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EX-32.A - EXHIBIT 32.A - MICROS SYSTEMS INCv342468_ex32a.htm
EX-32.B - EXHIBIT 32.B - MICROS SYSTEMS INCv342468_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 March 31, 2013

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 ¨

 

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 þ                NO ¨

 

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 March 31, 2013, there were issued and outstanding 78,658,832 shares of Registrant’s Common Stock, $0.025 par value.

 

 
 

 

MICROS SYSTEMS, INC. AND SUBSIDIARIES

 

Form 10-Q

For the three and nine months ended March 31, 2013

 

PART I – FINANCIAL INFORMATION

 

ITEM 1.       FINANCIAL STATEMENTS

 

2
 

 

MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except par value data)

 

   March 31,   June 30, 
   2013   2012 
ASSETS          
Current Assets:          
Cash and cash equivalents  $565,698   $562,786 
Short-term investments   103,654    19,252 
Accounts receivable, net of allowance for doubtful accounts of $30,404 at March 31, 2013 and $31,753 at June 30, 2012   238,728    235,433 
Inventory   54,522    44,278 
Deferred income taxes   14,549    17,004 
Prepaid expenses and other current assets   54,595    37,343 
Total current assets   1,031,746    916,096 
           
Long-term investments   -    34,456 
Property, plant and equipment, net   40,768    35,435 
Deferred income taxes, non-current   50,029    50,326 
Goodwill   436,984    444,117 
Intangible assets, net   39,694    45,024 
Purchased and internally developed software costs, net of accumulated amortization of $90,808 at March 31, 2013 and $87,073 at June 30, 2012   33,188    33,980 
Other assets   6,845    6,586 
Total assets  $1,639,254   $1,566,020 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
Current Liabilities:          
Bank lines of credit  $3,981   $- 
Accounts payable   64,763    69,978 
Accrued expenses and other current liabilities   147,271    174,214 
Income taxes payable   10,725    1,788 
Deferred revenue   201,452    169,989 
Total current liabilities   428,192    415,969 
           
Income taxes payable, non-current   33,443    34,722 
Deferred income taxes, non-current   2,645    2,554 
Other non-current liabilities   15,586    16,644 
Total Liabilities   479,866    469,889 
           
Commitments and contingencies (Note 12)          
           
Equity:          
MICROS Systems, Inc. Shareholders' Equity: Common stock, $0.025 par value; authorized 120,000 shares; issued and outstanding 78,659 at March 31, 2013 and 80,309 at June 30, 2012   1,966    2,008 
Capital in excess of par   43,336    107,662 
Retained earnings   1,130,236    1,000,822 
Accumulated other comprehensive loss   (19,290)   (17,847)
Total MICROS Systems, Inc. shareholders' equity   1,156,248    1,092,645 
Noncontrolling interest   3,140    3,486 
Total equity   1,159,388    1,096,131 
           
Total liabilities and shareholders' equity  $1,639,254   $1,566,020 

 

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   Nine Months Ended 
   March 31,   March 31, 
   2013   2012   2013   2012 
                 
Revenue:                    
Hardware  $64,523   $63,045   $195,527   $168,881 
Software   36,821    37,577    106,346    105,402 
Services   213,761    177,422    637,603    530,722 
Total revenue   315,105    278,044    939,476    805,005 
                     
Cost of sales:                    
Hardware   41,514    40,187    127,867    106,988 
Software   5,813    5,838    16,434    14,991 
Services   102,290    79,484    304,308    233,754 
Total cost of sales   149,617    125,509    448,609    355,733 
                     
Gross margin   165,488    152,535    490,867    449,272 
                     
Selling, general and administrative expenses   83,175    79,384    248,073    236,769 
Research and development expenses   18,460    13,681    53,116    37,494 
Depreciation and amortization   5,702    3,523    16,748    11,383 
Total operating expenses   107,337    96,588    317,937    285,646 
                     
Income from operations   58,151    55,947    172,930    163,626 
                     
Non-operating income (expense):                    
Interest income   943    1,765    3,513    5,614 
Interest expense   (24)   (160)   (290)   (429)
Other income, net   645    6    3,175    203 
Total non-operating income, net   1,564    1,611    6,398    5,388 
                     
Income before taxes   59,715    57,558    179,328    169,014 
Income tax provision   15,370    14,102    49,627    49,992 
Net income   44,345    43,456    129,701    119,022 
Less:  Net income attributable to noncontrolling interest   (81)   (209)   (287)   (258)
Net income attributable to MICROS Systems, Inc.  $44,264   $43,247   $129,414   $118,764 
                     
Net income per share attributable to MICROS Systems, Inc. common shareholders:                    
Basic  $0.56   $0.54   $1.62   $1.48 
Diluted  $0.55   $0.53   $1.59   $1.45 
                     
Weighted-average number of shares outstanding:                    
Basic   79,050    80,123    79,695    80,283 
Diluted   80,502    82,008    81,272    82,127 

 

The details of total other-than-temporary impairment losses ("OTTI") of long-term investments included in other non-operating income (expense) (1):

 

   Three Months Ended   Nine Months Ended 
   March 31,   March 31, 
(in thousands)  2013   2012   2013   2012 
                     
Credit based OTTI recognized in non-operating income/expense  $-   $-   $600   $- 

 

(1) 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 COMPREHENSIVE INCOME

(Unaudited, in thousands)

 

   Three Months Ended 
   March 31, 
   2013   2012 
         
Net income  $44,345   $43,456 
Other comprehensive income (loss), net of taxes:          
Foreign currency translation adjustments, net of tax of $0   (26,713)   17,701 
Change in unrealized losses on long-term investments, net of taxes of $0 and $219   -    356 
Total other comprehensive (loss) income, net of taxes   (26,713)   18,057 
           
Comprehensive income   17,632    61,513 
           
Comprehensive income attributable to noncontrolling interest   (47)   (304)
           
Comprehensive income attributable to MICROS Systems, Inc.  $17,585   $61,209 

 

   Nine Months Ended 
   March 31, 
   2013   2012 
         
Net income  $129,701   $119,022 
Other comprehensive income (loss), net of taxes:          
Foreign currency translation adjustments, net of tax of $0   (4,110)   (40,819)
Change in unrealized losses on long-term investments, net of taxes (benefits) of $1,652 and ($310)   2,683    (504)
Total other comprehensive loss, net of taxes   (1,427)   (41,323)
           
Comprehensive income   128,274    77,699 
           
Comprehensive (income) loss attributable to noncontrolling interest   (303)   194 
           
Comprehensive income attributable to MICROS Systems, Inc.  $127,971   $77,893 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

5
 

 

MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

   Nine Months Ended 
   March 31, 
   2013   2012 
         
Net cash flows provided by operating activities  $139,895   $131,622 
           
Cash flows from investing activities:          
Proceeds from maturities of investments   24,685    108,372 
Proceeds from sales of auction rate securities   42,119    - 
Purchases of investments   (108,423)   (78,671)
Purchases of property, plant and equipment   (15,692)   (13,418)
Internally developed software costs   (3,398)   (5,870)
Net cash paid for acquisitions   (367)   (593)
Other   68    (51)
Net cash flows (used in) provided by investing activities   (61,008)   9,769 
           
Cash flows from financing activities:          
Repurchases of common stock   (90,887)   (53,652)
Proceeds from stock option exercises   7,326    12,096 
Proceed from advance on line of credit   4,014    - 
Realized tax benefits from stock option exercises   3,069    4,884 
Cash paid for acquisition of non-controlling interest   (846)   (4,212)
Other   (70)   (93)
Net cash flows used in financing activities   (77,394)   (40,977)
           
Effect of exchange rate changes on cash and cash equivalents   1,419    (27,025)
           
Net increase in cash and cash equivalents   2,912    73,389 
           
Cash and cash equivalents at beginning of period   562,786    661,259 
Cash and cash equivalents at end of period  $565,698   $734,648 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

