UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-Q





Quarterly
      Report Pursuant to Section 13 or 15(d)


of
      the
      Securities Exchange Act of 1934





For
      the
      quarterly period ended September 30, 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 reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.





YES þ   NO o




Indicate
      by check mark whether the Registrant 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
                fileroNon-accelerated
                filero
            Smaller
                Reporting Companyo





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
      October 31, 2008, there were issued and outstanding 80,380,632 shares of
      Registrant’s Common Stock at $0.00625 par value.





MICROS
      SYSTEMS, INC. AND SUBSIDIARIES





**Form
      10-Q**


For
      the
      three months ended September 30, 2008





**PART
      I – FINANCIAL INFORMATION**





**ITEM
      1.**  **FINANCIAL
      STATEMENTS**




MICROS
      SYSTEMS, INC. AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED BALANCE SHEETS


(Unaudited,
      in thousands, except per share data)





Sept.
                30,
              2008
            
            June
                30,
              2008ASSETSCurrent
                Assets:Cash
                and cash equivalents
            
            $
            325,441
            
            $
            381,964Accounts
                receivable, net of allowance for doubtful accounts of$29,021
                at September 30, 2008 and $28,348 at June 30, 2008
            
            
            203,153
            
            
            192,445Inventory,
                net
            
            
            52,795
            
            
            64,575Deferred
                income taxes
            
            
            17,528
            
            
            18,724Prepaid
                expenses and other current assets
            
            
            27,417
            
            
            29,737Total
                current assets
            
            
            626,334
            
            
            687,445Investments,
                non-current
            
            
            62,662
            
            
            65,216Property,
                plant and equipment, net of accumulated depreciation andamortization
                of $78,457 at September 30, 2008 and $78,505 at June 30,
                2008
            
            
            31,308
            
            
            29,165Deferred
                income taxes, non-current
            
            
            8,261
            
            
            7,108Goodwill
            
            
            186,895
            
            
            159,722Intangible
                assets, net of accumulated amortization of $7,844 at September 30,
                2008and
                $7,401 at June 30, 2008
            
            
            21,568
            
            
            16,168Purchased
                and internally developed software costs, net of
                accumulatedamortization
                of $60,432 at September 30, 2008 and $61,691 at June 30,
                2008
            
            
            32,045
            
            
            30,846Other
                assets
            
            
            8,249
            
            
            7,336Total
                assets
            
            $
            977,322
            
            $
            1,003,006LIABILITIES
                AND SHAREHOLDERS' EQUITYCurrent
                Liabilities:Bank
                lines of credit
            
            $
            987
            
            $
            989Accounts
                payable
            
            
            41,895
            
            
            46,843Accrued
                expenses and other current liabilities
            
            
            116,045
            
            
            124,913Income
                taxes payable
            
            
            4,099
            
            
            6,363Deferred
                revenue
            
            
            122,059
            
            
            115,398Total
                current liabilities
            
            
            285,085
            
            
            294,506Income
                taxes payable, non-current
            
            
            18,438
            
            
            18,302Deferred
                income taxes, non-current
            
            
            3,382
            
            
            2,181Other
                non-current liabilities
            
            
            10,183
            
            
            8,103Total
                liabilities
            
            
            317,088
            
            
            323,092Minority
                interests and minority ownership put arrangement
            
            
            6,702
            
            
            6,898Commitments
                and contingenciesShareholders'
                Equity:Common
                stock, $0.00625 par value; authorized 120,000 shares; issued
                andoutstanding
                80,629 shares at September 30, 2008 and 80,898 shares at June 30,
                2008
            
            
            504
            
            
            506Capital
                in excess of par
            
            
            126,347
            
            
            131,517Retained
                earnings
            
            
            505,468
            
            
            480,777Accumulated
                other comprehensive income
            
            
            21,213
            
            
            60,216Total
                shareholders' equity
            
            
            653,532
            
            
            673,016Total
                liabilities and shareholders' equity
            
            $
            977,322
            
            $
            1,003,006




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


2





MICROS
      SYSTEMS, INC. AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited,
      in thousands, except per share data)





Three
                Months EndedSeptember
                30,2008
            
            2007Revenue:Hardware
            
            $
            63,693
            
            $
            64,901Software
            
            
            37,576
            
            
            30,851Services
            
            
            142,800
            
            
            120,730Total
                revenue
            
            
            244,069
            
            
            216,482Cost
                of sales:Hardware
            
            
            43,059
            
            
            39,938Software
            
            
            7,300
            
            
            8,509Services
            
            
            67,766
            
            
            54,793Total
                cost of sales
            
            
            118,125
            
            
            103,240Gross
                margin
            
            
            125,944
            
            
            113,242Selling,
                general and administrative expenses
            
            
            76,801
            
            
            70,895Research
                and development expenses
            
            
            10,471
            
            
            9,416Depreciation
                and amortization
            
            
            4,087
            
            
            3,846Total
                operating expenses
            
            
            91,359
            
            
            84,157Income
                from operations
            
            
            34,585
            
            
            29,085Non-operating
                income (expense):Interest
                income
            
            
            3,254
            
            
            3,514Interest
                expense
            
            
            (146
            )
            
            (63
            )Other
                income (expense), net
            
            
            687
            
            
            (129
            )Total
                non-operating income, net
            
            
            3,795
            
            
            3,322Income
                before taxes, minority interests and equity in net earnings of
                affiliates
            
            
            38,380
            
            
            32,407Income
                tax provision
            
            
            13,049
            
            
            10,856Income
                before minority interests and equity in net earnings of
                affiliates
            
            
            25,331
            
            
            21,551Minority
                interests and equity in net earnings of affiliates, net of
                taxes
            
            
            (449
            )
            
            (247
            )Net
                income (1)
            
            $
            24,882
            
            $
            21,304Net
                income per common share (1)(2):Basic
            
            $
            0.31
            
            $
            0.26Diluted
            
            $
            0.30
            
            $
            0.25Weighted-average
                number of shares outstanding (2):Basic
            
            
            80,688
            
            
            81,584Diluted
            
            
            82,196
            
            
            83,512





(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.


