UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended December 31,2011

Commission file number 0-9993

MICROS SYSTEMS, INC.

 (Exact name of Registrant as specifiedin its charter)

443-285-6000

 Registrant’s telephone number,including area code

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

YES þ           NO¨

Indicate by check mark whether the Registrant has submitted electronicallyand posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit andpost such files).

YES þ          NO¨

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

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

YES ¨          NOþ

As of January 31, 2012, there were issued and outstanding 79,927,546shares of Registrant’s Common Stock, $0.025 par value.

MICROS SYSTEMS, INC. AND SUBSIDIARIES

Form 10-Q

For the three and six months ended December31, 2011 

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except par value data)

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

MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

The details of total other-than-temporary impairment losses ("OTTI")of long-term investments and a reconciliation to OTTI change included in other non-operating income (expense) ⁽¹⁾:

(1) See Note 3 "Financial Instruments and Fair Value Measurements"in Notes to Condensed Consolidated Financial Statements.

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

MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

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

MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited, in thousands)

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

MICROS SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)

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

MICROS SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying condensed consolidated financialstatements of MICROS Systems, Inc. and its subsidiaries (collectively, the “Company”) have been prepared by the Companypursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). This Quarterly Report on Form10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2011.

The accompanying condensed consolidated financialstatements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ofAmerica for interim financial information and in accordance with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X,promulgated by the Securities and Exchange Commission. Accordingly, they do not include all disclosures required by U.S. generallyaccepted accounting principles for complete financial statements.

The condensed consolidated financial statementsincluded in this report reflect all normal and recurring adjustments that, in the opinion of management, are necessary for a fairpresentation of the financial position of the Company, its results of operations and cash flows for the interim periods set forthherein. The results for the three and six months ended December 31, 2011 are not necessarily indicative of the results to be expectedfor the full year or any future periods.

The following table provides information on the componentsof inventory:

Short-term and long-term investments consistof the following:

Fair value is the price that would be receivedto 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 anasset or liability) used to measure fair value based on the quality and reliability of the information provided by the inputs:

The following table provides information regardingthe financial assets accounted for at fair value and the type of inputs used to value the assets:

At December 31, 2011 and June 30, 2011, allof the Company’s investments, other than the Company’s investments in auction rate securities, were recognized at fairvalue determined based upon observable input information provided by the Company’s pricing service vendors for identicalor similar assets. For these investments, cost approximated fair value. During the six months ended December 31, 2011 and 2010,the Company did not recognize any gains or losses on its investments, other than those related to the Company’s investmentsin auction rate securities during the six months ended December 31, 2010. See “Auction Rate Securities” below for furtherdiscussion on the valuation of the Company’s investments in auction rate securities.

The contractual maturitiesof investments held at December 31, 2011 are as follows:

AUCTION RATE SECURITIES

The Company’s investments in auctionrate securities, carried at estimated fair values, were its only assets valued on the basis of Level 3 inputs. Auction rate securitiesare long-term debt instruments with variable interest rates that are designed to reset to prevailing market interest rates every7 to 35 days through the auction process. The auction rate securities held by the Company are supported by student loans for whichrepayment is guaranteed either by the Federal Family Education Loan Program or insured by AMBAC Financial Group. AMBAC FinancialGroup commenced a voluntary case under Chapter 11 of the U.S. Bankruptcy Code in November 2010, which may enable it to limit oravoid its obligations to provide insurance for repayment of the relevant securities. Before February 2008, due to the liquiditypreviously provided by the interest rate reset mechanism and the anticipated short-term nature of the Company’s investment,the auction rate securities were classified as short-term investments available-for-sale in the Company’s consolidated balancesheets. 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 ratesecurities have been classified as long-term investments available-for-sale as of December 31, 2011 and June 30, 2011 instead ofbeing classified as short-term investments, as was the case before February 2008.

