Attached files
file | filename |
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EX-23 - MICROS SYSTEMS INC | v164884_ex23.htm |
EX-32.A - MICROS SYSTEMS INC | v164884_ex32a.htm |
EX-31.A - MICROS SYSTEMS INC | v164884_ex31a.htm |
EX-31.B - MICROS SYSTEMS INC | v164884_ex31b.htm |
EX-32.B - MICROS SYSTEMS INC | v164884_ex32b.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
Quarterly
Report Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
For the
quarterly period ended September 30, 2009
Commission
file number 0-9993
MICROS
SYSTEMS, INC.
|
(Exact
name of Registrant as specified in its
charter)
|
MARYLAND
|
52-1101488
|
|
(State
of incorporation)
|
|
(IRS
Employer Identification
Number)
|
7031
Columbia Gateway Drive, Columbia, Maryland
|
21046-2289
|
|
(Address
of principal executive offices)
|
|
(Zip
code)
|
443-285-6000
|
Registrant’s
telephone number, including area
code
|
Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES þ NO
o
Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the Registrant was required to submit
and post such files).
YES o
NO o
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer þ
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
Reporting Company ¨
|
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
YES ¨ NO
þ
As of
October 30, 2009, there were issued and outstanding 79,677,456 shares of
Registrant’s Common Stock, $0.00625 par value.
MICROS
SYSTEMS, INC. AND SUBSIDIARIES
Form
10-Q
For the
three months ended September 30, 2009
PART
I – FINANCIAL INFORMATION
ITEM
1.
|
FINANCIAL
STATEMENTS
|
2
MICROS
SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited,
in thousands, except per share data)
September 30,
2009
|
June 30,
2009
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 326,265 | $ | 292,257 | ||||
Short-term
investments
|
141,295 | 146,679 | ||||||
Accounts
receivable, net of allowance for doubtful accounts of $33,100 at September
30, 2009 and $32,079 at June 30, 2009
|
170,412 | 157,479 | ||||||
Inventory,
net
|
38,615 | 39,783 | ||||||
Deferred
income taxes
|
19,008 | 20,283 | ||||||
Prepaid
expenses and other current assets
|
31,913 | 27,238 | ||||||
Total
current assets
|
727,508 | 683,719 | ||||||
Long-term
investments
|
57,608 | 57,823 | ||||||
Property,
plant and equipment, net
|
29,572 | 30,520 | ||||||
Deferred
income taxes, non-current
|
12,843 | 11,483 | ||||||
Goodwill
|
191,908 | 190,739 | ||||||
Intangible
assets, net
|
17,113 | 17,709 | ||||||
Purchased
and internally developed software costs, net of accumulated amortization
of $70,254 at September 30, 2009 and $66,804 at June 30,
2009
|
24,101 | 25,749 | ||||||
Other
assets
|
6,434 | 6,344 | ||||||
Total
assets
|
$ | 1,067,087 | $ | 1,024,086 | ||||
LIABILITIES
AND EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Bank
lines of credit
|
$ | 1,170 | $ | 1,090 | ||||
Accounts
payable
|
32,068 | 36,647 | ||||||
Accrued
expenses and other current liabilities
|
105,939 | 104,821 | ||||||
Income
taxes payable
|
4,110 | 7,999 | ||||||
Deferred
revenue
|
141,770 | 112,146 | ||||||
Total
current liabilities
|
285,057 | 262,703 | ||||||
Income
taxes payable, non-current
|
20,064 | 19,611 | ||||||
Deferred
income taxes, non-current
|
906 | 1,752 | ||||||
Other
non-current liabilities
|
10,496 | 10,539 | ||||||
316,523 | 294,605 | |||||||
Commitments
and contingencies (Note 11)
|
||||||||
Equity:
|
||||||||
MICROS
Systems, Inc. Shareholders' Equity:
|
||||||||
Common
stock, $0.00625 par value; authorized 120,000 shares; issued and
outstanding 79,667 at September 30, 2009 and 80,310 at June 30,
2009
|
498 | 502 | ||||||
Capital
in excess of par
|
107,025 | 127,146 | ||||||
Retained
earnings
|
604,162 | 579,331 | ||||||
Accumulated
other comprehensive income
|
32,377 | 16,468 | ||||||
Total
MICROS Systems, Inc. shareholders' equity
|
744,062 | 723,447 | ||||||
Noncontrolling
interest
|
6,502 | 6,034 | ||||||
Total
equity
|
750,564 | 729,481 | ||||||
Total
liabilities and equity
|
$ | 1,067,087 | $ | 1,024,086 |
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
3
MICROS
SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited,
in thousands, except per share data)
Three Months Ended
September 30,
|
||||||||
2009
|
2008
|
|||||||
Revenue:
|
||||||||
Hardware
|
$ | 43,779 | $ | 63,693 | ||||
Software
|
24,926 | 37,576 | ||||||
Services
|
143,768 | 142,800 | ||||||
Total
revenue
|
212,473 | 244,069 | ||||||
Cost
of sales:
|
||||||||
Hardware
|
28,273 | 43,059 | ||||||
Software
|
5,550 | 7,300 | ||||||
Services
|
62,138 | 67,766 | ||||||
Total
cost of sales
|
95,961 | 118,125 | ||||||
Gross
margin
|
116,512 | 125,944 | ||||||
Selling,
general and administrative expenses
|
65,282 | 76,801 | ||||||
Research
and development expenses
|
11,016 | 10,471 | ||||||
Depreciation
and amortization
|
3,842 | 4,087 | ||||||
Total
operating expenses
|
80,140 | 91,359 | ||||||
Income
from operations
|
36,372 | 34,585 | ||||||
Non-operating
income (expense):
|
||||||||
Interest
income
|
1,051 | 3,254 | ||||||
Interest
expense
|
- | (146 | ) | |||||
Other
(expense) income, net
|
(394 | ) | 687 | |||||
Total
non-operating income, net
|
657 | 3,795 | ||||||
Income
before taxes
|
37,029 | 38,380 | ||||||
Income
tax provision
|
12,034 | 13,049 | ||||||
Net
income
|
24,995 | 25,331 | ||||||
Less: net
income attributable to noncontrolling interest
|
(224 | ) | (449 | ) | ||||
Net
income attributable to MICROS Systems, Inc.
|
$ | 24,771 | $ | 24,882 | ||||
Net
income per common share attributable to MICROS Systems, Inc. common
shareholders (1):
|
||||||||
Basic
|
$ | 0.31 | $ | 0.31 | ||||
Diluted
|
$ | 0.31 | $ | 0.30 | ||||
Weighted-average
number of shares outstanding:
|
||||||||
Basic
|
79,749 | 80,688 | ||||||
Diluted
|
81,314 | 82,196 |
The
details of total other-than-temporary impairment losses ("OTTI") of long-term
investments and a reconciliation
to OTTI change included in other non-operating expense are as follows (2):
Three Months Ended
September 30,
|
||||||||
2009
|
2008
|
|||||||
Changes
in other-than-temporary impairment losses
|
$ | 355 | $ | - | ||||
Add:
change in non-credit based OTTI recognized in other comprehensive
income
|
32 | - | ||||||
Credit
based OTTI charge recognized in non-operating income
(expense)
|
$ | 387 | $ | - |
(1) See
Note 6, "Share-based Compensation" in Notes to Condensed Consolidated Financial
Statements.
(2) See
Note 3, "Financial Instruments and Fair Value Measurements" in Notes to
Consolidated Financial Statements.
