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, 2009


Commission
file number 0-9993





MICROS
SYSTEMS, INC.


——————————————————————


(Exact
name of Registrant as specified in its charter)





MARYLAND
                                        52-1101488(State
      of incorporation)
                                        (IRS
      Employer Identification Number)7031
      Columbia Gateway Drive, Columbia, Maryland 21046-2289(Address
      of principal executive offices)
                                        (Zip
      code)443-285-6000Registrant’s
      telephone number, including area
code





Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.





YES þ NO o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-t (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).





YES o NO o





Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer þ
              Accelerated
      filer oNon-accelerated
      filer o
              Smaller
      Reporting Company o





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).





YES o NO þ





As of
April 30, 2009, there were issued and outstanding 80,400,968 shares of
Registrant’s Common Stock, $0.00625 par value.





MICROS
SYSTEMS, INC. AND SUBSIDIARIES





Form
10-Q


For the
three and nine months ended March 31, 2009





PART
I – FINANCIAL INFORMATION





ITEM
      1.
            FINANCIAL
      STATEMENTS


2





MICROS
SYSTEMS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(Unaudited,
in thousands, except per share data)





March
      31,
                      2009
                    
                    
                    June
      30,
                      2008ASSETSCurrent
      Assets:Cash
      and cash equivalents
                    
                    $
                    383,272
                    
                    
                    $
                    381,964Accounts
      receivable, net of allowance for doubtful accounts of $29,432 at March 31,
      2009 and $28,348 at June 30, 2008
                    
                    
                    173,259
                    
                    
                    
                    192,445Inventory,
      net
                    
                    
                    41,764
                    
                    
                    
                    64,575Deferred
      income taxes
                    
                    
                    19,734
                    
                    
                    
                    18,724Prepaid
      expenses and other current assets
                    
                    
                    29,799
                    
                    
                    
                    29,737Total
      current assets
                    
                    
                    647,828
                    
                    
                    
                    687,445Investments,
      non-current
                    
                    
                    56,625
                    
                    
                    
                    65,216Property,
      plant and equipment, net of accumulated depreciation and amortization of
      $81,331 at March 31, 2009 and $78,505 at June 30, 2008
                    
                    
                    30,541
                    
                    
                    
                    29,165Deferred
      income taxes, non-current
                    
                    
                    8,583
                    
                    
                    
                    7,108Goodwill
                    
                    
                    186,360
                    
                    
                    
                    159,722Intangible
      assets, net of accumulated amortization of $9,475 at March 31, 2009 and
      $7,401 at June 30, 2008
                    
                    
                    18,899
                    
                    
                    
                    16,168Purchased
      and internally developed software costs, net of accumulated amortization
      of $62,851 at March 31, 2009 and $61,691 at June 30, 2008
                    
                    
                    27,490
                    
                    
                    
                    30,846Other
      assets
                    
                    
                    6,742
                    
                    
                    
                    7,336Total
      assets
                    
                    $
                    983,068
                    
                    
                    $
                    1,003,006LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      Liabilities:Bank
      lines of credit
                    
                    $
                    1,061
                    
                    
                    $
                    989Accounts
      payable
                    
                    
                    33,520
                    
                    
                    
                    46,843Accrued
      expenses and other current liabilities
                    
                    
                    106,677
                    
                    
                    
                    124,913Income
      taxes payable
                    
                    
                    9,911
                    
                    
                    
                    6,363Deferred
      revenue
                    
                    
                    125,119
                    
                    
                    
                    115,398Total
      current liabilities
                    
                    
                    276,288
                    
                    
                    
                    294,506Income
      taxes payable, non-current
                    
                    
                    16,339
                    
                    
                    
                    18,302Deferred
      income taxes, non-current
                    
                    
                    2,002
                    
                    
                    
                    2,181Other
      non-current liabilities
                    
                    
                    8,425
                    
                    
                    
                    8,103Total
      liabilities
                    
                    
                    303,054
                    
                    
                    
                    323,092Minority
      interests and minority ownership put arrangement
                    
                    
                    6,761
                    
                    
                    
                    6,898Commitments
      and contingencies (Note 14)Shareholders'
      Equity:Common
      stock, $0.00625 par value; authorized 120,000 shares; issued and
      outstanding 80,384 shares at March 31, 2009 and 80,898 shares at June 30,
      2008
                    
                    
                    502
                    
                    
                    
                    506Capital
      in excess of par
                    
                    
                    128,594
                    
                    
                    
                    131,517Retained
      earnings
                    
                    
                    555,546
                    
                    
                    
                    480,777Accumulated
      other comprehensive (loss) income
                    
                    
                    (11,389
                    )
                    
                    
                    60,216Total
      shareholders' equity
                    
                    
                    673,253
                    
                    
                    
                    673,016Total
      liabilities and shareholders' equity
                    
                    $
                    983,068
                    
                    
                    $
                    1,003,006





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 EndedMarch
      31,
                          
                          
                          March
      31,2009
                          
                          
                          2008
                          
                          
                          2009
                          
                          
                          2008Revenue:Hardware
                          
                          $
                          42,757
                          
                          
                          $
                          65,289
                          
                          
                          $
                          162,596
                          
                          
                          $
                          197,384Software
                          
                          
                          28,322
                          
                          
                          
                          37,910
                          
                          
                          
                          104,094
                          
                          
                          
                          113,278Services
                          
                          
                          134,587
                          
                          
                          
                          133,988
                          
                          
                          
                          420,980
                          
                          
                          
                          386,958Total
      revenue
                          
                          
                          205,666
                          
                          
                          
                          237,187
                          
                          
                          
                          687,670
                          
                          
                          
                          697,620Cost
      of sales:Hardware
                          
                          
                          26,284
                          
                          
                          
                          42,882
                          
                          
                          
                          104,099
                          
                          
                          
                          127,105Software
                          
                          
                          6,565
                          
                          
                          
                          7,648
                          
                          
                          
                          20,963
                          
                          
                          
                          25,671Services
                          
                          
                          61,767
                          
                          
                          
                          62,398
                          
                          
                          
                          199,090
                          
                          
                          
                          180,783Total
      cost of sales
                          
                          
                          94,616
                          
                          
                          
                          112,928
                          
                          
                          
                          324,152
                          
                          
                          
                          333,559Gross
      margin
                          
                          
                          111,050
                          
                          
                          
                          124,259
                          
                          
                          
                          363,518
                          
                          
                          
                          364,061Selling,
      general and administrative expenses
                          
                          
                          64,349
                          
                          
                          
                          75,838
                          
                          
                          
                          213,545
                          
                          
                          
                          226,593Research
      and development expenses
                          
                          
                          10,260
                          
                          
                          
                          10,382
                          
                          
                          
                          31,355
                          
                          
                          
                          29,474Depreciation
      and amortization
                          
                          
                          4,189
                          
                          
                          
                          3,280
                          
                          
                          
                          12,567
                          
                          
                          
                          10,755Total
      operating expenses
                          
                          
                          78,798
                          
                          
                          
                          89,500
                          
                          
                          
                          257,467
                          
                          
                          
                          266,822Income
      from operations
                          
                          
                          32,252
                          
                          
                          
                          34,759
                          
                          
                          
                          106,051
                          
                          
                          
                          97,239Non-operating
      income (expense):Interest
      income
                          
                          
                          1,696
                          
                          
                          
                          4,226
                          
                          
                          
                          7,514
                          
                          
                          
                          11,472Interest
      expense
                          
                          
                          (535
                          )
                          
                          
                          (29
                          )
                          
                          
                          (817
                          )
                          
                          
                          (197
                          )Other
      income (expense), net
                          
                          
                          107
                          
                          
                          
                          (868
                          )
                          
                          
                          527
                          
                          
                          
                          (771
                          )Total
      non-operating income, net
                          
                          
                          1,268
                          
                          
                          
                          3,329
                          
                          
                          
                          7,224
                          
                          
                          
                          10,504Income
      before taxes, minority interests and equity in net earnings of
      affiliates
                          
                          
                          33,520
                          
                          
                          
                          38,088
                          
                          
                          
                          113,275
                          
                          
                          
                          107,743Income
      tax provision
                          
                          
                          9,888
                          
                          
                          
                          12,378
                          
                          
                          
                          37,005
                          
                          
                          
                          35,862Income
      before minority interests and equity in net earnings of
      affiliates
                          
                          
                          23,632
                          
                          
                          
                          25,710
                          
                          
                          
                          76,270
                          
                          
                          
                          71,881Minority
      interests and equity in net earnings of affiliates, net of
      taxes
                          
                          
                          (279
                          )
                          
                          
                          (564
                          )
                          
                          
                          (962
                          )
                          
                          
                          (1,342
                          )Net
      income (1)
                          
                          $
                          23,353
                          
                          
                          $
                          25,146
                          
                          
                          $
                          75,308
                          
                          
                          $
                          70,539Net
      income per common share (1):Basic
                          
                          $
                          0.29
                          
                          
                          $
                          0.31
                          
                          
                          $
                          0.93
                          
                          
                          $
                          0.86Diluted
                          
                          $
                          0.29
                          
                          
                          $
                          0.30
                          
                          
                          $
                          0.92
                          
                          
                          $
                          0.84Weighted-average
      number of shares outstanding:Basic
                          
                          
                          80,382
                          
                          
                          
                          81,368
                          
                          
                          
                          80,499
                          
                          
                          
                          81,655Diluted
                          
                          
                          81,047
                          
                          
                          
                          83,174
                          
                          
                          
                          81,449
                          
                          
                          
                          83,532





(1) See
Note 9, "Share-based Compensation" in Notes to Condensed Consolidated Financial
Statements.





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


4





MICROS
SYSTEMS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited,
in thousands)





Nine
      Months EndedMarch
      31,2009
                      
                      
                      2008Net
      cash flows provided by operating activities
                      
                      $
                      116,941
                      
                      
                      $
                      129,263Cash
      flows provided by investing activities:Net
      cash paid for acquisitions
                      
                      
                      (32,701
                      )
                      
                      
                      (12,858
                      )Purchases
      of property, plant and equipment
                      
                      
                      (10,437
                      )
                      
                      
                      (10,188
                      )Internally
      developed software
                      
                      
                      (702
                      )
                      
                      
                      (1,759
                      )Disposal
      of property, plant and equipment
                      
                      
                      215
                      
                      
                      
                      527Purchases
      of investments
                      
                      
                      -
                      
                      
                      
                      (610,650
                      )Proceeds
      from sales of investments
                      
                      
                      4,025
                      
                      
                      
                      627,950Net
      cash flows used in investing activities
                      
                      
                      (39,600
                      )
                      
                      
                      (6,978
                      )Cash
      flows provided by financing activities:Principal
      payments on line of credit and long-term debt related to an
      acquisition
                      
                      
                      (18,124
                      )
                      
                      
                      -Repurchases
      of stock
                      
                      
                      (15,431
                      )
                      
                      
                      (53,499
                      )Proceeds
      from stock option exercises
                      
                      
                      1,395
                      
                      
                      
                      27,111Realized
      tax benefits from stock option exercises
                      
                      
                      84
                      
                      
                      
                      11,117Other
                      
                      
                      (1,634
                      )
                      
                      
                      (2,403
                      )Net
      cash flows used in financing activities
                      
                      
                      (33,710
                      )
                      
                      
                      (17,674
                      )Effect
      of exchange rate changes on cash and cash equivalents
                      
                      
                      (42,323
                      )
                      
                      
                      27,489Net
      increase in cash and cash equivalents
                      
                      
                      1,308
                      
                      
                      
                      132,100Cash
      and cash equivalents at beginning of year
                      
                      
                      381,964
                      
                      
                      
                      242,702Cash
      and cash equivalents at end of period
                      
                      $
                      383,272
                      
                      
                      $
                      374,802





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


5





MICROS
SYSTEMS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE (LOSS)
INCOME


(Unaudited,
in thousands)





AccumulatedCapital
                      
                      
                      
                      
                      
