##### 



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 December 31, 2003
Commission file number 0-9993         

MICROS SYSTEMS, INC.

(Exact name of Registrant as specified in its charter)


|MARYLAND                 |  | 52-1101488                             
|------------------------ |  | ---------------------------------------
|(State of incorporation) |  | (I.R.S. Employer Identification Number)

|                                                           |  |           
|---------------------------------------------------------- |  | ----------
|7031
Columbia Gateway Drive, Columbia, Maryland 21046-2289
|                                                          
|(Address of principal executive offices)                   |  | (Zip code)

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

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

YES þ NO o

Indicate by check mark whether the Registrant is an Accelerated Filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).

YES þ NO o

As of January 31, 2004, there were 18,368,475 shares of Common Stock, $0.025
par value, outstanding.

1



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##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended December 31, 2003

Part I - Financial Information

Item 1. Financial Statements

General

The information contained in this report is furnished for the Registrant,
MICROS Systems, Inc., and its subsidiaries (referred to collectively herein as
MICROS or the Company). In the opinion of management, the information in
this report contains all adjustments, consisting only of normal recurring
adjustments, which are necessary for a fair statement of the results for the
interim periods presented. The financial information presented herein should
be read in conjunction with the financial statements included in the
Registrants Form 10-K for the fiscal year ended June 30, 2003, as filed with
the Securities and Exchange Commission.

2



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##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


(Unaudited, in thousands)


|                                                                                                                                                |                                                                                                                                    |                      |                            |         |              |         |          |         |         |         | 
|----------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | -------------------- | -------------------------- | ------- | ------------ | ------- | -------- | ------- | ------- | ------- | 
|                                                                                                                                                |                                                                                                                                    |                      |                            |         | December 31, |         | June 30,
|                                                                                                                                                |                                                                                                                                    |                      |                            |         | 2003         |         | 2003    
|                                                                                                                                                |                                                                                                                                    |                      |                            |         |              |         |         
|ASSETS                                                                                                                                          |                                                                                                                                    |                      |                            |         |              |         |          |        
|Current assets:                                                                                                                                 |                                                                                                                                    |                      |                            |         |              |         |          |        
|                                                                                                                                                | Cash and cash equivalents                                                                                                          |                      | $                          | 61,288  |              |         | $        | 45,682  |        
|                                                                                                                                                | Accounts receivable, net of allowance for doubtful accounts
of
$12,188 at December 31, 2003 and $10,648 at June 30, 2003           |                      |                            | 91,945  |              |         |          | 98,700  |        
|                                                                                                                                                | Inventories, net of allowance for obsolescence of $6,428 at
December
31, 2003 and $5,900 at June 30, 2003                          |                      |                            | 33,780  |              |         |          | 31,864  |        
|                                                                                                                                                | Deferred income taxes                                                                                                              |                      |                            | 9,160   |              |         |          | 7,885   |        
|                                                                                                                                                | Prepaid expenses and other current assets                                                                                          |                      |                            | 17,595  |              |         |          | 17,860  |        
|                                                                                                                                                |                                                                                                                                    |                      |                            |         |              |         |          |        
|                                                                                                                                                |                                                                                                                                    | Total current assets |                            |         | 213,768      |         |          |         | 201,991 |        
|Property, plant and equipment, net of accumulated
depreciation and
amortization of $55,798 at December 31, 2003 and $50,931 at June 30,
2003    |                                                                                                                                    |                      | 19,387                     |         |              |         | 20,179   |        
|Deferred income taxes, non-current                                                                                                              |                                                                                                                                    |                      | 30,851                     |         |              |         | 32,003   |        
|Goodwill and intangible assets, net of accumulated
amortization of $31,332
at December 31, 2003 and $29,516 at June 30, 2003                    |                                                                                                                                    |                      | 73,516                     |         |              |         | 74,270   |        
|Purchased and internally developed software costs, net of
accumulated
amortization of $27,714 at December 31, 2003 and $23,487 at June 30,
2003 |                                                                                                                                    |                      | 36,650                     |         |              |         | 38,089   |        
|Other investments                                                                                                                               |                                                                                                                                    |                      |                           |         |              |         | 10       |        
|Other assets                                                                                                                                    |                                                                                                                                    |                      | 4,019                      |         |              |         | 3,473    |        
|                                                                                                                                                |                                                                                                                                    |                      |                            |         |              |         |          |        
|Total assets                                                                                                                                    |                                                                                                                                    | $                    | 378,191                    |         |              | $       | 370,015  |        
|                                                                                                                                                |                                                                                                                                    |                      |                            |         |              |         |          |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                            |                                                                                                                                    |                      |                            |         |              |         |          |        
|Current liabilities:                                                                                                                            |                                                                                                                                    |                      |                            |         |              |         |          |        
|                                                                                                                                                | Bank lines of credit                                                                                                               |                      | $                          | 2,231   |              |         | $        | 10,185  |        
|                                                                                                                                                | Current portion of long term debt                                                                                                  |                      |                            |        |              |         |          | 363     |        
|                                                                                                                                                | Current portion of capital
lease obligations                                                                                       |                      |                            | 138     |              |         |          | 106     |        
|                                                                                                                                                | Accounts payable                                                                                                                   |                      |                            | 25,539  |              |         |          | 24,177  |        
|                                                                                                                                                | Accrued expenses and other current
liabilities                                                                                     |                      |                            | 49,070  |              |         |          | 44,240  |        
|                                                                                                                                                | Income taxes payable                                                                                                               |                      |                            | 5,015   |              |         |          | 10,102  |        
|                                                                                                                                                | Deferred income taxes                                                                                                              |                      |                            | 608     |              |         |          | 501     |        
|                                                                                                                                                | Deferred service revenue                                                                                                           |                      |                            | 35,908  |              |         |          | 38,538  |        
|                                                                                                                                                |                                                                                                                                    |                      |                            |         |              |         |          |        
|                                                                                                                                                |                                                                                                                                    |                      | Total current liabilities  |         |              | 118,509 |          |         |         | 128,212 | 
|Capital lease obligations, net of current
portion                                                                                               |                                                                                                                                    |                      | 199                        |         |              |         | 198      |        
|Deferred income taxes, non-current                                                                                                              |                                                                                                                                    |                      | 11,504                     |         |              |         | 11,495   |        
|Other non-current liabilities                                                                                                                   |                                                                                                                                    |                      | 1,278                      |         |              |         | 6,510    |        
|Commitments and contingencies                                                                                                                   |                                                                                                                                    |                      |                            |         |              |         |          |        
|Minority interests                                                                                                                              |                                                                                                                                    |                      | 2,448                      |         |              |         | 2,372    |        
|Shareholders equity:                                                                                                                           |                                                                                                                                    |                      |                            |         |              |         |          |        
|                                                                                                                                                | Common stock, $0.025 par; authorized 50,000 shares; issued
and
outstanding 18,236 at December 31, 2003 and 18,018 at June 30, 2003 |                      |                            | 456     |              |         |          | 450     |        
|                                                                                                                                                | Capital in excess of par                                                                                                           |                      |                            | 73,160  |              |         |          | 69,644  |        
|                                                                                                                                                | Retained earnings                                                                                                                  |                      |                            | 165,699 |              |         |          | 152,381 |        
|                                                                                                                                                | Accumulated other comprehensive income
(loss)                                                                                      |                      |                            | 4,938   |              |         |          | (1,247  | )      
|                                                                                                                                                |                                                                                                                                    |                      |                            |         |              |         |          |        
|                                                                                                                                                |                                                                                                                                    |                      | Total shareholders equity |         |              | 244,253 |          |         |         | 221,228 | 
|                                                                                                                                                |                                                                                                                                    |                      |                            |         |              |         |          |        
|Total liabilities and shareholders
equity                                                                                                      |                                                                                                                                    | $                    | 378,191                    |         |              | $       | 370,015  |        
|                                                                                                                                                |                                                                                                                                    |                      |                            |         |              |         |          |        

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

3



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##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited, in thousands, except per share data)