3





MICROS
      SYSTEMS, INC. AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited,
      in thousands)





Three
                Months EndedSeptember
                30,2008
            
            2007Net
                cash flows provided by operating activities
            
            $
            29,658
            
            $
            24,676Cash
                flows provided by investing activities:Net
                cash paid for acquisitions
            
            
            (32,288
            )
            
            (11,562
            )Purchases
                of property, plant and equipment
            
            
            (3,343
            )
            
            (4,031
            )Internally
                developed software
            
            
            (125
            )
            
            (611
            )Disposal
                of property, plant and equipment
            
            
            190
            
            
            103Purchases
                of investments
            
            
            -
            
            
            (308,000
            )Proceeds
                from sales of investments
            
            
            3,375
            
            
            270,025Net
                cash flows used in investing activities
            
            
            (32,191
            )
            
            (54,076
            )Cash
                flows provided by financing activities:Principal
                payments on line of credit and long-term debt
            
            
            (18,124
            )
            
            -Repurchases
                of stock
            
            
            (10,352
            )
            
            -Proceeds
                from stock option exercises
            
            
            1,363
            
            
            12,513Realized
                tax benefits from stock option exercises
            
            
            77
            
            
            6,357Other
            
            
            (474
            )
            
            (90
            )Net
                cash flows (used in) provided by financing activities
            
            
            (27,510
            )
            
            18,780Effect
                of exchange rate changes on cash and cash equivalents
            
            
            (26,480
            )
            
            8,446Net
                decrease in cash and cash equivalents
            
            
            (56,523
            )
            
            (2,174
            )Cash
                and cash equivalents at beginning of year
            
            
            381,964
            
            
            242,702Cash
                and cash equivalents at end of period
            
            $
            325,441
            
            $
            240,528





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


4





MICROS
      SYSTEMS, INC. AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE
      INCOME


(Unaudited,
      in thousands)





AccumulatedCapital
            
            
            
            OtherCommon
                Stock
            
            in Excess
            
            Retained
            
            ComprehensiveShares
            
            Amount
            
            of
                Par
            
            Earnings
            
            Income
            
            TotalBalance,
                June 30, 2008
            
            
            80,898
            
            $
            506
            
            $
            131,517
            
            $
            480,777
            
            $
            60,216
            
            $
            673,016Comprehensive
                income (loss):Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            24,882
            
            
            -
            
            
            24,882Foreign
                currency translation adjustments, net of tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (39,517
            )
            
            (39,517
            )Changes
                in unrealized losses on non-current investments, net of
                tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            514
            
            
            514Total
                comprehensive loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (14,121
            )Minority
                interest put arrangement
            
            
            -
            
            
            -
            
            
            -
            
            
            (191
            )
            
            -
            
            
            (191
            )Share-based
                compensation
            
            
            -
            
            
            -
            
            
            3,733
            
            
            -
            
            
            -
            
            
            3,733Stock
                issued upon exercise of options
            
            
            78
            
            
            -
            
            
            1,363
            
            
            -
            
            
            -
            
            
            1,363Repurchases
                of stock
            
            
            (347
            )
            
            (2
            )
            
            (10,350
            )
            
            -
            
            
            -
            
            
            (10,352
            )Income
                tax benefit from options exercised
            
            
            -
            
            
            -
            
            
            84
            
            
            -
            
            
            -
            
            
            84Balance,
                September 30, 2008
            
            
            80,629
            
            $
            504
            
            $
            126,347
            
            $
            505,468
            
            $
            21,213
            
            $
            653,532




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




5


MICROS
        SYSTEMS, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For
        the
        three months ended September 30, 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, 2008.





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.





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





The
      condensed consolidated financial statements included in this report reflect
      all
      normal and recurring adjustments that, in the opinion of management, are
      necessary for a fair 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 months ended September 30, 2008 are not necessarily
      indicative of the results to be expected for the full year or any future
      periods.





2.
            Acquisitions


During
      the three month period ended September 30, 2008, the Company acquired Fry,
      Inc.
      (“Fry”) for a total cash purchase price of approximately $32.3 million, net of
      cash acquired. The
      Company also assumed debt of approximately $18.1 million, which was paid off
      immediately after the acquisition.Approximately $6.0 million of the
      total purchase price is currently held in escrow and, if specified Company
      claims against Fry arise, such amounts may be used to satisfy these claims.
      Any
      amounts then remaining after the satisfaction of any such claims will be paid
      in
      two installments, at 12 and 18 months after closing. The selling Fry
      shareholders are eligible to earn up to an additional $17 million in earn out
      payments over the next approximately two year period, which are payable based
      upon meeting specified financial targets. Fry is an e-commerce design,
      development and managed services provider headquartered in Ann Arbor, Michigan.
      In connection with the acquisition, the Company recorded goodwill of
      approximately $33.2 million, intangible assets of approximately $7.0 million
      and
      capitalized software of approximately $4.7 million. 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
      Fry has been included in the Company’s results 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.





3.
            Inventory


The
      components of inventory are as follows:





(in
                thousands)
            
            September 30,
              2008
            
            June 30,
              2008Raw
                materials
            
            $
            4,637
            
            $
            5,521Work-in-process
            
            
            8
            
            
            21Finished
                goods
            
            
            48,150
            
            
            59,033Total
                inventory
            
            $
            52,795
            
            $
            64,575





The
      Company maintains a reserve for obsolescence for inventory of approximately
      $12.3 million at September 30, 2008, compared to approximately $11.5 million
      at
      June 30, 2008. During the three months ended September 30, 2008 and September
      30, 2007, the Company reserved approximately $1.5 million and approximately
      $0.5
      million, respectively. All reserves related to potentially obsolete and slow
      moving products. Approximately $1.0 million of the reserve recorded during
      the
      three months ended September 30, 2008 related to a potential obsolete product
      which will be replaced with a new product currently being developed by the
      Company. Foreign currency translation decreased the reserve for obsolescence
      for
      inventory by approximately $0.5 million as of September 30,
      2008.


6





4.
            Investments,
                non-current


As
      of
      September 30, 2008, the
      Company continues to hold auction rate securities that are classified as
      available for sale, investments, non-current. These investments are classified
      as non-current as auctions for these securities failed to obtain sufficient
      bids
      to establish a clearing rate. As a result, the securities were not saleable
      in
      the auction, thereby no longer providing short-term liquidity. In the absence
      of
      a liquid market or a negotiated sales transaction, the Company engaged an
      independent valuation firm to update the valuation of its auction rate
      securities as of September 30, 2008. The valuation firm used a mark to model
      approach to arrive at this valuation, which the Company reviewed and to which
      it
      agreed. Based on the fair value determination described in Note 5, Fair value
      measurement, below, the fair value decreased compared to cost, but improved
      by
      approximately $0.7 million compared to June 30, 2008 fair value related to
      those
      investments still held as of September 30, 2008. The Company updated its
      temporary unrealized losses on these investments to approximately $3.4 million
      (approximately $2.1 million, net of tax) in the other comprehensive income
      component of stockholders’ equity. During the three months ended September 30,
      2008, the Company redeemed approximately $3.4 million of its auction rate
      securities at their par value. The Company recognized no gains or losses related
      to the sale of its investments in auction rate securities during the three
      months ended September 30, 2008 and 2007.