                      OtherCommon
      Stock
                      
                      
                      in
      Excess
                      
                      
                      Retained
                      
                      
                      ComprehensiveShares
                      
                      
                      Amount
                      
                      
                      of
      Par
                      
                      
                      Earnings
                      
                      
                      Income
      (Loss)
                      
                      
                      TotalBalance,
      June 30, 2008
                      
                      
                      80,898
                      
                      
                      $
                      506
                      
                      
                      $
                      131,517
                      
                      
                      $
                      480,777
                      
                      
                      $
                      60,216
                      
                      
                      $
                      673,016Comprehensive
      income (loss):Net
      income
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      75,308
                      
                      
                      
                      -
                      
                      
                      
                      75,308Foreign
      currency translation adjustments, net of tax
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (68,746
                      )
                      
                      
                      (68,746
                      )Changes
      in unrealized losses on non-current investments, net of
tax
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (2,859
                      )
                      
                      
                      (2,859
                      )Total
      comprehensive income
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      3,703Minority
      interest put arrangement
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (539
                      )
                      
                      
                      -
                      
                      
                      
                      (539
                      )Share-based
      compensation
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      11,018
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      11,018Stock
      issued upon exercise of options
                      
                      
                      81
                      
                      
                      
                      -
                      
                      
                      
                      1,395
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,395Repurchases
      of stock
                      
                      
                      (595
                      )
                      
                      
                      (4
                      )
                      
                      
                      (15,427
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (15,431
                      )Income
      tax benefit from options exercised
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      91
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      91Balance,
      March 31, 2009
                      
                      
                      80,384
                      
                      
                      $
                      502
                      
                      
                      $
                      128,594
                      
                      
                      $
                      555,546
                      
                      
                      $
                      (11,389
                      )
                      
                      $
                      673,253





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


6


1. Basis of
presentation


The
accompanying condensed consolidated financial statements of MICROS Systems, Inc.
and its subsidiaries (collectively, the “Company”) have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”). This Quarterly Report on Form 10-Q should be read in
conjunction with the Company’s Annual Report on Form 10-K for the year ended
June 30, 2008.





The
accompanying condensed consolidated financial statements of the Company have
been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and in accordance
with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X,
promulgated by the Securities and Exchange Commission. Accordingly, they do not
include all disclosures required by U.S. generally accepted accounting
principles for complete financial statements.





All
references to share data in the accompanying condensed consolidated financial
statements and throughout these notes have been retroactively adjusted to
reflect the February 2008 two-for-one stock split.





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, 2009 are not
necessarily indicative of the results to be expected for the full year or any
future periods.





2. Acquisitions


During
August 2008, the Company acquired Fry, Inc. (“Fry”), an e-commerce design,
development and managed services provider headquartered in Ann Arbor, Michigan,
for a total cash purchase price of approximately $32.7 million, net of cash
acquired. The Company also assumed debt of approximately $18.1 million, which
was paid off immediately after the acquisition. Approximately $6.0 million of
the total purchase price is currently held in escrow and, if specified claims
against Fry arise, such amounts may be used to satisfy these claims. Any amounts
then remaining after the satisfaction of any such claims will be paid in two
installments, at 12 and 18 months after closing. The selling Fry shareholders
are eligible to earn up to an additional $17 million in earn out payments over
the next approximately two year period following closing, which are payable
based upon achievement of specified financial targets. As of March 31, 2009, the
Company has accrued approximately $4.5 million payable to selling Fry
shareholders for meeting the initial set of specified financial targets, and
will pay that amount during the quarter ended June 30, 2009. In connection with
the acquisition, the Company recorded goodwill of approximately $39.1 million,
intangible assets of approximately $7.0 million, and capitalized software of
approximately $4.7 million. The acquisition of Fry has been included in the
Company’s results since the acquisition date. The pro forma effect of this
acquisition is not material to the consolidated financial position and results
of operations presented herein.





3. Inventory


The components of inventory are as
follows:





(in
      thousands)
              
              March
      31,
                2009
              
              
              June
      30,
                2008Raw
      materials
              
              $
              3,603
              
              
              $
              5,521Work-in-process
              
              
              6
              
              
              
              21Finished
      goods
              
              
              38,155
              
              
              
              59,033Total
      inventory
              
              $
              41,764
              
              
              $
              64,575





The
Company maintained a reserve for inventory obsolescence of approximately $10.4
million at March 31, 2009, compared to approximately $11.5 million at June 30,
2008. During the three months ended March 31, 2009 and March 31, 2008, the
Company reserved approximately $0.4 million and approximately $0.6 million,
respectively. During the nine months ended March 31, 2009 and March 31, 2008,
the Company reserved approximately $2.1 million and approximately $1.7 million,
respectively. All reserves related to potentially obsolete and slow moving
products. As of March 31, 2009, foreign currency translation decreased the
reserve for inventory obsolescence by approximately $1.7 million as compared to
June 30, 2008.


7





4. Investments,
non-current


As of
March 31, 2009, the Company continued to hold auction rate securities that were
classified as available for sale, investments, non-current. These investments
were classified as non-current, because, beginning February 2008, auctions
for these securities failed to obtain sufficient bids to establish a clearing
rate. As a result, the securities were not saleable in the auction, thereby no
longer providing short-term liquidity. In the absence of a liquid market or a
negotiated sales transaction, the Company engaged an independent valuation firm
to update the valuation of its auction rate securities as of March 31, 2009. The
valuation firm used a mark to model approach to arrive at this valuation, which
the Company reviewed and with which it agreed. Based on the fair value
determination described below in Note 5 - Fair value measurements, the fair
value of the auction rate securities held as of March 31, 2009 decreased
compared to the cost and the fair value of the securities as of June 30, 2008.
Accordingly, the Company has recorded temporary unrealized losses on these
investments of approximately $8.8 million (approximately $5.5 million, net of
tax). These amounts are recorded in the other comprehensive income component of
stockholders’ equity as of March 31, 2009.





5. Fair
value measurements


Effective
July 1, 2008, the Company adopted the Financial Accounting Standards Board’s
(FASB) Statement of Financial Accounting Standards (SFAS) 157, “Fair Value
Measurements,” for financial assets and liabilities and for non-financial assets
and liabilities recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). Additionally, the Company
also adopted FASB Staff Position (FSP) No.157-2, which delayed the effective
date of SFAS No. 157 by one year for other non-financial assets and liabilities.
As defined in SFAS No. 157, 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). SFAS No. 157
establishes a framework for measuring fair value and expands disclosure about
fair value measurements. To increase consistency and comparability in fair value
measurements and related disclosure, SFAS No. 157 establishes a hierarchy that
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, as
follows:





·
            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 in markets that are not active, or inputs that are
      observable, either directly or indirectly, for substantially the full term
      of the asset or liability. This category includes those derivative
      instruments that the Company values using observable market
      data.


·
            Level
      3 - Measured based on prices or valuation models that require inputs that
      are both significant to the fair value measurement and less observable
      from objective sources (i.e., supported by little or no market
      activity).





The Company’s investments in auction
rate securities, classified as investments, non-current, were its only Level 3
assets. The Company engaged an independent valuation firm to update the
valuation of its auction rate securities as of March 31, 2009. The Company’s
valuation methodology for investments was a discounted cash flow model that
considers various inputs including: (a) the coupon rate specified under the
debt instruments, (b) the current credit ratings of the underlying issuers,
(c) collateral characteristics and (d) risk adjusted discount rates.
The valuation firm used a mark to model approach to arrive at this valuation,
which the Company reviewed and with which it agreed. The valuation was prepared
in accordance with FSP No. 157-3, “Determining the Fair Value of a Financial
Asset When the Market for That Asset Is Not Active,” which the FASB issued in
October 2008. FSP No. 157-3 clarified the application of SFAS No. 157 in
determining the fair value of an asset where the market for that asset is not
active.





The
Company reviews impairments in accordance with Emerging Issues Task Force Issue
No. 03-1 and FSP No. 115-1 and FAS No. 124-1, each of which is titled “The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments” to determine the classification of the impairment as temporary or
other-than-temporary. A temporary impairment charge results in an unrealized
loss being recorded in the other comprehensive income component of stockholders'
equity. Such an unrealized loss does not reduce net income for the applicable
accounting period because the loss is viewed as temporary. Unrealized losses are
recognized in the statement of operations when a decline in fair value is
determined to be other-than-temporary. Determination of whether the impairment
is temporary or other-than-temporary requires significant judgment. The primary
factors that are considered in classifying the impairment include the credit
quality of the underlying security, the extent to which and time period during
which the fair value of each investment has been below cost, the expected
holding or recovery period for each investment, the Company’s intent and ability
to hold each investment until recovery and the existence of any evidence of
default by the issuer. Based on its review, the Company determined that its
investments in auction rate securities were impaired and also determined that
the impairment was temporary. The Company plans to continue to monitor the
liquidity of its auction rate securities in the marketplace and the
creditworthiness of the entities supporting the obligations under these
securities, and will perform another impairment analysis as of the Company’s
fiscal year-end. If, as a result of its analysis, the Company determines that
the decline in fair value of the auction rate securities is
other-than-temporary, the Company will recognize the impairment as a loss in its
consolidated statement of operations.


8





The
financial assets and liabilities accounted for at fair value as of March 31,
2009 were as follows (does not include cash on hand or assets and liabilities
that are measured at historical cost or any basis other than fair
value):





(in
      thousands)
                  
                  Level
      1
                  
                  
                  Level
      2
                  
                  
                  Level
      3
                  
                  
                  TotalCash
      equivalents (1)
                  
                  $
                  290,699
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  290,699Investments,
      non-current:Auction
      rate securities
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  56,625
                  
                  
                  
                  56,625Balance
      at March 31, 2009
                  
                  $
                  290,699
                  
                  
                  $
                  -
                  
                  
                  $
                  56,625
                  
                  
                  $
                  347,324





(1) Cash
equivalents consisted primarily of certificates of deposit, in addition to money
market funds and overnight repurchase agreements.





A
reconciliation of changes in the fair value of investments, non-current,
classified as Level 3, and the related unrealized losses included in other
comprehensive income was as follows:





(in
      thousands)
                  
                  Cost
                  
                  
                  Temporary
                    Unrealized
                    Loss
                  
                  
                  Fair ValueBalance
      at June 30, 2008
                  
                  $
                  69,450
                  
                  
                  $
                  (4,234
                  )
                  
                  $
                  65,216Changes
      in unrealized losses related to investments
                  
                  
                  -
                  
                  
                  
                  676
                  
                  
                  
                  676Redemption
                  
                  
                  (3,375
                  )
                  
                  
                  145
                  
                  
                  
                  (3,230
                  )Balance
      at September 30, 2008
                  
                  
                  66,075
                  
                  
                  
                  (3,413
                  )
                  
                  
                  62,662Changes
      in unrealized losses related to investments
                  
                  
                  -
                  
                  
                  
                  (5,121
                  )
                  
                  
                  (5,121
                  )Balance
      at December 31, 2008
                  
                  
                  66,075
                  
                  
                  
                  (8,534
                  )
                  
                  
                  57,541Changes
      in unrealized losses related to investments
                  
                  
                  -
                  
                  
                  
                  (358
                  )
                  
                  
                  (358
                  )Redemption
                  
                  
                  (650
                  )
                  
                  
                  92
                  
                  
                  
                  (558
                  )Balance
      at March 31, 2009
                  
                  $
                  65,425
                  
                  
                  $
                  (8,800
                  )
                  
                  $
                  56,625





During
the nine months ended March 31, 2009, the Company redeemed approximately $4.0
million of its auction rate securities at their par value. The Company
recognized no gains or losses related to the sale or partial redemption of its
investments in auction rate securities during the nine months ended March 31,
2009 and 2008.





6. Goodwill
and intangible assets


During its first quarter of fiscal year
2009, the Company completed its annual impairment tests on its goodwill and
trademarks as of July 1, 2008. Based on its annual impairment test results, the
Company determined that no impairment of goodwill or trademarks existed as of
July 1, 2008, and subsequent to July 1, 2008, there has not been any event or
change in circumstances that have impaired goodwill or trademarks.





