MICROS Reports Fiscal 2014 Third Quarter Results

RECORD QUARTERLY REVENUE, NET INCOME AND EPS

May 01, 2014, 16:02 ET from MICROS Systems, Inc.

COLUMBIA, Md., May 1, 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 third quarter ended March 31, 2014. 

      FINANCIAL HIGHLIGHTS                                                                        

  • Revenue for the quarter was $349.0 million, an increase of $33.9 million, or 10.7%, versus the year ago period.
  • Revenue for the nine-month period was $1.009.3 billion, an increase of $69.8 million, or 7.4%, versus the year ago period.
  • GAAP net income for the quarter was $50.3 million, an increase of $6.0 million, or 13.6.%, versus the year ago period.
  • GAAP net income for the nine-month period was $126.0 million, a decrease of $3.4 million, or 2.7%, versus the year ago period.
  • GAAP diluted earnings per share (EPS) for the quarter was $0.66 per share, an increase of $0.11, or 20.0%, versus the year ago period.
  • GAAP diluted EPS for the nine-month period was $1.63, an increase of $0.04, or 2.5%, versus the year ago period.
  • 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 $55.0 million, an increase of $5.3 million, or 10.8%, versus the year ago period.
    • Non-GAAP net income for the nine-month period was $141.8 million, a decrease of $1.2 million, or 0.8%, versus the year ago period.
    • Non-GAAP diluted EPS for the quarter was $0.72, an increase of $0.10, or 16.1%, versus the year ago period.
    • Non-GAAP diluted EPS for the nine-month period was $1.84, an increase of $0.08, or 4.5%, versus the year ago period.

MICROS's quarterly revenue, GAAP net income and EPS (GAAP and Non-GAAP) were Company records.

Peter A. Altabef, MICROS's President and CEO, stated, "We are pleased with the strong revenue growth and profit performance this quarter. We are encouraged by an improved demand environment for our solutions from current and new clients."

MICROS's financial guidance for fiscal 2014 is for revenue between $1.360 billion and $1.385 billion and Non-GAAP EPS from $2.53 to $2.57. The guidance reflects an increase in the ranges provided in January 2014.   At that time, revenue guidance for fiscal 2014 was for revenue between $1.320 billion and $1.345 billion, and Non-GAAP EPS between $2.46 and $2.51.

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 May 1, 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.

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

MICROS SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share amounts)

Three Months Ended

Nine Months Ended

March 31,

March 31,

2014

2013

2014

2013

Revenue:

Hardware

$          78,621

$          64,523

$        216,249

$       195,527

Software

39,242

36,821

118,361

106,346

Service

231,105

213,761

674,642

637,603

Total revenue

348,968

315,105

1,009,252

939,476

Cost of sales:

Hardware

50,476

41,514

139,394

127,867

Software

6,939

5,813

19,519

16,434

Service

109,832

102,201

323,886

304,064

Stock option expense

77

89

266

244

Total cost of sales

167,324

149,617

483,065

448,609

Gross margin

181,644

165,488

526,187

490,867

Selling, general and administrative expenses

87,299

78,254

250,829

230,854

Research and development expenses

18,970

17,970

59,287

51,860

Depreciation and amortization

4,597

4,008

13,658

12,332

Stock option expense

5,577

4,651

16,128

16,022

Torex amortization expense

876

1,694

2,593

4,416

Torex restructuring charge

0

760

216

2,453

Litigation charge

0

0

2,800

0

Total operating expenses

117,319

107,337

345,511

317,937

Income from operations

64,325

58,151

180,676

172,930

Non-operating income (expense):

Interest income, net

877

919

2,543

3,223

Interest expense - litigation charge

-

-

(900)

0

Gain on settlement/sale - auction rate securities

0

0

338

3,494

Other non-operating income, net

(163)

645

(546)

(319)

Total non-operating (expense) income , net

714

1,564

1,435

6,398

Income before taxes

65,039

59,715

182,111

179,328

Income tax provision 

14,896

15,370

56,080

49,627

Net income

50,143

44,345

126,031

129,701

Less:  Net loss (income) attributable to noncontrolling interest

151

(81)

(51)

(287)

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

$          50,294

$          44,264

$        125,980

$       129,414

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

$              0.66

$              0.55

$               1.63

$              1.59

Weighted-average number of shares outstanding - diluted

76,771

80,502

77,081

81,272

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.

