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Release Date: |
January 31, 2008
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Contacts: |
Peter J. Rogers, Jr.
Executive Vice President, Investor Relations
443-285-8059
progers@micros.com
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MICROS REPORTS FISCAL 2008 SECOND QUARTER RESULTS RECORD SECOND QUARTER REVENUE, NET INCOME AND EPS
Columbia, Maryland... MICROS Systems, Inc. (Nasdaq:MCRS), a leading supplier of information systems to the hospitality and retail industries, today announced the results for its fiscal 2008 second quarter ended December 31, 2007.
FINANCIAL HIGHLIGHTS
- Revenue for the quarter was $244.0 million, an increase of $54.1 million, or 28.5%, over the same period last year.
- Revenue for the six-month period was $460.4 million, an increase of $96.9 million, or 26.6% over the same period last year.
- GAAP net income for the quarter was $24.1 million, an increase of $6.1 million, or 33.7%, over the same period last year. GAAP net income for the quarter was reduced by $3.2 million ($2.0 million net of tax benefits or $0.05 diluted earnings per share (EPS)) directly related to the 120,000 stock options granted to the Company’s Chairman and CEO, Mr. Giannopoulos during the quarter. The share-based payment charges relating to Mr. Giannopoulos’ option grant must be taken in full in the quarter of the grant, as Mr. Giannopoulos is at retirement age in accordance with the terms of the option plan and is thereby fully vested.
- GAAP net income for the six-month period was $45.4 million, an increase of $12.3 million, or 37.0%, over the same period last year.
- GAAP diluted EPS, was $0.57 per share, an increase of $0.13, or 29.5%, over the same period last year.
- GAAP diluted EPS for the six-month period was $1.08, an increase of $0.27, or 33.3%, over the same period last year.
- Non-GAAP financial results, excluding the effect of Financial Accounting Standard (FAS) No. 123 (R), which requires us to record the share-based payment charge, are as follows:
- Non-GAAP net income for the quarter was $28.4 million, an increase of $8.2 million, or 40.8%, over the year ago period.
- Non-GAAP net income for the six-month period was $52.7 million, an increase of $15.2 million, or 40.5%, over the year ago period.
- Non-GAAP diluted EPS for the quarter was $0.68, an increase of $0.19, or 38.8%, over the year ago period.
- Non-GAAP diluted EPS for the six-month period was $1.26, an increase of $0.34, or 37.0%, over the year ago period.
- MICROS’s financial results were Company records for the second fiscal quarter.
Tom Giannopoulos, MICROS’s Chairman and CEO, stated: “We are very pleased with the financial results for the quarter and the first six months of the fiscal year. We continue to exceed our financial targets and continue to win new customer contracts.”
On January 8, 2008, the Company’s Board of Directors approved a two-for-one stock split of the Company’s common stock, which will be executed in the form of a stock dividend of one share for each share held by shareholders on record as of January 22, 2008. GAAP earnings per diluted share, retroactively adjusted to reflect the announced two-for-one stock split are as follows:
Second quarter ended Six months ended
December 31, December 31,
2007 2006 2007 2006
Diluted EPS $ 0.29 $ 0.22 $ 0.54 $ 0.40
Weighted-average number of
shares outstanding - diluted 83,917 82,450 83,711 81,898
MICROS’s guidance for its fiscal 2008 third quarter ending March 31, 2008, is for revenue between $228.0 million and $232.0 million, net income between $23.8 million and $25.2 million, or diluted EPS between $0.56 and $0.59. Guidance for net income, excluding the projected share-based payment charge for the third quarter, is between $26.8 million and $28.2 million, or non-GAAP diluted EPS of $0.63 to $0.67.