7. Other
comprehensive income (loss)


The components of comprehensive income
(loss), net of tax, were as follows:





Three
      Months Ended
                  March
      31,
                
                
                Nine
      Months Ended
                  March
      31,(in
      thousands)
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008Net
      income
                
                $
                23,353
                
                
                $
                25,146
                
                
                $
                75,308
                
                
                $
                70,539Other
      comprehensive income (loss), net of tax:Foreign
      currency translation adjustments
                
                
                (16,029
                )
                
                
                20,865
                
                
                
                (68,746
                )
                
                
                37,252Unrealized
      loss on non-current investments
                
                
                (167
                )
                
                
                —
                
                
                
                (2,859
                )
                
                
                —Amortization
      of prior year pension costs
                
                
                —
                
                
                
                160
                
                
                
                —
                
                
                
                486Total
      comprehensive income
                
                $
                7,157
                
                
                $
                46,171
                
                
                $
                3,703
                
                
                $
                108,277


9


The foreign currency translation
adjustments of approximately $16.0 million (unfavorable) and approximately $20.9
million (favorable) for the three months ended March 31, 2009 and 2008,
respectively, and approximately $68.7 million (unfavorable) and approximately
$37.3 million (favorable) for the nine months ended March 31, 2009 and 2008,
respectively, were due to foreign currency exchange rate fluctuations, mainly
between the U.S. dollar and the Euro, and between the British pound sterling and
the U.S. dollar. The Euro has suffered approximately a 16% devaluation against
the dollar since June 30, 2008 and a 5% devaluation since December 31, 2008. The
British pound sterling has suffered approximately a 28% devaluation against the
U.S. dollar since June 30, 2008, and a 2% devaluation since December 31, 2008.
Approximately $306.4 million and $40.7 million of the Company’s net assets at
March 31, 2009 are denominated in Euros and British pound sterling,
respectively.





8. Line of
credit


The
Company has two credit agreements (the “Credit Agreements”) that in the
aggregate provide a $65.0 million multi-currency committed line of credit. The
lenders under the Credit Agreements are Bank of America, N.A., Wachovia Bank,
N.A., and US Bank (“Lenders”). The international facility is secured by 65% of
the capital stock of the Company’s main operating Ireland subsidiary and 100% of
the capital stock of all of the remaining major foreign subsidiaries. The U.S.
facility is secured by 100% of the capital stock of the Company’s major U.S.
subsidiaries as well as inventory and receivables located in the U.S. During the
three months ended December 31, 2008, the Credit Agreements were amended to (i)
extend the expiration of the agreements from July 31, 2009 to July 31, 2010 (ii)
modify or eliminate certain financial reporting requirements, and (iii) modify
or eliminate certain restrictions on the Company’s ability to assume additional
debt, repurchase stock, sell subsidiaries, or acquire companies. For borrowings
in U.S. currency, the interest rate under the Credit Agreements is equal to the
higher of the federal funds rate plus 50 basis points or the prime rate. For
borrowings in foreign currencies, the interest rate is determined by a
LIBOR-based formula, plus an additional margin of 125 to 200 basis points,
depending upon the Company’s consolidated earnings before interest, taxes,
depreciation and amortization for the immediately preceding four calendar
quarters. Under the terms of the Credit Agreements, the Company is required to
pay to the Lenders insignificant commitment fees on the unused portion of the
line of credit. The Credit Agreements also contain certain financial covenants
and restrictions on the Company’s ability to assume additional debt, repurchase
stock, sell subsidiaries or acquire companies. In case of an event of default,
as defined in the Credit Agreements including those not cured within the
applicable cure period, if any, the Lenders’ remedies include their ability to
declare all outstanding loans, plus interest and other related amounts owed, to
be immediately due and payable in full, and to pursue all rights and remedies
available to them under the Credit Agreements or under applicable
law.





As of
March 31, 2009, the Company had approximately $1.1 million outstanding under the
Credit Agreements and has applied approximately an additional $0.4 million to
guarantees. A total of approximately $63.5 million was available for future
borrowings as of March 31, 2009. The total outstanding balance consisted of
105.0 million in JPY (Japanese Yen) (approximately $1.1 million at the March 31,
2009 exchange rate).





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, 2009 exchange rate.)
Under the terms of this facility, the Company may borrow in the form of either a
line of credit or term debt. As of March 31, 2009, there were no balances
outstanding on this credit facility, but approximately EUR 0.1 million
(approximately $0.1 million at the March 31, 2009 exchange rate) of the credit
facility has been applied to guarantees.





As of
March 31, 2009, the Company had approximately $64.7 million borrowing capacity
under all of the credit facilities described above. The weighted-average
interest rate on the outstanding balances under the lines of credit as of March
31, 2009 was 2.3% per annum.





9. Share-based
compensation


The
Company has incentive and non-qualified stock options outstanding that were
granted to directors, officers, and other employees. With respect to directors,
the Company’s policy and practice during the relevant period was that only those
directors who are employees of the Company were eligible to receive options. The
exercise price per share of each option equals the market value of a share of
the Company’s common stock on the date of the grant. Substantially all of the
options granted are exercisable pursuant to a three-year vesting schedule
whereby one-third of the options vest upon the first anniversary of the grant,
the second third of the options vest upon the second anniversary of the grant,
and the final third of the options vest upon the third anniversary of the grant.
All outstanding options expire ten years from the date of grant. Since the
inception of the stock option plan in 1991, the Company has authorized 35.2
million shares for issuance upon exercise of options, of which approximately 3.2
million shares are available for future grants as of March 31, 2009. On that
date, options to purchase approximately 7.3 million shares were outstanding,
including currently exercisable options to purchase approximately 5.0 million
shares.


10





The
Company accounts for its option awards in accordance with SFAS No. 123(R),
“Share-Based Payment.” The estimated fair value of option awards is measured as
of the date of grant, and non-cash share-based compensation expenses adjusted
for expected pre-vesting forfeitures are recognized ratably over the requisite
service (i.e. vesting) period of options in the consolidated statements of
operations. In addition, for the three and nine months ended March 31, 2008,
non-cash share-based compensation expenses adjusted for expected pre-vesting
forfeitures were also recognized for the non-vested portion of awards that were
granted before the effective date of SFAS No. 123(R) as those options
vested.





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





Three
      Months Ended
                    March
      31,
                  
                  
                  Nine
      Months Ended
                    March
      31,(in
      thousands)
                  
                  2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Selling,
      general and administrative
                  
                  $
                  2,953
                  
                  
                  $
                  3,373
                  
                  
                  $
                  10,364
                  
                  
                  $
                  12,645Research
      and development
                  
                  
                  233
                  
                  
                  
                  243
                  
                  
                  
                  654
                  
                  
                  
                  799Total
      non-cash share-based compensation expense
                  
                  
                  3,186
                  
                  
                  
                  3,616
                  
                  
                  
                  11,018
                  
                  
                  
                  13,444Income
      tax benefit
                  
                  
                  (825
                  )
                  
                  
                  (801
                  )
                  
                  
                  (2,644
                  )
                  
                  
                  (3,315
                  )Total
      non-cash share-based compensation expense,net
      of tax benefit
                  
                  $
                  2,361
                  
                  
                  $
                  2,815
                  
                  
                  $
                  8,374
                  
                  
                  $
                  10,129Impact
      on diluted net income per share
                  
                  $
                  0.03
                  
                  
                  $
                  0.04
                  
                  
                  $
                  0.10
                  
                  
                  $
                  0.13





During
the three months ended December 31, 2008 and 2007, the Company granted to the
Company’s Chairman, President, and CEO, A.L. Giannopoulos, options to purchase
150,000 shares and 240,000 shares, respectively. In accordance with the terms of
the option plan, any options that he holds that have not yet vested at the time
of his retirement will vest immediately upon his retirement as he is over the
retirement age of 62. Mr. Giannopoulos has not retired, but because he was over
the age of 62 at the time he received the options, the Company recorded 100% of
the non-cash share-based compensation expense related to the options granted to
Mr. Giannopoulos during the three months ended December 31, 2008 and 2007. As a
result, the Company recorded approximately $0.8 million (approximately $0.5
million net of tax benefits or $0.01 diluted earnings per share) for the nine
months ended March 31, 2009 and approximately $3.2 million (approximately $2.0
million net of tax benefits or $0.02 diluted earnings per share) for the nine
months ended March 31, 2008 related to options granted to Mr.
Giannopoulos.





No
compensation expense was capitalized for the three and nine months ended March
31, 2009 and 2008 because no stock options were granted to employees whose labor
costs were capitalized as software development costs.





As of March 31, 2009, there was
approximately $15.7 million in non-cash share-based compensation costs related
to non-vested awards not yet recognized in the Company’s consolidated statements
of operations. This cost is expected to be recognized over a weighted-average
period of 1.9 years.




11




10. Net
income per share


Basic net
income per common share was computed by dividing net income available to common
shareholders by the weighted-average number of shares outstanding. Diluted net
income per share included the dilutive effect of stock options. A reconciliation
of the net income available to common shareholders and the weighted-average
number of common shares outstanding assuming dilution was as
follows:





Three
      Months Ended
                  March
      31,
                
                
                Nine
      Months Ended
                  March
      31,(in
      thousands, except per share data)
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008Net
      income
                
                $
                23,353
                
                
                $
                25,146
                
                
                $
                75,308
                
                
                $
                70,539Effect
      of minority put arrangement
                
                
                (181
                )
                
                
                (153
                )
                
                
                (539
                )
                
                
                (480
                )Net
      income available to common shareholders
                
                $
                23,172
                
                
                $
                24,993
                
                
                $
                74,769
                
                
                $
                70,059Average
      number of common shares outstanding
                
                
                80,382
                
                
                
                81,368
                
                
                
                80,499
                
                
                
                81,655Dilutive
      effect of outstanding stock options
                
                
                665
                
                
                
                1,806
                
                
                
                950
                
                
                
                1,877Average
      number of common shares outstanding assuming dilution
                
                
                81,047
                
                
                
                83,174
                
                
                
                81,449
                
                
                
                83,532Basic
      net income per share
                
                $
                0.29
                
                
                $
                0.31
                
                
                $
                0.93
                
                
                $
                0.86Diluted
      net income per share
                
                $
                0.29
                
                
                $
                0.30
                
                
                $
                0.92
                
                
                $
                0.84Anti-dilutive
      weighted average number of shares excluded from
    reconciliation
                
                
                5,664
                
                
                
                1,340
                
                
                
                4,077
                
                
                
                1,030





Net
income for the three months ended March 31, 2009 and 2008 reflects approximately
$3.2 million ($2.4 million, net of tax) and $3.6 million ($2.8 million, net of
tax), respectively, in non-cash share-based compensation expense. These non-cash
share-based compensation expenses reduced diluted net income per share by $0.03
and $0.04 per share for the three months ended March 31, 2009 and March 31,
2008, respectively.





Net
income for the nine months ended March 31, 2009 and 2008 reflects approximately
$11.0 million ($8.4 million, net of tax) and $13.4 million ($10.1 million, net
of tax), respectively, in non-cash share-based compensation expense. These
non-cash share-based compensation expenses reduced diluted net income per share
by $0.10 and $0.13 per share for the nine months ended March 31, 2009 and March
31, 2008, respectively.





11. Recent
accounting pronouncements





FSP
157-4


In April
2009, the FASB issued FASB Staff Position (“FSP”) FAS 157-4, “Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly,”
which indicates that if an entity determines that either the volume and/or level
of activity for an asset or liability has significantly decreased when compared
to normal activity for the asset or liability, further analysis of transactions
or price quotations is needed and a significant adjustment to the transactions
or quoted prices may be necessary to estimate fair value. This FSP also
reaffirms the fair value measurement objective promulgated under FAS 157, “Fair
Value Measurements,” namely, to measure the price that would be received to sell
an asset or transfer a liability in an orderly transaction between market
participants under market conditions at the measurement date. This FSP is
effective for interim and annual periods ending after June 15, 2009 (the
Company’s fiscal year ending June 30, 2009). The Company does not believe the
adoption of FSP 157-4 will have a material impact on the Company’s consolidated
financial position, results of operations and cash flows.





