Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended September 30, 2001
Commission file number 0-9993
MICROS SYSTEMS, INC.
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(Exact name of Registrant as specified in its charter)
MARYLAND 52-1101488
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(State of incorporation) (I.R.S. Employer
Identification Number)
7031 Columbia Gateway Drive, Columbia, Maryland 21046-2289
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 443-285-6000
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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 report(s)), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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As of September 30, 2001, there were 17,500,443 shares of Common Stock, $0.025
par value, outstanding.
1
MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 2001
Part I - Financial Information
Item 1. Financial Statements
General
The information contained in this report is furnished for the Registrant,
MICROS Systems, Inc., and its subsidiaries (referred to collectively herein as
"MICROS" or the "Company"). In the opinion of management, the information in
this report contains all adjustments, consisting only of normal recurring
adjustments, which are necessary for a fair statement of the results for the
interim periods presented. The financial information presented herein should be
read in conjunction with the financial statements included in the Registrant's
Form 10-K for the fiscal year ended June 30, 2001, as filed with the Securities
and Exchange Commission.
2
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per share data)
September 30, June 30,
2001 2001
------------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 29,732 $ 26,456
Accounts receivable, net of allowance for
doubtful accounts of $8,063 at September 30,
2001 and $7,508 at June 30, 2001 91,810 84,779
Inventories 28,042 28,547
Deferred income taxes 6,960 6,955
Prepaid expenses and other current assets 12,262 11,032
-------- --------
Total current assets 168,806 157,769
Property, plant and equipment, net of accumulated
depreciation and amortization of $37,054 at
September 30, 2001 and $35,366 at June 30, 2001 23,220 23,553
Deferred income taxes, non-current 23,823 23,573
Goodwill and intangible assets, net of accumulated
amortization of $20,747 at September 30, 2001 and
$18,483 at June 30, 2001 37,428 35,182
Purchased and internally developed software costs, net
of accumulated amortization of $14,003 at
September 30, 2001 and $12,699 at June 30, 2001 31,728 31,529
Other assets 3,089 2,850
-------- --------
Total assets $288,094 $274,456
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank lines of credit $11,688 $4,659
Current portion of long-term debt 143 2,317
Current portion of capital lease obligations 101 131
Accounts payable 23,468 21,980
Accrued expenses and other current liabilities 31,782 35,417
Income taxes payable 4,246 5,200
Deferred income taxes 576 547
Deferred service revenue 33,267 26,874
-------- --------
Total current liabilities 105,271 97,125
Long-term debt, net of current portion 955 979
Capital lease obligations, net of current portion 259 252
Deferred income taxes, non-current 14,233 14,213
Other non-current liabilities 1,100 936
Commitments and contingencies
Minority interests 2,352 2,103
Shareholders' equity:
Common stock, $0.025 par; authorized 50,000
shares; issued and outstanding 17,500 at
September 30, 2001 and 17,475 at June 30, 2001 438 437
Capital in excess of par 56,877 56,515
Retained earnings 119,239 118,360
Accumulated other comprehensive loss (12,630) (16,464)
-------- --------
Total shareholders' equity 163,924 158,848
-------- --------
Total liabilities and shareholders' equity $288,094 $274,456
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
3
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
Three Months Ended September 30,
--------------------------------
2001 2000
---- ----
Revenue:
Hardware and software $42,698 $39,588
Service 40,813 34,758
------ ------
Total revenue 83,511 74,346
------ ------
Costs and expenses:
Cost of sales
Hardware and software 24,253 20,314
Service 19,190 18,167
------ ------
Total cost of sales 43,443 38,481
Selling, general and administrative expenses 28,680 29,927
Research and development expenses 4,826 4,133
Depreciation and amortization 3,755 3,315
------ ------
Total costs and expenses 80,704 75,856
------ ------
Income (loss) from operations 2,807 (1,510)
Non-operating income (expense):
Interest income 235 259
Interest expense (288) (116)
Other expense, net (1,086) (165)
------ ------
Income (loss) before taxes, minority interests
and equity in net earnings of affiliates 1,668 (1,532)
Income tax expense (benefit) 667 (621)
------ ------
Income (loss) before minority interests and
equity in net earnings of affiliates 1,001 (911)
Minority interests and equity in net earnings
of affiliates (122) (8)
------ ------
Net income (loss) $ 879 $ (919)
====== ======
Net income (loss) per common share:
Basic $0.05 $(0.05)
====== ======
Diluted $0.05 $(0.05)
====== ======
Weighted-average number shares outstanding:
Basic 17,492 17,344
====== ======
Diluted 17,722 17,344
====== ======
The accompanying notes are an integral part of the consolidated financial
statements.
