UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K





x           ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934


For the
Fiscal Year Ended June 30, 2010





OR





 ̈           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ____________to__________





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
No.)
  7031 Columbia Gateway Drive, Columbia, Maryland 21046-2289(Address of Principal Executive Offices) (Zip Code)





443-285-6000


(Registrant’s
telephone number, including area code)





Securities
registered pursuant to Section 12(b) of the Act:





Title of Each Class
              
              Name of ExchangeCommon Stock, par value $0.025 per share
              
              The NASDAQ Stock Market LLC





Securities
registered pursuant to Section 12(g) of the Act: None





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


YES þ    NO o





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


YES o    NO þ





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


YES þ    NO o





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


YES o    NO o





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.





þ





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





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





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





YES  o    NO þ





The
aggregate market value of the common equity (all of which is voting) held by
non-affiliates computed by reference to the price at which the common equity was
last sold as of December 30, 2009 was $2,456,870,905.





At the
close of business on July 31, 2010, there were issued and outstanding 80,107,423
shares of Registrant’s Common Stock at $0.025 par value.





DOCUMENTS
INCORPORATED BY REFERENCE





The
definitive proxy statement relating to the registrant’s Annual Meeting of
Stockholders, to be held November 19, 2010, is incorporated by reference in Part
III to the extent described therein.





TABLE
OF CONTENTS





Page No.PART IItem 1.
                                    
                                    Business
                                    
                                    3Item 1A.
                                    
                                    Risk
      Factors
                                    
                                    16Item 1B.
                                    
                                    Unresolved
      Staff Comments
                                    
                                    19Item 2.
                                    
                                    Properties
                                    
                                    19Item 3.
                                    
                                    Legal
      Proceedings
                                    
                                    20PART IIItem 5.
                                    
                                    Market for the
      Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity
      Securities
                                    
                                    21Item 6.
                                    
                                    Selected
      Financial Data
                                    
                                    22Item 7.
                                    
                                    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                    
                                    23Item 7A.
                                    
                                    Quantitative
      and Qualitative Disclosures About Market Risk
                                    
                                    37Item 8.
                                    
                                    Financial
      Statements and Supplementary Data
                                    
                                    37Item 9.
                                    
                                    Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
                                    
                                    37Item 9A.
                                    
                                    Controls
      and Procedures
                                    
                                    37Item 9B.
                                    
                                    Other
      Information
                                    
                                    37PART IIIItem 10.
                                    
                                    Directors,
      Executive Officers and Corporate Governance
                                    
                                    38Item 11.
                                    
                                    Executive
      Compensation
                                    
                                    38Item 12.
                                    
                                    Security
      Ownership of Certain Beneficial Owners and Management and
      Related
                                    
                                    38Stockholder
      MattersItem 13.
                                    
                                    Certain
      Relationships and Related Transactions, and Director
      Independence
                                    
                                    38Item 14.
                                    
                                    Principal
      Accounting Fees and Services
                                    
                                    38PART IVItem 15.
                                    
                                    Exhibits
      and Financial Statement Schedule
                                    
                                    39Signatures
                                    
                                    73Exhibit Index
                                    
                                    74


2





PART
      I





ITEM
      1.
            BUSINESS





INTRODUCTION





MICROS Systems, Inc. is a leading
worldwide designer, manufacturer, marketer, and servicer of enterprise
information solutions for the global hospitality and retail industries. MICROS
Systems, Inc. was incorporated in the State of Maryland in 1977 as Picos
Manufacturing, Inc. and, in 1978, changed its name to MICROS Systems,
Inc.





References to “MICROS,” the “Company,”
“we,” “us,” and “our” herein include the operations of MICROS Systems, Inc. and
also our subsidiaries on a consolidated basis, unless the context indicates
otherwise.  Our fiscal year runs from July 1 through June
30.  Accordingly, references to a fiscal year mean the 12-month period
ending June 30 of that year; i.e., fiscal year 2010 means the 12-month period
ending June 30, 2010.





We operate in two reportable segments
for financial reporting purposes: U.S. and International.  You can
find financial information for each reportable segment, as well as certain
financial information about geographic areas, in Note 17 “Segment Information”
in our Notes to Consolidated Financial Statements included in this Annual Report
on Form 10-K.  In each of our two reportable segments, we have
developed an infrastructure through which we license and sell all of our
products and services.  While the products and services that are sold
may be configured for each segment to address local issues, laws, tax
requirements and customer preferences, the products and services are
substantially similar worldwide.





During January 2010, we uncovered
certain fraudulent activities in our subsidiary in Japan that occurred during
the period from fiscal year 2006 to the second quarter of fiscal year
2010.  We determined that these fraudulent transactions resulted in a
cumulative overstatement of revenue and net income attributable to MICROS
Systems, Inc. of approximately $6.9 million and $4.9 million, respectively, over
this period and also concluded that the misstatements did not materially affect
the previously issued financial statements for any of our prior
periods.  Appropriate adjustments have been made to prior period
information included in the accompanying consolidated financial statements and
described in Note 19 “Revisions to Prior Period Financial Statements” in the
Notes to the Consolidated Financial Statements included in this
report.





Almost all of our customers are in the
hospitality industry and the retail industry.  The hospitality
industry encompasses numerous defined markets, including lodging (including, for
example, individual hotel sites, hotel chains and franchise groups), table
service and quick service restaurants, restaurant chains and franchise groups,
entertainment venues (including, for example, stadiums and arenas), business
foodservice operations, casinos, transportation foodservice, government
operations, and cruise ships.  The retail industry consists of retail
operations selling directly to consumers, including retailers of clothing,
shoes, food, hardware, jewelry, and other specialty items.





Our enterprise information solutions
comprise three major areas: (1) hotel information systems; (2) restaurant
information systems; and (3) retail information systems.  In addition
to our software enterprise solutions and hardware products, we offer an
extensive array of services and other products for our hotel, restaurant and
retail information systems.  The hotel information systems consist
mainly of software, encompassing property based management systems (“PMS”),
related property-specific modules and applications, and central systems,
including central reservation systems (“CRS”).  The restaurant
information systems consist of hardware and software for point-of-sale (“POS”)
and operational applications, a suite of back office applications, including
inventory, labor and financial management, and certain centrally hosted
enterprise applications.  The retail systems consist of software
encompassing POS, loss prevention, web commerce applications, business
analytics, customer gift cards, electronic payments and enterprise applications.
We market our products and services globally.





We market our hotel systems directly to
customers through our direct sales force and through international distributors.
Our hotel PMS applications are installed worldwide in leading hotel chains,
including the following:





·
                      
                      Accor (France)
                      
                      ·
                      
                      Hyatt Hotels & Resorts
                      
                      ·
                      
                      Omni·
                      
                      Best Western
                      
                      ·
                      
                      Hilton Hotels
                      
                      ·
                      
                      Peninsula (Hong Kong)·
                      
                      Camino Real (Mexico)
                      
                      ·
                      
                      InterContinental Hotels Group
                      
                      ·
                      
                      Rica Hotels (Sweden)·
                      
                      Carlson Hotels
                      
                      ·
                      
                      ITC Welcome Group (India)
                      
                      ·
                      
                      Shangri-La (Hong Kong)·
                      
                      Danubius (Bulgaria)
                      
                      ·
                      
                      Kempinski (Germany)
                      
                      ·
                      
                      Société du Louvre (France)·
                      
                      Delta Hotels (Canada)
                      
                      ·
                      
                      Loews
                      
                      ·
                      
                      Solare (Japan)·
                      
                      Dusit Thani (Thailand)
                      
                      ·
                      
                      Louvre Hotels
                      
                      ·
                      
                      Starwood International·
                      
                      Fairmont
                      
                      ·
                      
                      MGM Mirage
                      
                      ·
                      
                      Steigenberger·
                      
                      Federal (Malaysia)
                      
                      ·
                      
                      Marriott International
                      
                      ·
                      
                      Travelodge (U.K.)·
                      
                      Four Seasons (Canada)
                      
                      ·
                      
                      Millennium
                      
                      ·
                      
                      Wyndham Worldwide·
                      
                      Hard Rock Hotels
                      
                      ·
                      
                      Mövenpick (Switzerland)
                      
                      ·
                      
                      Wynn Resorts





Globally, there are approximately
26,000 MICROS PMS applications installed (most of which are accompanied by
other


property-specific
modules and applications).


3





The MICROS CRS is installed in numerous
hotel chains, including the following:





·
                    
                    Boscolo (Italy)
                    
                    ·
                    
                    Louvre Hotels
                    
                    ·
                    
                    Shell Hospitality·
                    
                    Camino Real
                    
                    ·
                    
                    MacDonalds (U.K.)
                    
                    ·
                    
                    Sokos (Finland)·
                    
                    Constellation (Australia)
                    
                    ·
                    
                    MGM Resorts International
                    
                    ·
                    
                    Starhotels (Italy)·
                    
                    Delta Hotels (Canada)
                    
                    ·
                    
                    Oberoi (India)
                    
                    ·
                    
                    Sun International (South·
                    
                    Equatorial (Malaysia)
                    
                    ·
                    
                    Omni
                    
                    
                    
                    Africa)·
                    
                    Fairmont
                    
                    ·
                    
                    Pan Pacific (Singapore)
                    
                    ·
                    
                    Travelodge (U.K.)·
                    
                    Four Seasons
                    
                    ·
                    
                    Red Lion
                    
                    ·
                    
                    Westmark·
                    
                    Great Wolf Resorts
                    
                    ·
                    
                    Rydges (Australia)
                    
                    ·
                    
                    Wyndham Worldwide·
                    
                    Hard Rock Hotels
                    
                    ·
                    
                    Shangri-La
                    
                    ·
                    
                    Wynn Resorts·
                    
                    Loews Hotels
                    
                    ·
                    
                    Société du Louvre
                    
                    ·
                    
                    Xanterra





Globally, over 70
hotel chains have installed MICROS’s CRS applications.





We market our restaurant systems
directly, and indirectly through our domestic and international
dealers.  Our restaurant POS systems are installed
worldwide.  Major table service restaurant chain customers include the
following:





·
                    
                    Bertucci’s
                    
                    ·
                    
                    Friendly’s
                    
                    ·
                    
                    Mimi’s Cafe·
                    
                    Chevy’s
                    
                    ·
                    
                    Groupe Le Duff (France)
                    
                    ·
                    
                    Mitchells and Butlers (U.K.)·
                    
                    Cara (Canada)
                    
                    ·
                    
                    Hard Rock Café
                    
                    ·
                    
                    Perkins·
                    
                    Cracker Barrel
                    
                    ·
                    
                    HMS Host
                    
                    ·
                    
                    Rainforest Cafe·
                    
                    Denny’s
                    
                    ·
                    
                    Hooters
                    
                    ·
                    
                    Ruby Tuesday’s·
                    
                    Eat ‘n Park
                    
                    ·
                    
                    IHOP
                    
                    ·
                    
                    Ruth’s Chris Steakhouse·
                    
                    El Torito
                    
                    ·
                    
                    Johnny Carinos
                    
                    ·
                    
                    T.G.I. Friday’s·
                    
                    ESPN Zone
                    
                    ·
                    
                    La Madeleine
                    
                    ·
                    
                    VIPS (Spain)·
                    
                    Fazer Amica (Finland)
                    
                    ·
                    
                    Lone Star
                    
                    ·
                    
                    Wagamama (U.K.)·
                    
                    Famous Dave’s
                    
                    ·
                    
                    Manchu Wok
                    
                    ·
                    
                    Whitbread (U.K.)





Major quick service chain restaurant customers, as well as numerous franchisees of the following, include:





·
                    
                    Atlanta Bread
                    
                    ·
                    
                    Krispy Kreme
                    
                    ·
                    
                    Tropical Smoothie Café·
                    
                    Arby’s
                    
                    ·
                    
                    Nordsee (Germany)
                    
                    ·
                    
                    Wagamama’s (U.K)·
                    
                    Auntie Anne’s
                    
                    ·
                    
                    Pollo Campero
                    
                    ·
                    
                    Wendy’s·
                    
                    Baja Fresh
                    
                    ·
                    
                    Panera Bread
                    
                    ·
                    
                    Wingstop·
                    
                    Ben & Jerry’s
                    
                    ·
                    
                    Popeye’s
                    
                    ·
                    
                    Yum! Brands (Pizza Hut,·
                    
                    Burger King
                    
                    ·
                    
                    Retail Brand Group
                    
                    
                    
                    KFC International, and·
                    
                    Coffee Club (Australia)
                    
                    ·
                    
                    Saxby’s Coffee
                    
                    
                    
                    Taco Bell)·
                    
                    El Pollo Loco
                    
                    ·
                    
                    Starbucks
                    
                    ·
                    
                    Zaxby’s·
                    
                    Five Guys
                    
                    ·
                    
                    Subway





Our restaurant POS systems are also installed in
hotel restaurants in various hotel chains, including Accor, Boyd Gaming, Camino
Real, Danubius, Fairmont, Four Seasons, Hilton, Hyatt, InterContinental Hotels,
Kempinski, Mandarin Oriental, MGM Mirage, Marriott International, Millennium,
Omni, Pan Pacific, Peninsula, Radisson, Starwood, and Wyndham
International.  Additional significant markets for our POS systems
include complex foodservice environments, such as casinos, cruise ships, sports
arenas, airport concourses, theme parks, recreational centers, institutional
food service organizations, and specialty retail shops. Users include Aramark,
Centerplate, Compass, Delaware North, HMS Host, and various government
entities.  We have installed large POS systems in Citi Field (New York
City), the Foxwoods Hotel and Casino (Ledyard, CT), Grand Casino (Australia),
Atlantis (Bahamas), Mandalay Resorts Group, Sun City (South Africa), Harrah’s
Casinos,  Meadowlands Sports Complex, The Venetian Resort, Wembley
Stadium (U.K.), and Wynn Resorts.  We supply and service POS systems
for users in the complex foodservice environments identified above both directly
and through distribution channels, including through specialty reseller
relationships with Blackboard Inc. and The CBORD Group Inc.





We also market a Windows® based
restaurant POS system through our Hospitality Solutions International (“HSI”)
division.  Through our JTECH Communications, Inc. (“JTECH”)
subsidiary, we market a range of on-premises paging and alert solutions for
restaurants, retail, and medical environments.





Our
retail solutions are provided through our subsidiaries Datavantage,
CommercialWare, Advance Retail Systems (Mexico), MICROS Retail & Supply
Chain aka RedSky (United Kingdom), eOne, and Fry.  In our marketing,
we sometimes refer to this group of subsidiaries as the “MICROS Retail”
group.  See the discussion of “MICROS Retail” under the “Retail
Information Systems” heading below.  Our retail store customers
include the following retailers:


4





·
                      
                      Adidas (Germany and
                      
                      ·
                      
                      Armani Exchange
                      
                      ·
                      
                      BostonianUSA)
                      
                      ·
                      
                      Barney’s New York
                      
                      ·
                      
                      Burberry Limited·
                      
                      Advance Auto Parts
                      
                      ·
                      
                      Books-A-Million
                      
                      ·
                      
                      Chelsea and Scott·
                      
                      Ann Taylor
                      
                      ·
                      
                      Blain’s Farm and Fleet
                      
                      ·
                      
                      Christopher & Banks·
                      
                      Garnet Hill
                      
                      ·
                      
                      Polo Ralph Lauren
                      
                      ·
                      
                      Stonewall Kitchen·
                      
                      Hannaford Brothers
                      
                      ·
                      
                      PPG
                      
                      ·
                      
                      Sur La Table·
                      
                      Hugo Boss (Germany)
                      
                      ·
                      
                      Reebok Retail
                      
                      ·
                      
                      Talbots·
                      
                      Jo Ann Stores
                      
                      ·
                      
                      Roots Canada
                      
                      ·
                      
                      Tesco (U.K.)·
                      
                      Jos. A. Banks Clothiers
                      
                      ·
                      
                      S & K Famous Brands
                      
                      ·
                      
                      Urban Brands·
                      
                      Limited Brands
                      
                      ·
                      
                      Sainsbury’s (U.K.)
                      
                      ·
                      
                      The U.S. Mint·
                      
                      Maytag
                      
                      ·
                      
                      7-11 (Mexico)
                      
                      ·
                      
                      Tommy Hilfiger·
                      
                      Michaels Stores
                      
                      ·
                      
                      Smith & Hawken
                      
                      ·
                      
                      Wm Morrison (U.K.)·
                      
                      Nike Mexico
                      
                      ·
                      
                      Starbucks
                      
                      ·
                      
                      Whirlpool·
                      
                      Pendleton
                      
                      ·
                      
                      Steve Madden Retail
                      
                      ·
                      
                      Zales





PRODUCTS
AND SERVICES





Summary
of Product Solutions (Software and Hardware):





Hotel Products
                  
                  DescriptionSoftwareOpera
      PMS
                  
                  PMS
      software product for hotel reservations, targeted to full service
      hotelsOpera
      Xpress PMS
                  
                  PMS
      software product for hotels, targeted to limited service
      hotelsOpera
      Lite PMS
                  
                  PMS
      software for hotels, targeted to smaller hotelsOperetta
      PMS
                  
                  PMS
      software and hardware bundle for hotels, targeted to smaller
      hotelsFidelio
      Versions 7 and 8 PMS
                  
                  PMS
      software products for hotel reservationsOpera
      Revenue Management System
                  
                  Software
      that helps hotels develop and manage pricing strategiesOpera
      Central Reservation System
                  
                  Software
      that manages hotel reservations for hotel chains or hotel
      groupsOpera
      Customer Information System
                  
                  Software
      that manages customer information and loyalty programsOpera
      Vacation Ownership System
                  
                  Software
      that manages reservations for hotel condominiums and related condominium
      managementOpera
      Web Booking Suite System
                  
                  Software
      that enables Opera PMS to receive Internet reservationsOpera
      Sales and Catering
                  
                  Software
      that helps hotels manage meeting needs (food, hotel rooms, meeting space,
      and other customer needs)Opera
      Sales Force Automation (SFA)
                  
                  Software
      that manages leads, meeting agendas, and contracting, and provides other
      support to the national and regional sales teams for hotel
      chainsOpera
      Activity Scheduler
                  
                  Software
      that manages the scheduling and billing for hotel resort recreational
      activities, such as golf, tennis, spas, etc.Opera
      Kiosk
                  
                  Enables
      guest check-in and check-out at stand-alone kiosk, and other interactive
      featuresOpera
      Business Intelligence
                  
                  Software
      that provides analytics for financial and operations
    analysesmyfidelio.net
                  
                  An
      Internet based hotel reservation service and networkFidelio
      Cruise  SPMS Systems
                  
                  A
      suite of software products that manages reservations, POS and other
      activities for the cruise industryMaterials
      Management
                  
                  Software
      that provides inventory control and costing for food production, mainly
      marketed to hotel
restaurants





Restaurant Products
                    
                    DescriptionSoftwareMICROS
      9700 HMS
                    
                    POS
      software for large foodservice, leisure and entertainment
      venuesSimphony
                    
                    Centrally-hosted
      POS for large foodservice, leisure and entertainment
  venuesMICROS
      3700 POS
                    
                    POS
      software for table service and quick service
restaurantsRestaurant
      Enterprise Series (RES)
                    
                    Suite
      of software products for 3700 POSKitchen
      Display System
                    
                    Component
      of RES, providing additional reporting capabilities and
      informationRES
      Kiosk
                    
                    Component
      of RES, for self-ordering and customer information via kiosk or other
      hardwareHSI
      Profit Series POS
                    
                    POS
      software for table service restaurants (only marketed through the HSI
      division)mymicros.net
                    
                    Suite
      of web based software products for use with restaurant POS
      productsmyhsi.net
                    
                    Suite
      of web based software products for HSI Profit SeriesMICROS
      e7 POS
                    
                    POS
      product for small restaurants (only marketed in North and South
      America)


5





HardwareMICROS
      Workstation 5A Terminal
                  
                  Windows
      CE POS and Windows Embedded POS terminal for
restaurantsMICROS
      Workstation 4-LX Terminal
                  
                  Windows
      CE POS terminal for restaurants-enhanced version of Workstation
      4MICROS
      2010 PC Workstation
                  
                  PC
      based POS terminal for restaurantsMICROS
      Keyboard Workstation Terminal
                  
                  Windows
      CE POS terminal used in large complex foodservice, leisure and
      entertainment venuesJTECH
      Paging Products
                  
                  Suite
      of paging productsMICROS
      Kitchen Display System
                  
                  Hardware
      for kitchen display
systems





Retail Products
                    
                    DescriptionSoftwareStore
      21 Store Management System
                    
                    POS
      retail software product targeted for specialty
retailersTradewind
      Store Management System
                    
                    POS
      retail software product targeted for stores with high volume
      transactionsXstore
      Management System
                    
                    Java
      based POS retail software productMICROS
      Enterprise Merchandising
                    
                    Java
      based, centrally hosted merchandising application that manages inventory
      throughout a chain and provides reporting and analytical
      functionsHome
      Office Business Intelligence Suite
                    
                    Suite
      of software products that analyzes, manages and reports on business
      activities at the store level for corporate control (which includes XBR
      Loss Prevention)Gift
      Cards Software
                    
                    Software
      product that manages a retailer’s gift card programCWDirect
      Cross Channel Order Management System
                    
                    Software
      that manages orders across multiple methods of ordering (phone, kiosk,
      Internet, etc.)CWLocate
      Merchandise Location System
                    
                    Software
      that enables a retailer to locate inventory across multiple
      locationsCWCollaborate
                    
                    Software
      that connects retailers with suppliers to efficiently manage inventory and
      reorder levelsOpen
      Commerce Platform
                    
                    Web
      site development, management, hosting and ecommerce
      applicationsCreations
                    
                    Integrated
      life cycle and supply chain software for retail operations that allowstracking
      of inventory from a supplier to
POS





Hotel
Information Systems





For the hotel and resort industry, we
develop, distribute, and support a complete line of hotel software products and
services.  The hotel information systems include PMS, sales and
catering systems, CRS, customer information systems, revenue management systems,
and an Internet/Global Distribution System based hotel reservation service
called myfidelio.net.  We also provide installation and end-user
training services, and support services (including help desk) for our various
software products.  MICROS markets its hotel products under brand
names such as Opera and Fidelio.





Globally, there are approximately
26,000 active MICROS PMS applications installed, which includes some sites using
PMS products for which MICROS has ceased ongoing development (although in many
instances we continue to provide limited support services to those
sites).  Most of the hotels using a MICROS PMS have also installed
other MICROS property-specific modules and applications; additionally, there are
over 2,000 hotels running various MICROS property-specific modules and
applications without a MICROS PMS.




6




The PMS software provides for hotel
room check-in and checkout, reservations, guest accounting, travel agent
accounting, and engineering management.  The PMS software also
interfaces to central reservation systems, to on-line travel services (also
known as alternative distribution services, e.g., Expedia), and to global
distribution systems (e.g., Sabre, Galileo, Amadeus and
WorldSpan).  The sales and catering software enables hotel sales staff
to evaluate, reserve and invoice meetings, banquets and related events for a
property.  The CRS software enables hotels to coordinate, process,
track, and analyze hotel room reservations at a central facility for electronic
distribution to the appropriate lodging site.  The customer
information system software enables hotels to efficiently capture and track
relevant guest information.  The revenue management system software
enables hotels to manage room rates, occupancy, and the mix of business between
corporate and transient customers.  We also offer an Internet-based
hotel reservation service via our myfidelio.net service.  This service
enables corporations, tourist representation services, and consumers to reserve
rooms and manage reservations directly with designated hotels.  This
service also enables those hotel properties without internal reservation
capabilities to outsource to us the maintenance of their connectivity to the
global distribution systems and certain alternative distribution
systems.


We market
a comprehensive suite of hotel software products under the Opera brand
name.  Opera includes modules for property management, central
reservations, customer information systems, sales and catering, revenue
management, sales support, data mining, financial statements, condominium
reservations and accounting, golf reservations, spa management, and quality
management.  We also offer a module that enables guest check in and
check out, and other interactive features, via kiosk.




In addition to industry standard PCs,
the Opera platform will also run on large PC servers.  Opera runs on
two operating systems: Microsoft Windows® (Server
and XP) and IBM AIX®, and
uses an Oracle®
database.





We
believe that the Opera software suite is an important product line for our
continued growth in the hotel information systems market, because we believe it
reflects the future direction of PMS technology for us and the industry, and
because it has been a material source of our revenue growth within the hotel
industry.  Opera is written on current architecture, using an Oracle
database; it is highly configurable, adapted for use in multiple countries, and
fully integrated with modules, features and functions that we believe are
desirable to the hospitality industry.  Over 140 hotel chains have
implemented Opera, many of which are in the midst of multi-year
rollouts.





We also offer limited versions of the
Opera property management system called Opera Xpress, OperaLite, and
Operetta.  These products enable smaller properties to deploy the
Opera PMS, but at a lower price and with more limited product
features.  As of June 30, 2010, approximately 16,000hotel sites have
installed either Opera, OperaXpress PMS, OperaLite, or Operetta.





Opera’s software architecture enables
the product to be deployed either on-premises or hosted in an off-site
location.  We offer hosting services for hotel customers in various
data centers around the world (Ashburn and Manassas, Virginia; Buenos Aires,
Argentina; Frankfurt, Germany, and Singapore) with the application accessed via
Internet or similar high speed connections.  Currently, there are over
3,000 hotels running various Opera applications for which we provide hosting
services.





In addition, we market a suite of hotel
software products (PMS and other modules) under the Fidelio Version 7.0 brand
name.  Fidelio Version 7.0 uses the Microsoft Windows®
graphical user interface and runs on an Oracle®
database.  As of June 30, 2010, over 3,500 hotels were using Fidelio
Version 7.0.





Furthermore, we market a PMS product
under the brand name Fidelio Version 8 primarily in Europe.  This
product, which was entirely developed in and currently supported from Europe,
contains certain Internet-based features and uses the Windows®
operating system with an Oracle®
database.  The product is designed to meet the needs of independent
hotel operators and smaller chains based in Europe. The product is installed in
over 2,750 hotel sites as of June 30, 2010.





Throughour subsidiary Fidelio
Cruise, we market the Fidelio SPMS Cruise product, which is a PMS product for
the cruise industry. Fidelio Cruise’s PMS enables cruise operators to manage
passengers, visitors, groups and crew information at various stages from
check-in to check-out, invoicing, credit card handling with online
functionality, safety and security, and automated check-in with picture taking
for passengers, crew, and visitors.  Through the Fidelio Cruise SPMS
software, cruise lines can monitor all financial transactions on board and
operate a central accounting and invoicing system for each passenger and crew
member.  Furthermore, the software maintains the count of passengers
and staff on-board, as required by international industry
regulations.  Additional Fidelio Cruise modules support the operation
of health spas, on-board MICROS point-of-sale systems, business centers, shore
excursions, medical centers, and casinos onboard.





Fidelio Cruise introduced in fiscal
2010 a new product, the Fidelio Cruise Crew Management System.  This
product supports the shore side and shipboard crew resource operations for a
cruise ship.





Fidelio Cruise software is installed on
board 218 cruise ships.  Customers include: Carnival Cruise Lines,
Aida Cruises, Cunard Line, Fred Olsen Line, Holland America Line, MSC
Cruises, Norwegian Cruise Line, P&O Cruises UK, Pullmantur, Oceania, Regent
Seven Seas Cruises, Royal Caribbean International and Silversea
Cruises.





On December 31, 2009 MICROS acquired
TIG Global LLC (“TIG Global”) of Chevy Chase, Maryland. TIG Global provides
Internet based on-line marketing related services to hotels.  TIG
Global’s customer base is currently located largely in North
America.





Restaurant
Information Systems





Our restaurant systems include
full-featured POS applications, kitchen product applications, marketing
applications, and hardware.  Most of the products are designed to
operate on industry standard PCs.  Our products for order entry
operate on either industry standard PCs or proprietary terminals with additional
functionality and design appropriate for foodservice environments, including
three types of proprietary intelligent terminals that we developed and
designed.




7


Hardware





The workstations we have designed, and
that we currently market and sell, are the Workstation 5A, Workstation 4-LX and
Workstation 2010.  We also integrate other hardware devices (e.g.,
printers, cash drawers, handheld order entry and credit card remote payment
terminals, digital menu boards, kitchen control systems and pole displays) into
our complete product offerings.





Workstation 5A is a PC based POS
terminal using Microsoft’s Embedded CE 6.0 and POSReady 2009 operating systems.
The terminal is based upon the successful Workstation 4 and Workstation 5 POS
terminals, which we previously marketed.  Workstation 5A incorporates
a faster microprocessor and more advanced security capabilities than Workstation
5, as well as a 15” touch display.  Key design elements of MICROS’s PC
workstations, which Workstation 5A builds upon, are the encased nature of the
screen, special materials to withstand various levels of temperature and
humidity, more efficient energy use, and sound capabilities.





Workstation 4-LX is a thin-client POS
terminal, using Microsoft’s Windows® CE
operating system.  The terminal has standalone resiliency, which means
that even if the system server malfunctions, the POS terminal can continue to
function and store data until the server is operational.  Workstation
4-LX is an updated version of our Workstation 4 that has a faster microprocessor
and other improvements in memory management and data recovery as compared to the
prior model.





The
MICROS 2010 Workstation is a high-performance POS terminal designed to run our
restaurant applications and other third party PC-based software
applications.  The product uses an Intel® Pentium
chip architecture.  It can be configured to accommodate various memory
and storage requirements. The product supports several Microsoft operating
systems and Linux.





We also
market a product named the Keyboard Workstation 270.  This product
enables orders to be entered into the MICROS Simphony and 9700 HMS (software products
that are described below) via a lower cost, durable workstation with a keyboard
interface in lieu of a touchscreen.  The Keyboard Workstation is used
primarily in institutional foodservice environments, convention centers, and
sports complexes.





The Workstation 5A, Workstation 4-LX,
2010 Workstation, and the Keyboard Workstation 270 are all manufactured for us
by the Venture Group of Singapore (“Venture Group”, formerly GES
Singapore Pte. Ltd.), a third party contract manufacturing company.





Through our JTECH subsidiary, we offer
pagers, wireless systems, alert software, and related products (all manufactured
for us by third party contract manufacturers) for use in restaurants, retail,
medical, and other environments. JTECH primarily resells MICROS branded hardware
to its customers.





Additionally, we resell various other
hardware products, including personal computers, servers, printers, network
cards, and other related computer equipment.  We maintain a global,
non-exclusive preferred provider agreement with Hewlett Packard Corporation
(HP).  This relationship enables us to resell HP personal computers,
printers, and networking equipment on a global basis.





Software





Our main restaurant POS software
systems are the MICROS 9700 Hospitality Management System (“HMS”), Simphony, the MICROS
3700 POS system, Hospitality Solution’s Profit Series, and the MICROS e7
Series.  These systems provide transaction control for table service,
quick service and large foodservice and entertainment venues.





Leisure and Entertainment
Restaurants





The MICROS 9700 HMS is designed for
larger leisure and entertainment venues, which include resorts, casinos, airport
and other travel-related food service concessions, stadiums/arenas, theme parks,
table service and quick service restaurants in hotels, and larger stand-alone
restaurants.  The MICROS 9700 HMS product has an open systems
architecture running on Microsoft’s Windows® 2003
operating system and either Microsoft SQL Server 2005 or Oracle 10g
databases.   The product can be deployed on site in a
client-server configuration or on a multi-property configuration where a remote
server can address multiple restaurant operations.





Table Service and Quick Service
Restaurants





The MICROS 3700 POS is designed for
table service and quick service restaurants.  It has an open systems
architecture using Microsoft’s Windows® XP
operating system and a Sybase®relational database, and can run on standard PCs or proprietary
workstations.  It uses a color touch screen with a Microsoft
Windows® based
graphical user interface.




We have developed and we market a suite
of back office and operation focused software solutions that extend beyond
POS.  The suite is called the MICROS Restaurant Enterprise Series
(“RES”).  RES is an important component of our strategy to fully
integrate point-of-sale transaction processing with other restaurant operational
and management functions.  The MICROS RES software solutions include
point-of-sale transaction control, restaurant operations, data analysis, and
communications.  The POS software comprises the front-end application
for the RES system.  The restaurant operations modules include
inventory, product forecasting, labor management, financial management, gift
cards, and enterprise data management.  One of those modules is the
Kitchen Display System, which displays food orders and offers additional
reporting capabilities on restaurant service.  Another component is
MICROS RES Kiosk, which enables customer information and self-ordering on
third-party kiosks or other hardware.  All of these modules are
designed to operate at a single restaurant site.


8


For management of multiple restaurants,
MICROS RES includes a suite of software products called Enterprise
Management.  This suite enables data to be transmitted to a remote
site (e.g., the headquarters of a restaurant chain) for data collection and
analysis.  Additionally, pricing and menu changes can be made from a
remote site and downloaded to specified restaurant locations.




We market a POS system called MICROS e7
mainly to smaller restaurants around the world. This product runs on the MICROS
Workstation 5 and uses the Microsoft Windows® CE
Operating system.




Through our HSI division, we market the
HSI Profit Series POS primarily to table service restaurant customers in North
America.  The product contains a wide array of POS
features.





Enterprise Enabled Point of
Service





Simphony is an
enterprise-enabled POS product.  Simphony’s service-oriented
architecture and centralized configuration allows for a flexible deployment
model that can be molded to meet a hospitality industry customer’s
requirements.  It is capable of operating at large, single site venues
such as airport and other travel-related food service concessions, casinos,
theme parks, and resorts as well multi-unit quick service and table service
restaurant operations.





The enterprise Simphony database is supported
either by Microsoft SQL Server or Oracle.  The Simphony client utilizes
Microsoft’s Windows Presentation Foundation and Silverlight technologies to
provide a user interface with extensive features, and the ability to create
highly tailored ordering and presentation processes.  The
functionality within the client can be extended through the addition of custom
..NET assemblies.





In addition to the extensive feature
set and extensibility capabilities, Simphony enables customers to
reduce significantly the costs associated with a traditional multiple property
POS solution when deployed as an enterprise solution,  The Simphony services can be run
from the workstations which eliminates the need to manage a back office
server.  Software deployment for new properties and upgrades is
controlled and managed from the enterprise, thus eliminating the need to send
staff to every store for these tasks.





Centrally Hosted
Applications





Our design architecture enables
existing users of many MICROS POS and Hospitality Solutions International’s
products to access new technologies and third party software applications in
conjunction with their existing MICROS POS systems.  In addition, many
MICROS restaurant information system products interface with various back office
accounting and property management systems, including our hotel PMS
products.





We developed and market an
Internet-based portal product called “mymicros.net.”  The mymicros.net
posts restaurant transaction POS detail to a centralized data warehouse in near
real time.  This product enables the customer to view reports and
charts for a single site, a group of restaurants, or the entire enterprise from
any location that has an Internet connection.  In addition,
mymicros.net incorporates additional products for inventory management, labor
scheduling and control, gift cards, loyalty cards and other marketing programs.
The mymicros.net software product can either be purchased via a perpetual use
license or by an annual or multi-year “software as a service” subscription
contract.  The HSI division also markets a portal called
“myhsi.net.”  The product’s functionality is similar to the
mymicros.net portal, but is designed for use with the HSI POS
product.





We host these applications in the same
data centers where Opera is hosted.  As of June 30, 2010, we hosted
applications supporting approximately 12,800 restaurants.





Retail
Information Systems





Through our MICROS Retail group of
subsidiaries (“MICROS Retail”), we market retail store software automation
systems and business intelligence applications.  The retail store
systems are called Store21 Store Management System (“Store21”), Tradewind Store
Management System (“Tradewind”) and Xstore Store Management System
(“Xstore”).  Store21 is a POS product designed for specialty
retailers, while Tradewind is a POS product targeted at larger format stores and
at high transaction volume stores.  The products operate on
Microsoft’s Windows® NT and
2000 and 2003 operating systems and use a Sybase®
database.  Both products can be integrated with the retailer’s back
office systems, and we also offer certain additional back office,
communications, and reporting modules for use with Tradewind and
Store21.





Xstore is our next generation retail
POS software system.  It runs on the Sun Microsystems®
Java®
operating system, and its architecture enables it to be integrated to both
Windows and Linux-based back office systems.  Like Store21 and
Tradewind, its predecessor products, Xstore is a front-end POS software system
that may be integrated with the retailer’s back office
systems.  Xstore is highly customizable by the customer, and is
designed to respond to the trend among large retailers to move to Linux-based
systems.  Xstore is designed to be able to be run in a Windows or a
Linux environment, while Store21 and Tradewind, as currently designed, can
operate only in a Windows®
environment.


9


We also
offer the MICROS Retail Home Office Business Intelligence Suite for retail
stores, which includes loss prevention (marketed under the trade name “XBR”),
customer relationship management, gift cards (marketed under the trade name
“Relate”), and audit control (marketed under the trade name “Balance”). We also
offer XBR to our restaurant customers via MICROS provided centrally hosted or
self-hosted environment.





All of these applications and systems
run on both industry standard PCs and specially designed PC-based POS terminals
manufactured by IBM, MICROS, Dell, and NCR.





MICROS Retail offers an eCommerce
platform with extensive features, marketed under the trade name Open Commerce
Platform, as well as creative and design services to help customers create
custom websites.





MICROS Retail also offers software and
services that enable a retailer to manage customer purchase transactions across
multiple touch-points.  Specifically, these applications and services
enable a merchant to efficiently handle customer transactions from a store, the
Internet, catalog phone-in orders, call centers, kiosks, and wireless
devices.  The solutions enable the merchant to provide the customer
with full transparency through the purchasing process, e.g., research from one
channel, purchasing from a second channel and implementing a return or exchange
through a third channel.





MICROS Retail also has developed and
distributes Creations, a fully integrated lifecycle management and supply chain
traceability product.  Lifecycle management refers to the ability to
track and manage inventory from the manufacturer through the point of
distribution.  Creations customers, which are mostly located in the
U.K. include accounts such as Tesco, Sainsbury’s, Wm Morrison, Bodyshop, and
Booker.  The product has been introduced into North America with
primary users being Sobeys and Fresh and Easy retail chains.





Services





We provide a wide range of services to
our customers.  Our services include system installation, operator and
manager training, on-site hardware maintenance, customized software development,
application software support, credit card software support, systems
configuration, network support and professional consulting.  We also
offer software-hosting capabilities.


We
provide field hardware and software maintenance via a combination of direct and
indirect channels – authorized U.S. dealers and international
distributors.  The field hardware maintenance is provided mainly to
customers using MICROS POS hardware and software systems.  Depot field
maintenance is also provided.  We sometimes contract with PC
manufacturers to provide either first or second line support for PC servers for
hotel, restaurant and retail customers.





We operate several help desks around
the world.  There is a 24 hours per day, seven days a week (24/7) help
desk in our Columbia, Maryland headquarters.  We also maintain other
24/7 regional and product specific help desks in the following
locations:




·
              Galway,
      Ireland – primarily for customers in Europe, Africa, and the Middle
      East
 ·
              Buenos
      Aires, Argentina – primarily for customers in Latin
  America
 ·
              Singapore
      – primarily for customers in the Asia-Pacific
  region
 ·
              Cleveland,
      Ohio – for MICROS Retail products and
services.
 ·
              Scottsdale,
      Arizona – for the Hospitality Solutions International
    products
 ·
              Westborough,
      Massachusetts – for the CommercialWare and eOne
  products
 ·
              Ann Arbor, Michigan – for MICROS’s Fry, Inc.
      subsidiary





We also operate other more limited help
desk operations, including the myfidelio.net and Fidelio Cruise support desks in
Hamburg, Germany, the Fidelio Cruise support desk in Fort Lauderdale, Florida,
and the JTECH help desk in Boca Raton, Florida.





The help desks receive support calls
from customers and either address them telephonically or on-line, or, where
appropriate, dispatch a service call to the appropriate local service
provider.  Internationally, in-country support is provided by the
local sales entity, which may be a MICROS subsidiary or an authorized
independent distributor.  Our corporate customer support center
provides back-up support for our regional centers in Buenos Aires, Singapore,
and Galway, and our research and development operation in Naples, Florida,
provides higher-level support for the hotel software products.  The
regional support centers also provide back-up support and guidance for local and
in-country support providers.





We operate data centers in Ashburn and
Manassas, Virginia, Chicago, Frankfurt, Buenos Aires, and Singapore in
conjunction with third-party vendors to serve as hosting centers for customers
deploying our various hosted and application service products.  We
view hosting as an important strategic thrust of our business as demand shifts
from applications being deployed on premise of customers to centrally hosted
applications.