6
 

 

MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' 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 (Loss)   Interest   Total 
Balance, June 30, 2012   80,309    2,008    107,662    1,000,822    (17,847)   3,486    1,096,131 
Net income   -    -    -    129,414    -    287    129,701 
Foreign currency translation adjustments,
net of tax of $0
   -    -    -    -    (4,126)   16    (4,110)
Changes in unrealized losses on long-term investments, net of taxes of $1,652   -    -    -    -    2,683    -    2,683 
Acquisition of non-controlling interest   -    -    (197)   -    -    (649)   (846)
Share-based compensation   -    -    16,266    -    -    -    16,266 
Stock issued upon exercise of options   407    9    7,317    -    -    -    7,326 
Repurchases of stock   (2,057)   (51)   (90,836)   -    -    -    (90,887)
Income tax benefit from options exercised   -    -    3,124    -    -    -    3,124 
Balance, March 31, 2013   78,659   $1,966   $43,336   $1,130,236   $(19,290)  $3,140   $1,159,388 

 

   MICROS Systems, Inc. Shareholders         
                   Accumulated         
           Capital       Other   Non-     
   Common Stock   in Excess   Retained   Comprehensive   controlling     
   Shares   Amount   of Par   Earnings   Income (Loss)   Interest   Total 
Balance, June 30, 2011   80,805    2,020    132,529    833,839    48,323    6,540    1,023,251 
Net income   -    -    -    118,764    -    258    119,022 
Foreign currency translation adjustments, net of tax of $0   -    -    -    -    (40,367)   (452)   (40,819)
Changes in unrealized losses on long-term investments, net of tax benefits of $310   -    -    -    -    (504)   -    (504)
Acquisition of noncontrolling interest   -    -    (1,797)   -    -    (2,632)   (4,429)
Share-based compensation   -    -    12,549    -    -    -    12,549 
Stock issued upon exercise of options   666    16    12,080    -    -    -    12,096 
Repurchases of stock   (1,178)   (29)   (53,623)   -    -    -    (53,652)
Income tax benefit from options exercised   -    -    5,096    -    -    -    5,096 
Balance, March 31, 2012   80,293   $2,007   $106,834   $952,603   $7,452   $3,714   $1,072,610 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

7
 

 

MICROS SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED 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 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 (“SEC”). Accordingly, they do not include all disclosures required by U.S. generally accepted accounting principles for complete financial statements. 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, 2012.

 

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 and nine months ended March 31, 2013 are not necessarily indicative of the results to be expected for the full year or any future periods.

 

2.INVENTORY

The following table provides information on the components of inventory:

 

(in thousands)  March 31,
2013
   June 30,
2012
 
Raw materials  $1,813   $1,427 
Finished goods   52,709    42,851 
Total inventory  $54,522   $44,278 

 

3.FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Short-term and long-term investments consist of the following:

 

   As of March 31, 2013   As of June 30, 2012 
(in thousands)  Amortized
Cost Basis
   Aggregate
Fair Value
   Amortized
Cost Basis
   Aggregate
Fair Value
 
Time deposit – international  $25,006   $25,006   $19,419   $19,419 
Time deposit - domestic   33,201    33,201    0    0 
U.S. government debt securities   45,447    45,447    0    0 
Auction rate securities   0    0    52,625    34,289 
Total investments  $103,654   $103,654   $72,044   $53,708 

 

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). 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.
·Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; inputs that are derived principally from or corroborated by observable market data or other means.
·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 following table provides information regarding the financial assets accounted for at fair value and the type of inputs used to value the assets:

 

8
 

 

(in thousands)  Level 1   Level 2   Level 3   Total 
Balance, March 31, 2013:                    
Short-term investments:                    
Time deposit – international  $0   $25,006   $0   $25,006 
Time deposit – domestic   0    33,201    0    33,201 
U.S. government debt securities   45,447    0    0    45,447 
Total investments  $45,447   $58,207   $0   $103,654 
Balance, June 30, 2012:                    
Short-term and long-term investments:                    
Time deposit – international  $0   $19,419   $0   $19,419 
Auction rate securities   0    0    34,289    34,289 
Total investments  $0   $19,419   $34,289   $53,708 

 

At March 31, 2013 and June 30, 2012, the Company’s investments, other than the Company’s investment in auction rate securities at June 30, 2012, were recognized at fair value determined based upon observable input information provided by the Company’s pricing service vendors for identical or similar assets. For these investments, cost approximated fair value. During the three and nine months ended March 31, 2013 and 2012, the Company did not recognize any gains or losses on its investments other than those related to the Company’s investments in auction rate securities. See “Auction Rate Securities” below for further discussion on the valuation of the Company’s investments in auction rate securities.

 

AUCTION RATE SECURITIES

During the three and nine months ended March 31, 2013, the Company sold its remaining holdings of auction rate securities, which had cost bases of approximately $6.0 million and $52.6 million, respectively, and carrying values of approximately $5.4 million and $38.0 million, respectively. As a result of the transactions, the Company recognized a gain of approximately $4.1 million for the nine months ended March 31, 2013. The auction rate securities were the Company’s only assets that were previously valued on the basis of Level 3 inputs.

 

Information relating to the sale of auction rate securities during the three and nine month periods ended March 31, 2013 and 2012 is set forth below:

 

   Three Months Ended   Nine months ended 
   March 31,   March 31, 
(in thousands)  2013   2012   2013   2012 
Original cost, par value  $6,000   $0   $52,625   $0 
Impairment losses previously recorded in:                    
Consolidated statement of operations   (600)   0    (14,600)   0 
Carrying value   5,400    0    38,025    0 
Proceeds from sales   5,400    0    42,119    0 
Gain from sales recorded in consolidated statement of operations  $0   $0   $4,094   $0 

 

The following table contains a reconciliation of changes in the fair value of auction rate securities, and the related unrealized losses for the nine months ended March 31, 2013 and 2012:

 

(in thousands)  Cost   Temporary
Impairment
Loss (1)
   OTTI –
Non-Credit
Loss (1)
   OTTI –
Credit
Loss (2)
   Fair Value 
Balance, June 30, 2012  $52,625   $(4,336)  $0   $(14,000)  $34,289 
Change in losses related to investments   0    (3)   0    0    (3)
Balance, September 30, 2012   52,625    (4,339)   0    (14,000)   34,286 
Change in losses related to investments   0    515    0    (600)   (85)
Changes in losses related to sale   (46,625)   3,824    0    14,000    (28,801)
Balance, December 31, 2012   6,000    0    0    (600)   5,400 
Changes in losses related to sale   (6,000)   0    0    600    (5,400)
Balance, March 31, 2013  $0   $0   $0   $0   $0 

 

9
 

 

(in thousands)  Cost   Temporary
Impairment
Loss (1)
   OTTI –
Non-Credit
Loss (1)
   OTTI –
Credit
Loss (2)
   Fair Value 
Balance, June 30, 2011  $57,625   $(6,280)  $0   $(10,000)  $41,345 
Changes in losses related to investments   0    (1,492)   0    0    (1,492)
Balance, September 30, 2011   57,625    (7,772)   0    (10,000)   39,853 
Changes in losses related to investments   0    103    0    0    103 
Balance, December 31, 2011   57,625    (7,669)   0    (10,000)   39,956 
Changes in losses related to investments   0    575    0    0    575 
Balance, March 31, 2012  $57,625   $(7,094)  $0   $(10,000)  $40,531 

 

(1)OTTI means “other-than-temporary impairment.” The amounts in this column are recorded, net of tax, in the accumulated other comprehensive income (loss) component of stockholders’ equity.
(2)Increases in the amounts in this column are recorded in the condensed consolidated statement of operations.

