MICROS Reports Fiscal 2014 Second Quarter Results

RECORD QUARTERLY REVENUE

NEW STOCK BUYBACK PLAN APPROVED

Jan 30, 2014, 16:02 ET from MICROS Systems, Inc.

COLUMBIA, Md., Jan. 30, 2014 /PRNewswire/ -- MICROS Systems, Inc. (Nasdaq: MCRS), a leading supplier of information systems to the hospitality and retail industries, today announced the results for its fiscal 2014 second quarter ended December 31, 2013. 

FINANCIAL HIGHLIGHTS                                                                        

  • Revenue for the quarter was $345.6 million, an increase of $21.0 million, or 6.5%, versus the same period last year. 
  • Revenue for the six-month period was $660.3 million, an increase of $35.9 million, or 5.8% over the same period last year.
  • GAAP net income for the quarter was $43.4 million, a decrease of $0.7 million, or 1.5.%, versus the same period last year.
  • GAAP net income for the six-month period was $75.7 million, a decrease of $9.5 million, or 11.1%, versus the same period last year.
  • GAAP diluted earnings per share (EPS) for the quarter was $0.57 per share, an increase of $0.03, or 5.6%, over the same period last year.
  • GAAP diluted EPS for the six-month period was $0.98, a decrease of $0.06, or 5.8%, versus the same period last year.
  • Non-GAAP financial results, excluding the effect of charges for stock options, a litigation charge and accrued interest, amortization of Torex intangibles, restructuring of Torex, and gain on the sale and settlement of auction rate securities, are as follows:
    • Non-GAAP net income for the quarter was $48.3 million, an increase of $1.3 million, or 2.7%, versus the year ago period.
    • Non-GAAP net income for the six-month period was $86.8 million, a decrease of $6.5 million, or 0.7%, over the year ago period.
    • Non-GAAP diluted EPS for the quarter was $0.63, an increase of $0.05, or 8.6%, over the year ago period.
    • Non-GAAP diluted EPS for the six-month period was $1.12, a decrease of $0.02, or 1.8%, versus the year ago period.

MICROS's quarterly revenue was a Company record.

Peter A. Altabef, MICROS's President and CEO, stated, "We are pleased to achieve another quarter of strong revenue growth.  We are encouraged by the improving demand environment in our geographic regions and vertical markets."

MICROS's financial guidance for fiscal 2014 is for revenue between $1.320 billion and $1.345 billion and Non-GAAP EPS from $2.46 to $2.51. The guidance reflects an increase in the ranges first provided in August 2013.   At that time, revenue guidance for fiscal 2014 was for revenue between $1.295 billion and $1.320 billion, and Non-GAAP EPS between $2.46 and $2.50.

On January 28, 2014, our Board of Directors approved the purchase of an additional $200.0 million of our common stock.  This authorization will be added to the April 2013 repurchase authorization.   Under the new plan, shares will be purchased from time to time in the open market as business conditions warrant.

MICROS's stock is traded through NASDAQ under the symbol MCRS.  Some of the statements contained herein not based on historic facts are forward-looking statements that involve risks and uncertainties MICROS is subject to, among others, the following uncertainties and risks: product demand and market acceptance; impact of competitive products and pricing on margins; product development delays and technological difficulties; controlling expenses as MICROS continues to expand; the ability to obtain on acceptable terms the right to incorporate in MICROS's products and services technology patented by others; the risk that there are actual or perceived security vulnerabilities in MICROS's products; adverse results in legal disputes resulting in liabilities that exceed reserves; unanticipated tax liabilities; the effects of terrorist activity and armed conflict; the effects of major environmental disasters; weakening in general economic conditions that adversely affect demand for computer hardware or software; and currency fluctuations.

All information in this release is as of January 30, 2014.  MICROS undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in MICROS's expectations.

For further information regarding risks and uncertainties associated with MICROS's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business and Investment Risks" sections of MICROS's SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting MICROS's investor relations department at 443-285-8059 or at MICROS's website at http://www.micros.com.