We offer web site development and
portal management for retail customers through MICROS Retail’s Fry and eOne
Group divisions.  Specifically, we can develop and manage a customer’s
web site for ordering, sales promotion, and marketing.


10


Our TIG Global subsidiary offers
Internet based marketing services, mainly to hotels.





Services are a critical component of
our business.  Service revenue, which is comprised of software
database and configuration programming, installation, training, in-field
support, help desk, custom software development and maintenance service
contracts, constituted approximately 66.4% ($607.2 million) of our total revenue
in fiscal year 2010 compared to approximately 62.2%  ($565.0 million)
of our total revenue in fiscal year 2009 and approximately 55.5% ($529.4
million) in fiscal year 2008.





Maintenance service contracts, which
include field service, application hosting, depot hardware maintenance, and
software support, are a significant component of our service
offerings.  Revenues for service maintenance contracts were
approximately $354.7 million for fiscal year 2010, approximately $312.8 million
for fiscal year 2009 and, approximately $293.9 million for fiscal year
2008.  Service maintenance contract revenue is included in our service
revenue (described above).





SALES,
MARKETING AND DISTRIBUTION





We consider our direct and indirect
global distribution network to be a major strength and competitive
advantage.  This network has been built over the past 33
years.  We (including our various subsidiaries), our U.S.-based
dealers, and our international distributors work closely together in seeking to
identify new customers, products, services and markets, as well as to serve our
existing customer base with enhanced products and services.





Our restaurant products and services
are sold primarily through three channels: (i) the Direct Sales Channel,
comprised of our sales distribution network consisting of approximately 82
wholly or majority-owned subsidiaries and branch offices; (ii) the MICROS Major
Accounts program directed to designated regional, national, and international
customers; and (iii) the Indirect Sales Channel, an independent sales
distribution network consisting of approximately 51 domestic dealersand 37 international
distributors.





Our hotel products and services are
sold through our direct sales force and through international distributors, many
which also sell our restaurant products and services.





Our
retail products and services are sold primarily through our direct sales force
in the United States and numerous company owned international
subsidiaries.  MICROS Retail has several distributors which sell
certain of its products.





Foreign sales, including export sales
from the United States, accounted for approximately  51.9%
(approximately $474.5 million) of our total revenue in fiscal year 2010, 52.1%
(approximately $473.2 million) of our total revenue in fiscal year 2009 and
56.3% (approximately $537.5 million) in fiscal year 2008.





We also sell products used in the
provision of maintenance services, including miscellaneous spare parts, printer
ribbons, paper, printer cartridges, other consumable media supplies, network
products, and printers.  We offer these supplies through our direct
sales offices, our dealers and distributors, and, in North America, through a
telephone and on-line service called POS Depot.





RESEARCH
AND DEVELOPMENT





Our products are subject to
technological change.  Accordingly, we must continually devote our
efforts toward upgrading our existing products and developing innovative systems
incorporating new technologies.  Our products, as well as those of our
competitors, have offered an increasingly wider range of features and
capabilities.





Locations





We conduct our core restaurant POS
product software and hardware development, and also development of our
Internet-based restaurant software products, at our Columbia, Maryland corporate
headquarters.  To facilitate rapid responses for various regional
application needs, we also conduct restaurant POS software development in
regional offices located in Sydney, Australia; Neuss, Germany; and
Singapore.  Our HSI division conducts restaurant POS product research
and development in its facility in Scottsdale, Arizona. JTECH conducts its
development at its Boca Raton, Florida location.  In addition, we
monitor and evaluate software and hardware products and designs created by third
parties, and we have acquired and may in the future acquire ownership,
licensing, or distribution rights to some of those products and designs. We
contract the manufacturing of our POS terminals to the Venture Group of
Singapore.  Venture Group also provides certain hardware design
services to us.  Our internal hardware design team participates in the
design and development of these units.  This team also provides
oversight of the manufacturing process as a means of insuring adherence to
quality standards.  See also “Manufacturing and Supplies,”
below.





Development of our hotel property
management systems, sales and catering systems, central reservation systems, and
myfidelio.net, is primarily conducted in Naples, Florida.  Additional
development on the Fidelio Version 8.0 suite of hotel products is conducted in
Neuss, Germany.  We maintain close relationships with major software
operating and database companies like Oracle, IBM, Novell, Sybase, and
Microsoft.  These relationships enable us to incorporate software
changes from these companies into our products.  Our international
offices may also conduct specific product enhancement activities to meet
specific interface needs, local requirements, and specific customer
requests.


11


Product development for MICROS Retail’s
POS products is conducted in Cleveland, Ohio; MICROS Retail’s other products and
services are handled through offices in Westborough, Massachusetts, and Omaha,
Nebraska.  MICROS’s Fry, Inc. subsidiary conducts its web site and
ecommerce application development in Ann Arbor, Michigan.  MICROS’s
Advance Retail Solutions subsidiary conducts product development in Monterrey,
Mexico.  MICROS’s Red Sky Retail units conducts its development in
Nottingham, England.





R&D
facilities





The following table shows the location
of our main research and development facilities and the products addressed at
each facility.





Location
                  
                  ProductsColumbia,
      Maryland
                  
                  Restaurant
      POS software and hardware, Internet-based restaurant
      applicationsSydney,
      Australia
                  
                  Additional
      restaurant POS software developmentNeuss,
      Germany
                  
                  Additional
      restaurant POS software development; Fidelio Version 8.Scottsdale,
      Arizona
                  
                  Restaurant
      POS software (HSI only)Boca
      Raton, Florida
                  
                  Paging
      software and hardware developmentNaples,
      Florida
                  
                  Hotel
      PMS software and other modules, also Internet-based hotel
      applicationsCleveland,
      Ohio
                  
                  Retail
      POS software developmentWestborough,
      Massachusetts
                  
                  Retail
      Loss Prevention software development, cross-channel software
      developmentOmaha,
      Nebraska
                    Nottingham,
      England
                  
                  Retail
      web site development and management services
                    Retail
      life cycle management and supply chain traceability
    productsAnn
      Arbor, Michigan
                  
                  Retail
      web site and ecommerce
development





Expenses





Research and development (“R&D”)
expenses consist primarily of labor costs less capitalized software development
costs.  A summary of R&D expenditures for the fiscal years ended
June 30, 2010, 2009, and 2008 is set forth in the following table:





(in thousands)
                            
                            2010
                            
                            
                            2009
                            
                            
                            2008Total
      R&D incurred
                            
                            $
                            44,672
                            
                            
                            $
                            43,100
                            
                            
                            $
                            42,048Capitalized
      software development costs
                            
                            
                            (2,443
                            )
                            
                            
                            (470
                            )
                            
                            
                            (1,919
                            )Total
      R&D expenses
                            
                            $
                            42,229
                            
                            
                            $
                            42,630
                            
                            
                            $
                            40,129





COMPETITION





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





Competitors in the restaurant POS
marketplace include: (i) full service providers (hardware, software and
services), such as NCR, Panasonic, Par Technology, Radiant Systems, Sharp and
Torex Retail; (ii) suppliers that mainly provide software, such as Agilysys,
Positouch and Xpient Solutions; and (iii) providers that mainly provide
hardware, such as Casio, Dell, IBM, NCR and Wincor-Nixdorf.  There are
also numerous other companies that license their POS-oriented software with
PC-based systems in regional markets around the world.





JTECH’s competitors include Long Range
Systems and certain distributors of Motorola paging products.





Many of our competitors in the hotel
systems market are companies with software designed to run on industry standard
PCs.  These companies may have several hotel related software
products, or simply one product for a particular niche.  These
competitors include Agilysys, Amadeus Hospitality, Multi-Systems, Newmarket
(sales and catering product only), Northwind, Par Technology (Springer-Miller),
Protel and Softbrands (infor).  Our products also compete with
property management systems developed and marketed by major hotel chains for
their corporate-owned operations and franchisees.  Internationally, we
generally face smaller, regionally-oriented competitors.


12





The central reservation system market
is highly fragmented and competitive.  Many hotel chains and allied
reservation groups use their own customized central reservation
systems.  In addition to these internally developed products, our CRS
products compete with those offered by some of our PMS competitors, e.g.,
Northwind and Par Technology, and with those offered by specialized central
reservation providers, e.g., Amadeus, Pegasus, Trust International/TravelPort,
and Vantis Corporation.





TIG Global competitors include Synxis
(subsidiary of Sabre) and TravelClick. TIG Global currently competes mainly in
North America.





Competitors in the retail market
include Epicor (through its CRS Retail Systems and NSB divisions), Escalate
Retail, JDA Software, Oracle (through its 360 Commerce division), and SAP
(through its Triversity division) among many others.  Internationally,
MICROS Retail generally competes with smaller, regionally-oriented competitors.
Fry competes against several companies such as GSI Commerce and Art Technology
Group.





MANUFACTURING
AND SUPPLIES





Our manufacturing program seeks to
maintain flexibility and reduce costs by outsourcing key products and
subassemblies.  Our primary POS platforms, Workstation 5A, Workstation
5, Workstation 4 LX, and 2010 Workstation, are manufactured by the Venture
Group.





Our contract with Venture Group is
subject to automatic annual renewal unless either party elects to terminate the
agreement at the end of the term then in effect by providing notice to the other
party at least three months before the end of such term.  In addition
to other termination rights specified in the contract, either party may
terminate the contract for convenience (i.e., with or without cause) by
providing 120 days’ prior notice of termination to the other
party.  While historically we have enjoyed very good relations with
Venture Group, if it were to exercise its non-renewal or termination rights
under the Agreement or otherwise cease to manufacture our products, we believe
we could readily replace Venture Group with other contract manufacturers or
resell appropriate third party hardware products in lieu of those manufactured
by Venture Group.





Venture Group performs certain warranty
and post-warranty repairs on equipment that it manufactures for MICROS at its
facilities in Singapore and in Lowell, Massachusetts.  In addition, we
maintain a repair capability for certain products in our distribution facility
in Hanover, Maryland.  We also perform repairs at certain of our
direct and subsidiary offices worldwide, and, additionally, we contract with
third parties to provide repair services.





JTECH’s paging and related products are
largely manufactured by several contract manufacturers in China and Venture
Group.  JTECH conducts final assembly of its paging and related
products, including the installation of the applicable software, in its Boca
Raton, Florida facility.





Material sourcing is based on
availability, service, cost, delivery and quality of the purchased items from
domestic and international suppliers.  Some items are custom
manufactured to our design specifications.  We believe that the loss
of our current sources for components would not have a material adverse effect
on our business since other sources of supply are generally
available.  We believe that we maintain good relationships with our
suppliers.





EMPLOYEES





As of June 30, 2010, we employed 4,646
full-time employees.  The table below presents employees by
geographical region, expressed both as a headcount and as a percentage of total
employees:





By Geographical Region
                
                North
                  America
                
                
                Europe/Africa
                  Middle East
                
                
                Asia/
                  Pacific
                
                
                Latin
                  America
                
                
                TotalEmployees
                
                
                2,427
                
                
                
                1,478
                
                
                
                512
                
                
                
                229
                
                
                
                4,646As
      % of total
                
                
                52.2
                %
                
                
                31.8
                %
                
                
                11.0
                %
                
                
                5.0
                %
                
                
                100.0
                %





About 850 employees (35%) of the North
America-based employees work out of our three Maryland locations: our
headquarters building in Columbia, Maryland, our Hanover, Maryland distribution
center, and our TIG Global subsidiary in Chevy Chase, Maryland.





The table below presents information,
as of June 30, 2010, regarding employees organized by functional
skills:





By Functional Skills
                
                Sales &
                  Marketing
                
                
                Customer
                  Support
                
                
                Product
                  Development
                
                
                Admin./
                  Finance
                
                
                Operations
                
                
                TotalEmployees
                
                
                2,438
                
                
                
                1,195
                
                
                
                590
                
                
                
                324
                
                
                
                99
                
                
                
                4,646As
      % of total
                
                
                52.5
                %
                
                
                25.7
                %
                
                
                12.7
                %
                
                
                7.0
                %
                
                
                2.1
                %
                
                
                100.0
                %


13


We are not a party to any collective
bargaining agreements.  None of our employees are represented by a
labor union, except in those countries where representation is mandated by law,
such as France, Germany and Spain.  We use certain suppliers whose
employees may be represented by labor unions.  We believe that we
maintain good relations with our employees.





EXECUTIVE
OFFICERS OF THE REGISTRANT





Name
                      
                      PositionA.
      L. Giannopoulos
                      
                      Chairman,
      President and Chief Executive OfficerBernard
      Jammet
                      
                      Executive
      Vice President, Latin American RegionJennifer
      Kurdle
                      
                      Executive
      Vice President, Chief Administrative OfficerKaweh
      Niroomand
                      
                      Executive
      Vice President, Europe-Africa-Middle East regionThomas
      L. Patz
                      
                      Executive
      Vice President, Strategic Initiatives, and General
  CounselStefan
      Piringer
                      
                      Executive
      Vice President, Asia-Pacific regionPeter
      J. Rogers, Jr
                      
                      Executive
      Vice President, Investor Relations and Business
  DevelopmentCynthia
      A. Russo
                      
                      Executive
      Vice President and Chief Financial
Officer





A. L. Giannopoulos, 70, has
been the Company’s President and Chief Executive Officer since May 1993, and the
Company’s Chairman of the Board since April 2001.  He has been a
Director of the Company since March 1992.  Before 1992, Mr.
Giannopoulos served in a variety of positions for Westinghouse, most recently as
General Manager of the Westinghouse Information and Security Systems
Divisions.  Mr. Giannopoulos is a graduate of Lamar University with a
Bachelor of Science degree in Electrical Engineering.




Bernard Jammet, 52, has been
the Company’s Executive Vice President, Latin American Region since January
2001.  Previously, Mr. Jammet served the Company in various
capacities.  He first joined the Company in July
1984.  Before joining the Company, Mr. Jammet was employed with the
former MICROS distributor for France.  Mr. Jammet is a graduate of the
Hotel School of Lausanne, Switzerland, with a Masters degree in Hotel
Administration.




Jennifer Kurdle, 43, has been
the Company’s Executive Vice President, Chief Administrative Officer since July
2008.  From 2005 until 2008, Ms. Kurdle was the Company’s Executive
Vice President, Leisure & Entertainment, and held the position Vice
President, Leisure & Entertainment from 2000 to 2005.  Before
2000, Ms. Kurdle served the Company various capacities.  Ms. Kurdle
first joined the Company in 1990.  Ms. Kurdle is a graduate of
Fairmont State University.




Kaweh Niroomand, 57, has
been the Company’s Executive Vice
President, Europe-Asia-Middle East region since 2009. From 2005 until 2009, Mr.
Niroomand was the President of MICROS Europe, Africa and Middle East
(EAME).  In prior positions with MICROS, Mr. Niroomand was Executive Vice
President, EAME and Managing Director of MICROS-Fidelio Software Deutschland
GmbH.  Mr. Niroomand first started with Fidelio Software GmbH in
1993.  Mr. Niroomand is a graduate of the Technical University in Berlin
with a degree in Civil Engineering.




Thomas L. Patz, 50, has been
the Company’s Executive Vice President, Strategic Initiatives, and General
Counsel since January 2000.  Previously, Mr. Patz served the Company
in various legal capacities.  Mr. Patz first joined the Company in
August 1995.  Mr. Patz is a graduate of Brown University and the
University of Virginia School of Law.  Mr. Patz is a member of the
Maryland Bar.




Stefan Piringer, 45,has been the Company’s
Executive Vice President, Asia-Pacific region, since 2009.  From 1998 until
2009, Mr. Piringer was President Asia-Pacific region for the Company.
 Previously, Mr. Piringer served the Company in various sales &
marketing capacities.  Mr. Piringer first joined the Company in
1994.  Mr. Piringer is a graduate of the Tourism & Hotel Management
School of the Chamber of Commerce of Vienna, Austria, and holds the degree of
Hotelkaufmann.




Peter J. Rogers, Jr., 55, has
been the Company’s Executive Vice President of Investor Relations and Business
Development since November 2007.  From 1996 through November 2007, Mr.
Rogers was the Company’s Senior Vice President of Investor Relations and
Business Development. Previously, Mr. Rogers served the Company in various
marketing and business management capacities.  Mr. Rogers joined the
Company in 1987.  Mr. Rogers is a graduate of the University of
Pennsylvania and New York University Stern Graduate School of
Business.




Cynthia A. Russo, 40, has been
the Company’s Executive Vice President and Chief Financial Officer since April
1, 2010.  From November 2007 until April 2010, Ms. Russo was the
Company’s Senior Vice President and Corporate Controller.  Ms. Russo
previously served the Company in various capacities.  Ms. Russo first
joined the Company in January 1996.  Ms. Russo is a graduate of James
Madison University.  She is a Certified Public Accountant and a


Certified
Internal Auditor.





FOREIGN
SALES AND FOREIGN MARKET RISK





We recorded foreign sales, including
exports from the United States, of approximately $474.5 millionduring fiscal year 2010
to customers located primarily in Europe, Asia and Latin
America.  Comparable sales in fiscal years 2009 and 2008 were
approximately $473.2 millionand $537.5 million,
respectively.  See Note 17 “Segment Information” in the Notes to
Consolidated Financial Statements as well as Item 7 (Management’s Discussion and
Analysis of Financial Condition and Results of Operations) in this report for
additional geographic data.


14





Our international business and presence
expose us to certain risks, such as currency, interest rate and political
risks.  With respect to currency risk, we transact business in
different currencies primarily through our foreign subsidiaries.  The
fluctuation of currencies impacts sales and
profitability.  Frequently, sales and the costs associated with those
sales are not denominated in the same currency.





We transacted business in 39 currencies
in fiscal years 2010 and 2009 compared to 36 in fiscal year 2008.  The
relative currency mix over the past three fiscal years was as
follows:





Fiscal Year Ended June 30,% of Reported Revenues
                                      
                                      
                                      Exchange RatesRevenues by currency(1):
                                      
                                      2010
                                      
                                      
                                      2009
                                      
                                      
                                      2008
                                      
                                      
                                      2010
                                      
                                      
                                      2009
                                      
                                      
                                      2008United
      States Dollar
                                      
                                      
                                      53
                                      %
                                      
                                      
                                      53
                                      %
                                      
                                      
                                      49
                                      %
                                      
                                      
                                      1.0000
                                      
                                      
                                      
                                      1.0000
                                      
                                      
                                      
                                      1.0000European
      Euro
                                      
                                      
                                      21
                                      %
                                      
                                      
                                      21
                                      %
                                      
                                      
                                      22
                                      %
                                      
                                      
                                      1.2229
                                      
                                      
                                      
                                      1.4029
                                      
                                      
                                      
                                      1.5744British
      Pound Sterling
                                      
                                      
                                      7
                                      %
                                      
                                      
                                      7
                                      %
                                      
                                      
                                      9
                                      %
                                      
                                      
                                      1.4939
                                      
                                      
                                      
                                      1.6454
                                      
                                      
                                      
                                      1.9919Singapore
      Dollar
                                      
                                      
                                      2
                                      %
                                      
                                      
                                      1
                                      %
                                      
                                      
                                      1
                                      %
                                      
                                      
                                      0.7146
                                      
                                      
                                      
                                      0.6904
                                      
                                      
                                      
                                      0.7350Australian
      Dollar
                                      
                                      
                                      2
                                      %
                                      
                                      
                                      2
                                      %
                                      
                                      
                                      2
                                      %
                                      
                                      
                                      0.8416
                                      
                                      
                                      
                                      0.8058
                                      
                                      
                                      
                                      0.9587Swiss
      Franc
                                      
                                      
                                      1
                                      %
                                      
                                      
                                      2
                                      %
                                      
                                      
                                      2
                                      %
                                      
                                      
                                      0.9279
                                      
                                      
                                      
                                      0.9203
                                      
                                      
                                      
                                      0.9788Canadian
      Dollar
                                      
                                      
                                      1
                                      %
                                      
                                      
                                      1
                                      %
                                      
                                      
                                      2
                                      %
                                      
                                      
                                      0.9393
                                      
                                      
                                      
                                      0.8597
                                      
                                      
                                      
                                      0.9806Mexican
      Peso
                                      
                                      
                                      1
                                      %
                                      
                                      
                                      1
                                      %
                                      
                                      
                                      2
                                      %
                                      
                                      
                                      0.0773
                                      
                                      
                                      
                                      0.0759
                                      
                                      
                                      
                                      0.0970Sweden
      Krona
                                      
                                      
                                      1
                                      %
                                      
                                      
                                      1
                                      %
                                      
                                      
                                      1
                                      %
                                      
                                      
                                      0.1282
                                      
                                      
                                      
                                      0.1296
                                      
                                      
                                      
                                      0.1660All
      Other Currencies(2)
                                      
                                      
                                      11
                                      %
                                      
                                      
                                      11
                                      %
                                      
                                      
                                      10
                                      %
                                      
                                      
                                      0.1469
                                      
                                      
                                      
                                      0.1433
                                      
                                      
                                      
                                      0.1645Total
                                      
                                      
                                      100
                                      %
                                      
                                      
                                      100
                                      %
                                      
                                      
                                      100
                                      %





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


(2)
            The
      “% of Reported Revenue” for “All Other Currencies” is calculated based on
      the weighted average twelve month exchange rates for all other currencies.
      The “Exchange Rates to U.S. Dollar” for ‘All Other Currencies’ represents
      the weighted average June 30, 2010 exchange rates for all other
      currencies.  Weighting is based on the twelve month fiscal year
      revenue for each country or region whose currency is included in the “All
      Other Currencies” category.





A 10% increase or decrease in the value
of the Euro and British pound sterling in relation to the U.S. dollar in fiscal
year 2010 would have affected total revenues by approximately $25.1 million, or
2.7%.  The sensitivity analysis assumes a weighted average 10% change
in the exchange rate during the year with all other variables being held
constant.  This sensitivity analysis does not consider the effect of
exchange rate changes on either cost of sales, operating expenses, or income
taxes, and accordingly, is not an indicator of the effect of potential exchange
rate changes on our attributable to MICROS Systems, Inc. common
shareholders.





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





Finally, we are subject to, among
others, those environmental and geopolitical risks, and economic, pricing,
financial, and other risks described in Item 1A, “Risk Factors.”





PATENTS
AND TRADEMARKS





We hold six patents through our JTECH
subsidiary.  In general, we believe that, historically, our
competitive position has not been materially dependent upon patent
protection.  The technology used in the design and manufacture of most
of our hardware products is largely licensed or purchased from third
parties.  With respect to our software products, we have historically
relied on nondisclosure agreements and applicable U.S. and foreign copyright and
trademark laws for protection.  In the U.S. and in most other
countries, we believe that applicable law has provided and will continue to
provide us with sufficient protection.





There are risks that third party
entities, including competitors, could attempt to misappropriate our
intellectual property.  Given these potential risks, we have
implemented procedures to monitor misappropriation of its intellectual
property.  If a misappropriation is detected, we pursue appropriate
legal action when we determine that such action is appropriate.


“MICROS”,
“Fidelio”, “Datavantage”, “CommercialWare”, “JTECH”, “Go2Team”, “InStorePlus”,
“Ovation”, “OPERA”, “e7”, “Store21”, “Tradewind”, “Xstore”, “XBR”, “Premise
Pager System”, “TableAlert”, “ServAlert”, “GuestAlert”,
“HostAlert”,  “CommPass”, “CWDirect”, “CWCollaborate”, “CWStore”,
“CWLocate”, “CWAnalytics”, “CWData”, “CWIntegrate”, “FRY”, and “Open Commerce
Platform” are registered or unregistered trademarks or servicemarks of the
Company or its subsidiaries.  We also own numerous other trademarks
and servicemarks.  This Annual Report on Form 10-K also contains
trademarks, trade names and servicemarks of other companies that are the
property of their respective owners.


15





FLUCTUATIONS
AND CUSTOMERS





Our quarterly operating results have
varied in the past and may vary in the future depending upon various factors,
including the timing of new product introductions, changes in our pricing and
promotion policies and those of our competitors, market acceptance of new
products and enhanced versions of existing products and the capital expenditure
budgets of our customers.  Political uncertainty and international
events that often are unpredictable, e.g., terrorist attacks, natural disasters,
and the volatile and unpredictable political climate in the Middle East, are
expected to continue to adversely impact travel and tourism and therefore our
quarterly operating results.In addition, over the
last two fiscal years, world macroeconomic conditions and tightened credit
markets have resulted in reduced demand from customers
generally.  These conditions have made it harder for, and in some
cases may have prevented, some customers from obtaining financing for intended
purchases.  We believe that these economic conditions have resulted in
reduced demand for our products and services.





Historically, our business has been
affected by seasonal trends.  For example, the European summer
holidays tend to lower our sales volume in the European countries during our
first fiscal quarter, as compared to other quarters.  We also
experience a stronger than average sales volume for the retail products and
services in our second fiscal quarter due to the holiday
season.  Additionally, with the relative slowdown in corporate buying
at the beginning of the calendar year, which is our third fiscal quarter,
seasonal weakness for the third quarter ending March 31 has been
experienced.  Therefore, we believe that sequential quarter-to-quarter
historic comparisons of our results are not necessarily meaningful or indicative
of future performance.





No single customer accounts for 10% or
more of our consolidated revenues.  During the three fiscal years
ended June 30, 2010, we have been a party, directly and indirectly, to certain
contracts with the U.S. Federal Government, which contracts contained standard
termination for convenience clauses.  Our U.S. Government related
revenue was approximately 0.5%, 0.2%, and 0.3% of our total consolidated revenue
for the fiscal years ended June 30, 2010, 2009, and 2008,
respectively.  We do not anticipate any material adverse financial
impact if the U.S. Government elected to exercise its rights under a termination
for convenience clause.





ENVIRONMENTAL
MATTERS





We believe that we are in compliance in
all material respects with applicable environmental laws and do not anticipate
that environmental compliance will have a material effect on our future capital
expenditures, earnings or competitive position with respect to any of our
operations.





BACKLOG





We generally have a backlog of
approximately three months revenue, substantially all of which is cancelable at
any time before shipment of hardware and software or rendering of
services.  As of June 30, 2010, 2009 and 2008, the backlog totaled
approximately $338.7 million, $224.0 million and $204.6 million,
respectively.  Historically, only an immaterial portion of the backlog
existing as of the first day of the fiscal year does not result in recognizable
revenue in that fiscal year.





AVAILABLE
INFORMATION





We file with the U.S. Securities and
Exchange Commission (“SEC”) annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, proxy statements, and other documents as
required by applicable law and regulations.  The public may read and
copy any materials that we file with the SEC at the SEC’s Public Reference Room
at 100 F Street, N. E., Washington, DC 20549.  The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330 (1-800-732-0330).  The SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the
SEC.  We also maintain an Internet site
(http://www.micros.com).  We make available free of charge on or
through our Internet website our annual reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to these reports, as
soon as reasonably practicable after electronically filing those documents with
or furnishing them to the SEC.  The information on our website is not
incorporated into and is not a part of this report.





ITEM
1A.  RISK FACTORS





There are a number of risks to which we
are subject.  These risks include the following:





1.
              ENVIRONMENTAL AND GEOPOLITICAL
      RISKS.While we do not sell our products and services
      directly to consumers, changes in consumer habits in response to
      environmental or geopolitical risks affect demand for our products and
      services by the hospitality and tourism
  industries.


·     Our business is very sensitive to the
threat of terrorism and political uncertainty.  As the
hospitality and tourism industries we serve are highly sensitive to consumer
sentiments caused by world events, we are very vulnerable to downturns in
customer buying habits associated with the threat of terrorist attacks and
uncertain political climates, such as those existing in the Middle East and
parts of Asia.


·     Our business is very sensitive to
environmental and health disasters. Actual or anticipated
environmental disasters and epidemics, including for example, hurricanes,
tsunamis, and disease will deter and delay purchases of our products by
customers, as concerns about potential or anticipated instances of environmental
or health disasters tend to suppress travel and
tourism.  Environmental disasters may also adversely affect our
operations in the distressed areas.


16


·     Higher oil and gas prices worldwide
could have a material adverse impact on the travel and tourism industries, and
indirectly, on our business.  Material increases in oil and gas
prices tend to reduce discretionary spending by consumers, such as on travel and
dining, as well as on retail spending generally.  Reductions in
discretionary spending by consumers adversely affect our customers and,
indirectly, our business.  Moreover, increases in oil and gas prices
also directly adversely affect our customer base in other ways.  For
example, gas price increases can result in higher ingredient and food costs for
our restaurant customers.


· We maintain offices in certain parts
of the world that are subject to economic instability, political unrest, and
terrorism, such as the Middle East and Thailand.




2.
            ECONOMIC,
      PRICING AND FINANCIAL RISKS.


·     We are subject to the variability of
world economies.Since a substantial portion of our business
is conducted in foreign countries, a downturn in the economies of foreign
countries could adversely affect our financial results.  While, under
certain circumstances, reliance on foreign operations can have a moderating
impact (as one region’s improving conditions may offset another region’s
declining conditions), our foreign businesses nonetheless add a degree of
uncertainty to our planning and forecasting processes.


·     We are subject to the global economic
crisis.Starting in the summer of 2008, world macro-economic
conditions materially worsened, resulting in the failure of several key global
financial services providers, and a virtual freezing of the credit
markets.  These economic conditions resulted in reduced demand from
customers and the inability of some customers to secure financing for intended
purchases.  While many economists have noted signs of slow recovery,
and credit markets are improving, the current economic weakness may continue to
result in the reduced demand for our products and services.  These
economic conditions may also increase our bad debts despite additional
collection efforts.


·     Ourquarterly financial results 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.  We expect the customers with whom we do the largest amount
of business to vary from year to year as a result of the timing of the rollout
of each customer’s system.  Further, if a customer delays or
accelerates its delivery requirements, or if a product’s completion is delayed
or accelerated, revenues that we may have expected in a given quarter could be
deferred or accelerated into subsequent or earlier quarters,
respectively.  These events could have a meaningful effect on our
quarterly results.


·     Our ability to establish pricing is
subject to rapidly changing market and competitive conditions.To be
competitive and to avoid losing business on the basis of price, we must evaluate
our pricing routinely.  There are instances where we may have to
reduce our pricing to obtain business.  Market forces have and will
continue to place pressure on our gross margins and overall
profitability.


·     Our gross margins will vary from
quarter to quarter based upon product mix.  Product mix can
affect our operating results.  For example, as we enjoy a higher gross
margin on software than on hardware, our overall gross margin will vary
depending upon the percentage of software licensed and the percentage of
hardware sold each quarter.  The difficulty in predicting product mix
on a quarter-to-quarter basis results in uncertainty in projecting gross margin,
and we have experienced a degree of variability in our gross margins on a
quarter-to-quarter basis as a result of changes in product mix.


·     Our non-major account business is
difficult to predict.  Our major account customers (generally
those customers who operate 50 or more locations) have longer sales cycles and
deployments; our non-major account sales have much shorter sales cycles and
shorter deployments.  As a significant portion of our business
involves non-major accounts, there is inherent difficulty in predicting buying
patterns.  Accordingly, it is much harder to appropriately staff and
prepare for fluctuations in buying demand for non-major-account
customers.  This can result in inefficiencies that adversely affect
our operating results.


· Some of the advanced systems we sell
are very complex and require a high level of technical sophistication, which may
result in increased costs that adversely affect our operating
results.


·     We are subject to certain material
cost increases that may be out of our control.  While we
attempt to control third party costs, we have little or no control over certain
material expenses, such as health care costs (which are generally
experience-based) and costs of compliance with new
legislation.  Significant increases in any of these expenses could
adversely affect our operating results.


·     We are subject to fluctuations in
foreign currencies and exchange rates.  Because we conduct
significant portions of our business in foreign currencies, we experience
exchange rate fluctuations that can have a significant impact on our reported
results.  For example, as much of our European business is transacted
in Euros, our revenue on a consolidated basis will decline if the Euro weakens
relative to the U.S. Dollar and increase if the Euro strengthens relative to the
U.S. Dollar.


17


·     As a publicly traded company, our
stock price is subject to certain market trends that are out of our control and
that may not reflect our actual operating performance.  We can
experience short-term increases and declines in our stock price due to factors
other than those specific to our business, such as economic news or other events
generally affecting the trading markets.


·     We have encountered risks associated
with maintaining large cash balances.  While we have attempted
to invest our cash balances in investments generally considered to be relatively
safe, we nevertheless confront credit and liquidity risks.  For
example, the Company has invested some of its cash in auction rate securities,
which proved to be illiquid when the financial resale markets contracted in
February 2008.  Not only may those securities continue to be illiquid,
but there have been some charges taken due to credit losses resulting from our
investments in two of the auction rate securities, and there may be additional
charges taken for losses in the future related to our investments in auction
rate securities.  Also, bank failures could result in reduced
liquidity or the actual loss of money held in deposit accounts in excess of
federally insured amounts, if any.





3.
            TECHNOLOGY
      RISKS.


· Our customers’ requirements are
increasingly sophisticated.


·     The development of software is an
inherently difficult process that may result in software bugs that adversely
impact a customer’s business.  While we have a testing and beta
program and protocol that we implement before the general release of any
product, such processes cannot guarantee that the released software will not
have any bugs.  Our business could be adversely affected if these
problems are significant and not readily resolvable.


·     The manufacturing of our hardware
platform is performed primarily by a Singapore based third party contract
manufacturer, Venture Group of Singapore (fka GES Singapore) (“Venture
Group”).  While we believe we have a very good relationship
with Venture Group, and while we have not experienced any material manufacturing
problems with Venture Group, we cannot be certain that the relationship will
remain in force, nor can we be certain that Venture Group will not experience
labor or manufacturing challenges in the future, which may include claims of
patent infringement with respect to key product
components.  Additionally, Venture Group procures many of its
components from other third parties that could experience manufacturing or labor
issues.  We believe that, if our relationship with Venture Group were
to terminate, we could readily replace Venture Group with other contract
manufacturers or resell appropriate third-party hardware products in lieu of
those manufactured for us by Venture Group.  However, any disruption
or interruption of the supply of hardware products from Venture Group could
adversely affect our business in the short run.


·     Large customized deployments may be
difficult and may result in cost overruns that are not
recoverable.  We have certain contracts under which we are
required to provide systems and services at a fixed price.  We may be
contractually required to absorb costs that may not be recoverable if we
underestimate the amount of work required or if we encounter unanticipated
technical issues.  This risk can be pronounced given the complexity of
some of the systems we install and the size and scope of some of the
deployments.  Unanticipated costs that are not recoverable could
adversely affect our operations.


·     Our investment in certain
technologies may prove to be unsuccessful and may delay our focus on more
promising technologies.  As we invest significantly in research
and development, there is a risk that we will pursue technology that we
ultimately determine is not marketable or does not achieve the desired
solution.  In such an event, we may be required to write off our
investment, which could have an adverse impact on our operating
income.  Moreover, if we are delayed in deploying better technologies,
our business also could be adversely affected.


·     Actual or perceived security
vulnerabilities in our software products may result in reduced sales or
liabilities.  Our software may be used in connection with
processing sensitive data (e.g., credit card numbers), and is sometimes used to
store such data.  It may be possible for the data to be compromised if
our customer does not maintain appropriate security procedures.  In
those instances, the customer may attempt to seek damages from
us.  While we believe that all of our current software complies with
applicable industry security requirements and that we use appropriate security
measures to reduce the possibility of breach through our support and other
systems, we cannot assure that our customers’ systems will not be breached, or
that all unauthorized access can be prevented.  If a customer, or
other person, seeks redress from us as a result of a security breach, our
business could be adversely affected.


·     Hosting of software applications
presents increased security and liability risks.  As we expand
our software hosting capabilities and offer more of our software applications to
our customers on a hosted basis, our responsibility for data and system security
with respect to data held in the hosting centers increases. While we believe
that our current software applications comply with applicable laws and industry
security requirements, and while we believe that we use appropriate security
measures to reduce the possibility of unauthorized access or misuse of data in
the hosting center, we cannot provide absolute assurance that our hosted systems
will not be breached, or that all unauthorized access can be
prevented.  If a security breach were to occur, a customer, regulatory
agency, or other person could seek redress from us, which could adversely affect
our business.





4.
            RESOURCE
      AND PERSONNEL RISKS.


·     We could be adversely affected by
vendor labor difficulties.  Some of our vendors may have
employees who are protected by certain labor laws or who may be members of
unions.  We could experience unanticipated manufacturing or supply
shortages if any of our key vendors are subject to labor difficulties or work
slow-downs or stoppages.


·     Our inability to hire qualified
personnel, including particularly research & development personnel, could
adversely affect our ability to satisfy customer requirements on an efficient
basis.  Finding qualified technical personnel in all the
localities where our research and development facilities are situated is an
ongoing challenge.  If we cannot find appropriate personnel, we risk
delays in satisfying customer demands, or may even lose the opportunity to
provide software to the customer.  If we are required to retain a
consultant because we do not have available personnel, development costs would
increase.  In general, our inability to recruit and retain appropriate
personnel would adversely affect our business.


18


·     Our internal control over financial
reporting cannot provide absolute assurance that all frauds will be
detected.As we have previously disclosed, we discovered
fraudulent activities that occurred in our subsidiary in Japan during the period
from fiscal year 2006 to the second quarter of fiscal year 2010.  We
determined that these activities resulted in a cumulative overstatement of
revenues and net income of approximately $6.9 million and $4.9 million,
respectively, over this period.  Although the operation of our internal control system
ultimately led to discovery of the fraudulent activities in our Japanese
subsidiary, the individual involved was able to engage in fraudulent activities
for some time before detection.  While we believe our internal control
over financial reporting is effective, a controls system cannot provide absolute
assurance that the objectives of the controls system are met, and no evaluation
of controls can provide absolute assurance that control issues and instances of
fraud, if any, within our company have been detected.





5.
            LEGAL
      AND ACCOUNTING RISKS.


·     Although we attempt to protect our
proprietary technology, these protections do not preclude competitors from
developing products with features similar to our products.  We
cannot guarantee that we can effectively preserve the proprietary nature and
competitive advantages of our products, despite our efforts to do so through a
combination of trade secrets, copyright, trademark law, non-disclosure
agreements, and technical measures.  Others could attempt to copy what
we have developed, either through legal or illegal means.  Moreover,
others have been able to develop competitive products and services that do not
violate our proprietary rights.


·     We are subject to litigation, which
may be costly.As a company that does business with many
customers, employees, and vendors throughout the world, we are subject to
litigation, including claims made by or against us relating to intellectual
property rights and intellectual property licenses.  While we
generally take steps to reduce the likelihood that disputes will result in
litigation and damages, litigation is very commonplace and could have an adverse
effect on our business.  As part of the litigation risk, we could be
subject to potentially material adverse jury verdicts.  We are
currently subject to an adverse jury verdict in the amount of $7.5 million,
which we have appealed.


·     We are subject to claims by others
that we are infringing their intellectual property
rights.From time to time we receive letters from entities
that assert that we are infringing a patent.  In those instances, we
assess the validity of the claims and the purported patent, and determine
whether a license is appropriate or necessary.  If we conclude that a
license is not necessary, there is a risk that we will be sued; we may also face
indirect liability as a result of infringement claims brought against our
customers.  While we do not believe that our products and services
infringe any patents or other intellectual property rights, we have from time to
time and may continue to become involved in infringement
litigation.  If that occurs, we may incur significant legal expenses
and, if we are found liable, we could be obligated to pay significant damages or
enter into license agreements.


·     Credit card issuers have promulgated
credit card security guidelines as part of their ongoing effort to battle
identity theft and credit card fraud, which may substantially increase our
expenses; breaches of our customers’ credit card security may adversely affect
us.  We continue to work with credit card issuers to assure
that our products and services comply with the credit card associations’
security regulations and best practices applicable to our products and
services.  We cannot assure, however, that our products and services
are invulnerable to unauthorized access or hacking.  Additionally, we
cannot assure that our customers will implement all of the credit card security
features that we introduce, or all of the protections and procedures required by
the credit card issuers.  Our customers may not establish and maintain
appropriate levels of firewall protection and other security
measures.  If there is unauthorized access to credit card data that
results in financial loss, there is a potential that parties could seek damages
from us.  Additionally, changes in the security guidelines and laws
relating to consumer privacy could require significant and unanticipated
development efforts.





ITEM
1B.  UNRESOLVED STAFF COMMENTS





Not applicable.