|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |        |         |  
|-------------------------------------------------------------------------------- | --------------------------- | ------------------------------------ | ------ | ------------------ | ------- | ---------------- | ------ | ------ | ------ | ---- | ------ | ------- | ------- | - | ------ | ------ | ------- | -
|                                                                                 |                             |                                      |        | Three Months Ended |         | Six Months Ended
|                                                                                 |                             |                                      |        | December 31,       |         | December 31,    
|                                                                                 |                             |                                      |        |                    |         |                 
|                                                                                 |                             |                                      |        | 2003               |         | 2002             |        | 2003   |        | 2002
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |     
|Revenue:                                                                         |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 | Hardware                    |                                      | $      | 34,300             |         |                  | $      | 32,852 |        |      | $      | 68,246  |         |   | $      | 62,865 |        
|                                                                                 | Software                    |                                      |        | 19,975             |         |                  |        | 17,207 |        |      |        | 36,764  |         |   |        | 29,470 |        
|                                                                                 | Service                     |                                      |        | 62,979             |         |                  |        | 46,986 |        |      |        | 118,661 |         |   |        | 92,464 |        
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 |                             | Total revenue                        |        |                    | 117,254 |                  |        |        | 97,045 |      |        |         | 223,671 |   |        |        | 184,799 |  
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|Cost of sales:                                                                   |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 | Hardware                    |                                      |        | 24,717             |         |                  |        | 23,525 |        |      |        | 48,457  |         |   |        | 45,164 |        
|                                                                                 | Software                    |                                      |        | 4,507              |         |                  |        | 3,723  |        |      |        | 8,840   |         |   |        | 6,949  |        
|                                                                                 | Service                     |                                      |        | 26,958             |         |                  |        | 22,222 |        |      |        | 53,167  |         |   |        | 43,698 |        
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 |                             | Total cost of sales                  |        |                    | 56,182  |                  |        |        | 49,470 |      |        |         | 110,464 |   |        |        | 95,811  |  
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 |                             | Gross margin                         |        |                    | 61,072  |                  |        |        | 47,575 |      |        |         | 113,207 |   |        |        | 88,988  |  
|Selling, general and administrative
expenses                                     |                             |                                      | 38,129 |                    |         |                  | 32,682 |        |        |      | 73,691 |         |         |   | 62,126 |       
|Research and development expenses                                                |                             |                                      | 7,160  |                    |         |                  | 4,248  |        |        |      | 13,334 |         |         |   | 9,135  |       
|Depreciation and amortization                                                    |                             |                                      | 2,430  |                    |         |                  | 2,129  |        |        |      | 4,747  |         |         |   | 4,175  |       
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 |                             | Total operating expenses             |        |                    | 47,719  |                  |        |        | 39,059 |      |        |         | 91,772  |   |        |        | 75,436  |  
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|Income from operations                                                           |                             |                                      | 13,353 |                    |         |                  | 8,516  |        |        |      | 21,435 |         |         |   | 13,552 |       
|Non-operating income (expense):                                                  |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 | Interest income             |                                      |        | 274                |         |                  |        | 420    |        |      |        | 513     |         |   |        | 815    |        
|                                                                                 | Interest expense            |                                      |        | (508               | )       |                  |        | (225   | )      |      |        | (698    | )       |   |        | (585   | )      
|                                                                                 | Other income (expense), net |                                      |        | 1,535              |         |                  |        | (5     | )      |      |        | 1,641   |         |   |        | (664   | )      
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 |                             | Total non-operating income (expense) |        |                    | 1,301   |                  |        |        | 190    |      |        |         | 1,456   |   |        |        | (434    | )
|Income before taxes, minority interests and
equity in net earnings of affiliates |                             |                                      | 14,654 |                    |         |                  | 8,706  |        |        |      | 22,891 |         |         |   | 13,118 |       
|Income tax provision                                                             |                             |                                      | 5,935  |                    |         |                  | 3,570  |        |        |      | 9,271  |         |         |   | 5,247  |       
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|Income before minority interests and equity
in net earnings of affiliates        |                             |                                      | 8,719  |                    |         |                  | 5,136  |        |        |      | 13,620 |         |         |   | 7,871  |       
|Minority interests and equity in net
earnings of affiliates                      |                             |                                      | (148   | )                  |         |                  | (205   | )      |        |      | (302   | )       |         |   | (245   | )     
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|Net income                                                                       |                             | $                                    | 8,571  |                    |         | $                | 4,931  |        |        | $    | 13,318 |         |         | $ | 7,626  |       
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|Net income per common share:                                                     |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 | Basic                       |                                      | $      | 0.47               |         |                  | $      | 0.28   |        |      | $      | 0.74    |         |   | $      | 0.44   |        
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 | Diluted                     |                                      | $      | 0.45               |         |                  | $      | 0.28   |        |      | $      | 0.70    |         |   | $      | 0.43   |        
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|Weighted-average number shares
outstanding:                                      |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 | Basic                       |                                      |        | 18,177             |         |                  |        | 17,398 |        |      |        | 18,107  |         |   |        | 17,436 |        
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       
|                                                                                 | Diluted                     |                                      |        | 19,159             |         |                  |        | 17,612 |        |      |        | 19,058  |         |   |        | 17,707 |        
|                                                                                 |                             |                                      |        |                    |         |                  |        |        |        |      |        |         |         |   |        |       

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

4



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##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
For the Six Months Ended December 31, 2003
(Unaudited, in thousands)


|                                                |                                          |                            |        |              |   |           |     |          |   |               |        |               |   |       |         |        |        |       |        |             |       |   |         |        |        | 
|----------------------------------------------- | ---------------------------------------- | -------------------------- | ------ | ------------ | - | --------- | --- | -------- | - | ------------- | ------ | ------------- | - | ----- | ------- | ------ | ------ | ----- | ------ | ----------- | ----- | - | ------- | ------ | ------ | 
|                                                |                                          |                            |        |              |   |           |     |          |   |               |        |               |   |       |         |        |        |       |        | Accumulated |       |   |         |       
|                                                |                                          |                            |        |              |   |           |     |          |   |               |        | Capital       |   |       |         |        |        | Other |        |             |       |  
|                                                |                                          |                            |        | Common Stock |   | in Excess |     | Retained |   | Comprehensive |        |               |   |      
|                                                |                                          |                            |        | Shares       |   | Amount    |     | of Par   |   | Earnings      |        | Income (Loss) |   | Total
|                                                |                                          |                            |        |              |   |           |     |          |   |               |        |               |   |      
|Balance, June 30, 2003                          |                                          |                            | 18,018 |              |   | $         | 450 |          |   | $             | 69,644 |               |   | $     | 152,381 |        |        | $     | (1,247 | )           |       | $ | 221,228 |       
|Comprehensive income:                           |                                          |                            |        |              |   |           |     |          |   |               |        |               |   |       |         |        |        |       |        |             |       |   |         |       
|                                                | Net income                               |                            |        |             |   |           |     |         |   |               |        |              |   |       |         | 13,318 |        |       |        |            |       |   |         | 13,318 |       
|                                                | Foreign currency translation
adjustments |                            |        |             |   |           |     |         |   |               |        |              |   |       |         |       |        |       |        | 6,185       |       |   |         | 6,185  |       
|                                                |                                          |                            |        |              |   |           |     |          |   |               |        |               |   |       |         |        |        |       |        |             |       |   |         |       
|                                                |                                          | Total comprehensive income |        |              |  |           |     |          |  |               |        |               |  |       |         |        | 13,318 |       |        |             | 6,185 |   |         |        | 19,503 | 
|Stock issued upon exercise of options           |                                          |                            | 405    |              |   |           | 10  |          |   |               | 7,143  |               |   |       |        |        |        |       |       |             |       |   | 7,153   |       
|Repurchases of stock                            |                                          |                            | (187   | )            |   |           | (4  | )        |   |               | (6,833 | )             |   |       |        |        |        |       |       |             |       |   | (6,837  | )     
|Income tax benefit from stock options
exercised |                                          |                            |       |              |   |           |    |          |   |               | 3,206  |               |   |       |        |        |        |       |       |             |       |   | 3,206   |       
|                                                |                                          |                            |        |              |   |           |     |          |   |               |        |               |   |       |         |        |        |       |        |             |       |   |         |       
|Balance, December 31, 2003                      |                                          |                            | 18,236 |              |   | $         | 456 |          |   | $             | 73,160 |               |   | $     | 165,699 |        |        | $     | 4,938  |             |       | $ | 244,253 |       
|                                                |                                          |                            |        |              |   |           |     |          |   |               |        |               |   |       |         |        |        |       |        |             |       |   |         |       

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

5



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##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed and unaudited, in thousands)


|                                                               |                                                                              |                                                 |                                                 |         |                                       |        |         |         |        |         |  
|-------------------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ------- | ------------------------------------- | ------ | ------- | ------- | ------ | ------- | -
|                                                               |                                                                              |                                                 |                                                 |         | Six Months Ended
        December 31,
|                                                               |                                                                              |                                                 |                                                 |         |                                      
|                                                               |                                                                              |                                                 |                                                 |         | 2003                                  |        | 2002   
|                                                               |                                                                              |                                                 |                                                 |         |                                       |        |        
|Net
          cash flows provided by operating activities:     |                                                                              | $                                               | 30,284                                          |         |                                       | $      | 7,856   |        
|                                                               |                                                                              |                                                 |                                                 |         |                                       |        |         |        
|Cash
          flows from investing activities:                |                                                                              |                                                 |                                                 |         |                                       |        |         |        
|                                                               | Purchases
          of property, plant and equipment                         |                                                 |                                                 | (3,128  | )                                     |        |         | (3,233  | )     
|                                                               | Proceeds
          from dispositions of property, plant and equipment        |                                                 |                                                 | 3       |                                       |        |         | 71      |       
|                                                               | Internally
          developed software                                      |                                                 |                                                 | (2,322  | )                                     |        |         | (1,828  | )     
|                                                               | Proceeds
          from sale of subsidiary                                   |                                                 |                                                 |        |                                       |        |         | 286     |       
|                                                               | Purchases
          of other investments                                     |                                                 |                                                 | (500    | )                                     |        |         |        |       
|                                                               |                                                                              |                                                 |                                                 |         |                                       |        |         |        
|                                                               |                                                                              | Net
          cash used in investing activities |                                                 |         | (5,947                                | )      |         |         | (4,704 | )      
|Cash
          flows from financing activities:                |                                                                              |                                                 |                                                 |         |                                       |        |         |        
|                                                               | Principal
          payments on line of credits                              |                                                 |                                                 | (11,544 | )                                     |        |         | (12,887 | )     
|                                                               | Proceeds
          from lines of credit                                      |                                                 |                                                 | 3,279   |                                       |        |         | 2,240   |       
|                                                               | Principal
          payments on pre-acquisition shareholder loan             |                                                 |                                                 | (363    | )                                     |        |         |        |       
|                                                               | Principal
          payments on long-term debt and capital lease obligations |                                                 |                                                 | (48     | )                                     |        |         | (93     | )     
|                                                               | Dividends
          to minority owners                                       |                                                 |                                                 | (161    | )                                     |        |         |        |       
|                                                               | Repurchases
          of stock                                               |                                                 |                                                 | (6,837  | )                                     |        |         | (3,510  | )     
|                                                               | Proceeds
          from issuance of stock                                    |                                                 |                                                 | 7,153   |                                       |        |         | 129     |       
|                                                               |                                                                              |                                                 |                                                 |         |                                       |        |         |        
|                                                               |                                                                              |                                                 | Net
          cash used in financing activities |         |                                       | (8,521 | )       |         |        | (14,121 | )
|                                                               |                                                                              |                                                 |                                                 |         |                                       |        |         |        
|Effect
          of exchange rate changes on cash              |                                                                              |                                                 | (210                                            | )       |                                       |        | 15      |        
|                                                               |                                                                              |                                                 |                                                 |         |                                       |        |         |        
|Net
          increase (decrease) in cash and cash equivalents |                                                                              |                                                 | 15,606                                          |         |                                       |        | (10,954 | )      
|Cash
          and cash equivalents at beginning of period     |                                                                              |                                                 | 45,682                                          |         |                                       |        | 66,638  |        
|                                                               |                                                                              |                                                 |                                                 |         |                                       |        |         |        
|Cash
          and cash equivalents at end of period           |                                                                              | $                                               | 61,288                                          |         |                                       | $      | 55,684  |        
|                                                               |                                                                              |                                                 |                                                 |         |                                       |        |         |        