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
4
MICROS
SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited,
in thousands)
Three Months Ended
September 30,
|
||||||||
2009
|
2008
|
|||||||
Net
cash flows provided by operating activities
|
$ | 41,849 | $ | 29,658 | ||||
Cash
flows from investing activities:
|
||||||||
Proceeds
from sales of investments (short-term and long-term)
|
87,937 | 6,191 | ||||||
Purchases
of investments (short-term and long-term)
|
(77,932 | ) | (82,578 | ) | ||||
Purchases
of property, plant and equipment
|
(1,710 | ) | (3,343 | ) | ||||
Internally
developed software
|
(200 | ) | (125 | ) | ||||
Disposal
of property, plant and equipment
|
18 | 190 | ||||||
Net
cash paid for acquisitions
|
- | (32,288 | ) | |||||
Net
cash flows provided by (used in) investing activities
|
8,113 | (111,953 | ) | |||||
Cash
flows from financing activities:
|
||||||||
Repurchases
of stock
|
(30,336 | ) | (10,352 | ) | ||||
Proceeds
from stock option exercises
|
4,850 | 1,363 | ||||||
Realized
tax benefits from stock option exercises
|
2,196 | 77 | ||||||
Principal
payments on line of credit and long-tem debt related to an
acquisition
|
- | (18,124 | ) | |||||
Other
|
(129 | ) | (474 | ) | ||||
Net
cash flows used in financing activities
|
(23,419 | ) | (27,510 | ) | ||||
Effect
of exchange rate changes on cash and cash equivalents
|
7,465 | (23,269 | ) | |||||
Net
increase (decrease) in cash and cash equivalents
|
34,008 | (133,074 | ) | |||||
Cash
and cash equivalents at beginning of year
|
292,257 | 377,072 | ||||||
Cash
and cash equivalents at end of period
|
$ | 326,265 | $ | 243,998 |
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
5
MICROS
SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited,
in thousands)
MICROS
Systems, Inc. Shareholders
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
Capital
|
Other
|
Non-
|
||||||||||||||||||||||||||
Common
Stock
|
in
Excess
|
Retained
|
Comprehensive
|
controlling
|
||||||||||||||||||||||||
Shares
|
Amount
|
of
Par
|
Earnings
|
Income
|
Interest
|
Total
|
||||||||||||||||||||||
Balance,
June 30, 2009
|
80,310 | $ | 502 | $ | 127,146 | $ | 579,331 | $ | 16,468 | $ | 6,034 | $ | 729,481 | |||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
- | - | - | 24,771 | - | 224 | 24,995 | |||||||||||||||||||||
Foreign
currency translation adjustments, net
of tax of $0
|
- | - | - | - | 15,802 | 244 | 16,046 | |||||||||||||||||||||
Non-credit
other-than-temporary losses on long-term
investments, net of tax of $65
|
- | - | - | - | 107 | - | 107 | |||||||||||||||||||||
Total
comprehensive income
|
41,148 | |||||||||||||||||||||||||||
Minority
interest put arrangement
|
- | - | - | 60 | - | - | 60 | |||||||||||||||||||||
Share-based
compensation
|
- | - | 3,051 | - | - | - | 3,051 | |||||||||||||||||||||
Stock
issued upon exercise of options
|
458 | 3 | 4,847 | - | - | - | 4,850 | |||||||||||||||||||||
Repurchases
of stock
|
(1,101 | ) | (7 | ) | (30,329 | ) | - | - | - | (30,336 | ) | |||||||||||||||||
Income
tax benefit from options exercised
|
- | - | 2,310 | - | - | - | 2,310 | |||||||||||||||||||||
Balance,
September 30, 2009
|
79,667 | $ | 498 | $ | 107,025 | $ | 604,162 | $ | 32,377 | $ | 6,502 | $ | 750,564 |
MICROS
Systems, Inc. Shareholders
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
Capital
|
Other
|
Non-
|
||||||||||||||||||||||||||
Common
Stock
|
in
Excess
|
Retained
|
Comprehensive
|
controlling
|
||||||||||||||||||||||||
|
Shares
|
Amount
|
of
Par
|
Earnings
|
Income
|
Interest
|
Total
|
|||||||||||||||||||||
Balance,
June 30, 2008
|
80,898 | $ | 506 | $ | 131,517 | $ | 480,777 | $ | 60,216 | $ | 5,892 | $ | 678,908 | |||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
- | - | - | 24,882 | - | 449 | 25,331 | |||||||||||||||||||||
Foreign
currency translation adjustments, net
of tax of $0
|
- | - | - | - | (39,517 | ) | (497 | ) | (40,014 | ) | ||||||||||||||||||
Non-credit
other-than-temporary losses on long-term
investments, net of tax of $306
|
- | - | - | - | 514 | - | 514 | |||||||||||||||||||||
Total
comprehensive income
|
(14,169 | ) | ||||||||||||||||||||||||||
Minority
interest put arrangement
|
- | - | - | (191 | ) | - | - | (191 | ) | |||||||||||||||||||
Dividends
to non-controlling interest
|
(89 | ) | (89 | ) | ||||||||||||||||||||||||
Share-based
compensation
|
- | - | 3,733 | - | - | - | 3,733 | |||||||||||||||||||||
Stock
issued upon exercise of options
|
78 | - | 1,363 | - | - | - | 1,363 | |||||||||||||||||||||
Repurchases
of stock
|
(347 | ) | (2 | ) | (10,350 | ) | - | - | - | (10,352 | ) | |||||||||||||||||
Income
tax benefit from options exercised
|
- | - | 84 | - | - | - | 84 | |||||||||||||||||||||
Balance,
September 30, 2008
|
80,629 | $ | 504 | $ | 126,347 | $ | 505,468 | $ | 21,213 | $ | 5,755 | $ | 659,287 |
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
6
MICROS
SYSTEMS, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
1.
|
BASIS
OF PRESENTATION
|
The
accompanying condensed consolidated financial statements of MICROS Systems, Inc.
and its subsidiaries (collectively, the “Company”) have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”). This Quarterly Report on Form 10-Q should be read
in conjunction with the Company’s Annual Report on Form 10-K for the year ended
June 30, 2009.
The
accompanying condensed consolidated financial statements of the Company have
been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and in accordance
with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X,
promulgated by the Securities and Exchange Commission. Accordingly,
they do not include all disclosures required by U.S. generally accepted
accounting principles for complete financial statements.
The
condensed consolidated financial statements included in this report reflect all
normal and recurring adjustments that, in the opinion of management, are
necessary for a fair presentation of the financial position of the Company, its
results of operations and cash flows for the interim periods set forth
herein. The results for the three months ended September 30, 2009 are
not necessarily indicative of the results to be expected for the full year or
any future periods. Certain prior period amounts have been
reclassified in the accompanying financial statements to conform to the current
period presentation.
There
were no subsequent events that the Company was required to recognize or disclose
in the accompanying consolidated financial statements. Subsequent
events have been evaluated through November 5, 2009, the date these financial
statements are issued.
2.
|
INVENTORY
|
The components of inventory are as
follows:
(in thousands)
|
September 30,
2009
|
June 30,
2009
|
||||||
Raw
materials
|
$ | 1,617 | $ | 1,889 | ||||
Work-in-process
|
35 | 15 | ||||||
Finished
goods
|
36,963 | 37,879 | ||||||
Total
inventory
|
$ | 38,615 | $ | 39,783 |
The
Company maintained a reserve for inventory obsolescence of approximately $11.5
million at September 30, 2009, compared to approximately $11.4 million at June
30, 2009. During the three months ended September 30, 2009 and 2008,
the Company reserved approximately $0.6 million and $1.5 million,
respectively. All reserves related to potentially obsolete and slow
moving products. As of September 30, 2009, foreign currency
translation increased the reserve for inventory obsolescence by approximately
$0.1 million as compared to June 30, 2009.
3.
|
FINANCIAL
INSTRUMENTS AND FAIR VALUE
MEASUREMENTS
|
Short-term
and long-term investments consist of the following:
September 30, 2009
|
June 30, 2009
|
|||||||||||||||
(in thousands)
|
Amortized
Cost Basis
|
Aggregate
Fair Value
|
Amortized
Cost Basis
|
Aggregate
Fair Value
|
||||||||||||
Time
deposit – international
|
$ | 109,449 | $ | 109,449 | $ | 115,762 | $ | 115,762 | ||||||||
Auction
rate securities
|
64,275 | 57,608 | 64,275 | 57,823 | ||||||||||||
U.S.
government
|
25,041 | 25,041 | 25,084 | 25,084 | ||||||||||||
Foreign
corporate debt security
|
5,685 | 5,685 | 4,209 | 4,209 | ||||||||||||
Time
deposit - U.S.
|
1,114 | 1,114 | 970 | 970 | ||||||||||||
Other
|
6 | 6 | 654 | 654 | ||||||||||||
Total
investments
|
$ | 205,570 | $ | 198,903 | $ | 210,954 | $ | 204,502 |
Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit
price). Under the applicable accounting standard, the following
hierarchy prioritizes the inputs (generally, assumptions that market
participants use in pricing an asset or liability) used to measure fair value
based on the quality and reliability of the information provided by the
inputs:
·
|
Level
1 - Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical, unrestricted assets or
liabilities. The Company considers active markets as those in
which transactions for the assets or liabilities occur with sufficient
frequency and volume to provide pricing information on an ongoing
basis.
|
7
·
|
Level
2 - Quoted prices in markets that are not active, or inputs that are
observable, either directly or indirectly, for substantially the full term
of the asset or liability.
|
·
|
Level
3 - Measured based on prices or valuation models using unobservable inputs
to the extent relevant observable inputs are not available (i.e., where
there is little or no market activity for the asset or
liability).
|
The financial assets accounted for at
fair value were as follows (excludes cash and cash equivalents of approximately
$326.3 million and $292.3 million as of September 30, 2009 and June 30,
2009):
(in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Balance
at September 30, 2009:
|
||||||||||||||||
Short-term
and long-term investments:
|
||||||||||||||||
Time
deposit - international
|
$ | - | 109,449 | $ | - | $ | 109,449 | |||||||||
Auction
rate securities
|
- | - | 57,608 | 57,608 | ||||||||||||
U.S.
government
|
25,041 | - | - | 25,041 | ||||||||||||
Foreign
corporate debt security
|
5,685 | - | - | 5,685 | ||||||||||||
Time
deposit - U.S.
|
- | 1,114 | - | 1,114 | ||||||||||||
Other
|
- | 6 | - | 6 | ||||||||||||
Total
short-term and long-term investments
|
$ | 30,726 | $ | 110,569 | $ | 57,608 | $ | 198,903 | ||||||||
Balance
at June 30, 2009:
|
||||||||||||||||
Short-term
and long-term investments:
|
||||||||||||||||
Time
deposit - international
|
$ | - | 115,762 | $ | - | $ | 115,762 | |||||||||
Auction
rate securities
|
- | - | 57,823 | 57,823 | ||||||||||||
U.S.
government
|
25,084 | - | - | 25,084 | ||||||||||||
Foreign
corporate debt security
|
4,209 | - | - | 4,209 | ||||||||||||
Time
deposit - U.S.
|
- | 970 | - | 970 | ||||||||||||
Other
|
- | 654 | - | 654 | ||||||||||||
Total
short-term and long-term investments
|
$ | 29,293 | $ | 117,386 | $ | 57,823 | $ | 204,502 |
At September 30, 2009 and June 30,
2008, all of the Company’s investments, other than the Company’s investments in
auction rate securities, were recognized at fair value, which approximates cost
for all investments, determined based upon observable input information provided
by the Company’s pricing service vendors for identical or similar
assets. See “Auction Rate Securities” below for further discussion on
the valuation of the Company’s investments in auction rate
securities.
