##### 



Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarter ended September 30, 2002
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   X          NO

As of October 31, 2002, there were 17,389,663 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 September 30, 2002

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, 2002, as filed with
the Securities and Exchange Commission.

2



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##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per share data)

|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |          |         |         |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------- | -------------------- | -------------------------- | ------- | ------------- | ------- | -------- | ------- | ------- | ------- | 
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         | September 30, |         | June 30,
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         | 2002          |         | 2002    
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |         
|ASSETS                                                                                                                                           |                                                                                                                                     |                      |                            |         |               |         |          |        
|Current assets:                                                                                                                                  |                                                                                                                                     |                      |                            |         |               |         |          |        
|                                                                                                                                                 | Cash and cash equivalents                                                                                                           |                      | $                          | 61,412  |               |         | $        | 66,638  |        
|                                                                                                                                                 | Accounts receivable, net of allowance for
doubtful accounts of $8,992 at
September 30, 2002 and $8,981 at June 30, 2002             |                      |                            | 92,051  |               |         |          | 86,918  |        
|                                                                                                                                                 | Inventories, net of allowance for obsolescence of
$5,118 at September 30, 2002 and $4,957 at
June 30, 2002                          |                      |                            | 32,368  |               |         |          | 31,211  |        
|                                                                                                                                                 | Deferred income taxes                                                                                                               |                      |                            | 6,999   |               |         |          | 7,008   |        
|                                                                                                                                                 | Prepaid expenses and other current assets                                                                                           |                      |                            | 13,874  |               |         |          | 12,756  |        
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |          |        
|                                                                                                                                                 |                                                                                                                                     | Total current assets |                            |         | 206,704       |         |          |         | 204,531 |        
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |          |         |         |         | 
|Property, plant and equipment, net of accumulated
depreciation and amortization of
$44,699 at September 30, 2002 and $42,669
at June 30, 2002    |                                                                                                                                     |                      | 21,188                     |         |               |         | 21,467   |        
|Deferred income taxes, non-current                                                                                                               |                                                                                                                                     |                      | 20,270                     |         |               |         | 20,707   |        
|Goodwill and intangible assets, net of accumulated
amortization of $27,903 at September 30, 2002 and
$28,025 at June 30, 2002                    |                                                                                                                                     |                      | 31,945                     |         |               |         | 32,055   |        
|Purchased and internally developed software costs,
net of accumulated amortization of
$19,531 at September 30, 2002 and $18,248
at June 30, 2002 |                                                                                                                                     |                      | 29,872                     |         |               |         | 30,303   |        
|Other assets                                                                                                                                     |                                                                                                                                     |                      | 4,100                      |         |               |         | 3,767    |        
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |          |        
|Total assets                                                                                                                                     |                                                                                                                                     | $                    | 314,079                    |         |               | $       | 312,830  |        
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |          |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                             |                                                                                                                                     |                      |                            |         |               |         |          |        
|Current liabilities:                                                                                                                             |                                                                                                                                     |                      |                            |         |               |         |          |        
|                                                                                                                                                 | Bank lines of credit                                                                                                                |                      | $                          | 18,466  |               |         | $        | 18,699  |        
|                                                                                                                                                 | Current portion of capital lease obligations                                                                                        |                      |                            | 150     |               |         |          | 147     |        
|                                                                                                                                                 | Accounts payable                                                                                                                    |                      |                            | 24,007  |               |         |          | 25,955  |        
|                                                                                                                                                 | Accrued expenses and other current liabilities                                                                                      |                      |                            | 34,616  |               |         |          | 34,554  |        
|                                                                                                                                                 | Income taxes payable                                                                                                                |                      |                            | 3,413   |               |         |          | 7,303   |        
|                                                                                                                                                 | Deferred income taxes                                                                                                               |                      |                            | 576     |               |         |          | 547     |        
|                                                                                                                                                 | Deferred service revenue                                                                                                            |                      |                            | 40,158  |               |         |          | 33,841  |        
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |          |        
|                                                                                                                                                 |                                                                                                                                     |                      | Total current liabilities  |         |               | 121,386 |          |         |         | 121,046 | 
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |          |         |         |         | 
|Capital lease obligations, net of current portion                                                                                                |                                                                                                                                     |                      | 280                        |         |               |         | 279      |        
|Deferred income taxes, non-current                                                                                                               |                                                                                                                                     |                      | 9,931                      |         |               |         | 9,933    |        
|Other non-current liabilities                                                                                                                    |                                                                                                                                     |                      | 1,284                      |         |               |         | 1,232    |        
|Commitments and contingencies                                                                                                                    |                                                                                                                                     |                      |                            |         |               |         |          |        
|Minority interests                                                                                                                               |                                                                                                                                     |                      | 2,287                      |         |               |         | 1,978    |        
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |          |         |         |         | 
|Shareholders equity:                                                                                                                            |                                                                                                                                     |                      |                            |         |               |         |          |        
|                                                                                                                                                 | Common stock, $0.025 par; authorized 50,000
shares; issued and outstanding 17,451 at September
30, 2002 and 17,521 at June 30, 2002 |                      |                            | 436     |               |         |          | 438     |        
|                                                                                                                                                 | Capital in excess of par                                                                                                            |                      |                            | 55,176  |               |         |          | 56,867  |        
|                                                                                                                                                 | Retained earnings                                                                                                                   |                      |                            | 133,294 |               |         |          | 130,599 |        
|                                                                                                                                                 | Accumulated other comprehensive loss                                                                                                |                      |                            | (9,995  | )             |         |          | (9,542  | )      
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |          |        
|                                                                                                                                                 |                                                                                                                                     |                      | Total shareholders equity |         |               | 178,911 |          |         |         | 178,362 | 
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |          |        
|Total liabilities and shareholders equity                                                                                                       |                                                                                                                                     | $                    | 314,079                    |         |               | $       | 312,830  |        
|                                                                                                                                                 |                                                                                                                                     |                      |                            |         |               |         |          |        