4
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Three Months Ended September 30, 2001
(Unaudited, in thousands)
Accumulated
Capital Other
Common Stock in Excess Retained Comprehensive
Shares Amount Of Par Earnings Loss Total
------ ------ ------ -------- ---- -----
Balance, June 30, 2001 17,475 $437 $56,515 $118,360 $(16,464) $158,848
Comprehensive income
Net income -- -- -- 879 -- 879
Foreign currency translation
adjustments -- -- -- -- 3,834 3,834
--------
Total comprehensive income -- -- -- -- -- 4,713
Stock issued upon exercise of
options 25 1 303 -- -- 304
Income tax benefit from stock
options exercised -- -- 59 -- -- 59
------ ---- ------- -------- -------- --------
Balance, September 30, 2001 17,500 $438 $56,877 $119,239 $(12,630) $163,924
====== ==== ======= ======== ======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
5
MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed and unaudited, in thousands)
Three Months Ended September 30,
--------------------------------
2001 2000
---- ----
Net cash flows provided by operating activities: $3,873 $6,241
------ ------
Cash flows from investing activities:
Purchases of property, plant and equipment (1,419) (3,787)
Proceeds from dispositions of property, plant and equipment --
Internally developed software (994) (2,530)
Proceeds from settlement 200 --
Purchase of equity interest in investees (51) --
Net cash paid for acquisitions, minority interests and
contingent earn-out payments (3,433) (2,295)
------ ------
Net cash used in investing activities (5,697) (8,612)
------ ------
Cash flows from financing activities:
Principal payments on line of credit (3,006) (630)
Principal payments on long-term debt and capital lease
obligations (2,420) (280)
Proceeds from lines of credit 10,174 3,129
Proceeds from issuance of stock 304 204
------ ------
Net cash provided by financing activities 5,052 2,423
------ ------
Effect of exchange rate changes on cash 48 (41)
------ ------
Net increase in cash and cash equivalents 3,276 11
Cash and cash equivalents at beginning of period 26,456 26,211
------ ------
Cash and cash equivalents at end of period $29,732 $26,222
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
6
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended September 30, 2001
(Unaudited, in thousands, except per share data)
1. Inventories
The components of inventories are as follows:
September 30, June 30,
2001 2001
--------------- --------------
Raw materials $ 6,323 $ 3,736
Work-in-process 1,170 445
Finished goods 20,549 24,366
--------------- --------------
$ 28,042 $ 28,547
=============== ==============
2. New accounting standards
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141, "Business
Combinations" ("FAS 141") and No. 142, "Goodwill and Other Intangible
Assets" ("FAS 142"). FAS No. 141 requires that all business combinations
be accounted for under the purchase method only and that certain
acquired intangible assets in a business combination be recognized as
assets apart from goodwill. FAS No. 142 requires that ratable
amortization of goodwill be replaced with periodic tests of the
goodwill's impairment and that intangible assets other than goodwill be
amortized over their useful lives. FAS No. 141 is effective for all
business combinations initiated after June 30, 2001 and for all business
combinations accounted for by the purchase method for which the date of
acquisition is before June 30, 2001. The provisions of FAS No. 142 will
be effective for fiscal years beginning after December 15, 2001. The
Company is currently reviewing the provisions of these statements.
In September 2000, the Emerging Issues Task Force ("EITF") issued EITF
00-10, "Accounting for Shipping and Handling Fees and Costs" which
states that all amounts billed to a customer in a sale transaction
related to shipping and handling represents revenues earned and as such,
should be classified as revenue. The Company has adopted EITF 00-10 as
of July 2001. All comparative financial statements reflect the change in
classification within the income statement.