5.
            Fair
                value measurement


The
      Company adopted the Financial Accounting Standards Board’s (FASB) Statement of
      Financial Accounting Standards (SFAS) 157, “Fair Value Measurements,” effective
      July 1, 2008, for financial assets and liabilities and for non-financial assets
      and liabilities recognized or disclosed at fair value in the financial
      statements on a recurring basis (at least annually). Additionally, the Company
      also adopted FASB Staff Position (FSP) No.157-2, which delayed the effective
      date of SFAS No. 157 by one year for other non-financial assets and liabilities.
      As defined in SFAS No. 157, fair value is the price that would be received
      to
      sell an asset or paid to transfer a liability in an orderly transaction between
      market participants at the measurement date (exit price). SFAS No. 157
      establishes a framework for measuring fair value and expands disclosure about
      fair value measurements. To increase consistency and comparability in fair
      value
      measurements and related disclosure, SFAS No. 157 establishes a hierarchy that
      prioritizes the inputs (generally, assumptions that market participants use
      in
      pricing an asset or liability) used to measure fair value based on the quality
      and reliability of the information provided by the inputs, as follows:





·
            Level
                1 - Unadjusted quoted prices in active markets that are accessible
                at the
                measurement date for identical, unrestricted assets or liabilities.
                The
                Company considers active markets as those in which transactions for
                the
                assets or liabilities occur with sufficient frequency and volume
                to
                provide pricing information on an ongoing
                basis.


·
            Level
                2 - Quoted prices in markets that are not active, or inputs that
                are
                observable, either directly or indirectly, for substantially the
                full term
                of the asset or liability. This category includes those derivative
                instruments that the Company values using observable market data.
                Substantially all of these inputs are observable in the marketplace
                throughout the full term of the derivative instrument, can be derived
                from
                observable data or supported by observable levels at which transactions
                are executed in the marketplace. Instruments in this category include
                non-exchange traded derivatives such as over-the-counter commodity
                price
                swaps, investments and interest rate
                swaps.


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





The
      Company’s investments in auction rate securities, classified as investments,
      non-current, are its only Level 3 assets. The Company engaged an independent
      valuation firm to update the valuation of its auction rate securities as of
      September 30, 2008. The Company’s valuation methodology for investments is a
      discounted cash flow model that considers various inputs including: (a) the
      coupon rate specified under the debt instruments, (b) the current credit
      ratings of the underlying issuers, (c) collateral characteristics and
      (d) risk adjusted discount rates. The valuation firm used a mark to model
      approach to arrive at this valuation, which the Company reviewed and agreed
      to.
      The measurement was made in compliance with FSP No. 157-3, “Determining the Fair
      Value of a Financial Asset When the Market for That Asset Is Not Active,” which
      FASB issued in October 2008. FSP No. 157-3 clarified the application of SFAS
      No.
      157 in determining the fair value of an asset where the market for that asset
      is
      not active. FSP No. 157-3 provides an example to illustrate key considerations
      in determining the fair value of a financial asset when the market for that
      financial asset is not active.


7





The
      Company reviews impairments in accordance with Emerging Issues Task Force 03-1
      and FSP 115-1 and FAS 124-1, each of which is titled “The Meaning of
      Other-Than-Temporary Impairment and Its Application to Certain Investments” to
      determine the classification of the impairment as temporary or
      other-than-temporary. A temporary impairment charge results in an unrealized
      loss being recorded in the other comprehensive income component of stockholders'
      equity. Such an unrealized loss does not reduce net income for the applicable
      accounting period because the loss is viewed as temporary. Unrealized losses
      are
      recognized in the statement of operations when a decline in fair value is
      determined to be other-than-temporary. Determination of whether the impairment
      is temporary or other-than-temporary requires significant judgment. The primary
      factors that are considered in classifying the impairment include the extent
      to
      which and time period during which the fair value of each investment has been
      below cost, the expected holding or recovery period for each investment, and
      the
      Company’s intent and ability to hold each investment until
      recovery.





The
      financial assets and liabilities accounted for at fair value as of September
      30,
      2008 are as follows (does not include cash on hand or assets and liabilities
      that are measured at historical cost or any basis other than fair
      value):





(in
                thousands)
            
            Level
                1
            
            Level
                2
            
            Level
                3
            
            TotalCash
                equivalents
            
            $
            189,247
            
            $
            -
            
            $
            -
            
            $
            189,247Investments,
                non-current:Auction
                rate securities
            
            
            -
            
            
            -
            
            
            62,661
            
            
            62,661Balance
                at September 30, 2008
            
            $
            189,247
            
            $
            -
            
            $
            62,661
            
            $
            251,908





Cash
      equivalents consist primarily of certificate of deposits, in addition to money
      markets funds and overnight repurchase agreements.





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





(in
                thousands)
            
            Cost
            
            Temporary
              Unrealized
              Loss
            
            Fair
                ValueBalance
                at June 30, 2008
            
            $
            69,450
            
            $
            (4,234
            )
            $
            65,216Changes
                in unrealized losses related to investments:Still
                held at September 30, 2008
            
            
            -
            
            
            675
            
            
            675Redeemed
                during the period
            
            
            (3,375
            )
            
            145
            
            
            (3,230
            )Balance
                at September 30, 2008
            
            $
            66,075
            
            $
            (3,414
            )
            $
            62,661





During
      the three months ended September 30, 2008, the Company redeemed approximately
      $3.4 million of its auction rate securities at their par value. The Company
      recognized no gains or losses related to the sale of its investments in auction
      rate securities during the three months ended September 30, 2008 and 2007.





6.
            Goodwill
                and intangible assets


During
      the three month period ended September 30, 2008, the Company completed its
      annual impairment tests on its goodwill and trademarks as of July 1, 2008.
      Based
      on its annual impairment test results, the Company determined that no impairment
      of goodwill or trademarks existed as of July 1, 2008.





7.
            Other
                comprehensive income (loss)


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





Three
                Months Ended
              September
                30,(in
                thousands)
            
            2008
            
            2007Net
                income
            
            $
            24,882
            
            $
            21,304Other
                comprehensive income (loss):Foreign
                currency translation adjustments
            
            
            (39,517
            )
            
            11,331Unrealized
                loss on non-current investments
            
            
            514
            
            
            —Amortization
                of prior year pension costs
            
            
            —
            
            
            162Total
                comprehensive (loss) income
            
            $
            (14,121
            )
            $
            32,797


8





The
      foreign currency translation adjustments of approximately $39.5 million and
      approximately $11.3 million for the three months ended September 30, 2008 and
      2007 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 including
      those
      not cured within the applicable cure period, if applicable, the Lenders’
remedies include their ability to declare all outstanding loans, plus interest
      and other related amounts owed, to be immediately due and payable in full,
      and
      to pursue all rights and remedies available to them under the Credit Agreements
      or under applicable law.





As
      of
      September 30, 2008, the Company had approximately $1.0 million outstanding
      under
      the Credit Agreements and had approximately $64.0 million available for future
      borrowings. The total outstanding balance consisted of 105.0 million in JPY
      (Japanese Yen) (approximately $1.0 million at the September 30, 2008 exchange
      rate).





The
      Company also has a credit relationship with a European bank in the amount of
      EUR
      1.0 million (approximately $1.4 million at the September 30, 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 September 30, 2008, there were
      no
      balances outstanding on this credit facility, but approximately EUR 0.1 million
      (approximately $0.2 million at the September 30, 2008 exchange rate) of the
      credit facility has been used for guarantees.