ITEM
      2.
            PROPERTIES





Our worldwide corporate headquarters,
including our executive offices, are located in Columbia,
Maryland.  We also conduct sales, marketing, customer support, and
product development activities at this location.  We lease the entire
five-story structure, consisting of 247,624 square feet, from Columbia Gateway
Office Corporation, under a lease that, as amended, terminates on February 29,
2016.  We sublease a portion of one of the five floors, consisting of
39,459 square feet, to Motorola, Inc.  The sublease expires March 10,
2015.





In
addition to over 50 smaller offices, we lease the following larger facilities
(defined, for purposes of this filing, as those locations in which we lease
approximately 10,000 square feet.)





Location
                              
                              Approximate
                                Size
                                (Square
      Feet)
                              
                              Use
                              
                              Expiration Date
                              
                              Additional CommentsColumbia,
      Maryland
                              
                              247,624
                              
                              Headquarters
      and other functions (see above)
                              
                              February
      29, 2016
                              
                              See
      aboveHanover,
      Maryland
                              
                              87,600
                              
                              Warehouse,
      distribution, light assembly, configuration, manufacturing,
      repair
                              
                              July
      31, 2015Cleveland,
      Ohio
                              
                              70,000
                              
                              Sales,
      marketing, support, product development
                              
                              February
      28, 2014
                              
                              Cleveland
      is the headquarters for the MICROS Retail groupNeuss,
      Germany
                              
                              42,000
                              
                              Sales,
      marketing, product development, and customer support
                              
                              December
      31, 2015
                              
                              Also
      serves as one of the hub offices for Europe, Africa, and the Middle
      EastAnn
      Arbor, Michigan
                              
                              35,748
                              
                              Sales,
      marketing, customer support, product development and product
      support
                              
                              Ranges
      from November 20, 2010 to July 31, 2012
                              
                              Ann
      Arbor is the headquarters for the Fry, Inc. subsidiaryWestborough,
      Massachusetts
                              
                              27,234
                              
                              Sales,
      marketing, customer support, product development and product
      support
                              
                              November
      30, 2013
                              
                              MICROS
      Retail maintains this office for its XBR loss prevention products, as well
      as for its CommercialWare products and servicesChevy
      Chase, Maryland
                              
                              26,744
                              
                              Sales,
      Web development services
                              
                              November
      15, 2017
                              
                              Headquarters
      of the TIG Global subsidiaryBoca
      Raton, Florida
                              
                              19,755
                              
                              Sales,
      marketing, product  development, customer support and light
      assembly
                              
                              February
      29, 2012
                              
                              Boca
      Raton is the headquarters for the JTECH subsidiaryNaples,
      Florida
                              
                              20,156
                              
                              Software
      development
                              
                              December
      31, 2016
                              
                              Naples
      is the main site for the development of the Company’s hotel
      productsGalway,
      Ireland
                              
                              18,025
                              
                              Customer
      support, sales and marketing
                              
                              May
      31, 2022 (we have early termination rights in 2012 and
    2017)
                              
                              Also
      serves as the regional headquarters for Europe, Africa, and the Middle
      EastNanterre,
      France
                              
                              16,867
                              
                              Sales,
      marketing, support
                              
                              December
      31, 2014 (we have an early termination right in 2010)Buffalo,
      NY
                              
                              16,821
                              
                              Sales,
      marketing, support
                              
                              September
      15, 2015
                              
                              We
      have subleased a portion of this property to another
    company.Chicago,
      Illinois
                              
                              16,706
                              
                              Sales,
      marketing, product development, and hosting
                              
                              December
      31, 2014
                              
                              Fry,
      Inc. maintains this office for its hosting services as well as for sales
      and services.Sydney,
      Australia
                              
                              13,500
                              
                              Sales,
      marketing, support, product development
                              
                              December
      14, 2012Scottsdale,
      Arizona
                              
                              12,969
                              
                              Sales,
      marketing, support, product development
                              
                              January
      31, 2016
                              
                              Scottsdale
      is the headquarters for the HSI divisionMexico
      City, Mexico, DF
                              
                              11,946
                              
                              Sales,
      marketing, customer support, operations
                              
                              December
      31, 2012Huntington
      Beach, California
                              
                              10,970
                              
                              Sales,
      marketing, support
                              
                              January
      31, 2013Slough,
      England (three sites)
                              
                              25,000
                              
                              Sales,
      marketing, support
                              
                              Ranges
      from September 29, 2013 to December 31, 2016Singapore
                              
                              9,367
                              
                              Sales,
      marketing, support
                              
                              September
      30, 2014


19





To satisfy other sales, service and
support, and product development needs, we and our subsidiaries lease space in
other U.S. cities, including Boston, Cincinnati, Dallas, Denver, Hartford,
Houston, Nashville, New Orleans, New York, Pittsburgh, Portland, San Diego, San
Francisco, and Seattle, and in numerous cities overseas, including Buenos Aires,
Argentina; Hamburg, Germany; Helsinki, Finland; Madrid, Spain; Rome, Italy; São
Paulo, Brazil; Stockholm, Sweden; Tokyo, Japan; Toronto, Canada; Vancouver,
Canada; Vienna, Austria; and Zurich, Switzerland.  In general, we
believe that additional space will be available as needed.





ITEM
      3.
            LEGAL
      PROCEEDINGS





We are and have been involved in legal
proceedings arising in the normal course of business.





There is a case pending in the U.S.
District Court for the Northern District of Georgia, styled Ware v. Abercrombie &
Fitch Stores, Inc. et al.; although the Company was not a party to that
case, the Company may have had some obligation to indemnify certain of the
defendants who are the Company’s customers based on the terms of the Company’s
contracts with those customers.  The plaintiff alleged that the
defendants infringed a patent relating to the processing of credit card
transactions.  The defendants included approximately 107 individual
retailers, 13 of whom are the Company’s customers for retail point-of-sale
software.  The Company initially agreed to provide indemnity coverage
to five of the defendants who are the Company’s customers in accordance with
applicable provisions of the contracts between the Company and those customers,
however, one such customer subsequently filed for protection under the U.S.
Bankruptcy Code.  During the quarter ended June 30, 2010, the Company
entered into settlement agreements with all of the defendants for whom it may
have had indemnity obligations. Through June 30, 2010, our legal fees with
respect to the third party action have not been material, and the settlement
amounts were not material.





As disclosed in previous filings, on
May 22, 2008, a jury returned verdicts totaling $7.5 million against the Company
in the consolidated actions of Roth Cash Register v. MICROS
Systems, Inc., et al. and Shenango Systems Solutions v. MICROS Systems, Inc., et
al.  The cases initially were filed in 2000 in the Court of
Common Pleas of Allegheny County, Pennsylvania.  The complaints both
related to the non-renewal of dealership agreements in the year 2000 between the
Company and the respective plaintiffs.  The agreements were
non-renewed as part of a restructuring of the dealer channel.  There
is no other outstanding litigation relating to the restructuring of the dealer
channel in the year 2000.  The plaintiffs alleged that the Company and
certain of its subsidiaries and employees entered into a plan to eliminate the
plaintiffs as authorized dealers and improperly interfere with the plaintiffs'
relationships with their respective existing and potential future clients and
customers without compensation to the plaintiffs.  As a result, the
plaintiffs claimed that the Company was liable for, among other things, breach
of contract and tortious interference with existing and prospective contractual
relationships.  The Company and the plaintiffs have appealed the
verdicts on various grounds.  Oral argument on the appeal took place
on February 24, 2010, before the Superior Court of Pennsylvania.  The
court has not yet issued a decision on the appeal.  The Company has
established only an immaterial reserve for any potential liability relating to
these matters, as the Company believes that it presented strong arguments to
reverse the verdicts on appeal, and therefore believes that an unfavorable
outcome in these cases is not probable.  Nevertheless, even if the
verdicts were not reversed or reduced on appeal, payment of the resulting
obligations would not have a material adverse effect on the Company’s
consolidated financial position or liquidity.





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


20





PART
      II





ITEM
      5.
            MARKET
      FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
      ISSUER PURCHASES OF EQUITY
SECURITIES





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





STOCK
PERFORMANCE GRAPH


The following line graph compares the
cumulative total shareholder return on the Company’s common stock during the
past five fiscal years, based on the market price of MICROS Systems, Inc. common
stock, with the cumulative total yearly return of the S&P 500 Index, and
with the S&P Application Software composite index.  The graph
assumes $100 invested on June 30, 2005 in MICROS Systems, Inc. common stock, and
an identical amount in the S&P 500 Index and the S&P 500 Application
Software composite index, and assumes the reinvestment of
dividends.











Shareholder ReturnsCompany/Index
                        
                        June 2006
                        
                        
                        June 2007
                        
                        
                        June 2008
                        
                        
                        June 2009
                        
                        
                        June 2010MICROS
      Systems, Inc.
                        
                        $
                        97.61
                        
                        
                        $
                        121.56
                        
                        
                        $
                        136.27
                        
                        
                        $
                        113.16
                        
                        
                        $
                        142.44S&P
      500 Index
                        
                        $
                        108.63
                        
                        
                        $
                        131.00
                        
                        
                        $
                        113.81
                        
                        
                        $
                        83.97
                        
                        
                        $
                        96.09S&P
      500 Application Software
                        
                        $
                        108.89
                        
                        
                        $
                        131.79
                        
                        
                        $
                        117.24
                        
                        
                        $
                        91.83
                        
                        
                        $
                        114.09





PRICE
RANGE OF COMMON STOCK





The Company’s common stock is traded on
the NASDAQ Stock Market under the symbol MCRS.  As of August 19, 2010,
there were 18,383 record holders of the Company’s common stock, $0.025 par
value.





The following table shows the range of
sales prices for the periods indicated, as reported by NASDAQ.





1st Quarter
                              
                              
                              2nd Quarter
                              
                              
                              3rd Quarter
                              
                              
                              4th QuarterFiscal
      Year Ended June 30, 2010High
                              
                              $
                              31.11
                              
                              
                              $
                              32.43
                              
                              
                              $
                              33.50
                              
                              
                              $
                              38.16Low
                              
                              $
                              22.79
                              
                              
                              $
                              25.68
                              
                              
                              $
                              26.17
                              
                              
                              $
                              31.26Fiscal
      Year Ended June 30, 2009High
                              
                              $
                              34.41
                              
                              
                              $
                              27.17
                              
                              
                              $
                              20.17
                              
                              
                              $
                              28.65Low
                              
                              $
                              22.98
                              
                              
                              $
                              13.34
                              
                              
                              $
                              13.47
                              
                              
                              $
                              18.45


21





The Company has never paid a cash
dividend and has no current intention to pay any cash dividends.  Its
current policy is to retain earnings and to use those funds for the operation
and expansion of its business as well as the repurchase of the Company’s
stock.  The Company is a party to two credit agreements which, as
renewed on July 30, 2010, restrict the payment of cash dividends.  See
Item 7, “Management’s Discussion and Analysis of Financial Condition and Results
of Operations – Liquidity and Capital Resources” and Note 7 “Line of Credit,” in
the Notes to the Consolidated Financial Statements included in this
report.





PURCHASES
OF COMPANY STOCK





In August 2009 the Board of Directors
authorized the purchase of two million shares of the Company’s common stock over
the next three years, to be purchased from time to time depending on market
conditions and other corporate considerations as determined by
management.





We have incurred an aggregate of
approximately $0.3 million in fees in the aggregate related to all stock
purchase plans.  As of July 31, 2010, approximately 1.6 million
additional shares are available for purchase.  During the fourth
quarter of fiscal year 2010, our stock purchases were as follows




’





Issuer
Purchases of Equity Securities




Total Number
                            of Shares
                            Purchased
                          
                          
                          Average
                            Price
                            Paid per
                            Share
                          
                          
                          Total Number of
                            Shares Purchased
                            asPart of Publicly
                            Announced Plan or
                            Program
                          
                          
                          Maximum Number
                            of Sharesthat May
                            Yet bePurchased
                            Underthe Plan or
                            Program04/01/10 –
      04/30/10
                          
                          
                          —
                          
                          
                          
                          N/A
                          
                          
                          
                          —
                          
                          
                          
                          1,986,13005/01/10 –
      05/31/10
                          
                          
                          —
                          
                          
                          
                          N/A
                          
                          
                          
                          —
                          
                          
                          
                          1,986,13006/01/10 –
      06/30/10
                          
                          
                          350,000
                          
                          
                          $
                          33.52
                          
                          
                          
                          350,000
                          
                          
                          
                          1,636,130350,000
                          
                          
                          $
                          33.52
                          
                          
                          
                          350,000
                          
                          
                          
                          1,636,130





ITEM
      6.
            SELECTED
      FINANCIAL DATA





FiscalYearEndedJune30,(1)(in thousands, except per share data)
                        
                        
                        2010(2),(4)
                        
                        
                        
                        2009(2),(3),(4)
                        
                        
                        2008(2)
                        
                        
                        2007(2)
                        
                        
                        2006Statement
      of Operations Data:Revenue
                        
                        $
                        914,319
                        
                        
                        $
                        907,725
                        
                        
                        $
                        953,950
                        
                        
                        $
                        784,973
                        
                        
                        $
                        678,233Income
      from operations
                        
                        $
                        167,973
                        
                        
                        $
                        140,835
                        
                        
                        $
                        138,890
                        
                        
                        $
                        110,390
                        
                        
                        $
                        90,978Net
      income attributable to MICROS Systems, Inc.
                        
                        $
                        114,353
                        
                        
                        $
                        96,292
                        
                        
                        $
                        100,737
                        
                        
                        $
                        79,875
                        
                        
                        $
                        62,963Net
      income per share attributable to MICROS Systems, Inc.
    common:Basic
                        
                        $
                        1.44
                        
                        
                        $
                        1.19
                        
                        
                        $
                        1.23
                        
                        
                        $
                        1.00
                        
                        
                        $
                        0.81Diluted
                        
                        $
                        1.41
                        
                        
                        $
                        1.17
                        
                        
                        $
                        1.20
                        
                        
                        $
                        0.97
                        
                        
                        $
                        0.77Balance
      Sheet Data:Working
      capital (5)
                        
                        $
                        468,047
                        
                        
                        $
                        416,593
                        
                        
                        $
                        391,656
                        
                        
                        $
                        343,937
                        
                        
                        $
                        252,585Total
      assets
                        
                        $
                        1,138,291
                        
                        
                        $
                        1,021,379
                        
                        
                        $
                        1,002,147
                        
                        
                        $
                        846,093
                        
                        
                        $
                        647,357Line
      of credit
                        
                        $
                        1,442
                        
                        
                        $
                        1,090
                        
                        
                        $
                        989
                        
                        
                        $
                        2,308
                        
                        
                        $
                        2,134MICROS
      Systems, Inc. shareholders’ equity
                        
                        $
                        783,380
                        
                        
                        $
                        718,997
                        
                        
                        $
                        671,723
                        
                        
                        $
                        550,493
                        
                        
                        $
                        416,552Book
      value per share (6), (7)
                        
                        $
                        9.79
                        
                        
                        $
                        8.95
                        
                        
                        $
                        8.30
                        
                        
                        $
                        6.79
                        
                        
                        $
                        5.34Additional
      Data:Weighted
      average number of common shares outstanding:Basic
                        
                        
                        79,856
                        
                        
                        
                        80,486
                        
                        
                        
                        81,546
                        
                        
                        
                        79,978
                        
                        
                        
                        77,383Diluted
                        
                        
                        81,448
                        
                        
                        
                        81,461
                        
                        
                        
                        83,346
                        
                        
                        
                        82,581
                        
                        
                        
                        81,248





(1)
            Fiscal
      years 2006 - 2009 have been revised to reflect the corrections of the
      misstatements related to certain fraudulent activities uncovered in the
      Company’s Japanese subsidiary that occurred during the period from fiscal
      year 2006 to the six months ended December 31, 2009.  See Note
      19 “Revisions to Prior Period Financial Statements” in the Notes to
      Consolidated Financial Statements.


(2)
            Fiscal
      years 2010, 2009, 2008 and 2007 include approximately $12.4 million ($8.1
      million, net of tax or $0.10 per diluted share), $13.9 million ($9.8
      million, net of tax or $0.12 per diluted share), $17.2 million ($13.1
      million net of tax or $0.16 per diluted share) and $14.0 million ($11.1
      million net of tax or $0.14 per diluted share) respectively, in non-cash
      share-based compensation expense.  See Note 3 “Share-based
      Compensation” in the Notes to Consolidated Financial
      Statements.


(3)
            Fiscal
      year 2009 includes approximately $3.1 million ($2.1 million, net of tax)
      in restructuring charges and approximately $0.7 million in an inventory
      write down reflecting adjustments to the Company’s cost structure to
      address lower sales volume in certain of the Company’s locations affecting
      both of its reportable segments.


(4)
            The
      fiscal years 2010 and 2009 include an other-than-temporary impairment of
      approximately $4.8 million and $1.3 million, respectively, for long-term
      investments.  See Note 2 “Financial Instruments and Fair Value
      Measurements” in the Notes to Consolidated Financial
      Statements.


22


(5)
            Current
      assets less current liabilities.


(6)
            Calculated
      as shareholders’ equity divided by common stock outstanding at June
      30.


(7)
            Share
      information for the fiscal years ended June 30, 2006 and 2007 is
      retroactively adjusted to reflect the February 2008 two-for-one stock
      split.





ITEM
      7.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





We are a
leading worldwide designer, manufacturer, marketer, and servicer of enterprise
information solutions for the global hospitality and specialty retail
industries.  Our enterprise solutions comprise three major areas:
hotel information systems, restaurant information systems, and specialty retail
information systems.  We also offer a wide range of related
services.  We distribute our products and services directly and
through a network of independent dealers and distributors.




We are
organized and operate in four operating segments:  U.S., Europe, the
Pacific Rim, and Latin America regions.  We have identified our U.S.
operating segment as a separate reportable segment and we have aggregated our
three international operating segments into one reportable segment,
international, as the three international operating segments share many similar
economic characteristics.  Our management views the U.S. and
international segments separately in operating our business, although the
products and services are similar for each segment.





CRITICAL
ACCOUNTING ESTIMATES





Our discussion and analysis of our
financial condition and results of operations are based on our consolidated
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America.  The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses.  On an ongoing basis, we evaluate our estimates, including
those that impact revenue recognition, share-based compensation, capitalized
software, goodwill and intangible assets, fair value of investments, allowance
for doubtful accounts, allowance for obsolescence and income
taxes.  We base our estimates on historical experience and on various
other assumptions that we believe are reasonable under the circumstances, and
which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other
sources.  Actual results may differ from these estimates.





The following comprise the critical
accounting estimates that we used in the preparation of our consolidated
financial statements.





Revenue
recognition





Revenue is generated from the sale of
software licenses, hardware, services and support and is recognized when
persuasive evidence of an arrangement exists, delivery has occurred or services
have been rendered, the arrangement fee is fixed or determinable and
collectability of the related receivable is probable.  Our revenue
recognition involves judgment, including estimates of fair value in arrangements
that contain multiple elements, assessments of the likelihood of nonpayment and
estimates of total costs and costs to complete a project.  In making
these judgments we analyze various factors, including the nature and terms of
the specific transaction, the nature and terms of comparable transactions, the
creditworthiness of our customers, our historical experience, accuracy of prior
estimates and overall market and economic conditions.  Changes in
judgments related to these items, or a deterioration in market or economic
conditions, could materially impact the timing and amount of revenue and costs
recognized.





Allowance
for doubtful accounts





We maintain an allowance for doubtful
accounts for estimated losses that may result from the inability of our
customers to make required payments and for limited circumstances when the
customer disputes the amounts due to us.  Our methodology for
determining this allowance requires estimates and is based on the age of the
receivable, customer payment practices and history, inquiries, credit reports
from third parties and other financial information.  If the financial
condition of our customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be required which
could affect our financial results in future periods.  As of June 30,
2010 and 2009, accounts receivable totaled approximately $153.1 million and
$155.2 million, net of an allowance for doubtful accounts of approximately $28.4
million and $31.9 million, respectively.  Additionally, bad debt
expenses for the fiscal years 2010, 2009 and 2008 were approximately $3.9
million, $8.3 million, and $6.9 million, respectively.





Inventory





Inventory is stated at the lower of
cost or market.  Cost is determined principally by the first-in,
first-out pricing method.  We wrote down inventory in the amount of
approximately $12.3 million and $11.4 million as of June 30, 2010 and 2009,
respectively.  We regularly compare inventory quantities on hand
against historical usage or forecasts related to specific items to evaluate
obsolescence and excessive quantities.  Nevertheless, changes in
business trends, competition and other factors not apparent when, or occurring
after, we make our estimates of inventory obsolescence could result in the need
to undertake additional inventory write-offs in future periods.


23





Financial
instruments and fair value measurements





All of our short-term investments are
recorded at fair value, which approximates cost.  Our investments in
auction rate securities (debt instruments with long-term scheduled maturities
and periodic interest rate reset dates, classified as long-term investments in
the accompanying consolidated balance sheets) as discussed below, are carried at
fair value.





We periodically review to identify and
evaluate each investment that has an unrealized loss.  Unrealized
losses that are determined to be temporary in nature are reported, net of tax,
in accumulated other comprehensive income.   Other-than-temporary
“credit loss” (loss due to security issuer’s credit risk), net of tax and
valuation allowances, is recognized in the consolidated statements of
operations, while other-than-temporary impairment loss related to factors other
than credit loss, net of tax, is recognized in accumulated other comprehensive
income.





We periodically assess whether we would
likely recover the entire cost basis of each of our auction rate securities,
and, therefore, whether the securities had incurred an other-than-temporary
impairment.  The factors considered in classifying the impairment
include (a) the credit quality of the underlying security, (b) the extent to
which and time period during which the fair value of each investment has been
below cost, (c) the expected holding or recovery period for each investment, (d)
our intent to hold each investment until recovery, the likelihood that we will
not be required to sell the security prior to recovery and our expectation of
recovery of the entire amortized cost basis of the security, and (e) the
existence of any evidence of default by the issuer.  Applying these
factors entails significant judgment and considerable uncertainty.  We
then estimated the extent to which other-than-temporary credit loss or
non-credit loss was applicable to our investments in auction rate
securities.  Because there is no liquid market or negotiated
transaction history with regard to the auction rate securities, we engaged an
independent valuation firm to perform a valuation of our investments in auction
rate securities at June 30, 2010.  The valuation firm used a
discounted cash flow model that considered various inputs including: (a) the
coupon rate specified under the debt instruments, (b) the current credit ratings
of the underlying issuers, (c) collateral characteristics, (d) discount rates,
(e) severity of default and (f) probability that the securities will be sold at
auction or through early redemption.  While we reviewed and agreed
with this valuation, many of the assumptions utilized in connection with the
valuation are subject to considerable uncertainty, and changes in assumptions or
subsequent events could result in the recognition of additional credit
loss.





A change
in factors, including economic conditions, rates of default with respect to the
obligations underlying the securities, our liquidity needs, and a variety of
other factors may cause our future valuation results to differ, in which case
our financial results in future periods could be affected
significantly.





Capitalized
software development costs





Costs incurred in the research and
development of new software products to be licensed to others, primarily
consisting of salaries, employee benefits and administrative costs, are expensed
as incurred and included in research and development expenses until
technological feasibility is established.  The capitalization of
software development costs on a product-by-product basis starts when a product’s
technological feasibility has been established and ends when the product is
available for general release to customers, at which time amortization of the
capitalized software development costs begins.  Technological
feasibility is established when the product reaches the working model
stage.  The cost of purchased software is also
capitalized.





Annual amortization of capitalized
software development costs is included in software cost of sales.  For
each capitalized software product, the annual amortization is equal to the
greater of: (i) the amount computed using the ratio that the software product’s
current fiscal year gross revenue bears to the total current fiscal year and
anticipated future gross revenues for that product or (ii) the amount computed
based on straight-line method over the remaining estimated economic life of the
product.  If we incorrectly estimate the remaining economic life of a
product or the anticipated future gross revenues of a product, we may be
required to take a significant write off of capitalized software development
costs or to accelerate amortization, either of which could materially affect our
future financial results.  Amortization expenses for the fiscal years
2010, 2009 and 2008 were approximately $9.7 million, $7.7 million and $9.4
million, respectively.




Valuation
of long-lived assets and intangible assets





We evaluate long-lived assets,
including finite-lived purchased intangible assets, for impairment whenever
events and changes in circumstances indicate that the carrying amount of an
asset may not be fully recoverable.  When indicators of impairment are
present, we compare the fair value of the asset groups, based on the
undiscounted cash flows the asset groups are expected to generate (or market
value, if available), to the net book value of the asset groups.  If
the fair value is less than the net book value, the asset group is impaired and
we recognize an impairment loss equal to the excess of the net book value over
the fair value.




The process of evaluating the potential
impairment of long-lived assets including finite-lived purchased intangible
assets is highly subjective and requires significant judgment at many points
during the analysis.  In estimating the fair value of the asset groups
for the purposes of our analyses, we make estimates and judgments about the
future cash flows of these asset groups.  The cash flow forecasts are
based on assumptions that are consistent with the plans and estimates used to
manage the Company.  A change in assumptions and estimates in future
periods could cause us to determine that asset groups are impaired, resulting in
a significant charge in future periods.


24




Goodwill
and indefinite-lived intangible assets




We do not amortize goodwill and
indefinite-lived intangible assets.  We assess annually, in the first
quarter of the fiscal year, whether goodwill and certain of our trademarks,
which are our only indefinite-lived purchased intangible assets, are impaired.
 Goodwill is evaluated for impairment by comparing the fair value of each
of our reporting units (our four operating segments consisting of U.S., Europe,
the Pacific Rim and Latin America) to their book value.  The fair
value of each reporting unit is determined based on a weighting of future income
approach (i.e., discounted future income) and market approach (i.e., a
comparison to the purchase and sale of similar assets in the relevant
industry).  If the fair value of the reporting unit exceeds the book
value of the net assets assigned to that unit, goodwill is not
impaired.  If goodwill is impaired, we recognize an impairment loss
based on the amount by which the book value of goodwill exceeds its implied fair
value.  The implied fair value of goodwill is determined by deducting the
fair value of a reporting unit’s identifiable assets and liabilities from the
fair value of the reporting unit as a whole, as if that reporting unit had just
been acquired and the fair value of the individual assets acquired and
liabilities assumed were being determined initially.




Trademarks are evaluated for impairment
by comparing their fair value to book value.  We estimate the fair
value of trademarks using an income approach, and recognize an impairment loss
if the estimated fair value of a trademark is less than its book
value.




Additional impairment assessments may
be performed on an interim basis if we encounter events or changes in
circumstances indicating that it is more likely than not that the book value of
goodwill and/or trademarks has been impaired.




The process of evaluating the potential
impairment of goodwill and/or trademarks is highly subjective and requires
significant judgment at many points during the analysis.  In
estimating the fair value of the reporting units for the purposes of our annual
or interim analyses, we make estimates and judgments about the future cash flows
of these businesses.  The cash flow forecasts are based on assumptions
that are consistent with the plans and estimates used to manage the underlying
reporting units and factor in assumptions on revenue and expense growth rates.
These estimates are based upon our historical experience and projections of
future activity, factoring in customer demand, changes in technology and the
cost structure necessary to achieve the related revenues. Additionally, these
cash flow analyses factor in expected amounts of working capital and weighted
average cost of capital. Changes in judgments on any of these factors could
materially impact the value of the reporting unit.  We also consider
our market capitalization on the date the analysis is
performed.   A determination that goodwill or intangible assets
are impaired (which could result from a change in our assumptions) could have a
significant impact on our operating results.  As of June 30, 2010 and
2009, goodwill totaled approximately $213.8 million and $190.7 million,
respectively.




Share-based
compensation





We account for our option awards
granted under our stock option program by estimating fair value of option awards
as of the date of grant.  Non-cash share-based compensation expenses,
which are based on the estimated value of the option awards adjusted for
expected pre-vesting forfeitures, are recognized ratably over the requisite
service (i.e. vesting) period of options in the consolidated statement of
operations.





We value stock options using the
Black-Scholes option pricing model, which was developed for use in estimating
the fair value of traded options that are fully transferable and have no vesting
restrictions.  Therefore, we are required to input highly subjective
assumptions about volatility rates, expected term of options, dividend yields
and applicable interest rates in determining the estimated fair
value.  Expected volatility is based on historical stock
prices.  The expected term of options granted is based on historical
option activities, adjusted for the remaining option life cycle by assuming
ratable exercise of any unexercised vested options over the remaining
term.  For this purpose, we separate groups of employees that have
historically exhibited similar behavior with regard to option exercises and
post-vesting cancellations.  The risk-free interest rate is based on
the U.S. Treasury yield curve in effect at the time of grant.  Total
expense recorded from period to period can be significantly different depending
on several variables, including the number of options granted, any changes to
assumptions such as pre-vesting cancellations and the estimated fair value of
those vested awards.  But unlike every other accounting policy in this
section, changes in estimates affect only newly granted options; they do not
result in a change in previously recorded amounts.





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 we determine that we will not be able to realize all or
part of our net deferred tax asset in the future, an adjustment to the deferred
tax asset would be charged to income in the period in which the determination is
made.  Our deferred tax assets and liabilities could be materially
affected if, based on subsequent events, we determine that we must derecognize
or recognize a tax position.  Such a change also could materially
affect our annual tax rate in the year in which the change
occurs.


25





Although
we are profitable on a consolidated basis, we have incurred losses in certain
foreign jurisdictions.  We applied valuation allowances in some
circumstances where the prospects of realizing the benefit of net operating loss
carryforwards and other deferred taxes are subject to
uncertainty.  The determination of the likelihood of realizing this
tax benefit requires significant judgment in some instances, and actual results
of our operating subsidiaries, particularly certain international subsidiaries,
could result in material adjustments to our deferred tax assets or liabilities,
and changes in our annual tax rate in the year in which the adjustments
occur.





We
review our uncertain income tax positions and apply a “more likely than not”
threshold to the recognition and derecognition of tax positions.  The
net unrecognized income tax benefits as of June 30, 2010 and 2009 were
approximately $21.3 million and $18.0 million, including interest and penalties
of approximately $2.4 million and $2.0 million,
respectively.  Significant judgment is required in determining our tax
positions and evaluating uncertainties relating to these
positions.  Changes in estimates regarding our tax positions, or
government determinations resulting from tax audits, could have an effect on our
deferred tax assets and liabilities, as well as our annual tax rate in the year
in which the changes or determinations occur.





RESULTS
OF OPERATIONS





As previously disclosed in our Form
10-Q for the period ended December 31, 2009, during January 2010, we uncovered
certain fraudulent activities in our Japanese subsidiary which occurred during
the period extending from fiscal year 2006 to the six months ended December 31,
2009.  As a result of our investigation, we determined that fraudulent
transactions resulted in a cumulative overstatement of revenue and net income
attributable to MICROS Systems, Inc. of approximately $6.9 million and $4.9
million, respectively, over this period. The transactions served principally to
inflate revenue and cost of sales through the creation of fraudulent revenue
documentation and to understate liabilities for loans executed where we were the
guarantor over this period.  These off-balance sheet loans were
indirectly used to pay down a portion of our fictitious accounts receivable
balances.  We concluded, based on our investigation, that the fraud
was solely perpetrated by one employee of our Japanese subsidiary who was not a
member of senior management and that the individual involved expended
significant effort over the period to create a variety of schemes which
deliberately circumvented or manipulated the entity's local controls and
procedures.  These schemes were primarily designed to inflate revenues
and cost of sales and to obtain financing from third parties to pay off the
accounts receivable balances in order to prolong the schemes.  We
terminated the employee upon completion of our investigation.





Based on the materiality guidelines
contained in SEC Staff Accounting Bulletin No. 99, "Materiality" and SEC Staff
Accounting Bulletin No. 108, "Considering the Effects of Prior Year
Misstatements in Current Year Financial Statements", we concluded that the
adjustments to correct for the fraudulent activities were not material to any of
our current financial statements for periods beginning with the year ended June
30, 2006 and through the three months ended September 30,
2009.  However, we concluded that the adjustments would be material to
the quarterly results and trend for the three months ended December 31,
2009.  Accordingly, we determined that we would revise our previous
financial statements to record these adjustments; however because the effect of
the adjustments were not material to any previously issued financial statements,
we determined not to amend our previously filed Quarterly Reports on Form 10-Q
or our Annual Reports on Form 10-K; rather, we would make corresponding
adjustments to prior period financial statements as appropriate the next time
those financial statements are filed.





The Consolidated Statement of
Operations for the fiscal years ended June 30, 2009 and 2008 included in this
Form 10-K has been revised to reflect the corrections of the misstatements
related to the fraudulent activities in our Japanese subsidiary described
above.  The corrections decreased revenue for the fiscal years ended
June 30, 2009 and 2008 by approximately $4.1 million and $0.2 million,
respectively and decreased net income attributable to MICROS Systems, Inc. by
approximately $3.0 million and $0.5 million, respectively.  See Note
19 “Revisions to Prior Period Financial Statements” in the Notes to Consolidated
Financial Statements for further detail.





During the three fiscal years ending
June 30, 2010, we acquired several businesses and accordingly, our results
include activities from the acquired businesses from their respective
acquisition dates.  See Note 4 “Acquisitions” in the Notes to
Consolidated Financial Statements for further detail on
acquisitions.





All references to share data have been
retroactively adjusted to reflect the two-for-one stock split effective February
5, 2008.


26




Comparison of Fiscal Year
2010 to Fiscal Year 2009





Revenue





The following table provides
information regarding the sales mix by reportable segments in fiscal years 2010
and 2009 (amounts are net of intersegment eliminations, based on location of the
selling entity, and include export sales):





Fiscal Year Ended June 30,U.S.
                    
                    
                    International
                    
                    
                    Total(in thousands)
                    
                    2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009Hardware
                    
                    $
                    96,560
                    
                    
                    $
                    107,960
                    
                    
                    $
                    91,773
                    
                    
                    $
                    101,874
                    
                    
                    $
                    188,333
                    
                    
                    $
                    209,834Software
                    
                    
                    45,964
                    
                    
                    
                    48,523
                    
                    
                    
                    72,824
                    
                    
                    
                    84,389
                    
                    
                    
                    118,788
                    
                    
                    
                    132,912Service
                    
                    
                    297,268
                    
                    
                    
                    277,999
                    
                    
                    
                    309,930
                    
                    
                    
                    286,980
                    
                    
                    
                    607,198
                    
                    
                    
                    564,979Total
      Revenue
                    
                    $
                    439,792
                    
                    
                    $
                    434,482
                    
                    
                    $
                    474,527
                    
                    
                    $
                    473,243
                    
                    
                    $
                    914,319
                    
                    
                    $
                    907,725





The
following table provides information regarding the total sales mix as a percent
of total revenue in fiscal years 2010 and 2009:





Fiscal Year Ended June 30,(in thousands)
                    
                    2010
                    
                    
                    2009Hardware
                    
                    
                    20.6
                    %
                    
                    
                    23.1
                    %Software
                    
                    
                    13.0
                    %
                    
                    
                    14.7
                    %Service
                    
                    
                    66.4
                    %
                    
                    
                    62.2
                    %Total
                    
                    
                    100.0
                    %
                    
                    
                    100.0
                    %





For fiscal year 2010, total revenue was
approximately $914.3 million, an increase of approximately $6.6 million, or 0.7%
compared to the fiscal year 2009 due to the following:





·
            Favorable
      foreign currency exchange rate fluctuations, for primarily all foreign
      currencies against the U.S. dollar, positively affected total revenue by
      approximately $11.0 million; and,


·
            Additional
      services revenue generated by TIG Global LLC (“TIG Global”), a company
      that we acquired in December 2009, and an additional 4% increase in
      services sales volume compared to fiscal year
  2009.


·
            Above
      increases were partially offset by 11% and 12% decreases in hardware and
      software sales volume, respectively, compared to fiscal year
      2009.  We believe these decreases were due to a slow-down in
      demand from our customers as a result of adverse global economic
      conditions.




The international
segment revenue for the fiscal year ended June 30, 2010 increased by
approximately $1.3 million compared to the fiscal year 2009.  The
favorable foreign currency exchange rate fluctuations positively affected total
revenue by approximately $11.0 million.  The services sales volume
increased 5% compared to fiscal year 2009.  The increase in services
sales volume was due to the continued expansion of our customer base coupled
with increased recurring support revenue from existing customers (primarily
through purchase of additional services).  These increases were
partially offset by 12% and 15% decreases in hardware and software sales volume,
respectively, both compared to fiscal year 2009.  We believe the
decreases in hardware and software sales volume were due to a slowdown in demand
from our customers because of adverse global economic conditions





U.S. segment revenue increased
approximately $5.3 million for the fiscal year ended June 30, 2010 compared to
the fiscal year 2009.  The increase was the result of additional
services revenue generated as a result of the acquisition of TIG Global in
December 2009 and the continued expansion of our customer base coupled with
increased recurring support revenue from existing customers (primarily through
purchase of additional services).  These increases were partially
offset by an 11% decrease in hardware revenues and a 5% decrease in software
sales revenues, both as compared to fiscal year 2009.  We believe
these decreases were due to a slowdown in demand from our customers because of
adverse U.S. and global economic conditions.





Cost
of Sales





The following table provides
information regarding our cost of sales in fiscal years 2010 and
2009:





Fiscal Year Ended June 30,2010
                      
                      
                      2009(in thousands)
                      
                      Cost
                        of Sales
                      
                      
                      % of Related
                        Revenue
                      
                      
                      Cost
                        of Sales
                      
                      
                      % of Related
                        RevenueHardware
                      
                      $
                      119,489
                      
                      
                      
                      63.4
                      %
                      
                      $
                      135,033
                      
                      
                      
                      64.4
                      %Software
                      
                      
                      25,731
                      
                      
                      
                      21.7
                      %
                      
                      
                      25,570
                      
                      
                      
                      19.2
                      %Service
                      
                      
                      267,618
                      
                      
                      
                      44.1
                      %
                      
                      
                      264,883
                      
                      
                      
                      46.9
                      %Total
      Cost of Sales
                      
                      $
                      412,838
                      
                      
                      
                      45.2
                      %
                      
                      $
                      425,486
                      
                      
                      
                      46.9
                      %


27


For fiscal year 2010, cost of sales as
a percent of revenue decreased 1.7% to 45.2% compared to 46.9% in fiscal year
2009.  Hardware cost of sales as a percent of related revenue
decreased primarily as a result of an overall margin improvement on
substantially all hardware categories compared to fiscal year
2009.  Software cost of sales as a percent of related revenue
increased primarily due to an increase in capitalized software amortization
expense (included in software cost of sales) as a percent of software revenue as
compared to fiscal year 2009 and a lower margin on sales of third party
software.  Service cost of sales as a percent of related revenue
decreased 2.8% to 44.1% primarily due to lower service labor costs resulting
from our continued cost cutting efforts.  The foreign currency
exchange rate fluctuations increased our cost of sales for the fiscal year 2010
by approximately $6.8 million.





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





SG&A expenses decreased
approximately $7.3 million compared to fiscal year 2009 to approximately $274.0
million.  This decrease was primarily due to the inclusion of the
following in fiscal year 2009 SG&A expenses:





·
            Higher
      bad debt expense, which was approximately $4.4 million higher than fiscal
      year 2010, due to adverse U.S. and global economic conditions;
      and,


·
            Approximately
      $3.1 million in restructuring charges, primarily reflecting adjustments to
      our cost structure to reflect lower sales volume in certain of our
      locations.  The charge included approximately $1.5 million in
      employee related costs and approximately $1.6 million in occupancy related
      costs for certain of our facilities that we have
  vacated.





During
fiscal year 2010, we were able to continue to reduce certain of our
costs.  All of these factors were partially offset by an approximately
$5.1 million increase in compensation related expenses in fiscal year 2010
compared to fiscal year 2009.





The foreign currency exchange rate
fluctuations increased our SG&A expenses for the fiscal year 2010 by
approximately $3.4 million compared to fiscal year 2009.





Research
and Development (“R&D”)





R&D expenses consist primarily of
labor costs less capitalized software development costs.  The
following table provides information regarding our R&D expenses in fiscal
years 2010 and 2009:





Fiscal Year Ended June 30,(in thousands)
                      
                      2010
                      
                      
                      2009R&D
      labor and other costs
                      
                      $
                      44,672
                      
                      
                      $
                      43,100Capitalized
      software development costs
                      
                      
                      (2,443
                      )
                      
                      
                      (470
                      )Total
      R&D expenses
                      
                      $
                      42,229
                      
                      
                      $
                      42,630%
      of Revenue
                      
                      
                      4.6
                      %
                      
                      
                      4.7
                      %





Depreciation
and Amortization Expenses





Depreciation and amortization expenses
for fiscal year 2010 decreased approximately $0.2 million compared to fiscal
year 2009 to approximately $17.3 million.