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

6



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##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended December 31, 2003
(Unaudited, $ in thousands, except per share data)


|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |  | The accompanying 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, 2003. Certain information and
footnote disclosures which are normally included in financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to SEC rules and regulations. The
information reflects all normal and recurring adjustments that, in the
opinion of management, are necessary for a fair presentation of the
financial position of the Company, and its results of operations for the
interim periods set forth herein. The results for the three- and six-
months ended December 31, 2003 are not necessarily indicative of the
results to be expected for the full year or any future period. Certain
amounts previously reported have been reclassified to conform to current
year presentation.
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. |  | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |  | The Company has incentive and non-qualified stock options outstanding
that were granted to directors, officers, and other employees pursuant to
authorization by the Board of Directors. The exercise price of all
options equals the market value 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. Currently, all outstanding
options expire ten years from the date of grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |  | The Company applies the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion (APB) No. 25,
Accounting for Stock Issued to Employees, in accounting for the stock
option awards. The Company has not recognized any related compensation
expense in the consolidated statements of operations because the fair
value of the stock underlying the options granted did not exceed the
exercise price of the options on the date of grant. If compensation
expense had been determined based on the weighted-average estimate of the
fair value of each option granted consistent with the provisions of SFAS
No. 123, Accounting for Stock-Based Compensation, as amended by SFAS
No. 148, the Companys net income would be reduced to pro forma amounts
as follows:                                                                                                                                                                                                                                                                                                                                                                           

|                                                                                                           |             |   |                    |      |                  |   |        |      |      |   |        |      |  |   |        |      | 
|---------------------------------------------------------------------------------------------------------- | ----------- | - | ------------------ | ---- | ---------------- | - | ------ | ---- | ---- | - | ------ | ---- |  | - | ------ | ---- | 
|                                                                                                           |             |   | Three Months Ended |      | Six Months Ended
|                                                                                                           |             |   | December 31,       |      | December 31,    
|                                                                                                           |             |   | 2003               |      | 2002             |   | 2003   |      | 2002
|                                                                                                           |             |   |                    |      |                  |   |        |      |     
|Net income - as reported                                                                                   |             | $ | 8,571              |      |                  | $ | 4,931  |      |      | $ | 13,318 |      |  | $ | 7,626  |     
|Add: stock-based compensation
expense included in reported
net income, net of tax                          |             |   |                   |      |                  |   |       |      |      |   |       |      |  |   |       |     
|Deduct: total stock-based
employee compensation expense
determined under the fair value
method, net of tax |             |   | (1,219             | )    |                  |   | (1,321 | )    |      |   | (2,487 | )    |  |   | (3,313 | )   
|                                                                                                           |             |   |                    |      |                  |   |        |      |      |   |        |      |  |   |        |     
|Net income - pro forma                                                                                     |             | $ | 7,352              |      |                  | $ | 3,610  |      |      | $ | 10,831 |      |  | $ | 4,313  |     
|                                                                                                           |             |   |                    |      |                  |   |        |      |      |   |        |      |  |   |        |     
|Basic net income per share                                                                                 |             |   |                    |      |                  |   |        |      |      |   |        |      |  |   |        |     
|                                                                                                           | As reported |   | $                  | 0.47 |                  |   | $      | 0.28 |      |   | $      | 0.74 |  |   | $      | 0.44 | 
|                                                                                                           | Pro forma   |   | $                  | 0.40 |                  |   | $      | 0.21 |      |   | $      | 0.60 |  |   | $      | 0.25 | 
|Diluted net income per share                                                                               |             |   |                    |      |                  |   |        |      |      |   |        |      |  |   |        |     
|                                                                                                           | As reported |   | $                  | 0.45 |                  |   | $      | 0.28 |      |   | $      | 0.70 |  |   | $      | 0.43 | 
|                                                                                                           | Pro forma   |   | $                  | 0.38 |                  |   | $      | 0.21 |      |   | $      | 0.57 |  |   | $      | 0.24 | 

| |  |                                                                                                                                                                                                                                                                                                                                
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The weighted average fair value of each option granted for the second
quarter of fiscal year 2004 and 2003 was $21.75 and $11.15, respectively.
The weighted average fair value of each option granted for the first six
months of fiscal year 2004 and 2003 was $21.65 and $11.18, respectively.
The fair value of each option

7



---



##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended December 31, 2003
(Unaudited, $ in thousands, except per share data)


|                                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------
|grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions:

|                        |  |                    |     |                  |  |           |     |           |  |  |     |   |  |  |     |  
|----------------------- |  | ------------------ | --- | ---------------- |  | --------- | --- | --------- |  |  | --- | - |  |  | --- | -
|                        |  | Three Months Ended |     | Six Months Ended
|                        |  | December 31,       |     | December 31,    
|                        |  | 2003               |     | 2002             |  | 2003      |     | 2002     
|                        |  |                    |     |                  |  |           |     |          
|Risk-free interest rate |  |                    | 3.7 | %                |  |           | 2.9 | %         |  |  | 3.7 | % |  |  | 2.9 | %
|Expected life           |  | 6.0 years          |     | 6.0 years        |  | 6.0 years |     | 6.0 years
|Expected volatility     |  |                    | 50  | %                |  |           | 50  | %         |  |  | 50  | % |  |  | 50  | %
|Expected dividend yield |  |                    | 0   | %                |  |           | 0   | %         |  |  | 0   | % |  |  | 0   | %

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  | The Black-Scholes option-pricing model was developed for use in
estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. In addition, option-pricing
models require the input of highly subjective assumptions including the
expected stock price volatility. The Company uses projected volatility
rates, which are based upon historical volatility rates, trended into
future years. Because the Companys employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect
the fair value estimate, in managements opinion, existing models,
including the Black-Scholes option-pricing model, do not necessarily
provide a reliable single measure of the fair value of employee stock
options.
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3. |  | Acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |  | On May 1, 2003, the Company acquired Datavantage Corporation
(Datavantage), a privately held software application developer and
system integrator specializing in the specialty and apparel retail
market, for total purchase price of approximately $52,300. The
consideration consisted of $33,800 in cash ($28,600 paid at closing and
$5,200 to be paid 18 months after closing subject to certain holdback
rights), approximately $300 in transaction costs and 719,360 shares of
MICROS common stock, valued at approximately $18,200. The following
unaudited pro forma summary presents the consolidated results of
operations as if the acquisition had occurred as of July 1, 2002.                                                                                                                                                                      
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |  | The summary includes adjustments for amortization of intangible assets,
interest expense on any debt incurred to fund the acquisition, and the
tax effect of these adjustments that would have been incurred had such
acquisition occurred as of July 1, 2002. These unaudited pro forma
results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisition
and other transactions been made as of that date or results which may
occur in the future.                                                                                                                                                                                                                                                                                                                                     

|                                    |         |   |                                      |        |             |   |             |  |              |   |      |     |  |   |         |        | 
|----------------------------------- | ------- | - | ------------------------------------ | ------ | ----------- | - | ----------- |  | ------------ | - | ---- | --- |  | - | ------- | ------ | 
|                                    |         |   | Three Months Ended December 31, 2002
|                                    |         |   |                                     
|                                    |         |   | Historical                           |        | Historical  |   | Pro forma   |  | Pro forma   
|                                    |         |   | MICROS                               |        | Datavantage |   | Adjustments |  | Consolidated
|Revenue                             |         | $ | 97,045                               |        |             | $ | 11,629      |  |              | $ |     |     |  | $ | 108,674 |       
|Net Income                          |         | $ | 4,931                                |        |             | $ | 1,404       |  |              | $ | (371 | )   |  | $ | 5,964   |       
|Net Income per
common share         |         |   |                                      |        |             |   |             |  |              |   |      |     |  |   |         |       
|                                    | Basic   |   | $                                    | 0.28   |             |   |             |  |              |   |      |     |  |   | $       | 0.33   | 
|                                    | Diluted |   | $                                    | 0.28   |             |   |             |  |              |   |      |     |  |   | $       | 0.33   | 
|Weighted average shares
outstanding |         |   |                                      |        |             |   |             |  |              |   |      |     |  |   |         |       
|                                    | Basic   |   |                                      | 17,398 |             |   |             |  |              |   |      | 719 |  |   |         | 18,117 | 
|                                    | Diluted |   |                                      | 17,612 |             |   |             |  |              |   |      | 719 |  |   |         | 18,331 | 

8



---



##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended December 31, 2003
(Unaudited, $ in thousands, except per share data)


|                                    |         |   |                                    |        |             |   |             |  |              |   |      |     |  |   |         |        | 
|----------------------------------- | ------- | - | ---------------------------------- | ------ | ----------- | - | ----------- |  | ------------ | - | ---- | --- |  | - | ------- | ------ | 
|                                    |         |   | Six Months Ended December 31, 2002
|                                    |         |   |                                   
|                                    |         |   | Historical                         |        | Historical  |   | Pro forma   |  | Pro forma   
|                                    |         |   | MICROS                             |        | Datavantage |   | Adjustments |  | Consolidated
|Revenue                             |         | $ | 184,799                            |        |             | $ | 21,910      |  |              | $ |     |     |  | $ | 206,709 |       
|Net Income                          |         | $ | 7,626                              |        |             | $ | 2,789       |  |              | $ | (557 | )   |  | $ | 9,858   |       
|Net Income per
common share         |         |   |                                    |        |             |   |             |  |              |   |      |     |  |   |         |       
|                                    | Basic   |   | $                                  | 0.44   |             |   |             |  |              |   |      |     |  |   | $       | 0.54   | 
|                                    | Diluted |   | $                                  | 0.43   |             |   |             |  |              |   |      |     |  |   | $       | 0.54   | 
|Weighted average shares
outstanding |         |   |                                    |        |             |   |             |  |              |   |      |     |  |   |         |       
|                                    | Basic   |   |                                    | 17,436 |             |   |             |  |              |   |      | 719 |  |   |         | 18,155 | 
|                                    | Diluted |   |                                    | 17,707 |             |   |             |  |              |   |      | 719 |  |   |         | 18,426 | 

|   |  |                                              
|-- |  | ---------------------------------------------
|4. |  | Inventories                                  
|   |  |                                              
|   |  | The components of inventories are as follows:

|                         |                 |   |              |        |          |   |        |        | 
|------------------------ | --------------- | - | ------------ | ------ | -------- | - | ------ | ------ | 
|                         |                 |   | December 31, |        | June 30,
|                         |                 |   | 2003         |        | 2003    
|                         |                 |   |              |        |         
|Raw materials            |                 | $ | 8,014        |        |          | $ | 8,368  |       
|Work-in-process          |                 |   | 70           |        |          |   | 146    |       
|Finished goods           |                 |   | 32,124       |        |          |   | 29,250 |       
|                         |                 |   |              |        |          |   |        |       
|                         | Total inventory |   |              | 40,208 |          |   |        | 37,764 | 
|Reserve for obsolescence |                 |   | (6,428       | )      |          |   | (5,900 | )     
|                         |                 |   |              |        |          |   |        |       
|                         | Net inventory   |   | $            | 33,780 |          |   | $      | 31,864 | 
|                         |                 |   |              |        |          |   |        |       