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 September 30,
|                                                                                 |                       |                       |                              |        |                                 
|                                                                                 |                       |                       |                              |        | 2002                             |        | 2001  
|                                                                                 |                       |                       |                              |        |                                  |        |       
|Revenue:                                                                         |                       |                       |                              |        |                                  |        |        |       
|                                                                                 | Hardware and software |                       | $                            | 43,160 |                                  |        | $      | 42,698 |       
|                                                                                 | Service               |                       |                              | 43,351 |                                  |        |        | 40,813 |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|                                                                                 |                       |                       | Total revenue                |        |                                  | 86,511 |        |        |        | 83,511 |  
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|Costs and expenses:                                                              |                       |                       |                              |        |                                  |        |        |       
|                                                                                 | Cost of sales         |                       |                              |        |                                  |        |        |        |       
|                                                                                 |                       | Hardware and software |                              |        | 25,276                           |        |        |        | 24,346 |       
|                                                                                 |                       | Service               |                              |        | 19,822                           |        |        |        | 19,097 |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|                                                                                 |                       |                       | Total cost of sales          |        |                                  | 45,098 |        |        |        | 43,443 |  
|                                                                                 |                       |                       |                              |        |                                  |        |        |        |        |        |  
|Selling, general and administrative expenses                                     |                       |                       | 29,444                       |        |                                  |        | 28,680 |       
|Research and development expenses                                                |                       |                       | 4,887                        |        |                                  |        | 4,826  |       
|Depreciation and amortization                                                    |                       |                       | 2,046                        |        |                                  |        | 3,755  |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|                                                                                 |                       |                       | Total costs and expenses     |        |                                  | 81,475 |        |        |        | 80,704 |  
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|Income from operations                                                           |                       |                       | 5,036                        |        |                                  |        | 2,807  |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |        |        |        |  
|Non-operating income (expense):                                                  |                       |                       |                              |        |                                  |        |        |       
|                                                                                 | Interest income       |                       |                              | 395    |                                  |        |        | 235    |       
|                                                                                 | Interest expense      |                       |                              | (359   | )                                |        |        | (288   | )     
|                                                                                 | Other expense, net    |                       |                              | (660   | )                                |        |        | (1,086 | )     
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|                                                                                 |                       |                       | Total non-operating expenses |        |                                  | (624   | )      |        |        | (1,139 | )
|                                                                                 |                       |                       |                              |        |                                  |        |        |        |        |        |  
|Income before taxes, minority interests and equity in net
earnings of affiliates |                       |                       | 4,412                        |        |                                  |        | 1,668  |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |        |        |        |  
|Income tax expense                                                               |                       |                       | 1,677                        |        |                                  |        | 667    |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|Income before minority interests and equity in net
earnings of affiliates        |                       |                       | 2,735                        |        |                                  |        | 1,001  |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |        |        |        |  
|Minority interests and equity in net earnings of affiliates                      |                       |                       | (40                          | )      |                                  |        | (122   | )     
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|Net income                                                                       |                       | $                     | 2,695                        |        |                                  | $      | 879    |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|Net income per common share:                                                     |                       |                       |                              |        |                                  |        |        |       
|                                                                                 | Basic                 |                       | $                            | 0.15   |                                  |        | $      | 0.05   |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|                                                                                 | Diluted               |                       | $                            | 0.15   |                                  |        | $      | 0.05   |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|Weighted-average number shares outstanding:                                      |                       |                       |                              |        |                                  |        |        |       
|                                                                                 | Basic                 |                       |                              | 17,474 |                                  |        |        | 17,492 |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |       
|                                                                                 | Diluted               |                       |                              | 17,807 |                                  |        |        | 17,722 |       
|                                                                                 |                       |                       |                              |        |                                  |        |        |       

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 Three Months Ended September 30, 2002
(Unaudited, in thousands)