Share-Based
Compensation Expenses





For fiscal years 2010 and 2009, we
recognized non-cash share-based compensation expense of approximately $12.4
million and $13.9 million, respectively.  The SG&A expenses,
R&D expenses and cost of sales discussed above include the following
allocations of non-cash share-based compensation expense:




Fiscal Year Ended June 30,(in thousands)
                      
                      2010
                      
                      
                      2009SG&A
                      
                      $
                      11,822
                      
                      
                      $
                      13,108R&D
                      
                      
                      511
                      
                      
                      
                      792Cost
      of sales
                      
                      
                      32
                      
                      
                      
                      —Total
      non-cash share-based compensation expense
                      
                      
                      12,365
                      
                      
                      
                      13,900Income
      tax benefit
                      
                      
                      (4,283
                      )
                      
                      
                      (4,100
                      )Total
      non-cash share-based compensation expense, net of tax
    benefit
                      
                      $
                      8,082
                      
                      
                      $
                      9,800Impact
      on diluted net income per share attributable to MICROS Systems, Inc.
      common shareholders
                      
                      $
                      0.10
                      
                      
                      $
                      0.12





The non-cash share-based compensation
expense allocated to SG&A for the 2010 and 2009 fiscal years included
approximately $1.7 million and $0.8 million related to the grant of options
during the respective years to our Chairman, President, and Chief Executive
Officer, A.L. Giannopoulos.  In accordance with the terms of our
option plan, as he is over the retirement age of 62, any options that he holds
that have not yet vested at the time of his retirement will vest immediately
upon his retirement.  Although Mr. Giannopoulos has not retired, we
expensed 100% of the share-based compensation expense related to his option
grant because he was over the age of 62 at the time he received the
options.


28




As of
June 30, 2010, there was approximately $13.7 million in non-cash share-based
compensation cost related to non-vested awards that were not yet recognized in
our consolidated statements of operations.  This cost is expected to
be recognized over a weighted-average period of 1.83 years.





Income
from Operations





Income from operations for fiscal year
2010 increased approximately $27.1 million, or 19.3%, to approximately $168.0
million, compared to fiscal year 2009.  The increase reflects an
overall improvement in margin coupled with our continued cost cutting
efforts.  Foreign currency exchange rate fluctuations increased our
income from operations for the fiscal year 2010 by approximately $0.5
million.





Non-operating
Income (Expense)





Net non-operating income for fiscal
year 2010 was approximately $0.2 million compared to approximately $6.0 million
for fiscal year 2009.  The decrease of approximately $5.9 million
reflects:





·
            A
      decrease in interest income of approximately $4.6 million due to overall
      lower interest earned on cash and cash equivalents and investments
      (short-term and long-term) balances;
and,


·
            The
      credit based other-than-temporary impairment losses of approximately $4.8
      million and $1.3 million for fiscal years ended June 30, 2010 and 2009,
      respectively, for investments in auction rate securities classified as
      long-term investments on our consolidated balance sheets.  This
      increase loss in fiscal year 2010 is related to the deterioration of one
      of our auction rate securities with an original cost of $10.0 million
      which is valued at approximately $4.3 million at June 30,
      2010.


·
            Above
      decreases in non-operating income was partially offset by approximately
      $1.3 million increase in the foreign currency exchange transaction
      gain.  For fiscal year 2010, the foreign currency exchange
      transaction gain was approximately $1.0 million compared to a loss of
      approximately $0.3 million in fiscal year
2009.




Income
Tax Expense


The effective tax rates for fiscal
years 2010 and 2009 were 31.4% and 33.5%, respectively.  The effective
tax rates for the fiscal years 2010 and 2009 were less than the 35.0% U.S.
statutory federal income tax rate, mainly due to the mix of earnings from
jurisdictions that have a lower statutory tax rate than the U.S., our continued
assertion to permanently reinvest the cumulative unremitted earnings of our
significant non-US affiliates, and tax benefits realized upon the expiration of
statutes of limitations or settlements with tax authorities,.  These
benefits were partially offset by the recognition of uncertain tax
positions, non-deductible compensation items including, non-cash share-based
compensation, valuation allowances, creditable foreign withholding taxes and the
inclusion of foreign income in our U.S. tax base.




The decrease in the effective tax rate
for fiscal year 2010 as compared to fiscal year 2009 was primarily attributable
to reductions in the recognition of uncertain tax positions, reductions in the
inclusion of foreign income in our U.S. tax base, and reductions in valuation
allowances, partially offset by increases in tax primarily attributable to a
decrease in tax benefits realized upon the expiration of statutes of limitations
or settlements with tax authorities, increases in non-deductible compensation
items and the mix of earnings from jurisdictions that have a lower statutory tax
rate than the U.S.




We recorded net unrecognized income tax
benefits of approximately $21.3 million and $18.0 million, including accrued
interest and penalties of approximately $2.4 million and $2.0 million at June
30, 2010 and 2009, respectively.  We have recognized approximately
$0.4 million and $0.7 million of interest expense for the fiscal years 2010 and
2009, respectively.  The non-current portion of the net unrecognized
income tax benefits represents benefits with respect to which we do not
anticipate making a payment within 12 months of the balance sheet
date.  If recognized, all of the net unrecognized income tax benefit
would be recognized as a reduction of income tax expense, impacting the
effective income tax rate.




We have recognized a decrease in
certain unrecognized tax benefits for the fiscal year ended June 30, 2010
primarily due to the expiration of statutes of limitations, which reduced the
effective tax rate and income tax expense by approximately $1.3
million.  We estimate that within the next 12 months, we will decrease
the unrecognized income tax benefits by approximately $2.7 million to $3.7
million due to the expiration of statues of limitations and settlement of issues
with tax authorities, which we believe would increase earnings as a result of a
reduction in tax expense.  However, audit outcomes and the timing of
audit settlements are subject to significant uncertainty.  Over the
next 12 months, it is reasonably possible that our tax positions will continue
to generate liabilities for uncertain tax positions.




Net
Income Attributable to MICROS Systems, Inc. and Diluted Net Income per Share
Attributable to MICROS Systems, Inc. Common Shareholders





Net income attributable to MICROS
Systems, Inc. for fiscal year 2010 increased approximately $18.1 million, or
18.8%, to approximately $114.4 million, compared to fiscal year
2009.  The increase is mainly due to an overall improvement in margin,
coupled with our continued cost cutting efforts.  Foreign currency
exchange rate fluctuations increased our net income attributable to MICROS
Systems, Inc. for fiscal year 2010 by approximately $1.1 million.





Diluted net income per share
attributable to MICROS Systems, Inc. common shareholders for fiscal year 2010
and 2009 was $1.41 and $1.17 per diluted share.




29




Comparison of Fiscal Year
2009 to Fiscal Year 2008




Revenue





The following table provides
information regarding the sales mix by reportable segments in fiscal years 2009
and 2008 (amounts are net of intersegment eliminations, based on location of the
selling entity, and include export sales):





Fiscal Year Ended June 30,U.S.
                    
                    
                    International
                    
                    
                    Total(in thousands)
                    
                    2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Hardware
                    
                    $
                    107,960
                    
                    
                    $
                    131,712
                    
                    
                    $
                    101,874
                    
                    
                    $
                    134,253
                    
                    
                    $
                    209,834
                    
                    
                    $
                    265,965Software
                    
                    
                    48,523
                    
                    
                    
                    60,012
                    
                    
                    
                    84,389
                    
                    
                    
                    98,527
                    
                    
                    
                    132,912
                    
                    
                    
                    158,539Service
                    
                    
                    277,999
                    
                    
                    
                    224,734
                    
                    
                    
                    286,980
                    
                    
                    
                    304,712
                    
                    
                    
                    564,979
                    
                    
                    
                    529,446Total
      Revenue
                    
                    $
                    434,482
                    
                    
                    $
                    416,458
                    
                    
                    $
                    473,243
                    
                    
                    $
                    537,492
                    
                    
                    $
                    907,725
                    
                    
                    $
                    953,950





The
following table provides information regarding the total sales mix as a percent
of total revenue for fiscal years 2009 and 2008:





Fiscal Year Ended June 30,(in thousands)
                    
                    2009
                    
                    
                    2008Hardware
                    
                    
                    23.1
                    %
                    
                    
                    27.9
                    %Software
                    
                    
                    14.7
                    %
                    
                    
                    16.6
                    %Service
                    
                    
                    62.2
                    %
                    
                    
                    55.5
                    %Total
                    
                    
                    100.0
                    %
                    
                    
                    100.0
                    %





For fiscal year 2009, total revenue was
approximately $907.7 million, a decrease of approximately $46.2 million, or 4.8%
compared to the fiscal year 2008 due to the following:





·
            The
      unfavorable foreign currency exchange rate fluctuations, for substantially
      all foreign currencies against the U.S. dollar, negatively affected total
      revenue by approximately $54.5
million;


·
            Hardware
      and software sales volume decreased by 17% and 10%, respectively, compared
      to fiscal year 2008.  We believe these decreases were due to a
      slow-down in demand from our customers as a result of adverse global
      economic conditions.


·
            The
      decreases noted above were offset partially by additional services revenue
      generated by Fry, a company that we acquired in August 2008, and an
      additional 5% increase in services sales volume compared to fiscal year
      2008.




The international
segment revenue for the fiscal year ended June 30, 2009 decreased by
approximately $64.2 million compared to the fiscal year 2008.  The
unfavorable foreign currency exchange rate fluctuations negatively affected
total revenue by approximately $54.5 million.  The hardware and
software sales volume decreased 17% and 4%, respectively, both compared to
fiscal year 2008.  We believe the decreases in hardware and software
sales volume were due to a slowdown in demand from our customers because of
adverse global economic conditions.  The decreases discussed above
were partially offset by a 6% increase in services sales volume compared to
fiscal year 2008.  The increase in services sales volume was due to
the continued expansion of our customer base coupled with increased recurring
support revenue from existing customers (primarily through purchase of
additional services).





U.S. segment revenue increased
approximately $18.0 million for the fiscal year ended June 30, 2009 compared to
the fiscal year 2008.  The increase was primarily the result of
additional services revenue generated as a result of the acquisition of Fry in
August 2008 and the continued expansion of our customer base coupled with
increased recurring support revenue from existing customers (primarily through
purchase of additional services).  This increase was partially offset
by 18% decrease in hardware and 19% decrease in software revenues, both compared
to fiscal year 2008.  We believe these decreases were due to a
slowdown in demand from our customers because of adverse U.S. and global
economic conditions.





Cost
of Sales





The following table provides
information regarding the cost of sales in fiscal years 2009 and
2008:





FiscalYearEndedJune30,2009
                            
                            
                            2008(in thousands)
                            
                            Cost
                              ofSales
                            
                            
                            %ofRelated
                              Revenue
                            
                            
                            Cost
                              ofSales
                            
                            
                            %ofRelated
                              RevenueHardware
                            
                            $
                            135,033
                            
                            
                            
                            64.4
                            %
                            
                            $
                            171,782
                            
                            
                            
                            64.6
                            %Software
                            
                            
                            25,570
                            
                            
                            
                            19.2
                            %
                            
                            
                            33,135
                            
                            
                            
                            20.9
                            %Service
                            
                            
                            264,883
                            
                            
                            
                            46.9
                            %
                            
                            
                            247,954
                            
                            
                            
                            46.8
                            %Total
      Cost of Sales
                            
                            $
                            425,486
                            
                            
                            
                            46.9
                            %
                            
                            $
                            452,871
                            
                            
                            
                            47.5
                            %




30




For fiscal year 2009, cost of sales as
a percent of revenue decreased 0.6% to 46.9% compared to fiscal year 2008.
Hardware cost of sales as a percent of related revenue decreased primarily as a
result of a lower freight costs as compared to fiscal year 2008. This decrease
was partially offset by an increase in the inventory reserve provision of
approximately $1.3 million, including, approximately $0.7 million related to
potentially obsolete products resulting from adjustments to our cost structure
in one of our locations. Software cost of sales as a percent of related revenue
decreased primarily due to a lower cost of sales with respect to third party
software and a decrease in capitalized software amortization expense (included
in software cost of sales) as a percent of software revenue as compared to
fiscal year 2008. Service cost of sales as a percent of related revenue was
constant compared to fiscal year 2008. The foreign currency exchange rate
fluctuations decreased our cost of sales for the fiscal year 2009 by
approximately $30.2 million.









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





SG&A expenses decreased
approximately $25.7 million to approximately $281.2 million compared to
approximately $306.9 million in fiscal year 2008.  As a percent of
revenue, SG&A expenses decreased 1.2% to 31.0% compared to 32.2% in fiscal
year 2008 primarily due to:





·
            Our
      ability to manage our variable costs, mainly our compensation related
      expenses; and,


·
            The
      decrease in non-cash share-based compensation expense, included in
      SG&A expenses, for fiscal year 2009 to approximately $13.1 million
      compared to non-cash share based compensation expense of approximately
      $16.2 million for fiscal year 2008.  See “Share-Based
      Compensation Expenses” below for further
  information.


·
            Foreign
      currency exchange rate fluctuations, which decreased our SG&A expenses
      for the fiscal year 2009 by approximately $15.5 million compared to fiscal
      year 2008.




The
decreases in SG&A noted above were partially offset by:





·
            Approximately
      $3.1 million in restructuring charges in fiscal year 2009, primarily
      reflecting adjustments to our cost structure to address lower sales volume
      in certain of our locations.  The charge included approximately
      $1.5 million in employee related costs and approximately $1.6 million in
      occupancy related costs for certain of our facilities that we
      vacated.


·
            The
      higher percentage of revenue represented by our fixed costs due to lower
      revenue in fiscal year 2009 as compared to fiscal year 2008;
      and,


·
            An
      increase in our bad debt expenses of approximately $1.4 million, due to
      adverse U.S. and global economic
conditions.




Research
and Development (“R&D”)





R&D expenses consist primarily of
labor costs less capitalized software development costs.  The
following table provides information regarding our R&D expenses in fiscal
years 2009 and 2008:





Fiscal Year Ended June 30,(in thousands)
                      
                      2009
                      
                      
                      2008R&D
      labor and other costs
                      
                      $
                      43,100
                      
                      
                      $
                      42,048Capitalized
      software development costs
                      
                      
                      (470
                      )
                      
                      
                      (1,919
                      )Total
      R&D expenses
                      
                      $
                      42,630
                      
                      
                      $
                      40,129%
      of Revenue
                      
                      
                      4.7
                      %
                      
                      
                      4.2
                      %





Foreign currency exchange rate
fluctuations decreased our R&D expenses for fiscal year 2009 by
approximately $1.0 million.





Depreciation
and Amortization Expenses





Depreciation and amortization expenses
for fiscal year 2009 increased approximately $2.4 million to approximately $17.5
million compared to approximately $15.1 million in fiscal year
2008.  The increase was primarily due to additional depreciation
expenses on capital expenditures since June 30, 2008 and the acquisition of
Fry.  These increases were partially offset by foreign currency
exchange rate fluctuations which decreased depreciation and amortization
expenses for the fiscal year 2009 by approximately $0.9 million.





Share-Based
Compensation Expenses





For fiscal years 2009 and 2008, we
recognized non-cash share-based compensation expense of approximately $13.9
million and $17.2 million, respectively.  The SG&A expenses and
R&D expenses discussed above included the following allocations of non-cash
share-based compensation expense:


31





Fiscal Year Ended June 30,(in thousands)
                      
                      2009
                      
                      
                      2008SG&A
                      
                      $
                      13,108
                      
                      
                      $
                      16,213R&D
                      
                      
                      792
                      
                      
                      
                      1,016Total
      non-cash share-based compensation expense
                      
                      
                      13,900
                      
                      
                      
                      17,229Income
      tax benefit
                      
                      
                      (4,100
                      )
                      
                      
                      (4,083
                      )Total
      non-cash share-based compensation expense, net of tax
    benefit
                      
                      $
                      9,800
                      
                      
                      $
                      13,146Impact
      on diluted net income per share attributable to MICROS Systems, Inc.
      common shareholders
                      
                      $
                      0.12
                      
                      
                      $
                      0.16





The non-cash share-based compensation
expense allocated to SG&A for the 2009 and 2008 fiscal years included
approximately $0.8 million and $3.2 million, respectively, related to the grant
of options during those fiscal years to our Chairman, President, and Chief
Executive Officer, A.L. Giannopoulos.  In accordance with the terms of
our option plan, as he was over the retirement age of 62, any options that he
holds that have not yet vested at the time of his retirement will vest
immediately upon his retirement.  Although Mr. Giannopoulos had not
retired, we expensed 100% of the share-based compensation expense related to his
option grant because he was over the age of 62 at the time he received the
options.





Income
from Operations





Income from operations for fiscal year
2009 increased approximately $1.9 million, or 1.4%, to approximately $140.8
million, compared to approximately $138.9 million in fiscal year
2008.  The increase principally reflects our ability to manage our
variable costs, mainly our compensation related expenses.  Foreign
currency exchange rate fluctuations decreased our income from operations for the
fiscal year 2009 by approximately $7.0 million.





Non-operating
Income (Expense)





Net non-operating income for fiscal
year 2009 was approximately $6.0 million compared to approximately $15.0 million
for fiscal year 2008.  The decrease of approximately $9.0 million
reflected:





·
            A
      decrease in interest income of approximately $6.0 million due to overall
      lower interest earned on cash and cash equivalents and investment
      (short-term and long-term)
balances;


·
            The
      credit based other-than-temporary impairment losses of approximately $1.3
      million for investments in auction rate securities classified as long-term
      investments on our consolidated balance
sheets.


·
            The
      inclusion in fiscal year 2008 of non-operating income of approximately
      $1.7 million for a grant received in fiscal year 2008 from the Irish
      Development Authority related to the number of jobs we created in
      Ireland.


·
            A
      partially offsetting $1.1 million decrease in the foreign currency
      exchange transaction loss from approximately $1.4 million in fiscal year
      2008 to approximately $0.3 million in fiscal year
  2009.




Income
Tax Expense





The effective tax rates for fiscal
years 2009 and 2008 were 33.5% and 34.0%, respectively.  The effective
tax rates for the fiscal years 2009 and 2008 were less than the 35.0% U.S.
statutory federal income tax rate, mainly due to the mix of earnings from
jurisdictions that have a lower statutory tax rate than the U.S., our continued
assertion to permanently reinvest the cumulative unremitted earnings of our
significant non-US affiliates, and tax benefits realized upon the expiration of
statutes of limitations or settlements with tax authorities, These benefits were
partially offset by the recognition of uncertain tax
positions,  non-deductible compensation items including , non-cash
share-based compensation , valuation allowances, creditable foreign withholding
taxes and the inclusion of foreign income in our U.S. tax base.




The decrease in the effective tax rate
for fiscal year 2009 as compared to fiscal year 2008 was primarily attributable
to the mix of earnings from jurisdictions that have a lower statutory tax rate
than the U.S., decreases in non-deductible compensation items including,
non-cash share-based compensation and reductions in the recognition of uncertain
tax positions due to the final settlement of certain tax audits, and the
expiration of statutes of limitations, partially offset by increases in tax
primarily attributable to increases in valuation allowances and
foreign  withholding taxes.





Net
income attributable to MICROS Systems, Inc. and Diluted Net Income per Share
Attributable to MICROS Systems, Inc. Common Shareholders





Net income attributable to MICROS
Systems, Inc. for fiscal year 2009 decreased approximately $4.4 million, or
4.4%, to approximately $96.3 million, compared to approximately $100.7 million
in fiscal year 2008.  The decrease is mainly due to an overall
decrease in sales volume and overall lower interest earned on our cash and cash
equivalents and short-term investments.  These decreases were
substantially offset by our ability to manage our variable costs, mainly our
compensation related expenses, and a decrease in non-cash share-based
compensation expense, all of which are explained above in more
detail.  Foreign currency exchange rate fluctuations decreased our net
income attributable to MICROS Systems, Inc. for fiscal year 2009 by
approximately $6.4 million.


32





Diluted net income per share
attributable to MICROS Systems, Inc. common shareholders for fiscal year 2009
was $1.17 per share compared to $1.20 per share for fiscal year
2008.





RECENT
ACCOUNTING STANDARDS





Recently
Adopted Accounting Pronouncements




On July
1, 2009, we adopted authoritative guidance issued by the Financial Accounting
Standards Board (“FASB”) on business combinations.  The guidance
addresses the manner in which the acquirer of a business recognizes and measures
in its financial statements the identifiable assets acquired, the liabilities
assumed, and any non-controlling interest in the acquired
business.  This guidance also provides standards for recognizing and
measuring the goodwill acquired in a business combination and for disclosure of
information to enable users of the financial statements to evaluate the nature
and financial effects of the business combination.  Our acquisition of
TIG Global on December 31, 2009 was accounted for under this
guidance.




On July 1, 2009, we adopted
authoritative guidance issued by the FASB that changes the accounting and
reporting for non-controlling interests.  This guidance requires,
among other things, that: non-controlling interests be reported as a component
of equity; changes in a parent’s ownership interest while the parent retains its
controlling interest be accounted for as equity transactions; and any retained
non-controlling equity investment upon the deconsolidation of a subsidiary
initially be measured at fair value.  The adoption of this guidance
did not have a material impact on our consolidated financial
statements.




On July 1, 2009, we adopted
authoritative guidance issued by the FASB which revises the factors that should
be considered in developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset.  This guidance is
intended to improve the consistency between the useful life of a recognized
intangible asset and the period of expected cash flows used to measure the fair
value of the asset under other U.S. generally accepted accounting
principles.  The adoption of this guidance did not have a material
impact on our consolidated financial statements.




On July 1, 2009, we adopted
authoritative guidance issued by the FASB on fair value measurement for
nonfinancial assets and liabilities, other than non-financial assets and
liabilities that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually), which already were subject
to FASB guidance.  The adoption of this guidance did not have a
material impact on our consolidated financial statements.




In January 2010, we adopted
authoritative guidance and disclosure requirements issued by the FASB related to
recurring and nonrecurring fair value measurements. The guidance requires new
disclosures on the transfers of assets and liabilities between Level 1 inputs
(quoted prices in active market for identical assets or liabilities) and Level 2
inputs (significant other observable inputs) of the fair value measurement
hierarchy, including the reasons and the timing of the transfers. Additionally,
the guidance requires separate disclosure of activities on purchases, sales,
issuance, and settlements of the assets and liabilities measured using
significant unobservable inputs (Level 3 fair value measurements). The adoption
of this guidance, other than required additional disclosures on the activities
for Level 3 fair value measurements which is effective for us beginning July 1,
2011, did not have a material impact on our consolidated financial
statements.





Recent
Accounting Pronouncements Not Yet Adopted





In October 2009, the FASB issued
authoritative guidance on revenue arrangements with multiple deliverables that
are outside the scope of software revenue recognition guidance.  Under
the guidance, when vendor-specific objective evidence or third-party evidence of
selling price is not available, a best estimate of the selling price is required
to separate deliverables and allocate arrangement consideration based on the
relative selling prices of the separate deliverables (the “relative selling
price method”).  The relative selling price method allocates any
discount in the arrangement proportionately to each deliverable on the basis of
each deliverable’s selling price.  The guidance also significantly
expands related disclosure requirements.  This standard is effective
for us beginning July 1, 2010.  We are continuing to evaluate the
impact that the adoption of this guidance will have on our consolidated
financial statements.





In October 2009, the FASB also issued
authoritative guidance on revenue recognition for arrangements that include
software elements.  Under the guidance, tangible products containing
software components and non-software components that function together to
deliver the tangible product’s essential functionality are excluded from the
scope of software revenue recognition guidance and will be subject to other
relevant revenue recognition guidance.  This guidance will become
effective for us beginning July 1, 2010.  We do not believe the
adoption of this guidance will have a material impact on our consolidated
financial statements.




33




LIQUIDITY
AND CAPITAL RESOURCES





Sources
and Uses of Cash





The Company’s consolidated statement of
cash flows summary for the 2010, 2009, and 2008 fiscal years is as
follows:





Fiscal Year Ended June 30,(in thousands)
                    
                    2010
                    
                    
                    2009
                    
                    
                    2008Net
      cash provided by (used in):Operating
      activities
                    
                    $
                    201,869
                    
                    
                    $
                    165,912
                    
                    
                    $
                    163,648Investing
      activities
                    
                    
                    (66,340
                    )
                    
                    
                    (193,219
                    )
                    
                    
                    (15,845
                    )Financing
      activities
                    
                    
                    (20,539
                    )
                    
                    
                    (37,195
                    )
                    
                    
                    (37,463
                    )





Operating
activities:





Net cash provided by operating
activities for fiscal year 2010 increased approximately $36.0 million compared
to fiscal year 2009 which was primarily due to an increase in net income of
approximately $17.7 million before adjusted for an increased performance based
compensation related accruals of approximately $16.6 million.





Net cash provided by operating
activities for fiscal year 2009 increased approximately $2.3 million compared to
fiscal year 2008 primarily due a decrease in net operating assets for the fiscal
year ended June 30, 2009 compared to fiscal year 2008.





Investing
activities:





Net cash used by investing activities
for fiscal year 2010 was approximately $66.3 million reflecting approximately
$30.7 million used primarily in connection with the acquisition of TIG Global in
December 2009. Additionally, approximately $11.5 million was used to purchase
property, plant and equipment and to internally develop software to be licensed
to others. We used approximately $24.3 million to purchase investments, net of
proceeds from sales of investments.





Net cash used by investing activities
for fiscal year 2009 was approximately $193.2 million reflecting approximately
$37.2 million used in connection with the acquisition of Fry in August 2008.
Additionally, approximately $13.8 million was used to purchase property, plant
and equipment and to internally develop software to be licensed to others. We
used approximately $142.4 million to purchase investments, net of proceeds from
sales of investments (including approximately $5.2 million received from the
sales of auction rate securities.)





Net cash used by investing activities
for fiscal year 2008 was approximately $15.8 million reflecting approximately
$16.1 million used in connection with various acquisitions, primarily the
acquisition of Check-in Data for which we used approximately $11.5
million.  Additionally, approximately $14.9 million was used to
purchase property, plant and equipment and to internally develop software to be
licensed to others.  We received approximately $14.9 million from the
sale of our investments, net of cash used to purchase
investments.  Included in the sales proceeds was approximately $17.5
million from the sales of auction rate securities.





Financing
activities:





Net cash used in financing activities
for fiscal year 2010 was approximately $20.5 million, reflecting approximately
$47.6 million used to purchase our stock.  This amount was partially
offset by proceeds from stock option exercises of approximately $23.3 million
and realized tax benefits from stock option exercises of approximately $3.5
million.





Net cash used in financing activities
for fiscal year 2009 was approximately $37.2 million, reflecting approximately
$22.2 million used to purchase our stock, and principal payments of
approximately $18.1 million on the line of credit and long-term debt that we
assumed as a result of our acquisition of Fry in August 2008.  These
amounts were partially offset by proceeds from stock option exercises of
approximately $2.9 million and realized tax benefits from stock option exercises
of approximately $1.0 million.





Net cash used in financing activities
for fiscal year 2008 was approximately $37.5 million, reflecting approximately
$74.3 million used to purchase our stock, partially offset by proceeds from
stock option exercises of approximately $27.9 million and realized tax benefits
from stock option exercises of approximately $11.0 million.





All cash and cash equivalents and
short-term investments are being retained for operations, expansion of the
business and the repurchase of our stock.





Capital
Resources





At June 30, 2010, we had two credit
agreements (the “Credit Agreements”) that in the aggregate provided a $65.0
million multi-currency committed line of credit.  Effective July 30,
2010, the Credit Agreements were renewed and extended through July 31, 2013,
subject to some changes in terms, including a reduction in the overall limit on
the line to $50.0 million (a change made at our request), the addition and
deletion of certain subsidiaries as co-borrowers, and a reduction in certain
fees payable to the lenders under certain circumstances.  See Note 7
“Line of Credit,” in the Notes to the Consolidated Financial Statements included
in this report.  As of June 30, 2010, we had approximately $1.4
million outstanding under the Credit Agreements and had applied approximately an
additional $0.4 million to guarantees.




34





We also have a credit relationship with
a European bank in the amount of EUR 1.0 million (approximately $1.2 million at
the June 30, 2010 exchange rate).  As of June 30, 2010, there were no
balances outstanding on this credit facility, but approximately EUR 0.6 million
(approximately $0.7 million at the June 30, 2010 exchange rate) of the credit
facility had been used for guarantees.





As of June 30, 2010, we had
approximately $63.6 million borrowing capacity under all of the credit
facilities described above (as noted above, the overall limit on our line of
credit decreased by $15.0 million on July 30, 2010).  The
weighted-average interest rate on the outstanding balances under the Credit
Agreements as of June 30, 2010 was 1.4%.





We do not currently invest in financial
instruments designed to protect against interest rate fluctuations, although we
will continue to evaluate the need to do so in the future.





We believe that our cash and cash
equivalents, short-term investments, cash generated from operations and our
available lines of credit are sufficient to provide our working capital needs
for the foreseeable future.  Based on our expected operating cash
flows and sources of cash, we do not believe that any limitations on liquidity
of our auction rate securities will have a material impact on our overall
ability to meet our liquidity needs.  In light of current economic
conditions generally and in light of the overall performance of the stock market
in recent periods, we cannot assume that funds would be available from other
sources if we were required to fund significant acquisitions or any
unanticipated and substantial cash needs.  We currently anticipate
that our property, plant and equipment expenditures for fiscal year 2011 will be
approximately $12 million.





The following table provides certain
financial indicators of our liquidity and capital resources as of June 30, 2010
and June 30, 2009:





As of June 30,(in
      thousands, except ratios)
                                  
                                  2010
                                  
                                  
                                  2009Cash
      and cash equivalents and short-term investments (1)
                                  
                                  $
                                  545,298
                                  
                                  
                                  $
                                  438,936Available
      credit facilities
                                  
                                  $
                                  66,223
                                  
                                  
                                  $
                                  66,403Outstanding
      credit facilities
                                  
                                  
                                  (1,442
                                  )
                                  
                                  
                                  (1,090
                                  )Outstanding
      guarantees
                                  
                                  
                                  (1,187
                                  )
                                  
                                  
                                  (778
                                  )Unused
      credit facilities
                                  
                                  $
                                  63,594
                                  
                                  
                                  $
                                  64,535Working
      capital (2)
                                  
                                  $
                                  468,047
                                  
                                  
                                  $
                                  416,593MICROS
      Systems, Inc. shareholders’ equity
                                  
                                  $
                                  783,380
                                  
                                  
                                  $
                                  718,997Current
      ratio (3)
                                  
                                  
                                  2.50
                                  
                                  
                                  
                                  2.58





(1)
            Does
      not include approximately $53.3 million and $57.8 million invested in
      auction rate securities, classified as long-term investments in our
      Consolidated Balance Sheet as of June 30, 2010 and 2009,
      respectively.


(2)
            Current
      assets less current liabilities.


(3)
            Current
      assets divided by current liabilities.  The Company does not
      have any long-term debt.





Inflation





We have not experienced any significant
impact as a result of inflation.





Contractual
Obligations





The following table summarizes our
contractual arrangements at June 30, 2010:





Paymentsduebyperiod(in thousands)
                            
                            Total
                            
                            
                            Lessthan
                              1year
                            
                            
                            1-3years
                            
                            
                            3-5years
                            
                            
                            Morethan
                              5yearsOperating
      lease obligations
                            
                            $
                            99,778
                            
                            
                            $
                            26,944
                            
                            
                            $
                            38,447
                            
                            
                            $
                            25,817
                            
                            
                            $
                            8,570SERP
      liability*
                            
                            
                            4,654
                            
                            
                            
                            96
                            
                            
                            
                            181
                            
                            
                            
                            650
                            
                            
                            
                            3,727Purchase
      obligations
                            
                            
                            576
                            
                            
                            
                            576
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Capital
      lease obligations
                            
                            
                            415
                            
                            
                            
                            189
                            
                            
                            
                            186
                            
                            
                            
                            40
                            
                            
                            
                            —Total
                            
                            $
                            105,423
                            
                            
                            $
                            27,805
                            
                            
                            $
                            38,814
                            
                            
                            $
                            26,507
                            
                            
                            $
                            12,297





*
              The
      term “SERP” refers to our Supplemental Executive Retirement
      Plan.  See Note 16, “Employee Benefit Plans” in the Notes to
      Consolidated Financial Statements included in this report for further
      information.





Due to the uncertainty with respect to
the timing of future cash flows associated with our unrecognized income tax
benefits at June 30, 2010, we are unable to reasonably estimate settlements with
taxing authorities.  The above contractual obligations table does not
reflect unrecognized income tax benefits of approximately $21.3
million.  See Note 13 “Income Taxes” in the Notes to Consolidated
Financial Statements included in this report.


35





FORWARD-LOOKING
STATEMENTS





The preceding management’s discussion
and analysis of financial condition and results of operations should be read in
conjunction with the consolidated financial statements and the related notes and
other financial information included elsewhere in this Annual Report on Form
10-K.  Certain statements contained in this Annual Report on Form 10-K
that are not historical facts are forward looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).  Our actual results may differ materially from those
anticipated in these forward-looking statements.





Examples of such forward-looking
statements in this Annual Report on Form 10-K include the
following:




·
            Item
      1, “Business,” statements regarding the future direction of PMS technology
      and the growth of the OPERA suite of products, development and release of
      additional products such as the Fidelio Cruise Crew Management System,
      business strategy for and in connection with our new TIG Global
      subsidiary, our strategy for product growth in restaurant software, trends
      in retail software, demand shift toward hosted applications and away from
      traditional on-premise implementations, our global distribution network,
      our expectations regarding sourcing of materials and equipment, our
      expectations regarding labor relations and employment, our expectations
      regarding interest rate fluctuations and strategies to counter interest
      rate fluctuations, the appropriateness of reliance on statutory and common
      law protections for our intellectual property, the risks associated with
      third party misappropriation of our intellectual property, competition,
      labor relations, quarterly results, the anticipated effect of the U.S.
      Government exercising a termination for convenience under one or more
      contracts that we have with the U.S. Government, and our belief that
      compliance with environmental laws and regulations will not have a
      material effect on expenditures, earnings, or our competitive
      position;


·
            Item
      1A, “Risk Factors,” regarding the anticipated or potential impact on our
      business, financial results, or competitive position of the various risks
      described in that section;


·
            Item
      2, “Properties,” regarding the anticipated availability of additional
      space;


·
            Item
      3, “Legal Proceedings,” regarding the likely effect of litigation on our
      results of operations or financial position;
and


·
            Item
      7A, “Quantitative and Qualitative Disclosures about Market
      Risk.”




Additional
forward-looking statements are contained elsewhere in this report, including in
the preceding Management’s Discussion and Analysis of Financial Condition and
Results of Operations.  Such statements include the
following:





(i)
            our
      statements about the growth and direction of the hospitality and retail
      industries generally, and our analysis of the growth and direction of
      various sectors within those
industries;


(ii)
            our
      expectation that product and service margins may decline in response to
      the competitive nature of our
market;


(iii)
            our
      statements regarding the effects of foreign currency rate fluctuations (in
      particular, Euro and British pound sterling) on our financial
      performance;


(iv)
            our
      expectations that the customers with whom we do the largest amount of
      business will fluctuate from year to year, and our statements about the
      effects of large customer orders on our quarterly earnings, revenues, and
      total revenues;


(v)
            our
      statements regarding the impact on financial results in future periods if
      we determine that the financial condition of customers has
      deteriorated;


(vi)
            our
      statements regarding the impact on financial results in future periods if
      we misjudge the remaining economic life of a
  product;


(vii)
            our
      statements concerning the fluctuations in the market price of our common
      stock, whether as a result of variations in our quarterly operating
      results or other factors;


(viii)
            our
      belief that any existing legal claims or proceedings will not have a
      material adverse effect on our results of operations or financial
      position;


(ix)
            our
      beliefs about our competitive
strengths;


(x)
            our
      expectations regarding effective tax rates in future
    periods;


(xi)
            our
      expectations regarding the impact or lack of impact on our financial
      position and results of operations of the application of recent accounting
      standards;


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


(xiii)
            our
      expectations about our capital expenditures for future
      periods;


(xiv)
            our
      expectations that our exposure to interest rate risk will not materially
      change in the future;


(xv)
            our
      expectation that we will evaluate our need to invest in instruments to
      protect against interest rate fluctuations and our exposure to such
      interest rate risk;


(xvi)
            our
      statements about the effects on our revenue recognition as a result of
      changes to a customers’ delivery requirements or a products’
      completion;


(xvii)
            our
      statements regarding our ability to increase sales of our higher margin
      products;


(xviii)
            our
      expected costs associated with modifying our products to comply with
      applicable legal rules, regulations, and guidelines, including the credit
      card associations’ security and data protection rules,
  and


(xix)
            our
      expectations regarding valuation and liquidity of auction rate securities
      in which we have invested.




There are a number of
important factors that could cause actual results to differ materially from
those in the forward looking statements.  These may include: changes
in applicable laws and regulations, other activities of governments,
governmental agencies, or other regulatory bodies that affect our products,
services, or business operations, changes in accounting and auditing rules (and
changes in the interpretations of those rules), as well as those matters
described in Item 1A, “Risk Factors.”


36




ITEM
      7A.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





We are exposed to interest rate risk
and to foreign currency exchange rate risk.  See Foreign Sales and
Foreign Market Risks in Part 1 “Business”, and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” above for
information regarding foreign currency exchange risks.  Our committed
lines of credit bear interest at a floating rate, which exposes us to interest
rate risks.  We manage our exposure to this risk by minimizing, to the
extent feasible, overall borrowing and monitoring available financing
alternatives.  At June 30, 2010, we had total borrowings of
approximately $1.4 million, and had not entered into any instruments to hedge
the resulting exposure to interest-rate risk.   Management
believes that the fair value of the debt equals its carrying value at June 30,
2010 and June 30, 2009.  Our exposure to fluctuations in interest
rates will increase or decrease in the future with increases or decreases in the
outstanding amount under the line of credit.  As our total borrowing
as of June 30, 2010 was approximately $1.4 million, a 1% change in interest rate
would have resulted in an immaterial impact on our consolidated financial
position, results of operations and cash flows. Our cash equivalents and our
portfolio of marketable securities, including auction rate securities, are
subject to market risk due to changes in interest rates.  The market
value of fixed interest rate securities may be adversely affected by a rise in
interest rates, while floating rate securities may produce less income than
expected if interest rates fall.  Should interest rates fluctuate by
1%, the change in value of our marketable securities would not have been
material as of June 30, 2010, but the change in our interest income would
be an increase of approximately $5.5 million based on the cash, cash equivalents
and short term investment balances as of June 30, 2010 for the year then
ended.





To minimize our exposure to credit risk
associated with financial instruments, we place our temporary cash investments
with high-credit-quality institutions, generally with bond rating of “A” and
above.  See Note 2 “Financial Instruments and Fair Value Measurements”
in the Notes to Consolidated Financial Statements for a discussion regarding
auction rate securities.





ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA





See the Index to Consolidated Financial
Statements on page 42 of this report.





ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE





Not applicable.





ITEM
      9A.
              CONTROLS
      AND PROCEDURES





EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES





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





MANAGEMENT’S
ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





Our management’s report on internal
control over financial reporting is set forth on page 43of this annual report on Form 10-K and is incorporated by reference
herein.





CHANGE
IN INTERNAL CONTROL OVER FINANCIAL REPORTING





No change in our internal control over
financial reporting occurred during our most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.





ITEM
      9B.
              OTHER
      INFORMATION





Not applicable.




37




PART
III




ITEM
      10.
              DIRECTORS,
      EXECUTIVE OFFICERS, AND CORPORATE
GOVERNANCE





See Part I, Item 1 for information
regarding the Company’s Executive Officers.  Other information
required by this Item 10 will be set forth in the Company’s Proxy Statement
under the captions “Information as to Nominees”, “Section 16(a) Beneficial
Ownership Reporting Compliance”, “Corporate Governance,” and “Audit Committee”
and other appropriate sections of the Proxy Statement, and that information is
incorporated herein by reference.




