the first quarter of fiscal 1996 increased $78,000
to $339,000, or 29.9%, compared to $261,000 for the same quarter of
fiscal 1995. The improvement was a result of an increase in interest
rates on investments and an increase in the investment balance.
Other income for the first quarter of fiscal 1995 included a dividend
of $175,000 from Fidelio, which was then owned 15% and accounted for
on the cost basis. Following an ownership increase to 30% in October
1994, Fidelio was accounted for on the equity method, and MICROS'
share of Fidelio's net income is included in equity in net earnings of
affiliates.
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 anticipates continued revenue growth at a rate in excess of
such market, and therefore an increase in its overall market share, it
does not expect to maintain growth at recent levels and there can be
no assurance that any particular level of growth can be achieved. In
addition, due to the competitive nature of the market, the Company
recently has experienced greater gross margin pressure on its products
than it has in the past, and the Company expects this trend to
continue. There can be no assurance that the Company will be able to
sufficiently increase sales of its higher margin products, including
software and services, to prevent declines in the Company's overall
gross margin.
9
<PAGE> 10
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of MICROS Systems, Inc.
We have reviewed the accompanying consolidated balance sheet of MICROS Systems,
Inc. and Subsidiaries as of September 30, 1995, and the related consolidated
statements of operations and cash flows for the three-month periods ended
September 30, 1995 and September 30, 1994. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards,
the consolidated balance sheet as of June 30, 1995, and the related
consolidated statements of operations, cash flows and shareholders' equity for
the year then ended (not presented herein), and in our report dated August 21,
1995 we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the accompanying consolidated balance sheet
information as of June 30, 1995, is fairly stated in all material respects in
relation to the consolidated balance sheet from which it has been derived.
PRICE WATERHOUSE LLP
Baltimore, Maryland
November 10, 1995
THE ABOVE REPORT IS NOT A "REPORT" WITHIN THE MEANING OF SECTIONS 7 AND 11 OF
THE SECURITIES ACT OF 1933 AND THE INDEPENDENT ACCOUNTANTS LIABILITY PROVISIONS
OF SECTION 11 OF THE ACT DO NOT APPLY.
10
<PAGE> 11
MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 1995
Part II - Other Information
Items 1 through 4.
No events occurred during the quarter covered by the report that would
require a response to any of these items.
Item 5. Other Information
For a discussion of certain recent events, see Note 3 of
Notes to Consolidated Financial Statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Computation of Earnings Per Share
Exhibit 15 - Letter Regarding Unaudited Interim Financial
Information
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - None
11
<PAGE> 12
MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MICROS SYSTEMS, INC.
-------------------------
(Registrant)
November 14, 1995
- ------------------ --------------------------
Gary C. Kaufman
Vice President, Finance and
Administration/Chief Financial
Officer
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered Page
- ------- -------------
<S> <C> <C>
11. Computation of Earnings Per Share 14
15. Letter regarding Unaudited Interim 15
Financial Information
27. Financial Data Schedule N/A
</TABLE>
13
<PAGE> 1
MICROS SYSTEMS, INC. AND SUBSIDIARIES
three months ended September 30, 1995 and 1994
Exhibit 11 - Computation of Earnings Per Share
(Unaudited - in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------
September 30, September 30,
1995 1994
------------- -------------
<S> <C> <C>
Weighted-average number
of common shares 7,861 7,802
Dilutive effect of outstanding
stock options 117 140
------------- -------------
Weighted-average number of
common and common equivalent
shares outstanding 7,978 7,942
============= =============
Net income per statements
of income $ 3,254 $ 3,036
============= =============
Net income per common and
common equivalent share $ 0.41 $ 0.38
============= =============
</TABLE>
14
<PAGE> 1
Exhibit No. 15
November 10, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that MICROS Systems, Inc. has incorporated by reference our report
dated November 10, 1995 (issued pursuant to the provisions of Statement on
Auditing Standards No. 71) in the Prospectus constituting part of its
Registration Statements on Forms S-8, (No. 33-69782, No. 33-44481 and No.
33-33535). We are also aware of our responsibilities under the Securities Act
of 1933.
Yours very truly,
PRICE WATERHOUSE LLP
15
<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 SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 5,141
<SECURITIES> 19,510
<RECEIVABLES> 29,971
<ALLOWANCES> 1,455
<INVENTORY> 14,136
<CURRENT-ASSETS> 73,392
<PP&E> 19,542
<DEPRECIATION> 8,161
<TOTAL-ASSETS> 98,805
<CURRENT-LIABILITIES> 34,146
<BONDS> 6,163
<COMMON> 197
0
0
<OTHER-SE> 56,945
<TOTAL-LIABILITY-AND-EQUITY> 98,805
<SALES> 24,764
<TOTAL-REVENUES> 32,360
<CGS> 12,743
<TOTAL-COSTS> 15,103
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88
<INCOME-PRETAX> 4,591
<INCOME-TAX> 1,627
<INCOME-CONTINUING> 3,254
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,254
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
