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, 2008


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)





Registrant’s
      telephone number, including area code: 443-285-6000





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




YES
þNO
      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
      definition of ‘accelerated filer’, ‘large 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, 2008, there were issued and outstanding 81,440,103 shares of
      Registrant’s Common Stock at $0.00625 par value.





MICROS
      SYSTEMS, INC. AND SUBSIDIARIES





**Form
      10-Q**


For
      the
      three and nine months ended March 31, 2008





**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)
 Mar. 31,
                  2008
                
                June 30,
                  2007ASSETSCurrent
                    Assets:Cash
                    and cash equivalents
                
                $
                374,802
                
                $
                242,702Short-term
                    investments
                
                
                -
                
                
                86,950Accounts
                    receivable, net of allowance for doubtful accounts of $26,386
                    at March 31,
                    2008 and $23,110 at June 30, 2007
                
                
                193,124
                
                
                180,203Inventory,
                    net
                
                
                61,475
                
                
                47,790Deferred
                    income taxes
                
                
                17,513
                
                
                16,683Prepaid
                    expenses and other current assets
                
                
                32,910
                
                
                27,650Total
                    current assets
                
                
                679,824
                
                
                601,978Investments,
                    non-current
                
                
                69,650
                
                
                -Property,
                    plant and equipment, net of accumulated depreciation and amortization
                    of
                    $78,725 at March 31, 2008 and $76,352 at June 30, 2007
                
                
                29,053
                
                
                27,955Deferred
                    income taxes, non-current
                
                
                22,831
                
                
                23,145Goodwill
                
                
                156,319
                
                
                138,332Intangible
                    assets, net of accumulated amortization of $7,828 at March 31,
                    2008 and
                    $4,726 at June 30, 2007
                
                
                16,400
                
                
                14,509Purchased
                    and internally developed software costs, net of accumulated amortization
                    of $60,959 at March 31, 2008 and $54,708 at June 30, 2007
                
                
                33,519
                
                
                36,296Other
                    assets
                
                
                6,929
                
                
                4,541Total
                    assets
                
                $
                1,014,525
                
                $
                846,756LIABILITIES
                    AND SHAREHOLDERS' EQUITYCurrent
                    Liabilities:Bank
                    lines of credit
                
                $
                1,053
                
                $
                2,308Accounts
                    payable
                
                
                49,644
                
                
                43,126Accrued
                    expenses and other current liabilities
                
                
                127,431
                
                
                117,142Income
                    taxes payable
                
                
                1,588
                
                
                8,094Deferred
                    service revenue
                
                
                122,220
                
                
                86,742Total
                    current liabilities
                
                
                301,936
                
                
                257,412Income
                    taxes payable, non-current
                
                
                16,665
                
                
                -Deferred
                    income taxes, non-current
                
                
                15,419
                
                
                15,934Other
                    non-current liabilities
                
                
                18,362
                
                
                17,554Total
                    liabilities
                
                
                352,382
                
                
                290,900Minority
                    interests and minority ownership put arrangement
                
                
                7,103
                
                
                4,723Commitments
                    and contingenciesShareholders'
                    Equity:Common
                    stock, $0.00625 par value; authorized 120,000 shares; issued
                    and
                    outstanding 81,526 shares at March 31, 2008 and 81,096 shares
                    at June 30,
                    2007 (1)
                
                
                510
                
                
                507Capital
                    in excess of par
                
                
                147,843
                
                
                149,089Retained
                    earnings
                
                
                450,197
                
                
                382,785Accumulated
                    other comprehensive income
                
                
                56,490
                
                
                18,752Total
                    shareholders' equity
                
                
                655,040
                
                
                551,133Total
                    liabilities and shareholders' equity
                
                $
                1,014,525
                
                $
                846,756
  (1)
        All
        share data has been retroactively adjusted for a two-for-one stock split
        effective February 5, 2008.
  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 31,2008
              
              2007
              
              2008
              
              2007Revenue:Hardware
              
              $
              65,289
              
              $
              58,541
              
              $
              197,384
              
              $
              168,144Software
              
              
              37,910
              
              
              34,032
              
              
              113,278
              
              
              94,540Services
              
              
              133,988
              
              
              107,983
              
              
              386,958
              
              
              301,448Total
                  revenue
              
              
              237,187
              
              
              200,556
              
              
              697,620
              
              
              564,132Cost
                  of sales:Hardware
              
              
              42,882
              
              
              37,745
              
              
              127,105
              
              
              107,981Software
              
              
              7,648
              
              
              7,597
              
              
              25,671
              
              
              21,593Services
              
              
              62,398
              
              
              50,199
              
              
              180,783
              
              
              142,020Total
                  cost of sales
              
              
              112,928
              
              
              95,541
              
              
              333,559
              
              
              271,594Gross
                  margin
              
              
              124,259
              
              
              105,015
              
              
              364,061
              
              
              292,538Selling,
                  general and administrative expenses
              
              
              75,838
              
              
              65,897
              
              
              226,593
              
              
              186,624Research
                  and development expenses
              
              
              10,382
              
              
              8,943
              
              
              29,474
              
              
              23,834Depreciation
                  and amortization
              
              
              3,280
              
              
              2,961
              
              
              10,755
              
              
              9,122Total
                  operating expenses
              
              
              89,500
              
              
              77,801
              
              
              266,822
              
              
              219,580Income
                  from operations
              
              
              34,759
              
              
              27,214
              
              
              97,239
              
              
              72,958Non-operating
                  income (expense):Interest
                  income
              
              
              4,226
              
              
              2,689
              
              
              11,472
              
              
              7,521Interest
                  expense
              
              
              (29
              )
              
              (94
              )
              
              (197
              )
              
              (284
              )Other
                  income (expense), net
              
              
              (868
              )
              
              136
              
              
              (771
              )
              
              120Total
                  non-operating income, net
              
              
              3,329
              
              
              2,731
              
              
              10,504
              
              
              7,357Income
                  before taxes, minority interests and equity in net earnings of
                  affiliates
              
              
              38,088
              
              
              29,945
              
              
              107,743
              
              
              80,315Income
                  tax provision
              
              
              12,378
              
              
              10,156
              
              
              35,862
              
              
              26,893Income
                  before minority interests and equity in net earnings of
                  affiliates
              
              
              25,710
              
              
              19,789
              
              
              71,881
              
              
              53,422Minority
                  interests and equity in net earnings of affiliates, net of
                  taxes
              
              
              (564
              )
              
              (339
              )
              
              (1,342
              )
              
              (844
              )Net
                  income (1)
              
              $
              25,146
              
              $
              19,450
              
              $
              70,539
              
              $
              52,578Net
                  income per common share (1)(2):Basic
              
              $
              0.31
              
              $
              0.24
              
              $
              0.86
              
              $
              0.66Diluted
              
              $
              0.30
              
              $
              0.23
              
              $
              0.84
              
              $
              0.64Weighted-average
                  number of shares outstanding (2):Basic
              
              
              81,368
              
              
              81,164
              
              
              81,655
              
              
              79,604Diluted
              
              
              83,174
              
              
              83,347
              
              
              83,532
              
              
              82,391
  (1)
        See
        Note 9, "Share-based Compensation" in Notes to Condensed Consolidated Financial
        Statements.
 (2)
        All
        share data has been retroactively adjusted for a two-for-one stock split
        effective February 5, 2008.
  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 Ended
              March 31,2008
            
            2007Net
                cash flows provided by operating activities
            
            $
            129,263
            
            $
            67,245Cash
                flows provided by investing activities:Net
                cash paid for acquisitions
            
            
            (12,858
            )
            
            (35,994
            )Purchases
                of property, plant and equipment
            
            
            (10,188
            )
            
            (9,058
            )Internally
                developed software
            
            
            (1,759
            )
            
            (1,381
            )Disposal
                of property, plant and equipment
            
            
            527
            
            
            331Purchases
                of investments
            
            
            (610,650
            )
            
            -Proceeds
                from sales of investments
            
            
            627,950
            
            
            -Net
                cash flows used in investing activities
            
            
            (6,978
            )
            
            (46,102
            )Cash
                flows provided by financing activities:Proceeds
                from stock option exercises
            
            
            27,111
            
            
            31,369Realized
                tax benefits from stock option exercises
            
            
            11,117
            
            
            15,653Repurchases
                of stock
            
            
            (53,499
            )
            
            (2,395
            )Principal
                payments on line of credit
            
            
            (1,640
            )
            