ITEM
      11.
              EXECUTIVE
      COMPENSATION





The information required by Item 11
will be set forth in the Company’s Proxy Statement under the caption “Executive
Compensation,” and that information is incorporated herein by
reference.




ITEM
      12.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS





Except for the information set forth
below, the information required by Item 12 will be set forth in the Company’s
Proxy Statement under the caption “Security Ownership of Certain Beneficial
Owners and Management,” and that information is incorporated herein by
reference.





EQUITY
COMPENSATION PLAN INFORMATION





As of June 30, 2010Plan category
                                            
                                            Number of securities
                                              to be issued upon
                                              exercise of
                                              outstanding options,
                                              warrants
                                            
                                            
                                            Weighted-Average
                                              exercise price of
                                              outstanding options,
                                              warrants and rights
                                            
                                            
                                            Number of securities
                                              remaining available for future
                                              issuance under equity
                                              compensation plans
                                              (excluding securities
                                              reflected in column (a))(a)
                                            
                                            
                                            (b)
                                            
                                            
                                            (c)Equity
      compensation plans approved by security holders
                                            
                                            
                                            6,573,716
                                            
                                            
                                            $
                                            24.06
                                            
                                            
                                            
                                            3,496,581Equity
      compensation plans not approved by security holders
                                            
                                            
                                            N/A
                                            
                                            
                                            
                                            N/A
                                            
                                            
                                            
                                            N/ATotal
                                            
                                            
                                            6,573,716
                                            
                                            
                                            $
                                            24.06
                                            
                                            
                                            
                                            3,496,581





ITEM
      13.
              CERTAIN
      RELATIONSHIPS AND RELATED
TRANSACTIONS





The information required by Item 13
will be set forth in the Company’s Proxy Statement under the captions to
“Certain Relationships and Related Party Transactions” and “Corporate
Governance” and that information is incorporated herein by
reference.





ITEM
      14.
              PRINCIPAL
      ACCOUNTING FEES AND SERVICES





The information required by Item 14
will be set forth in the Company’s Proxy Statement under the caption
“Independent Registered Public Accounting Firm,” and that information is
incorporated herein by reference.


38





PART
IV





ITEM
      15.
              EXHIBITS
      AND FINANCIAL STATEMENT
SCHEDULE





(a)
              Exhibits
      and Financial Statement
Schedule:





(1)
              Financial
      Statements – See the Index to Consolidated Financial Statements on page
      42


(2)
              Schedule
      II – See the Index to Consolidated Financial Statements on page
      42


(3)
              Exhibits:


3(i)
            Articles
      of Incorporation of the Company are incorporated herein by reference to
      Exhibit 3 to the Annual Report on Form 10-K of the Company for the fiscal
      year ended June 30, 1990.


3(i)(a)
            Amendment
      to Articles of Incorporation is incorporated herein by reference to
      Exhibit 3(i) to the Quarterly Report on Form 10-Q of the Company for the
      period ended March 31, 1997.


3(i)(b)
            Amendment
      to Articles of Incorporation is incorporated herein by reference to
      Exhibit 3(i) to the Quarterly Report on Form 10-Q of the Company for the
      period ended March 31, 1998.


3(i)(c)
            Amendment
      to Articles of Incorporation is incorporated herein by reference to
      Exhibit 3(i) to the Form 8-K filed on November 16,
  2007.


3(ii)
            By-laws
      of the Company, as amended, are incorporated herein by reference to
      Exhibit 3(ii) to the Quarterly Report on Form 10-Q of the Company for the
      period ended December 31, 2008.


10(a)*
            MICROS
      Systems, Inc. 1991 Stock Option Plan as amended, is incorporated herein by
      reference to Exhibit A to the Proxy Statement of the Company for the 2009
      Annual Meeting of Shareholders


10(b)*
            Employment
      Agreement dated June 1, 1995 between MICROS Systems, Inc. and A. L.
      Giannopoulos is incorporated herein by reference to Exhibit 10e to the
      Annual Report on Form 10-K of the Company for the fiscal year ended June
      30, 1995.


10(b)(1)*
            First
      Amendment to Employment Agreement dated February 6, 1997 between MICROS
      Systems, Inc. and A. L. Giannopoulos is incorporated herein by reference
      to Exhibit 10 to the Quarterly Report on Form 10-Q of the Company for the
      period ended December 31, 1996.


10(b)(2)*
            Second
      Amendment to Employment Agreement dated February 1, 1998 between MICROS
      Systems, Inc. and A. L. Giannopoulos is incorporated herein by reference
      to Exhibit 10 to the Quarterly Report on Form 10-Q of the Company for the
      period ended December 31, 1997.


10(b)(3)*
            Third
      Amendment to Employment Agreement dated September 8, 1999 between MICROS
      Systems, Inc. and A. L. Giannopoulos is incorporated herein by reference
      to Exhibit 10g to the Annual Report on Form 10-K of the Company for the
      fiscal year ended June 30, 1999.


10(b)(4)*
            Fourth
      Amendment to Employment Agreement dated November 19, 2001 between MICROS
      Systems, Inc. and A. L. Giannopoulos is incorporated herein by reference
      to Exhibit 10 to the Quarterly Report on Form 10-Q of the Company for the
      period ended December 31, 2001.


10(b)(5)*
            Fifth
      Amendment to Employment Agreement dated November 15, 2002 between MICROS
      Systems, Inc. and A. L. Giannopoulos is incorporated herein by reference
      to Exhibit 10 to the Quarterly Report on Form 10-Q of the Company for the
      period ended December 31, 2002.


10(b)(6)*
            Sixth
      Amendment to Employment Agreement dated January 28, 2004 between MICROS
      Systems, Inc. and A. L. Giannopoulos is incorporated herein by reference
      to Exhibit 10 to the Quarterly Report on Form 10-Q of the Company for the
      period ended December 31, 2003.


10(b)(7)*
            Seventh
      Amendment to Employment Agreement dated August 9, 2005 between MICROS
      Systems, Inc. and A. L. Giannopoulos is incorporated herein by reference
      to Exhibit 10 to the Current Report on Form 8-K filed on August 11,
      2005.


10(b)(8)*
            Eighth
      Amendment to Employment Agreement dated June 6, 2006, between MICROS
      Systems, Inc. and A.L. Giannopoulos is incorporated herein by reference to
      Exhibit 10 to the Current Report on Form 8-K filed on June 8,
      2006.


10(b)(9)*
            Ninth
      Amendment to Employment Agreement dated November 17, 2006, between MICROS
      Systems, Inc. and A.L. Giannopoulos is incorporated herein by reference to
      Exhibit 10 to the Current Report on Form 8-K filed on November 21,
      2006.


10(b)(10)*
            Tenth
      Amendment to Employment Agreement dated June 12, 2008, between MICROS
      Systems, Inc. and A.L. Giannopoulos is incorporated herein by reference to
      Exhibit 10 to the Current Report on Form 8-K filed on June 13,
      2008.


10(b)(11)*
            Eleventh
      Amendment to Employment Agreement dated November 21, 2008, between MICROS
      Systems, Inc. and A.L. Giannopoulos is incorporated herein by reference to
      Exhibit 10.1 to the Current Report on Form 8-K filed on November 24,
      2008.


10(b)(12)*  Twelfth
      Amendment to Employment Agreement dated August 24, 2010, between
      MICROS Systems, Inc. and A.L. Giannopoulos is incorporated herein by
      reference to Exhibit 10.1 to the Current Report on Form 8-K filed on
      August 26, 2010.


10(c)*
            Employment
      Agreement dated May 28, 1997 between MICROS Systems, Inc. and Thomas L.
      Patz is incorporated herein by reference to Exhibit 10 to the Annual
      Report on Form 10-K of the Company for the fiscal year ended June 30,
      1997.


10(c)(1)*
            First
      Amendment to Employment Agreement dated October 1, 1998 between MICROS
      Systems, Inc. and Thomas L. Patz (filed herewith as Exhibit
      10(c)(1)).


10(c)(2)*
            Second
      Amendment to Employment Agreement dated November 17, 2006 between MICROS
      Systems, Inc. and Thomas L. Patz is incorporated herein by reference to
      Exhibit 10 to the Current Report on Form 8-K filed on November 21, 2006
      .


39





10(d)*
            Employment
      Agreement dated November 19, 2005, between MICROS Systems, Inc. and
      Jennifer Kurdle is incorporated herein by reference to Exhibit 10 to the
      Annual Report on Form 10-K for the fiscal year ended June 30,
      2009.


10(e)*
            Employment
      Agreement dated May 28, 1997 between MICROS Systems, Inc. and Gary C.
      Kaufman is incorporated herein by reference to Exhibit 10 to the Annual
      Report on Form 10-K of the Company for the fiscal Year ended June 30,
      1997.


10(e)(1)*
            First
      Amendment to Employment Agreement dated October 1, 1998 between MICROS
      Systems, Inc. and Gary C. Kaufman is incorporated herein by reference to
      Exhibit 10 to the Quarterly Report on Form 10-Q of the Company for the
      period ended December 31, 1998.


10(e)(2)*
            Second
      Amendment to Employment Agreement dated November 17, 2006 between
      MICROS Systems, Inc. and Gary C. Kaufman is incorporated herein by
      reference to Exhibit 10 to the Current Report on Form 8-K filed on
      November 21, 2006.


10(f)
            Restated
      Supplemental Executive Retirement Plan, as approved by the Board of
      Directors on


April
      27, 2005, is incorporated herein by reference to Exhibit 10 to the Annual
      Report on Form 10-K for the fiscal year ended June 30,
    2006.


10(g)
            Amended
      and Restated Credit Agreement, effective as of July 29, 2005, among MICROS
      Systems, Inc., DV Technology Holdings Corporation, Datavantage
      Corporation, MICROS Fidelio Nevada, LLC, MSI Delaware, LLC, MICROS-Fidelio
      Worldwide, Inc., and JTECH Communications, Inc. as Borrower, Bank of
      America, N.A., as administrative agent, swing line lender and L/C issuer,
      and Wachovia Bank, N.A., and US Bank, N.A., and Banc of America Securities
      LLC, as sole lead arranger and book manager, is incorporated herein by
      reference to Exhibit 10 to the Annual Report on Form 10-K for the fiscal
      year ended June 30, 2005.


10(g)(1)
            First
      Amendment to Credit Agreements, dated December 11, 2008 among MICROS
      Systems, Inc. DV Technology Holdings Corporation, Datavantage Corporation,
      MICROS Fidelio Nevada, LLC, MSI Delaware, LLC, Micros Fidelio Worldwide,
      Inc., JTECH Communications, MICROS-Fidelio (Ireland) Ltd. as Guarantor,
      Bank of America, N.A., as Administrative Agent, and Bank of America, N.A.,
      Wachovia Bank, N.A., and U.S. Bank, N.A., as Lenders is incorporated
      herein by reference to Exhibit 10(b) to the Quarterly Report on Form 10-Q
      of the Company for the period ended December 31,
  2008.


10(g)(2)
            Second
      Amendment to Credit Agreements, dated July 30, 2010 among MICROS Systems,
      Inc. DV Technology Holdings Corporation, Datavantage Corporation, TIG
      Global LLC, Fry, Inc., JTECH Communications, and Micros-Fidelio Worldwide,
      Inc., MICROS-Fidelio (Ireland) Ltd. as Guarantor, Bank of America, N.A.,
      as Administrative Agent, and Bank of America, N.A., Wells Fargo, N.A., and
      U.S. Bank, N.A., as Lenders (filed herewith as Exhibit
    10(g)).


10(h)
            Amended
      and Restated Credit Agreement, effective as of July 29, 2005, among
      MICROS-Fidelio (Ireland) Ltd., MICROS-Fidelio Systems (U.K.) Ltd.,
      MICROS-Fidelio España S.L., MICROS Fidelio (Canada), Ltd., MICROS-Fidelio
      Brazil, Ltda., MICROS-Fidelio France S.A.S., Hospitality Technologies,
      S.A., MICROS-Fidelio Mexico S.A. de C.V., MICROS Systems Holding GmbH,
      MICROS-Fidelio GmbH, MICROS-Fidelio Software Portugal Unipessoal Lda,
      MICROS-Fidelio (Thailand) Co., Ltd., MICROS-Fidelio Singapore Pte Ltd.,
      MICROS-Fidelio Software (Philippines), Inc., MICROS-Fidelio Japan Ltd.,
      MICROS-Fidelio Australia Pty. Ltd., MICROS-Fidelio Hong Kong, Ltd.,
      Fidelio Nordic Norway A/S, Fidelio Nordic Oy, Fidelio Nordic Sverige,
      A.B., Hotelbk, A.B., as Borrower, Bank Of America, N.A., as Administrative
      Agent, swing line lender, and L/C issuer, and Wachovia Bank N.A. and US
      Bank N.A., and Banc of America Securities LLC, as sole lead arranger and
      book manager is incorporated herein by reference to Exhibit 10 to the
      Annual Report on Form 10-K for the fiscal year ended June 30,
      2005.


10(h)(1)
            Second
      Amendment to Credit Agreements, dated July 30, 2010 among MICROS-Fidelio
      (Ireland) Ltd., MICROS-Fidelio Systems (U.K.) Ltd., MICROS-Fidelio España
      S.L., MICROS Fidelio (Canada), Ltd., MICROS-Fidelio Brazil, Ltda.,
      MICROS-Fidelio France S.A.S., Hospitality Technologies, S.A.,
      MICROS-Fidelio Mexico S.A. de C.V., MICROS Systems Holding GmbH,
      MICROS-Fidelio GmbH, MICROS-Fidelio Software Portugal Unipessoal Lda,
      MICROS-Fidelio (Thailand) Co., Ltd., MICROS-Fidelio Singapore Pte Ltd.,
      MICROS-Fidelio Software (Philippines), Inc., MICROS-Fidelio Japan Ltd.,
      MICROS-Fidelio Australia Pty. Ltd., MICROS-Fidelio Hong Kong, Ltd., Micros
      Fidelio Norway A/S, Micros Fidelio Finland Oy, Micros
      Fidelio  Sverige, A.B., Hotelbk, A.B., as Borrower, Bank Of
      America, N.A., as Administrative Agent, swing line lender, and L/C issuer,
      and Wells Fargo N.A. and US Bank N.A., and Banc of America Securities LLC,
      as sole lead arranger and book manager (filed herewith as Exhibit
      10(h)).


10(i)
            Lease
      Agreement by and between Orix Columbia, Inc. and MICROS Systems, Inc.,
      dated August 17, 1998, with respect to the Company’s corporate
      headquarters located at 7031 Columbia Gateway Dr., Columbia MD 21046-2289,
      as amended by a First Amendment to Lease, dated October 27, 1999, a Second
      Amendment to Lease, dated December 26, 2001, and a Third Amendment to
      Lease, dated March 1, 2006 and by and between MICROS Systems, Inc. and
      Columbia Gateway Office Corporation as successor in interest to Orix
      Columbia, Inc. is incorporated herein by reference to Exhibit 10(j) to the
      Quarterly Report on Form 10-Q of the Company for the period ended March
      31, 2009.


10(j)
            Manufacturing
      Agreement, by and between MICROS Systems, Inc., and GES Singapore Pte Ltd.
      (now known as Venture Group of Singapore), with an effective date of
      November 6, 2002 (incorporated herein by reference to Exhibit 10(j) to the
      Annual Report on Form 10-K for the fiscal year ended June 30,
      2009)


14
            Code
      of Ethics and Business Practices is incorporated herein by reference to
      Exhibit 14 to the Annual Report on Form 10-K of the Company for the fiscal
      year ended June 30, 2004.


21
            Subsidiaries
      of the Company (filed herewith)


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


23(b)
            Consent
      of PricewaterhouseCoopers LLP (filed
herewith)


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


40





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


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


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





*      Management
contract or compensatory plan or arrangement.


41


MICROS
Systems, Inc.


INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS





PageNo.Management’s
      Annual Report on Internal Control Over Financial Reporting
                  43Financial
      Statements:Report
      of Independent Registered Public Accounting Firm
                  44Consolidated
      balance sheets as of June 30, 2010 and 2009
                  45Consolidated
      statements of operations for the fiscal years ended June 30, 2010, 2009
      and 2008
                  46Consolidated
      statements of cash flows for the fiscal years ended June 30, 2010, 2009
      and 2008
                  47Consolidated
      statements of shareholders’ equity for the fiscal years ended June
      30, 2010, 2009 and 2008
                  48Consolidated
      statements of comprehensive income for the fiscal years ended June
      30, 2010, 2009 and 2008
                  49Notes
      to consolidated financial statements
                  50 -
      71Financial
      Statement Schedule:Schedule
      II – Valuation and qualifying accounts and reserves
                  72





All other
schedules are omitted because they are not applicable, not required, or the
required information is included in the financial statements or notes
thereto


42


MANAGEMENT’S
ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





Management of MICROS Systems,
Inc. (the “Company”) is responsible for establishing and maintaining adequate
internal control over financial reporting.  Internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.  A company’s internal control over financial
reporting includes those policies and procedures that pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company, provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the
company; and provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.




Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements.  Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.




Management evaluated the Company’s
internal control over financial reporting as of June 30, 2010.  In
making this assessment, management used the framework established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”).  As a result of this assessment
and based on the criteria in the COSO framework, management has concluded that,
as of June 30, 2010, the Company’s internal control over financial reporting was
effective.




The Company’s independent registered
public accounting firm, PricewaterhouseCoopers LLP, has audited the Company’s
internal control over financial reporting.  Their opinion on the
effectiveness of the Company’s internal control over financial reporting and on
the Company’s financial statements is included in this Annual Report on Form
10-K.




43


REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To
the Board of Directors and Shareholders of MICROS Systems, Inc.:




In our opinion, the consolidated
financial statements listed in the accompanying index present fairly, in all
material respects, the financial position of MICROS Systems, Inc. and its
subsidiaries at June 30, 2010 and June 30, 2009, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2010 in conformity with accounting principles generally accepted in the
United States of America.  In addition, in our opinion, the financial
statement schedule listed in the accompanying index presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.  Also in our
opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of June 30, 2010, based on criteria
established in Internal Control - Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). The Company's
management is responsible for these financial statements and financial statement
schedule, for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting, included in Management's Annual Report on Internal Control over
Financial Reporting appearing under Item 9A. Our responsibility is to express
opinions on these financial statements, on the financial statement schedule, and
on the Company's internal control over financial reporting based on our
integrated audits.  We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United
States).  Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and whether effective internal control over financial
reporting was maintained in all material respects.  Our audits of the
financial statements included examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  Our audit of
internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk.  Our
audits also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audits provide a reasonable basis for
our opinions.





A company’s internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.  A company’s internal control over financial
reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the
financial statements.





Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements.  Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.




/s/PricewaterhouseCoopers
LLP


Baltimore,
Maryland


August
27, 2010


44


MICROS
SYSTEMS, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS




June 30,(in thousands, except par value
      data)
                          
                          2010
                          
                          
                          2009(1)ASSETSCurrent
      Assets:Cash
      and cash equivalents
                          
                          $
                          377,205
                          
                          
                          $
                          292,257Short-term
      investments
                          
                          
                          168,093
                          
                          
                          
                          146,679Accounts
      receivable, net of allowance for doubtful accounts of $28,392 at June 30,
      2010 and $31,892 at June 30, 2009
                          
                          
                          153,066
                          
                          
                          
                          155,212Inventory
                          
                          
                          35,103
                          
                          
                          
                          39,783Deferred
      income taxes
                          
                          
                          19,624
                          
                          
                          
                          19,870Prepaid
      expenses and other current assets
                          
                          
                          27,004
                          
                          
                          
                          27,238Total
      current assets
                          
                          
                          780,095
                          
                          
                          
                          681,039Long-term
      investments
                          
                          
                          59,884
                          
                          
                          
                          57,823Property,
      plant and equipment, net
                          
                          
                          27,349
                          
                          
                          
                          30,520Deferred
      income taxes, non-current
                          
                          
                          13,556
                          
                          
                          
                          11,456Goodwill
                          
                          
                          213,825
                          
                          
                          
                          190,739Intangible
      assets, net
                          
                          
                          19,590
                          
                          
                          
                          17,709Purchased
      and internally developed software costs, net of
accumulatedamortization
      of $71,985 at June 30, 2010 and $66,804 at June 30, 2009
                          
                          
                          17,468
                          
                          
                          
                          25,749Other
      assets
                          
                          
                          6,524
                          
                          
                          
                          6,344Total
      assets
                          
                          $
                          1,138,291
                          
                          
                          $
                          1,021,379LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      Liabilities:Bank
      lines of credit
                          
                          $
                          1,442
                          
                          
                          $
                          1,090Accounts
      payable
                          
                          
                          44,783
                          
                          
                          
                          38,445Accrued
      expenses and other current liabilities
                          
                          
                          135,469
                          
                          
                          
                          104,821Income
      taxes payable
                          
                          
                          5,856
                          
                          
                          
                          7,944Deferred
      revenue
                          
                          
                          124,498
                          
                          
                          
                          112,146Total
      current liabilities
                          
                          
                          312,048
                          
                          
                          
                          264,446Income
      taxes payable, non-current
                          
                          
                          22,737
                          
                          
                          
                          19,611Deferred
      income taxes, non-current
                          
                          
                          2,590
                          
                          
                          
                          1,752Other
      non-current liabilities
                          
                          
                          11,304
                          
                          
                          
                          10,539Total
      liabilities
                          
                          
                          348,679
                          
                          
                          
                          296,348Commitments
      and contingencies (Note 11)Equity:MICROS
      Systems, Inc. Shareholders’ Equity:Common
      stock, $0.025 par value authorized 120,000 shares; issued and outstanding
      at 80,042 at June 30, 2010 and 80,310 at June 30, 2009
                          
                          
                          2,001
                          
                          
                          
                          2,008Capital
      in excess of par
                          
                          
                          117,462
                          
                          
                          
                          125,640Retained
      earnings
                          
                          
                          689,750
                          
                          
                          
                          575,095Accumulated
      other comprehensive (loss) income
                          
                          
                          (25,833
                          )
                          
                          
                          16,254Total
      MICROS Systems, Inc. shareholders' equity
                          
                          
                          783,380
                          
                          
                          
                          718,997Noncontrolling
      interest
                          
                          
                          6,232
                          
                          
                          
                          6,034Total
      equity
                          
                          
                          789,612
                          
                          
                          
                          725,031Total
      liabilities and equity
                          
                          $
                          1,138,291
                          
                          
                          $
                          1,021,379





(1) See
Note 19 “Revisions to Prior Period Financial Statements” in Notes to
Consolidated Financial Statements.




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


45


MICROS
SYSTEMS, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS





Fiscal Year Ended June 30,(in thousands, except per share
      data)
                              
                              2010
                              
                              
                              2009
                              
                              
                              2008(1)
                              
                              
                              (1)Revenue:Hardware
                              
                              $
                              188,333
                              
                              
                              $
                              209,834
                              
                              
                              $
                              265,965Software
                              
                              
                              118,788
                              
                              
                              
                              132,912
                              
                              
                              
                              158,539Service
                              
                              
                              607,198
                              
                              
                              
                              564,979
                              
                              
                              
                              529,446Total
      revenue
                              
                              
                              914,319
                              
                              
                              
                              907,725
                              
                              
                              
                              953,950Cost
      of sales:Hardware
                              
                              
                              119,489
                              
                              
                              
                              135,033
                              
                              
                              
                              171,782Software
                              
                              
                              25,731
                              
                              
                              
                              25,570
                              
                              
                              
                              33,135Service
                              
                              
                              267,618
                              
                              
                              
                              264,883
                              
                              
                              
                              247,954Total
      cost of sales
                              
                              
                              412,838
                              
                              
                              
                              425,486
                              
                              
                              
                              452,871Gross
      margin
                              
                              
                              501,481
                              
                              
                              
                              482,239
                              
                              
                              
                              501,079Selling,
      general and administrative expenses
                              
                              
                              273,968
                              
                              
                              
                              281,230
                              
                              
                              
                              306,917Research
      and development expenses
                              
                              
                              42,229
                              
                              
                              
                              42,630
                              
                              
                              
                              40,129Depreciation
      and amortization
                              
                              
                              17,311
                              
                              
                              
                              17,544
                              
                              
                              
                              15,143Total
      operating expenses
                              
                              
                              333,508
                              
                              
                              
                              341,404
                              
                              
                              
                              362,189Income
      from operations
                              
                              
                              167,973
                              
                              
                              
                              140,835
                              
                              
                              
                              138,890Non-operating
      income (expense):Interest
      income
                              
                              
                              4,080
                              
                              
                              
                              8,681
                              
                              
                              
                              14,725Interest
      expense
                              
                              
                              (263
                              )
                              
                              
                              (895
                              )
                              
                              
                              (286
                              )Other
      (expense) income, net (2)
                              
                              
                              (3,665
                              )
                              
                              
                              (1,759
                              )
                              
                              
                              597Total
      non-operating income, net
                              
                              
                              152
                              
                              
                              
                              6,027
                              
                              
                              
                              15,036Income
      before taxes
                              
                              
                              168,125
                              
                              
                              
                              146,862
                              
                              
                              
                              153,926Income
      tax provision
                              
                              
                              52,745
                              
                              
                              
                              49,173
                              
                              
                              
                              52,301Net
      income
                              
                              
                              115,380
                              
                              
                              
                              97,689
                              
                              
                              
                              101,625Less:  net
      income attributable to non-controlling interest
                              
                              
                              (1,027
                              )
                              
                              
                              (1,397
                              )
                              
                              
                              (888
                              )Net
      income attributable to MICROS Systems, Inc.
                              
                              $
                              114,353
                              
                              
                              $
                              96,292
                              
                              
                              $
                              100,737Net
      income per share attributable to MICROS Systems, Inc. common
      shareholders:Basic
                              
                              $
                              1.44
                              
                              
                              $
                              1.19
                              
                              
                              $
                              1.23Diluted
                              
                              $
                              1.41
                              
                              
                              $
                              1.17
                              
                              
                              $
                              1.20Weighted-average
      number of shares outstanding:Basic
                              
                              
                              79,856
                              
                              
                              
                              80,486
                              
                              
                              
                              81,546Diluted
                              
                              
                              81,448
                              
                              
                              
                              81,461
                              
                              
                              
                              83,346





The
details of total other-than-temporary impairment losses (“OTTI”) of long-term
investments and a reconciliation to OTTI charge included in other non-operating
income (expense)(2):





FiscalYearEndedJune30,(inthousands)
                  
                  2010
                  
                  
                  2009
                  
                  
                  2008Total
      other-than-temporary impairment losses
                  
                  $
                  4,103
                  
                  
                  $
                  1,978
                  
                  
                  $
                  —Adjustment:  Non-credit
      based OTTI recognized in other comprehensive income
                  
                  
                  680
                  
                  
                  
                  (712
                  )
                  
                  
                  —Credit
      based OTTI charge recognized in non-operating income
    (expense)
                  
                  $
                  4,783
                  
                  
                  $
                  1,266
                  
                  
                  $
                  —





(1) See
Note 19 “Revisions to Prior Period Financial Statements” in Notes to
Consolidated Financial Statements.


(2) See
Note 2 “Financial Instruments and Fair Value Measurements” in Notes to
Consolidated Financial Statements.




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


46


MICROS
SYSTEMS, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS





Fiscal Year Ended June 30,(in thousands)
                      
                      2010
                      
                      
                      2009
                      
                      
                      2008(1)
                      
                      
                      (1)Cash
      flows from operating activities:Net
      income
                      
                      $
                      115,380
                      
                      
                      $
                      97,689
                      
                      
                      $
                      101,625Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                      
                      
                      17,311
                      
                      
                      
                      17,544
                      
                      
                      
                      15,143Amortization
      of capitalized software
                      
                      
                      9,682
                      
                      
                      
                      7,726
                      
                      
                      
                      9,385Amortization
      of prior service cost
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      648Provision
      for losses on accounts receivable
                      
                      
                      3,875
                      
                      
                      
                      8,318
                      
                      
                      
                      6,937Other-than-temporary
      impairment losses on investments
                      
                      
                      4,783
                      
                      
                      
                      1,266
                      
                      
                      
                      —Provision
      for deferred income tax benefits
                      
                      
                      (3,062
                      )
                      
                      
                      (3,554
                      )
                      
                      
                      (984
                      )Net
      loss on disposal of property, plant and equipment
                      
                      
                      946
                      
                      
                      
                      169
                      
                      
                      
                      87Share-based
      compensation
                      
                      
                      12,365
                      
                      
                      
                      13,900
                      
                      
                      
                      17,229Changes
      in operating assets and liabilities (net of impact of
      acquisitions):(Increase)
      decrease in accounts receivable
                      
                      
                      (4,099
                      )
                      
                      
                      19,680
                      
                      
                      
                      (4,199
                      )Decrease
      (increase) in inventory
                      
                      
                      3,905
                      
                      
                      
                      19,764
                      
                      
                      
                      (12,813
                      )(Increase)
      decrease in prepaid expenses and other assets
                      
                      
                      (940
                      )
                      
                      
                      2,121
                      
                      
                      
                      423Increase
      (decrease) in accounts payable
                      
                      
                      5,218
                      
                      
                      
                      (8,048
                      )
                      
                      
                      252Increase
      (decrease) in accrued expenses and other current
    liabilities
                      
                      
                      19,620
                      
                      
                      
                      (14,716
                      )
                      
                      
                      (1,632
                      )Increase
      (decrease) in income taxes payable
                      
                      
                      3,813
                      
                      
                      
                      (1,093
                      )
                      
                      
                      11,812Increase
      in deferred revenue
                      
                      
                      13,072
                      
                      
                      
                      5,146
                      
                      
                      
                      19,735Net
      cash flows provided by operating activities
                      
                      
                      201,869
                      
                      
                      
                      165,912
                      
                      
                      
                      163,648Cash
      flows from investing activities:Purchases
      of short-term investments
                      
                      
                      (308,966
                      )
                      
                      
                      (264,998
                      )
                      
                      
                      (615,686
                      )Proceeds
      from sales and maturities of short-term investments
                      
                      
                      284,677
                      
                      
                      
                      122,611
                      
                      
                      
                      630,612Net
      cash paid for acquisitions
                      
                      
                      (30,684
                      )
                      
                      
                      (37,193
                      )
                      
                      
                      (16,135
                      )Purchases
      of property, plant and equipment
                      
                      
                      (9,044
                      )
                      
                      
                      (13,361
                      )
                      
                      
                      (12,944
                      )Internally
      developed software costs
                      
                      
                      (2,443
                      )
                      
                      
                      (470
                      )
                      
                      
                      (1,919
                      )Disposal
      of property, plant and equipment
                      
                      
                      120
                      
                      
                      
                      192
                      
                      
                      
                      227Net
      cash flows used in investing activities
                      
                      
                      (66,340
                      )
                      
                      
                      (193,219
                      )
                      
                      
                      (15,845
                      )Cash
      flows from financing activities:Repurchases
      of common stock
                      
                      
                      (47,635
                      )
                      
                      
                      (22,242
                      )
                      
                      
                      (74,303
                      )Proceeds
      from stock option exercises
                      
                      
                      23,310
                      
                      
                      
                      2,866
                      
                      
                      
                      27,884Realized
      tax benefits from stock option exercises
                      
                      
                      3,543
                      
                      
                      
                      1,026
                      
                      
                      
                      11,018Principal
      payments on line of credit
                      
                      
                      —
                      
                      
                      
                      (18,124
                      )
                      
                      
                      (1,640
                      )Other
                      
                      
                      243
                      
                      
                      
                      (721
                      )
                      
                      
                      (422
                      )Net
      cash flows used in financing activities
                      
                      
                      (20,539
                      )
                      
                      
                      (37,195
                      )
                      
                      
                      (37,463
                      )Effect
      of exchange rate changes on cash and cash equivalents
                      
                      
                      (30,042
                      )
                      
                      
                      (20,313
                      )
                      
                      
                      26,348Net
      increase (decrease) in cash and cash equivalents
                      
                      
                      84,948
                      
                      
                      
                      (84,815
                      )
                      
                      
                      136,688Cash
      and cash equivalents at beginning of year
                      
                      
                      292,257
                      
                      
                      
                      377,072
                      
                      
                      
                      240,384Cash
      and cash equivalents at end of year
                      
                      $
                      377,205
                      
                      
                      $
                      292,257
                      
                      
                      $
                      377,072Supplemental
      disclosures of cash flow information:Cash
      paid during the fiscal year for:Interest
                      
                      $
                      111
                      
                      
                      $
                      120
                      
                      
                      $
                      137Income
      taxes
                      
                      $
                      44,318
                      
                      
                      $
                      51,278
                      
                      
                      $
                      28,752





(1) See
Note 19 “Revisions to Prior Period Financial Statements” in Notes to
Consolidated Financial Statements.




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




47




MICROS SYSTEMS, INC. AND
SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
 
 MICROS Systems, Inc.
      Shareholders (1)Common
      Stock(in
      thousands)
                                    
                                    Shares
                                    
                                    
                                    Amount
                                    
                                    
                                    Capital
      in
                                      Excess
      of
                                      Par
                                    
                                    
                                    Retained
                                      Earnings
                                    
                                    
                                    Accumulated
                                      Compre-
                                      hensive
                                      Income
                                      (Loss)
                                    
                                    
                                    Non-
                                      controlling
                                      interest
                                    
                                    
                                    TotalBalance,
      June 30, 2007, as previously reported
                                    
                                    
                                    81,096
                                    
                                    
                                    $
                                    2,027
                                    
                                    
                                    $
                                    147,569
                                    
                                    
                                    $
                                    382,101
                                    
                                    
                                    $
                                    18,793
                                    
                                    
                                    $
                                    4,404
                                    
                                    
                                    $
                                    554,894Cumulative
      impact of change in accounting principle relating to uncertain tax
      positions
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (2,647
                                    )
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (2,647
                                    )Balance,
      June 30, 2007, adjusted
                                    
                                    
                                    81,096
                                    
                                    
                                    
                                    2,027
                                    
                                    
                                    
                                    147,569
                                    
                                    
                                    
                                    379,454
                                    
                                    
                                    
                                    18,793
                                    
                                    
                                    
                                    4,404
                                    
                                    
                                    
                                    552,247Comprehensive
      income:Net
      income
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    100,737
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    888
                                    
                                    
                                    
                                    101,625Foreign
      currency translation adjustments, net of tax of $0
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    38,083
                                    
                                    
                                    
                                    820
                                    
                                    
                                    
                                    38,903Unrealized
      loss on long-term investments, net of tax of $1,583
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (2,651
                                    )
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (2,651
                                    )Amortization
      of prior year pension costs, net of tax of $0
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    648
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    648SERP
      amendment, net of tax of $3,650
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    5,281
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    5,281Non-controlling
      interest put arrangement
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (645
                                    )
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (645
                                    )Dividends
      to non-controlling interest
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (220
                                    )
                                    
                                    
                                    (220
                                    )Share-based
      compensation
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    17,229
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    17,229Stock
      issued upon exercise of options
                                    
                                    
                                    2,131
                                    
                                    
                                    
                                    53
                                    
                                    
                                    
                                    27,831
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    27,884Repurchases
      of stock
                                    
                                    
                                    (2,329
                                    )
                                    
                                    
                                    (58
                                    )
                                    
                                    
                                    (74,245
                                    )
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (74,303
                                    )Income
      tax benefit from options exercised
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    11,617
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    11,617Balance,
      June 30, 2008
                                    
                                    
                                    80,898
                                    
                                    
                                    
                                    2,022
                                    
                                    
                                    
                                    130,001
                                    
                                    
                                    
                                    479,546
                                    
                                    
                                    
                                    60,154
                                    
                                    
                                    
                                    5,892
                                    
                                    
                                    
                                    677,615Comprehensive
      income:Net
      income
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    96,292
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    1,397
                                    
                                    
                                    
                                    97,689Foreign
      currency translation adjustments, net of tax of $0
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (43,340
                                    )
                                    
                                    
                                    (534
                                    )
                                    
                                    
                                    (43,874
                                    )Unrealized
      loss on long-term  investments, net of tax of
    $392
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (560
                                    )
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (560
                                    )Non-controlling
      interest put arrangement
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (743
                                    )
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (743
                                    )Dividends
      to non-controlling interest
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (721
                                    )
                                    
                                    
                                    (721
                                    )Share-based
      compensation
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    13,900
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    13,900Stock
      issued upon exercise of options
                                    
                                    
                                    267
                                    
                                    
                                    
                                    7
                                    
                                    
                                    
                                    2,859
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    2,866Repurchases
      of stock
                                    
                                    
                                    (855
                                    )
                                    
                                    
                                    (21
                                    )
                                    
                                    
                                    (22,221
                                    )
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (22,242
                                    )Income
      tax benefit from options exercised
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    1,101
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    1,101Balance,
      June 30, 2009
                                    
                                    
                                    80,310
                                    
                                    
                                    
                                    2,008
                                    
                                    
                                    
                                    125,640
                                    
                                    
                                    
                                    575,095
                                    
                                    
                                    
                                    16,254
                                    
                                    
                                    
                                    6,034
                                    
                                    
                                    
                                    725,031Comprehensive
      income:Net
      income
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    114,353
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    1,027
                                    
                                    
                                    
                                    115,380Foreign
      currency translation adjustments, net of tax of $0
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (42,222
                                    )
                                    
                                    
                                    (714
                                    )
                                    
                                    
                                    (42,936
                                    )Unrealized
      gain on long-term  investments, net of tax of
$83
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    135
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    135Non-controlling
      interest put arrangement
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    302
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    302Dividends
      to non-controlling interest
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (115
                                    )
                                    
                                    
                                    (115
                                    )Share-based
      compensation
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    12,365
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    12,365Stock
      issued upon exercise of options
                                    
                                    
                                    1,378
                                    
                                    
                                    
                                    34
                                    
                                    
                                    
                                    23,276
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    23,310Repurchases
      of stock
                                    
                                    
                                    (1,646
                                    )
                                    
                                    
                                    (41
                                    )
                                    
                                    
                                    (47,594
                                    )
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    (47,635
                                    )Income
      tax benefit from options exercised
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    3,775
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    --
                                    
                                    
                                    
                                    3,775Balance,
      June 30, 2010
                                    
                                    
                                    80,042
                                    
                                    
                                    $
                                    2,001
                                    
                                    
                                    $
                                    117,462
                                    
                                    
                                    $
                                    689,750
                                    
                                    
                                    $
                                    (25,833
                                    )
                                    
                                    $
                                    6,232
                                    
                                    
                                    $
                                    789,612




(1) See
Note 19 “Revisions to Prior Period Financial Statements” in Notes to
Consolidated Financial Statements.




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




48




MICROS SYSTEMS, INC. AND
SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
 
 Fiscal
      Year Ended June 30,(in
    thousands)
                                
                                2010
                                
                                
                                2009
      (1)
                                
                                
                                2008
      (1)Net
      income
                                
                                $
                                115,380
                                
                                
                                $
                                97,689
                                
                                
                                $
                                101,625Other
      comprehensive income (loss), net of taxes:Foreign
      currency translation adjustments
                                
                                
                                (42,936
                                )
                                
                                
                                (43,874
                                )
                                
                                
                                38,903Unrealized
      gain (loss) on long-term investments, net of taxes (benefit) of $83,
      ($392) and ($1,583)
                                
                                
                                135
                                
                                
                                
                                (560
                                )
                                
                                
                                (2,651
                                )Amortization
      of prior year pension costs, net of taxes of $0
                                
                                
                                --
                                
                                
                                
                                --
                                
                                
                                
                                648Total
      other comprehensive income, net of taxes
                                
                                
                                (42,801
                                )
                                
                                
                                (44,434
                                )
                                
                                
                                36,900Comprehensive
      income
                                
                                
                                72,579
                                
                                
                                
                                53,255
                                
                                
                                
                                138,525Comprehensive
      income attributable to non-controlling interest
                                
                                
                                (313
                                )
                                
                                
                                (863
                                )
                                
                                
                                (1,708
                                )Comprehensive
      income attributable to MICROS Systems, Inc.
                                
                                $
                                72,266
                                
                                
                                $
                                52,392
                                
                                
                                $
                                136,817




(1) See
Note 19 “Revisions to Prior Period Financial Statements” in Notes to
Consolidated Financial Statements.
  The
accompanying notes are an integral part of the consolidated financial
statements.


