NASDAQ: MCRS 0 (00/00/0000 00:00am)


Press Release

MICROS REPORTS FISCAL 2014 THIRD QUARTER RESULTS

RECORD QUARTERLY REVENUE, NET INCOME AND EPS

Columbia, MD - May 1, 2014 - 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.

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

Contacts

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

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