FSP
115-2 and FSP 124-2


In April
2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation
of Other-Than-Temporary Impairments” to provide guidance for assessing whether
an impairment of a debt security is other than temporary and requires additional
disclosures with respect to both debt and equity securities. This FSP is
effective for reporting periods ending after June 15, 2009. The Company is
currently reviewing the impact of the adoption of FSP 115-2 and FSP 124-2 on the
Company’s consolidated financial position, results of operations and cash
flows.





FSP
107-1 and APB 28-1


In April
2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about
Fair Value of Financial Instruments.” FSP FAS 107-1 and APB 28-1 amend SFAS No.
107 “Disclosures about Fair Value of Financial Instruments,” and Accounting
Principles Board Opinion No. 28, “Interim Financial Reporting,” to require
publicly-traded companies to include disclosures about fair value of financial
instruments in summarized financial information for interim reporting periods as
well as in annual financial statements. This FSP is effective for reporting
periods ending after June 15, 2009. The Company does not believe the adoption of
FSP 107-1 and APB 28-1 will have a material impact on the Company’s consolidated
financial position, results of operations and cash flows.


12





FSP
142-3


In April
2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of
Intangible Assets,” which amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible
Assets” (“SFAS No. 142”). The intent of this FSP is to improve the consistency
between the useful life of a recognized intangible asset under SFAS No. 142 and
the period of expected cash flows used to measure the fair value of the asset
under SFAS No. 141(R), “Business Combinations,” and other U.S. generally
accepted accounting principles. This FSP is effective for fiscal years beginning
after December 15, 2008 (the Company’s fiscal year ending June 30, 2010),
and interim periods within those fiscal years. The Company does not believe the
adoption of FSP 142-3 will have a material impact on the Company’s consolidated
financial position, results of operations and cash flows.





SFAS
No. 161


In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities, an amendment of FASB Statement No. 133,” (“SFAS No.
161”) which requires additional disclosures about the objectives of the
derivative instruments and hedging activities, the method of accounting for such
instruments under SFAS No. 133 and its related interpretations, and a tabular
disclosure of the effects of such instruments and related hedged items on our
financial position, financial performance, and cash flows. SFAS No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008 (the Company’s fiscal year ending June 30,
2010). Historically the Company has not had material hedging transactions and
unless the Company engages in such transactions, the impact of the adoption of
SFAS No. 161 on its consolidated financial position, results of operations and
cash flows will not be material. Nevertheless, the impact of the adoption of
SFAS No. 161 cannot currently be determined, as it will depend on the nature and
extent of any hedging transactions, if any, that are in effect at the time of
the adoption or thereafter.





SFAS
No. 141(R)


In
December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combinations”
(“SFAS No. 141(R)”), which establishes principles and requirements for how the
acquirer of a business recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquired business. SFAS No. 141(R) also provides guidance for
recognizing and measuring the goodwill acquired in the business combination and
disclosing information to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS No. 141(R) is
effective for business combinations for which the acquisition dates are on or
after the beginning of the first fiscal year beginning on or after December 15,
2008 (the Company’s fiscal year ending June 30, 2010). The Company is currently
reviewing the impact of the adoption of SFAS No. 141(R) on the Company’s
consolidated financial position, results of operations and cash
flows.





SFAS
No. 160


In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements — an Amendment of ARB 51”, (“SFAS No.
160”). This statement amends Accounting Research Bulletin No. 51 to establish
accounting and reporting standards for the noncontrolling interest (minority
interest) in a subsidiary and for the deconsolidation of a subsidiary. SFAS No.
160 establishes accounting and reporting standards that require noncontrolling
interests to be reported as a component of equity, changes in a parent’s
ownership interest while the parent retains its controlling interest be
accounted for as equity transactions, and any retained noncontrolling equity
investment upon the deconsolidation of a subsidiary initially be measured at
fair value. SFAS No. 160 is effective for fiscal years beginning on or after
December 15, 2008 (the Company’s fiscal year ending June 30, 2010). The Company
does not believe the adoption of SFAS No. 160 will have a material impact on the
Company’s consolidated financial position, results of operations and cash
flows.





12. Segment
reporting data


The
Company is organized and operates in four operating segments: U.S., Europe, the
Pacific Rim, and Latin America. For the purposes of applying SFAS No. 131, the
Company has identified the U.S. as a separate reportable segment and has
aggregated its three international operating segments into one reportable
segment, international, as the three international operating segments share many
similar economic characteristics. Management views the U.S. and international
segments separately in operating its business, although the products and
services are similar for each segment.





All of
the Company’s recent business acquisitions involved companies offering products
and services that are similar or complementary to those currently offered by the
Company; accordingly, the acquired businesses have been incorporated into the
existing four operating segments based on their geographic locations, and they
are then operated, managed, and evaluated as a part of the applicable operating
segment.


13





A summary
of the Company’s reportable segments was as follows:





Three
      Months Ended
                  March
      31,
                
                
                Nine
      Months Ended
                  March
      31,(in
      thousands)
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008Revenue(1):U.S.
                
                $
                104,456
                
                
                $
                107,891
                
                
                $
                338,235
                
                
                $
                316,385International
                
                
                144,630
                
                
                
                184,462
                
                
                
                494,650
                
                
                
                533,461Intersegment
      eliminations
                
                
                (43,420
                )
                
                
                (55,166
                )
                
                
                (145,215
                )
                
                
                (152,226
                )Total
      revenue
                
                $
                205,666
                
                
                $
                237,187
                
                
                $
                687,670
                
                
                $
                697,620Income
      before taxes, minority interests and equity in net earnings of
      affiliates(1):U.S.
                
                $
                13,648
                
                
                $
                13,994
                
                
                $
                39,911
                
                
                $
                32,156International
                
                
                56,152
                
                
                
                68,681
                
                
                
                192,659
                
                
                
                199,178Intersegment
      eliminations
                
                
                (36,280
                )
                
                
                (44,587
                )
                
                
                (119,295
                )
                
                
                (123,591
                )Total
      income before taxes, minority interests and equity in net earnings of
      affiliates
                
                $
                33,520
                
                
                $
                38,088
                
                
                $
                113,275
                
                
                $
                107,743





As
      of(in
      thousands)
                
                March
      31,
                  2009
                
                
                June
      30,
                  2008Identifiable
      assets (2):U.S.
                
                $
                478,047
                
                
                $
                466,028International
                
                
                505,021
                
                
                
                536,978Total
      identifiable assets
                
                $
                983,068
                
                
                $
                1,003,006





(1)
            Amounts
      are based on the location of the selling entity, and include export
      sales.


(2)
            Amounts
      are based on the physical location of the
asset.





13. Shareholders’
equity


During
the period from fiscal year 2002 through fiscal year 2007, the Board of
Directors authorized the purchase of up to an aggregate of 10 million shares of
the Company’s common stock. The Company completed the repurchases of 10 million
shares as of July 2008. On July 9, 2008, the Board of Directors authorized the
repurchase of up to an additional two million shares of the Company’s common
stock over the next three years, to be purchased from time to time depending on
market conditions and other corporate considerations as determined by
management. The Company has incurred an aggregate of approximately $0.2 million
in fees related to all stock repurchases. As of March 31, 2009, approximately
1.5 million additional shares may be repurchased under the most recent
authorization.





The
following table provides a summary of the cumulative number of shares purchased
since the inception of the current repurchase program through March 31, 2009,
plus the shares purchased under the previous repurchase programs. All
repurchased shares reverted to the status of authorized but unissued
shares.





Number
      of
                  Shares
                
                
                Purchase
                  Price
      per
                  Share
                
                
                Total
      Price
                  Paid
                  (in thousands)Total
      shares purchased as of June 30, 2008
                
                
                9,862,500
                
                
                $
                18.82
                
                
                $
                185,587July
      1, 2008 – March 31, 2009
                
                
                594,900
                
                
                $
                25.94
                
                
                
                15,431Total
      shares purchased as of March 31, 2009
                
                
                10,457,400
                
                
                $
                19.22
                
                
                $
                201,018


14





14. Contingencies


In Part I, Item 3 of the Company’s
Annual Report on Form 10-K for the fiscal year ended June 30, 2008 (the “Form
10-K”), the Company provided disclosure regarding a case pending in the U.S.
District Court for the Northern District of Georgia, styled Ware v. Abercrombie &
Fitch Stores, Inc. et al. Although the Company is not a party to that
case, the Company may have some obligation to indemnify certain of the
defendants who are its customers, based on the terms of its contracts with those
customers. The plaintiff has alleged that the defendants are infringing a patent
relating to the processing of credit card transactions. The defendants include
approximately 107 individual retailers, 13 of whom are the Company’s customers
for retail point-of-sale software.  The Company is currently providing
indemnity coverage to five of the defendants who are the Company’s customers in
accordance with applicable provisions of the contracts between the Company and
those customers. As of March 31, 2009, the Company’s estimated indemnity
obligation is not material, and through March 31, 2009, the Company’s legal fees
with respect to indemnity coverage for this matter have not been material. The
case had been stayed pending the completion of the United States Patent and
Trademark Office’s reexamination of the plaintiff’s patent that is the subject
of the lawsuit. On April 24, 2009, the United States Patent and Trademark Office
issued a Notice of Intent to Issue Ex Parte Reexamination Certificate indicating
the withdrawal of its prior rejection of the claims of the patent and the
confirmation of such claims. As a result of this action, it is likely that the
court-ordered stay of the case will eventually be lifted, and the litigation
will proceed. Nevertheless, the Company continues to believe, based on currently
available information, that its products do not infringe upon the patent and
will vigorously defend the action.





On November 26, 2007, Heartland Payment
Systems, Inc., filed an action in the U.S. District Court for the District of
New Jersey naming as defendants MICROS Systems, Inc., Merchant Link LLC, and
Chase Paymentech Solutions, LLC. The case is styled Heartland Payment Systems,
Inc. v. MICROS Systems, Inc., et al. In its complaint, Heartland claims
that MICROS, Merchant Link, and Paymentech have engaged in an anti-competitive
arrangement relating to credit and debit card payment processing for restaurant
point-of-sale systems, and further claims that this arrangement violates federal
antitrust law and applicable New Jersey state laws. Heartland claims it has been
damaged by virtue of being required to deal with Merchant Link if it wishes to
provide services to users of MICROS point-of-sale software, by being required to
pay fees to Merchant Link that it claims are inappropriate or excessive, and by
being competitively disadvantaged relative to Chase Paymentech’s services.
Heartland seeks monetary damages in excess of $12 million, and also injunctive
and other equitable relief. The Company and the other defendants have filed
answers to the complaint, in which the Company and the other defendants have
denied all material allegations, and the Company has asserted counterclaims,
alleging that Heartland has engaged in tortious activity by defaming and
libeling the Company, and by improperly interfering with the Company’s customer
contracts and customer relationships. Heartland has filed answers to the
counterclaims denying all material allegations. The case is currently in the
discovery phase, and no trial date has been set in this matter. There were no
material developments to this proceeding during the three-month period ended
March 31, 2009.