As of December 31, 2011, the Company updatedits assessment as to whether it would likely recover the entire cost basis of each of the auction rate securities, and the extentto which the securities had incurred an other-than-temporary impairment. Determination of whether the impairment is temporary orother-than-temporary requires significant judgment. The primary factors that are considered in assessing the nature of the impairmentinclude (a) the credit quality of the underlying security, (b) the extent to which and time period during which the fair valueof each investment has been below cost, (c) the expected holding or recovery period for each investment, (d) the Company’sintent to hold each investment until recovery and likelihood that the Company will not be required to sell the security beforerecovery, and (e) the existence of any evidence of default by the issuer of the securities. The Company engaged an independentvaluation firm to perform a valuation of its auction rate securities in conjunction with the Company's assessment as to whetherany impairment was temporary rather than other-than-temporary. The valuation firm used a discounted cash flow model that consideredvarious inputs including: (a) the coupon rate specified under the debt instruments, (b) the current credit ratings of the underlyingissuers, (c) collateral characteristics, (d) discount rates, (e) severity of default and (f) probability that the securities willbe sold at auction or through early redemption. The valuation firm used a mark to model approach to arrive at this valuation, whichthe Company reviewed and with which it agreed.

Based on its fair value assessments, the Companydetermined that its investments in auction rate securities as of December 31, 2011 were impaired by approximately $17.7 millionas compared to an impairment of approximately $16.3 million as of June 30, 2011. Approximately $10.0 million of this impairmentat December 31, 2011 and June 30, 2011 was deemed to be other-than-temporary. The fair value assessment also included an evaluationof the amount of the other-than-temporary impairment attributable to credit loss. The factors considered in making an evaluationof the amount attributable to credit loss included the following: (a) default probability and the likelihood of restructuring ofthe security, (b) payment structure of the security to determine how the expected underlying collateral cash flows will be distributedto holders of the issuer’s securities and (c) performance indicators of the underlying assets in the trust (including defaultand delinquency rates). These assumptions are subject to change as the underlying market conditions change. Based on its evaluations,the Company determined that, consistent with the June 30, 2011 valuation, all of the cumulative other-than-temporary impairmentlosses of approximately $10.0 million as of December 31, 2011 were credit based.

The remaining cumulative impairment lossesof approximately $7.7 million (approximately $4.7 million, net of tax) were recorded in accumulated other comprehensive income,net of tax, as of December 31, 2011.

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

A summary of redemptions and sales of auctionrate securities were as follows:

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

On July 1, 2011, the date as of which the Companyconducts its annual impairment analysis, the Company adopted, in advance of the required adoption date, revised authoritative guidanceon how an entity tests goodwill for impairment. The new guidance allows the Company to first assess qualitative factors to determinewhether it is necessary to perform the two-step quantitative goodwill impairment test required under previous guidance. Under thenew guidance, the Company is no longer required to calculate the fair value of a reporting unit unless the Company determines,based on a qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carryingamount. During the three months ended September 30, 2011, the Company determined, based on its assessment of qualitative factorsas of July 1, 2011, that none of its reporting units met the “more likely than not” threshold requiring that the Companyperform the first step of the two-step goodwill impairment test. Accordingly, the Company did not perform any further analysis.

During the three months ended September 30,2011, the Company also completed its annual impairment tests on its indefinite-lived trademarks as of July 1, 2011. Based on itsannual impairment test results, the Company determined that an impairment loss existed for one of its subsidiary’s trademarksas of July 1, 2011 and recognized the associated impairment loss of approximately $0.1 million.

Subsequent to the annual impairment analysisdate of July 1, 2011, there have been no events or circumstances that would have caused the Company to determine that it is morelikely than not that the fair values of the Company’s reporting units are less than their respective carrying values. Subsequentto July 1, 2011, there have not been any events or changes in circumstances that have caused the Company to determine that thatit is more likely than not that indefinite-lived trademarks have been impaired.

The Company has two credit agreements (the“Credit Agreements”) that, through July 31, 2013, provide an aggregate $50.0 million multi-currency committed lineof credit. The lenders under the Credit Agreements are Bank of America, N.A., Wells Fargo N.A. and US Bank N.A. (“Lenders”).The international facility is secured by 65% of the capital stock of the Company’s main operating Ireland subsidiary and100% of the capital stock of all of the remaining major foreign subsidiaries. The U.S. facility is secured by 100% of the capitalstock 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 interestrate under the Credit Agreements is equal to the higher of the federal funds rate plus 50 basis points or the prime rate. For borrowingsin foreign currencies, the interest rate is determined by a LIBOR-based formula, plus an additional margin of 125 to 200 basispoints, depending upon the Company’s consolidated earnings before interest, taxes, depreciation and amortization for theimmediately preceding four calendar quarters. Under the terms of the Credit Agreements, the Company is required to pay to the Lendersinsignificant commitment fees on the unused portion of the line of credit. The Credit Agreements also contain certain financialcovenants and restrictions on the Company’s ability to assume additional debt, repurchase stock, sell subsidiaries or acquirecompanies. In case of an event of default, as defined in the Credit Agreements, including those not cured within any applicablecure period, the Lenders’ remedies include their ability to declare all outstanding loans, plus interest and other relatedamounts owed, to be immediately due and payable in full, and to pursue all rights and remedies available to them under the CreditAgreements or under applicable law.