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. An example of a forward looking statement includes the statements in the paragraphs above where MICROS provides guidance for its fiscal 2008 third quarter ending March 31, 2008. 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, such as hurricanes and tsunamis; 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 31, 2008. MICROS undertakes no duty to update any forwardlooking 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)
Second quarter ended Six months ended
December 31, December 31,
2007 2006 2007 2006
Revenue:
Hardware $67,194 $55,460 $132,095 $109,603
Software 44,517 32,752 75,368 60,508
Service 132,241 101,663 252,971 193,466
Total revenue 243,952 189,875 460,434 363,577
Cost of sales:
Hardware 44,284 36,270 84,223 70,236
Software 9,515 6,635 18,024 13,996
Service 63,591 48,116 118,384 91,822
Total cost of sales 117,390 91,021 220,631 176,054
Gross margin 126,562 98,854 239,803 187,523
Selling, general and
administrative expenses 74,130 59,867 141,484 115,456
Research and development expenses 9,423 7,858 18,536 14,651
Depreciation and amortization 3,629 3,338 7,475 6,161
Stock option expense (*) 5,983 2,695 9,827 5,510
Total operating expenses 93,165 73,758 177,322 141,778
Income from operations 33,397 25,096 62,481 45,745
Non-operating income, net 3,851 2,395 7,174 4,625
Income before taxes, minority
interests, and equity in net
earnings of affiliates 37,248 27,491 69,655 50,370
Income tax provision 12,627 9,072 23,483 16,737
Income before minority interests
and equity in net earnings of
affiliates 24,621 18,419 46,172 33,633
Minority interests and equity in
net earnings of affiliates (532) (401) (779) (505)
Net income $24,089 $18,018 $45,393 $33,128
PRE-stock split:
Net income per common share - -
diluted $0.57 $0.44 $1.08 $0.81
Weighted-average number of
shares outstanding - diluted 41,959 41,225 41,856 40,949
POST-stock split (1):
Net income per common share - -
diluted $0.29 $0.22 $0.54 $0.40
Weighted-average number of
shares outstanding - diluted 83,917 82,450 83,711 81,898
Reconciliation of GAAP Net Income and EPS, and Net Income and EPS before
share-based payment charge, i.e. stock option expense
Net income $24,089 $18,018 $45,393 $33,128
Add back: Stock option expense(*)
Selling, general and
administrative expenses 5,730 2,578 9,271 5,270
Research and development
expenses 253 117 556 240
Total stock option expense 5,983 2,695 9,827 5,510
Subtract: Total tax effect on
stock option expense 1,673 545 2,513 1,115
Net income (before share-based
payment charge) $28,399 $20,168 $52,707 $37,523
Net income per common share-diluted
(before share-based payment charge):
PRE-stock split: $0.68 $0.49 $1.26 $0.92
POST-stock split (1): $0.34 $0.24 $0.63 $0.46
(1) Share data has been retroactively adjusted for the two-for-one stock split approved by Board of Directors in January 2008.
We believe the inclusion of the above non-GAAP measure, excluding the effect of share-based payment charge, will be useful to investors because it will enhance the comparability of our results in recent periods to results in periods prior to our adoption of FAS 123(R). We also believe inclusion of this measure will enhance comparability of our results to results of our competitors, particularly those who did not adopt FAS 123(R) during one or more periods included in their public filings, and to the analysts' forecasts because the analysts continue to forecast excluding the effect of share-based payment charge, 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-cash share-based payment charges can have a significant impact on reported GAAP net income and diluted net income per share.
- Other companies may utilize non-cash share-based payments to a significantly greater or lesser degree in relation to overall compensation than MICROS.
- 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, June 30,
2007 2007
ASSETS
Current assets:
Cash and cash equivalents $327,804 $242,702
Short-term investments 59,800 86,950
Accounts receivable, net 169,610 180,203
Inventory, net 53,354 47,790
Deferred income taxes 17,340 16,683
Prepaid expenses and other
current assets 31,646 27,650
Total current assets 659,554 601,978
Property, plant and equipment, net 29,614 27,955
Deferred income taxes, non-current 24,282 23,145
Goodwill 151,667 138,332
Intangible assets, net 16,498 14,509
Purchased and internally developed
software costs, net 34,333 36,296
Other assets 6,499 4,541
Total assets $922,447 $846,756
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank lines of credit $2,480 $2,308
Accounts payable 39,381 43,126
Accrued expenses and other current
liabilities 119,330 117,142
Income taxes payable 7,229 8,094
Deferred service revenue 80,264 86,742
Total current liabilities 248,684 257,412
Income taxes payable, non-current 12,313 0
Deferred income taxes, non-current 15,304 15,934
Other non-current liabilities 19,048 17,554
Total liabilities 295,349 290,900
Minority interests and minority
ownership put arrangement 5,773 4,723
Commitments and contingencies
Shareholders' equity:
Common stock 512 507
Capital in excess of par 160,144 149,089
Retained earnings 425,204 382,785
Accumulated other comprehensive income 35,465 18,752
Total shareholders' equity 621,325 551,133
Total liabilities and shareholders'
equity $922,447 $846,756
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