            (3,124
            )Proceeds
                from lines of credit
            
            
            -
            
            
            1,650Other
            
            
            (763
            )
            
            (387
            )Net
                cash flows (used in) provided by financing activities
            
            
            (17,674
            )
            
            42,766Effect
                of exchange rate changes on cash and cash equivalents
            
            
            27,489
            
            
            (30
            )Net
                increase in cash and cash equivalents
            
            
            132,100
            
            
            63,879Cash
                and cash equivalents at beginning of year
            
            
            242,702
            
            
            237,222Cash
                and cash equivalents at end of period
            
            $
            374,802
            
            $
            301,101





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
      INCOME


(Unaudited,
      in thousands)





AccumulatedCapital
            
            
            
            OtherCommon Stock
            
            in Excess
            
            Retained
            
            ComprehensiveShares (1)
            
            Amount
            
            of Par
            
            Earnings
            
            Income
            
            TotalBalance,
                June 30, 2007 as previously reported
            
            
            81,096
            
            $
            507
            
            $
            149,089
            
            $
            382,785
            
            $
            18,752
            
            $
            551,133Cumulative
                impact of the adoption of FIN 48
            
            
            -
            
            
            -
            
            
            -
            
            
            (2,647
            )
            
            -
            
            
            (2,647
            )Balance,
                June 30, 2007, adjusted
            
            
            81,096
            
            
            507
            
            
            149,089
            
            
            380,138
            
            
            18,752
            
            
            548,486Comprehensive
                income:Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            70,539
            
            
            -
            
            
            70,539Foreign
                currency translation adjustments, net of tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            37,252
            
            
            37,252Amortization
                of prior year pension costs, net of tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            486
            
            
            486Total
                comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            108,277Minority
                interest put arrangement
            
            
            -
            
            
            -
            
            
            -
            
            
            (480
            )
            
            -
            
            
            (480
            )Share-based
                compensation
            
            
            -
            
            
            -
            
            
            13,444
            
            
            -
            
            
            -
            
            
            13,444Stock
                issued upon exercise of options
            
            
            2,074
            
            
            13
            
            
            27,098
            
            
            -
            
            
            -
            
            
            27,111Repurchases
                of stock
            
            
            (1,644
            )
            
            (10
            )
            
            (53,489
            )
            
            -
            
            
            -
            
            
            (53,499
            )Income
                tax benefit from options exercised
            
            
            -
            
            
            -
            
            
            11,701
            
            
            -
            
            
            -
            
            
            11,701Balance,
                March 31, 2008
            
            
            81,526
            
            $
            510
            
            $
            147,843
            
            $
            450,197
            
            $
            56,490
            
            $
            655,040




(1)
      All
      share data has been retroactively adjusted for a two-for-one stock split
      effective February 5, 2008.




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




6


MICROS
      SYSTEMS, INC. AND SUBSIDIARIES


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      three and nine months ended March 31, 2008


(unaudited)


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, 2007.





The
      year-end condensed balance sheet data was derived from audited financial
      statements, but does not include all disclosures required by accounting
      principles generally accepted in the United States of America. Certain
      information and footnote disclosures that are normally included in financial
      statements prepared in accordance with generally accepted accounting principles
      have been condensed or omitted as permitted by SEC rules and regulations.





On
      February 5, 2008, the Company effected a two-for-one stock split of the
      Company’s common stock, in the form of a stock dividend of one share for each
      share held by shareholders of record as of January 22, 2008. All references
      to
      share data in the accompanying condensed consolidated financial statements
      and
      throughout these notes have been retroactively adjusted to reflect the
      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 statement 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, 2008 are not
      necessarily indicative of the results to be expected for the full year or any
      future periods.





2.
            Acquisitions





During
      the first quarter of fiscal year 2008, the Company acquired Check-in Data AG
      (“Check in Data”) for an aggregate total cash purchase price of approximately
      $13.5 million, net of cash acquired, in a step acquisition by acquiring an
      80%
      interest in July 2007 and the remaining 20% interest in September 2007.
      Approximately $2.0 million of the total purchase price was held back to satisfy
      certain claims the Company may have against Check in Data. Any amounts remaining
      after satisfaction of any claims will be paid in two installments, at 12 and
      18
      months after the closing. Headquartered in Switzerland, Check in Data was a
      distributor of MICROS products and services and also provided complementary
      products and services. The assets acquired included approximately $3.6 million
      in cash. Goodwill of approximately $12.6 million and intangible assets and
      capitalized software of approximately $3.3 million were recorded in connection
      with the acquisition. The purchase price allocation is not finalized and is
      subject to the final working capital adjustments, which are currently not
      expected to be material. The acquisition of Check in Data has been included
      in
      the results of the Company since the acquisition date. The pro forma effect
      of
      this acquisition on operating results is not material to the consolidated
      financial position and results of operations presented herein.





In
      connection with the 80% acquisition in July 2007, the arrangement provided
      the
      minority interest holders the option to require the Company to purchase the
      minority shares from the minority interest holders (“Put Option”) based on a
      pre-defined formula, which was based on certain financial results of the
      acquired company. The Put Option was terminated when the Company purchased
      the
      remaining 20% interest in September 2007. The effect of the Put Option while
      it
      was outstanding was immaterial.





3.
            FASB
                Interpretation No. 48





Effective
      July 1, 2007, the Company adopted the provisions of FASB Interpretation No.
      48,
“Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement
      No. 109” (“FIN 48”). FIN 48 clarifies the accounting for income taxes by
      prescribing a minimum recognition threshold that a tax position is required
      to
      meet before being recognized in the financial statements.  FIN 48 also
      provides guidance on derecognition, measurement, classification, interest and
      penalties, accounting in interim periods, disclosure and transition. The
      cumulative effect of adopting FIN 48 of approximately $2.6 million, including
      interest and penalties, was recorded as a reduction to retained earnings and
      an
      increase in net income taxes payable. As a result of the adoption of FIN 48,
      the
      Company had approximately $10.9 million of unrecognized income tax
      benefits as of July 1, 2007, of which approximately $1.9 million represented
      accrual for interest and penalties.




7




During
      the three and nine months ended March 31, 2008, the Company recorded additional
      non-current unrecognized income tax benefits of approximately $4.4 million
      and
      approximately $5.3 million, respectively, including interest and penalties.
      These amounts have been recorded as non-current since the Company does not anticipate making a payment within 12
      months of the balance sheet date. If
      recognized, the unrecognized income tax benefits would be recognized as a
      reduction of income tax expense, impacting the effective income tax rate. The
      Company has reviewed its uncertain income tax positions in accordance with
      FIN
      48, and currently is not able to reasonably estimate material changes in the
      unrecognized income tax benefits and the impact it would have on its
      consolidated financial position, results of operations and cash flows in the
      next twelve months.





The
      Company historically classified interest and penalties related to unrecognized
      income tax benefits as a component of income tax expense. The Company is
      maintaining this practice following its adoption of FIN 48.





In
      the
      ordinary course of the Company’s business, transactions occur for which the
      ultimate tax outcome may be uncertain. In addition, tax authorities periodically
      audit the Company’s income tax returns. These audits include examination of the
      Company’s significant tax filing positions, including the timing and amounts of
      deductions and the allocation of income and expenses among tax jurisdictions.
      The Company is currently under audits in certain of its major taxing
      jurisdictions, with open tax years beginning in fiscal year 1999. Currently,
      the
      Company is not able to reasonably estimate the completion date of these ongoing
      audits. The Company’s major taxing jurisdictions include Australia, Ireland,
      Germany, Singapore, the United Kingdom and the United States.





4.
            Inventory





The
      components of inventory are as follows:





(in
                thousands)
            
            March 31,
              2008
            
            June 30,
              2007Raw
                materials
            
            $
            5,509
            
            $
            5,687Work-in-process
            
            
            74
            
            
            38Finished
                goods
            
            
            55,892
            
            
            42,065Total
                inventory
            
            $
            61,475
            
            $
            47,790





The
      Company maintains a reserve for obsolescence for inventory of approximately
      $11.1 million at March 31, 2008 compared to approximately $9.9 million at June
      30, 2007. During the three months ended March 31, 2008 and March 31, 2007,
      respectively, the Company reserved approximately $0.6 million and approximately
      $0.7 million, and during the nine months ended March 31, 2008 and March 31,
      2007, respectively, approximately $1.7 million and approximately $2.1 million.
      All reserves related to potentially obsolete and slow moving products. Foreign
      currency translation increased the reserve for obsolescence for inventory by
      approximately $1.1 million as of March 31, 2008.