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. |  | Recent accounting standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |  | On December 17, 2003, the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin No. 104 (SAB
104), Revenue Recognition, which supercedes SAB
101, Revenue Recognition in Financial Statements. SAB
104s primary purpose is to rescind accounting guidance
contained in SAB 101 related to multiple element revenue
arrangements, superseded as a result of the issuance of Emerging
Issues Task Force (EITF) Issue No. 00-21,
Accounting for Revenue Arrangements with Multiple
Deliverables. Additionally, SAB 104 rescinds the SECs
Revenue Recognition in Financial Statements Frequently Asked
Questions and Answer issued with SAB 101 that had been codified
in SEC Topic 13, Revenue Recognition.                                                                                                                                                                                                                                                                  
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |  | In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest
Entities, which addresses consolidation by business enterprises of
variable interest entities that either: (1) do not have sufficient equity
investment at risk to permit the entity to finance its activities without
additional subordinated financial support, or (2) the equity investors
lack an essential characteristic of a controlling financial interest.
The provisions of FIN 46 are effective immediately for all arrangements
entered into after January 31, 2003. For those arrangements made prior
to January 31, 2003, the provisions of FIN No. 46 are required to be
adopted at the beginning of the first interim period or annual period
beginning after December 15, 2003. As of December 31, 2003, the Company
does not have any entities that require disclosure or new consolidation
as a result of adopting the provisions of FIN 46.
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |  | In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others. This
interpretation requires that a guarantor recognize a liability for the
fair value of the obligation undertaken in issuing the guarantee at the
inception of the guarantee. The adoption of FIN 45 had no impact on the
results of operations of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |  | The Company has applied the disclosure provisions of FIN 45 to its
agreements that contain guarantee or indemnification clauses. These
disclosure provisions expand those required by FASB Statement No. 5,
Accounting for Contingencies, by requiring a guarantor to disclose
certain types of guarantees, even if the likelihood of requiring the
guarantors performance is remote. The following is a description of
arrangements in which the Company is the guarantor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

9



---



##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended December 31, 2003
(Unaudited, $ in thousands, except per share data)

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  | The Company is a party to a variety of customer agreements pursuant to
which it may be obligated to indemnify its customer with respect to
certain matters. Typically, these obligations arise in the context of
contracts entered into by the Company, under which the Company may agree
to defend and hold harmless its customer from and against losses arising
from a breach of representations and covenants related to such matters as
title to the assets sold, certain intellectual property rights, and
violations of law. In each of these circumstances, payment by the
Company is conditioned on the customer making an adverse claim pursuant
to the procedures specified in the particular contract, which procedures
typically allow the Company to challenge the customers claims. Further,
the Companys obligations under these agreements may be limited in terms
of time and/or amount, and, in some instances, the Company may have
recourse against independent third parties in connection with customers
contract indemnity claims.
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |  | It is not possible to predict the maximum potential amount of future
payments under these or similar agreements, due to the conditional nature
of these obligations and the unique facts and circumstances involved in
each particular agreement. To date, the Company has not incurred
material expense under these agreements and has not accrued any amounts
relating to such provisions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|6. |  | Net income per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |  | Basic net income per common share is computed by dividing net income by
the weighted average number of shares outstanding. Diluted net income
per share includes the dilutive effect of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |  | A reconciliation of the weighted average number of common shares
outstanding assuming dilution is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|                                                           |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|---------------------------------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                                                           |  | Three Months Ended |        | Six Months Ended
|                                                           |  | December 31,       |        | December 31,    
|                                                           |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                                                           |  |                    |        |                  |  |      |        |     
|Net income                                                 |  | $                  | 8,571  |                  |  | $    | 4,931  |      |  | $ | 13,318 |  |  | $ | 7,626  | 
|                                                           |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|Average common shares outstanding                          |  |                    | 18,177 |                  |  |      | 17,398 |      |  |   | 18,107 |  |  |   | 17,436 | 
|Dilutive effect of outstanding stock options               |  |                    | 982    |                  |  |      | 214    |      |  |   | 951    |  |  |   | 271    | 
|                                                           |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|Average common shares outstanding assuming
dilution        |  |                    | 19,159 |                  |  |      | 17,612 |      |  |   | 19,058 |  |  |   | 17,707 | 
|                                                           |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|Basic net income per share                                 |  | $                  | 0.47   |                  |  | $    | 0.28   |      |  | $ | 0.74   |  |  | $ | 0.44   | 
|                                                           |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|Diluted net income per share                               |  | $                  | 0.45   |                  |  | $    | 0.28   |      |  | $ | 0.70   |  |  | $ | 0.43   | 
|                                                           |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|Anti-dilutive weighted shares excluded from
reconciliation |  |                    | 757    |                  |  |      | 2,232  |      |  |   | 768    |  |  |   | 1,662  | 

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7. |  | Segment reporting data                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |  | The Company develops, manufactures, sells and services point-of-sale
computer systems, property management systems, central reservation and
central information systems products for the hospitality industry and
information technology solutions for the specialty and general
merchandise retail industry. MICROS is organized and operates in two
segments: U.S. and International. The International segment is primarily
in Europe, the Pacific Rim and Latin America. For purposes of applying
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, management views the U.S. and International segments
separately in operating the business, although the products and services
are similar for each segment.

10



---



##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended December 31, 2003
(Unaudited, $ in thousands, except per share data)

|                                                            
|------------------------------------------------------------
|A summary of the Companys operating segments is as follows:

|                                                                                      |                           |                                                                                        |   |                    |         |                  |   |         |        |      |   |         |         |  |   |         |         | 
|------------------------------------------------------------------------------------- | ------------------------- | -------------------------------------------------------------------------------------- | - | ------------------ | ------- | ---------------- | - | ------- | ------ | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                                      |                           |                                                                                        |   | Three Months Ended |         | Six Months Ended
|                                                                                      |                           |                                                                                        |   | December 31,       |         | December 31,    
|                                                                                      |                           |                                                                                        |   | 2003               |         | 2002             |   | 2003    |        | 2002
|                                                                                      |                           |                                                                                        |   |                    |         |                  |   |         |        |     
|Revenues (1):                                                                         |                           |                                                                                        |   |                    |         |                  |   |         |        |      |   |         |         |  |   |        
|                                                                                      | United States             |                                                                                        | $ | 64,557             |         |                  | $ | 53,286  |        |      | $ | 128,026 |         |  | $ | 103,454 |        
|                                                                                      | International             |                                                                                        |   | 69,164             |         |                  |   | 58,231  |        |      |   | 126,208 |         |  |   | 106,757 |        
|                                                                                      | Intersegment eliminations |                                                                                        |   | (16,467            | )       |                  |   | (14,472 | )      |      |   | (30,563 | )       |  |   | (25,412 | )      
|                                                                                      |                           |                                                                                        |   |                    |         |                  |   |         |        |      |   |         |         |  |   |        
|                                                                                      |                           | Total revenues                                                                         |   | $                  | 117,254 |                  |   | $       | 97,045 |      |   | $       | 223,671 |  |   | $       | 184,799 | 
|                                                                                      |                           |                                                                                        |   |                    |         |                  |   |         |        |      |   |         |         |  |   |        
|Income before taxes,
minority interests and
equity in net earnings of
affiliates (1): |                           |                                                                                        |   |                    |         |                  |   |         |        |      |   |         |         |  |   |        
|                                                                                      | United States             |                                                                                        | $ | 6,566              |         |                  | $ | 1,838   |        |      | $ | 9,868   |         |  | $ | 2,417   |        
|                                                                                      | International             |                                                                                        |   | 21,151             |         |                  |   | 17,711  |        |      |   | 37,201  |         |  |   | 29,328  |        
|                                                                                      | Intersegment eliminations |                                                                                        |   | (13,063            | )       |                  |   | (10,843 | )      |      |   | (24,178 | )       |  |   | (18,627 | )      
|                                                                                      |                           |                                                                                        |   |                    |         |                  |   |         |        |      |   |         |         |  |   |        
|                                                                                      |                           | Total income before
taxes, minority
interests and equity
in net earnings of
affiliates |   | $                  | 14,654  |                  |   | $       | 8,706  |      |   | $       | 22,891  |  |   | $       | 13,118  | 
|                                                                                      |                           |                                                                                        |   |                    |         |                  |   |         |        |      |   |         |         |  |   |        

|                         |               |                           |   |              |         |          |   |         |         | 
|------------------------ | ------------- | ------------------------- | - | ------------ | ------- | -------- | - | ------- | ------- | 
|                         |               |                           |   | December 31, |         | June 30,
|                         |               |                           |   | 2003         |         | 2003    
|                         |               |                           |   |              |         |         
|Identifiable assets (2): |               |                           |   |              |         |          |   |        
|                         | United States |                           | $ | 181,446      |         |          | $ | 186,748 |        
|                         | International |                           |   | 196,745      |         |          |   | 183,267 |        
|                         |               |                           |   |              |         |          |   |        
|                         |               | Total identifiable assets |   | $            | 378,191 |          |   | $       | 370,015 | 
|                         |               |                           |   |              |         |          |   |        



|(1) |  | Amounts based on the location of the customer.      
|--- |  | ----------------------------------------------------
|    |  |                                                     
|(2) |  | Amounts based on the location of the selling entity.