 

4.GOODWILL AND INTANGIBLE ASSETS

During the three months ended September 30, 2012, the Company determined, based on its assessment of qualitative factors as of July 1, 2012, the date of the annual goodwill impairment test, that none of its reporting units met the “more likely than not” threshold (i.e., it is more likely than not that the fair values of the Company’s reporting units are less than their respective carrying values) requiring that the Company perform the first step of the two-step goodwill impairment test. Accordingly, the Company did not perform any further analysis.

 

During the three months ended September 30, 2012, the Company also completed its annual impairment tests on its indefinite-lived trademarks as of July 1, 2012. Based on its annual impairment test results, the Company determined that no impairment losses occurred with respect to its indefinite-lived trademarks as of July 1, 2012.

 

Subsequent to the annual impairment analysis date of July 1, 2012, there have been no events or circumstances that caused the Company to determine that it is more likely than not that the fair values of the Company’s reporting units are less than their respective carrying values. Subsequent to July 1, 2012, there have not been any events or circumstances that caused the Company to determine that it is more likely than not that its indefinite-lived trademarks have been impaired.

 

5.CREDIT AGREEMENTS

The Company has two credit agreements (the “Credit Agreements”) that, through July 31, 2013, provide an aggregate $50.0 million multi-currency committed line of credit. The lenders under the Credit Agreements are Bank of America, N.A., Wells Fargo N.A. and US Bank N.A. (“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 a number of the Company’s U.S. subsidiaries as well as inventory and receivables located in the U.S.

 

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 any applicable cure period, 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 March 31, 2013, the Company had approximately $4.0 million outstanding under the Credit Agreements and has applied approximately $0.6 million to guarantees. A total of approximately $45.4 million was available for future borrowings as of March 31, 2013.

 

The Company also has a credit relationship with a European bank in the amount of EUR 1.0 million (approximately $1.3 million at the March 31, 2013 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 March 31, 2013, there were no balances outstanding on this credit facility, but approximately EUR 0.5 million (approximately $0.6 million at the March 31, 2013 exchange rate) of the credit facility has been used for guarantees.

 

10
 

 

As of March 31, 2013, the Company had an aggregate borrowing capacity of approximately $46.1 million available under all of the credit facilities described above.

 

6.SHARE-BASED COMPENSATION

The non-cash share-based compensation expenses included in the condensed consolidated statements of operations are as follows:

 

   Three Months Ended
March 31,
   Nine months ended
March 31,
 
(in thousands)  2013   2012   2013   2012 
Selling, general and administrative  $4,161   $3,446   $14,766   $11,528 
Research and development   490    264    1,256    878 
Cost of sales   89    58    244    143 
Total non-cash share-based compensation expense   4,740    3,768    16,266    12,549 
Income tax benefit   (1,570)   (1,441)   (5,225)   (4,344)
Total non-cash share-based compensation expense, net of tax benefit  $3,170   $2,327   $11,041   $8,205 
Impact on diluted net income per share attributable to MICROS Systems, Inc. common shareholders  $0.04   $0.03   $0.14   $0.10 

 

No non-cash share-based compensation expense has been capitalized for the three and nine months ended March 31, 2013 and 2012. As of March 31, 2013, there was approximately $32.4 million (net of estimated forfeitures) in non-cash share-based compensation expense related to non-vested awards that is expected to be recognized in the Company’s consolidated statements of operations over a weighted-average period of 2.0 years.

 

7.Net income per share attributable to MICROS Systems, Inc. common shareholders

Basic net income per share attributable to MICROS Systems, Inc. common shareholders is computed by dividing net income available to MICROS Systems, Inc. by the weighted-average number of shares outstanding. Diluted net income per share attributable to MICROS Systems, Inc. common shareholders includes additional dilution from shares of common stock issuable upon the exercise of outstanding stock options.

 

The following table provides a reconciliation of the net income available to MICROS Systems, Inc. to basic and diluted net income per share:

 

   Three Months Ended
March 31,
   Nine months ended
March 31,
 
(in thousands, except per share data)  2013   2012   2013   2012 
Net income attributable to MICROS Systems, Inc.  $44,264   $43,247   $129,414   $118,764 
                     
Weighted-average common shares outstanding   79,050    80,123    79,695    80,283 
Dilutive effect of outstanding stock options   1,452    1,885    1,577    1,844 
Weighted-average common shares outstanding assuming dilution   80,502    82,008    81,272    82,127 
                     
Basic net income per share attributable to MICROS Systems, Inc. common shareholders  $0.56   $0.54   $1.62   $1.48 
Diluted net income per share attributable to MICROS Systems, Inc. common shareholders  $0.55   $0.53   $1.59   $1.45 
                     
Anti-dilutive weighted shares excluded from reconciliation   2,963    1,337    2,306    1,544 

 

Results for the three months ended March 31, 2013 and 2012 include approximately $4.7 million ($3.2 million, net of tax) and $3.8 million ($2.3 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 attributable to MICROS Systems, Inc. common shareholders by $0.04 and $0.03 for the three months ended March 31, 2013 and 2012, respectively.

 

11
 

 

Results for the nine months ended March 31, 2013 and 2012 include approximately $16.3 million ($11.0 million, net of tax) and $12.5 million ($8.2 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 attributable to MICROS Systems, Inc. common shareholders by $0.14 and $0.10 for the nine months ended March 31, 2013 and 2012, respectively.

 

8.INCOME TAXES

The effective tax rate for the three months ended March 31, 2013 and 2012 was 25.7% and 24.5%, respectively. The increase in effective tax rate for the three months ended March 31, 2013 compared to the same period last year was primarily attributable to an increase in taxes associated with changes in the Company’s uncertain tax positions, partially offset by a decrease in taxes due to changes in earnings mix among jurisdictions and nondeductible compensation expense. The Company has recognized an increase in net unrecognized tax benefits for the three months ended March 31, 2013 as compared to the same period last year, which resulted in an increase in income tax expense of approximately $2.7 million and an increase in the effective tax rate of 4.7%. This increase was primarily due to the reduction of the recognition of expiration of statutes of limitation during the three months ended March 31, 2013 as compared to the same period last year.

 

The effective tax rate for the nine months ended March 31, 2013 and 2012 was 27.7% and 29.6%, respectively. The decrease in effective tax rate for the nine months ended March 31, 2013 compared to the same period last year was primarily attributable to a decrease in taxes associated with changes in the Company’s earnings mix among jurisdictions and nondeductible compensation expense, partially offset by a tax rate decrease in the U.K. which reduced the carrying value of the Company’s deferred tax assets. The Company has recognized a decrease in net unrecognized tax benefits for the nine months ended March 31, 2013 as compared to the same period last year, which resulted in a reduction in income tax expense of approximately $3.1 million and a reduction in the effective tax rate of 1.8%. This reduction was primarily due to favorable settlements with tax authorities and the expiration of statutes of limitation recognized during the three months ended September 30, 2012.

 

The Company estimates that within the next 12 months, its unrecognized income tax benefits will decrease by between approximately $4.6 million and approximately $6.6 million due to the expiration of statutes of limitations and settlements with tax authorities. However, audit outcomes and the timing of audit settlements are subject to significant uncertainty. Over the next 12 months, it is reasonably possible that the Company’s tax positions will continue to generate liabilities related to uncertain tax positions.

 

The Company currently has no plans to repatriate to the U.S. its cumulative unremitted foreign earnings, as it intends to permanently reinvest such earnings internationally. If the Company changes its strategy in the future and repatriates such funds, the amount of any taxes, which could be significant, and the application of any tax credits, would be determined based on the appropriate jurisdictional income tax laws at the time of such repatriation. Due to the extent of uncertainty as to which remittance structure would be used should a decision be made in the future to repatriate, the availability and the complexity of calculating foreign tax credits, and the implications of indirect taxes, including withholding taxes, determination of the unrecognized deferred income tax liability related to these unremitted earnings is not practicable.