MICROS SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share amounts)

Three Months Ended

Six Months Ended

December 31,

December 31,

2013

2012

2013

2012

Revenue:

Hardware

$      71,096

$      67,245

$    137,628

$    131,004

Software

44,758

38,747

79,119

69,525

Service

229,715

218,528

443,537

423,842

Total revenue

345,569

324,520

660,284

624,371

Cost of sales:

Hardware

45,671

43,295

88,918

86,352

Software

7,179

5,257

12,580

10,621

Service

110,414

103,767

214,054

201,864

Stock option expense

90

82

189

155

Total cost of sales

163,354

152,401

315,741

298,992

Gross margin

182,215

172,119

344,543

325,379

Selling, general and administrative expenses

85,502

79,952

163,528

152,600

Research and development expenses

21,439

17,526

40,317

33,891

Depreciation and amortization

4,669

4,207

9,062

8,324

Stock option expense

5,661

7,233

10,552

11,371

Torex amortization expense

941

1,314

1,717

2,722

Torex restructuring charge

0

296

216

1,693

Litigation charge

0

0

2,800

0

Total operating expenses

118,212

110,528

228,192

210,601

Income from operations

64,003

61,591

116,351

114,778

Non-operating income (expense):

Interest income, net

778

1,129

1,667

2,305

Interest expense - litigation charge

-

-

(900)

0

Gain on settlement/sale - auction rate securities

0

3,494

338

3,494

Other non-operating income, net

(536)

(635)

(383)

(964)

Total non-operating income , net

242

3,988

722

4,835

Income before taxes

64,245

65,579

117,073

119,613

Income tax provision 

20,687

21,289

41,184

34,257

Net income

43,558

44,290

75,889

85,356

Less:  Net income attributable to noncontrolling interest

(143)

(204)

(203)

(206)

Net Income attributable to MICROS Systems, Inc. (GAAP)

$      43,415

$      44,086

$       75,686

$      85,150

Net Income per diluted common share attributable to MICROS Systems, Inc.

$           0.57

$           0.54

$           0.98

$           1.04

Weighted-average number of shares outstanding - diluted

76,785

81,289

77,245

81,643

Reconciliation of GAAP Net Income and EPS attributable to MICROS Systems, Inc. to Non-GAAP Net Income and EPS attributable to MICROS Systems, Inc.

Net Income attributable to MICROS Systems, Inc.

$      43,415

$      44,086

$       75,686

$      85,150

Add back:

Stock option expense

    Selling, general and administrative expenses

5,117

6,905

9,521

10,605

    Research and development expenses

544

328

1,031

766

    Cost of sales

90

82

189

155

5,751

7,315

10,741

11,526

Litigation charge, including accrued interest expense

-

-

3,700

0

Torex amortization expense

941

1,314

1,717

2,722

Torex restructuring charge

-

296

216

1,693

Gain on settlement/sale - auction rate securities

0

(3,494)

(338)

(3,494)

Total add back

6,692

5,431

16,036

12,447

Subtract tax effect on:

Stock option expense

1,817

2,391

3,374

3,655

Litigation charge, including accrued interest expense

-

-

1,410

0

Torex amortization expense

23

59

45

118

Torex restructuring charge

-

83

49

432

Non-GAAP Net Income attributable to MICROS Systems, Inc.

$      48,267

$      46,984

$       86,844

$      93,392

Non-GAAP Net Income per Diluted Common Share

 attributable to MICROS Systems, Inc.

$           0.63

$           0.58

$           1.12

$           1.14

We believe the inclusion of the above non-GAAP measure will be useful to investors because it will enhance the comparability of our current period results to prior periods' results without comparable charges. We also believe inclusion of this measure will enhance comparability of our results to results of our competitors and to the analysts' forecasts because the analysts typically forecast excluding the effect of share-based payment charge and above one time charges, the non-GAAP measure. In addition, our management uses this measure to evaluate our operating performance and compare our results to our competitors. Management also uses this measure as a metric to measure performance under our executive compensation program.

The Company notes that non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. Instead, they are based on subjective determinations by management designed to supplement our GAAP financial measures. They are subject to a number of important limitations and should be considered only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Among the limitations on the use of the non-GAAP measure are the following:

- The exclusion of non-GAAP items can have a significant impact on reported GAAP net income and diluted net income per share.

- Other companies may calculate non-GAAP net income and non-GAAP net income per share differently than MICROS does, limiting the usefulness of those measures for comparative purposes.