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8. |  | Shareholders Equity                                                                                                                                                                                                                                                                                                                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                             
|   |  | In fiscal year 2002, the Board
        of Directors authorized the purchase of up to one million shares of the
        Companys common stock. A summary of the cumulative number of whole
        shares purchased and retired through December 31, 2003, is as follows.
        Since the inception of the re-purchase program, we have incurred approximately
        $26 in fees related to the program.

|                                                 |  |        |         |                |  |           |  |  |  |   |       |  |  |  |  |  |  |   |        | 
|------------------------------------------------ |  | ------ | ------- | -------------- |  | --------- |  |  |  | - | ----- |  |  |  |  |  |  | - | ------ | 
|                                                 |  | Whole  |         | Average        |  |           |  | 
|                                                 |  | Shares |         | Purchase Price |  | Principal
|                                                 |  |        |         |                |  |          
|Total shares purchased as of June 30, 2003       |  |        | 377,841 |                |  |           |  |  |  | $ | 24.59 |  |  |  |  |  |  | $ | 9,291  | 
|Shares
purchased from July 1  December 31,
2003 |  |        | 186,510 |                |  |           |  |  |  | $ | 36.67 |  |  |  |  |  |  |   | 6,838  | 
|                                                 |  |        |         |                |  |           |  |  |  |   |       |  |  |  |  |  |  |   |        | 
|Total shares purchased as of December 31,
2003   |  |        | 564,351 |                |  |           |  |  |  | $ | 28.58 |  |  |  |  |  |  | $ | 16,129 | 
|                                                 |  |        |         |                |  |           |  |  |  |   |       |  |  |  |  |  |  |   |        | 

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9. |  | Legal proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |  | On October 9, 2003, MICROS entered
      into a settlement agreement in connection with alleged breaches under a
      vendor development agreement. The total settlement amount, net of legal
      fees, was $1.7 million, which includes approximately $1.2 million in cash
      and approximately $0.5 million in credits for future development services
      that MICROS may, in its discretion, use over the next two years. The net
      cash payment of approximately $1.2 million was recorded as non-operating
      income.



11



---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations

Results of Operations  Second Quarter and Six-Month Comparisons

MICROS recorded diluted net income of $0.45 per common share in the second
quarter of fiscal year 2004, compared with diluted net income of $0.28 per
common share in the second quarter of fiscal year 2003. For the six-months
ended December 31, 2003, diluted net income was $0.70 per common share compared
with diluted net income of $0.43 per common share for the six-months ended
December 31, 2002. The quarter and year to date increases were mainly due to
increased sales volume, including sales from the new subsidiary, Datavantage,
which was acquired on May 1, 2003. Datavantage accounted for diluted net
income of $0.10 and $0.17 per common share for the three- and
six-months ended
December 31, 2003, respectively.

Revenue increased $20.2 million to $117.3 million in the second quarter of
fiscal year 2004 compared to $97.0 million in the second quarter of fiscal year
2003. For the first six months of fiscal year 2004, revenue increased $38.9
million or 21.0% to $223.7 million. Of the increases, the U.S. reporting unit
accounted for $13.7 million and $28.2 million while the international reporting
unit accounted for $6.5 million and $10.7 million for the three- and six-month
period ended December 31, 2003, respectively. The increase in the U.S. was
mainly due to sales from Datavantage.

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

|               |  |                    |        |                    |  |                  |        |                  |  |      |        |      |  |      |        |      |  |   |         |  |  |   |        |  |  |   |        |  |  |   |        | 
|-------------- |  | ------------------ | ------ | ------------------ |  | ---------------- | ------ | ---------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | - | ------- |  |  | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|               |  | U.S.               |        | International      |  | U.S.             |        | International   
|               |  | Three Months Ended |        | Three Months Ended |  | Six Months Ended |        | Six Months Ended
|               |  | December 31,       |        | December 31,       |  | December 31,     |        | December 31,    
|(in thousands) |  | 2003               |        | 2002               |  | 2003             |        | 2002             |  | 2003 |        | 2002 |  | 2003 |        | 2002
|               |  |                    |        |                    |  |                  |        |                  |  |      |        |      |  |      |        |     
|Hardware       |  | $                  | 21,864 |                    |  | $                | 20,496 |                  |  | $    | 12,436 |      |  | $    | 12,356 |      |  | $ | 44,286  |  |  | $ | 39,731 |  |  | $ | 23,960 |  |  | $ | 23,134 | 
|Software       |  |                    | 11,075 |                    |  |                  | 8,252  |                  |  |      | 8,900  |      |  |      | 8,955  |      |  |   | 20,538  |  |  |   | 14,352 |  |  |   | 16,226 |  |  |   | 15,118 | 
|Service        |  |                    | 32,287 |                    |  |                  | 22,769 |                  |  |      | 30,692 |      |  |      | 24,217 |      |  |   | 62,376  |  |  |   | 44,919 |  |  |   | 56,285 |  |  |   | 47,545 | 
|               |  |                    |        |                    |  |                  |        |                  |  |      |        |      |  |      |        |      |  |   |         |  |  |   |        |  |  |   |        |  |  |   |        | 
|Total Revenue  |  | $                  | 65,226 |                    |  | $                | 51,517 |                  |  | $    | 52,028 |      |  | $    | 45,528 |      |  | $ | 127,200 |  |  | $ | 99,002 |  |  | $ | 96,471 |  |  | $ | 85,797 | 
|               |  |                    |        |                    |  |                  |        |                  |  |      |        |      |  |      |        |      |  |   |         |  |  |   |        |  |  |   |        |  |  |   |        | 

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

|         |  |                    |       |                  |  |      |       |      |  |  |       |   |  |  |       |  
|-------- |  | ------------------ | ----- | ---------------- |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | -
|         |  | Three Months Ended |       | Six Months Ended
|         |  | December 31,       |       | December 31,    
|         |  | 2003               |       | 2002             |  | 2003 |       | 2002
|         |  |                    |       |                  |  |      |       |     
|Hardware |  |                    | 29.3  | %                |  |      | 33.9  | %    |  |  | 30.5  | % |  |  | 34.0  | %
|Software |  |                    | 17.0  | %                |  |      | 17.7  | %    |  |  | 16.4  | % |  |  | 16.0  | %
|Service  |  |                    | 53.7  | %                |  |      | 48.4  | %    |  |  | 53.1  | % |  |  | 50.0  | %
|         |  |                    |       |                  |  |      |       |      |  |  |       |   |  |  |       |  
|Total    |  |                    | 100.0 | %                |  |      | 100.0 | %    |  |  | 100.0 | % |  |  | 100.0 | %
|         |  |                    |       |                  |  |      |       |      |  |  |       |   |  |  |       |  

Hardware revenue increased primarily due to increased volume of computer
equipment and the new Workstation 4 unit, which was released in the fourth
quarter of fiscal year 2003. The increase in Workstation 4 was offset, to a
degree, by a decrease in the sale of PC Workstations. The decrease in
PC Workstations is partially due to the replacement with the new and
less expensive Workstation 4. Software
revenue increased primarily from the sale of Datavantages suite of software
products, third party software, and Opera. Service revenue increased primarily
due to increased support revenues from the continued expansion of the MICROS
customer base as well as the recurring support revenue of existing customers
and the addition of professional services provided by Datavantage.

Datavantages hardware, software and service revenues for the second quarter
were $3.5 million, $3.2 million and $7.0 million, respectively. Year to date
revenues were $6.3 million, $5.6 million and $13.5 million, respectively.

12



---



##### 



Overall cost of sales, as a percentage of revenue, decreased to 47.9% for the
second quarter of fiscal year 2004 from 51.0% in the prior year. For the first
six months of fiscal year 2004 and 2003, cost of sales, as a percentage of
revenue, was 49.4% and 51.9%, respectively.

Cost of sales for hardware, as a percentage of related revenue, increased to
72.0% in the second quarter of fiscal year 2004 compared to 71.6% for the same
quarter a year earlier. The slight increase was mainly due to the increase in
sales volume for third-party computer equipment, which generates lower margins.
For the first six months of fiscal year 2004, hardware costs, as a percentage
of related revenue, decreased slightly to 71.0% from 71.8% in the prior year.
This decrease was primarily due to the year to date sales of Workstation 4, released in the
fourth quarter of fiscal year 2003.

Software costs, as a percentage of related revenue, increased to 22.6% in the
second quarter of fiscal year 2004 compared to 21.6% for the same quarter a
year earlier. For the first six months of fiscal year 2004, software costs
increased to 24.0% from 23.6% in the prior year. The quarter and year to date
increases were mainly attributed to an increase in software amortization costs
from Datavantage and the strengthening of the EURO.

Service costs as a percentage of related revenue decreased to 42.8% in the
second quarter of fiscal year 2004 compared to 47.3% for the same quarter a
year earlier. For the first six months of fiscal year 2004, service costs, as
a percentage of related revenue, decreased to 44.8% from 47.3% a year earlier.
The quarter and year to date decreases were attributed to Datavantages high
margins in their service products.

Selling, general and administrative expenses increased by $5.4 million or 16.7%
in the second quarter of fiscal year 2004 compared to the same period last
year. On a year to date basis, selling, general and administrative expenses
increased by $11.6 million or 18.6%. The quarter and year to date increases
were mainly due to the increase in salaries and related expenses, increase in
outside consulting services for a large new roll out program and related
foreign exchange increases. Of the increases, Datavantage contributed $3.7
million and $7.6 million for the three- and six-month period ended December 31,
2003, respectively. As a percentage of revenue, selling, general and
administrative expenses decreased to 32.5% and 33.0% in the three- and six-
months ended December 31, 2003 from 33.7% and 33.6% in the same periods of the
previous year, respectively.