 

The Company’s income tax returns are no longer subject to examination by the U.S. tax authorities for tax years ending before June 2011, by the U.K. tax authorities for tax years ending before June 2009, by the German tax authorities for tax years ending before June 2007 and the Irish tax authorities for tax years ending before June 2009. Certain periods prior to these dates, however, could be subject to adjustment as a result of the competent authority process, or due to the impact of items such as carryback or carryforward claims.

 

9.RECENT ACCOUNTING GUIDANCE

 

Recently Adopted Accounting Pronouncements

On July 1, 2012, the Company adopted Financial Accounting Standards Board (“FASB”) guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in stockholders’ equity. The new guidance requires that changes in other comprehensive income be presented either in a single continuous statement of net income and other comprehensive income or in two separate but consecutive statements.  In accordance with the new guidance, the Company has presented two separate but consecutive statements which include the components of net income and other comprehensive income. The adoption of this new guidance did not have a material impact on the Company’s condensed consolidated financial statements.

 

12
 

 

Recent Accounting Guidance Not Yet Adopted

In July 2012, the FASB issued revised guidance on how an entity tests indefinite-lived intangible assets for impairment. Under the new guidance, an entity is no longer required to calculate the fair value of the indefinite-lived intangible assets and perform the quantitative impairment test unless the entity determines, based on a qualitative assessment, that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. This revised guidance is effective for the Company beginning in its fiscal year 2014. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

 

In February 2013, the FASB issued guidance on disclosure requirements for items reclassified out of Accumulated Other Comprehensive Income (“AOCI”.) This new guidance requires entities to present (either on the face of the income statement or in the notes) the effects on the line items of the income statement for amounts reclassified out of AOCI. The new guidance will be effective for the Company beginning July 1, 2013. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements other than requiring additional disclosures.

 

In March 2013, the FASB issued guidance on a parent’s accounting for the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a foreign entity. This new guidance requires that the parent release any related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. The new guidance will be effective for the Company beginning July 1, 2014. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

 

10.SEGMENT INFORMATION

The Company is organized and operates in four operating segments: U.S./Canada, Europe, the Pacific Rim, and Latin America regions. The Company has identified U.S./Canada 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./Canada and International segments separately in operating its business, although the products and services are similar for each segment. The Company’s chief operating decision maker is the Company’s Chief Executive Officer.

 

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 that operating segment.

 

A summary of certain financial information regarding the Company’s reportable segments is set forth below:

 

   Three Months Ended
March 31,
   Nine months ended
March 31,
 
(in thousands)  2013   2012   2013   2012 
Revenues (1):                    
U.S./Canada  $135,768   $136,139   $403,342   $402,210 
International   191,664    153,337    573,224    439,865 
Intersegment eliminations (2)   (12,327)   (11,432)   (37,090)   (37,070)
Total revenues  $315,105   $278,044   $939,476   $805,005 
                     
Income before taxes (1):                    
U.S./Canada  $32,050   $31,253   $103,430   $93,094 
International   36,931    34,826    103,569    103,462 
Intersegment eliminations (2)   (9,266)   (8,521)   (27,671)   (27,542)
Total income before taxes  $59,715   $57,558   $179,328   $169,014 

  

13
 

 

   As of 
(in thousands)  March 31,
2013
   June 30,
2012
 
Identifiable assets (3):          
U.S./Canada  $708,732   $724,902 
International   930,522    841,118 
Total identifiable assets  $1,639,254   $1,566,020 

 

(1)Amounts based on the location of the selling entity.
(2)Amounts primarily represent elimination of U.S./Canada and Ireland’s intercompany business.
(3)Amounts based on the physical location of the assets.

 

11.SHAREHOLDERS’ EQUITY

The Company’s Board of Directors periodically authorizes the repurchase of the Company’s common stock, to be purchased from time to time over a specified time period depending on market conditions and other corporate considerations as determined by management. On January 22, 2013, the Company’s Board of Directors authorized the purchase of up to two million additional shares of the Company’s common stock. As of March 31, 2013, approximately 1.6 million additional shares remain available for purchases under the most recent authorization. The following table summarizes the cumulative number of shares purchased under all purchase authorizations. All of the purchased shares were retired and reverted to the status of authorized but unissued shares:

 

(in thousands, except per share data)  Number of
Shares
   Average
Purchase Price
per Share
   Total Purchase
Value
 
Total shares purchased:               
As of June 30, 2012   14,360   $24.24   $348,066 
Three months ended September 30, 2012   276    47.63    13,165 
Three months ended December 31, 2012   920    43.70    40,207 
Three months ended March 31, 2013   861    43.59    37,515 
As of March 31, 2013   16,417   $26.74   $438,953 

 

On April 23, 2013, the Company’s Board of Directors authorized the purchase of up to $225 million of the Company’s common stock, to be purchased from time to time over the ensuing three years depending on market conditions and other corporate considerations as determined by management.

 

12.COMMITMENTS AND CONTINGENCIES

On May 22, 2008, a jury returned verdicts against the Company in the consolidated actions of Roth Cash Register v. MICROS Systems, Inc., et al. (the “Roth Matter”) and Shenango Systems Solutions v. MICROS Systems, Inc., et al. (the “Shenango Matter”). 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. 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. The plaintiffs claimed that, as a result, the Company was liable for, among other things, breach of contract and tortious interference with existing and prospective contractual relationships. In May 2008, the jury returned verdicts against the Company totaling $7.5 million. Both parties appealed the original verdicts on various grounds. On December 30, 2010, the Superior Court of Pennsylvania reversed and remanded the trial court judgment as to $4.5 million of the award and affirmed the trial court judgment as to the remaining $3.0 million of the award. Following the denial of appeals of the Superior Court decision by the Pennsylvania Supreme Court on April 10, 2012, the Company accrued a charge of $3.0 million in its selling, general and administrative expenses. The matter was subsequently remanded to the Court of Common Pleas (the trial court) for further proceedings consistent with the appellate decisions. On June 7, 2012, the Company paid an aggregate of approximately $3.5 million to the two plaintiffs, reflecting all amounts that were determined to be owed to the plaintiff in the Shenango Matter and all amounts that were no longer in dispute and that were payable to the plaintiff in the Roth Matter, including as to each payment (i) interest that had accrued at the statutory rate of 6% per annum, and (ii) certain reductions and offsets that were approved by the Court of Common Pleas. Upon the conclusion of the post-appeal proceedings in the trial court, the Court of Common Pleas entered an order amending the amount of the remaining portion of the judgment in favor of the plaintiff in the Roth Matter from $4.5 million to approximately $2.8 million. The Company has appealed the amended judgment.

 

The Company is and has been involved in legal proceedings arising in the normal course of business, and 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, financial position, or cash flows. However, litigation is subject to many uncertainties, and the outcome of litigation is not predictable with assurance. An adverse outcome in current or future litigation could have a material adverse effect on the Company’s business, financial condition, results of operations, and liquidity.

 

14
 

 

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./Canada, Europe, the Pacific Rim, and Latin America regions. We have identified our U.S./Canada 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./Canada and international segments separately in operating our business, although the products and services are similar for each segment.

 

We have been adversely impacted by the current global economic uncertainty. We believe that cautious consumer spending, coupled with difficulties in obtaining credit, continue to negatively impact our customers’ abilities to acquire or open new hospitality and retail venues, and also limit customers’ willingness and ability to make certain capital expenditures on new systems and system upgrades. In light of these challenging and uncertain conditions, we continue to review the timing of certain discretionary expenses, and scrutinize carefully and cautiously the expansion of our workforce.

 

FORWARD-LOOKING STATEMENTS

The following management’s 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. Certain 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”). Our actual results may differ materially from those anticipated in these forward-looking statements.