In Part I, Item 3 of the Form 10-K, the
Company also provided disclosure regarding two consolidated cases pending in the
Court of Common Pleas of Allegheny County, Pennsylvania, styled Roth Cash Register v. MICROS
Systems, Inc., et al., and Shenango Systems Solutions
v. MICROS Systems, Inc., et al. On May 22, 2008, a jury returned a
combined verdict of $7.5 million against the Company in those actions.  The
cases initially were filed in 2000, and the complaints both related to the
non-renewal of dealership agreements in the year 2000 between the Company and
the respective plaintiffs. There are, however, no other litigation matters
relating to the restructuring of the dealer channel in the year 2000. 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. As a result, the plaintiffs claimed that the
Company was liable for, among other things, breach of contract and tortious
interference with existing and prospective contractual relationships. Following
the jury verdict, the Company moved for judgment notwithstanding the verdict and
for a new trial, and the plaintiffs also moved for judgment notwithstanding the
verdict and for a new trial. On December 23, 2008, the Court denied all of the
motions. On December 30, 2008, the plaintiffs filed praecipes for entry of
judgment on the verdicts. The Company filed its notices of appeal on January 27,
2009. On February 3, 2009, both plaintiffs filed notices of cross appeal. There
were no other material developments to this proceeding during the three-month
period ended March 31, 2009. The Company has established only an immaterial
reserve for any potential liability relating to these matters, as the Company
believes that it has raised and can present strong points through appeal, and
therefore that an unfavorable outcome in these cases is not probable. However,
even if the verdicts were not reversed or reduced as a result of the post-trial
motions or any subsequent appeals, payments of the resulting obligations would
not have a material adverse effect on the Company’s consolidated financial
position or liquidity.


15





The Company is and has been involved in
legal proceedings arising in the normal course of business, and, subject to the
matters referenced above, the Company is of the opinion, based upon presently
available information and the advice of counsel concerning pertinent legal
matters, that any resulting liability should not have a material adverse effect
on the Company’s results of operations or financial position or cash
flows.





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 software and
systems for the global hospitality industry (including, e.g., hotels and
restaurants) and the specialty retail industry. In addition to our software and
hardware products, we offer an extensive array of related services to our
customers, including, e.g., implementation, training, and support. We distribute
our products and services directly and through our domestic branch offices and
our international subsidiary offices, as well as indirectly (both domestically
and internationally) through a network of independent dealers and
distributors.





We manage
our business geographically and are organized and operate in two reportable
segments for financial reporting purposes: U.S. and International. International
reportable segment operations are primarily in Europe, the Pacific Rim and Latin
America. For purposes of applying Statement of Financial Accounting Standards
(“SFAS”) No. 131, “Disclosures about Segments of an Enterprise and Related
Information,” management views the U.S. and International reportable segments
separately in operating our business, although the products and services are
similar for each segment. In each of these two reportable segments, we have
developed an infrastructure through which we license and sell all of our
products and services. While the products and services that are sold must be
customized to address local issues, laws, tax requirements and customer
preferences, the products and services are substantially similar
worldwide.





We have
been and continue to be adversely affected by the current global recession. We
believe that weakened consumer spending, coupled with difficulties in obtaining
credit (including the cost of credit) have negatively affected our customers’
abilities to acquire or open new hospitality and retail venues, and also limit
their willingness and ability to make significant capital expenditures on new
systems and system upgrades. In light of the very challenging and uncertain
conditions, we continue to implement actions to enhance our liquidity and
maintain a solid balance sheet. Several of these actions are as follows: (i)
reducing certain discretionary expenses; (ii) reducing certain rates for third
party contractors; (iii) tactically implementing headcount reductions in certain
departments; and (iv) tactically implementing hiring freezes in certain
departments.





Forward-looking
statements




The following discussion and analysis
of our financial condition and results of operations should be read in
conjunction with the condensed consolidated financial statements and the related
notes and other financial information included elsewhere in this Quarterly
Report on Form 10-Q. Statements contained in this Quarterly Report on Form 10-Q
that are not historical facts are forward looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), that involve risks and uncertainties. Our actual results may
differ materially from those anticipated in these forward-looking statements as
a result of specified factors, including those set forth in the section titled
“Business and Investment Risks; Information Relating to Forward-Looking
Statements,” in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for
the Fiscal Year ended June 30, 2008 and in Part II, Item 1A, “Risk Factors” in
this report.





Examples
of such forward-looking statements include:





·
            Our
      assumptions regarding the materiality of any subsequent adjustments to the
      purchase price of our acquisitions during the relevant
    period;


·
            Our
      expectations regarding the effect of the adoption of various accounting
      pronouncements;


·
            Our
      expectations regarding the impact of competition on product and service
      margins;


·
            Our
      statements regarding the effects of Euro fluctuations (and other currency
      fluctuations) on our financial
performance;


·
            Our
      expectation that customers with which we do the largest amount of business
      will change from period to period;


·
            Our
      belief that our reserve against future indemnity expenditures will be
      sufficient;


16


·
            Our
      belief that any liability from ongoing legal proceedings will not have a
      material adverse effect on the Company’s results of operations or
      financial position or cash flows;


·
            Our
      expectations regarding the future course of the three legal proceedings
      described in this report;


·
            Our
      statements about the effects of larger customer orders on our quarterly
      earnings and revenues;


·
            Our
      statements regarding the costs associated with maintaining compliance with
      applicable legal, financial, and industry requirements and
      standards;


·
            Our
      beliefs regarding the effects on our results of operations or financial
      position of any current legal proceedings in which we may be
      involved;


·
            Our
      expectations regarding effective tax rates in future periods, and the
      effects of tax audits in certain
jurisdictions;


·
            Our
      expectations about the adequacy of our cash flows and our available lines
      of credit to meet our working capital needs, and our ability to raise
      additional funds if and when
needed;


·
            Our
      beliefs regarding impairment of our investments in auction rate
      securities, and our intention and ability to retain those investments
      under current market conditions;


·
            Our
      expectations regarding our exposure to interest rate risk;
    and


·
            Our
      expectation that we will evaluate our need to invest in instruments to
      protect against interest rate fluctuations and our exposure to such
      interest rate risk.





Results of
Operations





The results of our operations were
adversely affected by the strengthening of U.S. dollar against foreign
currencies as 52% of our total revenue for the nine months ended March 31, 2009
was generated by our international segment. The results were also adversely
affected by a slow down in demand from our customers which we believe was due to
the uncertainties arising from the current U.S. and global economic conditions.
All references to share data in this Item 2 have been adjusted to reflect the
two-for-one stock split effected on February 5, 2008.





Revenue:





Three Months Ended March 31,
2009:





An
analysis of the sales mix by reportable segments was as follows (amounts are net
of intersegment eliminations, based on location of the selling entity, and
include export sales):





Three
      Months Ended March 31,U.S.
                
                
                International
                
                
                Total(in
      thousands)
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008Hardware
                
                $
                24,358
                
                
                $
                32,813
                
                
                $
                18,399
                
                
                $
                32,476
                
                
                $
                42,757
                
                
                $
                65,289Software
                
                
                11,458
                
                
                
                14,189
                
                
                
                16,864
                
                
                
                23,721
                
                
                
                28,322
                
                
                
                37,910Service
                
                
                66,445
                
                
                
                57,830
                
                
                
                68,142
                
                
                
                76,158
                
                
                
                134,587
                
                
                
                133,988$
                102,261
                
                
                $
                104,832
                
                
                $
                103,405
                
                
                $
                132,355
                
                
                $
                205,666
                
                
                $
                237,187





An
analysis of the total sales mix as a percent of total revenue was as
follows:





Three
      Months Ended
                  March
      31,2009
                
                
                2008Hardware
                
                
                20.8
                %
                
                
                27.5
                %Software
                
                
                13.8
                %
                
                
                16.0
                %Service
                
                
                65.4
                %
                
                
                56.5
                %100.0
                %
                
                
                100.0
                %


17





For the
three months ended March 31, 2009, total revenue was approximately $205.7
million, a decrease of approximately $31.5 million, or 13.3% compared to the
same period last year due to the following:


· The unfavorable
foreign currency exchange rate fluctuations, for substantially all foreign
currencies against the U.S. dollar, negatively affected total revenue by
approximately $21.3 million;


· Hardware and
software revenue, without giving effect to currency translation, decreased by
29% and 16%, respectively, compared to the same period last year. We believe
these decreases were due to a slow down in demand from our customers as a result
of the adverse U.S. and global economic conditions.


· The decreases noted
above were offset partially by additional services revenue generated by Fry, a
company which we acquired in August 2008.





The
international segment revenue for the three months ended March 31, 2009
decreased by approximately $29.0 million compared to the same period last year.
The unfavorable foreign currency exchange rate fluctuations negatively affected
international segment revenue by approximately $21.3 million. Without giving
effect to currency translation, hardware revenue decreased 32% and software
revenue decreased 14%, respectively, compared to the same period last year. As
stated above, we believe these decreases excluding the impact of foreign
currency exchange rate fluctuations were due to a slowdown in demand from our
customers because of the adverse U.S. and global economic conditions. These
decreases were partially offset by an 8% increase in overall services revenue,
without giving effect to foreign currency translation, compared to the same
period last year, which was due to the continued expansion of our customer base
coupled with increased recurring support revenue from existing customer
(primarily through purchase of additional services).





U.S.
segment revenue decreased approximately $2.6 million for the three months ended
March 31, 2009 compared to the same period last year. The decrease in U.S.
segment revenue was due primarily to a 26% decrease in hardware revenue and 19%
decrease in software revenue, both compared to the same period last year. These
decreases were substantially offset by additional services revenue generated as
a result of the acquisition of Fry in August 2008 and an overall increase in
services revenue which was due to the continued expansion of our customer base
coupled with increased recurring support revenue from existing customers
(primarily through purchase of additional services). We believe the decreases in
hardware and software revenues were due to a slowdown in demand from our
customers because of the uncertainties arising from the overall current U.S. and
global economic conditions.





Nine months ended March 31,
2009:





An
analysis of the sales mix by reportable segments was as follows (amounts are net
of intersegment eliminations, based on location of the selling entity, and
include export sales):





Nine
      Months Ended March 31,U.S.
                
                
                International
                
                
                Total(in
      thousands)
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008Hardware
                
                $
                86,026
                
                
                $
                99,292
                
                
                $
                76,570
                
                
                $
                98,092
                
                
                $
                162,596
                
                
                $
                197,384Software
                
                
                38,668
                
                
                
                43,847
                
                
                
                65,426
                
                
                
                69,431
                
                
                
                104,094
                
                
                
                113,278Service
                
                
                206,934
                
                
                
                164,283
                
                
                
                214,046
                
                
                
                222,675
                
                
                
                420,980
                
                
                
                386,958$
                331,628
                
                
                $
                307,422
                
                
                $
                356,042
                
                
                $
                390,198
                
                
                $
                687,670
                
                
                $
                697,620





An
analysis of the total sales mix as a percent of total revenue was as
follows:





Nine
      Months Ended
                  March
      31,2009
                
                
                2008Hardware
                
                
                23.7
                %
                
                
                28.3
                %Software
                
                
                15.1
                %
                
                
                16.2
                %Service
                
                
                61.2
                %
                
                
                55.5
                %100.0
                %
                
                
                100.0
                %


18


For the
nine months ended March 31, 2009, total revenue was approximately $687.7
million, a decrease of approximately $10.0 million, or 1.4% compared to the same
period last year due to the following:


· The unfavorable
foreign currency exchange rate fluctuations, for substantially all foreign
currencies against the U.S. dollar, negatively affected total revenue by
approximately $36.6 million;


· Hardware and
software revenues, without giving effect to foreign currency translation,
decreased by 14% and 2%, respectively, compared to the same period last year. We
believe these decreases were due to a slow down in demand from our customers
because of adverse U.S. and global economic conditions.


· The decreases
described above were offset partially by additional services revenue generated
by Fry, a company we acquired in August 2008. Additionally, overall services
revenue, without giving effect to foreign currency translation and Fry,
increased by 6% due to the continued expansion of our customer base coupled with
increased recurring support revenue from existing customers (primarily through
purchase of additional services).





The
international segment revenue for the nine months ended March 31, 2009 decreased
by approximately $34.2 million compared to the same period last year. The
unfavorable foreign currency exchange rate fluctuations negatively affected
total revenue by approximately $36.6 million. Services revenue, without giving
effect to foreign currency translation, increased 6% and software revenue, also
without giving effect to foreign currency translation, increased 4%, both
compared to the same period last year. The increase in service revenue was due
to the continued expansion of our customer base coupled with increased recurring
support revenue from existing customers (primarily through purchase of
additional services). The increases in services and software revenue were
partially offset by a 14% decrease (without giving effect to foreign currency
translation) in hardware revenue. As stated above, we believe the decrease in
hardware revenue was due to a slowdown in demand from our customers because of
adverse U.S. and global economic conditions.