In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("FAS 144"). FAS 144 supercedes FASB Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." FAS 144 applies to all long-lived
assets (including discontinued operations) and consequently amends
Accounting Principles Board Opinion No. 30, "Reporting Results of
Operations- Reporting the Effects of Disposal of a Segment of a
Business." FAS 144 is effective for financial statements issued for
fiscal years beginning after December 15, 2001. Management is currently
determining what effect, if any, FAS 144 will have on its financial
position and results of operations.
3. Legal proceedings
MICROS is and has been involved in legal proceedings arising in the
normal course of business. The Company is of the opinion, based upon
presently available information and the advice of counsel concerning
pertinent legal matters, that any resulting liability should not have a
material adverse effect on the Company's results of operations or
financial position.
4. Net income (loss) per share
Basic net income per common share is computed by dividing net income by
the weighted-average number of shares outstanding. Diluted net income
per share includes the dilutive effect of stock options.
Basic and diluted net loss per common share is computed using the
weighted-average number of shares outstanding during the period and does
not include unexercised stock options since their effect would be
anti-dilutive due to the losses in the three-month period ended
September 30, 2000.
7
MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended September 30, 2001
(Unaudited, in thousands, except per share data)
A reconciliation of the weighted-average number of common shares
outstanding assuming dilution is as follows:
Three Months Ended
September 30,
2001 2000
---- ----
Net income (loss) $ 879 $ (919)
------ ------
Average common shares outstanding 17,492 17,344
Dilutive effect of outstanding stock options 230 --
------ ------
Average common shares outstanding assuming
dilution 17,722 17,344
------ ------
Basic net income (loss) per share $0.05 $(0.05)
====== =======
Diluted net income (loss) per share $0.05 $(0.05)
====== =======
For the three-month periods ended September 30, 2001 and 2000, 1,839
options and 2,245 options, respectively, were excluded from the above
reconciliation as these options were anti-dilutive for these periods.
5. Segment reporting data
The Company develops, manufactures, sells and services point-of-sale
computer systems, property management systems, central reservation and
central information systems products for the hospitality industry.
MICROS is organized and operates in two segments: U.S. and
International. The International segment is primarily in Europe, the
Pacific Rim and Latin America. For purposes of applying SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information,"
management views the U.S. and International segments separately in
operating the business, although the products and services are similar
for each segment. The following information is presented in accordance
with the requirements of SFAS No. 131.
A summary of the Company's operating segments is as follows:
Three Months Ended
September 30,
Revenues(1): 2001 2000
---- ----
United States $46,405 $38,714
International 48,535 46,825
Intersegment eliminations (11,429) (11,193)
-------- --------
Total revenues $83,511 $74,346
======== ========
Income (loss) before taxes, minority interests, and
equity in net earnings of affiliates (1):
United States $(6,174) $(6,748)
International 14,730 11,752
Intersegment eliminations (6,888) (6,536)
-------- --------
Total income (loss) before taxes, minority
interests, and equity in net earnings of
affiliates $1,668 $(1,532)
======== ========
September 30, June 30,
2001 2001
---- ----
Identifiable assets (2):
United States $147,025 $145,568
International 141,069 128,888
Intersegment eliminations -- --
-------- --------
Total identifiable assets $288,094 $274,456
======== ========
(1) Amounts based on the location of the customer.
(2) Amounts based on the location of the selling entity.
8
MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 2001
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - First Quarter Comparison
The Company recorded a diluted net income of $0.05 per common share in the
first quarter of fiscal 2002, compared with a net loss of $0.05 per common share
in the first quarter of fiscal 2001. The increase was mainly due to an increase
in sales volume.