 

Examples of such forward-looking statements in this Quarter Report on Form 10-Q include the following:

 

·our expectations regarding the effects of current economic conditions on our customers, our distributors, and our business generally;
·our expectations about the adequacy of our cash flows and our available borrowing capacity to meet our working capital needs, and our ability to raise additional funds if and when needed;
·our expectations regarding the impact of recently adopted accounting standards;
·our expectations regarding executing a new line of credit to replace the current line of credit;
·our expectations regarding future expenditures on property, plant, and equipment.
·our belief that, except as noted, existing legal claims or proceedings will not have a material adverse effect on our results of operations or financial position;
·our intention to continue to evaluate the need to invest in financial instruments designed to protect against interest rate fluctuations;
·our expectations regarding effective tax rates in future periods;
·our expectations regarding future reductions in U.K. tax rates; and
·our statements regarding the effects of foreign currency rate fluctuations (in particular, the Euro and British Pound Sterling) and changes in interest rates on our financial performance.

 

RESULTS OF OPERATIONS

The following discussion of our results of operations for the three- and nine-month periods ended March 31, 2013 includes, for the 2013 periods, the results of operations of Torex Retail Holdings Ltd. (“Torex”), a company we acquired on May 31, 2012.

 

15
 

  

 

Revenue:

 

Three Months Ended March 31, 2013:

 

The following table provides information regarding sales mix by reportable segments for the three months ended March 31, 2013 and 2012 (amounts are net of intersegment eliminations, and are allocated to the particular segment based on the location of the customer):

 

   Three Months Ended March 31, 
   U.S./Canada   International   Total 
(in thousands)  2013   2012   2013   2012   2013   2012 
Hardware  $27,937   $30,759   $36,586   $32,286   $64,523   $63,045 
Software   12,543    15,007    24,278    22,570    36,821    37,577 
Service   82,463    73,619    131,298    103,803    213,761    177,422 
Total Revenue  $122,943   $119,385   $192,162   $158,659   $315,105   $278,044 

 

The following table provides information regarding the total sales mix as a percent of total revenue:

 

   Three Months Ended
March 31,
 
(in thousands)  2013      2012 
Hardware   20.5%   22.7%
Software   11.7%   13.5%
Service   67.8%   63.8%
Total   100.0%   100.0%

 

For the three months ended March 31, 2013, total revenue was approximately $315.1 million, an increase of approximately $37.1 million, or 13.3% compared to the same period last year. The revenue increase reflects the following factors:

·Hardware and service revenue increased by 2.3% and 20.5%, respectively, compared to the same period last year. Software revenue decreased by 2.0% compared to the same period last year.
·The increases for hardware and service revenue were largely attributable to the additional revenue generated by Torex. The additional revenue generated by Torex was approximately $48.1 million, which was comprised of hardware revenue of approximately $12.0 million, software revenue of approximately $3.1 million and services revenue of approximately $33.0 million.
·The decrease in software revenue was primarily due to a decrease in sale of our internally developed restaurant and organic retail software products compared to the same period last year. This decrease was partially offset by the additional software revenue generated by Torex and an increase in sale of Opera suite software products.
·Current global economic uncertainty continued to have an adverse impact on revenues.
·The unfavorable foreign currency exchange rate fluctuations, primarily for the British Pound Sterling and Euro against the U.S. dollar, negatively impacted total revenue by approximately $2.3 million.

 

The International segment revenue for the three months ended March 31, 2013 increased by approximately $33.5 million, an increase of 21.1% compared to the same period last year. The revenue increase reflects the following factors:

·Hardware, software and service revenue increased by 13.3%, 7.6% and 26.5%, respectively, compared to the same period last year. These increases are largely due to the additional revenues generated by Torex.
·The unfavorable foreign currency exchange rate fluctuations, primarily for the British Pound Sterling and Euro against the U.S. dollar, negatively impacted total revenue by approximately $2.3 million.

 

16
 

 

U.S./Canada segment revenue for the three months ended March 31, 2013 increased approximately $3.5 million, an increase of 2.9% compared to the same period last year. The revenue increase reflects the following factors:

·Hardware and software revenue decreased by 9.2% and 16.4%, respectively, compared to the same period last year. Service revenue increased by 12.0% compared to the same period last year.
·The decrease in hardware revenue is primarily due to a decrease in the sale of our Workstation products, partially offset by an increase in sale of third party hardware products. The decrease in software revenue is primarily due to decreases in the sale of our internally developed restaurant and retail software products.
·The increase in service revenue is primarily due to increases in maintenance services, partially offset by a decrease in web-based market services.

 

Nine months ended March 31, 2013:

 

The following table provides information regarding sales mix by reportable segments for the nine months ended March 31, 2013 and 2012 (amounts are net of intersegment eliminations, and are allocated to the particular segment based on the location of the customer):

 

   Nine months ended March 31, 
   U.S./Canada   International   Total 
(in thousands)  2013   2012   2013   2012   2013   2012 
Hardware  $83,577   $78,633   $111,950   $90,248   $195,527   $168,881 
Software   36,570    38,550    69,776    66,852    106,346    105,402 
Service   247,687    232,766    389,916    297,956    637,603    530,722 
Total Revenue  $367,834   $349,949   $571,642   $455,056   $939,476   $805,005 

 

The following table provides information regarding the total sales mix as a percent of total revenue:

 

   Nine months ended
March 31,
 
(in thousands)  2013      2012 
Hardware   20.8%   21.0%
Software   11.3%   13.1%
Service   67.9%   65.9%
Total   100.0%   100.0%

 

For the nine months ended March 31, 2013, total revenue was approximately $939.5 million, an increase of approximately $134.5 million, or 16.7% compared to the same period last year. The revenue increase reflects the following factors:

·Hardware, software and service revenue increased by 15.8%, 0.9% and 20.1%, respectively, compared to the same period last year. These increases were largely attributable to the approximately $144.1 million of revenue generated by Torex, which was comprised of hardware revenue of approximately $35.8 million, software revenue of approximately $7.9 million and services revenue of approximately $100.4 million.
·Current global economic uncertainty continued to have an adverse impact on revenues.
·The unfavorable foreign currency exchange rate fluctuations, primarily for the Euro and Brazilian Real against the U.S. dollar, negatively impacted total revenue by approximately $11.4 million.

 

The International segment revenue for the nine months ended March 31, 2013 increased by approximately $116.6 million, an increase of 25.6% compared to the same period last year. The revenue increase reflects the following factors:

·Hardware, software and service revenue increased by 24.0%, 4.4% and 30.9%, respectively, compared to the same period last year. These increases are largely attributable to the additional revenues generated by Torex.
·The unfavorable foreign currency exchange rate fluctuations, primarily for the Euro and Brazilian Real against the U.S. dollar, negatively impacted total revenue by approximately $11.4 million.

 

17
 

 

U.S./Canada segment revenue for the nine months ended March 31, 2013 increased approximately $17.9 million, an increase of 5.1% compared to the same period last year. The revenue increase reflects the following factors:

·Hardware and service revenue increased by 6.3% and 6.4%, respectively, compared to the same period last year. Software revenue decreased by 5.1% compared to the same period last year.
·The increase in hardware revenue was primarily due to an increase in sales of third party computer equipment to our retail customers (primarily during the three months ended September 30, 2012), partially offset by a decrease in sales of our Workstation products.
·The decrease in software revenue was due to decreased sales of our internally developed restaurant software products, compared to the same period last year.
·The increase in service revenue was primarily due to increases in maintenance services, partially offset by a decrease in our professional services and web-based marketing services.

 

Cost of Sales:

 

Three Months Ended March 31, 2013:

 

The following table provides information regarding our cost of sales:

 

   Three Months Ended March 31, 
   2013   2012 
(in thousands)  Cost 
of Sales
   % of Related
Revenue
   Cost 
of Sales
   % of Related
Revenue
 
Hardware  $41,514    64.3%  $40,187    63.7%
Software   5,813    15.8%   5,838    15.5%
Service   102,290    47.9%   79,484    44.8%
Total Cost of Sales  $149,617    47.5%  $125,509    45.1%

 

For the three months ended March 31, 2013 and 2012, cost of sales as a percent of revenue was 47.5% and 45.1%, respectively. Hardware cost of sales as a percent of hardware revenue for the three months ended March 31, 2013 increased 0.6% compared to the same period last year. Software cost of sales as a percent of software revenue for the three months ended March 31, 2013 increased approximately 0.3% compared to the same period last year. The increases primarily reflect margins generated by Torex. When compared to our other businesses, Torex generally has higher sales of non-proprietary hardware, and realizes lower margin from its products. These increases were partially offset by decreases in hardware and software cost of sales for our other businesses when compared to the same period last year.