|                                                |                                          |  |              |   |           |   |          |   |               |   |         |   |       |   |         |       |       |   |             |      |   |   |         |       |  
|----------------------------------------------- | ---------------------------------------- |  | ------------ | - | --------- | - | -------- | - | ------------- | - | ------- | - | ----- | - | ------- | ----- | ----- | - | ----------- | ---- | - | - | ------- | ----- | -
|                                                |                                          |  |              |   |           |   |          |   |               |   |         |   |       |   |         |       |       |   | Accumulated |      |   |   |        
|                                                |                                          |  |              |   |           |   |          |   |               |   | Capital |   |       |   |         |       | Other |   |             |      |  
|                                                |                                          |  | Common Stock |   | in Excess |   | Retained |   | Comprehensive |   |         |   |      
|                                                |                                          |  | Shares       |   | Amount    |   | of Par   |   | Earnings      |   | Loss    |   | Total
|                                                |                                          |  |              |   |           |   |          |   |               |   |         |   |      
|Balance, June 30, 2002                          |                                          |  | 17,521       |   |           | $ | 438      |   |               | $ | 56,867  |   |       | $ | 130,599 |       |       | $ | (9,542      | )    |   | $ | 178,362 |      
|Comprehensive income                            |                                          |  |              |   |           |   |          |   |               |   |         |   |       |   |         |       |       |   |             |      |   |   |         |      
|                                                | Net income                               |  |              |  |           |   |          |  |               |   |         |  |       |   |         | 2,695 |       |   |             |     |   |   |         | 2,695 |  
|                                                | Foreign currency translation adjustments |  |              |  |           |   |          |  |               |   |         |  |       |   |         |      |       |   |             | (453 | ) |   |         | (453  | )
|                                                |                                          |  |              |   |           |   |          |   |               |   |         |   |       |   |         |       |       |   |             |      |   |   |         |      
|Total comprehensive income                      |                                          |  |             |   |           |   |         |   |               |   |        |   |       |   |        |       |       |   |            |      |   |   | 2,242   |      
|Stock issued upon exercise of options           |                                          |  | 2            |   |           |   |         |   |               |   | 33      |   |       |   |        |       |       |   |            |      |   |   | 33      |      
|Stock retired                                   |                                          |  | (72          | ) |           |   | (2       | ) |               |   | (1,730  | ) |       |   |        |       |       |   |            |      |   |   | (1,732  | )    
|Income tax benefit from stock
options exercised |                                          |  |             |   |           |   |         |   |               |   | 6       |   |       |   |        |       |       |   |            |      |   |   | 6       |      
|                                                |                                          |  |              |   |           |   |          |   |               |   |         |   |       |   |         |       |       |   |             |      |   |   |         |      
|Balance, September 30, 2002                     |                                          |  | 17,451       |   |           | $ | 436      |   |               | $ | 55,176  |   |       | $ | 133,294 |       |       | $ | (9,995      | )    |   | $ | 178,911 |      
|                                                |                                          |  |              |   |           |   |          |   |               |   |         |   |       |   |         |       |       |   |             |      |   |   |         |      

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)

|                                                           |                                                                                     |                                       |                                                     |        |                                  |        |        |        |        |       | 
|---------------------------------------------------------- | ----------------------------------------------------------------------------------- | ------------------------------------- | --------------------------------------------------- | ------ | -------------------------------- | ------ | ------ | ------ | ------ | ----- | 
|                                                           |                                                                                     |                                       |                                                     |        | Three Months Ended September 30,
|                                                           |                                                                                     |                                       |                                                     |        |                                 
|                                                           |                                                                                     |                                       |                                                     |        | 2002                             |        | 2001  
|                                                           |                                                                                     |                                       |                                                     |        |                                  |        |       
|                                                           |                                                                                     |                                       |                                                     |        |                                  |        |        |        |        |       | 
|Net cash flows (used in) provided by operating activities: |                                                                                     | $                                     | (625                                                | )      |                                  | $      | 3,873  |       
|                                                           |                                                                                     |                                       |                                                     |        |                                  |        |        |       
|Cash flows from investing activities:                      |                                                                                     |                                       |                                                     |        |                                  |        |        |       
|                                                           | Purchases of property, plant and equipment                                          |                                       |                                                     | (1,833 | )                                |        |        | (1,419 | )     
|                                                           | Proceeds from dispositions of property, plant and equipment                         |                                       |                                                     | 45     |                                  |        |        |       |       
|                                                           | Internally developed software                                                       |                                       |                                                     | (878   | )                                |        |        | (994   | )     
|                                                           | Proceeds from settlement                                                            |                                       |                                                     |       |                                  |        |        | 200    |       
|                                                           | Purchase of equity interest in investees                                            |                                       |                                                     |       |                                  |        |        | (51    | )     
|                                                           | Net cash paid for acquisitions, minority interests and
contingent earn-out payments |                                       |                                                     |       |                                  |        |        | (3,433 | )     
|                                                           |                                                                                     |                                       |                                                     |        |                                  |        |        |       
|                                                           |                                                                                     | Net cash used in investing activities |                                                     |        | (2,666                           | )      |        |        | (5,697 | )    
|                                                           |                                                                                     |                                       |                                                     |        |                                  |        |        |       
|Cash flows from financing activities:                      |                                                                                     |                                       |                                                     |        |                                  |        |        |       
|                                                           | Principal payments on line of credit                                                |                                       |                                                     | (158   | )                                |        |        | (3,006 | )     
|                                                           | Proceeds from lines of credit                                                       |                                       |                                                     |       |                                  |        |        | 10,174 |       
|                                                           | Principal payments on long-term debt and capital lease
obligations                  |                                       |                                                     | (41    | )                                |        |        | (2,420 | )     
|                                                           | Repurchase of stock                                                                 |                                       |                                                     | (1,732 | )                                |        |        |       |       
|                                                           | Proceeds from issuance of stock                                                     |                                       |                                                     | 33     |                                  |        |        | 304    |       
|                                                           |                                                                                     |                                       |                                                     |        |                                  |        |        |       
|                                                           |                                                                                     |                                       | Net cash (used in) provided by financing activities |        |                                  | (1,898 | )      |        |        | 5,052 | 
|                                                           |                                                                                     |                                       |                                                     |        |                                  |        |        |       
|Effect of exchange rate changes on cash                    |                                                                                     |                                       | (37                                                 | )      |                                  |        | 48     |       
|                                                           |                                                                                     |                                       |                                                     |        |                                  |        |        |       
|Net (decrease) increase in cash and cash equivalents       |                                                                                     |                                       | (5,226                                              | )      |                                  |        | 3,276  |       
|Cash and cash equivalents at beginning of period           |                                                                                     |                                       | 66,638                                              |        |                                  |        | 26,456 |       
|                                                           |                                                                                     |                                       |                                                     |        |                                  |        |        |       
|Cash and cash equivalents at end of period                 |                                                                                     | $                                     | 61,412                                              |        |                                  | $      | 29,732 |       
|                                                           |                                                                                     |                                       |                                                     |        |                                  |        |        |       