As
      of
      September 30, 2008, the Company had approximately $65.2 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 September 30, 2008 was 2.2% per annum.





9.
            Share-based
                compensation


The
      Company has incentive and non-qualified stock options outstanding that were
      granted to directors, officers, and other employees. With respect to directors,
      the Company’s policy and practice during the relevant period was that only those
      directors who are 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 3.1 million shares are available for future grants as of September
      30, 2008. On that date, options to purchase approximately 6.2 million shares
      were outstanding, including currently exercisable options to purchase
      approximately 3.6 million shares.


9





The
      Company accounts for its option awards in accordance with FASB 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,
      for
      the three months ended September 30, 2007, non-cash share-based compensation
      expenses adjusted for expected pre-vesting forfeitures are also 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
              September
                30,(in
                thousands)
            
            2008
            
            2007Selling,
                general and administrative
            
            $
            3,525
            
            $
            3,542Research
                and development
            
            
            208
            
            
            302Total
                non-cash share-based compensation expense
            
            
            3,733
            
            
            3,844Income
                tax benefit
            
            
            (841
            )
            
            (841
            )Total
                non-cash share-based compensation expense, net of tax
                benefit
            
            $
            2,892
            
            $
            3,003Impact
                on diluted net income per share
            
            $
            0.04
            
            $
            0.04





No
      compensation expense was capitalized for the three months ended September 30,
      2008 and 2007 because no stock options were granted to employees whose labor
      costs were capitalized as software development costs.





As
      of
      September 30, 2008, there was approximately $16.4 million in non-cash
      share-based compensation costs related to non-vested awards not yet recognized
      in the Company’s consolidated statements of operations. This cost is expected to
      be recognized over a weighted-average period of 1.7 years.





10.
            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
              September
                30,(in
                thousands, except per share data)
            
            2008
            
            2007Net
                income
            
            $
            24,882
            
            $
            21,304Effect
                of minority put arrangement
            
            
            (191
            )
            
            (158
            )Net
                income available to common shareholders
            
            $
            24,691
            
            $
            21,146Average
                number of common shares outstanding
            
            
            80,688
            
            
            81,584Dilutive
                effect of outstanding stock options
            
            
            1,508
            
            
            1,928Average
                number of common shares outstanding assuming dilution
            
            
            82,196
            
            
            83,512Basic
                net income per share
            
            $
            0.31
            
            $
            0.26Diluted
                net income per share
            
            $
            0.30
            
            $
            0.25Anti-dilutive
                weighted average number of shares excluded from
                reconciliation
            
            
            1,482
            
            
            1,314





Net
      income for the three months ended September 30, 2008 and 2007 include
      approximately $3.7 million ($2.9 million, net of tax) and $3.8 million ($3.0
      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 September 30, 2008
      and
      September 30, 2007.


10





11.
            Recent
                accounting pronouncements


***FSP
      142-3***


In
      April
      2008, the FASB issued FASB Staff Position (“FSP”) FAS 142-3, “Determination of
      the Useful Life of Intangible Assets,” which amends the factors that should be
      considered in developing renewal or extension assumptions used to determine
      the
      useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and
      Other Intangible Assets” (“SFAS No. 142”). The intent of this FSP is to improve
      the consistency between the useful life of a recognized intangible asset under
      SFAS No. 142 and the period of expected cash flows used to measure the fair
      value of the asset under SFAS No. 141(R), “Business Combinations,” and other
      GAAP. This FSP is effective for fiscal years beginning after December 15,
      2008 (the Company’s fiscal year 2010), and interim periods within those fiscal
      years. The Company is currently reviewing the impact of the adoption of FSP
      FAS
      142-3 on its consolidated financial position, results of operations and cash
      flows.





***SFAS
      No. 161***


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





***SFAS
      No. 141(R)***


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




***SFAS
      No. 160***


In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements — an Amendment of ARB 51”, (“SFAS No.
      160”). This statement amends Accounting Research Bulletin No. 51 to establish
      accounting and reporting standards for the noncontrolling interest (minority
      interest) in a subsidiary and for the deconsolidation of a subsidiary. SFAS
      No.
      160 establishes accounting and reporting standards that require noncontrolling
      interests to be reported as a component of equity, changes in a parent’s
      ownership interest while the parent retains its controlling interest be
      accounted for as equity transactions, and any retained noncontrolling equity
      investment upon the deconsolidation of a subsidiary initially be measured at
      fair value. SFAS No. 160 is effective for 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’s fiscal year
      2010). The Company is currently reviewing the impact of the adoption of SFAS
      No.
      160 on the Company’s consolidated financial position, results of operations and
      cash flows.





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.


11





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





All
      of
      the Company’s recent business acquisitions involved companies 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
              September
                30,(in
                thousands)
            
            2008
            
            2007Revenue(1):U.S.
            
            $
            116,245
            
            $
            99,986International
            
            
            181,984
            
            
            163,443Intersegment
                eliminations
            
            
            (54,160
            )
            
            (46,947
            )Total
                revenue
            
            $
            244,069
            
            $
            216,482Income
                before taxes, minority interests and equity in net earnings of
                affiliates(1):U.S.
            
            $
            12,095
            
            $
            9,873International
            
            
            70,303
            
            
            60,766Intersegment
                eliminations
            
            
            (44,018
            )
            
            (38,232
            )Total
                income before taxes, minority interests and equity in net earnings
                of
                affiliates
            
            $
            38,380
            
            $
            32,407





As
                of(in
                thousands)
            
            September
                30,
              2008
            
            June
                30,
              2008Identifiable
                assets(2):U.S.
            
            $
            455,996
            
            $
            466,028International
            
            
            521,326
            
            
            536,978Total
                identifiable assets
            
            $
            977,322
            
            $
            1,003,006





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


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





13.
            Shareholders’
                equity


During
      the period from fiscal year 2002 through fiscal year 2007, the Board of
      Directors authorized the purchase of up to an aggregate of 10 million shares
      of
      the Company’s common stock. The Company completed the repurchases of 10 million
      shares as of July 2008. On July 9, 2008, the Board of Directors authorized
      the
      repurchase of up to an additional two million shares of the Company’s common
      stock over the next three years, to be purchased from time to time depending
      on
      market conditions and other corporate considerations as determined by
      management. The Company has incurred an aggregate of approximately $0.2 million
      in fees related to all stock repurchases. As of September 30, 2008,
      approximately 1.8 million additional shares may be repurchased under the most
      recent authorization.


12





The
      following table provides a summary of the cumulative number of shares purchased
      since the inception of the current repurchase program through September 30,
      2008, plus the shares purchased under the previous repurchase programs. All
      repurchased shares reverted to the status of authorized but unissued
      shares.