As of December 31, 2011, the Company had nobalances outstanding under the Credit Agreements and has applied approximately $0.5 million to guarantees. A total of approximately$49.5 million was available for future borrowings as of December 31, 2011.

The Company also has a credit relationshipwith a European bank in the amount of EUR 1.0 million (approximately $1.3 million at the December 31, 2011 exchange rate). Underthe terms of this facility, the Company may borrow in the form of either a line of credit or term debt. As of December 31, 2011,there were no balances outstanding on this credit facility, but approximately EUR 0.6 million (approximately $0.8 million at theDecember 31, 2011 exchange rate) of the credit facility has been used for guarantees.

As of December 31, 2011, the Company had aggregateborrowing capacity of approximately $50.0 million under all of the credit facilities described above.

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

No non-cash share-based compensation expensehas been capitalized for the six months ended December 31, 2011 and 2010, as stock options were not granted to employees whoselabor cost was capitalized as software development costs or inventory.

As of December 31, 2011, there was approximately$27.0 million (net of estimated forfeitures) in non-cash share-based compensation related to non-vested awards, which is expectedto be recognized in the Company’s consolidated statements of operations over a weighted-average period of 2.0 years.

Basic net income per share attributable toMICROS Systems, Inc. common shareholders is computed by dividing net income attributable to MICROS Systems, Inc. by the weighted-averagenumber of shares outstanding. Diluted net income per share attributable to MICROS Systems, Inc. common shareholders includes thedilutive effect of stock options.

A reconciliation of the net income available to MICROS Systems,Inc. and the weighted-average number of common shares outstanding assuming dilution is as follows:

Results for the three months ended December31, 2011 and 2010 include approximately $5.8 million ($3.8 million, net of tax) and $4.3 million ($2.4 million, net of tax), innon-cash share-based compensation expense, respectively. These non-cash share-based compensation expenses reduced diluted net incomeper share attributable to MICROS Systems, Inc. common shareholders by $0.05 and $0.03 for the three months ended December 31, 2011and 2010, respectively.

Results for the six months ended December 31,2011 and 2010 include approximately $8.8 million ($5.9 million, net of tax) and $7.0 million ($4.3 million, net of tax), in non-cashshare-based compensation expense, respectively. These non-cash share-based compensation expenses reduced diluted net income pershare attributable to MICROS Systems, Inc. common shareholders by $0.07 and $0.05 for the six months ended December 31, 2011 and2010, respectively.

Recently Adopted Accounting Guidance

On July 1, 2011, the date as of which the Companyconducts its annual impairment analysis, the Company adopted, in advance of the required adoption date, revised authoritative guidanceon how an entity tests goodwill for impairment. The new guidance allows an entity to first assess qualitative factors to determinewhether it is necessary to perform the two-step quantitative goodwill impairment test required under previous guidance. Under thenew guidance, an entity is no longer required to calculate the fair value of a reporting unit unless the entity determines, basedon a qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carryingamount. Based on its qualitative analysis as of July 1, 2011, the Company determined that none of its reporting units met the “morelikely than not” threshold requiring that the Company perform the first step of the two-step goodwill impairment test. Accordingly,the Company did not perform any further analysis.

On July 1, 2011, the Company adopted authoritativeguidance to amend the disclosure requirements related to fair value measurements. The guidance requires disclosure of changes duringa reporting period attributable to purchases, sales, issuance, and settlements of the assets and liabilities measured using significantunobservable inputs (Level 3 fair value measurements). The adoption of this new guidance did not have a material impact on theCompany’s condensed consolidated financial statements.

Recent Accounting Guidance Not Yet Adopted

In June 2011, the FASB issued accounting guidanceon presentation of comprehensive income. The new guidance requires that changes in other comprehensive income be presentedeither in a single continuous statement of net income and other comprehensive income or in two separate but consecutive statements. It eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’equity. The new guidance will be effective for the Company beginning July 1, 2012 and will require only presentation changes inthe consolidated financial statements.