During the three months ended September
30, 2009 and 2008, the Company did not recognize any gains or losses, other than
related to the Company’s investments in auction rate securities.
The contractual maturities of
investments held at September 30, 2009 are as follows:
(in thousands)
|
Amortized
Cost Basis
|
Aggregate
Fair Value
|
||||||
Due
within one year
|
$ | 141,295 | $ | 141,295 | ||||
Due
after 10 years - auction rate securities
|
64,275 | 57,608 | ||||||
Balance
at September 30, 2009
|
$ | 205,570 | $ | 198,903 |
AUCTION
RATE SECURITIES
The Company’s investments in auction
rate securities, carried at estimated fair values, were its only assets valued
on the basis of Level 3 inputs. Auction rate securities are long-term
debt instruments with variable interest rates that are designed to periodically
reset to prevailing market rates every 7 to 35 days through the auction
process. The auction rate securities held by the Company are
supported by student loans for which repayment is guaranteed either by the
Federal Family Education Loan Program or insured by AMBAC Financial
Group. Due to the liquidity previously provided by the interest rate
reset mechanism and the short-term nature of the Company’s investment, the
auction rate securities previously (prior to February 2008) were classified as
short-term investments available-for-sale in the Company’s consolidated balance
sheets. Beginning in February 2008, auctions for these securities
failed to obtain sufficient bids to establish a clearing rate and the securities
were not saleable in auction, thereby no longer providing short-term
liquidity. As a result, the auction rate securities have been
classified as long-term investments available-for-sale as of September 30, 2009
and June 30, 2009 instead of being classified as short-term investments, as was
the case prior to February 2008.
8
As of September 30, 2009, the Company
updated its assessment as to whether it would likely recover the entire cost
basis of each of the auction rate securities, and, therefore, whether the
securities had incurred an other-than-temporary impairment. Determination of
whether the impairment is temporary or other-than-temporary requires significant
judgment. The primary factors that are considered in assessing the
nature of the impairment include (a) the credit quality of the underlying
security, (b) the extent to which and time period during which the fair value of
each investment has been below cost, (c) the expected holding or recovery period
for each investment, (d) the Company’s intent to hold each investment until
recovery and likelihood that the Company will not be required to sell the
security prior to recovery, and (e) the existence of any evidence of default by
the issuer. The Company engaged an independent valuation firm to perform a
valuation of its auction rate securities in conjunction with the Company's
assessment of any impairment as temporary versus other-than-temporary. The
valuation firm used a discounted cash flow model that considered various inputs
including: (a) the coupon rate specified under the debt instruments,
(b) the current credit ratings of the underlying issuers, (c) collateral
characteristics, (d) discount rates, (e) severity of default and (f) probability
of failing or passing auction or early redemption. The valuation firm
used a mark to model approach to arrive at this valuation, which the Company
reviewed and with which it agreed.
Based on its fair value assessment, the
Company determined that its investments in auction rate securities as of
September 30, 2009 were impaired by approximately $6.7 million as compared to an
impairment of approximately $6.5 million as of June 30, 2009. The
September 30, 2009 valuation further evaluated the amount of the
other-than-temporary impairment attributable to credit loss. The
factors considered in making an evaluation of the amount attributable to credit
loss included the following: (a) default probability and the
likelihood of restructuring of the security, (b) payment structure of the
security to determine how the expected underlying collateral cash flows will be
distributed to each security issued from the structure and (c) performance
indicators of the underlying assets in the trust (including default and
delinquency rates). These assumptions are subject to change as the
underlying market conditions change. Based on its evaluations, the
Company determined that approximately $1.7 million of the cumulative impairment
losses were credit based and recorded $0.4 million, the incremental credit based
losses as compared to June 30, 2009, in its consolidated statement of operations
for the three months ended September 30, 2009.
The remaining impairment losses of
approximately $5.0 million (approximately $3.1 million, net of tax) were
recorded in accumulated other comprehensive income as of September 30,
2009.
A reconciliation of changes in the fair
value of auction rate securities, and the related realized and unrealized losses
were as follows:
(in
thousands)
|
Cost
|
Temporary
Impairment
Loss (1)
|
OTTI -
Non-Credit
Loss (1)
|
OTTI - Credit
Loss (2)
|
Fair
Value
|
|||||||||||||||
Balance
at June 30, 2009
|
$ | 64,275 | $ | (4,474 | ) | $ | (712 | ) | $ | (1,266 | ) | $ | 57,823 | |||||||
Changes
in losses related to investments
|
- | 140 | 32 | (387 | ) | (215 | ) | |||||||||||||
Redemption
|
- | - | - | - | - | |||||||||||||||
Balance
at September 30, 2009
|
$ | 64,275 | $ | (4,334 | ) | $ | (680 | ) | $ | (1,653 | ) | $ | 57,608 |
(1)
Recorded in the accumulated other comprehensive income (loss) component of
stockholders' equity.
(2)
Recorded in the condensed consolidated statement of operations.
During the three months ended September
30, 2009, the Company had no sales or redemptions of its auction rate
securities.
The Company plans to continue to
monitor its investments, including the liquidity of and creditworthiness of the
issuers of its auction rate securities, on an ongoing basis for indications of
further impairment and, if an impairment is identified, for proper
classification of the impairment. Based on the Company’s expected
operating cash flows and sources of cash, the Company does not believe that any
reduction in the liquidity of its auction rate securities will have a material
impact on its overall ability to meet its liquidity needs.
4.
|
GOODWILL
AND INTANGIBLE ASSETS
|
During the three months ended September
30, 2009, the Company completed its annual impairment tests as of July 1, 2009
on its goodwill and its indefinite-lived trademarks. Based on its
annual impairment test results, the Company determined that no impairment of its
goodwill or indefinite-lived trademarks existed as of July 1, 2009, and
subsequent to July 1, 2009, there have not been any events or changes in
circumstances indicating that it is more likely than not that goodwill or
indefinite-lived trademarks have been impaired.
5.
|
LINE
OF CREDIT
|
The Company has two credit agreements
(the “Credit Agreements”) that in the aggregate provide a $65.0 million
multi-currency committed line of credit which expires on July 31,
2010. The lenders under the Credit Agreements are Bank of America,
N.A., Wachovia Bank, N.A. and US Bank (“Lenders”). The international
facility is secured by 65% of the capital stock of the Company’s main operating
Ireland subsidiary and 100% of the capital stock of all of the remaining major
foreign subsidiaries. The U.S. facility is secured by 100% of the
capital stock of the Company’s major U.S. subsidiaries as well as inventory and
receivables located in the U.S.
9
For borrowings in U.S. currency, the
interest rate under the Credit Agreements is equal to the higher of the federal
funds rate plus 50 basis points or the prime rate. For borrowings in
foreign currencies, the interest rate is determined by a LIBOR-based formula,
plus an additional margin of 125 to 200 basis points, depending upon the
Company’s consolidated earnings before interest, taxes, depreciation and
amortization for the immediately preceding four calendar
quarters. Under the terms of the Credit Agreements, the Company is
required to pay to the Lenders insignificant commitment fees on the unused
portion of the line of credit. The Credit Agreements also contain
certain financial covenants and restrictions on the Company’s ability to assume
additional debt, repurchase stock, sell subsidiaries or acquire
companies. In case of an event of default, as defined in the Credit
Agreements including those not cured within the applicable cure period, if any,
the Lenders’ remedies include their ability to declare all outstanding loans,
plus interest and other related amounts owed, to be immediately due and payable
in full, and to pursue all rights and remedies available to them under the
Credit Agreements or under applicable law.
As of September 30, 2009, the Company
had approximately $1.2 million outstanding under the Credit Agreements and has
applied an additional approximately $0.4 million to guarantees.
The Company also has a credit agreement
with a European bank under which the Company may borrow up to EUR 1.0 million
(approximately $1.5 million at the September 30, 2009 exchange
rate). Under the terms of this facility, the Company may borrow in
the form of either a line of credit or term debt. As of September 30,
2009, there were no balances outstanding on this credit facility, but
approximately EUR 0.4 million (approximately $0.6 million at the September 30,
2009 exchange rate) of the credit facility has been used for
guarantees.