U.S.
segment revenue increased approximately $24.2 million for the nine months ended
March 31, 2009 compared to the same period last year. The increase was primarily
the result of additional services revenue generated as a result of the
acquisition of Fry in August 2008 and the continued expansion of our customer
base coupled with increased recurring support revenue from existing customers
(primarily through purchase of additional services). This increase was partially
offset by 13% decrease in hardware and 12% decrease in software revenues, both
compared to the same period last year. We believe these decreases were due to a
slowdown in demand from our customers because of adverse U.S. and global
economic conditions.





Cost
of Sales:





Three Months Ended March 31,
2009:





An
analysis of the cost of sales was as follows:





Three Months Ended March 31,2009
                                
                                
                                2008(in thousands)
                                
                                Cost of
                                  Sales
                                
                                
                                % of
                                  Related
                                  Revenue
                                
                                
                                Costs of
                                  Sales
                                
                                
                                % of
                                  Related
                                  RevenueHardware
                                
                                $
                                26,284
                                
                                
                                
                                61.5
                                %
                                
                                $
                                42,882
                                
                                
                                
                                65.7
                                %Software
                                
                                
                                6,565
                                
                                
                                
                                23.2
                                %
                                
                                
                                7,648
                                
                                
                                
                                20.2
                                %Service
                                
                                
                                61,767
                                
                                
                                
                                45.9
                                %
                                
                                
                                62,398
                                
                                
                                
                                46.6
                                %$
                                94,616
                                
                                
                                
                                46.0
                                %
                                
                                $
                                112,928
                                
                                
                                
                                47.6
                                %




For the
three months ended March 31, 2009 and 2008, cost of sales as a percent of
revenue were 46.0% and 47.6%, respectively. Hardware cost of sales as a percent
of related revenue for the three months ended March 31, 2009 decreased 4.2%
compared to the same period last year primarily as a result of a decrease in
freight costs, and an overall improvement in margins on substantially all
hardware product sales.





Software
cost of sales as a percent of related revenue increased approximately 3.0%
compared to the same period last year primarily as a result of (1) an
unfavorable change in sales mix, (2) lower margin realized on third party
software sales compared to same period last year, and (3) an increase in
capitalized software amortization expense as a percent of software. These
increases in software costs were partially offset by a 10% increase in the sale
of Opera suite software products compared to the same period last year. Sales of
Opera suite software products (and other internally developed software
applications) generally generate higher margins than sales of third party
software.




19




Service
costs as a percent of related revenue decreased approximately 0.7% compared to
the same period last year due to lower travel costs, substantially offset by
lower margin realized on Fry services revenue compared to MICROS’ services
revenue, excluding Fry.





Nine months ended March 31,
2009:





An
analysis of the cost of sales was as follows:





Nine Months Ended March 31,2009
                
                
                2008(in thousands)
                
                Cost of
                  Sales
                
                
                % ofRelatedRevenue
                
                
                Costs ofSales
                
                
                % ofRelatedRevenueHardware
                
                $
                104,099
                
                
                
                64.0
                %
                
                $
                127,105
                
                
                
                64.4
                %Software
                
                
                20,963
                
                
                
                20.1
                %
                
                
                25,671
                
                
                
                22.7
                %Service
                
                
                199,090
                
                
                
                47.3
                %
                
                
                180,783
                
                
                
                46.7
                %$
                324,152
                
                
                
                47.1
                %
                
                $
                333,559
                
                
                
                47.8
                %





For the
nine months ended March 31, 2009 and 2008, cost of sales as a percent of revenue
were 47.1% and 47.8%, respectively. Hardware cost of sales as a percent of
related revenue for the nine months ended March 31, 2009 decreased 0.4% compared
to the same period last year primarily as a result of a decrease in freight
costs, partially offset by lower margin realized on the combined sale of
Workstation 4 and Workstation 5 during the nine months ended March 31, 2009
compared to the same period last year. Workstation 5 was released in October
2007 and is the larger version of the Workstation 4.





Software
cost of sales as a percent of related revenue decreased approximately 2.6%
compared to the same period last year. The decrease in the software cost of
sales was primarily as a result of a 25% increase in the sale of Opera suite
software products compared to the same period last year. Sales of Opera suite
software products (and other internally developed software applications)
generally generate higher margins than sales of third party
software.





Service
costs as a percent of related revenue increased approximately 0.6% compared to
the same period last year due to lower margins generally realized on Fry
services revenue compared to MICROS’ services revenue, excluding
Fry.





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





SG&A
expenses, as a percentage of revenue, for the three months ended March 31, 2009,
were 31.3%, a decrease of 0.7% compared to the same period last year. This
decrease was primarily due to our ability to manage our variable costs,
partially offset by unfavorable leveraging of fixed costs as a result of lower
revenue during the three months ended March 31, 2009 compared to same period
last year.





SG&A
expenses, as a percentage of revenue, for the nine months ended March 31, 2009,
were 31.1%, a decrease of 1.4% compared to the same period last year. This
decrease primarily was due to our ability to manage our variable costs and lower
share-based compensation expense compared to the same period last
year.




20




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





R&D
expenses consisted primarily of labor costs less capitalized software
development costs. An analysis of R&D activities is as follows:





Three Months EndedMarch 31,
                
                
                Nine Months EndedMarch 31,(in thousands)
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008Total
      R&D incurred
                
                $
                10,729
                
                
                $
                10,782
                
                
                $
                32,057
                
                
                $
                31,233Capitalized
      software development costs
                
                
                (469
                )
                
                
                (400
                )
                
                
                (702
                )
                
                
                (1,759
                )Total
      R&D expenses
                
                $
                10,260
                
                
                $
                10,382
                
                
                $
                31,355
                
                
                $
                29,474%
      of Revenue
                
                
                5.0
                %
                
                
                4.4
                %
                
                
                4.6
                %
                
                
                4.2
                %





Depreciation
and Amortization Expenses:





Depreciation
and amortization expenses for the three months ended March 31, 2009 increased
approximately $0.9 million to approximately $4.2 million compared to the same
period last year. The increase was primarily due to additional depreciation
expense incurred on capital expenditures made since March 31, 2008 and the
acquisition of Fry.





Depreciation
and amortization expenses for the nine months ended March 31, 2009 increased
approximately $1.8 million to approximately $12.6 million compared to the same
period last year. The increase was primarily due to additional depreciation
expense incurred on capital expenditures made since March 31, 2008 and the
recent acquisition of Fry.





Share-Based
Compensation Expenses:





We
account for our option awards in accordance with SFAS No. 123(R), “Share-Based
Payment.” The estimated fair value of awards granted under the stock option
program are measured as of the date of grant, and non-cash share-based
compensation expenses, adjusted for expected pre-vesting forfeitures, are
recognized ratably over the requisite service (i.e., vesting) period of options
in the consolidated statements of operations. In addition, for the three and
nine months ended March 31, 2008, non-cash share-based compensation expenses,
adjusted for expected pre-vesting forfeitures, also were recognized for the
non-vested portion of awards that were granted before the effective date of SFAS
No. 123(R) as those options vested. The SG&A expenses and R&D expenses
discussed above include the following allocations of non-cash share-based
compensation expense:





Three Months EndedMarch 31,
                
                
                Nine Months EndedMarch 31,(in thousands)
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008SG&A
                
                $
                2,953
                
                
                $
                3,373
                
                
                $
                10,364
                
                
                $
                12,645R&D
                
                
                233
                
                
                
                243
                
                
                
                654
                
                
                
                799Total
      non-cash share-based compensation expense
                
                
                3,186
                
                
                
                3,616
                
                
                
                11,018
                
                
                
                13,444Income
      tax benefit
                
                
                (825
                )
                
                
                (801
                )
                
                
                (2,644
                )
                
                
                (3,315
                )Total
      non-cash share-based compensation expense,net
      of tax benefit
                
                $
                2,361
                
                
                $
                2,815
                
                
                $
                8,374
                
                
                $
                10,129Impact
      on diluted net income per share
                
                $
                0.03
                
                
                $
                0.04
                
                
                $
                0.10
                
                
                $
                0.13





During
the three months ended December 31, 2008 and 2007, we granted to our Chairman,
President, and CEO, A.L. Giannopoulos, options to purchase 150,000 shares and
240,000 shares, respectively. In accordance with the terms of the option plan,
any options that he holds that have not yet vested at the time of his retirement
will vest immediately upon his retirement as he is over the retirement age of
62. Mr. Giannopoulos has not retired, but because he was over the age of 62 at
the time he received the options, we recorded 100% of the non-cash share-based
compensation expense related to the options granted to Mr. Giannopoulos during
the nine months ended March 31, 2009 and 2008. As a result, we recorded
approximately $0.8 million (approximately $0.5 million net of tax benefits or
$0.01 diluted earnings per share) for the nine months ended March 31, 2009 and
approximately $3.2 million (approximately $2.0 million net of tax benefits or
$0.02 diluted earnings per share) for the nine months ended March 31, 2008
related to options granted to Mr. Giannopoulos.





Non-operating
Income:





Net
non-operating income for the three months ended March 31, 2009, was
approximately $1.3 million, a decrease of approximately $2.1 million compared to
the same period last year. The decrease was due to a decline in interest income
of approximately $2.5 million due to overall lower interest rates earned on cash
and cash equivalents.




21




Net
non-operating income for the nine months ended March 31, 2009, was approximately
$7.2 million, a decrease of approximately $3.3 million compared to the same
period last year. The decrease was due to a decrease in interest income of
approximately $4.0 million due to overall lower interest rates earned on cash
and cash equivalents.





Income
Tax Provisions:





The
effective tax rate for the three months ended March 31, 2009 and 2008 was 29.5%
and 32.5%, respectively. The effective tax rate for the nine months ended March
31, 2009 and 2008 was 32.7% and 33.3%, respectively. The effective tax rates for
the three and nine months ended March 31, 2009 and March 31, 2008 were less than
the 35.0% U.S. statutory federal income tax rate primarily due to decreases in
certain unrecognized tax positions as a result of the expiration of statutes of
limitations, the mix of earnings from jurisdictions that have a lower statutory
tax rate than the U.S., and from the phase-in of the deduction for domestic
production activities under the Internal Revenue Code.  These benefits were
partially offset by the non-deductible nature of certain non-cash
share-based compensation items, other non-deductible compensation items,
non-deductible foreign withholding taxes and the inclusion of foreign income in
our U.S. tax base. The decreases in tax rates as compared to the same periods
last year were primarily attributable to decreases of certain unrecognized tax
positions as a result of the expiration of statutes of limitations, changes in
the mix of earnings from foreign jurisdictions included in our U.S. tax base and
other non-deductible compensation.





We have
reviewed our uncertain income tax positions in accordance with FASB
Interpretation No. 48 “Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109.” We are currently under audit in
certain major taxing jurisdictions, with open tax years beginning in fiscal year
1999.  It is reasonably possible to estimate that within the next 12 months
we will decrease unrecognized tax benefits by approximately $1 million to $6
million due to the expiration of statutes of limitations, settlement of issues
with tax authorities and other events. Based on current estimates, this
estimated decrease in unrecognized tax benefits could increase earnings by
approximately $0.5 million to $2 million as a result of its impact on the
effective tax rate. However, audit outcomes and the timing of audit settlements
are subject to significant uncertainty. Further, over the next twelve months, it
is reasonably possible that our tax positions will continue to generate
liabilities for unrecognized tax benefits.





Based on
currently available information, we estimate that the fiscal year 2009 effective
tax rate will be approximately 33%.  We believe that due to changes in the
mix of earnings among jurisdictions, the fluctuation of earnings, and the impact
of certain discrete items recognized in accordance with the interim reporting
requirements of FASB Interpretation No. 18, “Accounting for Income Taxes in
Interim Periods,” there may be some degree of adjustment to the effective tax
rate on a quarterly basis.