49


MICROS
SYSTEMS, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





1.
            DESCRIPTION
      OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES:





DESCRIPTION
OF BUSINESS


MICROS Systems, Inc. is a leading
worldwide designer, manufacturer, marketer and servicer of enterprise
information solutions for the global hospitality and specialty retail
industries.  The information solutions consist of application specific
software and hardware systems, supplemented by a wide range of
services.  The hospitality industry includes numerous defined markets
such as lodging (including individual hotel sites, hotel central reservation
systems and customer information systems), table service restaurants, quick
service restaurants, entertainment venues such as stadiums and arenas, business
foodservice operations, casinos, transportation foodservice, government
operations, and cruise ships.  The specialty retail industry consists
of retail operations selling to consumers both general and specific products,
such as clothing, shoes, food, hardware, jewelry, and other specialty
items.  (References to “MICROS” or the “Company” in these notes
include the operations of MICROS Systems, Inc. and its subsidiaries on a
consolidated basis.)





REVISIONS
TO PRIOR PERIOD FINANCIAL STATEMENTS


During January 2010, the Company
uncovered certain fraudulent activities in its subsidiary in Japan that occurred
during the period from fiscal year 2006 to the six months ended December 31,
2009.  The Company determined that these fraudulent transactions
resulted in a cumulative overstatement of revenue and net income attributable to
MICROS Systems, Inc. of approximately $6.9 million and $4.9 million,
respectively, over this period.  The Company concluded that the
misstatements did not materially affect the previously issued financial
statements for any of its prior periods.  Appropriate adjustments have
been made to prior period information included in the accompanying consolidated
financial statements and described in these notes to the consolidated financial
statements.  See Note 19 “Revisions to Prior Period Financial
Statements” for further detail.





BASIS
OF PREPARATION AND USE OF ESTIMATES


The preparation of consolidated
financial statements in accordance with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the amounts reported in the Company’s consolidated
financial statements and accompanying notes.  Although these estimates
are based on assumptions that management believes are reasonable and
management’s knowledge of current matters pertaining to the Company and
anticipated activities that the Company may undertake in the future, actual
results may differ from these estimates.  Certain amounts reported in
the prior years have been reclassified in the accompanying financial statements
to conform to the current year’s presentation.





PRINCIPLES
OF CONSOLIDATION


The consolidated financial statements
include the accounts of the Company and its majority-owned
subsidiaries.  The net income attributable to MICROS Systems, Inc. is
recorded net of non-controlling interest.  Investments in 20% through
50% owned affiliated companies and any investments in other companies in which
the Company exercises significant influence over operating and financial
affairs, are accounted for under the equity method.  Otherwise,
investments are recorded at cost.  All intercompany accounts and
transactions have been eliminated.





FOREIGN
CURRENCY TRANSLATION


The financial statements of the
Company’s non-U.S. operations are translated into U.S. dollars for financial
reporting purposes.  The assets and liabilities of non-U.S. operations
whose functional currencies are not in U.S. dollars are translated at the fiscal
year-end exchange rates, while revenues and expenses are translated at month-end
exchange rates during the fiscal year which approximate weighted average
exchange rates.  Specifically, the applicable exchange rates used in
the financial statements are based on the exchange rates in effect on the last
business day of each month.  The cumulative translation effects are
reported in accumulated other comprehensive income, a separate component of
shareholders’ equity.  Gains and losses on monetary transactions
denominated in other than the functional currency of an operation are reflected
in other income (expense).





REVENUE
RECOGNITION


The Company’s revenue is generated from
the sale of software licenses, hardware, professional services and maintenance
support.





Software


The Company’s proprietary software
consists of hotel, restaurant and retail software systems.  The
Company also resells various third party software products.  All
software products are offered on a stand alone basis, and can be used either
with third party hardware products or the Company’s hardware
products.





Revenue from software licenses is
recognized when the following four basic criteria are met as
follows:





·
            Persuasive
      evidence of an arrangement exists:  The Company requires a
      contract signed by both parties to the agreement or a purchase order
      received from the customer as persuasive evidence of an
      arrangement.


·
            Delivery
      has occurred or services have been rendered:  Delivery occurs when
      risk of ownership has passed to the buyer or in the case of electronic
      delivery, when the customer is given access to the licensed
      programs.  The Company deems its OPERA software to be delivered
      when ready to “go live” (i.e., the software is ready to be used in the
      ordinary course of the customer’s
business).


50





·
            Fixed
      or determinable fee:  The Company considers the license fee to
      be fixed or determinable if the fee is not subject to refund or adjustment
      and is payable within its normal payment terms, generally, 90 days of
      delivery, with generally no more than 20% of the contract price due at the
      end of the payment term.  If a software license arrangement
      contains significant customer acceptance criteria or a cancellation right,
      recognition of the software revenue is deferred until the earlier of
      customer acceptance or the expiration of the acceptance period or
      cancellation right.  If the arrangement fee is not fixed or
      determinable, the Company recognizes the revenue as amounts become due and
      payable.


·
            Collection
      is probable:  The Company performs a credit review to determine
      the creditworthiness of the customer.  Collection is deemed
      probable if the Company expects that the customer will be able to pay
      amounts under the arrangement as they become due.  If the
      Company determines collection is not probable, revenue is recognized as
      collection occurs.





Hardware


The Company’s main proprietary hardware
is point-of-sale terminals.  The Company also sells other hardware
devices, such as printers, cash drawers, handheld order entry terminals and pole
displays and also resells various hardware products, including personal
computers, servers, printers, network cards and other related computer
equipment.  Hardware revenue is recognized when persuasive evidence of
an arrangement exists, delivery has occurred, the fee is fixed or determinable,
and collectability is probable.  If at the time of shipment, the
Company has not met these four criteria, recognition of the hardware revenue is
deferred until all four criteria are determined to have been met.





The Company’s hardware includes certain
system software embedded which is used solely in connection with the operation
of the hardware and is incidental to the hardware product as a whole; once
installed, the embedded system software is not updated for new versions that are
subsequently developed.





Service


The Company also provides maintenance
support and/or professional services, such as installation, customer specific
development, software-hosting and e-commerce design and
development.  Revenue from maintenance support and software-hosting
services is initially recorded as deferred revenue and is recognized ratably
over the contract term.  Revenue related to professional services is
recognized as the service is rendered provided all the other criteria for
revenue recognition have been met.





The Company’s software is ready for use
by the customer upon receipt.  While many of the customers may choose
to tailor the software to fit their specific needs or request the Company’s
assistance activating the programs, the Company’s implementation services do not
typically involve significant customization to, or development of, the
underlying source code.




Revenue
from fixed e-commerce design and development contracts, where the product is
designed, developed or modified to the customer’s specifications is recognized
on a percentage of completion basis based on the estimated costs incurred
compared to total estimated costs.  This method is used because
reasonably dependable estimates of the revenues and the project progress
applicable to various states of an arrangement can be made, based on historical
experience and milestones set in the contract.





Multiple
Element Arrangements


When more than one element such as
hardware, software and services are sold together in a single arrangement,
revenue is recognized using the residual method.  Provided that each
element meets the criteria for treatment as a separate unit of accounting, the
Company defers revenue for the fair value of the undelivered elements based on
vendor specific objective evidence of fair value (“VSOE”), and the remaining
portion of the arrangement fee is allocated to the delivered elements and
recognized as revenue when all the other criteria for revenue recognition are
met.  An element is considered a separate unit of accounting if it has
value to the customer on a standalone basis and there is objective and reliable
evidence of the fair value of the undelivered elements.  VSOE of fair
value for the Company’s services are based upon standalone sales of those
services.





Other


Costs related to shipping and handling
and billable travel expenses are included in cost of sales.  The
Company’s hardware and software products are sold under warranty for defects in
material and workmanship for a period generally ranging from 12 to 36 months
following delivery.  The Company establishes an accrual for estimated
warranty costs at the time of sale.  Historically, the Company’s
warranty expense has not been material.





FINANCIAL
INSTRUMENTS AND FAIR VALUE MEASUREMENTS


The fair market values of cash and cash
equivalents, marketable securities, accounts receivable, accounts payable,
accrued expenses and income taxes payable at both June 30, 2010 and 2009
approximate their carrying amounts.





The Company considers all highly liquid
investments with a maturity of generally three months or less at the date of
purchase to be cash equivalents.  These investments are recorded at
cost which approximates fair value.  Investments with original
maturities of greater than three months and remaining maturities of less than
one year are classified as short-term investments.  These investments
are classified as available-for-sale securities and are recorded at fair value
which approximates cost.  Auction rate securities, recorded at fair
value, are long-term debt instruments with variable interest rates that
periodically reset to prevailing market rates every 7 to 35 days through the
auction process (“auction rate securities.”) The
Company periodically reviews each investment to identify any unrealized losses
and evaluates whether the losses are temporary in nature.  Unrealized
losses that are determined to be temporary in nature are reported, net of tax,
in accumulated other comprehensive income.   Other-than-temporary
“credit loss” (loss due to security issuer’s credit risk) is recognized, net of
tax and valuation allowances, in the consolidated statements of operations,
while other-than-temporary impairment loss related to factors other than credit
loss is recognized, net of tax, in accumulated other comprehensive
income.


51




ALLOWANCE
FOR DOUBTFUL ACCOUNTS


The Company maintains allowances for
doubtful accounts for estimated losses that may result from the inability of the
Company’s customers to make required payments and for limited circumstances when
the customer disputes the amounts due to the Company.  The Company’s
methodology for determining this allowance requires estimates and is based on
the age of the receivable, customer’s payment practices and history, inquiries,
credit reports from third parties and other financial information.  If
the financial condition of the Company’s customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required.





INVENTORY


Inventory is stated at the lower of
cost or market.  Cost is determined principally on a first-in,
first-out basis.  Inventory quantities on hand, future purchase
commitments with the Company’s suppliers and the estimated utility of the
Company’s inventory is reviewed regularly.  If the review
indicates a reduction in utility below carrying value, the inventory is adjusted
with a charge to cost of sales.





PROPERTY,
PLANT AND EQUIPMENT


Property, plant and equipment are
stated at cost and depreciated using the straight-line method over their
estimated useful lives, ranging from three to ten years.  Leasehold
improvements are amortized over the life of the lease or estimated useful lives,
whichever is shorter.  Maintenance and repairs are charged to expense
as incurred, and the costs of additions and improvements are
capitalized.  Any gain or loss from the retirement or sale of an asset
is credited or charged to operations in the current period.





SOFTWARE
FOR INTERNAL USE


Internally used computer software is
capitalized and are amortized on a straight-line basis over the estimated life
of the software ranging up to ten years.





CAPITALIZED
SOFTWARE DEVELOPMENT COSTS


Costs incurred in the research and
development of new software products to be licensed to others, primarily
consisting of salaries, employee benefits and administrative costs, are expensed
as incurred and included in research and development expenses until
technological feasibility is established.  The capitalization of
software development costs on a product-by-product basis starts when a product’s
technological feasibility has been established and ends when the product is
available for general release to customers, at which time amortization of the
capitalized software development costs begins.  Technological
feasibility is established when the product reaches the working model
stage.  The cost of purchased software is also
capitalized.





Annual amortization of capitalized
software development costs is included in software cost of sales.  For
each capitalized software product, the annual amortization is equal to the
greater of: (i) the amount computed using the ratio that the software product’s
current fiscal year gross revenue bears to the total current fiscal year and
anticipated future gross revenues for that product or (ii) the amount computed
based on straight-line method over the remaining estimated economic life of the
product.  Amortization expenses for the fiscal years 2010, 2009 and
2008 were approximately $9.7 million, $7.7 million and $9.4 million,
respectively.





During the fiscal years 2009 and 2008,
the Company wrote off approximately $0.8 million and $0.7 million in capitalized
software costs, respectively.  No capitalized software costs were
written off in fiscal year 2010.





LONG-LIVED
ASSETS INCLUDING FINITE-LIVED PURCHASED INTANGIBLE ASSETS


The Company evaluates long-lived
assets, including finite-lived purchased intangible assets, for impairment
whenever events and changes in circumstances indicate that the carrying amount
of an asset may not be fully recoverable.  The Company compares the
fair value of the assets based on the undiscounted cash flows the assets are
expected to generate (or market value, if available) to the net book value of
the assets.  If the fair value is less than net book value, the asset
is impaired and the Company recognizes an impairment loss equal to the excess of
the net book value over the fair value.





During each of the fiscal years ended
June 30, 2010 and 2009, the Company recorded approximately $1.5 million in
accelerated amortization expenses related to finite-lived purchased intangible
assets.  During the three fiscal years ended June 30, 2010, the
Company did not recognize any impairment losses on long-lived assets, including
finite-lived purchased intangible assets.





GOODWILL
AND INDEFINITE-LIVED PURCHASED INTANGIBLE ASSETS


The Company assesses annually, in the
first quarter of its fiscal year, whether goodwill and certain of its
trademarks, which are the Company’s only indefinite-lived purchased intangible
assets, are impaired.  Goodwill is evaluated for impairment by comparing
the fair value of each of the Company’s reporting units (the Company’s four
operating segments consisting of U.S., Europe, the Pacific Rim and Latin
America) to their respective book values.  The fair value of each
reporting unit is determined based on a weighting of the income approach (i.e.,
discounted future income associated with the item) and market approach (i.e.,
market value of similar assets purchased or sold in the same
industry).  If the fair value of the reporting unit exceeds the book
value of the net assets assigned to that unit, goodwill is not
impaired.  If goodwill is impaired, the Company recognizes an
impairment loss based on the amount by which the book value of goodwill exceeds
its implied fair value.  The implied fair value of goodwill is determined
by deducting the fair value of a reporting unit’s identifiable assets and
liabilities from the fair value of the reporting unit as a whole, as if that
reporting unit had just been acquired and the fair value of the individual
assets acquired and liabilities assumed initially were being
determined.




52


Trademarks
are evaluated for impairment by comparing their fair value to book
value.  The Company estimates the fair value of trademarks using an
income approach to value, and recognizes an impairment loss if the estimated
fair value of a trademark is less than its book value.




Additional
impairment assessments may be performed on an interim basis if the Company
encounters events or changes in circumstances indicating that it is more likely
than not that the book value of goodwill and/or trademarks has been
impaired.




The
process of evaluating the potential impairment of goodwill and/or trademarks is
highly subjective and requires significant judgment at many points during the
analysis.  In estimating the fair value of the reporting units with
recognized goodwill for the purposes of its annual or interim analyses, the
Company makes estimates and judgments about the future cash flows of these
reporting units.  The cash flow forecasts are based on assumptions
that are consistent with the plans and estimates used to manage the underlying
reporting units. The Company also considers its market capitalization on the
date the analysis is performed.





ADVERTISING COSTS


Advertising costs are charged to expense
as incurred.  Advertising expenses for the fiscal years 2010, 2009 and
2008were approximately $4.2 million, $5.2 million and $7.5 million,respectively.





RESEARCH AND DEVELOPMENT
COSTS


Research and development costs,
primarily consisting of salaries, employee benefits and administrative costs
(other than capitalized software development costs) are charged to operations as
incurred.





SHARE-BASED
COMPENSATION


The
Company estimates the fair value of its option awards granted under the stock
option program as of the date of grant, and recognizes non-cash share-based
compensation expense, adjusted for expected pre-vesting forfeitures, ratably
over the requisite service (i.e. vesting) period of options in the consolidated
statement of operations.  The Company values stock options using the
Black-Scholes option pricing model, which was developed for use in estimating
the fair value of traded options that are fully transferable and have no vesting
restrictions.  Therefore, the Company is required to make highly
subjective assumptions about volatility rates, expected term of options,
dividend yields and applicable interest rates in determining the estimated fair
value.  Expected volatility is based on historical stock
prices.  The expected term of options granted is based on historical
option activities, adjusted for the remaining option life cycle by assuming
ratable exercise of any unexercised vested options over the remaining
term.  The risk-free interest rate is based on the U.S. Treasury yield
curve in effect at the time of grant.  See Note 3 “Share-Based
Compensation” for further detail.





WARRANTIES


The Company’s products are sold under
warranty for defects in material and workmanship for a period ranging generally
from 12 to 36 months.  The Company establishes an accrual for
estimated warranty costs at the time of sale.  Historically, the
Company’s warranty expense hasnot been material.





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 the results of operations 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 assetischarged to thedeferred income tax provision in the
period such determination is made.




Effective
July 1, 2007, the Company adopted guidance on accounting for uncertainty in
income taxes, which provides a minimum recognition threshold that a tax position
is required to meet before being recognized in the financial
statements.  The guidance also provides standards on derecognition,
measurement, and classification of the effects of a tax position, recognition of
interest and penalties, accounting in interim periods, and disclosure.See Note 13 “Income Taxes” for further
detail.




NET INCOME PER SHARE ATTRIBUTABLE TO
MICROS SYSTEMS, INC. COMMON SHAREHOLDERS


Basicnet income per share attributable to
MICROS Systems, Inc. common shareholdersis computed by dividingnet income available to MICROS Systems,
Inc.by the
weighted-average number of shares outstanding.Diluted net income per share
attributable to MICROS Systems, Inc. common shareholdersincludes the dilutive effect of stock
options.  A reconciliation of thenet income attributable to MICROS
Systems, Inc.and the
weighted-average number of common shares outstanding assuming dilution is as
follows:


53





Fiscal Year Ended June
      30,(in thousands, except per share
      data)
                                                            
                                                            2010
                                                            
                                                            
                                                            2009
                                                            
                                                            
                                                            2008Net income attributable to MICROS
      Systems, Inc.
                                                            
                                                            $
                                                            114,353
                                                            
                                                            
                                                            $
                                                            96,292
                                                            
                                                            
                                                            $
                                                            100,737Effect of non-controlling interest
      put arrangement
                                                            
                                                            
                                                            302
                                                            
                                                            
                                                            
                                                            (743
                                                            )
                                                            
                                                            
                                                            (645
                                                            )Net income available to MICROS
      Systems, Inc. common shareholders
                                                            
                                                            $
                                                            114,655
                                                            
                                                            
                                                            $
                                                            95,549
                                                            
                                                            
                                                            $
                                                            100,092Average common shares
      outstanding
                                                            
                                                            
                                                            79,856
                                                            
                                                            
                                                            
                                                            80,486
                                                            
                                                            
                                                            
                                                            81,546Dilutive effect of outstanding
      stock options
                                                            
                                                            
                                                            1,592
                                                            
                                                            
                                                            
                                                            975
                                                            
                                                            
                                                            
                                                            1,800Average common shares outstanding
      assuming dilution
                                                            
                                                            
                                                            81,448
                                                            
                                                            
                                                            
                                                            81,461
                                                            
                                                            
                                                            
                                                            83,346Basic net income per share
      attributable to MICROS Systems, Inc. common
      shareholders
                                                            
                                                            $
                                                            1.44
                                                            
                                                            
                                                            $
                                                            1.19
                                                            
                                                            
                                                            $
                                                            1.23Diluted net income per share
      attributable to MICROS Systems, Inc. common
      shareholders
                                                            
                                                            $
                                                            1.41
                                                            
                                                            
                                                            $
                                                            1.17
                                                            
                                                            
                                                            $
                                                            1.20Anti-dilutive weighted shares
      excluded from reconciliation
                                                            
                                                            
                                                            1,882
                                                            
                                                            
                                                            
                                                            4,105
                                                            
                                                            
                                                            
                                                            1,239





Fiscal
years 2010, 2009 and 2008 include approximately $12.4 million ($8.1 million, net
of tax), $13.9 million ($9.8 million, net of tax) and $17.2 million ($13.1
million, net of tax), respectively, in non-cash share-based compensation
expense.  These non-cash share-based compensation expenses reduced
diluted net income per share attributable to MICROS Systems, Inc. common
shareholders by $0.10, $0.12 and $0.16 for fiscal years 2010, 2009 and 2008,
respectively.  See Note 3 “Share-based Compensation” for further
detail.




The
effect of non-controlling interest put arrangement above relates to one of the
Company’s acquisitions where the non-controlling interest shareholders of the
acquired company have the option to require the Company to purchase their
remaining shares in the acquired company in accordance with a pre-defined
formula based on specified financial results of the acquired
company.





DEFINED BENEFIT PLAN


The
Company’s Supplemental Executive Retirement Plan (the “SERP”) provides
designated officers and executives of the Company with benefits upon retirement
or immediate vesting of benefits upon a participant’s death before
retirement.  This plan is described more fully in Note 16 “Employee
Benefit Plans.”





SUBSEQUENT EVENTS


In June 2009, the Company
adopted the authoritative guidance on subsequent events which
addresses the accounting for and disclosure of subsequent transactions and
events not addressed in other applicable generally accepted accounting
principles.




Subsequent to year-end, on August
24, 2010, the Compensation and Nominating Committee of the Board of Directors
authorized the purchases of an additional two million shares of the Company’s
common stock over the next three years, to be purchased from time to time
depending on market conditions and other corporate considerations as determined
by management.The
Board of Directors also on August 24, 2010, authorized and directed the Company
to enter into the Twelfth Amendment to the Employment Agreement between the
Company and Mr. Giannopoulos (the “Twelfth Amendment”).The
Twelfth Amendment establishes that Mr. Giannopoulos will be eligible to earn a
bonus for each fiscal year during the term of his employment agreement, provided
that he satisfies the objectives as determined by the Board of Directors for
that fiscal year.




There were noothersubsequent events thatthe Company was required to
recognizeordisclosein the accompanying consolidated
financial statements.  Subsequent events have been
evaluated throughthe date
these financial statements are issued.





RECENT ACCOUNTING
STANDARDS





Recently
Adopted Accounting Pronouncements


On July 1, 2009,the Companyadopted authoritative guidance issued
by the Financial Accounting Standards Board (“FASB”) on business combinations.  The
guidance addresses the manner in which the acquirer of a business recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any non-controlling interest in the acquired
business.  This guidance also provides standards for recognizing and
measuring the goodwill acquired inabusiness combination and for disclosure
of information to enable users of the financial statements to evaluate the
nature and financial effects of the business
combination.The
Company’sacquisition of
TIG GlobalLLC (“TIG
Global”)on December 31,
2009(See Note 4,
“Acquisitions”)was
accounted for under this guidance.


On July 1, 2009,the Companyadopted authoritative guidance issued
by the FASB that changes the accounting and reporting for non-controlling
interests.  This guidance requires, among other things, that:
non-controlling interests be reported as a component of
equity;changes in a
parent’s ownership interest while the parent retains its controlling interest be
accounted for as equity transactions; and any retained non-controlling equity
investment upon the deconsolidation of a subsidiary initially be measured at
fair value.  The adoption of this guidance did not have a material
impact onthe
Company’sconsolidated
financial statements.




On July
1, 2009, the Company adopted authoritative guidance issued by the FASB which
revises the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible
asset.  This guidance is intended to improve the consistency between
the useful life of a recognized intangible asset and the period of expected cash
flows used to measure the fair value of the asset under other U.S. generally
accepted accounting principles.  The adoption of this guidance did
nothave a material impact onthe Company’sconsolidated financial
statements.


54


On July 1, 2009,the Companyadopted authoritative guidance issued
by the FASB on fair value measurement for nonfinancial assets and liabilities,
other than non-financial assets and liabilities that are recognized or disclosed
at fair value in the financial statements on a recurring basis (at least
annually), which already were subject to FASB guidance.  The adoption
of this guidance did nothave a material impact onthe Company’sconsolidated financial
statements.




In
January 2010, the Company adopted authoritative guidance and disclosure
requirements issued by the FASB related to recurring and nonrecurring fair value
measurements. The guidance requires new disclosures on the transfers of assets
and liabilities between Level 1 inputs (quoted prices in active market for
identical assets or liabilities) and Level 2 inputs (significant other
observable inputs) of the fair value measurement hierarchy, including the
reasons and the timing of the transfers. Additionally, the guidance requires
separate disclosure of activities on purchases, sales, issuance, and settlements
of the assets and liabilities measured using significant unobservable inputs
(Level 3 fair value measurements).  The adoption of this guidance,
other than required additional disclosures on the activities for Level 3 fair
value measurements which is effective the Company beginning July 1, 2011, did
not have a material impact on the Company’s consolidated financial
statements.




Recent
Accounting Guidance Not Yet Adopted


In
October 2009, the FASB issued authoritative guidance on revenue arrangements
with multiple deliverables that are outside the scope of the software revenue
recognition guidance.  Under the guidance, when vendor-specific
objective evidence or third-party evidence of selling price is not available, a
best estimate of the selling price is required to separate deliverables and
allocate arrangement consideration based on the relative selling prices of the
separate deliverables (the “relative selling price method”).  The
relative selling price method allocates any discount in the arrangement
proportionately to each deliverable on the basis of each deliverable’s selling
price.  The guidance also significantly expands related disclosure
requirements.  This standard is effective for the Company beginning
July 1, 2010.  The Company is continuing to evaluate the impact that
the adoption of this guidance will have on its consolidated financial
statements.




In
October 2009, the FASB also issued authoritative guidance on revenue recognition
for arrangements that include software elements.  Under the guidance,
tangible products containing software components and non-software components
that function together to deliver the tangible product’s essential functionality
are excluded from the scope of software revenue recognition guidance and will be
subject to other relevant revenue recognition guidance.  This guidance
will become effective for the Company beginning July 1, 2010.  The
Company does not believe the adoption of this guidance will have a material
impact on its consolidated financial statements.





2.
            FINANCIAL
      INSTRUMENTS AND FAIR VALUE
MEASUREMENTS





Short-term
and long-term investments consist of the following:





June 30, 2010
                              
                              
                              June 30, 2009(in thousands)
                              
                              Amortized
                                Cost Basis
                              
                              
                              Aggregate
                                Fair Value
                              
                              
                              Amortized
                                Cost Basis
                              
                              
                              Aggregate
                                Fair ValueTime
      deposit - international
                              
                              $
                              56,270
                              
                              
                              $
                              56,270
                              
                              
                              $
                              115,762
                              
                              
                              $
                              115,762Auction
      rate securities
                              
                              
                              64,275
                              
                              
                              
                              53,258
                              
                              
                              
                              64,275
                              
                              
                              
                              57,823U.S.
      government debt securities
                              
                              
                              108,323
                              
                              
                              
                              108,323
                              
                              
                              
                              25,084
                              
                              
                              
                              25,084Foreign
      corporate debt securities
                              
                              
                              10,126
                              
                              
                              
                              10,126
                              
                              
                              
                              4,209
                              
                              
                              
                              4,209Time
      deposit - U.S.
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              970
                              
                              
                              
                              970Other
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              654
                              
                              
                              
                              654Total investments
                              
                              $
                              238,994
                              
                              
                              $
                              227,977
                              
                              
                              $
                              210,954
                              
                              
                              $
                              204,502





Fair
value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date (exit price).  The following hierarchy prioritizes
the inputs (generally, assumptions that market participants use in pricing an
asset or liability) used to measure fair value based on the quality and
reliability of the information provided by the inputs:





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


·
            Level
      2 - Quoted prices for similar assets or liabilities in active markets;
      quoted prices for identical assets or liabilities in markets that are not
      active; inputs that are observable, either directly or indirectly, for
      substantially the full term of the asset or liability; inputs that are
      derived principally from or corroborated by observable market data or
      other means.


·
            Level
      3 - Measured based on prices or valuation models using unobservable inputs
      to the extent relevant observable inputs are not available (i.e., where
      there is little or no market activity for the asset or
      liability).





The
following table provides information regarding the financial assets accounted
for at fair value and the type of inputs used to value the assets (excludes cash
and cash equivalents of approximately $377.2 million and $292.3 million as of
June 30, 2010 and 2009):


55





(in
      thousands)
                                      
                                      Level 1
                                      
                                      
                                      Level 2
                                      
                                      
                                      Level 3
                                      
                                      
                                      TotalBalance
      at June 30, 2010:Short-term
      and long-term investments:Time
      deposit - international
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      56,270
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      56,270Auction
      rate securities
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      53,258
                                      
                                      
                                      
                                      53,258U.S.
      government debt securities
                                      
                                      
                                      108,323
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      108,323Foreign
      corporate debt securities
                                      
                                      
                                      10,126
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      10,126Total
      short-term and long-term investments
                                      
                                      $
                                      118,449
                                      
                                      
                                      $
                                      56,270
                                      
                                      
                                      $
                                      53,258
                                      
                                      
                                      $
                                      227,977Balance
      at June 30, 2009:Short-term
      and long-term investments:Time
      deposit - international
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      115,762
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      115,762Auction
      rate securities
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      57,823
                                      
                                      
                                      
                                      57,823U.S.
      government debt securities
                                      
                                      
                                      25,084
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      25,084Foreign
      corporate debt securities
                                      
                                      
                                      4,209
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      4,209Time
      deposit - U.S.
                                      
                                      
                                      -
                                      
                                      
                                      
                                      970
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      970Other
                                      
                                      
                                      -
                                      
                                      
                                      
                                      654
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      654Total
      short-term and long-term investments
                                      
                                      $
                                      29,293
                                      
                                      
                                      $
                                      117,386
                                      
                                      
                                      $
                                      57,823
                                      
                                      
                                      $
                                      204,502





At June
30, 2010 and 2009, other than the Company’s investments in auction rate
securities, the Company’s investments were recognized at fair value determined
based upon observable input information provided by the Company’s pricing
service vendors for identical or similar assets.  For these
investments, cost approximated fair value.  During the three fiscal
years ended June 30, 2010, the Company did not recognize any gains or losses on
its investments, other than related to the Company’s investments in auction rate
securities.  See “Auction Rate Securities” below for further
discussion on the valuation of the Company’s investments in auction rate
securities.





The
contractual maturities of investments held at June 30, 2010 are as
follows:





(in
      thousands)
                    
                    Amortized
                      Cost Basis
                    
                    
                    Aggregate
                      Fair ValueDue
      within one year
                    
                    $
                    168,093
                    
                    
                    $
                    168,093Due
      between 1 - 2 years
                    
                    
                    6,626
                    
                    
                    
                    6,626Due
      after 10 years - auction rate securities
                    
                    
                    64,275
                    
                    
                    
                    53,258Balance
      at June 30, 2010
                    
                    $
                    238,994
                    
                    
                    $
                    227,977





AUCTION
RATE SECURITIES


The
Company’s investments in auction rate securities, carried at estimated fair
values, were its only assets valued on the basis of Level 3
inputs.  Auction rate securities are long-term debt instruments with
variable interest rates that are designed to reset to prevailing market interest
rates every 7 to 35 days through the auction process.  The auction
rate securities held by the Company are supported by student loans for which
repayment is guaranteed either by the Federal Family Education Loan Program or
insured by AMBAC Financial Group.  Before February 2008, due to the
liquidity previously provided by the interest rate reset mechanism and the
short-term nature of the Company’s investment, the auction rate securities
previously were classified as short-term investments available-for-sale in the
Company’s consolidated balance sheets.  Beginning in February 2008,
auctions for these securities failed to obtain sufficient bids to establish a
clearing rate and the securities were not saleable in auction, thereby no longer
providing short-term liquidity.  As a result, the auction rate
securities have been classified as long-term investments available-for-sale as
of June 30, 2010 and 2009 instead of being classified as short-term investments,
as was the case prior to February 2008.





As of
June 30, 2010, the Company updated its assessment as to whether it would likely
recover the entire cost basis of each of the auction rate securities, and,
therefore, whether the securities had incurred an other-than-temporary
impairment. Determination of whether the impairment is temporary or
other-than-temporary requires significant judgment.  The primary
factors that are considered in assessing the nature of the impairment include
(a) the credit quality of the underlying security, (b) the extent and time
period to which the fair value of each investment has been below cost, (c) the
expected holding or recovery period for each investment, (d) the Company’s
intent to hold each investment until recovery and likelihood that the Company
will not be required to sell the security prior to recovery, and (e) the
existence of any evidence of default by the issuer. The Company engaged an
independent valuation firm to perform a valuation of its auction rate securities
in conjunction with the Company's assessment of any impairment as temporary
rather than other-than-temporary. The valuation firm used a discounted cash flow
model that considered various inputs including:  (a) the coupon rate
specified under the debt instruments, (b) the current credit ratings of the
underlying issuers, (c) collateral characteristics, (d) discount rates, (e)
severity of default and (f) probability that the securities will be sold at
auction or through early redemption.  The valuation firm used a mark
to model approach to arrive at this valuation, which the Company reviewed and
with which it agreed.


56


Based on
its fair value assessments, the Company determined that its investments in
auction rate securities as of June 30, 2010 were impaired by approximately $11.0
million as compared to an impairment of approximately $6.5 million as of June
30, 2009.  Approximately $6.1 million and $2.0 million of this
impairment at June 30, 2010 and 2009, respectively, were deemed to be
other-than-temporary.  The fair value assessment also included an
evaluation of the amount of the other-than-temporary impairment attributable to
credit loss.  The factors considered in making an evaluation of the
amount attributable to credit loss included the following:  (a)
default probability and the likelihood of restructuring of the security, (b)
payment structure of the security to determine how the expected underlying
collateral cash flows will be distributed to holders of the issuer’s securities
and (c) performance indicators of the underlying assets in the trust (including
default and delinquency rates).  These assumptions are subject to
change as the underlying market conditions change.  Based on its
evaluations, the Company determined that approximately $6.0 million and $1.3
million of the cumulative other-than-temporary impairment losses as of June 30,
2010 and 2009, respectively, were credit based, as a result, for the fiscal
years ended June 30, 2010 and 2009, the Company recorded approximately $4.8
million and $1.3 million, respectively, in its consolidated statements of
operations.





The
remaining cumulative impairment losses of approximately $5.0 million
(approximately $3.1 million, net of tax) and approximately $5.2 million
(approximately $3.2 million, net of tax) were recorded in accumulated other
comprehensive income, net of tax, as of June 30, 2010 and 2009,
respectively.





A
reconciliation of changes in the fair value of auction rate securities, and the
related unrealized losses were as follows:





(in thousands)
                    
                    Cost
                    
                    
                    Temporary
                      Impairment
                      Loss (1)
                    
                    
                    OTTI -
                      Non-Credit
                      Loss (1)
                    
                    
                    OTTI -Credit
                      Loss (2)
                    
                    
                    Fair
                      ValueBalance
      at June 30, 2008
                    
                    $
                    69,450
                    
                    
                    $
                    (4,234
                    )
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    65,216Changes
      in losses related to investments
                    
                    
                    -
                    
                    
                    
                    (464
                    )
                    
                    
                    (712
                    )
                    
                    
                    (1,266
                    )
                    
                    
                    (2,442
                    )Redemption
                    
                    
                    (5,175
                    )
                    
                    
                    224
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (4,951
                    )Balance
      at June 30, 2009
                    
                    
                    64,275
                    
                    
                    
                    (4,474
                    )
                    
                    
                    (712
                    )
                    
                    
                    (1,266
                    )
                    
                    
                    57,823Changes
      in losses related to investments
                    
                    
                    -
                    
                    
                    
                    (462
                    )
                    
                    
                    680
                    
                    
                    
                    (4,783
                    )
                    
                    
                    (4,565
                    )Balance
      at June 30, 2010
                    
                    $
                    64,275
                    
                    
                    $
                    (4,936
                    )
                    
                    $
                    (32
                    )
                    
                    $
                    (6,049
                    )
                    
                    $
                    53,258





(1)  OTTI
means "other-than-temporary impairment."  The amounts in this column
are recorded, net of tax, in the accumulated other


comprehensive
income (loss) component of stockholders' equity.


(2)  The
amounts in this column are recorded in the consolidated statement of
operations.





During
the fiscal years ended June 30, 2010 and 2008, the Company had no sales or
redemptions of its auction rate securities.  During the fiscal year
ended June 30, 2009, the Company redeemed approximately $5.2 million of its
auction rate securities at their par value.  The Company had no
realized gains or losses related to the sale or redemption of its investments in
auction rate securities during the three fiscal years ended June 30,
2010.





The
Company plans to continue to monitor its investments, including the liquidity of
and creditworthiness of the issuers of its auction rate securities, on an
ongoing basis for indications of further impairment and, if an impairment is
identified, for proper classification of the impairment.  Based on the
Company’s expected operating cash flows and sources of cash, the Company does
not believe that any reduction in the liquidity of its auction rate securities
will have a material impact on its overall ability to meet its liquidity
needs.





3.
            SHARE-BASED
      COMPENSATION:





The
Company has incentive and non-qualified stock options outstanding that were
granted to directors, officers, and other employees pursuant to authorization by
the Board of Directors.  With respect to directors, the Company’s
policy and practice during fiscal years 2010 and 2009 was that only those
directors who are employees to the Company were eligible to receive
options.  The exercise price per share of each option equals the
market value of a share of the Company’s common stock on the date of the
grant.  Substantially all of the options granted become exercisable in
equal increments on the first three anniversaries of the date of
grant.  All outstanding options expire ten years from the date of
grant.  Since its inception in 1991, the Company has authorized
approximately 36.4 million shares for issuance upon exercise of options, of
which approximately 10.1 million shares were available for issuance;
approximately 6.6 million shares of which have been granted and remain
outstanding and approximately 3.5 million shares have not been granted as of
June 30, 2010 and remain in the Company’s 1991 Stock Option Plan to be
granted.





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





Fiscal Year Ended June 30,(in thousands)
                                
                                2010
                                
                                
                                2009
                                
                                
                                2008Selling,
      general and administrative
                                
                                $
                                11,822
                                
                                
                                $
                                13,108
                                
                                
                                $
                                16,213Research
      and development
                                
                                
                                511
                                
                                
                                
                                792
                                
                                
                                
                                1,016Cost
      of sales
                                
                                
                                32
                                
                                
                                
                                —
                                
                                
                                
                                —Total
      non-cash share-based compensation expense
                                
                                
                                12,365
                                
                                
                                
                                13,900
                                
                                
                                
                                17,229Income
      tax benefit
                                
                                
                                (4,283
                                )
                                
                                
                                (4,100
                                )
                                
                                
                                (4,083
                                )Total
      non-cash share-based compensation expense, net of tax
    benefit
                                
                                $
                                8,082
                                
                                
                                $
                                9,800
                                
                                
                                $
                                13,146Impact
      on diluted net income per share attributable to MICROS Systems, Inc.
      common shareholders
                                
                                $
                                0.10
                                
                                
                                $
                                0.12
                                
                                
                                $
                                0.16





The
non-cash share-based compensation expense for the fiscal years 2010, 2009 and
2008 included approximately $1.7 million, $0.8 million and $3.2 million,
respectively, related to grants of options to the Company’s Chairman, President,
and Chief Executive Officer, A.L. Giannopoulos during the respective fiscal
years.  In accordance with the terms of the Company’s option plan, as
he is over the retirement age of 62, any options that he holds that have not yet
vested will vest immediately upon his retirement.  Although Mr.
Giannopoulos had not retired, the Company expensed 100% of the share-based
compensation expense related to his option grants because he was over the age of
62 at the time he received the options.


57





No
non-cash share-based compensation expense has been capitalized for fiscal years
2010, 2009 and 2008, as stock options were not granted to employees whose labor
cost was capitalized as software development costs or inventory. Estimates
of fair values of options granted during the three fiscal years ended June 30,
2010, 2009, and 2008 were made on the date of grant using the following
assumptions:





Fiscal Year Ended June 30,2010
                  
                  
                  2009
                  
                  
                  2008Weighted-average
      expected volatility
                  
                  
                  42
                  %
                  
                  
                  39
                  %
                  
                  
                  35
                  %Expected
      volatility
                  
                  
                  41%
      - 42
                  %
                  
                  
                  35%
      - 42
                  %
                  
                  
                  33%
      - 36
                  %Expected
      term
                  
                  5.0
      – 5.2 years
                  
                  
                  4.9
      – 5.3 years
                  
                  
                  4.8
      – 5.3 yearsExpected
      dividend yield
                  
                  
                  0
                  %
                  
                  
                  0
                  %
                  
                  
                  0
                  %Risk-free
      interest rate
                  
                  
                  1.7%
      - 2.0
                  %
                  
                  
                  1.7%
      - 2.8
                  %
                  
                  
                  2.6%
      - 3.7
                  %





The
following is a summary of option activity during the fiscal year ended June 30,
2010:





(in thousands, except per share data and number of years)
                        
                        Number of
                          Shares
                        
                        
                        Weighted-
                          Average
                          Exercise Price
                        
                        
                        Weighted-
                          Average
                          Remaining
                          Contractual
                          Term
                          (in years)
                        
                        
                        Aggregate
                          Intrinsic
                          ValueOutstanding
      at June 30, 2009
                        
                        
                        7,132
                        
                        
                        $
                        21.79Granted
                        
                        
                        1,120
                        
                        
                        $
                        29.81Exercised
                        
                        
                        (1,378
                        )
                        
                        $
                        16.92Forfeited
      or expired
                        
                        
                        (300
                        )
                        
                        $
                        24.27Outstanding
      at June 30, 2010
                        
                        
                        6,574
                        
                        
                        $
                        24.06
                        
                        
                        
                        6.8
                        
                        
                        $
                        51,353Exercisable
      at June 30, 2010
                        
                        
                        4,668
                        
                        
                        $
                        23.10
                        
                        
                        
                        6.0
                        
                        
                        $
                        40,934





The
weighted-average grant-date estimated fair value per share of options granted
during the fiscal years 2010, 2009 and 2008 was $11.70, $5.93 and $12.87,
respectively.  The total intrinsic value, which is the difference
between the exercise price and the market price on the date of exercise, of
options exercised during the fiscal years 2010, 2009 and 2008 was approximately
$18.1 million, $3.8 million and $38.9 million, respectively.