As of September 30, 2009, the Company
had approximately $64.2 million borrowing capacity under all of the credit
facilities described above. The weighted-average interest rate on the
outstanding balances under the Credit Agreements as of September 30, 2009 was
1.5%.
6.
|
SHARE-BASED
COMPENSATION
|
The non-cash share-based compensation
expenses included in the consolidated statements of operations are as
follows:
Three Months Ended
September 30,
|
||||||||
(in thousands)
|
2009
|
2008
|
||||||
Selling,
general and administrative
|
$ | 2,904 | $ | 3,525 | ||||
Research
and development
|
147 | 208 | ||||||
Total
non-cash share-based compensation expense
|
3,051 | 3,733 | ||||||
Income
tax benefit
|
(942 | ) | (841 | ) | ||||
Total
non-cash share-based compensation expense, net of tax
benefit
|
$ | 2,109 | $ | 2,892 | ||||
Impact
on diluted net income per share
|
$ | 0.03 | $ | 0.04 |
No non-cash share-based compensation
expense has been capitalized for the three months ended September 30, 2009 and
2008, as stock options were not granted to employees whose labor cost was
capitalized as software development costs or inventory.
As of September 30, 2009, there was
approximately $10.9 million (net of estimated forfeitures) in non-cash
share-based compensation related to non-vested awards, which is expected to be
recognized in the Company’s consolidated statements of operations over a
weighted-average period of 1.5 years.
7.
|
NET
INCOME PER SHARE
|
Basic net income per common share is
computed by dividing net income available to MICROS Systems, Inc. common
shareholders by the weighted-average number of shares
outstanding. Diluted net income per share includes the dilutive
effect of stock options. A reconciliation of the net income available
to MICROS Systems, Inc. common shareholders and the weighted-average number of
common shares outstanding assuming dilution is as follows:
10
Three Months Ended
September 30,
|
||||||||
(in
thousands, except per share data)
|
2009
|
2008
|
||||||
Net
income attributable to MICROS Systems, Inc.
|
$ | 24,771 | $ | 24,882 | ||||
Effect
of minority put arrangement
|
60 | (191 | ) | |||||
Net
income available to MICROS Systems, Inc. common
shareholders
|
$ | 24,831 | $ | 24,691 | ||||
Average
common shares outstanding
|
79,749 | 80,688 | ||||||
Dilutive
effect of outstanding stock options
|
1,565 | 1,508 | ||||||
Average
common shares outstanding assuming dilution
|
81,314 | 82,196 | ||||||
Basic
net income per share
|
$ | 0.31 | $ | 0.31 | ||||
Diluted
net income per share
|
$ | 0.31 | $ | 0.30 | ||||
Anti-dilutive
weighted shares excluded from reconciliation
|
1,894 | 1,482 |
Results for the three months ended
September 30, 2009 and 2008 include approximately $3.1 million ($2.1 million,
net of tax) and $3.7 million ($2.9 million, net of tax), in non-cash share-based
compensation expense, respectively. These non-cash share-based
compensation expenses reduced diluted net income per share by $0.03 and $0.04
for the three months ended September 30, 2009 and 2008,
respectively.
8.
|
RECENT
ACCOUNTING GUIDANCE
|
RECENTLY
ADOPTED ACCOUNTING GUIDANCE
On July 1, 2009, the Company adopted
the authoritative guidance issued by the Financial Accounting Standards Board
(“FASB”) on business combinations. The guidance establishes
principles and requirements for how the acquirer of a business recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any non-controlling interest in the acquired
business. This statement also provides guidance for recognizing and
measuring the goodwill acquired in the business combination and disclosing
information to enable users of the financial statements to evaluate the nature
and financial effects of the business combination. As the Company did
not complete any business combinations since July 1, 2009, the adoption of this
new guidance did not have an impact on the Company’s consolidated financial
statements.
On July 1, 2009, the Company adopted
the authoritative guidance issued by the FASB that changes the accounting and
reporting for non-controlling interests. This statement requires that
non-controlling interests be reported as a component of equity, changes in a
parent’s ownership interest while the parent retains its controlling interest be
accounted for as equity transactions, and any retained non-controlling equity
investment upon the deconsolidation of a subsidiary initially be measured at
fair value. The adoption of this new guidance did not have a material
impact on the Company’s consolidated financial statements.
On July 1, 2009, the Company adopted
the authoritative guidance issued by the FASB which amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset. This
statement is intended to improve the consistency between the useful life of a
recognized intangible asset and the period of expected cash flows used to
measure the fair value of the asset and other U.S. generally accepted accounting
principles. The adoption of this new guidance did not have a material
impact on the Company’s consolidated financial statements.
On July 1, 2009, the Company adopted
the authoritative guidance on fair value measurement for nonfinancial assets and
liabilities, except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least
annually). The adoption of this new guidance did not have a material
impact on the Company’s consolidated financial statements.
RECENT
ACCOUNTING GUIDANCE NOT YET ADOPTED
In October 2009, the FASB issued the
authoritative guidance on revenue arrangements with multiple deliverables that
are outside the scope of the software revenue recognition
guidance. Under the new guidance, when vendor-specific objective
evidence or third-party evidence of selling price is not available, a best
estimate of the selling price is required to separate deliverables and allocate
arrangement consideration using the relative selling price
method. The new guidance also significantly expands related
disclosure requirements. This standard is effective for the Company
beginning July 1, 2010, with earlier adoption permitted. The Company
is continuing to evaluate the impact the adoption of this statement will have on
its consolidated financial statements.
In October 2009, the FASB also issued
the authoritative guidance on revenue recognition on arrangements that include
software elements. Under the new guidance, tangible products
containing software components and non-software components that function
together to deliver the tangible product’s essential functionality are excluded
from the scope of software revenue recognition guidance and will be subject to
other relevant revenue recognition guidance. This guidance will
become effective for the Company beginning July 1, 2010, with earlier adoption
permitted. The Company does not believe the adoption of this guidance
will have a material impact on its consolidated financial
statements.
11
9.
|
SEGMENT
INFORMATION
|
The Company is organized and operates
in four operating segments: U.S., Europe, the Pacific Rim, and Latin
America regions. The Company has identified the U.S. as a separate
reportable segment and has aggregated its three international operating segments
into one reportable segment, international, as the three international operating
segments share many similar economic characteristics. Management
views the U.S. and international segments separately in operating its business,
although the products and services are similar for each segment.
Historically, all of the Company’s new
business acquisitions have been incorporated into the existing operating
segments, based on their respective geographic locations, and are subsequently
operated and managed as part of the applicable operating segment.
A summary of the Company’s reportable
segments is as follows:
Three
Months Ended
|
||||||||
September 30,
|
||||||||
(in
thousands)
|
2009
|
2008
|
||||||
Revenues
(1):
|
||||||||
United
States
|
$ | 111,391 | $ | 127,436 | ||||
International
|
109,167 | 125,637 | ||||||
Intersegment
eliminations (2)
|
(8,085 | ) | (9,004 | ) | ||||
Total
revenues
|
$ | 212,473 | $ | 244,069 | ||||
Income
before taxes (1):
|
||||||||
United
States
|
$ | 17,908 | $ | 16,854 | ||||
International
|
24,837 | 27,297 | ||||||
Intersegment
eliminations (2)
|
(5,716 | ) | (5,771 | ) | ||||
Total
income before taxes
|
$ | 37,029 | $ | 38,380 |
As of
|
||||||||
(in
thousands)
|
September 30,
2009
|
June 30,
2009
|
||||||
Identifiable
assets (3):
|
||||||||
United
States
|
$ | 477,096 | $ | 492,402 | ||||
International
|
589,991 | 531,684 | ||||||
Total
identifiable assets
|
$ | 1,067,087 | $ | 1,024,086 |
|
(1)
|
Amounts
based on the location of the selling
entity.
|
|
(2)
|
Amounts
primarily represent elimination of U.S.’s intercompany
business.
|
|
(3)
|
Amounts
based on the physical location of the
asset.
|
10.
|
SHAREHOLDERS’
EQUITY
|
During the period from fiscal year 2002
through fiscal year 2009 the Board of Directors authorized the purchase of up to
an aggregate of 12 million shares of the Company’s common stock. On
August 25, 2009, the Board of Directors authorized the purchase of an additional
two million shares of the Company’s common stock over the next three years, to
be purchased from time to time depending on market conditions and other
corporate considerations as determined by management. The Company has
incurred an aggregate of approximately $0.3 million in fees related to all stock
purchases. As of September 30, 2009, approximately 2.2 million shares
remain available for purchase under the outstanding authorizations.
The following table summarizes the
cumulative number of shares purchased under the purchase authorizations, all of
which have been retired:
Number of
Shares
|
Average
Purchase Price
per Share
|
Total Purchase
Value
(in thousands)
|
||||||||||
Total
shares purchased:
|
||||||||||||
As
of June 30, 2009
|
10,717,800 | $ | 19.39 | $ | 207,829 | |||||||
Three
months ended September 30, 2009
|
1,101,200 | $ | 27.55 | 30,336 | ||||||||
As
of September 30, 2009
|
11,819,000 | $ | 20.15 | $ | 238,165 |
12
11.
|
CONTINGENCIES
|
There is a case pending in the U.S.