Number of
              Shares
            
            Purchase
              Price per
              Share
            
            Total Price
              Paid
              (in thousands)Total
                shares purchased as of June 30, 2008
            
            
            9,862,500
            
            $
            18.82
            
            $
            185,587July
                1, 2008 – September 30, 2008
            
            
            346,900
            
            $
            29.84
            
            
            10,352Total
                shares purchased as of September 30, 2008
            
            
            10,209,400
            
            $
            19.19
            
            $
            195,939





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 death before retirement.
      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.” As previously disclosed in the Company’s Form 10-K for the fiscal
      year ended June 30, 2008, the Board of Directors approved the removal of all
      participants that were not vested as of June 30, 2008, and as a result, there
      are only 3 participants in the SERP Plan. Additionally, as of June 30, 2008,
      the
      SERP Plan has been fully funded.





The
      components of net period pension cost are as follows:





Three
                Months Ended
              September
                30,(in
                thousands)
            
            2008
            
            2007Service
                cost
            
            $
            -
            
            $
            162Interest
                cost
            
            
            71
            
            
            217Amortization
                of prior service cost
            
            
            -
            
            
            162Net
                periodic pension cost
            
            $
            71
            
            $
            541





15.
            Contingencies


In
      Part
      I, Item 3 of the Company’s Annual Report on Form 10-K for the fiscal year ended
      June 30, 2008 (the “Form 10-K”), the Company provided disclosure regarding a
      case pending in the U.S. District Court for the Northern District of Georgia,
      styled Ware
      v. Abercrombie & Fitch Stores, Inc. et al .
      Although the Company is not a party to that case, the Company may have some
      obligation to indemnify certain of the defendants who are its customers, based
      on the terms of its contracts with those customers. The plaintiff has alleged
      that the defendants are infringing a patent relating to the processing of credit
      card transactions. The defendants include approximately 107 individual
      retailers, 13 of whom are our customers for retail point-of-sale software.
      The
      Company is currently providing indemnity coverage to five of the defendants
      who
      are the Company’s customers in accordance with applicable provisions of the
      contracts between the Company and those customers. The indemnity coverage
      estimated as of September 30, 2008 is immaterial. Through September 30, 2008,
      the Company’s legal fees with respect to indemnity coverage for this matter have
      not been material. Currently, the case is subject to a court-ordered stay
      pending the completion of the United States Patent and Trademark Office’s
      reexamination of the patent that is the subject of the lawsuit. There were
      no
      material developments to this proceeding during the three-month period ended
      September 30, 2008.





On
      November 26, 2007, Heartland Payment Systems, Inc., filed an action in the
      U.S.
      District Court for the District of New Jersey naming as defendants MICROS
      Systems, Inc., Merchant Link LLC, and Chase Paymentech Solutions, LLC. The
      case
      is styled Heartland
      Payment Systems, Inc. v. MICROS Systems, Inc., et al .
      In its
      complaint, Heartland claims that MICROS, Merchant Link, and Paymentech have
      engaged in an anti-competitive arrangement relating to credit and debit card
      payment processing for restaurant point-of-sale systems, and further claims
      that
      this arrangement violates federal antitrust law and applicable New Jersey state
      laws. Heartland claims it has been damaged by virtue of being required to deal
      with Merchant Link if it wishes to provide services to users of MICROS POS
      software, by being required to pay fees to Merchant Link that it claims are
      inappropriate or excessive, and by being competitively disadvantaged relative
      to
      Chase Paymentech’s services. Heartland seeks monetary damages in excess of $12
      million, and also injunctive and other equitable relief. As noted in Part I,
      Item 3 of the Form 10-K, the Company moved to dismiss the complaint on various
      grounds. Subsequent to the filing of the Form 10-K, on September 29, 2008,
      the
      court denied the motion. Accordingly, the Company and the other defendants
      have
      filed answers to the complaint, in which the Company has denied all material
      allegations, and has asserted counterclaims, in which it alleges that Heartland
      has engaged in tortious activity by defaming and libeling the Company, and
      by
      improperly interfering with the Company’s customer contracts and customer
      relationships. No trial date has been set in this matter.


13





In
      Part
      I, Item 3 of the Form 10-K, we also provided disclosure regarding two
      consolidated cases pending in the Court of Common Pleas of Allegheny County,
      Pennsylvania, styled Roth
      Cash Register v. MICROS Systems, Inc., et al. ,
      and Shenango
      Systems Solutions v. MICROS Systems, Inc., et al. On May
      22, 2008, a jury returned a combined verdict of $7.5 million against the Company
      in those actions. The cases initially were filed in 2000, and the complaints
      both related to the non-renewal of dealership agreements in the year 2000
      between the Company and the respective plaintiffs. The agreements were
      non-renewed as part of a restructuring of the dealer channel. The plaintiffs
      alleged that the Company and certain of its subsidiaries and employees entered
      into a plan to eliminate the plaintiffs as authorized dealers and improperly
      interfere with the plaintiffs' relationships with their respective existing
      and
      potential future clients and customers without compensation to the plaintiffs.
      As a result, the plaintiffs claimed that the Company was liable for, among
      other
      things, breach of contract and tortious interference with existing and
      prospective contractual relationships. The Company moved for judgment
      notwithstanding the verdict and for a new trial, and the plaintiffs also moved
      for judgment notwithstanding the verdict and for a new trial. On October 30,
      2008, the court held a hearing at which the parties argued the motions. The
      court has not yet issued a decision on any of the pending motions. There are
      no
      other litigation matters relating to the restructuring of the dealer channel
      in
      the year 2000.





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.


14


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


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


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


·
            Our
                statements regarding the effects of 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 and revenues;


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


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


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


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


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


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


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





**Factors
      that may affect future results**





Current
      market and economic 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 and future
      periods. Further, 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.
      Wildly vacillating and unpredictable oil and gas prices, and other deep economic
      concerns relating to liquidity, fluctuations in the stock market and worldwide
      recession, also directly and indirectly can have a significant impact on our
      customers, and, accordingly, on our business. 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 very difficult
      to
      predict with any accuracy. These disturbances may 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.


15





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.





We
      have
      invested a portion of our cash in auction rate securities, which, in light
      of
      current market conditions, are subject to constraints on liquidity. There is
      also the possibility that the underlying security and collateral could have
      their ratings further downgraded by the applicable credit rating agencies,
      which
      could further 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 a particular 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 interpretation and application 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. It is difficult to reliably predict the magnitude of those
      costs.




The
      foregoing discussion of factors that may affect future results 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, 2008.





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 include software encompassing property management
      systems, sales and catering systems, central reservation systems, customer
      information systems, revenue management systems, and an Internet/Global
      Distribution System based hotel reservation service;





(2)
      Restaurant information systems, which include 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; and





(3)
      Specialty retail information systems, which include retail store software
      automation systems and business intelligence applications, including software
      encompassing point-of-sale, loss prevention, business analytics, and customer
      gift cards, as well as enterprise applications.





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.