Recent accounting
pronouncements





FSP
157-4


In April
2009, the FASB issued FASB Staff Position (“FSP”) FAS 157-4, “Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly,”
which indicates that if an entity determines that either the volume and/or level
of activity for an asset or liability has significantly decreased when compared
to normal activity for the asset or liability, further analysis of transactions
or price quotations is needed and a significant adjustment to the transactions
or quoted prices may be necessary to estimate fair value. This FSP also
reaffirms the fair value measurement objective promulgated under FAS 157, “Fair
Value Measurements,” namely, to measure the price that would be received to sell
an asset or transfer a liability in an orderly transaction between market
participants under market conditions at the measurement date. This FSP is
effective for interim and annual periods ending after June 15, 2009 (our fiscal
year ending June 30, 2009). We do not believe the adoption of FSP 157-4 will
have a material impact on our consolidated financial position, results of
operations and cash flows.





FSP
115-2 and FSP 124-2


In April
2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation
of Other-Than-Temporary Impairments” to provide guidance for assessing whether
an impairment of a debt security is other than temporary and requires additional
disclosures with respect to both debt and equity securities. This FSP is
effective for reporting periods ending after June 15, 2009. We are currently
reviewing the impact of the adoption of FSP 115-2 and FSP 124-2 on our
consolidated financial position, results of operations and cash
flows.




22




FSP
107-1 and APB 28-1


In April
2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about
Fair Value of Financial Instruments.” FSP FAS 107-1 and APB 28-1 amend SFAS No.
107 “Disclosures about Fair Value of Financial Instruments,” and Accounting
Principles Board Opinion No. 28, “Interim Financial Reporting,” to require
publicly-traded companies to include disclosures about fair value of financial
instruments in summarized financial information for interim reporting periods as
well as in annual financial statements. This FSP is effective for reporting
periods ending after June 15, 2009. We do not believe the adoption of FSP 107-1
and APB 28-1 will have a material impact on our consolidated financial position,
results of operations and cash flows.





FSP
142-3


In April
2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of
Intangible Assets,” which amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible
Assets” (“SFAS No. 142”). The intent of this FSP is to improve the consistency
between the useful life of a recognized intangible asset under SFAS No. 142 and
the period of expected cash flows used to measure the fair value of the asset
under SFAS No. 141(R), “Business Combinations,” and other U.S. generally
accepted accounting principles. This FSP is effective for fiscal years beginning
after December 15, 2008 (our fiscal year ending June 30, 2010), and interim
periods within those fiscal years. We do not believe the adoption of FSP FAS
142-3 will have a material impact on our consolidated financial position,
results of operations and cash flows.





SFAS
No. 161


In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS No.
161”), which requires additional disclosures about the objectives of the
derivative instruments and hedging activities, the method of accounting for such
instruments under SFAS No. 133 and its related interpretations, and a tabular
disclosure of the effects of such instruments and related hedged items on our
financial position, results of operations, and cash flows. SFAS No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008 (our fiscal year ending June 30, 2010).
Historically we have not had material hedging transactions and, unless we engage
in such transactions, the impact of the adoption of SFAS No. 161 on our
consolidated financial position, results of operations and cash flows will not
be material. Nevertheless, the impact of the adoption of SFAS No. 161 cannot
currently be determined, as it will depend on the nature and extent of any
hedging transactions, if any, that are in effect at the time of the adoption or
thereafter.





SFAS
No. 141(R)


In
December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combinations”
(“SFAS No. 141(R)”), which establishes principles and requirements for how the
acquirer of a business recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquired business. SFAS No. 141(R) also provides guidance for
recognizing and measuring the goodwill acquired in the business combination and
disclosing information to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS No. 141(R) is
effective for business combinations for which the acquisition dates are on or
after the beginning of the first fiscal year beginning on or after December 15,
2008 (our fiscal year ending June 30, 2010). We are currently reviewing the
impact of the adoption of SFAS No. 141(R) on our consolidated financial
position, results of operations and cash flows.





SFAS
No. 160


In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements — an Amendment of ARB 51”, (“SFAS No.
160”). This statement amends Accounting Research Bulletin No. 51 to establish
accounting and reporting standards for the noncontrolling interest (minority
interest) in a subsidiary and for the deconsolidation of a subsidiary. SFAS No.
160 establishes accounting and reporting standards requiring that noncontrolling
interests be reported as a component of equity, changes in a parent’s ownership
interest while the parent retains its controlling interest be accounted for as
equity transactions, and any retained noncontrolling equity investment upon the
deconsolidation of a subsidiary initially be measured at fair value. SFAS No.
160 is effective for fiscal years beginning on or after December 15, 2008 (our
fiscal year ending June 30, 2010). We do not believe the adoption of SFAS No.
160 will have a material impact on our consolidated financial position, results
of operations and cash flows.





23





Critical accounting policies
and 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 U.S.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and
expenses and related disclosure of contingent assets and liabilities. We base
our estimates and judgments on historical experience and on various assumptions
that we believe to be reasonable under the circumstances. Different assumptions
would affect these estimates, and actual results may differ from these
estimates.





We
believe the following are our accounting policies and estimates that involve our
more significant judgments and estimates used in the preparation of the
condensed financial statements:





· Revenue recognition
and deferred revenue;


· Allowance for
doubtful accounts;


·
Inventory;


· Investments,
non-current;


· Non-cash
share-based compensation;


· Capitalized
software development costs;


· Valuation of
long-lived assets, including intangible assets and impairment review of
goodwill;


· Contingencies and
litigation;


· Income taxes;
and


· Foreign currency
translation.





We have
reviewed our critical accounting policies and estimates and the related
disclosures with our Audit Committee. These policies and procedures are
described further in our Annual Report on Form 10-K for the year ended June 30,
2008 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 and Cash Equivalents





The
Company’s consolidated statements of cash flows summary is as
follows:





Nine Months EndedMarch 31,(in
      thousands)
                  
                  2009
                  
                  
                  2008Net
      cash provided by (used in):Operating
      activities
                  
                  $
                  116,941
                  
                  
                  $
                  129,263Investing
      activities
                  
                  
                  (39,600
                  )
                  
                  
                  (6,978
                  )Financing
      activities
                  
                  
                  (33,710
                  )
                  
                  
                  (17,674
                  )





Operating
activities:


Net cash
provided by operating activities for the nine months ended March 31, 2009
decreased approximately $12.3 million compared to the nine months ended March
31, 2008. The decrease was primarily due to an increase in net operating assets
for the nine months ended March 31, 2009 compared to the same period last year,
partially offset by an increase in net income of approximately $4.8
million.





Investing
activities:


Net cash
used in investing activities for the nine months ended March 31, 2009 was
approximately $39.6 million, as a result of approximately $32.7 million used for
our acquisition of Fry and approximately $11.1 million used to purchase
property, plant and equipment and internally developed software to be licensed
to others. During the nine months ended March 31, 2009, we redeemed
approximately $4.0 million of our auction rate securities at par value. See
“Capital Resources,” below, for a discussion of our investments in auction rate
securities.




24




Net cash
provided by investing activities for the nine months ended March 31, 2008 was
approximately $7.0 million, primarily as a result of approximately $12.9 million
used for acquisitions, substantially in connection with our acquisition of
Check-in Data AG, and approximately $11.9 million used to purchase property,
plant and equipment and internally developed software to be licensed to others.
The cash used in investing activities was partially offset by net proceeds from
the sale of auction rate securities exceeding investments in auction rate
securities by approximately $17.3 million. See “Capital Resources,” below, for a
discussion of our investments in auction rate securities.





Financing
activities:


Net cash
used in financing activities for the nine months ended March 31, 2009 was
approximately $33.7 million, primarily due to principal payments of
approximately $18.1 million on the line of credit and long-term debt that we
assumed as a result of our acquisition of Fry in August 2008. Additionally, we
used approximately $15.4 million for our stock repurchases during the
period.





Net cash
provided by financing activities for the nine months ended March 31, 2008 was
approximately $17.7 million, primarily due to stock repurchases of approximately
$53.5 million, offset by proceeds from stock option exercises of approximately
$27.1 million and realized tax benefits from stock option exercises of
approximately $11.1 million.





During
the nine months ended March 31, 2009, the unfavorable foreign exchange rate
fluctuations, for substantially all foreign currencies against the U.S. dollar,
negatively affected cash and cash equivalents’ balance by approximately $42.3
million. Our March 31, 2009 cash and cash equivalents’ balance of approximately
$383.3 million is an increase of approximately $50.1 million from the December
31, 2008 balance. All cash and cash equivalents were being retained for the
operation and expansion of the business, as well as for the repurchase of our
common stock.





Capital
Resources





At March
31, 2009, we had approximately $383.3 million in cash and cash equivalents.
Additionally, we continued to hold auction rate securities (long-term
instruments with variable interest rates that are designed to periodically reset
to prevailing market rates every 7 to 35 days through an auction process) with a
fair value of approximately $56.6 million. These securities are supported by
student loans for which repayment is either backed by the Federal Family
Education Loan Program or insured by AMBAC Financial Group. Due to the liquidity
previously provided by the interest reset mechanism and the short-term nature of
our investments, we initially classified the auction rate securities as
short-term investments. Beginning in February 2008, there were insufficient bids
in the auctions for these auction rate securities to establish a clearing rate,
and the securities were not saleable in the auction. As a result, the auction
process no longer provided short-term liquidity and the auction rate securities
have been classified as non-current investments available-for-sale as of March
31, 2009 and June 30, 2008. We also engaged an independent valuation firm to
update the valuation of the auction rate securities as of March 31, 2009. The
valuation of auction rate securities held as of March 31, 2009 reflected a
further decrease in fair value of those securities of approximately $4.7 million
(approximately $2.9 million, net of tax) as compared to their fair value as of
June 30, 2008. We do not believe the decrease in fair value to be
other-than-temporary based on the extent to which and time during which the fair
value of each investment has been below cost, the expected holding or recovery
period for each investment, and our intention and ability to hold each
investment until recovery. During the nine months ended March 31, 2009, we
redeemed approximately $4.0 million of our auction rate securities at their par
value and have not recognized any gains or losses related to the sale or partial
redemption of our investments in auction rate securities. Based on the
valuation, we have increased the temporary unrealized losses on these
investments to approximately $8.8 million (approximately $5.5 million, net of
tax). We plan to continue to monitor the liquidity of the auction rate
securities in the marketplace and the creditworthiness of the entities
supporting the obligations under these securities, and will perform another
impairment analysis as of our fiscal year-end.




25




We have
two credit agreements (the “Credit Agreements”) that in the aggregate provide a
$65.0 million multi-currency committed line of credit. During the quarter ended
December 31, 2008, the Credit Agreements were amended to (i) extend the
expiration of the agreements from July 31, 2009 to July 31, 2010 (ii) modify or
eliminate certain financial reporting requirements, and (iii) modify or
eliminate certain restrictions on our ability to assume additional debt,
repurchase stock, sell subsidiaries, or acquire companies. 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 our consolidated earnings before interest, taxes, depreciation
and amortization for the immediately preceding four calendar quarters. As of
March 31, 2009, we had approximately $1.1 million outstanding under the Credit
Agreements and had applied approximately an additional $0.4 million to
guarantees. A total of approximately $63.5 million was available for future
borrowings as of March 31, 2009. The total outstanding balance consisted of
105.0 million in JPY (Japanese Yen) (approximately $1.1 million at the March 31,
2009 exchange rate).





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, 2009 exchange rate.) Under the
terms of this facility, we may borrow in the form of either a line of credit or
term debt. As of March 31, 2009, there were no balances outstanding on this
credit facility, but approximately EUR 0.1 million (approximately $0.1 million
at the March 31, 2009 exchange rate) of the credit facility has been applied to
guarantees.





As of
March 31, 2009, we had approximately $64.7 million borrowing capacity under all
of the credit facilities described above. The weighted-average interest rate on
the outstanding balances under the lines of credit as of March 31, 2009 was 2.3%
per annum. See Note 8 to the condensed consolidated financial statements
included in this report for additional information regarding the Credit
Agreements.