In May 2011, the FASB issued accounting guidanceto amend the accounting and disclosure requirements on fair value measurements so that the requirements under U.S. generally acceptedaccounting principles and International Financial Reporting Standards are the same.  The new guidance clarifies the FASB’sintent that the use of the highest-and-best-use concept in a fair value measurement is relevant only when measuring non-financialassets. The new guidance also permits certain financial assets and liabilities with offsetting positions in market risks or counterpartycredit risks to be measured on a net basis, and provides guidance on the applicability of premiums and discounts in a fair valuemeasurement.  Additionally, the new guidance clarifies that a reporting entity should disclose quantitative information aboutunobservable inputs used in a fair value measurement that is categorized within Level 3 of the fair value hierarchy, and describethe valuation processes and the sensitivity of the fair value measurement to changes in unobservable inputs, as well as the interrelationshipsbetween those fair value measurements, if any. The new guidance will be effective for the Company beginning January 1, 2012,and, other than requiring additional disclosures, the adoption of this guidance will not have a material impact on the Company’sconsolidated financial statements.

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

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

A summary of certain financial informationregarding the Company’s reportable segments is set forth below:

During the period from fiscal year 2002 throughfiscal year 2011, the Board of Directors on several occasions authorized Company purchases of its common stock. In the aggregate,the Board has authorized the purchase of up to 16 million shares. The Company has incurred an aggregate of approximately $0.3 millionin fees related to all stock purchases. As of December 31, 2011, approximately 1.9 million additional shares are available forpurchase under the most recent authorization.

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

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 ShenangoSystems Solutions v. MICROS Systems, Inc., et al. On December 30, 2010, the Superior Court of Pennsylvania issued an opinion reversingand remanding $4.5 million of the award and affirming $3.0 million of the award. Both the Company and the plaintiffs filed motionsseeking reconsideration of certain aspects of the appellate court decision, and, on April 1, 2011, the Superior Court denied allof the motions for reconsideration. Subsequently, on April 13, 2011, the Company and one of the plaintiffs filed petitions withthe Pennsylvania Supreme Court seeking the ability to appeal certain issues in the litigation. The Pennsylvania Supreme Court hasnot yet ruled on either of the petitions. During the three months ended December 31, 2010, the Company reserved an additional $3.0million for any potential liability relating to these matters, which is included in its selling, general and administrative expenses.The Company is recognizing interest expense related to the judgment as the amount payable will be subject to interest accruingat the statutory rate of 6% per annum. There were no developments with respect to that matter during the six-month period endedDecember 31, 2011.

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

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION 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 enterprisesolutions comprise three major areas: hotel information systems, restaurant information systems, and specialty retail informationsystems. We also offer a wide range of related services. We distribute our products and services directly and through a networkof independent dealers and distributors.

We are organized and operate in four operatingsegments: U.S., Europe, the Pacific Rim, and Latin America regions. We have identified our U.S. operating segment as a separatereportable 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 internationalsegments separately in operating our business, although the products and services are similar for each segment.

We have been adversely impacted by the currentglobal economic uncertainty. We believe that constrained consumer spending, coupled with difficulties in obtaining credit, maycontinue to negatively impact our customers’ abilities to acquire or open new hospitality and retail venues, and may alsolimit customers’ willingness and ability to make certain capital expenditures on new systems and system upgrades. In lightof these challenging and uncertain conditions, we continue to review certain discretionary expenses, and scrutinize carefully andcautiously the expansion of our workforce.

FORWARD-LOOKING STATEMENTS

The following management’s discussionand analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidatedfinancial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form10-Q. Certain statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward looking statementswithin the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21Eof the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our actual results may differ materially fromthose anticipated in these forward-looking statements.

Examples of such forward-looking statementsin this Quarterly Report on Form 10-Q include the following: 

RESULTS OF OPERATIONS

Revenue:

Three Months Ended December 31, 2011:

The following table provides information regardingsales mix by reportable segments for the three months ended December 31, 2011 and 2010. The amounts are net of intersegment eliminationsand are allocated to our U.S. or International segments based on the location of the customers:

The following table provides information regardingthe total sales mix as a percent of total revenue:

For the three months ended December 31, 2011,total revenue was approximately $270.4 million, an increase of approximately $23.3 million, or 9.4% compared to the same periodlast year principally due to the following factors:

·     Hardware,software and service revenue increased by 20.0%, 4.5% and 7.4%, respectively, compared to the same period last year. We believethe increases were primarily due to an improvement in demand from our international customers as a result of a modest improvementin global economic conditions. Favorable foreign currency exchange rate fluctuations increased total revenue by approximately $0.2million.