MICROS SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands)

December 31, 2013

June 30, 2013

ASSETS

Current assets:

     Cash and cash equivalents and short-term investments

$         627,266

$         634,069

     Accounts receivable, net

221,799

228,455

     Inventory

57,602

49,273

    Income taxes receivable

4,599

12,771

     Deferred income taxes

15,307

15,022

     Prepaid expenses and other current assets

49,222

44,648

           Total current assets

975,795

984,238

Property, plant and equipment, net

57,257

44,127

Deferred income taxes, non-current

48,258

50,186

Goodwill

452,780

432,950

Intangible assets, net

37,355

37,754

Purchased and internally developed software costs, net

35,539

32,543

Other assets

8,686

7,240

Total Assets

$      1,615,670

$     1,589,038

LIABILITIES AND EQUITY

Current liabilities:

     Bank lines of credit

$                     -

$             1,757

     Accounts payable

72,313

73,099

     Accrued expenses and other current liabilities

151,276

155,491

     Income taxes payable

7,373

11,002

     Deferred revenue

176,303

177,236

         Total current liabilities

407,265

418,585

Income taxes payable, non-current

41,692

35,019

Deferred income taxes, non-current

551

1,157

Other non-current liabilities

15,646

16,007

         Total liabilities

465,154

470,768

Commitments and contingencies

Equity:

  MICROS Systems, Inc. stockholders' equity:

     Common stock

1,881

1,918

     Capital in excess of par

0

0

     Retained earnings

1,132,904

1,136,763

     Accumulated other comprehensive income (loss)

12,419

(23,625)

          Total MICROS Systems, Inc. stockholders' equity

1,147,204

1,115,056

  Noncontrolling interest

3,312

3,214

Total Equity

1,150,516

1,118,270

Total Liabilities and Equity

$      1,615,670

$     1,589,038

 

MICROS SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

 Six Months Ended 

 December 31, 

2013

2012

Cash flows from operating activities:

Net income

$           75,889

$           85,356

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

10,779

11,046

Share-based compensation

10,741

11,526

Amortization of capitalized software

3,111

2,260

Provision for losses on accounts receivable

31

1,997

Litigation reserve, including interest expense

3,700

-

Gain on sales of auction rate securities

-

(4,094)

Other-than-temporary impairment losses on investments, net

-

600

Net (gain) loss on disposal of property, plant and equipment

-

(40)

Changes in operating assets and liabilities (net of impact of acquisitions):

Decrease in accounts receivable

12,216

23,899

Increase in inventory

(7,377)

(7,244)

Increase in prepaid expenses and other assets

(4,053)

(6,303)

Decrease in accounts payable

(2,323)

(8,149)

Decrease in accrued expenses and other current liabilities

(9,585)

(31,809)

Increase (decrease) in income taxes assets and liabilities

13,491

(4,053)

Decrease in deferred revenue

(5,414)

(9,257)

Net cash flows provided by operating activities

101,206

65,735

Cash flows from investing activities:

Proceeds from maturities of investments

139,476

23,824

Proceeds from sales of auction rate securities

-

36,719

Purchases of investments

(69,705)

(83,841)

Purchases of property, plant and equipment

(20,854)

(10,009)

Internally developed software costs

(3,769)

(2,225)

Other

45

(122)

Net cash flows provided by (used in) investing activities

45,193

(35,654)

Cash flows from financing activities:

Repurchases of common stock

(111,312)

(53,372)

Proceeds from stock option exercises

19,080

4,655

Realized tax benefits from stock option exercises

1,830

1,426

Principal payments on line of credit

(1,795)

-

Cash paid for acquisition of noncontrolling interest

-

(846)

Other

(174)

(51)

Net cash flows used in financing activities

(92,371)

(48,188)

Effect of exchange rate changes on cash and cash equivalents

9,163

7,431

Net (decrease) increase in cash and cash equivalents

63,191

(10,676)

Cash and cash equivalents at beginning of year

486,023

562,786

Cash and cash equivalents at end of year

$        549,214

$        552,110

Contact: Peter J. Rogers, Jr. Executive Vice President, Investor Relations 443-285-8059

SOURCE MICROS Systems, Inc.



RELATED LINKS

http://www.micros.com