16





The
      markets in which we operate are highly competitive. We compete on various bases,
      including product functionality, service capabilities, price and geography.
      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.





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





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:***





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):





Three
                Months Ended September 30,U.S.
            
            International
            
            Total(in
                thousands)
            
            2008
            
            2007
            
            2008
            
            2007
            
            2008
            
            2007Hardware
            
            $
            32,243
            
            $
            33,043
            
            $
            31,450
            
            $
            31,858
            
            $
            63,693
            
            $
            64,901Software
            
            
            13,940
            
            
            12,178
            
            
            23,636
            
            
            18,673
            
            
            37,576
            
            
            30,851Service
            
            
            67,404
            
            
            51,417
            
            
            75,396
            
            
            69,313
            
            
            142,800
            
            
            120,730$
            113,587
            
            $
            96,638
            
            $
            130,482
            
            $
            119,844
            
            $
            244,069
            
            $
            216,482





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





Three
                Months Ended
              September
                30,2008
            
            2007Hardware
            
            
            26.1
            %
            
            30.0
            %Software
            
            
            15.4
            %
            
            14.3
            %Service
            
            
            58.5
            %
            
            55.7
            %100.0
            %
            
            100.0
            %





For
      the
      three months ended September 30, 2008, total revenue was approximately $244.1
      million, an increase of approximately $27.6 million, or 12.7% compared to the
      same period last year, of which approximately $2.4 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 an increase in installation revenue resulting from expansion
      of
      our customer base, increases in the volume of our support services that reflect
      increased recurring support revenue from existing customers, and additional
      revenue generated from Fry, Inc., a company we acquired in August 2008. The
      increase in recurring support revenue contributed 42.7% and the increase in
      installation revenue relating to the expansion of our customer base contributed
      54.9% of the service revenue increase.





The
      increase in international segment sales for the three months ended September
      30,
      2008 of approximately $10.6 million is also due primarily to an increase in
      service revenue. The increase in international services revenue primarily
      resulted from expansion of our customer base coupled with increased recurring
      support revenue from existing customers.


17





U.S.
      segment sales increased approximately $16.9 million for the three months ended
      September 30, 2008 compared to the same period last year. The increase was
      primarily the result of an increase in service revenues (support and
      installation) from expansion of our customer base, coupled with recurring
      support revenue from existing customers and additional revenue generated as
      a
      result of the acquisition of Fry, Inc. in August 2008.





***Cost
      of Sales:***





An
      analysis of the cost of sales is as follows:





Three
                Months Ended September 30,2008
            
            2007(in
                thousands)
            
            Cost
                of
              Sales
            
            %
                of
              Related
              Revenue
            
            Costs
                of
              Sales
            
            %
                of
              Related
              RevenueHardware
            
            $
            43,059
            
            
            67.6
            %
            $
            39,938
            
            
            61.5
            %Software
            
            
            7,300
            
            
            19.4
            %
            
            8,509
            
            
            27.6
            %Service
            
            
            67,766
            
            
            47.5
            %
            
            54,793
            
            
            45.4
            %$
            118,125
            
            
            48.4
            %
            $
            103,240
            
            
            47.7
            %





For
      the
      three months ended September 30, 2008 and 2007, cost of sales as a percent
      of
      revenue were 48.4% and 47.7%, respectively. Hardware cost of sales as a percent
      of related revenue for the three months ended September 30, 2008 increased
      6.1%
      compared to the same period last year primarily as a result of a lower margin
      realized on the sale of third party hardware and Workstation 4. Additionally,
      the margin realized during the three months ended September 30, 2008 on the
      sale
      of Workstation 5 was lower than the margin realized on the sale of Workstation
      4
      during the three months ended September 30, 2007. Workstation 5 was released
      in
      October 2007 and is the larger version of the next generation Workstation 4.
      Software cost of sales as a percent of related revenue decreased approximately
      8.2% compared to the same period last year. The decrease was primarily as a
      result of a 53% increase in the sale of Opera suite software products, which
      is
      an internally developed software application. Service costs as a percent of
      related revenue increased approximately 2.1% compared to the same period last
      year primarily due to increased labor costs.





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





SG&A
      expenses, as a percentage of revenue, for the three months ended September
      30,
      2008, were 31.5%, a decrease of 1.2% 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.





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





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





Three
                Months Ended
              September
                30,(in
                thousands)
            
            2008
            
            2007Total
                R&D incurred
            
            $
            10,596
            
            $
            10,027Capitalized
                software development costs
            
            
            (125
            )
            
            (611
            )Total
                R&D expenses
            
            $
            10,471
            
            $
            9,416%
                of Revenue
            
            
            4.3
            %
            
            4.3
            %





***Depreciation
      and Amortization Expenses:***





Depreciation
      and amortization expenses for the three months ended September 30, 2008
      increased approximately $0.2 million to approximately $4.1 million compared
      to
      the same period last year. The increase is primarily due to additional
      depreciation expense on capital expenditures since September 30, 2008 and recent
      acquisitions.


18





***Share-Based
      Compensation Expenses:***





We
      account for our option awards in accordance with SFAS No. 123(R), “Share-Based
      Payment.” The estimated fair value of awards granted under the stock option
      program are measured as of the date of grant, and non-cash share-based
      compensation expenses, adjusted for expected pre-vesting forfeitures, are
      recognized ratably over the requisite service (i.e. vesting) period of options
      in the consolidated statements of operations. In addition, for the three months
      ended September 30, 2007, non-cash share-based compensation expenses, adjusted
      for expected pre-vesting forfeitures, is also 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
              September
                30,(in
                thousands)
            
            2008
            
            2007SG&A
            
            $
            3,525
            
            $
            3,542R&D
            
            
            208
            
            
            302Total
                non-cash share-based compensation expense
            
            
            3,733
            
            
            3,844Income
                tax benefit
            
            
            (841
            )
            
            (841
            )Total
                non-cash share-based compensation expense, net of tax
                benefit
            
            $
            2,892
            
            $
            3,003Impact
                on diluted net income per share
            
            $
            0.04
            
            $
            0.04





***Non-operating
      Income:***





Net
      non-operating income for the three months ended September 30, 2008, was
      approximately $3.8 million, an increase of approximately $0.5 million compared
      to the same period last year. The increase was primarily due to foreign exchange
      transaction gains of approximately $0.5 million for the three months ended
      September 30, 2008 compared to foreign exchange transaction losses of
      approximately $0.3 million for the three months ended September 30,
      2007.