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 September 30, 2002
(Unaudited, in thousands, except per share data)



|1. |  | Inventories                                  
|-- |  | ---------------------------------------------
|  
|   |  | The components of inventories are as follows:

|                |  |               |        |          |  |   |        | 
|--------------- |  | ------------- | ------ | -------- |  | - | ------ | 
|                |  | September 30, |        | June 30,
|                |  | 2002          |        | 2002    
|                |  |               |        |         
|Raw materials   |  | $             | 6,449  |          |  | $ | 6,850  | 
|Work-in-process |  |               | 619    |          |  |   | 986    | 
|Finished goods  |  |               | 25,300 |          |  |   | 23,375 | 
|                |  |               |        |          |  |   |        | 
|                |  | $             | 32,368 |          |  | $ | 31,211 | 
|                |  |               |        |          |  |   |        | 



|2. |  | New accounting standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In July 2002, The Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 146, Accounting
for Costs Associated with Exit or Disposal Activities. SFAS No. 146
nullifies the guidance in Emerging Issues Task Force (EITF) Issue No.
94-3, Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in
a Restructuring). Under EITF No. 94-3, an entity recognized a liability
for an exit cost on the date that the entity committed itself to an exit
plan. In SFAS No. 146, the FASB acknowledges that an entitys commitment
to a plan does not, by itself, create a present obligation to the other
parties that meets the definition of a liability and requires that a
liability for a cost that is associated with an exit or disposal activity
be recognized when the liability is incurred. It also establishes that
fair value is the objective for the initial measurement of the liability.
SFAS No. 146 will be effective for exit or disposal activities that are
initiated after December 31, 2002. The Company believes that the
adoption of SFAS No. 146 will not have a material effect on the Companys
consolidated financial statements.
|  
|   |  | In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which was adopted by the
Company in fiscal year 2002. This Statement supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, and the accounting and reporting provisions of
Accounting Principles Board Opinion No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events
and Transactions, for the disposal of a segment of a business. SFAS No.
144 expands the reporting of discontinued operations to include any
component of an entity with operations and cash flows that can be clearly
distinguished from the rest of the Company. This Statement also requires
that any net assets to be disposed of by sale be reported at the lower of
carrying value or fair market value less costs to sell. The adoption of
SFAS No. 144 had no impact on the Companys consolidated financial
statements.                                                                                                                                                                                         
|  
|   |  | In June 2001, the FASB issued SFAS No. 141, Business Combinations and
No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires
that all business combinations initiated after June 30, 2002, be
accounted for under the purchase method and requires certain acquired
intangible assets to be recognized as assets apart from goodwill. SFAS
No. 142 requires that intangible assets with finite lives be amortized
while goodwill and intangible assets with indefinite lives not be
amortized but be tested annually for impairment. The Company adopted
SFAS 142 on July 1, 2002, and at that time, ceased amortizing goodwill.
Going forward, the Company will review goodwill for potential impairment
on an annual basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

7



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##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended September 30, 2002
(Unaudited, in thousands, except per share data)



| |  | The following table represents the impact of SFAS 142 on net income,
basic and diluted net income per share had SFAS 142 been in effect in the
first quarter of fiscal 2002:
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      |                                   |   |                            |        |      |   |       |        | 
|------------------------------------- | --------------------------------- | - | -------------------------- | ------ | ---- | - | ----- | ------ | 
|                                      |                                   |   | For the Three Months Ended
|                                      |                                   |   | September 30,             
|                                      |                                   |   |                           
|                                      |                                   |   | 2002                       |        | 2001
|                                      |                                   |   |                            |        |     
|Net income                            |                                   |   |                            |        |      |   |       |       
|                                      | Reported net income               |   | $                          | 2,695  |      |   | $     | 879    | 
|                                      | Goodwill amortization, net of tax |   |                            |       |      |   |       | 1,115  | 
|                                      |                                   |   |                            |        |      |   |       |       
|Adjusted net income                   |                                   | $ | 2,695                      |        |      | $ | 1,994 |       
|                                      |                                   |   |                            |        |      |   |       |       
|Basic net income per share            |                                   |   |                            |        |      |   |       |       
|                                      | Reported net income per share     |   | $                          | 0.15   |      |   | $     | 0.05   | 
|                                      | Goodwill amortization, net of tax |   |                            |       |      |   |       | 0.06   | 
|                                      |                                   |   |                            |        |      |   |       |       
|Adjusted basic net income per share   |                                   | $ | 0.15                       |        |      | $ | 0.11  |       
|                                      |                                   |   |                            |        |      |   |       |       
|Diluted net income per share          |                                   |   |                            |        |      |   |       |       
|                                      | Reported net income per share     |   | $                          | 0.15   |      |   | $     | 0.05   | 
|                                      | Goodwill amortization, net of tax |   |                            |       |      |   |       | 0.06   | 
|                                      |                                   |   |                            |        |      |   |       |       
|Adjusted diluted net income per share |                                   | $ | 0.15                       |        |      | $ | 0.11  |       
|                                      |                                   |   |                            |        |      |   |       |       
|Weighted average shares outstanding   |                                   |   |                            |        |      |   |       |       
|                                      | Basic                             |   |                            | 17,474 |      |   |       | 17,492 | 
|                                      | Diluted                           |   |                            | 17,807 |      |   |       | 17,722 | 