·     Thehardware revenue increase reflects a 20% increase in sales of our Workstation products primarily to our international customers.

·     Softwarerevenue for substantially all software products (third party and internally developed), other than Simphony, increased as comparedto the same period last year. The software revenue for the three months ended December 31, 2010 included a major rollout of Simphonyby one large customer.

·     Theincrease in services revenue primarily reflects increases in recurring maintenance services, implementation services related toincreases in hardware sales and hosting services. Services revenue for the three months ended December 31, 2010 included revenuerelated to a major rollout of Simphony by one large customer.

·     Theincreases also reflect additional revenue generated by companies that we acquired after the first quarter of fiscal year 2011 (allinternationally based).

The international segment revenue for the threemonths ended December 31, 2011 increased by approximately $24.3 million, an increase of 18.7% compared to the same period lastyear due to the following:

·     Hardware,software and service revenue increased by 24.3%, 27.3% and 15.3%, respectively, compared to the same period last year. We believethe increases were primarily due to an improvement in demand from our international customers as a result of a modest improvementin global economic conditions.

·     Thehardware revenue increase reflects a 30% increase in sales of our Workstation products.

·     Theincrease in software revenue primarily reflects increases in the sale of our internally developed hotel and restaurant softwareproducts.

·     Theincreases also reflect additional revenue generated by companies that we acquired after the first quarter of fiscal year 2011 andadditional service revenue generated from the continued expansion of our customer base.

U.S. segment revenue for the three months endedDecember 31, 2011 decreased approximately $1.0 million, a decrease of 0.9% compared to the same period last year due to the following:

·     Softwareand services revenue decreased by 23.1% and 1.3%, respectively, compared to the same period last year. The software and servicesrevenue for the three months ended December 31, 2010 included revenue related to a major rollout of Simphony by one large customer.

·     The2011 decreases were substantially offset by an increase in hardware revenue of 15.4% compared to the same period last year. Thisincrease is primarily due to an increase in sales of third party hardware to our retail based customers and a 12% increase in salesof our Workstation products.

Six Months Ended December 31, 2011:

The following table provides information regardingsales mix by reportable segments for the six months ended December 31, 2011 and 2010. The amounts are net of intersegment eliminationsand are allocated to our U.S. or International segments based on the location of the customers:

The following table provides information regardingthe total sales mix as a percent of total revenue:

For the six months ended December 31, 2011,total revenue was approximately $527.0 million, an increase of approximately $46.4 million, or 9.7% compared to the same periodlast year principally due to the following factors:

·     Hardware,software and service revenue increased by 14.9%, 11.2% and 7.9%, respectively, compared to the same period last year. We believethe increases were primarily due to an improvement in demand from our international customers as a result of a modest improvementin global economic conditions and favorable foreign currency exchange rate fluctuations, primarily for the Euro, Australian Dollarand Swiss Franc against the U.S. dollar, which increased total revenue by approximately $7.8 million.

·     Thehardware revenue increase reflects a 20% increase in sales of our Workstation products primarily to our international customers.

·     Softwarerevenue for substantially all software products (third party and internally developed) other than Simphony increased as comparedto the same period last year. The software revenue for the six months ended December 31, 2010 included a major rollout of Simphonyby one large customer.

·     Theincrease in services revenue primarily reflects increases in maintenance services, implementation services related to increasein hardware sales and hosting services. Services revenue for the six months ended December 31, 2010 included revenue related toa major rollout of Simphony by one large customer.

·     Theincreases also reflect additional revenue generated by companies that we acquired after the first quarter of fiscal year 2011 (allinternationally based).

The international segment revenue for the sixmonths ended December 31, 2011 increased by approximately $49.1 million, an increase of 19.9% compared to the same period lastyear due to the following:

·     Hardware,software and service revenue increased by 23.4%, 18.7% and 19.1%, respectively, compared to the same period last year. We believethe increases were primarily due to an improvement in demand from our international customers as a result of a modest improvementin global economic conditions and favorable foreign currency exchange rate fluctuations, primarily for the Euro, Australian Dollarand Swiss Franc against the U.S. dollar, which increased total revenue by approximately $7.8 million.