District Court for the Northern District of Georgia, styled Ware v. Abercrombie
& Fitch Stores, Inc. et al.; although the Company is not a party to that
case, the Company may have some obligation to indemnify certain of the
defendants who are the Company’s customers, based on the terms of the Company’s
contracts with those customers. The plaintiff has alleged that the
defendants are infringing a patent relating to the processing of credit card
transactions. The defendants include approximately 107 individual
retailers, 13 of whom are the Company’s customers for retail point-of-sale
software. The Company is currently providing indemnity coverage to
five of the defendants who are the Company’s customers in accordance with
applicable provisions of the contracts between the Company and those
customers. Through June 30, 2009, the Company’s legal fees with
respect to indemnity coverage for this matter have not been material, and the
Company does not anticipate that its future indemnification obligations will be
material. The case was subject to a court-ordered stay pending the
completion of the United States Patent and Trademark Office’s reexamination of
the patent that is the subject of the lawsuit. On July 14, 2009, the
United States Patent and Trademark Office issued a Reexamination Certificate
upholding the validity of the patent and the plaintiff moved the Court to lift
the stay. The Court lifted the Stay on September 4, 2009, and the
parties have filed a Joint Preliminary Planning Report and Scheduling Plan
whereby the Defendants are seeking, among other things, a moratorium on
discovery pending the Court’s ruling on two separate motions for summary
judgment filed by one defendant in this case and another defendant in a related
case. Based on currently available information, the Company does not
believe that the Company’s products infringe the patent. Should the case
proceed, the Company will vigorously defend the action.
On November 26, 2007, Heartland Payment
Systems, Inc., filed an action in the U.S. District Court for the District of
New Jersey naming as defendants MICROS Systems, Inc., Merchant Link LLC, and
Chase Paymentech Solutions, LLC. In its complaint, Heartland claimed
that MICROS, Merchant Link, and Paymentech engaged in an anti-competitive
arrangement relating to credit and debit card payment processing for restaurant
point-of-sale systems, and further claimed that this arrangement violates
federal antitrust law and applicable New Jersey state laws. Heartland
claimed it was damaged by virtue of being required to deal with Merchant Link if
it wished to provide services to users of MICROS point-of-sale software, by
being required to pay fees to Merchant Link that it claims are inappropriate or
excessive, and by being competitively disadvantaged relative to Chase
Paymentech’s services. Heartland is seeking monetary damages in
excess of $12 million, and also injunctive and other equitable
relief. The Company and the other defendants have filed answers to
the complaint, in which the Company and the other defendants have denied all
material allegations. The Company also has asserted counterclaims,
alleging that Heartland has engaged in tortious activity by defaming and
libeling the Company and by improperly interfering with the Company’s customer
contracts and customer relationships. Heartland has filed answers to
the counterclaims denying all material allegations. The case is
currently in the discovery phase, and no trial date has been set in this
matter.
As disclosed in previous filings, on
May 22, 2008, a jury returned verdicts totaling $7.5 million against the Company
in the consolidated actions of Roth Cash Register v. MICROS
Systems, Inc., et al. and Shenango Systems Solutions
v. MICROS Systems, Inc., et al. The cases initially were
filed in 2000 in the Court of Common Pleas of Allegheny County,
Pennsylvania. The complaints both related to the non-renewal of
dealership agreements in the year 2000 between the Company and the respective
plaintiffs. The agreements were non-renewed as part of a
restructuring of the dealer channel. There is no other outstanding
litigation relating to the restructuring of the dealer channel in the year
2000. The plaintiffs alleged that the Company and certain of its
subsidiaries and employees entered into a plan to eliminate the plaintiffs as
authorized dealers and improperly interfere with the plaintiffs' relationships
with their respective existing and potential future clients and customers
without compensation to the plaintiffs. As a result, the plaintiffs
claimed that the Company was liable for, among other things, breach of contract
and tortious interference with existing and prospective contractual
relationships. The Company and the plaintiffs have appealed the
verdicts on various grounds. The Company has filed its briefs on
appeal, and the plaintiffs have filed their response briefs. The Company has
established only an immaterial reserve for any potential liability relating to
these matters, as the Company believes that it can present strong arguments to
reverse the verdicts on appeal, and therefore believes that an unfavorable
outcome in these cases is not probable. Nevertheless, even if the
verdicts were not reversed or reduced as a result of the post-trial motions or
any subsequent appeals, payments of the resulting obligations would not have a
material adverse effect on the Company’s consolidated financial position or
liquidity.
The Company is and has been involved in
legal proceedings arising in the normal course of business, and, subject to the
matters referenced above, the Company is of the opinion, based upon presently
available information and the advice of counsel concerning pertinent legal
matters, that any resulting liability should not have a material adverse effect
on the Company’s results of operations or financial position or cash
flows.
13
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
We are a leading worldwide designer,
manufacturer, marketer, and servicer of enterprise information solutions for the
global hospitality and specialty retail industries. Our enterprise
solutions comprise three major areas: hotel information systems, restaurant
information systems, and specialty retail information systems. We
also offer a wide range of related services. We distribute our
products and services directly and through a network of independent dealers and
distributors.
We are organized and operate in four
operating segments: U.S., Europe, the Pacific Rim, and Latin America
regions. We have identified our U.S. operating segment as a separate
reportable segment and we have aggregated our three international operating
segments into one reportable segment, international, as the three international
operating segments share many similar economic characteristics. Our
management views the U.S. and international segments separately in operating our
business, although the products and services are similar for each
segment.
We have been and continue to be
adversely affected by the current global recession. We believe that
weakened consumer spending, coupled with difficulties in obtaining credit
(including the cost of credit) have negatively affected our customers’ abilities
to acquire or open new hospitality and retail venues, and also limit their
willingness and ability to make significant capital expenditures on new systems
and system upgrades. In light of these very challenging and uncertain
conditions, we continue to implement actions to enhance our liquidity and
maintain a solid balance sheet. These actions include: (i) reducing
certain discretionary expenses; (ii) reducing certain rates for third party
contractors; (iii) implementing headcount reductions in certain departments; and
(iv) implementing hiring freezes in certain departments.
FORWARD-LOOKING
STATEMENTS
The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the condensed consolidated
financial statements and the related notes and other financial information
included elsewhere in this Quarterly Report on Form 10-Q. Statements
contained in this Quarterly Report on Form 10-Q that are not historical facts
are forward looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that
involve risks and uncertainties. Our actual results may differ
materially from those anticipated in these forward-looking statements as a
result of specified factors, including those set forth in the section titled
“Business and Investment Risks; Information Relating to Forward-Looking
Statements,” in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for
the Fiscal Year ended June 30, 2009 and in Part II, Item 1A, “Risk Factors” in
this report.
Examples
of such forward-looking statements include:
|
·
|
our
statements about the growth of and conditions in the hospitality and
retail industries generally, and our analysis of the growth and direction
of various sectors within those
industries;
|
|
·
|
our
expectation that product and service margins may decline in response to
the competitive nature of our
market;
|
|
·
|
our
statements regarding the effects of foreign currency rate fluctuations (in
particular, the Euro and British pound sterling) on our financial
performance;
|
|
·
|
our
expectations that the customers with whom we do the largest amount of
business will fluctuate from year to year, and our statements about the
effects of large customer orders on our quarterly earnings, revenues, and
total revenues;
|
|
·
|
our
statements regarding the impact on financial results in future periods if
we determine that the financial condition of customers has
deteriorated;
|
|
·
|
our
statements regarding the impact on financial results in future periods if
we misjudge the remaining economic life of a
product;
|
|
·
|
our
statements concerning the fluctuations in the market price of our common
stock, whether as a result of variations in our quarterly operating
results or other factors;
|
|
·
|
our
belief that any existing legal claims or proceedings will not have a
material adverse effect on our results of operations or financial
position;
|
|
·
|
our
beliefs about our competitive
strengths;
|
|
·
|
our
expectations regarding effective tax rates in future
periods;
|
|
·
|
our
expectations regarding the impact or lack of impact on our financial
position and results of operations of the application of recent accounting
standards;
|
|
·
|
our
expectations about the adequacy of our cash flows and our available lines
of credit to meet our working capital needs, and our ability to raise
additional funds if and when
needed;
|
|
·
|
our
expectations about our capital expenditures for future
periods;
|
|
·
|
our
expectations that our exposure to interest rate risk will not materially
change in the future;
|
|
·
|
our
expectation that we will evaluate our need to invest in instruments to
protect against interest rate fluctuations and our exposure to such
interest rate risk;
|
14
|
·
|
our
statements about the effects on our revenue recognition of changes in
customers’ delivery requirements or a product’s
completion;
|
|
·
|
our
statements regarding our ability to increase sales of our higher margin
products;
|
|
·
|
our
expected costs associated with modifying our products to comply with
applicable legal rules, regulations, and guidelines, including the credit
card associations’ security and data protection rules,
and
|
|
·
|
our
expectations regarding valuation and liquidity of auction rate securities
in which we have invested.