|3. |  | Legal proceedings                                                                                                                                                                                                                                                                                                                                                          
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | MICROS is and has been involved in legal proceedings arising in the
normal course of business. The Company is of the opinion, based upon
presently available information and the advice of counsel concerning
pertinent legal matters, that any resulting liability should not have a
material adverse effect on the Companys results of operations or
financial position.
|  
|4. |  | Net income 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
|                                                    |  | September 30,     
|                                                    |  | 2002               |        | 2001
|                                                    |  |                    |        |     
|Net income                                          |  | $                  | 2,695  |      |  | $ | 879    | 
|                                                    |  |                    |        |      |  |   |        | 
|Average common shares outstanding                   |  |                    | 17,474 |      |  |   | 17,492 | 
|Dilutive effect of outstanding stock options        |  |                    | 333    |      |  |   | 230    | 
|                                                    |  |                    |        |      |  |   |        | 
|Average common shares outstanding assuming
dilution |  |                    | 17,807 |      |  |   | 17,722 | 
|                                                    |  |                    |        |      |  |   |        | 
|Basic net income per share                          |  | $                  | 0.15   |      |  | $ | 0.05   | 
|                                                    |  |                    |        |      |  |   |        | 
|Diluted net income per share                        |  | $                  | 0.15   |      |  | $ | 0.05   | 
|                                                    |  |                    |        |      |  |   |        | 

8



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##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended September 30, 2002
(Unaudited, in thousands, except per share data)



|   |  | For the three-month period ended September 30, 2002 and 2001, 1,684
options and 1,839 options, respectively, were excluded from the above
reconciliation as these options were anti-dilutive for these periods.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|5. |  | Segment reporting data                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | The Company develops, manufactures, sells and services point-of-sale
computer systems, property management systems, central reservation and
central information systems products for the hospitality industry.
MICROS is organized and operates in two segments: U.S. and International.
The International segment is primarily in Europe, the Pacific Rim and
Latin America. For purposes of applying SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information, management views the
U.S. and International segments separately in operating the business,
although the products and services are similar for each segment.
|  
|   |  | A summary of the Companys operating segments is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                                                                                      |                           |                                                                                        |   |                                  |        |      |   |         |        | 
|------------------------------------------------------------------------------------- | ------------------------- | -------------------------------------------------------------------------------------- | - | -------------------------------- | ------ | ---- | - | ------- | ------ | 
|                                                                                      |                           |                                                                                        |   | Three Months Ended September 30,
|                                                                                      |                           |                                                                                        |   | 2002                             |        | 2001
|                                                                                      |                           |                                                                                        |   |                                  |        |     
|Revenues (1):                                                                         |                           |                                                                                        |   |                                  |        |      |   |        
|                                                                                      | United States             |                                                                                        | $ | 49,608                           |        |      | $ | 46,405  |       
|                                                                                      | International             |                                                                                        |   | 47,827                           |        |      |   | 48,535  |       
|                                                                                      | Intersegment eliminations |                                                                                        |   | (10,924                          | )      |      |   | (11,429 | )     
|                                                                                      |                           |                                                                                        |   |                                  |        |      |   |        
|                                                                                      |                           | Total revenues                                                                         |   | $                                | 86,511 |      |   | $       | 83,511 | 
|                                                                                      |                           |                                                                                        |   |                                  |        |      |   |        
|Income before taxes, minority interests and
equity in net earnings of affiliates (1): |                           |                                                                                        |   |                                  |        |      |   |        
|                                                                                      | United States             |                                                                                        | $ | 625                              |        |      | $ | (6,174  | )     
|                                                                                      | International             |                                                                                        |   | 11,570                           |        |      |   | 14,730  |       
|                                                                                      | Intersegment eliminations |                                                                                        |   | (7,783                           | )      |      |   | (6,888  | )     
|                                                                                      |                           |                                                                                        |   |                                  |        |      |   |        
|                                                                                      |                           | Total income before taxes, minority
interests and equity in net earnings of
affiliates |   | $                                | 4,412  |      |   | $       | 1,668  | 
|                                                                                      |                           |                                                                                        |   |                                  |        |      |   |        

|                         |               |                           |   |               |         |          |   |         |         | 
|------------------------ | ------------- | ------------------------- | - | ------------- | ------- | -------- | - | ------- | ------- | 
|                         |               |                           |   | September 30, |         | June 30,
|                         |               |                           |   | 2002          |         | 2002    
|                         |               |                           |   |               |         |         
|Identifiable assets (2): |               |                           |   |               |         |          |   |        
|                         | United States |                           | $ | 128,562       |         |          | $ | 133,653 |        
|                         | International |                           |   | 185,517       |         |          |   | 179,177 |        
|                         |               |                           |   |               |         |          |   |        
|                         |               | Total identifiable assets |   | $             | 314,079 |          |   | $       | 312,830 | 
|                         |               |                           |   |               |         |          |   |        



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



|6. |  | Shareholders Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In fiscal 2002, the Board of Directors authorized the purchase of up to
one million shares of the Companys common stock. During fiscal 2002,
the Company purchased and subsequently retired 95.6 thousand shares at an
aggregate cost of $2,610. In the first quarter of fiscal 2003, the
Company purchased and subsequently retired 71.9 thousand shares at an
aggregate cost of $1,732. A summary of the cumulative number of whole
shares retired is as follows:

|                                              |  |  |         | 
|--------------------------------------------- |  |  | ------- | 
|Total shares retired as of June 30, 2002      |  |  | 95,600  | 
|Shares retired in Q1                          |  |  | 71,900  | 
|                                              |  |  |         | 
|Total shares retired as of September 30, 2002 |  |  | 167,500 | 
|                                              |  |  |         | 

9



---



##### 



MICROS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended September 30, 2002
(Unaudited, in thousands, except per share data)



|7. |  | Subsequent event                                                                                                                                                                                                                                                        
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | On October 1, 2002, the Company sold its 68% interest in its majority-owned
subsidiary in South Africa for 19 million South African Rand (approximately
$1.8 million at October 1, 2002 exchange rate). The Company will maintain a
dealer relationship with the entity.