 

Service costs as a percent of service revenue for the three months ended March 31, 2013 increased 3.1% compared to the same period last year. This increase primarily reflects margins generated by Torex. When compared to our other businesses, Torex generally realizes lower margins from its services. The increase also reflects an unfavorable product mix between professional services and maintenance services. MICROS generally realizes higher margins on professional services than it does on maintenance services.

 

Nine months ended March 31, 2013:

 

The following table provides information regarding our cost of sales:

 

   Nine months ended March 31, 
   2013   2012 
(in thousands)  Cost 
of Sales
   % of Related
Revenue
   Cost 
of Sales
   % of Related
Revenue
 
Hardware  $127,867    65.4%  $106,988    63.4%
Software   16,434    15.5%   14,991    14.2%
Service   304,308    47.7%   233,754    44.0%
Total Cost of Sales  $448,609    47.8%  $355,733    44.2%

 

18
 

 

For the nine months ended March 31, 2013 and 2012, cost of sales as a percent of revenue were 47.8% and 44.2%, respectively. Hardware cost of sales as a percent of hardware revenue for the nine months ended March 31, 2013 increased 2.0% compared to the same period last year. Software cost of sales as a percent of software revenue for the nine months ended March 31, 2013 increased approximately 1.3% compared to the same period last year. Service costs as a percent of service revenue for the nine months ended March 31, 2013 increased 3.7% compared to the same period last year. These increases primarily reflect margins generated by Torex. When compared to our other businesses, Torex generally has higher sales of non-proprietary hardware, and realizes lower margins from its products and services. The increases also reflect an unfavorable mix between professional services and maintenance services. MICROS generally realizes higher margins on professional services than it does on maintenance services.

 

Selling, General and Administrative (“SG&A”) Expenses:

SG&A expenses, as a percentage of revenue, for the three months ended March 31, 2013, were 26.4%, a decrease of 2.2% compared to the same period last year. SG&A expenses, as a percentage of revenue, for the nine months ended March 31, 2013, were 26.4%, a decrease of 3.0% compared to the same period last year. The decreases in both 2013 periods were primarily due to a decrease in incentive based compensation expense as compared to the same periods last year.

 

Research and Development (“R&D”) Expenses:

R&D expenses consisted primarily of labor costs less capitalized software development costs. The following table provides information regarding our R&D expenses:

 

   Three Months Ended
March 31,
   Nine months ended
March 31,
 
(in thousands)  2013   2012   2013   2012 
R&D labor and other costs  $19,633   $15,602   $56,514   $43,364 
Capitalized software development costs   (1,173)   (1,921)   (3,398)   (5,870)
Total R&D expenses  $18,460   $13,681   $53,116   $37,494 
% of Revenue   5.9%   4.9%   5.7%   4.7%

 

The increase in total R&D expenses is primarily related to additional R&D expenses associated with Torex. The decreases in capitalized software development costs are primarily related to the completion of the development of C3G, our supply chain and life cycle management tool software, during the three months ended September 30, 2012, and XBR Ingenium, our next generation loss prevention reporting and business analytics solution, during the three months ended March 31, 2013.

 

Depreciation and Amortization Expenses:

Depreciation and amortization expenses for the three months ended March 31, 2013 were approximately $5.7 million, an increase of approximately $2.2 million compared to the same period last year. Depreciation and amortization expenses for the nine months ended March 31, 2013 were approximately $16.7 million, an increase of approximately $5.4 million compared to the same period last year. The increases in both 2013 periods are primarily due to amortization of intangible assets acquired in connection with our acquisition of Torex.

 

Share-Based Compensation Expenses:

The following table provides information regarding the allocation of non-cash share-based compensation expense to SG&A expense, R&D expense and cost of sales, and the impact of the expense on diluted net income per share attributable to MICROS common shareholders:

 

   Three Months Ended
March 31,
   Nine months ended
March 31,
 
(in thousands)  2013   2012   2013   2012 
Selling, general and administrative  $4,161   $3,446   $14,766   $11,528 
Research and development   490    264    1,256    878 
Cost of sales   89    58    244    143 
Total non-cash share-based compensation expense   4,740    3,768    16,266    12,549 
Income tax benefit   (1,570)   (1,441)   (5,225)   (4,344)
Total non-cash share-based compensation expense, net of tax benefit  $3,170   $2,327   $11,041   $8,205 
Impact on diluted net income per share attributable to MICROS Systems, Inc. common shareholders  $0.04   $0.03   $0.14   $0.10 

 

19
 

 

As of March 31, 2013, there was approximately $32.4 million (net of estimated forfeitures) in non-cash share-based compensation expense related to non-vested awards that is expected to be recognized in our consolidated statements of operations over a weighted-average period of 2.0 years.

 

Non-operating Income:

Net non-operating income for the three months ended March 31, 2013 and 2012 was approximately $1.6 million. The interest income for the three months ended March 31, 2013 decreased approximately $0.8 million as compared to the same period last year due to lower available funds and lower interest rates during the three months ended March 31, 2013. The reduction in available funds principally reflects our use of available funds to acquire Torex. The decrease in interest income was offset by foreign currency exchange gain for the three months ended March 31, 2013 of approximately $0.7 million, compared to foreign currency exchange loss of approximately $0.3 million for the three months ended March 31, 2012.

 

Net non-operating income for the nine months ended March 31, 2013 was approximately $6.4 million compared to approximately $5.4 million for the same period last year. The increase of approximately $1.0 million was due to an approximately $4.1 million gain on the sale of auction rate securities, offset by lower interest income of approximately $2.1 million, credit based impairment loss of approximately $0.6 million related to the final auction rate security in our portfolio (the security subsequently was sold during the three months ended March 31, 2013 for an amount equal to the fair value of the security), and higher foreign currency exchange losses of approximately $0.3 million. The lower interest income was due to lower available funds, primarily reflecting our use of available funds to acquire Torex, and lower interest rates during the nine months ended March 31, 2013.

 

Income Tax Provisions:

The effective tax rate for the three months ended March 31, 2013 and 2012 was 25.7% and 24.5%, respectively. The increase in effective tax rate for the three months ended March 31, 2013 compared to the same period last year was primarily attributable to an increase in taxes associated with changes in our uncertain tax positions, partially offset by a decrease in taxes due to changes in earnings mix among jurisdictions and nondeductible compensation expense. We have recognized an increase in net unrecognized tax benefits for the three months ended March 31, 2013 as compared to the same period last year, which resulted in an increase in income tax expense of approximately $2.7 million and an increase in the effective tax rate of 4.7%. This increase was primarily due to the reduction of the recognition of expiration of statutes of limitation during the three months ended March 31, 2013 as compared to the same period last year.

 

The effective tax rate for the nine months ended March 31, 2013 and 2012 was 27.7% and 29.6%, respectively. The decrease in effective tax rate for the nine months ended March 31, 2013 compared to the same period last year was primarily attributable to a decrease in taxes associated with changes in our earnings mix among jurisdictions and nondeductible compensation expense, partially offset by a tax rate decrease in the U.K. which reduced the carrying value of our deferred tax assets. We have recognized a decrease in net unrecognized tax benefits for the nine months ended March 31, 2013 as compared to the same period last year, which resulted in a reduction in income tax expense of approximately $3.1 million and a reduction in the effective tax rate of 1.8%. This reduction was primarily due to favorable settlements with tax authorities and the expiration of statutes of limitation recognized during the three months ended September 30, 2012.