|
RESULTS
OF OPERATIONS
Revenue:
An
analysis of the sales mix by reportable segments was as follows (amounts are net
of intersegment eliminations, based on location of the selling entity, and
include export sales):
Three Months Ended September
30,
|
||||||||||||||||||||||||
U.S.
|
International
|
Total
|
||||||||||||||||||||||
(in thousands)
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||
Hardware
|
$ | 20,964 | $ | 32,243 | $ | 22,815 | $ | 31,450 | $ | 43,779 | $ | 63,693 | ||||||||||||
Software
|
9,336 | 13,940 | 15,590 | 23,636 | 24,926 | 37,576 | ||||||||||||||||||
Service
|
70,032 | 67,404 | 73,736 | 75,396 | 143,768 | 142,800 | ||||||||||||||||||
Total
Revenue
|
$ | 100,332 | $ | 113,587 | $ | 112,141 | $ | 130,482 | $ | 212,473 | $ | 244,069 |
An
analysis of the total sales mix as a percent of total revenue is as
follows:
Three Months Ended
September 30,
|
||||||||
(in thousands)
|
2009
|
2008
|
||||||
Hardware
|
20.6 | % | 26.1 | % | ||||
Software
|
11.7 | % | 15.4 | % | ||||
Service
|
67.7 | % | 58.5 | % | ||||
Total
|
100.0 | % | 100.0 | % |
For the three months ended September 30, 2009, total revenue was approximately $212.5 million, a decrease of approximately $31.6 million, or 12.9% compared to the same period last year due to the following: |
·
|
Hardware and software revenue decreased by 31.3% and 33.7%, respectively, compared to the same period last year. Service revenue increased by 0.7% compared to the same period last year. We believe these changes were primarily due to a slow down in demand from our customers as a result of the adverse global economic conditions. | |
·
|
The % changes above also reflect the unfavorable foreign currency exchange rate fluctuations, for substantially all foreign currencies against the U.S. dollar, which negatively impacted total revenue by approximately $5.4 million. | |
·
|
The service revenue also reflects additional service revenue generated by Fry, a company which we acquired in August 2008. |
The international segment revenue for the three months ended September 30, 2009 decreased by approximately $18.3 million, a decrease of 14.1% compared to the same period last year due to the following: |
·
|
Hardware, software and service revenue decreased by 27.5%, 34.0% and 2.2%, respectively, compared to the same period last year. We believe these decreases were primarily due to a slow down in demand from our customers as a result of the adverse global economic conditions. | |
·
|
The % decreases above also reflect the unfavorable foreign currency exchange rate fluctuations, for substantially all foreign currencies against the U.S. dollar, which negatively impacted revenue by approximately $5.4 million. | |
U.S. segment revenue for the three months ended September 30, 2009 decreased approximately $13.3 million, a decrease of 11.7% compared to the same period last year due to the following: |
·
|
Hardware and software revenue decreased by 35.0% and 33.0%, respectively, compared to the same period last year. Service revenue increased by 3.9% compared to the same period last year. We believe these changes were primarily due to a slow down in demand from our customers as a result of the adverse global economic conditions. | |
·
|
The service revenue also reflects additional service revenue generated by Fry, a company which we acquired in August 2008. | |
15
Cost
of Sales:
An
analysis of the cost of sales was as follows:
Three Months Ended September
30,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
(in thousands)
|
Cost
of Sales
|
% of Related
Revenue
|
Cost
of Sales
|
% of Related
Revenue
|
||||||||||||
Hardware
|
$ | 28,273 | 64.6 | % | $ | 43,059 | 67.6 | % | ||||||||
Software
|
5,550 | 22.3 | % | 7,300 | 19.4 | % | ||||||||||
Service
|
62,138 | 43.2 | % | 67,766 | 47.5 | % | ||||||||||
Total
Cost of Sales
|
$ | 95,961 | 45.2 | % | $ | 118,125 | 48.4 | % |
For the
three months ended September 30, 2009 and 2008, cost of sales as a percent of
revenue were 45.2% and 48.4%, respectively. Hardware cost of sales as
a percent of related revenue for the three months ended September 30, 2009
decreased 3.0% compared to the same period last year primarily as a result of an
overall improvement in margins on substantially all hardware product sales,
including a decrease in freight costs.
Software
cost of sales as a percent of related revenue increased approximately 2.9%
compared to the same period last year. This increase was primarily as
a result of an increase in capitalized software amortization expense as a
percent of software revenue due to a decrease in software revenue.
Service
costs as a percent of related revenue decreased approximately 4.3% compared to
the same period last year due to lower overall labor and travel
costs.
Selling,
General and Administrative (“SG&A”) Expenses:
SG&A
expenses, as a percentage of revenue, for the three months ended September 30,
2009, were 30.7%, a decrease of 0.8% compared to the same period last year
despite a decrease in total revenue. This decrease was due to our
ability to manage our variable costs, especially our non-billable travel
costs. Additionally, we were able to reduce our compensation related
expenses by approximately $4.1 million for the three months ended September 30,
2009 compared to the same period last year.
Research
and Development (“R&D”) Expenses:
R&D
expenses consisted primarily of labor costs less capitalized software
development costs. An analysis of R&D activities is as
follows:
Three Months Ended
September 30,
|
||||||||
(in thousands)
|
2009
|
2008
|
||||||
R&D
labor and other costs
|
$ | 11,216 | $ | 10,596 | ||||
Capitalized
software development costs
|
(200 | ) | (125 | ) | ||||
Total
R&D expenses
|
$ | 11,016 | $ | 10,471 | ||||
%
of Revenue
|
5.2 | % | 4.3 | % |
The increase in R&D expenses as a
percentage of revenue is primarily due to the 12.9% decrease in revenue compared
to the same period last year.
Depreciation
and Amortization Expenses:
Depreciation
and amortization expenses for the three months ended September 30, 2009
decreased approximately $0.2 million to approximately $3.8 million compared to
the same period last year.
Share-Based
Compensation Expenses:
For the three months ended September
30, 2009 and 2008, we recognized non-cash share-based compensation expense of
approximately $3.1 million and $3.7 million, respectively. The
SG&A and R&D expenses discussed above include the following allocations
of non-cash share-based compensation expenses:
16
Three Months Ended
September 30,
|
||||||||
(in thousands)
|
2009
|
2008
|
||||||
SG&A
|
$ | 2,904 | $ | 3,525 | ||||
R&D
|
147 | 208 | ||||||
Total
non-cash share-based compensation expense
|
3,051 | 3,733 | ||||||
Income
tax benefit
|
(942 | ) | (841 | ) | ||||
Total
non-cash share-based compensation expense, net of tax
benefit
|
$ | 2,109 | $ | 2,892 | ||||
Impact
on diluted net income per share
|
$ | 0.03 | $ | 0.04 |
As of September 30, 2009, there was
approximately $10.9 million in non-cash share-based compensation cost related to
non-vested awards not yet recognized in our consolidated statements of
operations. This cost is expected to be recognized over a
weighted-average period of 1.5 years.
Non-operating
Income:
Net
non-operating income for the three months ended September 30, 2009, was
approximately $0.7 million compared to approximately $3.8 million for the same
period last year. The decrease of approximately $3.1 million
reflects:
|
·
|
A
decrease in interest income of approximately $2.2 million due to overall
lower interest earned on cash and cash equivalents and investment
(short-term and long-term)
balances;
|
|
·
|
The
credit based other-than-temporary impairment losses of approximately $0.4
million for investments in auction rate securities for the three months
ended September 30, 2009; and,
|
|
·
|
Foreign
currency exchange loss of less than $0.1 million for the three months
ended September 30, 2009 compared to foreign currency exchange gain of
approximately $0.5 million for the same period last
year.
|
Income
Tax Provisions:
The effective tax rate for the three
months ended September 30, 2009 and 2008 was 32.5% and 34.0%,
respectively. The decrease in tax rate for the three months ended
September 30, 2009 compared to the same period last year was primarily
attributable to a decrease in foreign interest income included in our U.S. tax
base and a decrease in non-deductible non-cash share-based
compensation. These decreases to the tax rate were partially offset
by adverse changes in the mix of estimated earnings from jurisdictions that have
a low statutory tax rate.
Based on currently available
information, we estimate that the fiscal year 2010 effective tax rate will be
approximately 33%. We believe that due to changes in the mix of earnings
among jurisdictions, the fluctuation of earnings, and the impact of certain
discrete items recognized during the interim reporting periods, there may be
some degree of adjustment to the effective tax rate on a quarterly
basis.
RECENT
ACCOUNTING STANDARDS
Recently
Adopted Accounting Pronouncements
On July 1, 2009, we adopted the
authoritative guidance issued by the FASB on business
combinations. The guidance establishes principles and requirements
for how the acquirer of a business recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquired business. This statement also
provides guidance for recognizing and measuring the goodwill acquired in the
business combination and disclosing information to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. As we did not complete any business combinations since
July 1, 2009, the adoption of this new guidance did not have an impact on our
consolidated financial statements.