Research and development (R&D) expenses consist primarily of labor costs less
capitalized software development costs. In the second quarter of fiscal year
2004, R&D expenses increased $2.9 million, or 68.6%, compared to the same
period last year. On a year to date basis, R&D expenses increased $4.2
million, or 46.0%, compared to the same period last year. The quarter
and year to date increases were mainly due to Datavantage and the
write off of an unreleased product of $0.8 million. Datavantage
contributed $1.4 million of the quarterly increase and $2.9 million of the year
to date increase. As a percentage of revenue, R&D expenses increased to 6.1%
in second quarter of fiscal year 2004 compared to 4.4% in the second quarter of
fiscal year 2003. On a year to date basis, R&D expenses was 6.0% and 4.9% of
revenue for fiscal year 2004 and 2003, respectively. A comparative summary of
R&D activities is as follows ($ in thousands):

|                                                 |  |                    |       |                  |  |      |       |      |  |   |        |  |  |   |        | 
|------------------------------------------------ |  | ------------------ | ----- | ---------------- |  | ---- | ----- | ---- |  | - | ------ |  |  | - | ------ | 
|                                                 |  | Three Months Ended |       | Six Months Ended
|                                                 |  | December 31,       |       | December 31,    
|                                                 |  | 2003               |       | 2002             |  | 2003 |       | 2002
|                                                 |  |                    |       |                  |  |      |       |     
|R&D Expense                                      |  | $                  | 7,160 |                  |  | $    | 4,248 |      |  | $ | 13,334 |  |  | $ | 9,135  | 
|Capitalized
          Software Development Costs |  |                    | 914   |                  |  |      | 950   |      |  |   | 2,322  |  |  |   | 1,828  | 
|                                                 |  |                    |       |                  |  |      |       |      |  |   |        |  |  |   |        | 
|Total                                            |  | $                  | 8,074 |                  |  | $    | 5,198 |      |  | $ | 15,656 |  |  | $ | 10,963 | 
|                                                 |  |                    |       |                  |  |      |       |      |  |   |        |  |  |   |        | 

Depreciation and amortization expense increased by $0.3 million or 14.1% in
second quarter of fiscal year 2004 compared to the same period last year. On a
year to date basis, depreciation and amortization increased by $0.6 million or
13.7% compared to the same period last year. The quarter and year to date
increases were mainly due to Datavantage.

Income from operations for the second quarter of fiscal year 2004 was $13.4
million, or 11.4% of revenue, compared to $8.5 million, or 8.8% of revenue, in
the second quarter of fiscal year 2003. For the first six months of fiscal
year 2004, income from operations was $21.4 million, or 9.6% of revenue,
compared to $13.6 million, or 7.3% of revenue in the same period of the prior
year. The quarter and year to date increases were mainly due to the overall
increase in sales volume, including sales from the new subsidiary, Datavantage,
acquired in May 2003.

13



---



##### 



Datavantages contribution to the overall income from operations was $3.6
million, or 26.9%, and $5.4 million, or 25.2%, for the second quarter and first
six months of fiscal year 2004, respectively.

Non-operating income increased $1.1 million to $1.3 million in the second
quarter of fiscal year 2004. On a year to date basis, non-operating income
increased $1.9 million to $1.5 million. The quarter and year to date increases
were mainly due to a legal settlement in the net amount of approximately $1.2
million.

Income before taxes increased $5.9 million to $14.7 million in the second
quarter of fiscal year 2004. On a year to date basis, income before taxes
increased $9.8 million to $22.9 million.

The effective tax rate for the second quarter of fiscal year 2004 and 2003 was
40.5% and 41.0%, respectively. The year to date effective tax rate for fiscal
year 2004 and 2003 was 40.5% and 40.0%, respectively. Prior years second
quarter effective tax rate was higher to adjust to the year to date tax rate
for fiscal year 2003.

Critical Accounting Policies

The Companys discussion and analysis of its financial condition and results of
operations are based on the consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires the
Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses. On an ongoing basis, the Company
evaluates its estimates, including those that impact revenue recognition and
those related to capitalized software, intangible assets, allowance for
doubtful accounts, allowance for obsolescence, income taxes, contingencies and
litigation. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions.

Management believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of the consolidated
financial statements.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | The Company recognizes revenue when persuasive evidence of an arrangement
exists, delivery has occurred or the services have been provided to the
customer, the fee is fixed or determinable, and collectibility is reasonably
assured. In instances where the customer specifies final acceptance,
revenue is deferred until all acceptance criteria are met. The Company
reduces revenue for estimated customer returns and allowances.                                              
|
| | Hardware                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Revenue from hardware sales is
recognized at the time of shipment.                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Software                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | If a third party can install the software, revenue is recognized when
shipped, with an appropriate deferral for any undelivered software contract
elements. However, if the Company is the sole party that has the
proprietary knowledge to install the software, revenue is recognized upon
installation and when ready to go live, with an appropriate deferral for any
undelivered software contract elements. This deferral is earned when
significant obligations no longer exist.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Service                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Service contract and hosting revenue is initially recorded as deferred
service revenue and is recognized on a pro rata basis over the contract
term. Revenue for the installation of the product, programming and the
training of customers staff is recognized as the work is performed.
Revenue from customer-specific development work is recognized under the
completed contract method.                                                                                          
|
| | Multiple-element arrangements                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | The Company enters into transactions that include multiple-element
arrangements, which may include any combination of hardware, software and/or
services. When some elements are delivered prior to others in an                                                                                                                                                                                                                                                                       

14



---



##### 



|                                                                                                                                                                                                          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|arrangement and all of the following criteria are met, revenue for the
delivered elements is recognized upon delivery of such item. Otherwise,
revenue is deferred until the delivery of the last element.



| |  |  | Vendor-specific objective evidence (VSOE) of fair value of undelivered elements;     
| | - |  | -------------------------------------------------------------------------------------
|
| |  |  | The functionality of delivered elements is not dependent on the undelivered elements;
|
| |  |  | Delivery of the element(s) represents the culmination of the earning process.        

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Capitalized software development costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Software development costs, for software products to be licensed to others,
incurred prior to establishing technological feasibility are charged to
operations and included in research and development costs. Software
development costs incurred after establishing technological feasibility and
purchased software costs are capitalized on a product-by-product basis until
the product is available for general release to customers, at which time
amortization begins. Annual amortization, charged to cost of sales, is the
greater of the amount computed using the ratio that current gross revenues
for a product bear to the total of current and anticipated future gross
revenues for that product, or the straight-line method over the remaining
estimated economic life of the product.                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Long-lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Intangible Assets Other than Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|The Company reviews its long-lived assets (other than goodwill) for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company assesses the
recoverability of the long-lived assets (other than goodwill) by comparing
the estimated undiscounted cash flows associated with the related asset or
group of assets against their respective carrying amounts. The amount of an
impairment, if any, is calculated based on the excess of the carrying amount
over the fair value of those assets.                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|At December 31, 2003, the net book value of Intangible Assets Other than
Goodwill was approximately $13.3 million. The Company did not recognize any
impairment loss during the three- and six- months ended December 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|The Company adopted Statement of Financial Accounting Standard (SFAS) No.
142, Goodwill and Other Intangible Assets on July 1, 2001. This standard
requires that goodwill no longer be amortized, and instead, be tested for
impairment on an annual basis (or whenever events occur which may indicate
possible impairment). The Company performs the impairment analysis on an
annual basis during the first quarter of its fiscal year. This analysis
requires management to make a series of critical assumptions to: (1)
evaluate whether any impairment exists, and (2) measure the amount of
impairment.                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|In testing for a potential impairment of goodwill, SFAS 142 requires the
Company to: (1) allocate goodwill to the various reporting units to which
the acquired goodwill relates; (2) estimate the fair value of those
reporting units to which goodwill relates; and (3) determine the carrying
value (book value) of those reporting units. Furthermore, if the estimated
fair value is less than the carrying value for a reporting unit, SFAS 142
requires the estimation of the fair value of all identifiable assets and
liabilities of the reporting unit, in a manner similar to a purchase price
allocation for an acquired business. Only after this process is completed,
is the amount of goodwill impairment determined. The Company estimated the
fair value of its U.S. and international reporting units using the
discounted cash flow method.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|The process of evaluating the potential impairment of goodwill is highly
subjective and requires significant judgment at many points during the
analysis. In estimating the fair value of the reporting units with
recognized goodwill for the purposes of our annual or periodic analyses, the
Company makes estimates and judgments about the future cash flows of these
businesses. The cash flow forecasts are based on assumptions that are
consistent with the plans and estimates used to manage the underlying
reporting units. MICROS also considers
its market capitalization (adjusted for unallocated monetary assets such as
cash, marketable debt securities and debt) on the date the analysis is
performed.                                                                                                                                    

15



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##### 



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company completed the first step of its annual impairment analysis in
the first quarter of fiscal year 2004. As the estimated fair value of the
U.S. and international reporting units exceed the carrying values, the
Company concluded there was no impairment of goodwill. As of December 31,
2003, the net book value of goodwill for the U.S. and international
reporting unit was $51.8 million and $8.4 million,
respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Allowance for doubtful accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|The Company maintains allowances for doubtful accounts for estimated losses
that may result from the inability of our customers to make required
payments. These allowances are based on customer payment practices and
history, inquiries, credit reports from third parties and other financial
information. If the financial condition of our customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the expected future
tax consequences attributable to the differences between the financial
statement carrying amounts and the tax basis of assets and liabilities.
Deferred tax assets and liabilities are measured using the enacted tax rates
in effect for the year in which those temporary differences are expected to
be recovered or settled. The effect on the deferred tax assets and
liabilities of a change in tax rate is recognized in income in the period
that includes the enactment date. Valuation allowances are established when
necessary to reduce deferred tax assets to the amounts more likely than not
to be realized. If the Company determines that it will not be able to
realize all or part of its net deferred tax asset in the future, an
adjustment to the deferred tax asset would be charged to income in the
period such determination is made.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|The financial statements of the Companys non-U.S. operations are translated
into U.S. dollars for financial reporting purposes. The assets and
liabilities of non-U.S. operations whose functional currencies are not in
U.S. dollars are translated at the quarter-end exchange rates, while
revenues and expenses are translated at month-end exchange rates during the
fiscal year. The cumulative translation effects are reflected in
shareholders equity. Gains and losses on transactions denominated in other
than the functional currency of an operation are reflected in other income
(expense).                                                                                                                                                                                                                                                                                                                                                                                                   

Liquidity and Capital
Resources

Effective July 17, 2003, the Company (and its subsidiaries) entered into two
new credit agreements (the Credit Agreements) which in the aggregate offer a
$65.0 million multi-currency committed line of credit, expiring on July 31,
2005. The lenders (the Lenders) under the Credit Agreements are Bank of
America, N.A., Wachovia Bank, N.A., and US Bank. Simultaneously upon entering
into the Credit Agreements, the Company entered into: (i) a security agreement,
pursuant to which the Lenders have a security interest in all inventory and
receivables located in the United States; and (ii) a pledge agreement and
irrevocable stock powers, pursuant to which the Company pledges stock to the
Lenders in certain subsidiaries. Interest due under the Credit Agreements is
calculated as follows: (i) if the advance is made in U.S. dollars, the greater
of the Federal Funds Rate, plus 50 basis points, or the Bank of America prime
rate, plus an additional 25 to 150 basis points, depending upon the Companys
consolidated earnings before interest, taxes, depreciation and amortization
(EBITDA) for the immediately preceding four calendar quarters; and (ii) if
the advance is made in a foreign currency, the LIBOR rate for the applicable
denominated currency, plus an additional 150 to 250 basis points, depending
upon the Companys consolidated EBITDA for the immediately preceding four
calendar quarters. The Credit Agreements also require the Company to satisfy
certain financial covenants and limits the Companys ability to assume
additional debt and pay cash dividends. The Lenders under the Credit
Agreements have not alleged any breaches thereunder by MICROS. Additionally, the Credit Agreements impose upon the
Company certain commitment fees on the unused portion of the line of credit.