Revenue increased by $9.2 million or 12.3% to $83.5 million for the first
quarter of fiscal 2002 compared to the same period last year. A comparison of
the sales mix for fiscal years 2002 and 2001 is as follows:
Three Months Ended
September 30,
2001 2000
---- ----
Hardware 35.2% 37.2%
Software 16.0% 16.1%
Service 48.8% 46.7%
----- -----
100.0% 100.0%
===== =====
Combined hardware and software revenues for the first quarter of fiscal
2002 increased $3.1 million, or 7.9%, and service revenues increased $6.1
million, or 17.4%, over the same period a year earlier.
Combined hardware and software sales increased, in absolute dollars, in the
first quarter of fiscal 2002 in comparison to the prior year primarily due to
the acquisitions of Indatec GMbH & CO KG in January 2001 and the assets of the
hospitality division of Hospitality Solutions International ("HSI") in October
2000. Service revenues increased primarily due to support revenues earned on a
larger customer base.
Cost of sales, as a percentage of revenue, remained relatively constant
at 52.0% and 51.8% for the first quarter of fiscal 2002 and 2001, respectively.
Cost of sales for hardware and software products, as a percentage of related
revenue, increased to 56.8% in the first quarter of fiscal 2002 compared to
51.3% for the same quarter a year earlier. This increase, as a percentage of
revenue, is primarily due to the increase of third party software sales, which
generate lower margins.
Service costs, as a percentage of service revenue, decreased to 47.0% in
the first quarter of fiscal 2002 compared to 52.3% in the same quarter in fiscal
2001. The decrease was primarily due to the continued expansion of the Company's
customer base and the ability of the Company to increase service revenues at a
rate in excess of service costs.
Selling, general and administrative expenses decreased $1.2 million, or
4.2%, in the first quarter of fiscal 2002 compared to the same period last year.
As a percentage of revenue, selling, general and administrative expenses
decreased to 34.3% in the first quarter of fiscal 2002 compared to 40.3% in the
first quarter of fiscal 2001. The decrease is primarily due to the Company's
continued efforts to reduce expenses, partially offset by operating expenses of
recent acquisitions.
Research and development expenses (exclusive of capitalized software
development costs), which consist primarily of labor costs, increased $0.7
million, or 16.8%, in the first quarter of fiscal 2002 compared to the same
period a year earlier. The increase is primarily due to the release of Opera
software in June 2001. Upon general release of a product, all new expenditures
are charged to operations as incurred and previously capitalized amounts are
amortized. Actual research and development expenditures, including capitalized
software development costs of $1.0 million in the first quarter of fiscal 2002
and $2.5 million in the first quarter of fiscal 2001, decreased $0.8 million, or
12.75%, compared to the same period a year earlier. The decrease is mainly due
to the reduction of outside consulting costs.
Income from operations for the first quarter of fiscal 2002 was $2.8
million, or 3.4% of revenue, compared to a loss of $1.5 million, or 2.0% of
revenue, in the first quarter of fiscal 2001. The increase is primarily due to
higher sales volume and the Company's continued efforts to reduce operating
expenses.
Other expense increased from $0.2 million for the first quarter of fiscal
2001 to $1.1 million in the first quarter of fiscal 2002. The Company
experienced foreign currency translation loss of $1.0 million in the first
quarter of fiscal 2002 compared
9
to a loss of $0.2 million in the first quarter of fiscal 2001. The translation
loss is primarily due to fluctuations in exchange rates with the Euro, South
African Rand and Australian Dollar.
The effective tax rate for the first quarter of fiscal 2002 and fiscal 2001
was 40.0% and 40.5%, respectively.
The European Union ("EU") filed a challenge against the U.S. Foreign Sales
corporation ("FSC") tax provisions with the World Trade Organization ("WTO"). On
July 23, 2001, the WTO issued a final decision upholding this challenge.
Officials representing the United States on trade issues continue to seek
resolution through a negotiated settlement. It is currently not possible to
predict what impact, if any, this issue will have on future earnings pending
final resolution of the matter with the WTO, EU, and the United States.