On July 1, 2009, we adopted the
authoritative guidance issued by the FASB that changes the accounting and
reporting for non-controlling interests. This statement requires that
non-controlling interests be reported as a component of equity, changes in a
parent’s ownership interest while the parent retains its controlling interest be
accounted for as equity transactions, and any retained noncontrolling equity
investment upon the deconsolidation of a subsidiary initially be measured at
fair value. The adoption of this new guidance did not have a material
impact on our consolidated financial statements.
On July 1, 2009, we adopted the
authoritative guidance issued by the FASB which amends the factors that should
be considered in developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset. This statement is
intended to improve the consistency between the useful life of a recognized
intangible asset and the period of expected cash flows used to measure the fair
value of the asset and other U.S. generally accepted accounting
principles. The adoption of this new guidance did not have a material
impact on our consolidated financial statements.
17
On July 1, 2009, we adopted the
authoritative guidance on fair value measurement for nonfinancial assets and
liabilities, except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least
annually). The adoption of this new guidance did not have a material
impact on our consolidated financial statements.
Recent
Accounting Pronouncements Not Yet Adopted
In October 2009, the FASB issued the
authoritative guidance on revenue arrangements with multiple deliverables that
are outside the scope of the software revenue recognition
guidance. Under the new guidance, when vendor-specific objective
evidence or third-party evidence of selling price is not available, a best
estimate of the selling price is required to separate deliverables and allocate
arrangement consideration using the relative selling price
method. The new guidance also significantly expands related
disclosure requirements. This standard is effective for us beginning
July 1, 2010, with earlier adoption permitted. We are continuing to
evaluate the impact that the adoption of this statement will have on our
consolidated financial statements.
In October 2009, the FASB also issued
the authoritative guidance on revenue recognition on arrangements that include
software elements. Under the new guidance, tangible products
containing software components and non-software components that function
together to deliver the tangible product’s essential functionality are excluded
from the scope of software revenue recognition guidance and will be subject to
other relevant revenue recognition guidance. This guidance will
become effective for us beginning July 1, 2010, with earlier adoption
permitted. We do not believe the adoption of this guidance will have
a material impact on our consolidated financial statements.
CRITICAL
ACCOUNTING ESTIMATES
Our
discussion and analysis of our financial condition and results of operations are
based on our condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial
statements requires us to make estimates that affect the reported amounts of
assets, liabilities, revenue and expenses. We base our estimates on
historical experience and on various assumptions that we believe to be
reasonable under the circumstances. Actual results may differ from
these estimates.
The
following comprise the critical accounting estimates that we used in the
preparation of our condensed consolidated financial statements:
· Revenue
recognition;
· Allowance
for doubtful accounts;
· Inventory;
· Financial
instruments and fair value measurements;
· Capitalized
software development costs;
· Valuation
of long-lived assets and intangible assets
· Goodwill
and indefinite-lived intangible assets;
· Share-based
compensation;
· Income
taxes.
We have
reviewed our critical accounting estimates and the related disclosures with our
Audit Committee. Critical accounting estimates are described further
in our Annual Report on Form 10-K for the year ended June 30, 2009 in Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations,” under the heading “Critical Accounting Estimates.”
LIQUIDITY
AND CAPITAL RESOURCES
Sources
and Uses of Cash
Our
condensed consolidated statement of cash flows summary is as
follows:
Three Months Ended
September 30,
|
||||||||
(in thousands)
|
2009
|
2008
|
||||||
Net
cash provided by (used in):
|
||||||||
Operating
activities
|
$ | 41,849 | $ | 29,658 | ||||
Investing
activities
|
8,113 | (111,953 | ) | |||||
Financing
activities
|
(23,419 | ) | (27,510 | ) |
18
Operating
activities:
Net cash
provided by operating activities for the three months ended September 30, 2009
increased approximately $12.2 million compared to the three months ended
September 30, 2008. This increase was primarily due to an improvement
in collections related to deferred revenue for the three months ended September
30, 2009 as compared to the same period last year.
Investing
activities:
Net cash
flows from investing activities for the three months ended September 30, 2009
was approximately $8.1 million reflecting approximately $10.0 million we
received from the sale of investments, net of cash used to purchase
investments. This amount was partially offset by approximately $1.9
million we used to purchase property, plant and equipment, and also internally
developed software to be licensed to others.
Financing
activities:
Net cash
used in financing activities for the three months ended September 30, 2009 was
approximately $23.4 million, principally reflecting stock repurchases of
approximately $30.3 million. This amount was partially offset by
proceeds from stock option exercises of approximately $4.9 million and realized
tax benefits from stock option exercises of approximately $2.2
million.
Capital
Resources
During
the three months ended September 30, 2009, the favorable foreign exchange rate
fluctuations for substantially all foreign currencies against the U.S. dollar
positively affected our cash and cash equivalents’ balance by approximately $7.5
million. Our cash and cash equivalents’ balance of approximately
$326.3 million at September 30, 2009 is an increase of approximately $34.0
million from the June 30, 2009 balance and an increase of approximately $82.3
million from the September 30, 2008 balance. All cash and cash
equivalents were being retained for the operation and expansion of the business,
as well as for the repurchase of our common stock.
We have two credit agreements (the
“Credit Agreements”) that in the aggregate provide a $65.0 million
multi-currency committed line of credit. As of September 30, 2009, we
had approximately $1.2 million outstanding under the Credit Agreements and had
applied approximately an additional $0.4 million to guarantees. We
also have a credit relationship with a European bank in the amount of EUR 1.0
million (approximately $1.5 million at the September 30, 2009 exchange
rate). As of September 30, 2009, there were no balances outstanding
on this credit facility, but approximately EUR 0.4 million (approximately $0.6
million at the September 30, 2009 exchange rate) of the credit facility has been
used for guarantees. As of September 30, 2009, we had approximately $64.2
million borrowing capacity under all of the credit facilities described
above. The weighted-average interest rate on the outstanding balances
under the Credit Agreements as of September 30, 2008 was 1.5%. See
Note 5 “Line of Credit,” in the Notes to the Condensed Consolidated
Financial Statements included in this report for further information about our
credit facilities.
We do not currently invest in financial
instruments designed to protect against interest rate fluctuations, although we
will continue to evaluate the need to do so in the future.
We believe that our cash and cash
equivalents, short-term investments, cash generated from operations and our
available lines of credit are sufficient to provide our working capital needs
for the foreseeable future. In light of current economic conditions
generally and in light of the overall performance of the stock market beginning
in 2008, we cannot assure that funds would be available from other sources if
required in connection with acquisitions or any unanticipated and substantial
cash needs. We currently anticipate that our property, plant and
equipment expenditures for fiscal year 2010 will be approximately $13
million.
Financial indicators of our liquidity
and capital resources as of September 30, 2009 and June 30, 2009, were as
follows:
(in
thousands, except ratios)
|
September 30,
2009
|
June 30,
2009
|
||||||
Cash
and cash equivalents and short-term investments (1)
|
$ | 467,560 | $ | 438,936 | ||||
Available
credit facilities
|
$ | 66,463 | $ | 66,403 | ||||
Outstanding
credit facilities
|
(1,170 | ) | (1,090 | ) | ||||
Outstanding
guarantees
|
(1,083 | ) | (778 | ) | ||||
Unused
credit facilities
|
$ | 64,210 | $ | 64,535 | ||||
Working
capital (2)
|
$ | 442,451 | $ | 421,016 | ||||
MICROS
Systems, Inc.’s shareholders’ equity
|
$ | 744,062 | $ | 723,447 | ||||
Current
ratio (3)
|
2.55 | 2.60 |
(1)
|
Does
not include approximately $57.6 million and $57.8 million invested in
auction rate securities, classified as long-term investments in our
condensed consolidated balance sheet as of September 30, 2009 and June 30,
2009, respectively.
|
(2)
|
Current
assets less current liabilities.
|
(3)
|
Current
assets divided by current liabilities. The Company does not
have any long-term debt.
|
19
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Currency
exchange rate risk
We recorded foreign sales, including
exports from the United States, of approximately $112.1 million and $130.5
million during the three months ended September 30, 2009 and 2008, respectively,
to customers located primarily in Europe, Asia and Latin America. See
Note 9 “Segment Information” in the Notes to Condensed Consolidated Financial
Statements as well as Item 2 (Management’s Discussion and Analysis of Financial
Condition and Results of Operations) above for additional geographic
data.
Our international business and presence
expose us to certain risks, such as currency, interest rate and political
risks. With respect to currency risk, we transact business in
different currencies primarily through our foreign subsidiaries. The
fluctuation of currencies impacts sales and
profitability. Frequently, sales and the costs associated with those
sales are not denominated in the same currency.