***Income
      Tax Provisions:***





The
      effective tax rates for the three months ended September 30, 2008 and 2007
      were
      34.0% and 33.5%, respectively. The effective tax rates for the three months
      ended September 30, 2008 and September 30, 2007 were less than the 35.0% U.S.
      statutory federal income tax rate, mainly due to the mix of earnings from
      jurisdictions that have a lower statutory tax rate than the U.S. and from the
      phase-in of the deduction for domestic production activities under the Internal
      Revenue Code.  These benefits were partially offset by the
      non-deductible nature of certain non-cash share-based compensation items, other
      non-deductible compensation items, foreign withholding taxes and the inclusion
      of foreign income in our U.S. tax base. The increase in tax rate from 33.5%
      to
      34.0% was primarily attributable to changes in the mix of earnings from foreign
      jurisdictions included in our U.S. tax base, partially offset by the increase
      in
      utilizable foreign tax credits and Net Operating Loss Carryforwards as well
      as
      proportional reduction of non-deductible non-cash share based compensation
      and
      other non-deductible compensation items as compared to the prior fiscal
      period.





Based
      on
      currently available information, we estimate that the fiscal year 2009 effective
      tax rate will be approximately 34.0%.  We believe that due to changes in
      the mix of earnings among jurisdictions, the fluctuation of earnings, and the
      impact of certain discrete items recognized in accordance with the interim
      reporting requirements of FASB Interpretation No. 18, “Accounting for Income
      Taxes in Interim Periods,” there may be some degree of adjustment to the
      effective tax rate on a quarterly basis.





**Recent
      accounting pronouncements**





***FSP
      142-3***


In
      April
      2008, the FASB issued FSP FAS 142-3,
      “Determination of the Useful Life of Intangible Assets,” which amends the
      factors that should be considered in developing renewal or extension assumptions
      used to determine the useful life of a recognized intangible asset under SFAS
      No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”). The intent of
      this FSP is to improve the consistency between the useful life of a recognized
      intangible asset under SFAS No. 142 and the period of expected cash flows used
      to measure the fair value of the asset under SFAS No. 141(R), “Business
      Combinations,” and other GAAP. This FSP is effective for fiscal years beginning
      after December 15, 2008 (our fiscal year 2010), and interim periods within
      those fiscal years. We are currently reviewing the impact of the adoption of
      FSP
      FAS 142-3 on our consolidated financial position, results of operations and
      cash
      flows.


19





***SFAS
      No. 161***


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





***SFAS
      No. 141(R)***


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





***SFAS
      No. 160***


In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements — an Amendment of ARB 51”, (“SFAS No.
      160”). This statement amends Accounting Research Bulletin No. 51 to establish
      accounting and reporting standards for the noncontrolling interest (minority
      interest) in a subsidiary and for the deconsolidation of a subsidiary. SFAS
      No.
      160 establishes accounting and reporting standards requiring that noncontrolling
      interests be reported as a component of equity, changes in a parent’s ownership
      interest while the parent retains its controlling interest be accounted for
      as
      equity transactions, and any retained noncontrolling equity investment upon
      the
      deconsolidation of a subsidiary initially be measured at fair value. SFAS No.
      160 is effective for 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 (our fiscal year 2010). We are currently reviewing
      the impact of the adoption of SFAS No. 160 on our consolidated financial
      position, results of operations and cash flows.





**Critical
      accounting policies and estimates**





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. Different assumptions
      would affect these estimates, and actual results may differ from these
      estimates.





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


20





·
              Revenue
                  recognition and deferred
                  revenue;


·
            Allowance
                for doubtful accounts;


·
            Inventory;


·
            Investment,
                non-current;


·
            Non-cash
                share-based compensation;


·
            Capitalized
                software development costs;


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


·
            Contingencies
                and litigation;


·
            Income
                taxes; and


·
            Foreign
                currency translation.





We
      have
      reviewed our critical accounting policies and estimates and the related
      disclosures with our Audit Committee. These policies and procedures are
      described further in our Annual Report on Form 10-K for the year ended June
      30,
      2008 in Item 7, “Management’s Discussion and Analysis of Financial Condition and
      Results of Operations,” under the heading “Critical Accounting
      Estimates.”





**Liquidity
      and capital resources**





**Sources
      and Uses of Cash and Cash Equivalents**





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





Three
                Months Ended
              September
                30,(in
                thousands)
            
            2008
            
            2007Net
                cash provided by (used in):Operating
                activities
            
            $
            29,658
            
            $
            24,676Investing
                activities
            
            
            (32,191
            )
            
            (54,076
            )Financing
                activities
            
            
            (27,510
            )
            
            18,780





***Operating
      activities:***


Net
      cash
      provided by operating activities for the three months ended September 30, 2008
      increased approximately $5.0 million compared to the three months ended
      September 30, 2007 due primarily to an increase in net income of approximately
      $3.6 million and net changes in substantially all current assets and
      liabilities, the most significant of which are an approximately $15.4 million
      decrease in accrued expenses and other current liabilities, partially offset
      by
      an approximately $14.6 million decrease in inventory. The decrease in accrued
      expenses and other current liabilities is primarily due to decreases in
      compensation related accruals.





***Investing
      activities:***


Net
      cash
      used in investing activities for the three months ended September 30, 2008
      was
      approximately $32.2 million, as a result of approximately $32.3 million used
      for
      our acquisition of Fry, Inc. and approximately $3.5 million used to purchase
      property, plant and equipment and internally developed software to be licensed
      to others. During the three months ended September 30, 2008, we redeemed $3.4
      million of our auction rate securities at par value. See “Capital Resources,”
below, for a discussion of our investments in auction rate
      securities.





Net
      cash
      used in investing activities for the three months ended September 30, 2007
      was
      approximately $54.1 million, primarily as a result of our net investment in
      auction rate securities of approximately $38.0 million. We also used
      approximately $11.6 million in connection with our acquisition of Check-in
      Data
      AG. Additionally, approximately $4.6 million was also used to purchase property,
      plant and equipment and to internally developed software to be licensed to
      others.





***Financing
      activities:***


Net
      cash
      used in financing activities for the three months ended September 30, 2008
      was
      approximately $27.5 million, primarily due to principal payments on line of
      credit and long-term debt of approximately $18.1 million that we assumed as
      a
      result of our acquisition of Fry, Inc. in August 2008. Additionally, we used
      approximately $10.4 million for our stock repurchases during the three-month
      period ended September 30, 2008.


21





Net
      cash
      provided by financing activities for the three months ended September 30, 2007
      was approximately $18.8 million, primarily reflecting proceeds from stock option
      exercises of approximately $12.5 million and realized tax benefits from stock
      option exercises of approximately $6.4 million. We did not repurchase any of
      our
      stock during the three-month period ended September 30, 2007.





At
      September 30, 2008, all cash and cash equivalents were being retained for the
      operation and expansion of the business, as well as for the repurchase of our
      common stock.