As of
June 30, 2010, there was approximately $13.7 million (net of estimated
forfeitures) in non-cash share-based compensation costs related to non-vested
awards, expected to be recognized in the Company’s consolidated statements of
operations over a weighted-average period of 1.83 years.





Cash
received from options exercised during the fiscal years 2010, 2009 and 2008 was
approximately $23.3 million, $2.9 million and $27.9 million,
respectively.





4.
            ACQUISITIONS:





FY 2010:





TIG GLOBAL, LLC.


On
December 31, 2009, the Company acquired TIG Global, LLC (“TIG Global”), an
online marketer specializing in hotel and destination internet marketing,
headquartered in the Washington, D.C. metropolitan area, for a total cash
purchase price of approximately $29.0 million, net of cash
acquired.  Approximately $3.0 million of the total purchase price is
held in escrow and, if specified claims against TIG Global arise, such amounts
may be used to satisfy those claims.  The amounts held in escrow, net
of any payments made to satisfy any such claims are to be paid in two
installments, at 12 and 18 months after closing.  The former TIG
Global members may receive an additional amount of up to $0.9 million based upon
achievement of specified financial targets for calendar year
2010.  Approximately $0.6 million of the $0.9 million has been
included in the recorded purchase price allocation based on fair
value.  In connection with the acquisition, the Company recorded
goodwill of approximately $25.0 million and intangible assets of approximately
$6.8 million, principally comprised of customer relationships which will be
amortized over 10 years.


58


FY 2009:





FRY,
INC.


During
August 2008, the Company acquired Fry, Inc. (“Fry”), an e-commerce design,
development and managed services provider headquartered in Ann Arbor, Michigan,
for a total cash purchase price of approximately $32.7 million, net of cash
acquired.  The Company also assumed debt of approximately $18.1
million, which was paid off immediately after the
acquisition.  Approximately $6.0 million of the total purchase price
was initially held in escrow to satisfy certain claims the Company may have had
against Fry.  Any amounts then remaining after the satisfaction of any
such claims are to be paid in two installments, at 12 and 18 months after
closing.  The first installment of approximately $2.9 million was paid
in August 2009 and a second installment of approximately $2.7 million was paid
in February 2010.  Approximately $.1million has also been paid to
Company to satisfy certain of its claims against the selling Fry
shareholders.  As of June 2010, the balance of the escrow is
approximately $.3 million, which shall be paid as the remaining pending claims
are resolved.  The selling Fry shareholders were eligible to earn up
to an additional $17 million in earn out payments over the approximately two
year period following closing, which were payable based upon achievement of
specified financial targets.  In April 2009, the Company paid
approximately $4.5 million to the former Fry shareholders for meeting the
initial set of specified financial targets and in June 2010, the Company paid
approximately $1.6 million to the sellers for meeting another set of financial
targets for calendar year 2009.   In connection with the
acquisition, the Company recorded goodwill of approximately $40.2 million,
intangible assets of approximately $7.0 million, and capitalized software of
approximately $4.7 million.





FY 2008:





CHECK-IN-DATA AG


During
the first quarter of fiscal year 2008, the Company acquired Check-in Data AG
(“Check in Data”) for an aggregate cash purchase price of approximately $13.5
million, net of cash acquired, in a step acquisition in which the Company
acquired an 80% interest in July 2007 and the remaining 20% interest in
September 2007.  Approximately $2.0 million of the total purchase
price which was initially held back to satisfy certain claims the Company may
have had against Check in Data was released and paid in fiscal year
2009.  Headquartered in Switzerland, Check in Data was a distributor
of MICROS products and services and also provided complementary products and
services.  Goodwill of approximately $11.9 million and intangible
assets and capitalized software of approximately $3.3 million were recorded in
connection with the acquisition.





OTHER:


During
fiscal year 2008, the Company also acquired another distributor of MICROS
products and services.  The aggregate cash purchase price for this
acquisition was approximately $4.3 million, net of cash acquired, which excluded
certain amounts that were held back to be released on either an agreed upon date
or upon the resolution of contractual indemnity obligations of the sellers, if
any.  The first installment, including working capital adjustment, of
approximately $0.4 million was paid in July 2009, and a second installment of
approximately $0.4 million was paid in October 2009.  The balance
remaining after satisfaction of any claims, if any, will be paid at four years
after the April 2008 closing.





The acquisitions described above have
been included in the Company’s results since their respective acquisition dates
and thepro forma
effectsof the acquisitions werenot material to the consolidated
financial statementsfor
any periods presented in the financial statements.





5.
            INVENTORY:





The
following table provides information on the components of inventory at June 30, 2010 and 2009:





(in
    thousands)
                            
                            2010
                            
                            
                            2009Raw
    materials
                            
                            $
                            1,807
                            
                            
                            $
                            1,904Finished
    goods
                            
                            
                            33,296
                            
                            
                            
                            37,879$
                            35,103
                            
                            
                            $
                            39,783





6.
            PROPERTY, PLANT AND
      EQUIPMENT:





The following table provides information
on the components of
property, plant and equipment at June 30, 2010 and 2009:





(in thousands)
                                
                                2010
                                
                                
                                2009
                                
                                Useful LifeLeasehold improvements
                                
                                $
                                11,779
                                
                                
                                $
                                10,655
                                
                                ShorterofusefullifeorleasetermMachinery
      and equipment
                                
                                
                                12,641
                                
                                
                                
                                11,679
                                
                                5-10
  yearsFurniture and
      fixtures
                                
                                
                                19,374
                                
                                
                                
                                19,330
                                
                                7-10
  yearsComputer hardware and
      software
                                
                                
                                76,094
                                
                                
                                
                                74,087
                                
                                3-7yearsTotal property, plant and
      equipment
                                
                                
                                119,888
                                
                                
                                
                                115,751Accumulated depreciation and
      amortization
                                
                                
                                (92,539
                                )
                                
                                
                                (85,231
                                )Net property, plant and
      equipment
                                
                                $
                                27,349
                                
                                
                                $
                                30,520





Depreciation expense for the fiscal
years 2010, 2009 and 2008was approximately $12.7 million, $13.2 million
and $12.6 million,
respectively.


59


7.
            LINE OF
    CREDIT:




The
Company had two credit agreements (the “Credit Agreements”) that in the
aggregate provided a $65.0 million multi-currency committed line of
credit.  The lenders under the Credit Agreements were Bank of America,
N.A., Wachovia Bank, N.A., and US Bank (“Lenders”).  The international
facility was secured by 65% of the capital stock of the Company’s main operating
Ireland subsidiary and 100% of the capital stock of all of the remaining major
foreign subsidiaries.  The U.S. facility was secured by 100% of the
capital stock of the Company’s major U.S. subsidiaries as well as inventory and
receivables located in the U.S.





For
borrowings in U.S. currency, the interest rate under the Credit Agreements was
equal to the higher of the federal funds rate plus 50 basis points or the prime
rate.  For borrowings in foreign currencies, the interest rate was
determined by a LIBOR-based formula, plus an additional margin of 125 to 200
basis points, depending upon the Company’s consolidated earnings before
interest, taxes, depreciation and amortization for the immediately preceding
four calendar quarters.  Under the terms of the Credit Agreements, the
Company was required to pay to the Lenders insignificant commitment fees on the
unused portion of the line of credit.  The Credit Agreements also
contained certain financial covenants and restrictions on the Company’s ability
to assume additional debt, repurchase stock, sell subsidiaries or acquire
companies.  In case of an event of default, as defined in the Credit
Agreements including those not cured within the applicable cure period, if any,
the Lenders’ remedies included their ability to declare all outstanding loans,
plus interest and other related amounts owed, to be immediately due and payable
in full, and to pursue all rights and remedies available to them under the
Credit Agreements or under applicable law.




As of
June 30, 2010, the Company had approximately $1.4 million outstanding under the
Credit Agreements and has applied approximately an additional $0.4 million to
guarantees.  A total of approximately $63.1 million was available for
future borrowings as of June 30, 2010.  The total outstanding balance
consisted of 127.5 million in JPY (Japanese Yen) (approximately $1.4 million at
the June 30, 2010 exchange rate).




The Company also has a credit
relationship with a European bank in the amount of EUR 1.0 million
(approximately $1.2 million at the June 30, 2010 exchange
rate).  Under the terms of this facility, the Company may borrow in
the form of either a line of credit or term debt.  As of June 30,
2010, there were no balances outstanding on this credit facility, but
approximately EUR 0.6 million (approximately $0.7 million at the June 30, 2010
exchange rate) of the credit facility has been used for
guarantees.




As of June 30, 2010, the Company hadapproximately $63.6 million
borrowing capacity under all of the credit facilities described
above.  The weighted-average interest rate on the outstanding balances
under the Credit Agreements as of June 30, 2010was 1.4%.




Subsequent to the fiscal year ended June
30, 2010, the Credit Agreements were amended to extend the maturity date until
July 31, 2013, with some further modifications to the terms and
conditions.The changes to the Credit Agreements in connection
with the renewal and extension include the addition and deletion of certain
subsidiaries as co-borrowers, a reduction in the overall limit on the line to
$50.0 million (a change made at the Company’s request), and reduction in certain
fees payable to the lenders under certain circumstances.





8.
            ACCRUED EXPENSES AND OTHER CURRENT
      LIABILITIES:





The components of accrued expenses and
other current liabilities at June 30 are as follows:





(in
    thousands)
                        
                        2010
                        
                        
                        2009Compensation, benefits and related
      taxes
                        
                        $
                        57,903
                        
                        
                        $
                        40,659Deposits received from
      customers
                        
                        
                        29,227
                        
                        
                        
                        29,824Professional
      services
                        
                        
                        11,606
                        
                        
                        
                        7,808VAT and sales
      taxes
                        
                        
                        10,381
                        
                        
                        
                        9,197Payable for investment securities
      purchased
                        
                        
                        9,985
                        
                        
                        
                        —Product
    related
                        
                        
                        6,119
                        
                        
                        
                        3,276Customer
      related
                        
                        
                        1,669
                        
                        
                        
                        2,355Restructuring
      charges
                        
                        
                        265
                        
                        
                        
                        1,762Other
                        
                        
                        8,314
                        
                        
                        
                        9,940$
                        135,469
                        
                        
                        $
                        104,821





During fiscal year 2009, the Company
recorded restructuring charges of approximately $3.1 million (approximately $2.1
million, net of tax), primarily to reflect adjustments to its cost structure in
response to lower sales volume in certain of its locations.  The
charge included approximately $1.5 million in employee related costs and
approximately $1.6 million in occupancy related costs for certainfacilities that the Company
hadvacated.  The
occupancy related costs is expected to be paid through September
2013.  The charges affectedboth of the Company’s reportablesegments.  This
reductiondid not have a
significant impact on the Company’s fiscal year 2010 financial results andis not expected to have a
significant impact onitsfuture financial results.  As
of June 30, 2010, the remaining accrual related to the charge was approximately
$0.6 million, of which approximately $0.3 million is included in accrued
expenses and other current liabilities, and the remaining non-current balance of
approximately $0.3 million is included in other non-current liabilities in the
accompanying consolidated balance sheets.


60


9.
            GOODWILL:




Goodwill allocated to the Company’s
reportable segments as of June 30, 2010 and 2009 and changes in the carrying
amount of goodwill are as follows:





(in thousands)
                        
                        United States
                        
                        
                        International
                        
                        
                        TotalBalance at June 30,
      2008
                        
                        $
                        95,888
                        
                        
                        $
                        63,834
                        
                        
                        $
                        159,722Goodwill adjustment for prior
      years’ acquisitions
                        
                        
                        23
                        
                        
                        
                        (187
                        )
                        
                        
                        (164
                        )Goodwill acquired - Fry,
      Inc.
                        
                        
                        38,600
                        
                        
                        
                        —
                        
                        
                        
                        38,600Foreign currency
      translation
                        
                        
                        —
                        
                        
                        
                        (7,419
                        )
                        
                        
                        (7,419
                        )Balance at June 30,
      2009
                        
                        
                        134,511
                        
                        
                        
                        56,228
                        
                        
                        
                        190,739Goodwill adjustment for prior
      years’ acquisitions
                        
                        
                        1,619
                        
                        
                        
                        (92
                        )
                        
                        
                        1,527Goodwill acquired – TIG
      Global
                        
                        
                        24,996
                        
                        
                        
                        —
                        
                        
                        
                        24,996Foreign currency
      translation
                        
                        
                        —
                        
                        
                        
                        (3,437
                        )
                        
                        
                        (3,437
                        )Balance at June 30,
      2010
                        
                        $
                        161,126
                        
                        
                        $
                        52,699
                        
                        
                        $
                        213,825





Duringthefiscal yearended June 30, 2009, the Company adjusted its goodwill with
an offsetting adjustment to its net deferred tax assets related to its prior
year acquisitions, primarily due to adjustments to purchase accounting and
operating loss carryforwards.




Based on the results of its annual
impairment tests, the Company determined that no impairment of goodwill existed
as of and for the fiscal years ended June 30, 2010, 2009 and
2008.





10.
            INTANGIBLE
      ASSETS:





Purchased
intangible assets are amortized over the estimated useful lives of the
respective asset category unless such lives are deemed
indefinite.  The following table provides information on the Company’s
intangible assets at June 30, 2010 and 2009:





(in thousands except number of years)
                                
                                Gross
                                  Carrying
                                  Amount
                                
                                
                                Accumulated
                                  Amortization
                                
                                
                                Net Carrying
                                  Amount
                                
                                
                                Useful
                                  Life
                                  (in years)At
      June 30, 2010:Customer
      lists
                                
                                $
                                30,951
                                
                                
                                $
                                (13,632
                                )
                                
                                $
                                17,319
                                
                                
                                
                                4
      - 10Non-compete
      agreement
                                
                                
                                309
                                
                                
                                
                                (84
                                )
                                
                                
                                225
                                
                                
                                
                                2
      - 4Product
      lines
                                
                                
                                326
                                
                                
                                
                                (326
                                )
                                
                                
                                —Service
      revenue backlog
                                
                                
                                833
                                
                                
                                
                                (786
                                )
                                
                                
                                47
                                
                                
                                
                                5Trademark
                                
                                
                                1,200
                                
                                
                                
                                (92
                                )
                                
                                
                                1,108
                                
                                
                                
                                25Finite-lived
      purchased intangible assets
                                
                                
                                33,619
                                
                                
                                
                                (14,920
                                )
                                
                                
                                18,699Trademarks
                                
                                
                                891
                                
                                
                                
                                —
                                
                                
                                
                                891Total
                                
                                $
                                34,510
                                
                                
                                $
                                (14,920
                                )
                                
                                $
                                19,590At
      June 30, 2009:Customer
      lists
                                
                                $
                                25,788
                                
                                
                                $
                                (10,554
                                )
                                
                                $
                                15,234
                                
                                
                                
                                4 -
      10Non-compete
      agreement
                                
                                
                                10
                                
                                
                                
                                (7
                                )
                                
                                
                                3
                                
                                
                                
                                4Product
      lines
                                
                                
                                326
                                
                                
                                
                                (317
                                )
                                
                                
                                9
                                
                                
                                
                                5Service
      revenue backlog
                                
                                
                                906
                                
                                
                                
                                (533
                                )
                                
                                
                                373
                                
                                
                                
                                3 -
      5Trademark
                                
                                
                                1,200
                                
                                
                                
                                (44
                                )
                                
                                
                                1,156
                                
                                
                                
                                25Finite-lived
      purchased intangible assets
                                
                                
                                28,230
                                
                                
                                
                                (11,455
                                )
                                
                                
                                16,775Trademarks
                                
                                
                                934
                                
                                
                                
                                —
                                
                                
                                
                                934Total
                                
                                $
                                29,164
                                
                                
                                $
                                (11,455
                                )
                                
                                $
                                17,709





Certain
of the Company’s trademarks are deemed to have indefinite lives and therefore
are not amortized.  Amortization expense related to finite-lived
purchased intangible assets was approximately $4.6 million, $4.4 million and
$2.5 million in the fiscal years 2010, 2009 and 2008,
respectively.  For each of the fiscal years ended June 30, 2010 and
2009, the Company recorded approximately $1.5 million in accelerated
amortization expenses related to finite-lived purchased intangible
assets.  During the three fiscal years ended June 30, 2010, 2009, and
2008 the Company did not recognize any impairment losses on long-lived assets,
including finite-lived purchased intangible assets.




61




30 is as follows (in
thousands):




2011
                      
                      $
                      2,9282012
                      
                      
                      2,8062013
                      
                      
                      2,6122014
                      
                      
                      2,0802015
                      
                      
                      2,000Later years
                      
                      
                      6,273Total
                      
                      $
                      18,699





11.
            COMMITMENTS AND
      CONTINGENCIES:





LEASES


The
Company and its subsidiaries lease office space under operating leases expiring
at various dates through 2022 and lease equipment under both operating and
capital leases.  The capital leases are primarily international
automobile leases used by sales and installation personnel.  Rent
expense under the operating leases for the three fiscal years ending June 30,
2010, 2009, and 2008 was as follows:





(in thousands)
                  
                  Rent
                    Expense
                  
                  
                  Sublease
                    Income
                  
                  
                  NetRent
                    Expense2010
                  
                  $
                  29,338
                  
                  
                  $
                  (937
                  )
                  
                  $
                  28,4012009
                  
                  
                  30,772
                  
                  
                  
                  (952
                  )
                  
                  
                  29,8202008
                  
                  
                  27,825
                  
                  
                  
                  (931
                  )
                  
                  
                  26,894





As of June 30, 2010, future minimum
lease payments for those leases having an initial or remaining non-cancelable
lease term in excess of one year are as follows:





(inthousands)
                          
                          Operating
                            Leases
                          
                          
                          Less
                            Sublease
                            Rentals
                          
                          
                          Net
                            Operating
                            Leases
                          
                          
                          Capital
                            LeasesFiscal Year Ending June
      30,2011
                          
                          $
                          26,944
                          
                          
                          $
                          (965
                          )
                          
                          $
                          25,979
                          
                          
                          $
                          1892012
                          
                          
                          21,483
                          
                          
                          
                          (957
                          )
                          
                          
                          20,526
                          
                          
                          
                          1052013
                          
                          
                          16,964
                          
                          
                          
                          (905
                          )
                          
                          
                          16,059
                          
                          
                          
                          812014
                          
                          
                          14,188
                          
                          
                          
                          (923
                          )
                          
                          
                          13,265
                          
                          
                          
                          402015
                          
                          
                          11,629
                          
                          
                          
                          (654
                          )
                          
                          
                          10,975
                          
                          
                          
                          —2016 and
      thereafter
                          
                          
                          8,570
                          
                          
                          
                          —
                          
                          
                          
                          8,570
                          
                          
                          
                          —$
                          99,778
                          
                          
                          $
                          (4,404
                          )
                          
                          $
                          95,374
                          
                          
                          
                          415Less:  current
      portion
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          189Long-term obligations under
      capital lease
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          $
                          226





LEGAL PROCEEDINGS


There is
a case pending in the U.S. District Court for the Northern District of Georgia,
styled Ware v.
Abercrombie & Fitch Stores, Inc. et al.; although the Company was not
a party to that case, the Company may have had some obligation to indemnify
certain of the defendants who are the Company’s customers based on the terms of
the Company’s contracts with those customers.  The plaintiff alleged
that the defendants infringed a patent relating to the processing of credit card
transactions.  The defendants included approximately 107
individualretailers, 13 of whom
are the Company’s customers for retail point-of-sale
software.The Company initially agreed to provide indemnity
coverage to five of the defendants who are the Company’s customers in accordance
with applicable provisions of the contracts between the Company and those
customers, however, one such customer subsequently filed for protection under
the U.S. Bankruptcy Code.  During the quarter ended June 30, 2010, the
Company entered into settlement agreements with all of the defendants for whom
it may have had indemnity obligations. Through June 30, 2010, our legal fees
with respect to the third party action have not been material, and the
settlement amounts were not material.




On May 22, 2008, a jury returned verdicts
totaling $7.5 million against the Company in the consolidated actions ofRoth Cash
Register v. MICROS Systems, Inc., et al. and Shenango Systems Solutions v.
MICROS Systems, Inc., et al.   The cases initially
were filed in 2000 in the Court of Common Pleas of Allegheny County,
Pennsylvania.  The complaints both related to the non-renewal of
dealership agreements in the year 2000 between the Company and the respective
plaintiffs.  The agreements were non-renewed as part of a
restructuring of the dealer channel.  There is no other outstanding
litigation relating to the restructuring of the dealer channel in the year
2000.  The plaintiffs alleged that the Company and certain of its
subsidiaries and employees entered into a plan to eliminate the plaintiffs as
authorized dealers and improperly interfere with the plaintiffs' relationships
with their respective existing and potential future clients and customers
without compensation to the plaintiffs.  As a result, the plaintiffs
claimed that the Company was liable for, among other things, breach of contract
and tortious interference with existing and prospective contractual
relationships.  The Company and the plaintiffs have appealed the
verdicts on various grounds.Oral argument on the appeal took
place on February 24, 2010, before the Superior Court of
Pennsylvania.  The court has not yet issued a decision on the
appeal.  The Company has
established an immaterial reserve for any potential liability relating to these
matters, as the Company believes that it presentedstrong arguments to reverse the
verdicts on appeal, and therefore believes that an unfavorable outcome in these
cases is not probable.  Nevertheless, even if the verdicts were not
reversed or reduced on appeal, payment of the resulting obligations would not
have a material adverse effect on the Company’s consolidated financial position
or liquidity.


62


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





12.
            SHAREHOLDERS’
      EQUITY:





During
the period from fiscal year 2002 through fiscal year 2009, the Board of
Directors authorized the purchase of up to an aggregate of 12 million shares of
the Company’s common stock.  The Company completed the purchases of 12
million shares through February 2010.  On August 25, 2009, the Board
of Directors authorized the purchase of an additional two million shares of the
Company’s common stock over the next three years, to be purchased from time to
time depending on market conditions and other corporate considerations as
determined by management.   The Company has incurred an aggregate
of approximately $0.3 million in fees related to all stock
purchases.  As of June 30, 2010, approximately 1.6 million additional
shares are available for purchases under the most recent
authorization.




The
following table summarizes the cumulative number of shares purchased under the
purchase authorizations, all of which have been retired:





Number of
                            Shares
                          
                          
                          Average
                            Purchase Price
                            per Share
                          
                          
                          Total Purchase
                            Value
                            (in thousands)Total shares
      purchased:As of June 30,
      2007
                          
                          
                          7,533,198
                          
                          
                          $
                          14.77
                          
                          
                          $
                          111,284Fiscal year
      2008
                          
                          
                          2,329,302
                          
                          
                          $
                          31.90
                          
                          
                          
                          74,303As of June 30,
      2008
                          
                          
                          9,862,500
                          
                          
                          $
                          18.82
                          
                          
                          
                          185,587Fiscal year
      2009
                          
                          
                          855,300
                          
                          
                          $
                          26.00
                          
                          
                          
                          22,242As of June 30,
      2009
                          
                          
                          10,717,800
                          
                          
                          $
                          19.39
                          
                          
                          
                          207,829Fiscal year
      2010
                          
                          
                          1,646,070
                          
                          
                          $
                          28.94
                          
                          
                          
                          47,635As of June 30,
      2010
                          
                          
                          12,363,870
                          
                          
                          $
                          20.66
                          
                          
                          $
                          255,464





Subsequent to year-end, on August 24,
2010, the Board of Directors authorized the purchase of an additional two
million shares of the Company’s common stock over the next three years, to be
purchased from time to time depending on market conditions and other corporate
considerations as determined by management.





13.
            INCOME
    TAXES:





Incomebefore taxes for the three fiscal years
ended June 30, 2010, 2009,
and 2008was taxedas indicated inthe following
jurisdictions:





(in
    thousands)
                    
                    2010
                    
                    
                    2009
                    
                    
                    2008United
    States
                    
                    $
                    82,626
                    
                    
                    $
                    72,039
                    
                    
                    $
                    66,915International
                    
                    
                    85,499
                    
                    
                    
                    74,823
                    
                    
                    
                    87,011$
                    168,125
                    
                    
                    $
                    146,862
                    
                    
                    $
                    153,926





The components of income tax expense for
the three fiscal years ended June 30, 2010 are as follows:





(in
    thousands)
                      
                      2010
                      
                      
                      2009
                      
                      
                      2008Current:Federal
                      
                      $
                      32,498
                      
                      
                      
                      31,729
                      
                      
                      $
                      29,720State
                      
                      
                      4,554
                      
                      
                      
                      4,443
                      
                      
                      
                      2,996Foreign
                      
                      
                      18,755
                      
                      
                      
                      16,555
                      
                      
                      
                      20,56955,807
                      
                      
                      
                      52,727
                      
                      
                      
                      53,285Deferred:Federal
                      
                      
                      (1,311
                      )
                      
                      
                      (2,600
                      )
                      
                      
                      (116
                      )State
                      
                      
                      (117
                      )
                      
                      
                      (233
                      )
                      
                      
                      (225
                      )Foreign
                      
                      
                      (1,634
                      )
                      
                      
                      (721
                      )
                      
                      
                      (643
                      )(3,062
                      )
                      
                      
                      (3,554
                      )
                      
                      
                      (984
                      )$
                      52,745
                      
                      
                      $
                      49,173
                      
                      
                      $
                      52,301


63


The total tax provision is different
from the amount that would have beenrecorded by applying the U.S. statutory
federal income tax rate to income before taxes.  The reconciliation of
these differencesfor the
three fiscal years ended June 30, 2010is as follows:





2010
                        
                        
                        2009
                        
                        
                        2008Statutory
    rate
                        
                        
                        35.0
                        %
                        
                        
                        35.0
                        %
                        
                        
                        35.0
                        %Increase (decrease) resulting
      from:State taxes, net of federal tax
      benefit
                        
                        
                        1.4
                        
                        
                        
                        1.5
                        
                        
                        
                        1.3Effect of tax rates in foreign
      jurisdictions
                        
                        
                        (11.6
                        )
                        
                        
                        (12.4
                        )
                        
                        
                        (9.7
                        )Share-based and other
      compensation
                        
                        
                        1.5
                        
                        
                        
                        0.9
                        
                        
                        
                        1.8Non-deferred foreign
      income
                        
                        
                        0.3
                        
                        
                        
                        1.3
                        
                        
                        
                        1.5Domestic manufacturing
      deduction
                        
                        
                        (0.7
                        )
                        
                        
                        (0.7
                        )
                        
                        
                        (0.7
                        )Valuation
      allowances
                        
                        
                        2.0
                        
                        
                        
                        2.5
                        
                        
                        
                        2.1Uncertain tax
      positions
                        
                        
                        2.1
                        
                        
                        
                        3.1
                        
                        
                        
                        3.9Foreign withholding
      taxes
                        
                        
                        1.0
                        
                        
                        
                        0.8
                        
                        
                        
                        0.7Other
      differences
                        
                        
                        0.4
                        
                        
                        
                        1.5
                        
                        
                        
                        (1.9
                        )Effective tax
      rate
                        
                        
                        31.4
                        %
                        
                        
                        33.5
                        %
                        
                        
                        34.0
                        %





The
Company has not provided U.S. deferred income taxes on the cumulative unremitted
earnings of its significant non-U.S. affiliates as the Company plans to
permanently reinvest cumulative unremitted foreign earnings outside the
U.S.  These cumulative unremitted foreign earnings of approximately
$507 million and $459 million for fiscal years 2010 and 2009, respectively,
relate primarily to ongoing operations in foreign jurisdictions and are required
to fund foreign operations, capital expenditures and expansion
requirements.  It is not practicable to determine the unrecognized
deferred income taxes on these foreign subsidiaries.




The significant components of the
Company’s deferred tax assets and liabilities at June 30, 2010 and
2009are as
follows:





(in
    thousands)
                      
                      2010
                      
                      
                      2009Deferred tax
      assets:Net operating loss
      carryforwards
                      
                      $
                      12,464
                      
                      
                      $
                      13,372Accruals
                      
                      
                      11,468
                      
                      
                      
                      10,255Share-based
      compensation
                      
                      
                      13,421
                      
                      
                      
                      12,337Bad debt
      reserves
                      
                      
                      6,570
                      
                      
                      
                      6,857Inventory
                      
                      
                      2,040
                      
                      
                      
                      2,271Benefit related
      accruals
                      
                      
                      2,032
                      
                      
                      
                      1,737Deferred revenues and customer
      deposits
                      
                      
                      1,286
                      
                      
                      
                      1,333Other unrealized gains and
      losses
                      
                      
                      4,021
                      
                      
                      
                      2,244Restructuring
                      
                      
                      620
                      
                      
                      
                      832Tax credit
      carryforward
                      
                      
                      94
                      
                      
                      
                      —Tax impact of technology
      transfer
                      
                      
                      —
                      
                      
                      
                      124Total deferred tax
      assets
                      
                      
                      54,016
                      
                      
                      
                      51,362Deferred tax
      liabilities:Intangibles
      amortization
                      
                      
                      (7,682
                      )
                      
                      
                      (8,076
                      )Capitalized software development
      costs
                      
                      
                      (3,795
                      )
                      
                      
                      (4,301
                      )Depreciation
                      
                      
                      (705
                      )
                      
                      
                      (1,240
                      )Other
                      
                      
                      (14
                      )
                      
                      
                      (13
                      )Total deferred tax
      liabilities
                      
                      
                      (12,196
                      )
                      
                      
                      (13,630
                      )Valuation
      allowance:Net operating
      losses
                      
                      
                      (7,039
                      )
                      
                      
                      (6,244
                      )Other
                      
                      
                      (4,557
                      )
                      
                      
                      (2,276
                      )Total valuation
      allowance
                      
                      
                      (11,596
                      )
                      
                      
                      (8,520
                      )Net deferred tax
      assets
                      
                      $
                      30,224
                      
                      
                      $
                      29,212


64


The tax effected net operating loss
carryforwards and related valuation allowance at June 30, 2010 and 2009 are as
follows:





(in
    thousands)
                      
                      2010
                      
                      
                      2009Net operating loss
      carryforwards:U.S.
                      
                      $
                      3,947
                      
                      
                      $
                      5,287International
                      
                      
                      8,517
                      
                      
                      
                      8,08512,464
                      
                      
                      $
                      13,372Net operating loss carryforward
      valuation allowance:U.S.
                      
                      
                      —
                      
                      
                      
                      —International
                      
                      
                      (7,039
                      )
                      
                      
                      (6,244
                      )(7,039
                      )
                      
                      
                      (6,244
                      )Net operating loss carryforwards,
      net of valuation allowance
                      
                      $
                      5,425
                      
                      
                      $
                      7,128





Deferred income taxes reflect the net
tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes.




The Company is profitable on a
consolidated basis.  However, it has incurred losses in certain
jurisdictions.  A valuation allowance has been provided at June 30,
2010 and 2009 to offset the related deferred tax assets in these jurisdictions
due to uncertainty of realizing the benefit of the net operating loss
carryforwards and other deferred tax assets.




The Company’s net operating loss
carryforwards and tax credit carryforwards (if not applied against taxable
income) as of June 30, 2010 expire as follows:




Expires in Fiscal Year(in thousand)
                      
                      2011
                      
                      
                      2012
                      
                      
                      Thereafter
                      
                      
                      No
                        Expiration
                      
                      
                      TotalU.S.:Net operating loss
      carryforwards
                      
                      $
                      —
                      
                      
                      $
                      —
                      
                      
                      $
                      3,947
                      
                      
                      $
                      —
                      
                      
                      $
                      3,947Valuation
      allowances
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      ——
                      
                      
                      
                      —
                      
                      
                      
                      3,947
                      
                      
                      
                      —
                      
                      
                      
                      3,947International:Net operating loss
      carryforwards
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      4,960
                      
                      
                      
                      3,557
                      
                      
                      
                      8,517Valuation
      allowances
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      (4,960
                      )
                      
                      
                      (2,079
                      )
                      
                      
                      (7,039
                      )—
                      
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      1,478
                      
                      
                      
                      1,478Net operating loss
      carryforwards,Net of valuation
      allowances
                      
                      $
                      —
                      
                      
                      $
                      —
                      
                      
                      $
                      3,947
                      
                      
                      $
                      1,478
                      
                      
                      $
                      5,425





Effective
July 1, 2007, the Company adopted guidance on accounting for uncertainty in
income taxes, which provides a minimum recognition threshold that a tax position
is required to meet before being recognized in the financial statements.
 The guidance also provides standard on derecognition, measurement, and
classification of the effects of a tax position, recognition of interest and
penalties, accounting in interim periods and disclosure.The cumulative effect of
adoptingthe guidance ofapproximately $2.6 million,
including interest and penalties of approximately $0.3 million, was recorded as
a reduction to retained earnings and an increase innet incometaxes payable.




The
Company’s net unrecognized income tax benefits were approximately $21.3 million
and $18.0 million, including interest and penalties of approximately $2.4
million and $2.0 million, at June 30, 2010 and 2009,
respectively.  The Company has recognized approximately $0.4 million
and $0.7 million of interest expense for the fiscal years ending June 30, 2010
and 2009, respectively.  The interest and penalties related to
unrecognized income tax benefits are classified as a component of income tax
expense. The non-current components of the unrecognized income tax benefits were
recorded as non-current to the extent that the Company does not anticipate
making a payment within 12 months of the balance sheet date.  If
recognized, all of the unrecognized income tax benefit would be recognized as a
reduction of income tax expense, impacting the effective income tax rate. The
Company has recognized a decrease in certain unrecognized tax benefits,
including interest and penalties for the fiscal year ended June 30, 2010
primarily due to the expiration of statutes of limitations, which reduced the
effective tax rate and income tax expense by approximately $1.3
million.




In the
ordinary course of the Company’s business, transactions occur for which the
ultimate tax outcome may be uncertain.  Tax authorities periodically audit
the Company’s income tax returns. These audits include examination of the
Company’s significant tax filing positions, including the timing and amounts of
deductions and the allocation of income and expenses among tax
jurisdictions.  The Company files income tax returns with tax authorities
in  the U.S. as well as with various foreign tax jurisdictions. The
Company currently considers its major taxing jurisdictions to include the U.S.,
the United Kingdom and Ireland.




The
Company’s income tax returns are no longer subject to examination by the U.S.
tax authorities for tax years ending before June 2007, by the U.K. tax
authorities for tax years ending before June 2005 and the Irish tax authorities
for tax years ending before June 2005.Certain
periods prior to these dates, however, could typically be subject to adjustment
due to the impact of items such as competent authority or carryback or
carryforward claims.


65


The
Company estimates that within the next 12 months, it will decrease unrecognized
income tax benefits, including interest and penalties by approximately $2.7
million to $3.7 million due to the expiration of statutes of limitations and
settlement of issues with tax authorities, which it believes would increase
earnings as a result of a reduction in tax expense. However, audit outcomes and
the timing of audit settlements are subject to significant
uncertainty.  Over the next 12 months, it is reasonably possible that
the Company will continue to generate liabilities for uncertain tax positions.
Due to changes in the mix of earnings among jurisdictions and the impact of
discreet items recognized on an intraperiod basis, there may be some degree of
volatility to the quarterly tax rate. The statute of limitations associated with
our significant tax jurisdictions, generally expires in our third
quarter.




The
significant components of the Company’s gross unrecognized tax benefits at June
30, 2010 and 2009 are as follows:





Gross Unrecognized Tax Benefits(in thousands)
                        
                        2010
                        
                        
                        2009Balance,
      beginning of year
                        
                        $
                        17,834
                        
                        
                        $
                        17,190Current
      year uncertain tax positions:Gross
      increases
                        
                        
                        4,552
                        
                        
                        
                        7,086Prior
      year uncertain tax positions:Gross
      increases
                        
                        
                        714
                        
                        
                        
                        50Gross
      decreases
                        
                        
                        (1,375
                        )
                        
                        
                        (2,699
                        )Expiration
      of statute of limitations
                        
                        
                        (1,081
                        )
                        
                        
                        (1,166
                        )Settlements
      with tax authorities
                        
                        
                        —
                        
                        
                        
                        (2,627
                        )Balance,
      end of year
                        
                        $
                        20,644
                        
                        
                        $
                        17,834





14.
            OTHER INCOME (EXPENSE),
      NET:





The following table provides information
regarding the components of otherincome (expense) for the three fiscal
years ended June 30, 2010,
2009, and 2008:





Fiscal Year Ended June 30,(in thousands)
                    
                    2010
                    
                    
                    2009
                    
                    
                    2008Credit based impairment losses on
      investments
                    
                    $
                    (4,783
                    )
                    
                    $
                    (1,266
                    )
                    
                    $
                    —Grant
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    1,726Foreign exchangegain (loss), net
                    
                    
                    974
                    
                    
                    
                    (297
                    )
                    
                    
                    (1,384
                    )Other, net
                    
                    
                    144
                    
                    
                    
                    (196
                    )
                    
                    
                    255Total other (expense) income,
      net
                    
                    $
                    (3,665
                    )
                    
                    $
                    (1,759
                    )
                    
                    $
                    597





For
fiscal year 2008, the Company recognized approximately $1.7 million in income
due to its receipt of a grant payment from the Irish Development Authority
related to the number of jobs the Company created in Ireland.





15.
            RELATED PARTYTRANSACTIONS





Effective
June 30, 1995, the Company and Louis M. Brown, Jr., Vice-Chairman of
the Board, entered into a Consulting Agreement that, as amended, expired
in accordance with its terms on June 30, 2008.  Under the Consulting
Agreement, Mr. Brown was to provide during each fiscal year an average of 20
hours per week of consulting services to the Company in exchange for an annual
base consulting fee of approximately $0.3 million.  Additionally for
fiscal year 2008, Mr. Brown’s total compensation also included annual target
bonusof approximately $0.2 million thatwas accrued during the fiscal year 2008 and paid in the fiscal year
2009.  Notwithstanding the expiration of his Consulting Agreement, Mr.
Brown continues to serve the Company as Vice-Chairman of the Board of
Directors.





16.
            EMPLOYEE BENEFIT
      PLANS:





DEFINED CONTRIBUTION
PLANS


The Company sponsors an employee savings
plan (the “Plan”), which conforms to the provisions of Section 401(k) of the
Internal Revenue Code.  The Plan covers substantially all full-time
and part-time employees in the U.S. and allows employees to voluntarily defer
their eligiblecompensation
through contributions to the Plan, up to the maximum amount per year permitted
under the Internal Revenue Code.The Company matches 50% of the first 5%
in eligible compensation deferred by each participating employee.





During each of the three fiscal years
ended June 30, 2010, 2009, and 2008, the Company’s matching contributions to the
Plan were approximately $2.1 million, $2.3 million and $1.9 million,
respectively.The Company does not have
any material obligations to past or present employees related to post employment
benefits under the Plan.





DEFINED BENEFIT PLAN


The
Company’s Supplemental Executive Retirement Plan (“SERP”) provides designated
officers and executives of the Company or their designated beneficiaries with
benefits upon retirement or death.  The Company funds the benefits
under the SERP with corporate owned life insurance policies held by a segregated
trust (known as a “Rabbi Trust”), whose assets are subject to the claims of
creditors of the Company.  The Board of Directors of the Company, in
its sole discretion, had selected the participants in the SERP.


66


During
fiscal year 2008, there were 13 participants in the SERP.  As of June
30, 2008, the Board of Directors approved the removal of all participants that
were not vested, leaving three vested participants in the SERP.