Except
for approximately $1.1 million outstanding on the Credit Agreements, as
described above, our only other long-term debt was approximately $0.3 million,
substantially in capital lease related obligations.





We
believe that our cash and cash equivalents, additional cash to be generated from
operations during the foreseeable future and our available lines of credit will
be 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 months, we cannot assume that funds
would be available from other sources if required to fund acquisitions or any
unanticipated and substantial cash needs. We currently anticipate that our
property, plant, and equipment expenditures for fiscal year 2009 will be
approximately $13 million.





ITEM
      3.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





We
recorded foreign sales, including exports from the United States, of
approximately $356.0 million and approximately $390.2 millionduring the nine months
ended March 31, 2009 and March 31, 2008, respectively.





Since a
substantial portion of our business is conducted in foreign countries, a
downturn in the economies of foreign countries could adversely affect our
financial results. Our significant international business and presence expose us
to certain market risks, such as currency fluctuation, interest rate changes,
and political risks. While, under certain circumstances, reliance on foreign
operations can have a moderating impact (as one region’s improving conditions
can offset another region’s declining conditions), our foreign businesses
nonetheless add a degree of uncertainty to our planning and forecasting
process.





With
respect to currency risk, we transact business in different currencies through
our foreign subsidiaries. The fluctuation of currencies affects sales and
profitability. Frequently, sales and the costs associated with those sales are
not denominated in the same currency. Refer to Note 7 to the condensed
consolidated financial statements of this Form 10-Q for information regarding
foreign currency translation effects, and to the portion of Item 2, Managements’
Discussion and Analysis, regarding revenue, for additional information regarding
the effects of foreign currency translation.





In the
nine months ended March 31, 2009 and March 31, 2008, we transacted business in
39 and 37 currencies, respectively.




26




The
relative currency mix for the three and nine months ended March 31, 2009 and
2008 were as follows:





% of Reported RevenueThree Months EndedMarch 31,
                        
                        
                        Nine Months Ended
                          March 31,
                        
                        
                        Exchange Rates
                          March 31,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Revenues
      by currency (1):United
      States Dollar
                        
                        
                        55
                        %
                        
                        
                        49
                        %
                        
                        
                        54
                        %
                        
                        
                        49
                        %
                        
                        
                        1.0000
                        
                        
                        
                        1.0000European
      Euro
                        
                        
                        21
                        %
                        
                        
                        23
                        %
                        
                        
                        21
                        %
                        
                        
                        22
                        %
                        
                        
                        1.3286
                        
                        
                        
                        1.5787British
      Pound Sterling
                        
                        
                        6
                        %
                        
                        
                        9
                        %
                        
                        
                        7
                        %
                        
                        
                        9
                        %
                        
                        
                        1.4347
                        
                        
                        
                        1.9846Australian
      Dollar
                        
                        
                        2
                        %
                        
                        
                        1
                        %
                        
                        
                        2
                        %
                        
                        
                        2
                        %
                        
                        
                        0.6952
                        
                        
                        
                        0.9140Japanese
      Yen
                        
                        
                        1
                        %
                        
                        
                        1
                        %
                        
                        
                        1
                        %
                        
                        
                        1
                        %
                        
                        
                        0.0101
                        
                        
                        
                        0.0100Swiss
      Franc
                        
                        
                        2
                        %
                        
                        
                        2
                        %
                        
                        
                        2
                        %
                        
                        
                        2
                        %
                        
                        
                        0.8785
                        
                        
                        
                        1.0068Mexican
      Peso
                        
                        
                        1
                        %
                        
                        
                        2
                        %
                        
                        
                        1
                        %
                        
                        
                        2
                        %
                        
                        
                        0.0706
                        
                        
                        
                        0.0940Canadian
      Dollar
                        
                        
                        1
                        %
                        
                        
                        2
                        %
                        
                        
                        1
                        %
                        
                        
                        2
                        %
                        
                        
                        0.7931
                        
                        
                        
                        0.9740All
      Other Currencies (2)
                        
                        
                        11
                        %
                        
                        
                        11
                        %
                        
                        
                        11
                        %
                        
                        
                        11
                        %
                        
                        
                        0.2093
                        
                        
                        
                        0.2205Total
                        
                        
                        100
                        %
                        
                        
                        100
                        %
                        
                        
                        100
                        %
                        
                        
                        100
                        %





(1)
Calculated using weighted average exchange rates for the period.


(2) The
“% of Reported Revenue” for “All Other Currencies” is calculated based on the
weighted average three and nine months’ exchange rates for all other currencies.
The “Exchange Rates as of March 31” for “All Other Currencies” represents the
weighted average March 31 exchange rates for all other currencies based on the
nine months revenue for each country or region.





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, 2009 would have
affected total revenues by approximately $18.9 million, or 2.8%. The sensitivity
analysis assumes a weighted average 10% change in the exchange rate during the
respective period with all other variables being held constant. This sensitivity
analysis does not consider the effect of exchange rate changes on either cost of
sales, operating expenses, or income taxes, and therefore is not necessarily an
indicator of the effect of potential exchange rate changes on our net
income.





We are
also subject to interest rate fluctuations in foreign countries to the extent
that we elect to borrow in the local foreign currency. In the past, this has not
been an issue of concern as we have the capacity to elect to borrow in other
currencies with more favorable interest rates. We will continue to evaluate the
need to invest in financial instruments designed to protect against interest
rate fluctuations.





Our
committed lines of credit bear interest at a floating rate, which exposes us to
interest rate risks. We manage our exposure to this risk by minimizing, to the
extent feasible, overall borrowing and monitoring available financing
alternatives. Our interest rate risk has not changed materially from June 30,
2008, and we do not currently foresee any significant changes in exposure or in
how we manage this exposure in the near future. For borrowings in U.S. currency,
the Credit Agreements bear interest at 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 our consolidated earnings before
interest, taxes, depreciation and amortization for the immediately preceding
four calendar quarters.  At March 31, 2009, we had total borrowings of
approximately $1.1 million, and had not entered into any instruments to hedge
the resulting exposure to interest-rate risk. Management believes that the fair
value of the debt equals its carrying value at March 31, 2009. Our exposure to
fluctuations in interest rates will be affected by the outstanding amount under
the Credit Agreements, the applicable interest rate, and any outstanding
instruments to hedge exposure to interest rate risk. As our total borrowing as
of March 31, 2009 was approximately $1.1 million, a 1% change in interest rate
would have resulted in an immaterial impact on our consolidated financial
position, results of operations and cash flows.





To
minimize our exposure to credit risk associated with financial instruments, we
place our temporary cash investments with high-credit-quality institutions,
typically maintaining an investment grade rating from at least one of the three
credit rating institutions. See “Capital Resources,” in Item 2 above for a
discussion of our investments in auction rate securities.





ITEM
      4.
              CONTROLS
      AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures as of the end of the period covered
by this report are functioning effectively to provide reasonable assurance that
the information required to be disclosed by us in reports filed under the
Securities Exchange Act of 1934 is (i) recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms and (ii)
accumulated and communicated to our management, including the Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding disclosure.




27




Change in
Internal Control over Financial Reporting





No change
in our internal control over financial reporting occurred during the Company’s
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 14 to the condensed
consolidated financial statements of this Form 10-Q for information regarding
certain pending legal proceedings.





ITEM
1A.  RISK FACTORS.





In addition to other information
presented in this report, including the risk factors set forth below, you should
consider carefully the factors discussed in Item 1A, “Risk Factors” in our
Annual Report on Form 10-K for the year ended June 30, 2008.





We face risks related to the current
economic crisis. Economic conditions that are beyond our control may result in
decreases in demand for our products and services. Such conditions include the
U.S. and global recession, tightening of the credit markets, reductions in
consumer spending, and fluctuations in exchange rates. Our primary customers –
the hospitality, restaurant, and retail industries – are highly sensitive to
economic, political, and environmental disturbances and uncertainty, all of
which are not only outside of our and our customers’ control, but also are
difficult to predict with any accuracy. In particular, declines in consumer
spending and general recessionary conditions directly affect our primary
customers, limiting their ability to purchase our systems and
services.





We have experienced declines in total
revenues that we believe are attributable to reduced demand resulting from
current U.S. and international economic conditions. Continued adverse economic
conditions likely will affect our customers’ operating performance which, in
turn, may continue to result in reduced demand for our products and services.
Moreover, weakened consumer spending, coupled with difficulties many businesses
are encountering in obtaining credit, have negatively affected our customers’
ability to acquire or open new hospitality and retail venues, as well as their
ability to make significant capital expenditures on the systems that we sell. We
believe these constraints may cause and in some cases may have already caused
our customers to maintain their existing systems rather than purchase newer
systems.





In addition, continued weakness in
domestic and foreign economies may cause some of our distributors and customers
to become illiquid and delay payments, or may otherwise adversely affect our
ability to collect on their accounts, which would result in higher levels of bad
debt expense. Although adverse changes in the financial condition of our
customers and distributors have not had a material effect on our financial
condition or operating results, continued adverse economic conditions may
require that we institute protective measures such as financial reviews,
modified customer credit limits and identification of alternative vendors, and
ultimately could materially adversely affect our business.





While we believe that our cash and cash
equivalents, additional cash generated from operations, and available lines of
credit will be sufficient to provide working capital needs for the foreseeable
future, current economic conditions, including the overall performance of the
stock market beginning in 2008, may limit the availability of funds from other
sources if we encounter an extraordinary need for external capital. These
factors also affect us indirectly, to the extent that they serve to limit our
customers’ ability to purchase our systems and services.





Public health concerns, including those
related to the spread of disease such as the swine flu, could adversely affect
travel and tourism, which are the primary businesses of many of our customers,
and therefore could adversely affect our business. The recent outbreak of swine
flu in Mexico, the United States and other countries, or other public health
concerns, could potentially reduce travel and tourism, which could adversely
affect demand for hotel rooms and restaurants. Because hotels and restaurants
constitute a substantial portion of our customer base, our business could be
adversely affected if public health concerns cause a reduction in travel and
tourism.




28




Similarly, because of the nature of the
industries in which our customers operate, we are subject to political risk,
including as a result of instability in the Middle East and the worldwide threat
of terrorism, and especially in developing countries with uncertain or unstable
political structures or regimes.





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.


10
            Lease
      Agreement by and between Orix Columbia, Inc. and MICROS Systems, Inc.,
      dated August 17, 1998, with respect to the Company’s corporate
      headquarters located at 7031 Columbia Gateway Dr., Columbia MD 21046-2289,
      as amended by a First Amendment to Lease, dated October 27, 1999, a Second
      Amendment to Lease, dated December 26, 2001, and a Third Amendment to
      Lease, dated March 1, 2006 and by and between MICROS Systems, Inc. and
      Columbia Gateway Office Corporation as successor in interest to Orix
      Columbia, Inc. (filed herewith)


23
            Consent
      of Houlihan Smith & Co., Inc. (filed
  herewith)


31(a)
            Certification
      of Principal Executive Officer pursuant to Rule 13a-14(a)under the
      Securities Exchange Act of 1934 (filed
  herewith).


31(b)
            Certification
      of Principal Financial Officer pursuant to Rule 13a-14(a) under the
      Securities Exchange Act of 1934 (filed
  herewith).


32(a)
            Certification
      of Principal Executive Officer pursuant to Rule 13a-14(b) under the
      Securities Exchange Act of 1934 and 18 U.S.C. 1350 (filed
      herewith).


32(b)
            Certification
      of Principal Financial Officer pursuant to Rule 13a-14(b) under the
      Securities Exchange Act of 1934 and 18 U.S.C. 1350 (filed
      herewith).




29


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:
      May 7, 2009
                
                /s/
                Gary C. KaufmanGary
      C. KaufmanExecutive
      Vice President,Finance
      and Administration/Chief
      Financial OfficerDate:
      May 7, 2009
                
                /s/
                Cynthia A. RussoCynthia
      A. RussoSenior
      Vice President andCorporate
      Controller


30