5.
            Investments,
                non-current





As
      of
      March 31, 2008, the Company held approximately $69.7 million of long-term debt
      instruments with variable interest rates that periodically reset to prevailing
      market rates every 7 to 35 days through the auction process (“auction rate
      securities”). 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 provided by the interest rate
      reset mechanism and the short-term nature of the Company’s
      investment ,
      the
      auction rate securities had previously been classified as short-term investments
      available-for-sale . The
      Company held approximately $87.0 million in auction rate securities as of June
      30, 2007.


8


During
      February 2008, the auctions for these auction rate securities began to fail
      to
      obtain sufficient bids to establish a clearing rate and were not saleable in
      the
      auction, thereby losing the sho rt-term
      liquidity previously provided by the auction process. As a result, the auction
      rate securities have been classified as non-current investments available-for-sale as of March 31, 2008. The Company
      does not believe its investments in auction rate securities have been impaired,
      either temporarily or permanently, as the underlying securities and collateral
      have not been down-graded from their AAA ratings due to failed auctions, and
      the
      Company has continued to be paid interest on these securities at the applicable
      penalty rate. Additionally, the Company has the financial ability and intent
      to
      hold its investments in auction rate securities until successful auctions occur
      or through the current market conditions. The Company plans to continue to
      monitor the liquidity situation in the marketplace and the creditworthiness
      of
      its holdings and will perform periodic impairment analysis. As of March 31,
      2008, there were no unrealized gains or losses on these investments and the
      Company recognized no gains or losses related to the sale of its investments
      in
      auction rate securities during the three or nine month periods ended March
      31,
      2008 and 2007.





6.
            Goodwill
                and intangible assets





During
      the first quarter of fiscal year 2008, the Company completed its annual
      impairment tests on its goodwill and trademarks as of July 1, 2007. Based on
      its
      annual impairment test results, the Company determined that no impairment of
      goodwill or trademarks existed as of July 1, 2007.





7.
            Other
                comprehensive income





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





Three Months Ended
              Mach 31,
            
            Nine Months Ended
              March 31,(in
                thousands)
            
            2008
            
            2007
            
            2008
            
            2007Net
                income
            
            $
            25,146
            
            $
            19,450
            
            $
            70,539
            
            $
            52,578Other
                comprehensive income:Foreign
                currency translation adjustments
            
            
            20,865
            
            
            2,277
            
            
            37,252
            
            
            9,831Amortization
                of prior year pension costs
            
            
            160
            
            
            —
            
            
            486
            
            
            —Total
                comprehensive income
            
            $
            46,171
            
            $
            21,727
            
            $
            108,277
            
            $
            62,409





The
      foreign currency translation adjustments of approximately $20.9 million and
      approximately $37.3 million for the three and nine months ended March 31, 2008
      were primarily due to foreign currency exchange rate fluctuation, mainly between
      the Euro and the U.S. dollar.





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 which
      expires on July 31, 2009. 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.





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 (“EBITDA”) 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, that is not
      cured within the applicable cure period (with respect to those defaults for
      which the Credit Agreements provide a cure period), the Lenders’ remedies
      include their ability to declare all outstanding loans, plus interest and other
      related amounts owed, to be immediately due and payable in full, and to pursue
      all rights and remedies available to them under the Credit Agreements or under
      applicable law.




9




As
      of
      March 31, 2008, the Company had approximately $1.1 million outstanding under
      the
      Credit Agreements and had approximately $63.9 million available for future
      borrowings. The total outstanding balance consisted of 105.0 million in JPY
      (Japanese Yen) (approximately $1.1 million at the March 31, 2008 exchange
      rate).





The
      Company also has a credit relationship with a European bank in the amount of
      EUR
      1.0 million (approximately $1.6 million at the March 31, 2008 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, 2008, there were no balances
      outstanding on this credit facility, but approximately EUR 0.1 million
      (approximately $0.2 million at the March 31, 2008 exchange rate) of the credit
      facility has been utilized for guarantees.





As
      of
      March 31, 2008, the Company had approximately $65.3 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, 2008 was 2.3%.





9.
            Share-based
                compensation





The
      Company has incentive and non-qualified stock options outstanding that were
      granted to directors, officers, and other employees pursuant to authorization
      by
      the Board of Directors. With respect to directors, the Company’s policy and
      practice during the current period was that only those directors who are either
      employees of or consultants to 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 34.0
      million shares for issuance upon exercise of options, of which approximately
      3.0
      million shares are available for future grants as of March 31, 2008. As of
      March
      31, 2008, options to purchase approximately 6.4 million shares were outstanding,
      including currently exercisable options to purchase approximately 3.6 million
      shares.





The
      Company accounts for its option awards in accordance with Statement of Financial
      Accounting Standards (“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, non-cash
      share-based compensation expense adjusted for expected pre-vesting forfeitures
      is recognized for the non-vested portion of awards that were granted before
      the
      effective date of SFAS No. 123(R) as those options incrementally
      vest.





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





Three Months Ended
              March 31,
            
            Nine Months Ended
              March 31,(in
                thousands)
            
            2008
            
            2007
            
            2008
            
            2007Selling,
                general and administrative
            
            $
            3,373
            
            $
            3,581
            
            $
            12,645
            
            $
            8,851Research
                and development
            
            
            243
            
            
            182
            
            
            799
            
            
            422Total
                non-cash share-based compensation expense
            
            
            3,616
            
            
            3,763
            
            
            13,444
            
            
            9,273Income
                tax benefit
            
            
            (801
            )
            
            (867
            )
            
            (3,315
            )
            
            (1,981
            )Total
                non-cash share-based compensation expense, net of tax
                benefit
            
            $
            2,815
            
            $
            2,896
            
            $
            10,129
            
            $
            7,292Impact
                on diluted net income per share
            
            $
            0.04
            
            $
            0.04
            
            $
            0.13
            
            $
            0.09




10


During
      the three months ended December 31, 2007, the Company granted to the Company’s
      Chairman, President, and Chief Executive Officer, A.L. Giannopoulos, options
      to
      purchase 240,000 shares. 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. Although Mr. Giannopoulos has not retired, the Company recorded 100% of
      the
      non-cash share-based compensation expense related to the 240,000 options granted
      to Mr. Giannopoulos during the three months ended December 31, 2007 of
      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)
      because he was over the age of 62 at the time he received the
      options.





No
      compensation expense was capitalized for the three and nine months ended March
      31, 2008 and March 31, 2007 because no stock options were granted to employees
      whose labor costs were capitalized as software development costs.





As
      of
      March 31, 2008, there was approximately $23.5 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 2.0 years.





10.
            Recent
                accounting pronouncements





SFAS
      141(R)





In
      December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combinations” (“SFAS 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 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 141(R) is effective for business combinations for
      which the acquisition dates are on or after the beginning of the first annual
      reporting period beginning on or after December 15, 2008. The Company is
      currently reviewing the impact of the adoption of SFAS 141(R)
      on the Company’s consolidated financial position, results of operations and cash
      flows.




SFAS
      160





In
      December 2007, the FASB issued SFAS No. 160,
      “Noncontrolling Interests in Consolidated Financial Statements — an
      Amendment of ARB 51”, (“SFAS 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 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 160 is
      effective for business combinations for which the acquisition dates are on
      or
      after the beginning of the first annual reporting period beginning on or after
      December 15, 2008. The Company is currently reviewing the impact of the
      adoption of SFAS 160 on
      the Company’s consolidated financial position, results of operations and cash
      flows.




11





11.
            Net
                income per share





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





Three Months Ended
              March 31,
            
            Nine Months Ended
              March 31,(in thousands, except per share data)
            
            2008
            
            2007
            
            2008
            
            2007Net
                income
            
            $
            25,146
            
            $
            19,450
            
            $
            70,539
            
            $
            52,578Effect
                of minority put arrangement
            
            
            (153
            )
            
            —
            
            
            (480
            )
            
            —Net
                income available to common shareholders
            
            $
            24,993
            
            $
            19,450
            
            $
            70,059
            
            $
            52,578Average
                number of common shares outstanding
            
            
            81,368
            
            
            81,164
            
            
            81,655
            
            
            79,604Dilutive
                effect of outstanding stock options
            
            
            1,806
            
            
            2,183
            
            
            1,877
            
            
            2,787Average
                number of common shares outstandingassuming
                dilution
            
            
            83,174
            
            
            83,347
            
            
            83,532
            
            
            82,391Basic
                net income per share
            
            $
            0.31
            
            $
            0.24
            
            $
            0.86
            
            $
            0.66Diluted
                net income per share
            
            $
            0.30
            
            $
            0.23
            
            $
            0.84
            
            $
            0.64Anti-dilutive
                weighted average number of sharesexcluded
                from reconciliation
            
            
            1,340
            
            
            1,894
            
            
            1,030
            
            
            2,308





Net
      income for the three months ended March 31, 2008 and March 31, 2007 include
      approximately $3.6 million ($2.8 million, net of tax) and $3.8 million ($2.9
      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 $0.04 for both the three months ended March 31, 2008 and
      March 31, 2007.