10



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##### 



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

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 for 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Revenue from hardware sales is recognized at the time of shipment with a
provision for estimated returns and allowances. Revenue from licensed
software sales is recognized in accordance with Statement of Position
(SOP) 97-2, Software Revenue Recognition, as amended by SOP 98-9,
Modification of SOP 97-2, Software Revenue Recognition with Respect to
Certain Transactions. 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 MICROS 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. Revenue from customer-specific
development work is recognized under the completed contract method.
Service contract revenue is initially recorded as deferred service
revenue and is recognized on a pro rata basis over the contract term.
Revenue from the installation of the product and the training of
customers staff is recognized as the work is performed.
|
| |  | 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 upon which 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.                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Goodwill and intangible assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | On July 1, 2002, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other Intangible Assets.
Under SFAS No. 142, the Company ceased amortizing goodwill. On an annual
basis, the Company will test goodwill for potential impairment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Allowance for doubtful accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | MICROS maintains allowances for doubtful accounts for estimated losses
which 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

11



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##### 





| |  | 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 MICROS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. dollar are translated at the fiscal year-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).                                                                                                                                                                                                                                                                                                                                                                                                     

Results of Operations  First Quarter Comparison

The Company recorded a diluted net income of $0.15 per common share in the
first quarter of fiscal 2003, compared with a diluted net income of $0.05 per
common share in the first quarter of fiscal 2002. The increase was mainly due
to an increase in service volume and a decrease in operating expenses primarily
driven by the discontinuation of goodwill amortization according to SFAS 142.

Revenue increased by $3.0 million or 3.6% to $86.5 million for the first
quarter of fiscal 2003 compared to the same period last year. A comparison of
the sales mix for fiscal years 2003 and 2002 is as follows:

|         |  |                    |       |      |  |  |       |  
|-------- |  | ------------------ | ----- | ---- |  |  | ----- | -
|         |  | Three Months Ended
|         |  | September 30,     
|         |  | 2002               |       | 2001
|         |  |                    |       |     
|Hardware |  |                    | 34.7  | %    |  |  | 35.2  | %
|Software |  |                    | 15.2  | %    |  |  | 15.9  | %
|Service  |  |                    | 50.1  | %    |  |  | 48.9  | %
|         |  |                    |       |      |  |  |       |  
|         |  |                    | 100.0 | %    |  |  | 100.0 | %
|         |  |                    |       |      |  |  |       |  

Combined hardware and software revenues for the first quarter of fiscal
2003 increased $0.5 million, or 1.1%, and service revenues increased $2.5
million, or 6.2%, over the same period a year earlier.

Combined hardware and software sales increased in the first quarter of
fiscal 2003 in comparison to the prior year primarily due to the increase in
sales for MICROS PC workstations, partially offset by a decrease in hotel
software. Part of the sales increase for MICROS PC workstations is related to
a large customer roll out program, which rose significantly in the first
quarter of fiscal 2002. Service revenues increased primarily due to the
increase in recurring maintenance service revenues.

Overall cost of sales, as a percentage of revenue, remained relatively
constant at 52.1% and 52.0% for the first quarter of fiscal 2003 and 2002,
respectively. Cost of sales for hardware and software products, as a
percentage of

12



---



##### 



related revenue, increased to 58.6% in the first quarter of fiscal 2003
compared to 57.0% for the same quarter a year earlier mainly due to the
increase in the sale of MICROS PC workstations, which generate lower margins.
Service costs, as a percentage of service revenue, decreased to 45.7% in the
first quarter of fiscal 2003 compared to 46.8% in the same quarter in fiscal
2002. The decrease was mainly due to the continued increase in recurring
maintenance service revenue while maintaining approximately the same level of
cost.

Selling, general and administrative expenses increased, in absolute
dollars, by $0.8 million or 2.7%, in the first quarter of fiscal 2003 compared
to the same period last year. As a percentage of revenue, selling, general and
administrative expenses decreased to 34.0% in the first quarter of fiscal 2003
compared to 34.3% in the first quarter of fiscal 2002. The slight decrease, as
a percentage of revenue, is primarily due to the Companys continued efforts to
reduce expenses.

Research and development expenses (exclusive of capitalized software
development costs), which consist primarily of labor costs, increased $0.1
million, or 1.3%, to $4.9 million in the first quarter of fiscal 2003 compared
to $4.8 million in fiscal 2002. Actual research and development expenditures,
including capitalized software development costs of $0.9 million in the first
quarter of fiscal 2003 and $1.0 million in the first quarter of fiscal 2002,
decreased $0.1 million, or 0.9%, compared to the same period a year earlier.

Depreciation and amortization expense decreased by $1.7 million or 45.5%
in the first quarter of fiscal 2003 compared to the same period in fiscal 2002
due to the adoption of FAS 142, Goodwill and Other Intangible Assets. For
further discussion, see Note 2 in the Notes to the Consolidated Financial
Statements.

Income from operations for the first quarter of fiscal 2003 was $5.0
million, or 5.8% of revenue, compared to $2.8 million, or 3.4% of revenue, in
the first quarter of fiscal 2002. The increase is primarily due to the
increase in service volume and the decrease in goodwill amortization expense.

Other expense decreased from $1.1 million for the first quarter of fiscal
2002 to $0.7 million in the first quarter of fiscal 2003. The Company
experienced foreign currency translation loss of $0.4 million in the first
quarter of fiscal 2003 compared to a loss of $1.0 million in the first quarter
of fiscal 2002.