 

Based on currently available information, we estimate that the fiscal year 2013 effective tax rate will be approximately between 27% and 28%. We believe that due to earnings fluctuations, changes in the mix of earnings among jurisdictions, 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.

 

We estimate that within the next 12 months, our unrecognized income tax benefits will decrease by between approximately $4.6 million and approximately $6.6 million due to the expiration of statutes of limitations and settlement of issues with tax authorities. However, audit outcomes and the timing of audit settlements are subject to significant uncertainty. Over the next 12 months, it is reasonably possible that our tax positions will continue to generate liabilities related to uncertain tax positions.

 

During our fiscal year 2014 first quarter ending September 30, 2013, we expect reduction of U.K. tax from the current tax rate of 23% to 21% effective April 1, 2014, and a further reduction to 20% effective April 1, 2015. The reduction in rates are expected to result in an increase in income tax expense of approximately $3.4 million for the three months ending September 30, 2013 and for the fiscal year ending June 30, 2014, an increase in the effective tax rate between 6% to 7% for the three months ending September 30, 2013 and an increase in the effective tax rate between 1% to 2% for the fiscal year ending June 30, 2014. The carrying value of our deferred tax assets will be reduced during the period when the rate reductions are enacted.

 

20
 

 

We currently have no plans to repatriate to the U.S. our cumulative unremitted foreign earnings, as we intend to permanently reinvest such earnings internationally. If we change our strategy in the future and repatriate such funds, the amount of any U.S. taxes due on the repatriation of such funds, which could be significant, and the application of any tax credits, would be determined based on the appropriate jurisdictional income tax laws at the time of such repatriation. Due to the extent of uncertainty as to which remittance structure would be used should a decision be made in the future to repatriate, the availability and the complexity of calculating foreign tax credits, and the implications of indirect taxes, including withholding taxes, determination of the unrecognized deferred income tax liability related to these unremitted earnings is not practicable.

 

Our income tax returns are no longer subject to examination by the U.S. tax authorities for tax years ending before June 2011, by the U.K. tax authorities for tax years ending before June 2009, by the German tax authorities for tax years ending before June 2007 and the Irish tax authorities for tax years ending before June 2009. Certain periods prior to these dates, however, could be subject to adjustment as a result of the competent authority process, or due to the impact of items such as carryback or carryforward claims.

 

Recent accounting standards

 

Recently Adopted Accounting Pronouncements

On July 1, 2012, we adopted Financial Accounting Standards Board (“FASB”) guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in stockholders’ equity. The new guidance requires that changes in other comprehensive income be presented either in a single continuous statement of net income and other comprehensive income or in two separate but consecutive statements. In accordance with the new guidance, we have presented two separate but consecutive statements which include the components of net income and other comprehensive income. The adoption of this new guidance did not have a material impact on our condensed consolidated financial statements.

 

Recent Accounting Guidance Not Yet Adopted

In July 2012, the FASB issued revised guidance on how an entity tests indefinite-lived intangible assets for impairment. Under the new guidance, an entity is no longer required to calculate the fair value of the indefinite-lived intangible assets and perform the quantitative impairment test unless the entity determines, based on a qualitative assessment, that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. This revised guidance is effective for us beginning in our fiscal year 2014. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

 

In February 2013, the FASB issued guidance on disclosure requirements for items reclassified out of Accumulated Other Comprehensive Income (“AOCI”.) This new guidance requires entities to present (either on the face of the income statement or in the notes) the effects on the line items of the income statement for amounts reclassified out of AOCI. The new guidance will be effective for us beginning July 1, 2013. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements other than requiring additional disclosures.

 

In March 2013, the FASB issued guidance on a parent’s accounting for the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a foreign entity. This new guidance requires that the parent release any related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. The new guidance will be effective for us beginning July 1, 2014. The adoption of this guidance is not expected to 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 are reasonable under the circumstances. Actual results may differ from these estimates.

 

21
 

 

The following comprise the categories of critical accounting estimates that we used in the preparation of our condensed consolidated financial statements included in this report:

·Revenue recognition;
·Allowance for doubtful accounts;
·Inventory;
·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, 2012 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:

 

   Nine months ended
March 31,
 
(in thousands)  2013   2012 
Net cash provided by (used in):          
Operating activities  $139,895   $131,622 
Investing activities   (61,008)   9,769 
Financing activities   (77,394)   (40,977)

 

Operating activities:

Net cash provided by operating activities for the nine months ended March 31, 2013 increased approximately $8.3 million compared to the nine months ended March 31, 2012. This increase was primarily due to an increase in net income of approximately $10.7 million and improved collections during the nine months ended March 31, 2013 as compared to the nine months ended March 31, 2012. These increases were partially offset by certain unfavorable changes in working capital during the three months ended March 31, 2013 in comparison to the same period last year, including higher interim income tax payments and higher purchases of inventory.

 

Investing activities:

Net cash used in investing activities for the nine months ended March 31, 2013 was approximately $61.0 million, reflecting approximately $41.6 million used to purchase investments, net of cash received from the maturities and sales of investments (including approximately $42.1 million received from the sale of our auction rate securities). We also used approximately $19.1 million to purchase property, plant and equipment, and to internally develop software to be licensed to others.

 

Net cash provided by investing activities for the nine months ended March 31, 2012 was approximately $9.8 million, reflecting approximately $29.7 million we received from the maturities of investments, net of cash used to purchase investments. We also used approximately $19.3 million to purchase property, plant and equipment, and to develop software to be licensed to others.

 

Financing activities:

Net cash used in financing activities for the nine months ended March 31, 2013 was approximately $77.4 million, reflecting approximately $90.9 million used to repurchase our stock, partially offset by proceeds from stock option exercises of approximately $7.3 million, realized tax benefits from stock option exercises of approximately $3.1 million and borrowings under the line of credit by our Japanese subsidiary of approximately $4.0 million.

 

22
 

 

Net cash used in financing activities for the nine months ended March 31, 2012 was approximately $41.0 million, reflecting approximately $53.7 million used to purchase our stock under our stock repurchase program, and approximately $4.2 million used to acquire a non-controlling interest held by a third party, thereby enabling us to become the sole owner of the entity. These amounts were partially offset by proceeds from stock option exercises of approximately $12.1 million and realized tax benefits from stock option exercises of approximately $4.9 million.

 

Capital Resources

Our cash and cash equivalents and short-term investment balance of approximately $669.4 million at March 31, 2013 is an increase of approximately $87.3 million from the June 30, 2012 balance. At March 31, 2013, approximately $311.2 million of our cash and cash equivalents and short-term investment balance is held internationally. We currently have no plans to repatriate to the U.S. our cumulative unremitted foreign earnings, as we intend to permanently reinvest such earnings internationally. If we change our strategy in the future and repatriate such funds, the amount of any U.S. taxes due on the repatriation of such funds, which could be significant, and the application of any tax credits, would be determined based on the appropriate jurisdictional income tax laws at the time of such repatriation. Due to the extent of uncertainty as to which remittance structure would be used should a decision be made in the future to repatriate, the availability and the complexity of calculating foreign tax credits, and the implications of indirect taxes, including withholding taxes, determination of the unrecognized deferred income tax liability related to these unremitted earnings is not practicable.

 

The favorable foreign exchange rate fluctuations against the U.S. dollar as compared to June 30, 2012 increased our cash and cash equivalents and short-term investment balance at March 31, 2013 by approximately $1.9 million. All cash and cash equivalents and short-term investments are being retained for our operations, expansion of our business, the repurchase of our common stock, and future acquisitions.