The Company also has a credit relationship with a European bank in the amount
of EUR 1.0 million (approximately $1.3 million at the December 31, 2003
exchange rate). Under the terms of this facility, the Company may borrow in

16



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##### 



the form of either a line of credit or term debt. As the Company has
significant international operations, its Euro-denominated borrowings do not
represent a significant foreign exchange risk. On an overall basis, the
Company monitors its cash and debt positions in each currency in an effort to
reduce its foreign exchange risk.

As of December 31, 2003, the total outstanding balance on the lines of credit
is $2.2 million consisting of: ZAR (South African Rand) 4.0 million
(approximately $0.6 million at the December 31, 2003 exchange rate), SEK
(Swedish Krona) 7.5 million (approximately $1.0 million at the December 31,
2003 exchange rate), and JPY (Japanese Yen) 60.0 million (approximately $0.6
million at the December 31, 2003 exchange rate). As of December 31, 2003, the
Company has approximately $64.1 million available to borrow. The
line of credit balance decreased from $10.2 million at June 30,
2003 to $2.2 million at December 31, 2003 mainly due to the
Companys positive cash flow.

Net cash provided by operating
activities for fiscal year 2004 was $30.3
million versus $7.9 million for fiscal year 2003. The Company
used $5.9
million for investing activities, including $5.4 million for the purchase of
property, plant, and equipment and internally developed software and $0.5
million for the purchase of long-term investments. The Company used $8.5 million for financing activities,
consisting primarily of net payments on the line of credit of $8.3 million,
proceeds from the issuance of stock of $7.2 million offset by $6.8 million in
the repurchase of the Companys stock. All cash is being retained for the
operation and expansion of the business and the repurchase of the Companys
stock.

The Company anticipates that its cash flow from operations along with available
lines of credit, in conjunction with other lines of credit for which the
Company may be eligible or lines of credit to be renewed or converted into term
debt, are sufficient to provide the working capital needs of the Company for
the next 12 months. The Company anticipates that its property, plant and
equipment expenditures for fiscal year 2004 will be approximately $1.0 million
higher than in fiscal year 2003.

Off-balance sheet arrangements

The Company does not have any off-balance sheet arrangements (as defined in the
applicable regulations) that have or are reasonably likely to have a current or
future effect on the Companys financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures, or capital resources that is material to investors.

Summary

In light of current market conditions, and world political and economic
uncertainty, it is difficult to determine whether the Company can continue to
enjoy revenue and profitability growth in the next year. Accordingly, there
can be no assurance that any particular level of growth is reasonable or can be
achieved. In addition, due to the competitive nature of the market, the
Company continues to experience gross margin pressure on its products and
service offerings, and the Company expects product and service margins to
decline. There can be no assurance that the Company will be able to increase
sufficiently sales of its higher margin products, including software, to
prevent future declines in the Companys overall gross margin.

Moreover, MICROSs financial results in any single quarter are dependent upon
the timing and size of customer orders and the shipment of products for large
orders. Large software orders from customers may account for more than an
insignificant portion of earnings in any quarter. The customers with whom
MICROS does the largest amount of business are expected to vary from year to
year as a result of the timing for the roll-out of each customers system.
Furthermore, if a customer delays or accelerates its delivery requirements or a
products completion is delayed or accelerated, revenues expected in a given
quarter may be deferred or accelerated into subsequent or earlier quarters.

The market price of MICROS Common Stock is volatile, and may be subject to
significant fluctuations in response to variations in MICROSs quarterly
operating results and other factors such as announcements of technological
developments or new products by MICROS, customer roll-outs, technological
advances by existing and new competitors, and general market conditions in the
hospitality and retail industries. In addition, conditions in the
stock market in general and shares of technology companies in particular have
experienced significant price and volume fluctuations which have at times been
unrelated to the operating performance of companies.

17



---



##### 



Moreover, some of the statements contained herein not based on historic facts
are forward looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended, that involve risks and uncertainties. Past
performance is not necessarily a strong or reliable indicator of future
performance. Actual results could differ materially from past results,
estimates or projections. Some of the additional risks and uncertainties are:
political and world instability created by the threat of subsequent terrorist
attacks, which gravely impacts the travel and tourism industries; product
demand and market acceptance, including demand and acceptance for the new OPERA
products; implementation of a cost-effective service structure capable of
servicing increasingly complex software systems in increasingly more remote
locations; achieving increased sales of higher margin software products; risks
and uncertainties associated with the Companys recent acquisition of
Datavantage; hiring and retention of qualified employees with sufficient
technical expertise; unexpected currency fluctuations; impact of competitive
products and pricing on margins; product development delays; technological
difficulties associated with new product releases; and managing expenses,
including those over which the Company exercises little or no control, such as
health care costs. These and other risks are disclosed in the Companys
releases and SEC filings, including in the section titled Business and
Investment Risks; Information Relating to Forward-Looking Statements, in the
Companys Annual Report on Form 10-K for the Fiscal Year ended June 30, 2003.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

MICROSs significant international business and presence exposes the Company to
a multitude of market risks, such as currency, interest rate and political
risks. With respect to currency risk, the Company transacts business in 22
different currencies through its foreign subsidiaries. The fluctuation of
currencies impacts sales and profitability. Frequently, sales and the costs
associated with such sales are not always denominated in the same currency.
Given the fact that the Company transacts business in many different
currencies, adverse declines in certain currencies can be offset by favorable
advances in other currencies. Recent weakness in certain Latin American
currencies, including the Argentine Peso and the Brazilian Real, has adversely
impacted the financial performance of the Company. Strength in the Euro has
helped to bolster sales and profitability in Europe; any subsequent decline
will adversely impact year over year growth comparisons.

Additionally, the Company is subject to interest rate fluctuations in foreign
countries to the extent that the Company elects to borrow in the local foreign
currency. In the past, this has not been an issue of concern as the Company
has the capacity to elect to borrow in other currencies with more favorable
interest rates. While the Company has not to date invested in financial
instruments designed to protect against interest rate fluctuations, the Company
will continue to evaluate the need to do so in the future.

Further, the Company is subject to political risk, due in part to instability
in the Middle East and the worldwide threat of terrorism, especially in
developing countries with uncertain or unstable political structures or
regimes. Contributing to this risk factor is the adverse impact that political
instability has on the travel and tourism industries. The Company is also
subject to the effects of, and changes in, laws and regulations, other
activities of governments, agencies and similar organizations.

Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report, the Company has
conducted an evaluation of the effectiveness of the design and operation of the
Companys Disclosure Controls and Procedures (as defined in Rules 13a-15 and
15d-15 under the Securities Exchange Act of 1934). This evaluation was carried
out under the supervision of the Companys management, including A.L.
Giannopoulos, MICROSs Chairman, Chief Executive Officer and President, and
Gary C. Kaufman, MICROSs Executive Vice President and Chief Financial Officer.
Disclosure Controls and Procedures are designed with the objective of ensuring
that information required to be disclosed in the reports MICROS files or
submits under the Securities Exchange Act of 1934 (Exchange Act), such as this
quarterly report, is recorded, processed, summarized and reported within the
time periods specified in the SECs rules and forms. Disclosure Controls and
Procedures are also designed with the objective of ensuring that
such information is accumulated and communicated to management, including the
Chief Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure.

18



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##### 



The Company does not expect that its Disclosure Controls and Procedures will
prevent all errors and all fraud. Despite its level of sophistication, detail
and thoroughness, a disclosure control system can provide only reasonable, not
absolute, assurance that the objectives of the control system are satisfied.
Because of the inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been or will be detected.

The evaluation of MICROSs Disclosure Controls and Procedures included a review
of the controls objectives and design, and the controls implementation and
operational procedures. In the course of this evaluation, MICROS sought to
identify and analyze the manner in which it collects information and requires
its employees from the four worldwide regional headquarters (North America,
Latin America, Europe/Africa/Middle East, and Asia Pacific) to produce such
information. Once the information is collected, the Company evaluated how the
information is analyzed for purposes of determining if, how, when and where to
disclose such information. Finally, MICROS analyzed the forms and guidelines it
has developed internally that are disseminated to all operations, and are
required to be resubmitted to the finance operation. These forms and documents
are designed to elicit pertinent financial and non-financial information from
the operations on a worldwide basis.

MICROS has evaluated and will continue periodically to evaluate its Disclosure
Controls and Procedures. Based on its most recent evaluations, MICROS has
concluded that, as of the end of the period covered by this quarterly report,
its Disclosure Controls and Procedures currently in place are effective at such
reasonable assurance level that material information relating to MICROS would
be made known to the Chairman, President and Chief Executive Officer, and the
Executive Vice President and Chief Financial Officer on a timely basis.

19



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##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended December 31, 2003

Part II - Other Information

Item 1. Legal Proceedings

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

Items 2 (Changes in Securities and Use of Proceeds) and 3 (Defaults Upon Senior
Securities).

No events occurred during the quarter covered by the report that would
require a response to any of these items.