We transacted business in approximately
thirty-nine currencies in the three months ended September 30, 2009 compared to
thirty-seven currencies in the three months ended September 30,
2008. The relative currency mix for the three months ended September
30, 2009 and 2008 were as follows:
Three Months Ended September 30,
|
||||||||||||||||
% of Reported
Revenue
|
Exchange Rates
|
|||||||||||||||
Revenues by currency (1):
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
United
States Dollar
|
52 | % | 53 | % | 1.0000 | 1.0000 | ||||||||||
European
Euro
|
22 | % | 21 | % | 1.4634 | 1.4076 | ||||||||||
British
Pound Sterling
|
7 | % | 8 | % | 1.5979 | 1.7778 | ||||||||||
Swiss
Franc
|
2 | % | 1 | % | 0.9651 | 0.8895 | ||||||||||
Japanese
Yen
|
2 | % | 2 | % | 0.0111 | 0.0094 | ||||||||||
Australian
Dollar
|
1 | % | 2 | % | 0.8823 | 0.7903 | ||||||||||
Mexican
Peso
|
1 | % | 2 | % | 0.0741 | 0.0916 | ||||||||||
Canadian
Dollar
|
1 | % | 1 | % | 0.9340 | 0.9398 | ||||||||||
Singapore
Dollar
|
1 | % | 1 | % | 0.7099 | 0.6960 | ||||||||||
Hong
Kong Dollar
|
1 | % | 1 | % | 0.1290 | 0.1288 | ||||||||||
All
Other Currencies
(2)
|
10 | % | 8 | % | 0.1864 | 0.1910 | ||||||||||
Total
|
100 | % | 100 | % |
(1)
|
Calculated
using weighted average exchange rates for the fiscal
period.
|
(2)
|
The
“% of Reported Revenue” for “All Other Currencies” is calculated based on
the weighted average three month exchange rates for all other currencies.
The “Exchange Rates as of September 30” for ‘All Other Currencies’
represents the weighted average September 30 exchange rates for all other
currencies. Weighting is based on the three month revenue for
each country or region whose currency is included in the ‘All Other
Currencies’ category. Revenues from each currency included in
“All Other Currencies” were less than 1% of our total revenues for the
relevant period.
|
A 10% increase or decrease in the value
of the Euro and British pound sterling in relation to the U.S. dollar in the
three months ended September 30, 2009 would have affected our total revenues by
approximately $6.1 million, or 2.9%. The sensitivity analysis assumes
a weighted average 10% change in the exchange rate during the period with all
other variables being held constant. This sensitivity analysis does
not consider the effect of exchange rate changes on cost of sales, operating
expenses, or income taxes, and accordingly, is not necessarily an indicator of
the effect of potential exchange rate changes on our net income.
Interest
rate risk
Our committed lines of credit bear
interest at a floating rate, which exposes us to interest rate
risks. We manage our exposure to this risk by minimizing, to the
extent feasible, overall borrowing and monitoring available financing
alternatives. At September 30, 2009, we had total borrowings of
approximately $1.2 million, and had not entered into any instruments to hedge
the resulting exposure to interest-rate risk. We believe that
the fair value of the debt equals its carrying value at September 30, 2009 and
June 30, 2009. Our exposure to fluctuations in interest rates will
increase or decrease in the future with increases or decreases in the
outstanding amount under our lines of credit. As our total borrowing
as of September 30, 2009 was approximately $1.2 million, a 1% change in interest
rate would have resulted in an immaterial impact on our condensed consolidated
financial position, results of operations and cash flows. Our cash equivalents
and our portfolio of marketable securities, including auction rate securities,
are subject to market risk due to changes in interest rates. Fixed
interest rate securities may have their market value adversely impacted due to a
rise in interest rates, while floating rate securities may produce less income
than expected if interest rates fall. Should interest rates fluctuate
by 1%, the change in value of our marketable securities would not have been
material as of September 30, 2009, and the change in our interest income
would not have been material for the three months ended September 30,
2009.
20
To minimize our exposure to credit risk
associated with financial instruments, we place our temporary cash investments
with high-credit-quality institutions, generally with bond rating of “A” and
above. However, see Note 3 “Financial Instruments and Fair Value
Measurements” in the Notes to Condensed Consolidated Financial Statements for a
discussion regarding auction rate securities.
Finally, we are subject to, among
others, those environmental and geopolitical risks, and economic, pricing,
financial, and other risks described in Item 1A, “Risk Factors.”
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
Evaluation
of Disclosure Controls and Procedures
Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this report. Based
on that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures as of the end of the
period covered by this report are functioning effectively to provide reasonable
assurance that the information required to be disclosed by us in reports filed
under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules and forms and
(ii) accumulated and communicated to our management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding disclosure.
Change
in Internal Control over Financial Reporting
No change
in our internal control over financial reporting occurred during our most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART
II – OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
Refer to Note 11 to the condensed
consolidated financial statements of this Form 10-Q for information regarding
certain pending legal proceedings.
ITEM
1A. RISK FACTORS.
In addition to other information
presented in this report, including the risk factors set forth below, you should
consider carefully the factors discussed in Item 1A, “Risk Factors” in our
Annual Report on Form 10-K for the year ended June 30, 2009.
We have experienced declines in total
revenues that we believe are attributable to reduced demand resulting from
current global economic conditions. Economic conditions that are
beyond our control, including the global recession, tightening of the credit
markets, reductions in consumer spending, and fluctuations in exchange rates,
have resulted in decreases in demand for our products and
services. Our primary customers – the hospitality, restaurant, and
retail industries – are highly sensitive to economic, political, and
environmental disturbances and uncertainty, all of which are not only outside of
our and our customers’ control, but also are difficult to predict with any
accuracy. In particular, weakened consumer spending, coupled with
difficulties many businesses are encountering in obtaining credit, have
negatively affected our customers’ operating results, which we believe has had
an adverse impact on their ability to acquire or open new hospitality and retail
venues, as well as their ability to make significant capital expenditures on the
systems that we sell. We believe these constraints may cause and in
some cases may have already caused our customers to maintain their existing
systems rather than purchase newer systems.
In addition, continued weakness in
domestic and foreign economies may cause some of our distributors and customers
to become illiquid and delay payments, or may otherwise adversely affect our
ability to collect on their accounts, which would result in higher levels of bad
debt expense. Although adverse changes in the financial condition of
our customers and distributors have not had a material effect on our financial
condition or operating results, continued adverse economic conditions may
require that we institute protective measures such as financial reviews,
modified customer credit limits and identification of alternative vendors, and
ultimately could materially adversely affect our business.
While we believe that our cash and cash
equivalents, additional cash generated from operations, and available lines of
credit will be sufficient to provide working capital needs for the foreseeable
future, current economic conditions, including the overall performance of the
stock market beginning in 2008, may limit the availability of funds from other
sources if we encounter an extraordinary need for external
capital. These factors also affect us indirectly, to the extent that
they serve to limit our customers’ ability to purchase our systems and
services.
21
Public health concerns, including those
related to the spread of disease such as H1N1, could adversely affect travel and
tourism, which are the primary businesses of many of our customers, and
therefore could adversely affect our business. The global outbreak of
H1N1, or other public health concerns, could potentially reduce travel and
tourism, which could adversely affect demand for hotel rooms and
restaurants. Because hotels and restaurants constitute a substantial
portion of our customer base, our business could be adversely affected if public
health concerns cause a reduction in travel and tourism.
ITEM
6.
|
EXHIBITS
|
|
3(i)
|
Articles
of Incorporation of the Company are incorporated herein by reference to
Exhibit 3 to the Annual Report on Form 10-K of the Company for the Fiscal
Year ended June 30, 1990.
|
|
3(i)(a)
|
Amendment
to Articles of Incorporation is incorporated herein by reference to
Exhibit 3(i) to the Quarterly Report on Form 10-Q of the Company for the
period ended March 31, 1997.
|
|
3(i)(b)
|
Amendment
to Articles of Incorporation is incorporated herein by reference to
Exhibit 3(i) to the Quarterly Report on Form 10-Q of the Company for the
period ended March 31, 1998.
|
|
3(i)(c)
|
Amendment
to Articles of Incorporation is incorporated herein by reference to
Exhibit 3(i) to the Form 8-K filed on November 16,
2007.
|
|
3(ii)
|
By-laws
of the Company, as amended, are incorporated herein by reference to
Exhibit 3(ii) to the Quarterly Report on Form 10-Q of the Company for the
period ended December 31, 2008.
|
|
23
|
Consent
of Houlihan Smith & Co., Inc. (filed herewith).
|
|
31(a)
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14(a)under the
Securities Exchange Act of 1934 (filed herewith).
|
|
31(b)
|
Certification
of Principal Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934 (filed herewith).
|
|
32(a)
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14(b) under the
Securities Exchange Act of 1934 and 18 U.S.C. 1350 (filed
herewith).
|
|
32(b)
|
|
Certification
of Principal Financial Officer pursuant to Rule 13a-14(b) under the
Securities Exchange Act of 1934 and 18 U.S.C. 1350 (filed
herewith).
|
22
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
MICROS SYSTEMS, INC.
|
|
(Registrant)
|
|
Date: November
5, 2009
|
/s/ Gary C. Kaufman
|
Gary
C. Kaufman
|
|
Executive
Vice President,
|
|
Finance
and Administration/
|
|
Chief
Financial Officer
|
|
Date: November
5, 2009
|
/s/ Cynthia A. Russo
|
Cynthia
A. Russo
|
|
Senior
Vice President and
|
|
Corporate
Controller
|
23