**Capital
      Resources**





At
      September 30, 2008, we had approximately $325.4 million in cash and cash
      equivalents. Additionally, we continued to hold auction rate securities
      (long-term instruments with variable interest rates that are designed to
      periodically reset to prevailing market rates every 7 to 35 days through an
      auction process) with a fair value of approximately $62.7 million. These
      securities are supported by student loans for which repayment is either backed
      by the Federal Family Education Loan Program or insured by AMBAC Financial
      Group. Due to the liquidity previously provided by the interest reset mechanism
      and the short-term nature of our investments, we classified the auction rate
      securities as short-term investments. Beginning in February 2008, there were
      insufficient bids in the auctions for these auction rate securities to establish
      a clearing rate, and the securities were not saleable in the auction. As a
      result, the auction process no longer provided short-term liquidity. As a
      result, the auction rate securities have been classified as non-current
      investments available-for-sale as of September 30, 2008 and June 30, 2008.
      We
      also engaged an independent valuation firm to update the valuation as of
      September 30, 2008. The valuation reflected a decrease in fair value compared
      to
      cost, but an improvement in fair value of approximately $0.7 million compared
      to
      June 30, 2008 fair value related to those investments still held as of September
      30, 2008. We do not believe the decrease in fair value to be
      other-than-temporary based on the extent and time the fair value of each
      investment has been below cost, the expected holding or recovery period for
      each
      investment, and the our intention and ability to hold each investment until
      recovery. Based on the valuation, we have updated the temporary unrealized
      losses on these investments to approximately $3.4 million (approximately $2.1
      million, net of tax). We plan to continue to monitor the liquidity situation
      in
      the marketplace and the creditworthiness of our holdings and will perform
      periodic impairment analysis.





See
      Note
      8 to the condensed consolidated financial statements included in this report
      for
      information regarding our credit agreements (the “Credit
      Agreements”).





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. In light of current economic conditions
      generally and in light of the overall performance of the stock market in recent
      months, we cannot assume that funds would be available from other sources if
      required to fund acquisitions, or any unanticipated and substantial cash needs.
      We currently anticipate that our property, plant, and equipment expenditures
      for
      fiscal year 2009 will be approximately $14 million.





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





We
      recorded foreign sales, including exports from the United States, of
      approximately $130.5 million and approximately $119.8 million **** during
      the three months ended September 30, 2008 and September 30, 2007, respectively.





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





With
      respect to currency risk, we transact business in different currencies through
      our foreign subsidiaries. The fluctuation of currencies affects sales and
      profitability. Frequently, sales and the costs associated with those sales
      are
      not denominated in the same currency.


22





In
      the
      three months ended September 30, 2008 and September 30, 2007, we transacted
      business in 37 currencies. The relative currency mix for the three months ended
      September 30, 2008 and September 30, 2007 were as follows:





%
                of Reported RevenueThree Months Ended
              September 30,
            
            Exchange Rates
              (in U.S. Dollars)
              As of September 30,2008
            
            2007
            
            2008
            
            2007Revenues
                by currency (1):United
                States Dollar
            
            
            53
            %
            
            50
            %
            
            1.0000
            
            
            1.0000European
                Euro
            
            
            21
            %
            
            21
            %
            
            1.4076
            
            
            1.4259British
                Pound Sterling
            
            
            8
            %
            
            9
            %
            
            1.7778
            
            
            2.0461Mexican
                Peso
            
            
            2
            %
            
            2
            %
            
            0.0916
            
            
            0.0914Australian
                Dollar
            
            
            2
            %
            
            2
            %
            
            0.7903
            
            
            0.8874Canadian
                Dollar
            
            
            1
            %
            
            4
            %
            
            0.9398
            
            
            1.0055All
                Other Currencies (2), (3)
            
            
            13
            %
            
            12
            %
            
            0.2773
            
            
            0.2490Total
            
            
            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 months’ exchange rates for all other
      currencies.


(3)
      The
“Exchange Rates as of September 30” for “All Other Currencies” represents the
      weighted average September 30 exchange rates for all other currencies based
      on
      the three month revenue.





A
      10%
      increase or decrease in the value of the Euro in relation to the U.S. dollar
      in
      the three months ended September 30, 2008 would have affected total revenues
      by
      approximately $5.1 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,
      2008, and we do not currently foresee any significant changes in exposure or
      in
      how we manage this exposure in the near future. For borrowings in U.S. currency,
      the Credit Agreements bear interest at higher of the federal funds rate plus
      50
      basis points or the prime rate. For borrowings in foreign currencies, the
      interest rate is determined by a LIBOR-based formula plus an additional margin
      of 125 to 200 basis points, depending upon our consolidated earnings before
      interest, taxes, depreciation and amortization for the immediately preceding
      four calendar quarters. At September 30, 2008, we had total borrowings of
      approximately $1.0 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 September 30, 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 September 30, 2008 was approximately $1.0 million, a 1% change in interest
      rate would have resulted in an immaterial impact on our consolidated financial
      position, results of operations and cash flows.





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


23





**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.




24


**PART
      II – OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





In
      Part
      I, Item 3 of our Annual Report on Form 10-K for the fiscal year ended June
      30,
      2008 (the “Form 10-K”), we provided disclosure regarding a case pending in the
      U.S. District Court for the Northern District of Georgia, styled Ware
      v. Abercrombie & Fitch Stores, Inc. et al. ;
      as
      noted in the Form 10-K, we are not a party to that case, we may have some
      obligation to indemnify certain of the defendants who are our customers. There
      were no material developments to this proceeding during the three-month period
      ended September 30, 2008.





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 .
      A
      description of the complaint in that action is included in Part I, Item 3 of
      the
      Form 10-K. As noted in the Form 10-K, we moved to dismiss the complaint on
      various grounds. Subsequent to the filing of the Form 10-K, on September 29,
      2008, the court denied the motion. Subsequent to that, we and the other
      defendants filed answers to the complaint, in which we denied all material
      allegations, and asserted counterclaims, in which we allege that Heartland
      has
      engaged in tortious activity by defaming and libeling us, and by improperly
      interfering with our customer contracts and customer relationships. No trial
      date has been set in this matter.





In
      Part
      I, Item 3 of the Form 10-K, we also provided disclosure regarding two
      consolidated cases pending in the Court of Common Pleas of Allegheny County,
      Pennsylvania, styled Roth
      Cash Register v. MICROS Systems, Inc., et al. ,
      and Shenango
      Systems Solutions v. MICROS Systems, Inc., et al. A
      description of the claims in that action, and the jury verdict that was returned
      against us, is included in Part I, Item 3 of the Form 10-K. We moved for
      judgment notwithstanding the verdict, and for a new trial, and the plaintiffs
      also moved for judgment notwithstanding the verdict and for a new trial. On
      October 30, 2008, the court held a hearing at which the parties argued the
      motions. The court has not yet issued a decision on any of the pending
      motions.





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).


25


SIGNATURES





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





MICROS
                SYSTEMS, INC.(Registrant)Date:
                November 6, 2008
            /s/
            Gary
                C. KaufmanGary
                C. KaufmanExecutive
                Vice President,Finance
                and Administration/Chief
                Financial OfficerDate:
                November 6, 2008
            /s/
            Cynthia
                A. RussoCynthia
                A. RussoSenior
                Vice President andCorporate
                Controller


26