$          50,294

$          44,264

$        125,980

$       129,414

Add back:

Stock option expense

    Selling, general and administrative expenses

5,037

4,161

14,557

14,766

    Research and development expenses

540

490

1,571

1,256

    Cost of sales

77

89

266

244

5,654

4,740

16,394

16,266

Litigation charge, including accrued interest expense

-

-

3,700

0

Torex amortization expense

876

1,694

2,593

4,416

Torex restructuring charge

-

760

216

2,453

Gain on settlement/sale - auction rate securities

0

0

(338)

(3,494)

Total add back

6,530

7,194

22,565

19,641

Subtract tax effect on:

Stock option expense

1,841

1,570

5,215

5,225

Litigation charge, including accrued interest expense

-

-

1,410

0

Torex amortization expense

23

59

67

177

Torex restructuring charge

-

208

49

641

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

$          54,960

$          49,621

$        141,804

$       143,012

Non-GAAP Net Income per Diluted Common Share attributable to MICROS Systems, Inc.

$              0.72

$              0.62

$               1.84

$              1.76

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)

March 31, 2014

June 30, 2013

ASSETS

Current assets:

     Cash and cash equivalents and short-term investments

$             658,377

$             634,069

     Accounts receivable, net

265,069

228,455

     Inventory

63,597

49,273

    Income taxes receivable

3,646

12,771

     Deferred income taxes

14,685

15,022

     Prepaid expenses and other current assets

51,689

44,648

           Total current assets

1,057,063

984,238

Property, plant and equipment, net

58,192

44,127

Deferred income taxes, non-current

50,278

50,186

Goodwill

454,086

432,950

Intangible assets, net

36,068

37,754

Purchased and internally developed software costs, net

37,987

32,543

Other assets

9,233

7,240

Total Assets

$         1,702,907

$         1,589,038

LIABILITIES AND EQUITY

Current liabilities:

     Bank lines of credit

$                         -

$                 1,757

     Accounts payable

74,347

73,099

     Accrued expenses and other current liabilities

157,361

155,491

     Income taxes payable

9,725

11,002

     Deferred revenue

230,083

177,236

         Total current liabilities

471,516

418,585

Income taxes payable, non-current

42,467

35,019

Deferred income taxes, non-current

470

1,157

Other non-current liabilities

14,705

16,007

         Total liabilities

529,158

470,768

Commitments and contingencies

Equity:

  MICROS Systems, Inc. stockholders' equity:

     Common stock

1,871

1,918

     Retained earnings

1,152,756

1,136,763

     Accumulated other comprehensive income (loss)

15,946

(23,625)

          Total MICROS Systems, Inc. stockholders' equity

1,170,573

1,115,056

  Noncontrolling interest

3,176

3,214

Total Equity

1,173,749

1,118,270

Total Liabilities and Equity

$         1,702,907

$         1,589,038

 

 

MICROS SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

 Nine Months Ended 

 March 31, 

2014

2013

Cash flows from operating activities:

Net income

$            126,031

$            129,701

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

Depreciation and amortization

16,251

16,748

Share-based compensation

16,394

16,266

Amortization of capitalized software

4,836

3,696

Provision for losses on accounts receivable

879

2,871

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

3

(48)

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

Increase in accounts receivable

(30,701)

(5,846)

Increase in inventory

(13,280)

(9,946)

Increase in prepaid expenses and other assets

(6,198)

(7,091)

Decrease in accounts payable

(410)

(5,020)

Decrease in accrued expenses and other current liabilities

(2,906)

(28,283)

Increase (decrease) in income taxes assets and liabilities

15,366

(2,089)

Increase in deferred revenue

46,780

32,430

Net cash flows provided by operating activities

176,745

139,895

Cash flows from investing activities:

Proceeds from maturities of investments

168,120

24,685

Proceeds from sales of auction rate securities

-

42,119

Purchases of investments

(94,374)

(108,423)

Purchases of property, plant and equipment

(26,639)

(15,692)

Internally developed software costs

(8,415)

(3,398)

Other

189

(299)

Net cash flows provided by (used in) investing activities

38,881

(61,008)

Cash flows from financing activities:

Repurchases of common stock

(170,616)

(90,887)

Proceeds from stock option exercises

41,470

7,326

Proceeds from advance on line of credit

-

4,014

Realized tax benefits from stock option exercises

2,639

3,069

Principal payments on line of credit

(1,795)

-

Cash paid for acquisition of non-controlling interest

-

(846)

Other

(183)

(70)

Net cash flows used in financing activities

(128,485)

(77,394)

Effect of exchange rate changes on cash and cash equivalents

9,731

1,419

Net increase in cash and cash equivalents

96,872

2,912

Cash and cash equivalents at beginning of year

486,023

562,786

Cash and cash equivalents at end of year

$            582,895

$            565,698

 

 

SOURCE MICROS Systems, Inc.



RELATED LINKS

http://www.micros.com