Net
      income for the nine months ended March 31, 2008 and March 31, 2007 include
      approximately $13.4 million ($10.1 million, net of tax) and $9.3 million ($7.3
      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 $0.13 and $0.09 for the nine months ended March 31, 2008
      and
      March 31, 2007, respectively. See Note 9, “Share-based
      Compensation.”





12.
            Segment
                reporting data





SFAS
      No.
      131, “Disclosures about Segments of an Enterprise and Related Information,”
establishes standards for reporting information about operating segments. SFAS
      No. 131 requires segmentation based on the Company’s internal organization and
      reporting of financial results. Operating segments are defined as components
      of
      an enterprise about which separate financial information is available that
      is
      evaluated regularly by the chief operating decision maker, or decision making
      group, in deciding how to allocate resources and in assessing performance.
      The
      Company’s chief operating decision maker is the Company’s Chief Executive
      Officer.





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 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. The management views the U.S. and international
      segments separately in operating its business, although the products and
      services are similar for each segment.





12





All
      of
      the Company’s recent business acquisitions involved companies that offer similar
      or complementary products and services 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.





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





Three Months Ended
              March 31,
            
            Nine Months Ended
              March 31,(in
                thousands)
            
            2008
            
            2007
            
            2008
            
            2007Revenue(1):U.S.
            
            $
            107,891
            
            $
            93,226
            
            $
            316,385
            
            $
            269,594International
            
            
            184,462
            
            
            147,718
            
            
            533,461
            
            
            403,988Intersegment
                eliminations
            
            
            (55,166
            )
            
            (40,388
            )
            
            (152,226
            )
            
            (109,450
            )Total
                revenue
            
            $
            237,187
            
            $
            200,556
            
            $
            697,620
            
            $
            564,132Income
                before taxes, minority interests and equityin
                net earnings of affiliates(1):U.S.
            
            $
            13,994
            
            $
            8,437
            
            $
            32,156
            
            $
            22,733International
            
            
            68,681
            
            
            55,082
            
            
            199,178
            
            
            147,434Intersegment
                eliminations
            
            
            (44,587
            )
            
            (33,574
            )
            
            (123,591
            )
            
            (89,852
            )Total
                income before taxes, minority interests and equity in net earnings
                of
                affiliates
            
            $
            38,088
            
            $
            29,945
            
            $
            107,743
            
            $
            80,315








As of(in
                thousands)
            
            March 31,
              2008
            
            June 30,
              2007Identifiable
                assets(2):U.S.
            
            $
            473,371
            
            $
            443,331International
            
            
            541,154
            
            
            403,425Total
                identifiable assets
            
            $
            1,014,525
            
            $
            846,756





(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




In
      fiscal
      year 2002, the Board of Directors authorized the purchase of up to four million
      shares of the Company’s common stock, and during fiscal year 2005 the Company
      purchased all of the remaining unpurchased shares under the fiscal year 2002
      authorization. In fiscal year 2005, the Board of Directors authorized the
      purchase of an additional four million shares of the Company’s common stock. As
      of October 2007, the Company purchased all of the remaining unpurchased shares
      under the fiscal year 2005 authorization. In November 2007, the Board of
      Directors authorized the purchase of an additional two million shares of the
      Company’s common stock. The
      Company has incurred an aggregate of approximately $0.1 million in fees related
      to all three of the stock purchase plans. As of March 31, 2008, 0.8 million
      additional shares may be repurchased under the November 2007
      authorization.





13





A
      summary
      of the cumulative number of shares purchased and retired since the inception
      of
      the current repurchase program through March 31, 2008, plus the shares purchased
      and retired under the previous repurchase programs, is as follows:





Number of
              Shares
              (in thousands)
            
            Average
              Price Paid
              Per Share
            
            Total Price
              Paid
              (in thousands)Total
                shares purchased as of June 30, 2007
            
            
            7,533
            
            $
            14.77
            
            $
            111,284July
                2007 – March 2008
            
            
            1,644
            
            $
            32.55
            
            
            53,4999,177
            
            $
            17.96
            
            $
            164,783





14.
            Pension
                benefits




The
      Company’s Supplemental Executive Retirement Plan (“SERP Plan”) provides
      designated officers and executives of the Company with benefits upon retirement
      or immediate vesting of benefits upon a participant’s pre-retirement death. The
      Company funds the benefits under the plan with corporate owned life insurance
      policies held by a segregated trust (known as a “Rabbi Trust”), whose assets are
      subject to the claims of creditors of the Company. The plan is accounted for
      in
      accordance with SFAS No. 87, “Employers Accounting for Pensions.”





The
      components of net period pension cost are as follows:





Three Months Ended
              March 31,
            
            Nine Months Ended
              March 31,(in
                thousands)
            
            2008
            
            2007
            
            2008
            
            2007Service
                cost
            
            $
            162
            
            $
            139
            
            $
            485
            
            $
            418Interest
                cost
            
            
            219
            
            
            174
            
            
            654
            
            
            521Amortization
                of prior service cost
            
            
            161
            
            
            137
            
            
            486
            
            
            411$
            542
            
            $
            450
            
            $
            1,625
            
            $
            1,350





15.
            Contingencies





In
      its
      Annual Report on Form 10-K for the fiscal year ended June 30, 2007, the Company
      reported on 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 customers of the
      Company. The Company is currently providing indemnity coverage to five of the
      defendants who are customers of the Company in accordance with applicable
      provisions of the contracts between the Company and those customers. Through
      March 31, 2008, the Company’s legal fees with respect to indemnity coverage for
      this matter have not been material. During the three month period ended December
      31, 2007, the Court ordered the case stayed pending the completion of the United
      States Patent and Trademark Office’s reexamination of the patent that is the
      subject of the lawsuit.





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 seeks monetary damages in excess of $12 million, and also
      injunctive and other equitable relief. We have moved to dismiss the complaint
      on
      various grounds, Heartland has responded to that motion, and we have filed
      a
      reply to that response. The court has not yet ruled on the motion. Based on
      currently available information, and analysis by counsel, we do not believe
      that
      our relationships and agreements with Merchant Link and Paymentech are
      anti-competitive or otherwise violate either federal antitrust law or applicable
      New Jersey law.





14





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.




15




**ITEM
                2.**
            **MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS**





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 below under the heading “Factors that May
      Affect Future Results.”





Examples
      of such forward-looking statements include :





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


·
            our
                statements regarding the effects of currency fluctuations (in particular,
                Euro 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;


·
            our
                statements about the effects of larger customer orders on our quarterly
                earnings, revenues, and total 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 ability and intent 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.





**Factors
      that may affect future results**





Current
      market conditions, and world political and economic uncertainty, make it
      difficult to predict whether we can continue to achieve revenue and
      profitability growth over the remainder of the current fiscal year. 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. Rising oil and gas prices
      also directly and indirectly can have a significant impact on our customers,
      and, accordingly, on our business. In sum, our primary customers - the
      hospitality, travel, restaurant, and retail industries - are highly sensitive
      to
      economic, political, and environmental disturbances, all of which are not only
      outside of our (and, frequently, their) control, but also are extraordinarily
      difficult to predict with any accuracy, and affect our financial position and
      the results of our operations.





The
      market for our products and services is highly competitive, which, among other
      things, results in gross margin pressure on our hardware and software products.
      Margins on services and on existing products have tended generally to decline
      over time, and we expect that trend to continue.





Currency
      fluctuations directly affect our financial results because we conduct business
      in many different currencies. In particular, a weakening or strengthening Euro
      could significantly affect our financial performance due to the volume of
      business that we conduct in the European market.




16




We
      have
      invested a portion of our cash in auction rate securities, which, in light
      of
      current market conditions, have not been as liquid an investment as originally
      anticipated. There is also the possibility that the underlying security and
      collateral could have their AAA ratings downgraded by the applicable credit
      rating agencies, which could impair the value of our investment.