Item 4. Submission of Matters to a Vote of Security Holders

The annual meeting of shareholders was held on November 21, 2003. A
quorum was present (in person and/or by proxy) and shareholders voted on the
following matters:



| | 1. |  | Election of Directors
| | -- |  | ---------------------

The management of the Company nominated a slate of six persons to serve on the
Board of Directors. No other nominations were made. The nominees received the
following votes:

|                    |  |     |            |                         |  |  |         | 
|------------------- |  | --- | ---------- | ----------------------- |  |  | ------- | 
|Nominee             |  | For |            | Vote Withheld (Abstain)
|                    |  |     |            |                        
|A.L. Giannopoulos   |  |     | 15,766,855 |                         |  |  | 290,480 | 
|Louis M. Brown, Jr. |  |     | 15,454,506 |                         |  |  | 602,829 | 
|B. Gary Dando       |  |     | 15,794,137 |                         |  |  | 263,198 | 
|John G. Puente      |  |     | 15,342,592 |                         |  |  | 714,743 | 
|Dwight S. Taylor    |  |     | 15,405,402 |                         |  |  | 651,933 | 
|William S. Watson   |  |     | 15,351,465 |                         |  |  | 705,870 | 

The entire slate of directors nominated was elected by a majority of the shares
present in person or represented by proxy and entitled to vote.



| | 2. |  | Selection of Independent Public Accountants
| | -- |  | -------------------------------------------

The Board of Directors of the Company selected PricewaterhouseCoopers LLP as
the independent public accountants for the Company for the fiscal year ending
June 30, 2004. A proposal to approve the selection of PricewaterhouseCoopers
LLP was approved by a majority of the shares present in person or represented
by proxy and entitled to vote. A total of 15,009,219 shares voted in the
affirmative; a total of 1,033,091 shares voted in the negative; and a total of
15,025 shares abstained from the vote.



| | 3. |  | Approval of Amendment to Stock Option Plan
| | -- |  | ------------------------------------------

The Board of Directors proposed an amendment to the 1991 Stock Option Plan,
which served to authorize the issuance of an additional 600,000 shares of
Common Stock. The shareholders approved the proposed amendment to the 1991
Stock Option Plan, with 11,456,217 shares in the affirmative, 2,174,785 shares
in the negative, 46,792 shares affirmatively abstained, and 2,379,541 shares
not voting.

20



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##### 



Item 5. Other Information

On January 28, 2004, the Board of Directors at a scheduled Board meeting
unanimously approved (with Mr. Giannopoulos abstaining from the vote) the Sixth
Amendment to the Employment Agreement between A.L. Giannopoulos and the Company
dated June 30, 1995, as previously amended by the First Amendment dated
February 6, 1997, the Second Amendment dated February 1, 1998, the Third
Amendment dated September 8, 1999, the Fourth Amendment dated November 19,
2001, and the Fifth Amendment dated November 15, 2002 (the agreement as amended
hereinafter referred to as the Agreement). The Sixth Amendment extends the
term of the Agreement for two more years, until June 30, 2009, and provides for
compensation for the extended term.

Item 6. Exhibits and Reports on Form 8-K

|    |  |                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Exhibits                                                                                                                                                                
|    |  | 10a Sixth Amendment to the Employment Agreement between the Company
and A.L. Giannopoulos dated January 28, 2004.                                                       
|    |  |                                                                                                                                                                         
|    |  | 31.1 Certification by CEO pursuant to Rule 13A-14 or 15D of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.  
|    |  |                                                                                                                                                                         
|    |  | 31.2 Certification by CFO pursuant to Rule 13A-14 or 15D of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.  
|    |  |                                                                                                                                                                         
|    |  | 32.1 Certification by CEO pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                     
|    |  |                                                                                                                                                                         
|    |  | 32.2 Certification by CFO pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                     
|    |  |                                                                                                                                                                         
|(b) |  | Reports on Form 8-K                                                                                                                                                     
|    |  |                                                                                                                                                                         
|    |  | Report on Form 8-K was filed on October 31, 2003, regarding the
release of financial results for the first fiscal quarter for fiscal
year 2004 ended September 30, 2003.
|    |  |                                                                                                                                                                         
|    |  | Report on Form 8-K was filed on January 30, 2004, regarding the
release of financial results for the second fiscal quarter for fiscal
year 2004 ended December 31, 2003.

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)                           
|                  |  |                                         |                  | 
|February 17, 2004 |  | /s/                                     | Gary C. Kaufman 
|                  |  |                                         |                 
|                  |  |                                         |                  | 
|                  |  | Gary C. Kaufman                        
|                  |  | Executive Vice President,              
|                  |  | Finance and Administration/            
|                  |  | Chief Financial Officer                
|                  |  |                                         |                  | 
|February 17, 2004 |  | /s/                                     | Cynthia A. Russo
|                  |  |                                         |                 
|                  |  | Cynthia A. Russo                       
|                  |  | Vice President and Corporate Controller

21



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##### 



Exhibit 10a

SIXTH AMENDMENT TO EMPLOYMENT AGREEMENT

This Sixth Amendment to the Employment Agreement is effective the
28th day of January, 2004 (the Sixth Amendment), by and between MICROS
SYSTEMS, INC., a Maryland corporation, with offices located at 7031
Columbia Gateway Drive, Columbia, Maryland 21046-2289 (hereinafter
referred to as the Company), and A. L. GIANNOPOULOS, whose address is
7031 Columbia Gateway Drive, Columbia, Maryland 21046-2289 (hereinafter
referred to as the Executive).

WHEREAS, the Executive and the Company entered into an Employment
Agreement dated June 1, 1995, as amended by the First Amendment dated
February 6, 1997, the Second Amendment dated February 1, 1998, the Third
amendment dated September 8, 1999, the Fourth Amendment dated November
19, 2001, and the Fifth Amendment dated November 15, 2002 (the agreement
as amended hereinafter referred to as the Agreement); and

WHEREAS, the parties hereto would like to amend the Agreement
pursuant to this Sixth Amendment in an effort to induce the Executive to
continue to render services to the Company for an extended term.

NOW, THEREFORE, the Company and the Executive, for good and
valuable consideration, and pursuant to the terms, conditions, and
covenants contained herein, hereby agree as follows:

1.     Section 3 of the Agreement, captioned Term, shall be deleted in
its entirety and the following new language inserted in lieu thereof:



| |  | The term of this Agreement shall commence upon the day and
year first above written (Commencement Date) and shall
continue until June 30, 2009, unless sooner terminated, as
provided herein.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2.     Section 4 of the Agreement, captioned Salary, is amended by
appending to the existing salary chart the following new rows:

|                                   |  |        |           | 
|---------------------------------- |  | ------ | --------- | 
|Period                             |  | Salary
|                                   |  |       
|July 1, 2007 through June 30, 2008 |  | $      | 1,250,000 | 
|July 1, 2008 through June 30, 2009 |  | $      | 1,500,000 | 

3.     Section 5 of the Agreement, captioned Bonuses, is amended by
appending to the existing bonus chart the following new rows:

|                   |  |              |         | 
|------------------ |  | ------------ | ------- | 
|Fiscal Year Ending |  | Target Bonus
|                   |  |             
|June 30, 2008      |  | $            | 600,000 | 
|June 30, 2009      |  | $            | 750,000 | 

4.     The first paragraph of Section 16(c)(3) of the Agreement shall be
deleted in its entirety and the following new language inserted in lieu
thereof:



| |  | Payment Upon Termination By The Company. If the Company
terminates the Executives employment for any reason other
than Good Cause, the Executive shall be entitled to receive
from the Company and the Company shall pay to the Executive
in one lump sum, within fifteen (15) days following the
Executives termination of employment, all of the salary and
Target Bonus payments provided for in Sections 4 and 5 of
this Agreement for the period beginning on the date of the
Executives termination of employment and ending on June 30,
2009.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

22



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##### 



5.     The first paragraph of Section 16(c)(4) of the Agreement shall be
deleted in its entirety and the following new language inserted in lieu
thereof:



| |  | Payment Upon Termination By The Executive. If the Executive
terminates his employment with the Company for Good Reason,
other than Good Reason described in Section 16(a)(3)a), he
shall be entitled to receive from the Company and the
Company shall pay to the Executive in one lump sum, within
fifteen (15) days following the date of the Executives
termination of employment, all of the salary and Target
Bonus payments provided for in Sections 4 and 5 of this
Agreement for the period beginning on the date of the
Executives termination and ending on June 30, 2009. If the
Executive terminates his employment with the Company for the
Good Reason described in Section 16(a)(3)a), then and in
such event, he shall be entitled to receive from the Company
and the Company shall pay to the Executive in one lump sum,
within fifteen (15) days following the date of the
Executives termination of employment, an amount equal to
the lesser of (i) all of the salary and Target Bonus
payments provided for in Sections 4 and 5 of this Agreement
for the period beginning on the date of the Executives
termination and ending on June 30, 2009, or (ii) all of the
salary and Target Bonus payments provided for in Sections 4
and 5 of this Agreement for the period commencing on the
date of the Executives termination and ending on the third
anniversary of the date of the Executives termination.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.     All other provisions of the Agreement shall remain in full force and
effect.

IN WITNESS WHEREOF, the parties have executed this Sixth Amendment
as of the dates indicated below, the effective date of this Sixth
Amendment being the 28th day of January, 2004.

|                 |                      |                         |  |        |  | 
|---------------- | -------------------- | ----------------------- |  | ------ |  | 
|                 | COMPANY:             |                         |  |        | 
|ATTEST:          | MICROS SYSTEMS, INC. |                         |  |        | 
|                 |                      |                         |  |        |  | 
|                 | By:                  | /s/ Louis M. Brown, Jr. |  | (SEAL) |  | 
|                 |                      |                         |  |        |  | 
|                 |                      | Louis M. Brown, Jr.     |  |        |  | 
|                 |                      | Vice Chairman           |  |        |  | 
|[Corporate Seal] |                      |                         |  |        |  | 

|         |            |                    |  |  |  | 
|-------- | ---------- | ------------------ |  |  |  | 
|         | EXECUTIVE: |                    |  |  | 
|         |            |                    |  |  |  | 
|WITNESS: |            |                    |  |  |  | 
|         | /s/        | A.L. Giannopoulos  |  | 
|         |            |                    |  |  |  | 
|         |            | A. L. GIANNOPOULOS |  | 

23