Euro Conversion
On January 1, 1999, certain member nations of the European Economic and
Monetary Union ("EMU") adopted a common currency, the Euro. For a three-year
transition period, both the Euro and individual participants' currencies will
remain in circulation. After June 30, 2002, the Euro will be the sole legal
tender for EMU countries. The adoption of the Euro will affect a multitude of
financial systems and business applications as the commerce of these nations
will be transacted in the Euro and the existing national currency during the
transition period. As of September 30, 2001, of the twelve countries currently
admitted to the EMU, the Company has subsidiary operations in six of those
countries and distributor relationships in the remaining six countries.
MICROS is currently addressing Euro related issues and its impact on
information systems, currency exchange rate risk, taxation, contracts,
competition, and pricing. Action plans currently being implemented are expected
to result in compliance with all laws and regulations; however, there can be no
certainty that such plans will be successfully implemented or that external
factors will not have an adverse effect on the Company's operations. Moreover,
there is still some uncertainty with respect to the interpretation of certain
Euro regulations, and the impact of the regulations on the Company's Euro
implementation. Any costs associated with the adoption of the Euro will be
expensed as incurred. The Company currently does not expect these costs to be
material to its results of operations, financial condition or liquidity.
Liquidity and Capital Resources
The Company currently has a $45.0 million multi-currency committed line of
credit expiring on December 31, 2001. The financing agreement was amended on
April 30, 2001 to include a security interest in inventory and receivables
located in the United States. Prior to this upcoming expiration date, the
Company anticipates that it will renew this line of credit for an additional
one-year period. The Company has the one-time option to convert the line of
credit into a three-year secured term loan upon expiration of the line of
credit. As of September 30, 2001, there is a balance outstanding of US $9.0
million, SEK 3.5 million (approximately $0.3 million at the September 30, 2001
exchange rate), ZAR 10.6 million (approximately $1.2 million at the September
30, 2001 exchange rate) and JPY 140.0 million (approximately $1.2 million at the
September 30, 2001 exchange rate) under this line of credit.
The Company also has a credit relationship from a European bank in the
amount of DM 15.0 million (approximately $7.0 million at the September 30, 2001
exchange rate). Under the terms of this facility, the Company may borrow in the
form of either a line of credit or term debt. Under the credit facility, the
Company previously had a balance of DM 5.0 million (approximately $2.2 million
at the June 30, 2001 exchange rate), which was discharged in full in September
2001.
Net cash provided by operating activities for fiscal 2002 was $3.9
million. The Company used $5.7 million for investing activities in fiscal 2002,
including $2.4 million for the purchase of property, plant, and equipment and
internally developed software and $3.4 million for earn-out payments. Net
financing activities for fiscal 2002 provided $5.1 million, primarily from the
proceeds from the line of credit of $10.2 million offset by $5.4 million in
repayments on the line of credit, long-term debt and capital lease obligations.
The cash position of the Company at September 30, 2001 was $29.7 million. All
cash is being held for the operation and expansion of the business.
The Company anticipates that its cash flow from operations along with
available lines of credit, in conjunction with other lines of credit for which
the Company may be eligible or lines of credit to be renewed or converted into
term debt, are sufficient to provide the working capital needs of the Company
for the foreseeable future. The Company anticipates that its rate of property,
plant and equipment expenditures for fiscal 2002 will be approximately the same
as fiscal 2001.
10
Summary
Until the first quarter of calendar year 2000, the Company had
experienced rapid revenue growth at a rate that it believes had exceeded that of
the global market for point-of-sale computer systems and property management
information systems products for the hospitality industry. In light of weaker
market conditions, the Company's growth rate declined. Currently, given the weak
worldwide economic conditions, and the general financial uncertainty triggered
in part by the terrorist attacks on September 11, 2001, there can be no
assurance that any particular level of growth can be achieved. In addition, due
to the competitive nature of the market, the Company continues to experience
gross margin pressure on its products and service offerings. There can be no
assurance that the Company will be able to continue to increase sufficiently
sales of its higher margin products, including software, to prevent future
declines in the Company's overall gross margin.
Moreover, MICROS's financial results in any single quarter are dependent
upon the timing and size of customer orders and the shipment of products for
large orders. Large software orders from customers may account for more than an
insignificant portion of earnings in any quarter. The customers with whom MICROS
does the largest amount of business are expected to vary from year to year as a
result of the timing for the roll-out of each customer's system. Furthermore, if
a customer delays or accelerates its delivery requirements or a product's
completion is delayed or accelerated, revenues expected in a given quarter may
be deferred or accelerated into subsequent or earlier quarters.