Our
      quarterly financial results frequently are dependent upon the timing and size
      of
      customer orders, because larger orders have at times accounted for a meaningful
      portion of quarterly earnings. We
      expect
      that the customers with whom we do the largest amount of business will change
      from year to year and sometimes from quarter to quarter, depending on the timing
      of the roll-outs of their systems. Moreover, any changes to a customer’s
      delivery requirements could affect the timing of our recognition of the
      associated revenue.





Changes
      to the schedule for completion and release of new products and services can
      also
      directly affect our quarterly financial results – if, for example, a
      product’s expected general release date must be delayed, revenues that we may
      have expected in one quarter may not be realized until a subsequent
      quarter.





Our
      products and services must continually be updated to comply with applicable
      new
      laws, regulations, and industry standards, including, by way of example, the
      security and data protection rules promulgated by the credit card associations,
      and to comply with changes to existing laws, regulations, and standards. Because
      laws, regulations, and standards, and the interpretations and applications
      of
      those laws, regulations, and standards frequently change, we expect to continue
      to incur costs associated with modifying our products and services to become
      and
      remain compliant, and it is difficult to reliably predict the magnitude of
      those
      costs.




The
      foregoing is in addition to those other risks and uncertainties disclosed in
      this report and our other SEC filings, including 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, 2007.





Overview





We
      are a
      leading worldwide designer, manufacturer, marketer and servicer of enterprise
      information solutions for the global hospitality and specialty retail
      industries. The information solutions consist of application-specific software
      and hardware systems, supplemented by a wide range of services including
      installation, training, maintenance and support, customer development and
      software hosting. Our enterprise solutions comprise three major
      areas:





(1)
      Hotel
      information systems, which consist of software encompassing property management
      systems, sales and catering systems, central reservation systems, and customer
      information systems. We have provided hotel information systems to more than
      21,000 hotels worldwide.





(2)
      Restaurant information systems, which consist of hardware and software for
      point-of-sale and operational applications, a suite of back office applications,
      including inventory, labor, and financial management, and certain centrally
      hosted enterprise applications. We have installed over 310,000 systems in table
      and quick service restaurants, hotels, motels, casinos, leisure and
      entertainment, and retail operations in more than 140 countries and on all
      seven
      continents.





(3)
      Specialty retail information systems, which consist of software encompassing
      point-of-sale, loss prevention, business analytics, customer gift cards, and
      enterprise applications. We have provided retail information systems to more
      than 90,000 specialty retail stores worldwide.





In
      addition to our software and hardware products, we offer an extensive array
      of
      related services to our customers. These services include installation, operator
      and manager training, on-site hardware maintenance, customized software
      development, application software support, credit card software support, help
      desk, systems configuration, network support, consulting and software hosting.
      We distribute our products and services directly and through our district and
      subsidiary offices, as well as through a network of independent dealers and
      distributors.





The
      markets in which we operate are highly competitive. We compete on various bases,
      including product functionality, service capabilities, price and geography.
      There are at least 20 significant competitors worldwide that offer some form
      of
      sophisticated restaurant point-of-sale system, over 15 significant hotel systems
      competitors and over 10 significant retail systems competitors. We believe
      that
      our competitive strengths include our established global distribution and
      service network, our ability to offer a broad array of hardware, software and
      service products to the hospitality and retail industry and our focus on
      providing specialized information systems solutions.




17




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 for each segment to address local issues, laws, tax requirements
      and
      customer preferences, the products and services are substantially similar
      worldwide.





Results
      of Operations





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, 2008:*





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





Three
                Months Ended March 31,U.S.
            
            International
            
            Total(in
                thousands)
            
            2008
            
            2007
            
            2008
            
            2007
            
            2008
            
            2007Hardware
            
            $
            32,813
            
            $
            29,878
            
            $
            32,476
            
            $
            28,663
            
            $
            65,289
            
            $
            58,541Software
            
            
            14,189
            
            
            12,406
            
            
            23,721
            
            
            21,626
            
            
            37,910
            
            
            34,032Service
            
            
            57,830
            
            
            48,090
            
            
            76,158
            
            
            59,893
            
            
            133,988
            
            
            107,983$
            104,832
            
            $
            90,374
            
            $
            132,355
            
            $
            110,182
            
            $
            237,187
            
            $
            200,556





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





Three Months Ended
              March 31,2008
            
            2007Hardware
            
            
            27.5
            %
            
            29.2
            %Software
            
            
            16.0
            %
            
            17.0
            %Service
            
            
            56.5
            %
            
            53.8
            %100.0
            %
            
            100.0
            %





For
      the
      three months ended March 31, 2008, total revenue was approximately $237.2
      million, an increase of approximately $36.6 million, or 18.3% compared to the
      same period last year, of which approximately $12.9 million was a result of
      favorable foreign currency exchange rate fluctuation, mainly between the Euro
      and the U.S. dollar. The increase in total revenue is due primarily to an
      increase in service revenue. The increase in our service revenue primarily
      resulted from expansion of our customer base and increases in the volume of
      our
      support services that reflects increased recurring support revenue from existing
      customers. The increase in recurring support revenue contributed 56.3% and
      the
      increase in installation revenue relating to the expansion of our customer
      base
      contributed 30.8% of the service revenue increase. Additionally, approximately
      $7.5 million of the increase in our service revenue was due to the favorable
      foreign currency exchange rate fluctuation. The increase in hardware revenue
      reflects an overall sales volume increase and approximately $3.2 million due
      to
      favorable foreign currency exchange rate fluctuation. We released Workstation
      5,
      our latest point of sale hardware, in October 2007.








18





The
      International segment sales for the three months ended March 31, 2008 increased
      approximately $22.2 million as a result of the following:





·
            An
                approximately $16.3 million or 27.2% increase in services revenue,
                of
                which approximately $7.5 million was due to favorable foreign currency
                exchange rate fluctuation;


·
            An
                approximately $3.8 million or 13.3% increase in hardware sales, of
                which
                approximately $3.2 million was due to favorable foreign currency
                exchange
                rate fluctuation; and


·
            An
                approximately $2.1 million or 9.7% increase in software sales, of
                which
                approximately $2.2 million was due to favorable foreign currency
                exchange
                rate fluctuation.





The
      above
      increases were due to continued expansion of our customer base coupled with
      increased recurring support revenue from existing customers, approximately
      $12.9
      million in additional revenue generated from favorable foreign currency exchange
      rate fluctuation, mainly between Euro and U.S. dollar and additional revenue
      generated from various acquisitions that were completed after March 31,
      2007.





U.S.
      segment sales increased approximately $14.5 million for the three months ended
      March 31, 2008 compared to the same period last year. The increase was primarily
      the result of an increase in service revenues from expansion of our customer
      base coupled with recurring support revenue from existing
      customers.





*Nine
      Months Ended March 31, 2008:*





An
      analysis of the sales mix by reportable segments is 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)
            
            2008
            
            2007
            
            2008
            
            2007
            
            2008
            
            2007Hardware
            
            $
            99,292
            
            $
            86,875
            
            $
            98,092
            
            $
            81,269
            
            $
            197,384
            
            $
            168,144Software
            
            
            43,847
            
            
            35,613
            
            
            69,431
            
            
            58,927
            
            
            113,278
            
            
            94,540Service
            
            
            164,283
            
            
            137,554
            
            
            222,675
            
            
            163,894
            
            
            386,958
            
            
            301,448$
            307,422
            
            $
            260,042
            
            $
            390,198
            
            $
            304,090
            
            $
            697,620
            
            $
            564,132





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





Nine Months Ended
              March 31,2008
            
            2007Hardware
            
            
            28.3
            %
            
            29.8
            %Software
            
            
            16.2
            %
            
            16.8
            %Service
            
            
            55.5
            %
            
            53.4
            %100.0
            %
            
            100.0
            %





For
      the
      nine months ended March 31, 2008, total revenue was approximately $697.6
      million, an increase of approximately $133.5 million, or 23.7% compared to
      the
      same period last year, of which approximately $33.6 million was a result of
      favorable foreign currency exchange rate fluctuation, mainly between the Euro
      and the U.S. dollar. The increase in total revenue is due primarily to increases
      in service revenue. The increase in our service revenue primarily resulted
      from
      expansion of our customer base and increases in the volume of our support
      services that reflects increased recurring support revenue from existing
      customers. The increase in recurring support revenue contributed 54.5% and
      the
      increase in installation revenue relating to the expansion of our customer
      base
      contributed 29.4% of the service revenue increase. Additionally, approximately
      $19.0 million of the increase in our service revenue was due to the favorable
      foreign currency exchange rate fluctuation. As stated above, we released
      Workstation 5, our latest point of sale hardware, in October
      2007.





