2014

MICROS Reports Fiscal 2014 Second Quarter Results RECORD QUARTERLY REVENUE

NEW STOCK BUYBACK PLAN APPROVED

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.



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