·     Thehardware revenue increase reflects a 42% increase in sales of our Workstation products.

·     Theincrease in software revenue primarily reflects increases in our internally developed restaurant and hotel software products.

·     Theincreases also reflect additional revenue generated by companies that we acquired after the first quarter of fiscal year 2011 andadditional service revenue generated from the continued expansion of our customer base.

U.S. segment revenue for the six months endedDecember 31, 2011 decreased approximately $2.7 million, a decrease of 1.2% compared to the same period last year due to the following:

·      Softwarerevenue decreased by 0.5% compared to the same period last year. The Software revenue for the six months ended December 31, 2010included revenue related to a major rollout of Simphony by one large customer. The 2011 decrease was substantially offset by increasesin sales of our other internally developed software products.

·     Servicesrevenue decreased by 3.2% compared to the same period last year. Services revenue for the six months ended December 31, 2010 includedrevenue related to a major rollout of Simphony by one large customer.

·     The2011 decreases were substantially offset by an increase in hardware revenue by 6.1% compared to the same period last year. Thisincrease is primarily due to an increase in sales of third party hardware to our retail based customers.

Cost of Sales:

Three Months Ended December 31, 2011:

The following table provides information regardingour cost of sales:

For the three months ended December 31, 2011and 2010, cost of sales as a percent of revenue was 43.7% and 44.4%, respectively. Foreign currency exchange rate fluctuationsincreased total cost of sales by approximately $0.3 million. Hardware cost of sales as a percent of related revenue for the threemonths ended December 31, 2011 decreased 1.7% compared to the same period last year, primarily a result of lower inventory provisionsand a decrease in freight costs for the three months ended December 31, 2011 compared to the same period last year. In addition,sales of our Workstation products, our internally developed hardware products which have higher margins than our other hardwareproducts, increased approximately 20% during the three months ended December 31, 2011 as compared to the same period last year.

Software cost of sales as a percent of relatedrevenue for the three months ended December 31, 2011 decreased approximately 2.5% compared to the same period last year. This decreasein software cost of sales was primarily the result of (1) a decrease in capitalized software amortization expense (included insoftware cost of sales) as a percent to software revenue due to a 4.5% increase in software revenue for the three months endedDecember 31, 2011 as compared to the same period last year and (2) an improvement in third party software margins as compared tosame period last year.

Service costs of sales as a percent of relatedrevenue for the three months ended December 31, 2011 decreased approximately 1.0% as compared to the same period last year. Thedecrease was primarily due to favorable change in the services revenue mix. The increase in services revenue included increasesin recurring maintenance and hosting services which have higher margins than other service products.

Six Months Ended December 31, 2011:

The following table provides information regardingour cost of sales:

For the six months ended December 31, 2011and 2010, cost of sales as a percent of revenue was 43.7% and 45.1%, respectively. Foreign currency exchange rate fluctuationsincreased total cost of sales for the six months ended December 31, 2011 by approximately $4.1 million as compared to the sameperiod last year. Hardware cost of sales as a percent of related revenue for the six months ended December 31, 2011 decreased 3.5%compared to the same period last year. This decrease was primarily a result of a decrease in freight costs and lower inventoryprovision for the six months ended December 31, 2011 compared to the same period last year. Additionally, we experienced a favorablemix of hardware sales in this period. Sales of our Workstation products, our internally developed hardware products which havehigher margins than our other hardware products, increased approximately 20% during the six months ended December 31, 2011 as comparedto the same period last year. These favorable changes were partially offset by lower margins on third party hardware sales duringthe six months ended December 31, 2011 compared to the same period last year.

Software cost of sales as a percent of relatedrevenue for the six months ended December 31, 2011 decreased approximately 4.1% compared to the same period last year. This decreasein software cost of sales was primarily the result of an increase in the sale of higher margin internally developed software productsand a lower capitalized software amortization expense (included in software cost of sales) as compared to same period last year.

Service costs of sales as a percent of relatedrevenue for the six months ended December 31, 2011 decreased approximately 0.5% compared to the same period last year.

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

SG&A expenses, as a percentage of revenue,for the three months ended December 31, 2011, were 30.3%, a decrease of 0.3% compared to the same period last year. This decreasewas primarily due to the fact that SG&A expense for the three months ended December 31, 2010 included a $3.0 million litigationcharge. The impact of the prior year litigation charge was partially offset by increases in compensation related expenses duringthe three months ended December 31, 2011 as compared to the same period last year.