The effective tax rate for the first quarter of fiscal 2003 and fiscal
2002 was 38.0% and 40.0%, respectively.

The EU filed a challenge against the U.S. Foreign Sales corporation
(FSC) tax provisions with the World Trade Organization (WTO). On August
30, 2002, the WTO arbitrator issued a final decision upholding this challenge.
The arbitrators decision allows the EU to impose sanctions on imports of U.S.
goods into EU member countries. The EU has not begun to impose such sanctions,
nor has it indicated when or if it will begin such charges. Legislative bodies
in the U.S. have made the revision of the international tax provisions of the
Internal Revenue Code a high priority on the legislative agenda. It is
uncertain when or if such legislative actions will mitigate the sanctions ruled
upon by the WTO. It is currently not possible to predict what impact, if any,
this issue will have on future earnings pending final resolution of the matter
with the WTO, EU, and the United States.

Euro Conversion

On January 1, 1999, certain member nations of the EMU adopted a common
currency, the Euro. For a three-year transition period, both the Euro and
individual participants currencies will remain in circulation. Since March 1,
2002, the Euro has become the sole legal tender for the twelve participating
EMU countries, and is in use in certain other countries and territories. The
adoption of the Euro has affected a multitude of financial systems and business
applications as the commerce of these nations is now transacted in the Euro.
Of the twelve participating countries currently using the Euro as their sole
legal tender, the Company has subsidiary operations in seven of those countries
and distributor relationships in the remaining five countries.

Liquidity and Capital Resources

The Company currently has a $45.0 million multi-currency committed line of
credit expiring on December 31, 2002. The financing agreement was amended on
April 30, 2001, to include a security interest in inventory and receivables
located in the United States. Prior to this upcoming expiration date, the
Company anticipates that it will

13



---



##### 



renew this line of credit for an additional one-year period. Interest due
under the line of credit is calculated as follows: (i) if the advance is in
U.S. dollars, at the option of the Company, either the banks prime rate minus
an amount as stipulated in the loan agreement based on Company performance, or
the LIBOR rate plus an additional LIBOR rate percentage; however, (ii) if the
advance is made in a foreign currency, the LIBOR rate for the applicable
denominated currency, plus an additional LIBOR rate percentage. The Company
has a one-time option to convert the line of credit into a three-year secured
term loan upon expiration of the line of credit. Interest due under the
three-year secured term loan shall be, at the option of the Company, the prime
rate plus one quarter of one percent (0.25%) or the floating LIBOR rate. Under
the terms of the current loan agreement, the Company may borrow up to $45.0
million less the amount of outstanding letters of credit and a fixed amount
equal to $1.5 million if the Company enters into any exchange contracts. The
agreement also requires the Company to satisfy certain financial covenants and
limits the assumption of additional debt and restricts the Companys payment of
dividends other than stock dividends.

The Company also has a credit relationship with a European bank in the
amount of EUR 7.6 million (approximately $7.5 million at the September 30, 2002
exchange rate). Under the terms of this facility, the Company may borrow in
the form of either a line of credit or term debt. As 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 September 30, 2002, the total outstanding line of credit is $18.5
million consisting of: US $15.0 million, ZAR (South African Rand) 14.6 million
(approximately $1.4 million at the September 30, 2002 exchange rate), SEK
(Swedish Krona) 6.0 million (approximately $0.6 million at the September 30,
2002 exchange rate), AUD (Australian Dollar) 0.5 million (approximately $0.3
million at the September 30, 2002 exchange rate) and JPY (Japanese Yen) 140.0
million (approximately $1.2 million at the September 30, 2002 exchange rate).
The Company has approximately $32.5 million available to borrow. The amount
available to borrow was reduced by $1.5 million for exchange contracts as
mandated in the amended financing agreement.

Net cash used in operating activities for fiscal 2003 was $0.6 million
versus net cash provided by operating activities of $3.9 million for fiscal
2002. The Company used $2.7 million for investing activities in fiscal 2003
mainly for the purchase of property, plant, and equipment and internally
developed software. The Company used $1.9 million in financing activities for
fiscal 2003 mainly for the repurchase of $1.7 million in common stock. All
cash is being held 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 foreseeable future. The Company anticipates that its rate of property,
plant and equipment expenditures for fiscal 2003 will be approximately the same
as fiscal 2002.

Summary

Until the first quarter of calendar year 2001, the Company had experienced
rapid revenue growth at a rate that it believes had exceeded that of the global
market for point-of-sale computer systems and property management information
systems products for the hospitality industry. In light of weaker market
conditions, the Companys growth rate declined. Currently, given the weak
worldwide economic conditions, and the general financial uncertainty triggered
in part by the terrorist attacks on September 11, 2002, there can be no
assurance that any particular level of growth can be achieved. In addition,
due to the competitive nature of the market, the Company continues to
experience gross margin pressure on its products and service offerings. There
can be no assurance that the Company will be able to continue to increase
sufficiently sales of its higher margin products, including software, to
prevent future declines in the Companys overall gross margin.

Moreover, MICROSs financial results in any single quarter are dependent
upon the timing and size of customer orders and the shipment of products for
large orders. Large software orders from customers may account for more than
an insignificant portion of earnings in any quarter. The customers with whom
MICROS does the largest amount of business are expected to vary from year to
year as a result of the timing for the roll-out of each

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customers system. Furthermore, if a customer delays or accelerates its
delivery requirements or a products completion is delayed or accelerated,
revenues expected in a given quarter may be deferred or accelerated into
subsequent or earlier quarters.

