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