19





The
      International segment sales for the nine months ended March 31, 2008 increased
      approximately $86.1 million as a result of the following:





·
            An
                approximately $58.8 million or 35.9% increase in services revenue,
                of
                which approximately $19.0 million was due to favorable foreign currency
                exchange rate fluctuation;


·
            An
                approximately $16.8 million or 20.7% increase in hardware sales,
                of which
                approximately $8.8 million was due to favorable foreign currency
                exchange
                rate fluctuation; and


·
            An
                approximately $10.5 million or 17.8% increase in software sales,
                of which
                approximately $5.8 million was due to favorable foreign currency
                exchange
                rate fluctuation.





The
      above
      increases were due to continued expansion of our customer base coupled with
      increased recurring support revenue from existing customers, approximately
      $33.6
      million in additional revenue generated from favorable foreign currency exchange
      rate fluctuation, mainly between Euro and U.S. dollar, and additional revenue
      generated from various acquisitions that were completed after March 31,
      2007.





U.S.
      segment sales increased approximately $47.4 million for the nine months ended
      March 31, 2008 compared to the same period last year. The increase primarily
      was
      the result of an increase in service revenues from expansion of our customer
      base coupled with recurring support revenue from existing
      customers.





***Cost
      of Sales:***





*Three
      Months Ended March 31, 2008:*





An
      analysis of the cost of sales is as follows:





Three Months Ended March 31,2008
            
            2007(in
                thousands)
            
            Cost of
              Sales
            
            % of
              Related
              Revenue
            
            Costs of
              Sales
            
            % of
              Related
              RevenueHardware
            
            $
            42,882
            
            
            65.7
            %
            $
            37,745
            
            
            64.5
            %Software
            
            
            7,648
            
            
            20.2
            %
            
            7,597
            
            
            22.3
            %Service
            
            
            62,398
            
            
            46.6
            %
            
            50,199
            
            
            46.5
            %$
            112,928
            
            
            47.6
            %
            $
            95,541
            
            
            47.6
            %





For
      the
      three months ended March 31, 2008 and 2007, cost of sales as a percent of
      revenue were 47.6%. Hardware cost of sales as a percent of related revenue
      increased 1.2% compared to the same period last year primarily as a result
      of an
      increase in freight costs, partially offset by a favorable change in product
      mix. The sale of Workstation 4 and Workstation 5 (released in October 2007)
      generate higher margin than third party hardware sales.





Software
      cost of sales as a percent of related revenue decreased approximately 2.1%
      compared to the same period last year.
      The
      decrease was a result of an overall decrease in substantially all software
      costs
      and a favorable change in product mix between internally developed software
      versus software purchased from third party suppliers. Service costs as a percent
      of related revenue increased approximately 0.1% compared to the same period
      last
      year due to increased travel costs, substantially offset by lower labor costs.




20


*Nine
      Months Ended March 31, 2008:*





An
      analysis of the cost of sales is as follows:





Nine
                Months Ended March 31,2008
            
            2007(in
                thousands)
            
            Cost
                of
              Sales
            
            %
                of
              Related
              Revenue
            
            Costs of
              Sales
            
            % of
              Related
              RevenueHardware
            
            $
            127,105
            
            
            64.4
            %
            $
            107,981
            
            
            64.2
            %Software
            
            
            25,671
            
            
            22.7
            %
            
            21,593
            
            
            22.8
            %Service
            
            
            180,783
            
            
            46.7
            %
            
            142,020
            
            
            47.1
            %$
            333,559
            
            
            47.8
            %
            $
            271,594
            
            
            48.1
            %





For
      the
      nine months ended March 31, 2008, cost of sales as a percent of revenue was
      47.8%, a decrease of 0.3% compared to the same period last year. Hardware cost
      of sales as a percent of related revenue increased 0.2% compared to the same
      period last year. The increase was primarily as a result of an increase in
      freight costs, partially offset by a favorable change in product mix and lower
      cost of sales for third party hardware compared to the same period last year.





Software
      cost of sales as a percent of related revenue decreased approximately 0.1%
      compared to the same period last year. The decrease was primarily as a result
      of
      a favorable change in product mix between internally developed software versus
      software purchased from third party suppliers. Service costs as a percent of
      related revenue decreased approximately 0.4% compared to the same period last
      year primarily due to a decrease in maintenance service part costs and a
      decrease in overall service labor costs.





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





SG&A
      expenses, as a percentage of revenue, for the three months ended March 31,
      2008,
      were 32.0%, a decrease of 0.9% compared to the same period last year. This
      decrease primarily was due to our ability to leverage our costs with the
      increase in total revenue and also reflects a decrease in non-cash share-based
      compensation expenses as a percent of total revenue.





SG&A
      expenses as a percentage of revenue for the nine months ended March 31, 2008,
      were 32.5%, a decrease of 0.6% compared to the same period last year. This
      decrease was primarily due to our ability to leverage our costs with the
      increase in total revenue, partially offset by an increase in non-cash
      share-based compensation expenses of approximately $3.8 million recorded as
      a
      component of SG&A expenses, compared to the same period last year. The
      non-cash share-based compensation expenses for the nine months ended March
      31,
      2008 include a charge of approximately $3.2 million resulting from the grant
      of
      options to our Chairman, President, and Chief Executive Officer, A.L.
      Giannopoulos, during the three months ended December 31, 2007. See “Share-Based
      Compensation Expense” below for further discussion.





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





R&D
      expenses consist primarily of labor costs less capitalized software development
      costs. Non-cash share-based compensation expenses allocated to R&D were not
      capitalized as software development costs during the three and nine months
      ended
      March 31, 2008 and 2007 because no stock options were granted to employees
      whose
      labor costs were capitalized as software development costs. An analysis of
      R&D activities is as follows:





Three
                Months Ended
              March
                31,
            
            Nine
                Months Ended
              March
                31,(in
                thousands)
            
            2008
            
            2007
            
            2008
            
            2007Total
                R&D incurred
            
            $
            10,782
            
            $
            9,467
            
            $
            31,233
            
            $
            25,215Capitalized
                software development costs
            
            
            (400
            )
            
            (524
            )
            
            (1,759
            )
            
            (1,381
            )Total
                R&D expenses
            
            $
            10,382
            
            $
            8,943
            
            $
            29,474
            
            $
            23,834%
                of Revenue
            
            
            4.4
            %
            
            4.5
            %
            
            4.2
            %
            
            4.2
            %




21


The
      increase in total R&D incurred and capitalized software development costs
      for the nine months ended March 31, 2008 was primarily due to additional R&D
      incurred for our retail software products. Total R&D incurred includes
      approximately $0.2 million and approximately $0.2 million for the non-cash
      share-based compensation expense allocated to R&D for the three months ended
      March 31, 2008 and March 31, 2007, respectively, and approximately $0.8 million
      and approximately $0.4 million for the nine months ended March 31, 2008 and
      March 31, 2007, respectively.





***Depreciation
      and Amortization Expenses:***





Depreciation
      and amortization expenses for the three months ended March 31, 2008 increased
      approximately $0.3 million to approximately $3.3 million compared to the same
      period last year. Depreciation and amortization expenses for the nine months
      ended March 31, 2008 increased approximately $1.6 million to approximately
      $10.8
      million compared to the same period last year. The increases are primarily
      due
      to additional depreciation and amortization expenses on capital expenditures
      since March 31, 2007 and due to recent acquisitions.





***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, non-cash share-based
      compensation expense, adjusted for expected pre-vesting forfeitures, is
      recognized for the non-vested portion of awards that were granted before the
      effective date of SFAS No. 123(R) as those options become vested.