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

Moreover, some of the statements contained herein not based on historic
facts are forward looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended, that involve risks and uncertainties. Past
performance is not necessarily a strong or reliable indicator of future
performance. Actual results could differ materially from past results,
estimates or projections. Some of the additional risks and uncertainties are:
political and world instability created by additional terrorist attacks, which
gravely impacts the travel and tourism industries; product demand and market
acceptance, including demand and acceptance for the new OPERA products and the
newest versions of the 3700 RES; implementation of a cost-effective service
structure capable of servicing increasingly complex software systems in
increasingly more remote locations; achieving increased sales of higher margin
software products; hiring and retention of qualified employees with sufficient
technical expertise; unexpected currency fluctuations; impact of competitive
products and pricing on margins; product development delays; technological
difficulties associated with new product releases; and controlling expenses.
These and other risks are disclosed in the Companys releases and SEC filings,
including in the section titled Business and Investment Risks; Information
Relating to Forward-Looking Statements, in the Companys Annual Report on Form
10-K for the Fiscal Year ended June 30, 2002.

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 23 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, have adversely
impacted the financial performance of the Company.

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

Further, the Company is subject to political risk, as demonstrated by the
terrorist attacks in the United States of September 11, 2001. More recently,
the terrorist attacks in Bali, Indonesia in October 2002 will adversely impact
the Companys sales for the foreseeable future in Indonesia, Australia, and
other parts of Asia, as there has been a marked decline in travel and tourism
in Asia since the Bali attacks. Globally, the potential of armed conflict with
Iraq has created additional uncertainty, which suppresses businesses for two
reasons: (i) capital expenditures are delayed since buyers are concerned by the
impact of potential war with Iraq on their businesses; and (ii) reduction in
consumer buying habits out of concern for additional terrorist attacks in
response to the United States conflict with Iraq. As history shows, worldwide
tourism in general and American tourism in particular have declined during
periods of actual armed conflict, as with the attacks on Iraq in 1991.
Accordingly, political and economic instability and uncertainty caused by
terrorism, and the resultant conflicts designed to thwart terrorism, may
materially adversely impact the travel, tourism and hospitality industries
which the Company serves. The Company is also

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subject to the effects of, and changes in, laws and regulations, other
activities of governments, agencies and similar organizations.

Item 4. Controls and Procedures

Background. As required by Rule 13a-15 under the Exchange Act, within the
90 days prior to the filing date of this report, the Company was required to
conduct an evaluation of the effectiveness of the design and operation of the
Companys Disclosure Controls and Procedures. This evaluation was carried
out under the supervision of the Companys management, including A.L.
Giannopoulos, MICROS Chairman, Chief Executive Officer and President, and Gary
C. Kaufman, MICROS 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 Securities and Exchange Commissions (SEC) 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.

Limitations. MICROS 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.

Scope of the Controls Evaluation. The evaluation of MICROS 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 worldwide 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 information from the
operations on a worldwide basis.

Conclusions. MICROS has evaluated its Disclosure Controls and Procedures.
The effectiveness of the Disclosure Controls and Procedures will be evaluated
quarterly. Based on the evaluation as of a date within 90 days of the filing
of this Form 10-Q, MICROS has concluded that Disclosure Controls and Procedures
(as defined in Rules 13a-14 and 15d-14 under the Securities and Exchange Act of
1934) are effective to ensure 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. No significant
changes were made to MICROS internal controls or in the other factors that
could significantly affect these controls subsequent to the date of the
evaluation and there were no required corrective actions with regard to
significant deficiencies or material weaknesses of these controls.

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MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 2002

Part II  Other Information

Item 1. Legal Proceedings

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

Items 2 through 5.

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

Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits99.1  Certification of Chief Executive Officer99.2  Certification of Chief Financial Officer                                       
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Reports on Form 8-K                                                                                                                        
|
| |     |  | Report on Form 8-K was filed on November 1, 2002, regarding the
release of financial results for the three months ended September 30,
2002.

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MICROS SYSTEMS, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 2002

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

|                  |  |                                        
|----------------- |  | ---------------------------------------
|                  |  | MICROS SYSTEMS, INC.                   
|                  |  | (Registrant)                           
|                  |  |                                        
|November 14, 2002 |  | /s/ Gary C. Kaufman                    
|                  |  | Gary C. Kaufman                        
|                  |  | Executive Vice President,              
|                  |  | Finance and Administration/            
|                  |  | Chief Financial Officer                
|                  |  |                                        
|November 14, 2002 |  | /s/ Cynthia A. Russo                   
|                  |  | Cynthia A. Russo                       
|                  |  | Vice President and Corporate Controller

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CERTIFICATIONS

I, A.L. Giannopoulos, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of MICROS Systems, Inc.
(the Registrant);

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
and

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the period presented in this quarterly report.

4.     The Registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the Registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The Registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrants auditors and the audit
committee of Registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the Registrants ability to record, process,
summarize and report financial data and have identified for the Registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrants internal controls;
and

6.     The Registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

By: /s/ A.L. Giannopoulos
A.L. Giannopoulos
Chairman, President and
Chief Executive Officer

Date: November 14, 2002

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I, Gary C. Kaufman, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of MICROS Systems, Inc.
(the Registrant);

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
and

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the period presented in this quarterly report.

4.     The Registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the Registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The Registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrants auditors and the audit
committee of Registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the Registrants ability to record, process,
summarize and report financial data and have identified for the Registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrants internal controls;
and

6.     The Registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

By: /s/ Gary C. Kaufman
Gary C. Kaufman
Executive Vice President,
Finance and Administration,
and Chief Financial Officer

Date: November 14, 2002

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