Under the
terms of the SERP, vested participants (or their designated beneficiaries upon
death) will receive ten annual payments over nine years commencing six months
after the earlier of death or retirement on or after age 62.  The
value of benefits under the SERP is not based on years of service, but is
determined based on the (1) participant’s age at retirement, at death or at a
change of control of the Company, and (2) the base salary received by the
participant during the 12 months immediately preceding his or her retirement,
death or at a change of control of the Company.  Two of the three
vested participants are currently receiving their SERP benefits.  The
remaining vested participant is the Company’s Chairman, President and Chief
Executive Officer, A.L. Giannopoulos.  As he is over the age of 65,
per the terms of the SERP, he is entitled to the maximum benefit rate of 30% of
his base salary upon his retirement, death or at a change of control of the
Company.





The
change in pension benefit obligation, funded status, and accumulated benefit
obligation of the SERP at June 30, 2010 and 2009 are as follows:





(in thousands)
                      
                      2010
                      
                      
                      2009Change
      in Projected Benefit Obligation (“PBO”):PBO
      at the beginning of year
                      
                      $
                      4,576
                      
                      
                      $
                      4,393Interest
      cost
                      
                      
                      179
                      
                      
                      
                      284Benefit
      payments
                      
                      
                      (101
                      )
                      
                      
                      (101
                      )PBO
      at the end of year
                      
                      $
                      4,654
                      
                      
                      $
                      4,576Fair
      value of plan assets
                      
                      
                      N/A
                      
                      
                      
                      N/AUnfunded
      status of PBO
                      
                      $
                      4,654
                      
                      
                      $
                      4,576Accumulated
      benefit obligation
                      
                      $
                      4,654
                      
                      
                      $
                      4,576Amount
      recognized in the consolidated balance sheet:Accrued
      benefit liability (1)
                      
                      $
                      4,654
                      
                      
                      $
                      4,576





(1)
              Accrued
      benefit liability is included in Other Non-Current Liabilities on the
      consolidated balance sheets, except for approximately $0.1 million as of
      June 30, 2010 and 2009, respectively, included in Accrued Expenses and
      Other Current Liabilities.





Assumptions
used to measure benefit obligations at June 30, 2010 and 2009 were as
follows:





2010
                  
                  
                  2009Discount
      rate (1)
                  
                  
                  4.40
                  %
                  
                  
                  4.40
                  %Expected
      return on plan assets
                  
                  
                  —
                  
                  
                  
                  —Rate
      of compensation increase (2)
                  
                  
                  N/A
                  
                  
                  
                  N/A





(1)
            The
      discount rate assumption is based on the internal rate of return for a
      portfolio of high-quality bonds (Moody’s Aa Corporate bonds) with
      maturities that are consistent with projected future cash
      flows.


(2)
            The
      rate of compensation increase is not applicable as the SERP benefits are
      defined and fixed as of June 30, 2008 for the remaining SERP
      participants.





The
components of net periodic pension cost and the assumptions used to determine
net cost for the three fiscal years ended June 30, 2010 are as
follows:





(in thousands)
                    
                    2010
                    
                    
                    2009
                    
                    
                    2008Service
      cost
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    646Interest
      cost
                    
                    
                    179
                    
                    
                    
                    264
                    
                    
                    
                    870Curtailment
      gain (1)
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (1,717
                    )Amortization
      of prior service cost
                    
                    
                    —
                    
                    
                    
                    20
                    
                    
                    
                    648Net
      periodic pension cost
                    
                    $
                    179
                    
                    
                    $
                    284
                    
                    
                    $
                    447Discount
      rate
                    
                    
                    4.40
                    %
                    
                    
                    5.00
                    %
                    
                    
                    6.10
                    %Expected
      return on plan assets
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Rate
      of compensation increase  (2)
                    
                    
                    N/A
                    
                    
                    
                    N/A
                    
                    
                    
                    9.00
                    %





(1)
            Due
      to the removal of unvested SERP participants as of June 30,
      2008.


(2)
            The
      rate of compensation increase is not applicable for fiscal year 2010 and
      2009 as the SERP benefits were defined and fixed as of June 30, 2008 for
      the remaining SERP participants.





The total
periodic pension costs for fiscal year 2011 will consist of an interest cost of
approximately $0.1 million.


67





As of
June 30, 2010, the projected benefit payments to be paid from the SERP are as
follows for the following fiscal years (each ending June 30) (in
thousands):





2011
                    
                    $
                    962012
                    
                    
                    922013
                    
                    
                    882014
                    
                    
                    852015
                    
                    
                    5652016
      – 2020
                    
                    
                    2,324





17.
            SEGMENT
      INFORMATION:





The Company is organized and operates in
four operating segments:  U.S., Europe, the Pacific Rim, and Latin
America regions.The Company has identified U.S. as a
separate reportable segment and has aggregated its three international operating
segments into one reportable segment, international, as the three international
operating segments share many similar economical
characteristics.  Management views the U.S. and international segments
separately in operating its business, although the products and services are
similar for each segment.The Company’s chief operating decision
maker is the Company’s Chief Executive Officer.





Historically, all of the Company’s new
business acquisitions have been incorporated into the existing operating
segments, based on their respective geographical locations, and are subsequently
operated and managed as part of that operating segment.





A summary of certain financial
information regarding theCompany’s reportable segments isset forth below:





Fiscal Years Ended June 30,(in thousands)
                                
                                2010
                                
                                
                                2009
                                
                                
                                2008Revenues
      (1):United
      States
                                
                                $
                                491,632
                                
                                
                                $
                                488,817
                                
                                
                                $
                                484,026International
                                
                                
                                461,310
                                
                                
                                
                                453,857
                                
                                
                                
                                514,389Intersegment
      eliminations (2)
                                
                                
                                (38,623
                                )
                                
                                
                                (34,949
                                )
                                
                                
                                (44,465
                                )Total
      revenues
                                
                                $
                                914,319
                                
                                
                                $
                                907,725
                                
                                
                                $
                                953,950Income
      before taxes  (1):United
      States
                                
                                $
                                85,701
                                
                                
                                $
                                78,465
                                
                                
                                $
                                80,291International
                                
                                
                                110,455
                                
                                
                                
                                91,932
                                
                                
                                
                                103,864Intersegment
      eliminations (2)
                                
                                
                                ( 28,031
                                )
                                
                                
                                (23,535
                                )
                                
                                
                                (30,229
                                )Total
      income before taxes
                                
                                $
                                168,125
                                
                                
                                $
                                146,862
                                
                                
                                $
                                153,926Capital
      expenditures (3):United
      States
                                
                                $
                                3,895
                                
                                
                                $
                                5,635
                                
                                
                                $
                                7,419International
                                
                                
                                5,149
                                
                                
                                
                                7,726
                                
                                
                                
                                5,525Total
      capital expenditures
                                
                                $
                                9,044
                                
                                
                                $
                                13,361
                                
                                
                                $
                                12,944Depreciation
      and amortization (3):United
      States
                                
                                $
                                10,611
                                
                                
                                $
                                10,668
                                
                                
                                $
                                7,582International
                                
                                
                                6,700
                                
                                
                                
                                6,876
                                
                                
                                
                                7,561Total
      depreciation and amortization
                                
                                $
                                17,311
                                
                                
                                $
                                17,544
                                
                                
                                $
                                15,143





As of June 30,(in thousands)
                            
                            2010
                            
                            
                            2009Identifiable
      assets (3):United
      States
                            
                            $
                            569,629
                            
                            
                            $
                            492,402International
                            
                            
                            568,662
                            
                            
                            
                            528,977Total
      identifiable assets
                            
                            $
                            1,138,291
                            
                            
                            $
                            1,021,379Goodwill
      (3):United
      States
                            
                            $
                            161,126
                            
                            
                            $
                            134,511International
                            
                            
                            52,699
                            
                            
                            
                            56,228Total
      goodwill
                            
                            $
                            213,825
                            
                            
                            $
                            190,739





(1)Amounts based on the location of the
selling entity.


(2)Amounts primarily represent elimination
of U.S. and Ireland’s intercompany business.


68


(3)Amounts based on the physical location
of the asset.





The Company’s products are distributed
in the U.S. and internationally, primarily in Europe, the Pacific Rim, and Latin
America through its subsidiaries, independent dealers/distributors and
Company-owned sales and service offices.  The Company’s principal
customers are lodging, food service-related businesses, specialty retail, and
entertainment venues.  No single customer accounts for 10% or more of
the Company’s consolidated revenues.





Revenues from unaffiliated customers by
geographic locationfor
fiscal years ended June 30, 2010, 2009, and 2008 are set forth below:





Fiscal Years Ended June 30,(in thousands)
                        
                        2010
                        
                        
                        2009
                        
                        
                        2008United
      States
                        
                        $
                        439,792
                        
                        
                        $
                        434,482
                        
                        
                        $
                        416,458International
                        
                        
                        474,527
                        
                        
                        
                        473,243
                        
                        
                        
                        537,492$
                        914,319
                        
                        
                        $
                        907,725
                        
                        
                        $
                        953,950





Long-lived
assets (property, plant, and equipment) organized by geographic locations as of
June 30 of each indicated fiscal year, are as follows:





(in thousands)
                        
                        2010
                        
                        
                        2009United
      States
                        
                        $
                        15,800
                        
                        
                        $
                        18,458International
                        
                        
                        11,549
                        
                        
                        
                        12,062$
                        27,349
                        
                        
                        $
                        30,520





Approximately $4.8 million and $3.3
million of the long-lived assets as of June 30, 2010 and 2009, respectively,
were located in Ireland.  There were no other individual foreign
countries in which the Company has material long-lived
assets.The
above chart does not include intangible assets.





There were no individual foreign
countries in which the Company received material revenues from unaffiliated
customers.





18.
            QUARTERLY FINANCIAL INFORMATION
      (UNAUDITED):





Quarterly financial information for the
fiscal years ended June 30, 2010 and 2009 isas follows(in thousands, except per share
data):





Fiscal Year 2010(1), (3), (4)1stQuarter
                    
                    
                    2ndQuarter
                    
                    
                    3rdQuarter
                    
                    
                    4thQuarterRevenue
                    
                    $
                    211,401
                    
                    
                    $
                    225,647
                    
                    
                    $
                    229,054
                    
                    
                    $
                    248,217Gross
margin
                    
                    
                    115,826
                    
                    
                    
                    124,979
                    
                    
                    
                    124,310
                    
                    
                    
                    136,366Income from
      operations
                    
                    
                    35,847
                    
                    
                    
                    39,598
                    
                    
                    
                    40,869
                    
                    
                    
                    51,659Net income attributable to MICROS
      Systems, Inc.
                    
                    
                    24,147
                    
                    
                    
                    26,130
                    
                    
                    
                    30,198
                    
                    
                    
                    33,880Income from operations per common
      share:Basic
                    
                    $
                    0.45
                    
                    
                    $
                    0.50
                    
                    
                    $
                    0.51
                    
                    
                    
                    0.64Diluted
                    
                    
                    0.44
                    
                    
                    
                    0.49
                    
                    
                    
                    0.50
                    
                    
                    
                    0.63Net income per share attributable
      to MICROS Systems, Inc. common shareholders:Basic
                    
                    $
                    0.30
                    
                    
                    $
                    0.33
                    
                    
                    $
                    0.38
                    
                    
                    $
                    0.42Diluted
                    
                    
                    0.30
                    
                    
                    
                    0.32
                    
                    
                    
                    0.37
                    
                    
                    
                    0.42Stock Prices (range of sales
      prices):High
                    
                    $
                    31.11
                    
                    
                    $
                    32.43
                    
                    
                    $
                    33.50
                    
                    
                    $
                    38.16Low
                    
                    
                    22.79
                    
                    
                    
                    25.68
                    
                    
                    
                    26.17
                    
                    
                    
                    31.26





Fiscal Year 2009(1), (2), (3), (4), (5)1stQuarter
                    
                    
                    2ndQuarter
                    
                    
                    3rdQuarter
                    
                    
                    4thQuarterRevenue
                    
                    $
                    243,632
                    
                    
                    $
                    236,509
                    
                    
                    $
                    204,743
                    
                    
                    $
                    222,840Gross
margin
                    
                    
                    125,938
                    
                    
                    
                    125,974
                    
                    
                    
                    110,655
                    
                    
                    
                    119,672Income from
      operations
                    
                    
                    34,008
                    
                    
                    
                    38,323
                    
                    
                    
                    31,857
                    
                    
                    
                    36,645Net income attributable to MICROS
      Systems, Inc.
                    
                    
                    24,298
                    
                    
                    
                    26,178
                    
                    
                    
                    22,952
                    
                    
                    
                    22,864Income from operations per common
      share:Basic
                    
                    $
                    0.42
                    
                    
                    $
                    0.48
                    
                    
                    $
                    0.40
                    
                    
                    $
                    0.46Diluted
                    
                    
                    0.41
                    
                    
                    
                    0.47
                    
                    
                    
                    0.39
                    
                    
                    
                    0.45Net income per share attributable
      to MICROS Systems, Inc. common shareholders:Basic
                    
                    $
                    0.30
                    
                    
                    $
                    0.32
                    
                    
                    $
                    0.28
                    
                    
                    $
                    0.28Diluted
                    
                    
                    0.29
                    
                    
                    
                    0.32
                    
                    
                    
                    0.28
                    
                    
                    
                    0.28Stock Prices (range of sales
      prices):High
                    
                    $
                    34.41
                    
                    
                    $
                    27.17
                    
                    
                    $
                    20.17
                    
                    
                    $
                    28.65Low
                    
                    
                    22.98
                    
                    
                    
                    13.34
                    
                    
                    
                    13.47
                    
                    
                    
                    18.45


69


(1)
              Fiscal years ended June 30,
      2010 and
      2009include
      approximately $12.4million ($8.1million, netof tax, or $0.10 per diluted
      share) and approximately $13.9 million ($9.8 million, net of tax, or $0.12
      per diluted share), respectively, in non-cash share-based compensation
      expenses.  See Note 3 “Share-basedCompensation.”The fiscal year 2010
      and 2009 also includes other-than-temporary impairment losses of
      approximately $4.8 million and $1.3 million, respectively, for long-term
      investments.  See Note 2 “Financial Instruments and Fair Value
      Measurement.”


(2)
              Fiscal year ended June 30, 2009
      includes approximately $3.1 million ($2.1 million, net of tax) in
      restructuring charges and approximately $0.7 million in an inventory
      provision reflecting adjustments to the Company’s cost structure to
      reflect lower sales volume in certain of the Company’s locations affecting
      both of its
      reportable segments.


(3)
            Net income attributable to MICROS
      Systems, Inc.for the
      fiscal years 2010has been increased by
      approximately $0.3 million for the impact of non-controlling interest
      arrangement as compared to fiscal year 2009 which has been decreased by
      approximately$0.7
      million.


(4)
              Sum of quarterly amounts does not
      equal the sum of as reported amounts for the respective fiscal years due
      to rounding
differences.





19.
            REVISIONS TO PRIOR PERIOD
      FINANCIAL STATEMENTS





As
previously disclosed by the Company in its Form 10-Q for the period ended
December 31, 2009, during January 2010, the Company uncovered certain fraudulent
activities in its Japanese subsidiary that occurred during the period from
fiscal year 2006 to the six months ended December 31, 2009.  As a result of
the Company’s investigation, the Company determined that fraudulent transactions
resulted in a cumulative overstatement of revenue and net income attributable to
MICROS Systems, Inc. of approximately $6.9 million and $4.9 million,
respectively, over this period. The transactions served principally to inflate
revenue and cost of sales through the creation of fraudulent revenue
documentation and to understate liabilities for loans executed where the Company
was the guarantor over this period.  These off-balance sheet loans were
indirectly used to pay down a portion of the Company's fictitious accounts
receivable balances.  The Company concluded, based on its investigation,
that the fraud was solely perpetrated by one employee of the Company's Japanese
subsidiary who was not a member of senior management and that the individual
involved expended significant effort over the period to create a variety of
schemes which deliberately circumvented or manipulated the entity's local
controls and procedures.  These schemes were primarily designed to inflate
revenues and cost of sales and to obtain financing from third parties to pay off
the accounts receivable balances in order to prolong the schemes.  The
Company terminated the employee upon completion of its
investigation.





The
following table shows the revised financial statement line items for the various
fiscal periods affected by the adjustments described above:




Fiscal Year Ended June 30,(in
      thousands, except per share data)
            
            2009
            
            
            2008
            
            
            2007
            
            
            2006Revenue:As previously
      reported
            
            $
            911,847
            
            
            $
            954,184
            
            
            $
            785,727
            
            
            $
            678,953Adjustment
            
            
            (4,122
            )
            
            
            (234
            )
            
            
            (754
            )
            
            
            (720
            )As revised
            
            $
            907,725
            
            
            $
            953,950
            
            
            $
            784,973
            
            
            $
            678,233Net income available to MICROS
      Systems, Inc.common
      shareholders:As previously
      reported
            
            $
            99,297
            
            
            $
            101,284
            
            
            $
            79,988
            
            
            $
            63,528Adjustment
            
            
            (3,005
            )
            
            
            (547
            )
            
            
            (113
            )
            
            
            (565
            )As revised
            
            $
            96,292
            
            
            $
            100,737
            
            
            $
            79,875
            
            
            $
            62,963Net income per share available
      toMICROS Systems, Inc. common
      shareholders:Basic:As previously
      reported
            
            $
            1.22
            
            
            $
            1.23
            
            
            $
            1.00
            
            
            $
            0.82Adjustment
            
            
            (0.03
            )
            
            
            -
            
            
            
            -
            
            
            
            (0.01
            )As revised
            
            $
            1.19
            
            
            $
            1.23
            
            
            $
            1.00
            
            
            $
            0.81Diluted:As previously
      reported
            
            $
            1.21
            
            
            $
            1.21
            
            
            $
            0.97
            
            
            $
            0.78Adjustment
            
            
            (0.04
            )
            
            
            (0.01
            )
            
            
            -
            
            
            
            (0.01
            )As revised
            
            $
            1.17
            
            
            $
            1.20
            
            
            $
            0.97
            
            
            $
            0.77


70


Based on
the materiality guidelines contained in SEC Staff Accounting Bulletin No. 99,
"Materiality" and SEC Staff Accounting Bulletin No. 108, "Considering the
Effects of Prior Year Misstatements in Current Year Financial Statements", the
Company concluded that the adjustments to correct for the fraudulent activities
are not material to any of its current financial statements for periods
beginning with the year ended June 30, 2006 and through the three months ended
September 30, 2009.  However, the Company concluded that the
adjustments would be material to the quarterly results and trend for the three
months ended December 31, 2009.   Accordingly, the Company
determined that it would revise its previous financial statements to record
these adjustments; however, because the effect of the adjustments were not
material to any previously issued financial statements, the Company determined
not to amend its previously filed Quarterly Reports on Form 10-Q or its Annual
Reports on Form 10-K, rather the Company would make corresponding adjustments to
prior period financial statements, as appropriate, the next time those financial
statements are filed.





The ConsolidatedStatements of Operations for the fiscal
years ended June 30, 2009 and 2008 and the ConsolidatedBalance Sheet as of June 30, 2009
included in this Form 10-Khasbeen revised as
follows:





Fiscal Year Ended June 30,2009
                        
                        
                        2008(in thousands, except for EPS)
                        
                        AsPreviously
                          Reported
                        
                        
                        Adjustment
                        
                        
                        As
                          Revised
                        
                        
                        AsPreviously
                          Reported
                        
                        
                        Adjustment
                        
                        
                        As
                          RevisedRevenue:Hardware
                        
                        $
                        210,676
                        
                        
                        $
                        (842
                        )
                        
                        $
                        209,834
                        
                        
                        $
                        265,965
                        
                        
                        $
                        -
                        
                        
                        $
                        265,965Software
                        
                        
                        134,845
                        
                        
                        
                        (1,933
                        )
                        
                        
                        132,912
                        
                        
                        
                        158,699
                        
                        
                        
                        (160
                        )
                        
                        
                        158,539Services
                        
                        
                        566,326
                        
                        
                        
                        (1,347
                        )
                        
                        
                        564,979
                        
                        
                        
                        529,520
                        
                        
                        
                        (74
                        )
                        
                        
                        529,446Total
                        
                        
                        911,847
                        
                        
                        
                        (4,122
                        )
                        
                        
                        907,725
                        
                        
                        
                        954,184
                        
                        
                        
                        (234
                        )
                        
                        
                        953,950Cost
      of Sales:Hardware
                        
                        
                        135,775
                        
                        
                        
                        (742
                        )
                        
                        
                        135,033
                        
                        
                        
                        171,779
                        
                        
                        
                        3
                        
                        
                        
                        171,782Software
                        
                        
                        27,244
                        
                        
                        
                        (1,674
                        )
                        
                        
                        25,570
                        
                        
                        
                        33,252
                        
                        
                        
                        (117
                        )
                        
                        
                        33,135Services
                        
                        
                        264,883
                        
                        
                        
                        0
                        
                        
                        
                        264,883
                        
                        
                        
                        247,954
                        
                        
                        
                        0
                        
                        
                        
                        247,954Total
                        
                        
                        427,902
                        
                        
                        
                        (2,416
                        )
                        
                        
                        425,486
                        
                        
                        
                        452,985
                        
                        
                        
                        (114
                        )
                        
                        
                        452,871Gross
      margin
                        
                        
                        483,945
                        
                        
                        
                        (1,706
                        )
                        
                        
                        482,239
                        
                        
                        
                        501,199
                        
                        
                        
                        (120
                        )
                        
                        
                        501,079Selling,
      general and administrative expenses
                        
                        
                        279,956
                        
                        
                        
                        1,274
                        
                        
                        
                        281,230
                        
                        
                        
                        306,624
                        
                        
                        
                        293
                        
                        
                        
                        306,917Income
      before taxes
                        
                        
                        149,842
                        
                        
                        
                        (2,980
                        )
                        
                        
                        146,862
                        
                        
                        
                        154,339
                        
                        
                        
                        (413
                        )
                        
                        
                        153,926Income
      tax provision
                        
                        
                        49,148
                        
                        
                        
                        25
                        
                        
                        
                        49,173
                        
                        
                        
                        52,167
                        
                        
                        
                        134
                        
                        
                        
                        52,301Net
      income attributable to MICROS Systems, Inc.
                        
                        
                        99,297
                        
                        
                        
                        (3,005
                        )
                        
                        
                        96,292
                        
                        
                        
                        101,284
                        
                        
                        
                        (547
                        )
                        
                        
                        100,737Net
      income attributable to MICROS Systems, Inc.common
      shareholders:Basic
                        
                        $
                        1.22
                        
                        
                        $
                        (0.03
                        )
                        
                        $
                        1.19
                        
                        
                        $
                        1.23
                        
                        
                        $
                        -
                        
                        
                        $
                        1.23Diluted
                        
                        $
                        1.21
                        
                        
                        $
                        (0.04
                        )
                        
                        $
                        1.17
                        
                        
                        $
                        1.21
                        
                        
                        $
                        (0.01
                        )
                        
                        $
                        1.20





As of June 30, 2009(in thousands)
                    
                    As
                      Previously
                      Reported
                    
                    
                    Adjustment
                    
                    
                    As
                      RevisedAccounts receivable,
      net
                    
                    $
                    157,479
                    
                    
                    $
                    (2,267
                    )
                    
                    $
                    155,212Deferred income taxes,
      current
                    
                    
                    20,283
                    
                    
                    
                    (413
                    )
                    
                    
                    19,870Deferred income taxes,
      non-current
                    
                    
                    11,483
                    
                    
                    
                    (27
                    )
                    
                    
                    11,456Total
assets
                    
                    
                    1,024,086
                    
                    
                    $
                    (2,707
                    )
                    
                    
                    1,021,379Accounts
      payable
                    
                    $
                    36,647
                    
                    
                    $
                    1,798
                    
                    
                    $
                    38,445Income taxes
      payable
                    
                    
                    7,999
                    
                    
                    
                    (55
                    )
                    
                    
                    7,944Retained
      earnings
                    
                    
                    579,331
                    
                    
                    
                    (4,236
                    )
                    
                    
                    575,095Accumulated other comprehensive
      income
                    
                    
                    16,468
                    
                    
                    
                    (214
                    )
                    
                    
                    16,254Total MICROS Systems, Inc.
      shareholders' equity
                    
                    
                    723,447
                    
                    
                    
                    (4,450
                    )
                    
                    
                    718,997Total liabilities and
      equity
                    
                    
                    1,024,086
                    
                    
                    $
                    (2,707
                    )
                    
                    
                    1,021,379





The
adjustments noted above had no impact on the consolidated statements of cash
flows for the relevant periods, other than to change certain reconciling items
in arriving at cash provided by operations; however, the aggregate amount of
cash provided by operations was unaffected for any of the relevant annual or
interim periods.


71


MICROS SYSTEMS, INC. AND
SUBSIDIARIES


SCHEDULE II - VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES


(in
thousands)





Description
                    
                    Balanceat
                      beginning
                      ofperiod
                    
                    
                    Charged
                      To
                      expense
                    
                    
                    Deductions(1)
                    
                    
                    Other(2)
                    
                    
                    Balance
                      atend
                      ofperiodAllowance for doubtful
      accounts:Year ended June 30,
      2010
                    
                    $
                    31,892
                    
                    
                    $
                    3,979
                    
                    
                    $
                    (6,622
                    )
                    
                    $
                    (857
                    )
                    
                    $
                    28,392Year ended June 30,
      2009
                    
                    
                    28,197
                    
                    
                    
                    8,449
                    
                    
                    
                    (2,888
                    )
                    
                    
                    (1,866
                    )
                    
                    
                    31,892Year ended June 30,
      2008
                    
                    
                    23,087
                    
                    
                    
                    7,010
                    
                    
                    
                    (4,066
                    )
                    
                    
                    2,166
                    
                    
                    
                    28,197





(1)Charge offs, net of
recoveries.


(2)Primarily related to foreign currency
translation.


72


SIGNATURES





Pursuant to the requirements of Section
13 or 15(d) 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.Date:
                August 27,
    2010
                
                By:
                
                /s/Cynthia A.
      RussoCynthia A.
      RussoExecutive Vice President and Chief
      Financial
Officer





Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant, and in the capacities and on the
dates indicated.





Name
                
                Title/s/A. L.
      Giannopoulos
                
                Chairman,
      President and
                
                August 27,
    2010A. L.
      Giannopoulos
                
                Chief Executive
      Officer/s/Cynthia A.
      Russo
                
                Executive Vice President, Chief
      Financial Officer
                
                August 27,
    2010Cynthia A.
      Russo
                
                and Principal Financial and
      Accounting Officer/s/Louis M. Brown, Jr.
                
                Director
      and
                
                August 27,
    2010Louis M. Brown,
      Jr.
                
                Vice Chairman of the
      Board/s/B. Gary
      Dando
                
                
                
                August 27,
    2010B. Gary
    Dando
                
                Director/s/F. Suzanne
      JennichesF. Suzanne
      Jenniches
                
                Director
                
                August 27,
    2010/s/John G.
      Puente
                
                
                
                August 27,
    2010John G.
    Puente
                
                Director/s/Dwight S.
      Taylor
                
                
                
                August 27,
    2010Dwight S.
      Taylor
                
                Director


73


EXHIBIT
INDEX





3(i)
            Articles
      of Incorporation of the Company are incorporated herein by reference to
      Exhibit 3 to the Annual Report on Form 10-K of the Company for the fiscal
      year ended June 30, 1990.3(i)(a)
            Amendment
      to Articles of Incorporation is incorporated herein by reference to
      Exhibit 3(i) to the Quarterly Report on Form 10-Q of the Company for the
      period ended March 31, 1997.3(i)(b)
            Amendment
      to Articles of Incorporation is incorporated herein by reference to
      Exhibit 3(i) to the Quarterly Report on Form 10-Q of the Company for the
      period ended March 31, 1998.3(i)(c)
            Amendment
      to Articles of Incorporation is incorporated herein by reference to
      Exhibit 3(i) to the Form 8-K filed on November 16,
2007.3(ii)
            By-laws of the Company, as
      amended, are incorporated herein by reference to Exhibit 3(ii) to the
      Quarterly Report on Form 10-Q of the Company for the period
      ended December 31, 2008.10(a)
            MICROS Systems, Inc. 1991 Stock
      Option Plan as amended, is incorporated herein by reference to Exhibit A
      to the Proxy Statement of the Company for the 2009 Annual Meeting of
      Shareholders10(b)*
            Employment Agreement dated June 1,
      1995 between MICROS Systems, Inc. and A. L. Giannopoulos is incorporated
      herein by reference to Exhibit 10e to the Annual Report on Form 10-K of
      the Company for the fiscal year ended June 30,
  1995.10(b)(1)*
            First Amendment to Employment
      Agreement dated February 6, 1997 between MICROS Systems, Inc. and A. L.
      Giannopoulos is incorporated herein by reference to Exhibit 10 to the
      Quarterly Report on Form 10-Q of the Company for the period ended December
      31, 1996.10(b)(2)*
            Second Amendment to Employment
      Agreement dated February 1, 1998 between MICROS Systems, Inc. and A. L.
      Giannopoulos is incorporated herein by reference to Exhibit 10 to the
      Quarterly Report on Form 10-Q of the Company for the period ended December
      31, 1997.10(b)(3)*
            Third Amendment to Employment
      Agreement dated September 8, 1999 between MICROS Systems, Inc. and A. L.
      Giannopoulosis
      incorporated herein by reference to Exhibit 10g to the Annual Report on
      Form 10-K of the Company for the fiscal year ended June 30,
      1999.10(b)(4)*
            Fourth Amendment to Employment
      Agreement dated November 19, 2001 between MICROS Systems, Inc. and A. L.
      Giannopoulos is incorporated herein by reference to Exhibit 10 to the
      Quarterly Report on Form 10-Q of the Company for the period ended December
      31, 2001.10(b)(5)*
            Fifth Amendment to Employment
      Agreement dated November 15, 2002 between MICROS Systems, Inc. and A. L.
      Giannopoulos is incorporated herein by reference to Exhibit 10 to the
      Quarterly Report on Form 10-Q of the Company for the period ended December
      31, 2002.10(b)(6)*
            Sixth Amendment to Employment
      Agreement dated January 28, 2004 between MICROS Systems, Inc. and A. L.
      Giannopoulos is incorporated herein by reference to Exhibit 10 to the
      Quarterly Report on Form 10-Q of the Company for the period ended December
      31, 2003.10(b)(7)*
            Seventh Amendment to Employment
      Agreement dated August 9, 2005 between MICROS Systems, Inc. and A. L.
      Giannopoulos is incorporated herein by reference to Exhibit 10 to the
      Current Report on Form 8-K filed on August 11,
  2005.10(b)(8)*
            Eighth Amendment to Employment
      Agreement dated June 6, 2006, between MICROS Systems, Inc. and A.L.
      Giannopoulos is incorporated herein by reference to Exhibit 10 to the
      Current Report on Form 8-K filed on June 8,
2006.10(b)(9)*
            Ninth Amendment to Employment
      Agreement dated November 17, 2006, between MICROS Systems, Inc. and A.L.
      Giannopoulos is incorporated herein by reference to Exhibit 10 to the
      Current Report on Form 8-K filed on November 21,
    2006.10(b)(10)*
            Tenth Amendment to Employment
      Agreement dated June 12, 2008, between MICROS Systems, Inc. and A.L.
      Giannopoulos is incorporated herein by reference to Exhibit 10 to the
      Current Report on Form 8-K filed on June 13,
  2008.10(b)(11)*
            Eleventh Amendment to Employment
      Agreement dated November 21, 2008, between MICROS Systems, Inc. and A.L.
      Giannopoulos is incorporated herein by reference to Exhibit 10.1 to the
      Current Report on Form 8-K filed on November 24,
    2008.10(b)(12)*
            Twelfth Amendment to Employment
      Agreement dated August 24, 2010, between MICROS Systems, Inc. and A.L.
      Giannopoulos is incorporated herein by reference to Exhibit 10.1 to the
      Current Report on Form 8-K filed on August 26,
  2010.10(c)*
            Employment Agreement dated May 28,
      1997 between MICROS Systems, Inc. and Thomas L. Patz is incorporated
      herein by reference to Exhibit 10 to the Annual Report on Form 10-K of the
      Company for the fiscal year ended June 30, 1997.10(c)(1)*
            First Amendment to Employment
      Agreement dated October 1, 1998 between MICROS Systems, Inc. and Thomas L.
      Patz (filed herewith as Exhibit 10(c)(1)).10(c)(2)*
            Second Amendment to Employment
      Agreement dated November 17, 2006 between MICROS Systems, Inc. and Thomas
      L. Patz is incorporated herein by reference to Exhibit 10 to the Current
      Report on Form 8-K filed on November 21, 2006.10(d)*
            Employment Agreement dated
      November 19, 2005, between MICROS Systems, Inc. and Jennifer Kurdle is
      incorporated herein by reference to Exhibit 10 to the Annual Report on
      Form 10-K for the fiscal year ended June 30,
  2009.10(e)
            Employment Agreement dated May 28,
      1997 between MICROS Systems, Inc. and Gary C. Kaufman is incorporated
      herein by reference to Exhibit 10 to the Annual Report on Form 10-K of the
      Company for the fiscal Year ended June 30, 1997.10(e)(1)*
            First Amendment to Employment
      Agreement dated October 1, 1998 between MICROS Systems, Inc. and Gary C.
      Kaufman is incorporated herein by reference to Exhibit 10 to the Quarterly
      Report on Form 10-Q of the Company for the period ended December 31,
      1998.


74





10(e)(2)*
            Second Amendment to Employment
      Agreement dated November 17, 2006 between MICROS Systems, Inc. and Gary C.
      Kaufman is incorporated herein by reference to Exhibit 10 to the Current
      Report on Form 8-K filed on November 21, 2006.10(f)*
            Restated Supplemental Executive
      Retirement Plan, as approved by the Board of Directors
      on
              April 27, 2005, is incorporated
      herein by reference to Exhibit 10 to the Annual Report on Form 10-K for
      the fiscal year ended June 30, 2006.10(g)
            Amended and Restated Credit
      Agreement, effective as of July 29, 2005, among MICROS Systems, Inc., DV
      Technology Holdings Corporation, Datavantage Corporation, MICROS Fidelio
      Nevada, LLC, MSI Delaware, LLC, MICROS-Fidelio Worldwide, Inc., and JTECH
      Communications, Inc. as Borrower, Bank of America, N.A., as administrative
      agent, swing line lender and L/C issuer, and Wachovia Bank, N.A., and US
      Bank, N.A., and Banc of America Securities LLC, as sole lead arranger and
      book manager, is incorporated herein by reference to Exhibit 10 to the
      Annual Report on Form 10-K for the fiscal year ended June 30,
      2005.10(g)(1)
            First Amendment to Credit
      Agreements, dated December 11, 2008 among MICROS Systems, Inc. DV
      Technology Holdings Corporation, Datavantage Corporation, MICROS Fidelio
      Nevada, LLC, MSI Delaware, LLC, MICROS-Fidelio (Ireland) Ltd. as
      Guarantor, Bank of America, N.A., as Administrative Agent, and Bank of
      America, N.A., Wachovia Bank, N.A., and U.S. Bank, N.A., as Lenders is
      incorporated herein by reference to Exhibit 10(b) to the Quarterly Report
      on Form 10-Q of the Company for the period ended December 31,
      2008.10(g)(2)
            Second Amendment to Credit
      Agreements, dated July 30, 2010 among MICROS Systems, Inc. DV Technology
      Holdings Corporation, Datavantage Corporation, TIG Global LLC, Fry, Inc.,
      and Micros-Fidelio Worldwide, Inc., MICROS-Fidelio (Ireland) Ltd. as
      Guarantor, Bank of America, N.A., as Administrative Agent, and Bank of
      America, N.A., Wells Fargo, N.A., and U.S. Bank, N.A., as Lenders (filed
      herewith as Exhibit 10A).10(h)
            Amended and Restated Credit
      Agreement, effective as of July 29, 2005, among MICROS-Fidelio (Ireland)
      Ltd., MICROS-Fidelio Systems (U.K.) Ltd., MICROS-Fidelio España S.L.,
      MICROS Fidelio (Canada), Ltd., MICROS-Fidelio Brazil, Ltda.,
      MICROS-Fidelio France S.A.S., Hospitality Technologies, S.A.,
      MICROS-Fidelio Mexico S.A. de C.V., MICROS Systems Holding GmbH,
      MICROS-Fidelio GmbH, MICROS-Fidelio Software Portugal Unipessoal Lda,
      MICROS-Fidelio (Thailand) Co., Ltd., MICROS-Fidelio Singapore Pte Ltd.,
      MICROS-Fidelio Software (Philippines), Inc., MICROS-Fidelio Japan Ltd.,
      MICROS-Fidelio Australia Pty. Ltd., MICROS-Fidelio Hong Kong, Ltd.,
      Fidelio Nordic Norway A/S, Fidelio Nordic Oy, Fidelio Nordic Sverige,
      A.B., Hotelbk, A.B., as Borrower, Bank Of America, N.A., as Administrative
      Agent, swing line lender, and L/C issuer, and Wachovia Bank N.A. and US
      Bank N.A., and Banc of America Securities LLC, as sole lead arranger and
      book manager is incorporated herein by reference to Exhibit 10 to the
      Annual Report on Form 10-K for the fiscal year ended June 30,
      2005.10(h)(1)
            Second Amendment to Credit
      Agreements, dated July 30, 2010 among MICROS-Fidelio (Ireland) Ltd.,
      MICROS-Fidelio Systems (U.K.) Ltd., MICROS-Fidelio España S.L., MICROS
      Fidelio (Canada), Ltd., MICROS-Fidelio Brazil, Ltda., MICROS-Fidelio
      France S.A.S., Hospitality Technologies, S.A., MICROS-Fidelio Mexico S.A.
      de C.V., MICROS Systems Holding GmbH, MICROS-Fidelio GmbH, MICROS-Fidelio
      Software Portugal Unipessoal Lda, MICROS-Fidelio (Thailand) Co., Ltd.,
      MICROS-Fidelio Singapore Pte Ltd., MICROS-Fidelio Software (Philippines),
      Inc., MICROS-Fidelio Japan Ltd., MICROS-Fidelio Australia Pty. Ltd.,
      MICROS-Fidelio Hong Kong, Ltd., Micros Fidelio Norway A/S, Micros Fidelio
      Finland Oy, Micros Fidelio  Sverige, A.B., Hotelbk, A.B., as
      Borrower, Bank Of America, N.A., as Administrative Agent, swing line
      lender, and L/C issuer, and Wells Fargo N.A. and US Bank N.A., and Banc of
      America Securities LLC, as sole lead arranger and book manager (filed
      herewith as Exhibit 10B).10(i)
            Lease
      Agreement by and between Orix Columbia, Inc. and MICROS Systems, Inc.,
      dated August 17, 1998, with respect to the Company’s corporate
      headquarters located at 7031 Columbia Gateway Dr., Columbia MD 21046-2289,
      as amended by a First Amendment to Lease, dated October 27, 1999, a Second
      Amendment to Lease, dated December 26, 2001, and a Third Amendment to
      Lease, dated March 1, 2006 and by and between MICROS Systems, Inc. and
      Columbia Gateway Office Corporation as successor in interest to Orix
      Columbia, Inc. is incorporated herein by reference to Exhibit 10 to the
      Quarterly Report on Form 10-Q of the Company for the period ended March
      31, 2009.10(j)
            Manufacturing
      Agreement, by and between MICROS Systems, Inc., and GES Singapore Pte Ltd.
      (now known as Venture Group
      of Singapore), with an effective date of November 6, 2002 (incorporated herein by reference
      to Exhibit 10 to the Annual Report on Form 10-K for the fiscal year ended
      June 30, 2009)14
            Code of Ethics and Business
      Practices is incorporated herein by reference to Exhibit 14 to the Annual
      Report on Form 10-K of the Company for the fiscal year ended June 30,
      2004.21
            Subsidiaries of the Company (filed
      herewith)23(a)
            Consent of Houlihan Smith &
      Co., Inc. (filed herewith)23(b)
            Consent of PricewaterhouseCoopers
      LLP (filed herewith)31(a)
            Certification of Principal
      Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange
      Act of 1934 (filed herewith)31(b)
            Certification of Principal
      Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange
      Act of 1934 (filed herewith)32(a)
            Certification of Principal
      Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange
      Act of 1934 and 18 U.S.C. 1350 (filed herewith)32(b)
            Certification of Principal
      Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange
      Act of 1934 and 18 U.S.C. 1350 (filed
  herewith)


75