 

We have two credit agreements (the “Credit Agreements”) that, through July 31, 2013, provide an aggregate $50.0 million multi-currency committed line of credit. As of March 31, 2013, we had approximately $4.0 million outstanding under the Credit Agreements and had applied approximately $0.6 million to guarantees. We also have a credit relationship with a European bank in the amount of EUR 1.0 million (approximately $1.3 million at the March 31, 2013 exchange rate). As of March 31, 2013, there were no balances outstanding on this credit facility, but approximately EUR 0.5 million (approximately $0.6 million at the March 31, 2013 exchange rate) of the credit facility has been used for guarantees. As of March 31, 2013, we had an aggregate borrowing capacity of approximately $46.1 million under all of the credit facilities described above. See Note 5 “Credit Agreements,” 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 are currently negotiating a new line of credit agreement to replace the Credit Agreements that expire on July 31, 2013. We expect the new line of credit agreement to have a comparable borrowing capacity as the Credit Agreements and do not expect any issues in executing the new line of credit agreement by July 31, 2013.

 

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 in recent periods, we cannot assume that funds would be available from other sources if we were required to fund significant acquisitions or any unanticipated and substantial cash needs. We currently anticipate that our property, plant and equipment expenditures for fiscal year 2013 will be approximately $20 million.

 

The following table provides information regarding certain financial indicators of our liquidity and capital resources:

 

(in thousands, except ratios)  March 31,
2013
   June 30,
2012
 
Cash and cash equivalents and short-term investments (1)  $669,352   $582,038 
Available credit facilities  $51,282   $51,266 
Outstanding credit facilities   (3,981)   0 
Outstanding guarantees   (1,202)   (1,055)
Unused credit facilities  $46,099   $50,211 
Working capital (2)  $603,554   $500,127 
MICROS Systems, Inc.’s shareholders’ equity  $1,156,248   $1,092,645 
Current ratio (3)   2.41    2.20 

 

23
 

 

(1)Does not include approximately $34.3 million invested in auction rate securities, classified as long-term investments in our Condensed Consolidated Balance Sheet as of June 30, 2012.
(2)Current assets less current liabilities.
(3)Current assets divided by current liabilities. The Company does not have any long-term debt.

 

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Currency exchange rate risk

We recorded foreign sales, including exports from the U.S./Canada, of approximately $571.6 million and $455.1 million during the nine months ended March 31, 2013 and 2012, respectively, to customers located primarily in Europe, Pacific Rim and Latin America. See Note 10, “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 reported sales and profitability. Frequently, sales and the costs associated with those sales are not denominated in the same currency.

 

We transacted business in 41 and 42 currencies in the nine months ended March 31, 2013 and 2012, respectively. The relative currency mix for the three and nine months ended March 31, 2013 and 2012 was as follows:

 

   % of Reported Revenues   Exchange Rates to 
   Three Months Ended   Nine months ended   U.S. Dollar as of 
   March 31,   March 31,   March 31, 
Revenues by currency (1)  2013   2012   2013   2012   2013   2012 
United States Dollar   41%   50%   41%   50%   1.0000    1.0000 
Euro   26%   22%   25%   22%   1.2818    1.3343 
British Pound Sterling   14%   7%   14%   8%   1.5202    1.6012 
Australian Dollar   2%   3%   2%   3%   1.0419    1.0353 
Mexican Peso   1%   1%   1%   1%   0.0812    0.0781 
Norway Krone   1%   1%   1%   1%   0.1710    0.1756 
Singapore Dollar   1%   1%   1%   1%   0.8061    0.7949 
Sweden Krona   1%   1%   1%   1%   0.1532    0.1512 
Swiss Franc   1%   2%   1%   2%   1.0532    1.1078 
All Other Currencies (2)   12%   12%   13%   11%   0.2375    0.3126 
Total   100%   100%   100%   100%          

 

(1)Calculated using weighted-average exchange rates for the fiscal period.
(2)The “% of Reported Revenue” is calculated based on the weighted-average three and nine month exchange rates for all other currencies. The “Exchange Rates to U.S. Dollar” represents the weighted-average March 31, 2013 and 2012 exchange rates for all other currencies. Weighting is based on the three and nine month fiscal period revenue for each country whose currency is included in the “All Other Currencies” category. Revenues from each currency included were less than 1% of our total revenues for the three months ended March 31, 2013.

 

A 10% increase or decrease in the value of the Euro and British Pound Sterling in relation to the U.S. dollar in the nine months ended March 31, 2013 would have affected our total revenues by approximately $37.0 million, or 3.9%. 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 attributable to MICROS Systems, Inc. common shareholders.

 

24
 

 

Interest rate risk

Our committed lines of credit bear interest at a floating rate, which exposes us to interest rate risk. We manage our exposure to this risk by minimizing, to the extent feasible, overall borrowing and by monitoring available financing alternatives. At March 31, 2013, we had approximately $4.0 million in borrowings and had not entered into any instruments to hedge our exposure to interest-rate risk. Our exposure to fluctuations in interest rates may increase in the future if we increase our borrowings under the line of credit. As we had approximately $4.0 million in borrowings as of March 31, 2013, 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 are subject to market risk due to changes in interest rates. The market value of fixed interest rate securities in our portfolio may be adversely affected by 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 March 31, 2013, but the change in our interest income for the nine months ended March 31, 2013 would be an increase or decrease (depending on the nature of the fluctuation) of approximately $5.0 million based on the cash, cash equivalents and short term investment balances as of March 31, 2013.

 

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 ratings of “A” and above.

 

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,” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2012.

 

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 effective 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 12 to the Condensed Consolidated Financial Statements included in this report for information regarding pending legal proceedings.

 

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On August 24, 2010, the Company’s Board of Directors authorized the purchase of up to two million shares of the Company’s common stock, to be purchased from time to time over the ensuing three years depending on market conditions and other corporate considerations as determined by management. On January 22, 2013, the Company’s Board of Directors authorized the purchase of up to an additional two million shares of the Company’s common stock, to be purchased from time to time over the ensuing three years depending on market conditions and other corporate considerations as determined by management.

 

As of March 31, 2013, all two million shares subject to the August 2010 authorization had been purchased, and approximately 1.6 million shares remain available for purchase under the January 2013 authorization.

 

25
 

 

During the three months ended March 31, 2013, our stock purchases were as follows:

 

Issuer Purchases of Equity Securities

   Total Number
of Shares
Purchased (1)
   Average
Price
Paid per
Share
   Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs
   Maximum Number
of Shares that May
Yet be Purchased
Under the Plans or
Programs
 
01/01/13 – 01/31/13   224,983   $42.99    224,983    2,218,885 
02/01/13 – 02/28/13   285,000   $43.88    285,000    1,933,885 
03/01/13 – 03/31/13   350,607   $43.74    350,607    1,583,278 
    860,590         860,590      

 

(1)    Purchases of Company securities described in the table were made under the Board of Directors’ August 24, 2010 and January 22, 2013 repurchase authorizations. All shares subject to the August 24, 2010 authorization have been purchased. The January 22, 2013 repurchase authorization expires on January 21, 2016.

 

On April 23, 2013, the Company’s Board of Directors authorized the purchase of up to $225 million of the Company’s common stock, to be purchased from time to time over the ensuing three years depending on market conditions and other corporate considerations as determined by management.

 

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.
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 (furnished 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 (furnished herewith)
101The following materials from MICROS Systems, Inc.’s quarterly report on Form 10-Q for the quarter ended March 31, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at March 31, 2013 and June 30, 2012, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2013 and 2012, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2013 and 2012, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2013 and 2012, (v) Condensed Consolidated Statements of Shareholders’ Equity for the nine months ended March 31, 2013 and 2012, and (vi) Notes to Condensed Consolidated Financial Statements.

 

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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:  April 25, 2013 /s/ Cynthia A. Russo
   Cynthia A. Russo
   Executive Vice President and
   Chief Financial Officer
   
   
Date:  April 25, 2013 /s/ Michael P. Russo
   Michael P. Russo
   Vice President, Corporate Controller
   and Principal Accounting Officer

 

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