The
      SG&A expenses and R&D expenses discussed above include the following
      allocations of non-cash share-based compensation expense:





Three
                Months Ended
              March
                31,
            
            Nine
                Months Ended
              March
                31,(in
                thousands)
            
            2008
            
            2007
            
            2008
            
            2007SG&A
            
            $
            3,373
            
            $
            3,581
            
            $
            12,645
            
            $
            8,851R&D
            
            
            243
            
            
            182
            
            
            799
            
            
            422Total
                non-cash share-based compensation expense
            
            
            3,616
            
            
            3,763
            
            
            13,444
            
            
            9,273Income
                tax benefit
            
            
            (801
            )
            
            (867
            )
            
            (3,315
            )
            
            (1,981
            )Total
                non-cash share-based compensation expense, net of tax
                benefit
            
            $
            2,815
            
            $
            2,896
            
            $
            10,129
            
            $
            7,292Impact
                on diluted net income per share
            
            $
            0.04
            
            $
            0.04
            
            $
            0.13
            
            $
            0.09





The
      non-cash share-based compensation expenses for the nine months ended March
      31,
      2008 include a charge of approximately $3.2 million (approximately $2.0 million
      net of tax benefits or $0.02 diluted earnings per share) resulting from the
      grant of options to our Chairman, President, and Chief Executive Officer, A.L.
      Giannopoulos, during the three month period ended December 31, 2007. In
      accordance with the terms of the Company’s option plan, any options that he
      holds at the time of his retirement that have not yet vested will vest
      immediately upon his retirement, as he is over the retirement age of 62.
      Although Mr. Giannopoulos has not retired, we expensed 100% of share-based
      payment charge related to his option grant during the three months ended
      December 31, 2007, because he was over the age of 62 at the time he received
      the
      options.




***Income
      from Operations:***





Income
      from operations for the three months ended March 31, 2008 was approximately
      $34.8 million, an increase of approximately $7.5 million or 27.7%, compared
      to
      the same period last year. Income from operations for the nine months ended
      March 31, 2008 was approximately $97.2 million, an increase of approximately
      $24.3 million or 33.3%, compared to the same period last year. The increase
      for
      the three months ended March 31, 2008 was primarily due to an increase in
      revenue, decreases in operating expenses as a percent of revenue and an increase
      due to favorable foreign currency exchange rate fluctuation (mainly between
      Euro
      and U.S. dollar). The increase for the nine months ended March 31, 2008 was
      primarily due to an increase in revenue, higher margins, decreases in operating
      expenses as a percent of revenue and an increase due to favorable foreign
      currency exchange rate fluctuation, partially offset by an increase of
      approximately $4.2 million in non-cash share-based compensation expense compared
      to the same period last year.




22





***Non-operating
      Income:***





Net
      non-operating income for the three months ended March 31, 2008, was
      approximately $3.3 million, an increase of approximately $0.6 million compared
      to the same period last year. The increase was primarily due to an increase
      in
      interest income resulting from overall higher cash and cash equivalents balances
      and non-current investment balances, substantially offset by foreign exchange
      loss.





Net
      non-operating income for the nine months ended March 31, 2008 was approximately
      $10.5 million, an increase of approximately $3.1 million compared to the same
      period last year. The increase was primarily due to an increase in interest
      income resulting from overall higher cash and cash equivalents balances and
      non-current investment balances, partially offset by foreign exchange
      loss.





***Income
      Tax Provisions:***





The
      effective tax rates for the three months ended March 31, 2008 and 2007 were
      32.5% and 33.9%, respectively. The effective tax rates for the nine months
      ended
      March 31, 2008 and 2007 were 33.3% and 33.5%, respectively. The effective tax
      rates for the three and nine months ended March 31, 2008 were less than the
      35.0%, U.S. statutory federal income tax rate, mainly due to the increased
      proportion 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 per the Internal Revenue Service code.  These benefits were
      partially offset by the non-deductible nature of certain non-cash
      share-based compensation items, other non-deductible compensation items, foreign
      withholding taxes and enacted tax rate changes in foreign jurisdictions and
      the
      recognition of certain discrete items in the periods.





Based
      on
      currently available information, we estimate that the fiscal year 2008 effective
      tax rate will be approximately 33.3%.  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.





Effective
      July 1, 2007, we adopted the provisions of FASB Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement
      No. 109” (“FIN 48”). FIN 48 clarifies the accounting for income taxes by
      prescribing a minimum recognition threshold that a tax position is required
      to
      meet before being recognized in the financial statements.  FIN 48 also
      provides guidance on derecognition, measurement, classification, interest and
      penalties, accounting in interim periods, disclosure and transition. The
      cumulative effect of adopting FIN 48 of approximately $2.6 million, including
      interest and penalties, was recorded as a reduction to retained earnings and
      an
      increase in net income taxes payable. As a result, we had approximately $10.9
      million of unrecognized income tax
      benefits as of July 1, 2007, of which approximately $1.9 million represented
      accrual for interest and penalties.





During
      the three months and nine months ended March 31, 2008, we recorded additional
      non-current unrecognized income tax benefits of approximately $4.4 million
      and
      approximately $5.3 million, respectively, including interest and penalties.
      These amounts have been recorded as non-current since we do not anticipate making a payment within 12 months of
      the
      balance sheet date. If
      recognized, the unrecognized income tax benefits would be recognized as a
      reduction of income tax expense, impacting the effective income tax rate. We
      have reviewed our uncertain income tax positions in accordance with FIN 48,
      and
      currently we are not able to reasonably estimate material changes in the
      unrecognized income tax benefits and the impact it would have on our
      consolidated financial position, results of operations and cash flows in the
      next twelve months.





We
      historically classified interest and penalties related to unrecognized income
      tax benefits as a component of income tax expense. We are maintaining this
      practice following our adoption of FIN 48.





In
      the
      ordinary course of business, transactions occur for which the ultimate tax
      outcome may be uncertain. In addition, tax authorities periodically audit our
      income tax returns. These audits include examination of our significant tax
      filing positions, including the timing and amounts of deductions and the
      allocation of income and expenses among tax jurisdictions. We are currently
      under audits in certain of our major taxing jurisdictions, with open tax years
      beginning in fiscal year 1999. Currently, we are not able to reasonably estimate
      the completion date of these ongoing audits. Our major taxing jurisdictions
      include Australia, Ireland, Germany, Singapore, the United Kingdom and the
      United States.




23





**Recent
      accounting pronouncements**





SFAS
      141(R)





In
      December 2007, the FASB issued SFAS No. 141 (Revised), “Business
      Combinations” (“SFAS 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 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 141(R) is effective for business combinations for which the
      acquisition dates are on or after the beginning of the first annual reporting
      period beginning on or after December 15, 2008. We are currently reviewing
      the impact of the adoption of SFAS 141(R) on our consolidated financial
      position, results of operations and cash flows.





SFAS
      160





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements — an Amendment of ARB 51”, (“SFAS 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
      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 160
      is
      effective for business combinations for which the acquisition dates are on
      or
      after the beginning of the first annual reporting period beginning on or after
      December 15, 2008. We are currently reviewing the impact of the adoption of
      SFAS 160 on our consolidated financial position, results of operations and
      cash
      flows.





**Critical
      accounting policies**





Our
      discussion and analysis of our financial condition and results of operations
      are
      based upon 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. Actual results may
      differ from these estimates under different assumptions or
      conditions.





We
      believe the following are our accounting policies 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;


·  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,
      2007 in Item 7, “Management’s Discussion and Analysis of Financial Condition and
      Results of Operations,” under the heading “Critical Accounting
      Estimates.”




24





**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 Ended
              March
                31,(in
                thousands)
            
            2008
            
            2007Net
                cash provided by (used in):Operating
                activities
            
            $
            129,263
            
            $
            67,245Investing
                activities
            
            
            (6,978
            )
            
            (46,102
            )Financing
                activities
            
            
            (17,674
            )
            
            42,766





***Operating
      activities:***


Net
      cash
      provided by operating activities for the nine months ended March 31, 2008
      increased approximately $62.0 million compared to the nine months ended March
      31, 2007 due primarily to an approximately $21.0 million increase in deferred
      service revenue, an approximately $18.0 million increase in net income, an
      approximately $17.6 million increase in cash provided by improved accounts
      receivables collection.





***Investing
      activities:***


Net
      cash
      used in 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, and approximately $11.9 million used to purchase property, plant and
      equipment and internally develop 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.





Net
      cash
      used in investing activities for the nine months ended March 31, 2007 was
      approximately $46.1 million, including approximately $36.0 million for
      acquisitions, of which approximately $29.8 million was for the acquisition
      of
      the RedSky IT Hospitality, Travel and Retail subsidiaries of RedSky IT in
      January 2007 and approximately $6.2 million was for acquisitions of various
      distributors of MICROS products and services and two other companies with
      complementary products and services. We also used approximately $10.4 million
      to
      purchase property, plant, and equipment and internally developed software to
      be
      licensed to others. We did not invest in auction rate securities during the
      nine
      months ended March 31, 2007.