The market price of MICROS Common Stock is volatile, and may be subject to
significant fluctuations in response to variations in MICROS's quarterly
operating results and other factors such as announcements of technological
developments or new products by MICROS, customer roll-outs, technological
advances by existing and new competitors, and general market conditions in the
hospitality industry. In addition, conditions in the stock market in general and
shares of technology companies in particular have experienced significant price
and volume fluctuations which have at times been unrelated to the operating
performance of companies.
Moreover, some of the statements contained herein not based on historic
facts are forward looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended, that involve risks and uncertainties. Past performance
is not necessarily a strong or reliable indicator of future performance. Actual
results could differ materially from past results, estimates or projections.
Some of the additional risks and uncertainties are: political and world
instability created by additional terrorist attacks, which gravely impacts the
travel and tourism industries; product demand and market acceptance, including
demand and acceptance for the new OPERA products and the newest versions of the
3700 RES; implementation of a cost-effective service structure capable of
servicing increasingly complex software systems in increasingly more remote
locations; achieving increased sales of higher margin software products; hiring
and retention of qualified employees with sufficient technical expertise;
unexpected currency fluctuations; impact of competitive products and pricing on
margins; product development delays; technological difficulties associated with
new product releases; and controlling expenses. These and other risks are
disclosed in the Company's releases and SEC filings, including in the section
titled "Business and Investment Risks; Information Relating to Forward-Looking
Statements", in the Company's Annual Report on Form 10-K for the Fiscal Year
ended June 30, 2001.
11
MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 2001
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Until calendar year 2000, the Company had experienced growth
internationally. MICROS's significant international business and presence does
expose the Company to certain market risks, such as currency, interest rate and
political risks. With respect to currency risk, the Company transacts business
in 28 different currencies through its foreign subsidiaries. The fluctuation of
currencies impacts sales and profitability. Frequently, sales and the costs
associated with such sales are not always denominated in the same currency.
Given the fact that the Company transacts business in many different currencies,
adverse declines in certain currencies can be offset by favorable advances in
other currencies. Recent weakness in certain European currencies has, however,
adversely impacted the financial performance of the Company.
Additionally, the Company is subject to interest rate fluctuations in
foreign countries to the extent that the Company elects to borrow in the local
foreign currency. In the past, this has not been an issue of concern as the
Company has the capacity to elect to borrow in other currencies with more
favorable interest rates. While the Company has not to date invested in
financial instruments designed to protect against interest rate fluctuations,
the Company will continue to evaluate the need to do so in the future.
Further, the Company is subject to political risk, as most recently
demonstrated by the terrorist attacks of September 11, 2001. Political and
economic instability and uncertainty caused by terrorism, and the resultant
conflicts designed to thwart terrorism, adversely impact the travel, tourism and
hospitality industries which the Company serves. The Company is also subject to
the effects of, and changes in, laws and regulations, other activities of
governments, agencies and similar organizations.
Finally, the Company's committed line of credit bears interest at a
floating rate of interest. It does not invest in financial instruments designed
to protect against interest rate fluctuations, although it will continue to
evaluate the need to do so in the future.
12
MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 2001
Part II - Other Information
Item 1. Legal Proceedings
MICROS is and has been involved in legal proceedings arising in the
normal course of business. The Company is of the opinion, based upon presently
available information and the advice of counsel concerning pertinent legal
matters, that any resulting liability should not have a material adverse effect
on the Company's results of operations or financial position.
Items 2 through 5.
No events occurred during the quarter covered by the report that would
require a response to any of these items.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
13
MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 2001
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)
November 14, 2001 /s/ Gary C. Kaufman
------------------------
Executive Vice President,
Finance and Administration/
Chief Financial Officer
November 14, 2001 /s/ Cynthia A. Russo
------------------------
Cynthia A. Russo
Vice President and
Corporate Controller
14