***Financing
      activities:***


Net
      cash
      used in 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.





Net
      cash
      provided by financing activities for the nine months ended March 31, 2007 was
      approximately $42.8 million, consisting primarily of proceeds from stock option
      exercises of approximately $31.4 million and realized tax benefits from stock
      option exercises of approximately $15.7 million, partially offset by our stock
      repurchases of approximately $2.4 million.





At March
      31,
      2008, all cash and cash equivalents were being retained for the operation,
      expansion of the business and for the repurchase of our common
      stock.




25





**Capital
      Resources**





At
      March
      31, 2008, we had approximately $374.8 million in cash and cash equivalents.
      Additionally, we had approximately $69.7 million invested in long-term
      instruments with variable interest rates that periodically reset to prevailing
      market rates every 7 to 35 days through auction process (“auction rate
      securities”). 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 provided by the interest
      reset mechanism and the short-term nature of our investments, the auction rate
      securities had previously been classified as short-term investments
      available-for-sale. During February 2008, the auctions for these auction rate
      securities began to fail to obtain sufficient bids to establish a clearing
      rate
      and were not saleable in the auction, thereby losing the short-term liquidity
      previously provided by the auction process. As a result, the auction rate
      securities have been classified as non-current investments available-for-sale
      as
      of March 31, 2008. We do not believe our investments in auction rate securities
      have been impaired, either temporarily or permanently, as the underlying
      securities and collateral have not been down-graded from their AAA ratings,
      and
      we have continued to be paid interest on these securities at the applicable
      penalty rate. Additionally, we have the financial ability and intent to hold
      our
      investments in auction rate securities until a successful auctions occur. We
      plan to continue to monitor the liquidity situation in the marketplace and
      the
      creditworthiness of our holdings and will perform periodic impairment
      analysis.




We
      have
      two credit agreements (the “Credit Agreements”) that in the aggregate provide a
      $65.0 million multi-currency committed line of credit which expires on July
      31,
      2009. 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 our 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 our major U.S.
      subsidiaries as well as inventory and receivables located in the
      U.S.





For
      borrowings in U.S. currency, the interest rate under the Credit Agreements
      is
      equal to the higher of the federal funds rate plus 50 basis points or the prime
      rate. For borrowings in foreign currencies, the interest rate is determined
      by a
      LIBOR-based formula, plus an additional margin of 125 to 200 basis points,
      depending upon our consolidated earnings before interest, taxes, depreciation
      and amortization (“EBITDA”) for the immediately preceding four calendar
      quarters. Under the terms of the Credit Agreements, we are 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 our 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, that is not cured within the applicable cure period
      (with respect to those defaults for which the Credit Agreements provide a cure
      period), the Lenders’ remedies include their ability to declare all outstanding
      loans, plus interest and other related amounts owed, to be immediately due
      and
      payable in full, and to pursue all rights and remedies available to them under
      the Credit Agreements or under applicable law.





As
      of
      March 31, 2008, we had approximately $1.1 million outstanding under the Credit
      Agreements and had approximately $63.9 million available for future borrowings.
      The total outstanding balance consisted of 105.0 million in JPY (Japanese Yen)
      (approximately $1.1 million at the March 31, 2008 exchange rate).





We
      also
      have a credit relationship with a European bank in the amount of EUR 1.0 million
      (approximately $1.6 million at the March 31, 2008 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, 2008, there were no balances outstanding on his
      credit facility, but approximately EUR 0.1 million (approximately $0.2 million
      at the March 31, 2008 exchange rate) of the credit facility has been utilized
      for guarantees.





As
      of
      March 31, 2008, we had approximately $65.3 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, 2008 was
      2.3%.





We
      believe that our cash and cash equivalents, cash generated from operations
      and
      our available lines of credit will be sufficient to provide our working capital
      needs for the foreseeable future. Nevertheless, if we need to raise additional
      funds, we believe we will be able to raise the necessary amounts either by
      entering into additional financing agreements or through the issuance of our
      common stock. We currently anticipate that our property, plant, and equipment
      expenditures for fiscal year 2008 will be approximately $14
      million.




26




**ITEM
      3.**  **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**





We
      recorded foreign sales, including exports from the United States, of
      approximately $390.2 million and approximately $304.1 million **** during
      the nine months ended March 31, 2008 and March 31, 2007, respectively.





Our
      significant international business and presence expose us to certain market
      risks, such as currency fluctuation, interest rate changes, and political risks.
      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.





In
      the
      nine months ended March 31, 2008 and March 31, 2007, we transacted business
      in
      36 currencies and 34 currencies, respectively.





The
      relative currency mix for the three and nine months ended March 31, 2008 and
      March 31, 2007 were as follows:


%
                of Reported RevenueThree
                Months Ended
              March
                31,
            
            Nine
                Months Ended
              March
                31,
            
            Exchange Rates
              March
                31,Revenues
                by currency (1):
            
            2008
            
            2007
            
            2008
            
            2007
            
            2008
            
            2007United
                States Dollar
            
            
            49
            %
            
            51
            %
            
            49
            %
            
            52
            %
            
            1.0000
            
            
            1.0000European
                Euro
            
            
            23
            %
            
            26
            %
            
            22
            %
            
            24
            %
            
            1.5787
            
            
            1.3358British
                Pound Sterling
            
            
            9
            %
            
            7
            %
            
            9
            %
            
            7
            %
            
            1.9846
            
            
            1.9679Canadian
                Dollar
            
            
            2
            %
            
            1
            %
            
            2
            %
            
            1
            %
            
            0.9740
            
            
            0.8661Australian
                Dollar
            
            
            1
            %
            
            3
            %
            
            2
            %
            
            3
            %
            
            0.9140
            
            
            0.8092Mexican
                Peso
            
            
            2
            %
            
            2
            %
            
            2
            %
            
            2
            %
            
            0.0940
            
            
            0.0906All
                Other Currencies (2), (3)
            
            
            14
            %
            
            10
            %
            
            14
            %
            
            11
            %
            
            0.2905
            
            
            0.1649Total
            
            
            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.(3)
                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.





A
      10%
      increase or decrease in the value of the Euro in relation to the U.S. dollar
      in
      the nine months ended March 31, 2008 would have affected total revenues by
      approximately $15.0 million, or 2.1%. 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 accordingly, 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, 2007, 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, 2008, 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, 2008. 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, 2008 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,
      generally with bond rating of “A” and above. See “Capital Resources,” in Item 2
      above for a discussion of our investments in auction rate
      securities.





27


**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. A controls system cannot provide absolute assurance,
      however, that the objectives of the controls system are met, and no evaluation
      of controls can provide absolute assurance that all control issues and instances
      of fraud, if any, within a company have been detected.





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.




28


**PART
      II – OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





In
      its Annual Report on Form 10-K for
      the fiscal year ended June 30, 2007, the Company reported on 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 customers of the Company. The Company is currently
      providing indemnity coverage to five of the defendants who are customers of
      the
      Company in accordance with applicable provisions of the contracts between the
      Company and those customers. Through March 31, 2008, the Company’s legal fees
      with respect to indemnity coverage for this matter have not been material.
      During the three month period ended December 31, 2007, the Court ordered the
      case stayed pending the completion of the United States Patent and Trademark
      Office’s reexamination of the patent that is the subject of the lawsuit.





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 seeks monetary damages in excess of $12 million, and also
      injunctive and other equitable relief. We have moved to dismiss the complaint
      on
      various grounds, Heartland has responded to that motion, and we have filed
      a
      reply to that response. The court has not yet ruled on the motion. Based on
      currently available information, and analysis by counsel, we do not believe
      that
      our relationships and agreements with Merchant Link and Paymentech are
      anti-competitive or otherwise violate either federal antitrust law or applicable
      New Jersey law.





We
      are
      and have been involved in legal proceedings arising in the normal course of
      business, and, subject to the matters referenced above, we are 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 our results of operations or financial position or cash flows.





**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 December 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 December 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 Form 8-K filed on October 17,
                2007.31(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 1, 2008
            /s/
            Gary
                C. KaufmanGary
                C. KaufmanExecutive
                Vice President,Finance
                and Administration/Chief
                Financial OfficerDate:
                May 1, 2008
            /s/
            Cynthia
                A. RussoCynthia
                A. RussoSenior
                Vice President andCorporate
                Controller





30