SG&A expenses, as a percentage of revenue,for the six months ended December 31, 2011, were 29.9%, an increase of 0.7% compared to the same period last year. This increaseis primarily due to increases in compensation related expenses as compared to the same period last year. Foreign currency exchangerate fluctuations increased total SG&A expenses by approximately $2.5 million for the six months ended December 31, 2011.

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

R&D expenses consisted primarily of laborcosts less capitalized software development costs. The following table provides information regarding our R&D expenses:

The increases in capitalized software developmentcosts and total R&D expenses are primarily related to continued development of our next generation retail and property managementrelated software.

Depreciation and Amortization Expenses:

Depreciation and amortization expenses forthe three months ended December 31, 2011 were approximately $3.6 million, an approximately $0.6 million decrease compared to thesame period last year. Depreciation and amortization expenses for the six months ended December 31, 2011 were approximately $7.9million, an approximately $0.5 million decrease compared to the same period last year. These decreases were primarily due to assetsthat became fully depreciated during the six months ended December 31, 2011.

Share-Based Compensation Expenses:

The following table provides information regardingthe allocation of non-cash share-based compensation expense across SG&A expenses, R&D expenses and cost of sales:

As of December 31, 2011, there was approximately$27.0 million in non-cash share-based compensation cost related to non-vested awards not yet recognized in our consolidated statementsof operations. This cost is expected to be recognized over a weighted-average period of 2.0 years.

Non-operating Income:

Net non-operating income for the three monthsended December 31, 2011 was approximately $1.4 million compared to approximately $1.5 million for the same period last year. Netnon-operating income for the three months ended December 31, 2011 included foreign currency losses of approximately $0.6 millionas compared to foreign currency gains of approximately $0.2 million for the same period last year. This unfavorable change wassignificantly offset by an increase in interest income of approximately $0.4 million and a decrease in interest expense of approximately$0.3 million during the three months ended December 31, 2011 as compared to the same period last year.

Net non-operating income for the six monthsended December 31, 2011 was approximately $3.8 million compared to approximately $1.7 million for the same period last year. Theincrease of approximately $2.1 million was primarily due to an increase in interest income of approximately $1.2 million and adecrease in foreign currency exchange losses of approximately $0.7 million for the six months ended December 31, 2011 as comparedto the same period last year.

The increases in interest income for the threeand six months ended December 31, 2011 compared to the same periods last year were due to an overall higher interest earned oninternationally held cash and cash equivalent and investment (short-term and long-term) balances and an increase in cash and cashequivalents and investment (short-term and long-term) balances aggregating approximately $77.0 million since December 31, 2010.

Income Tax Provisions:

The effective tax rate for the three monthsended December 31, 2011 and 2010 was 31.4% and 32.5%, respectively. The decrease in tax rate for the three months ended December31, 2011 compared to the same period last year was primarily attributable to the net reduction in valuation allowances.

The effective tax rate for the six months endedDecember 31, 2011 and 2010 was 32.2% and 32.6%, respectively. The decrease in tax rate for the six months ended December 31, 2011compared to the same period last year was primarily attributable to the net reduction in valuation allowances.

Based on currently available information, weestimate that the fiscal year 2012 effective tax rate will be approximately between 31% and 32%.  We believe that due to earningsfluctuations, changes in the mix of earnings among jurisdictions, and the impact of certain discrete items recognized during theinterim reporting periods, there may be some degree of adjustment to the effective tax rate on a quarterly basis.

Recent accounting GUIDANCE

See Note 8 “RecentAccounting Guidance,” in the Notes to the Condensed Consolidated Financial Statements included in this report for furtherinformation about recently adopted accounting guidance and recent accounting guidance not yet adopted.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financialcondition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordancewith accounting principles generally accepted in the United States of America. The preparation of these financial statements requiresus to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses. We base our estimates on historicalexperience and on various assumptions that we believe are reasonable under the circumstances. Actual results may differ from theseestimates.

The following comprise the categories of criticalaccounting estimates that we used in the preparation of our condensed consolidated financial statements:

·     Revenuerecognition;

·     Allowancefor doubtful accounts;

·     Inventory;

·     Financialinstruments and fair value measurements;

·     Capitalizedsoftware development costs;

·     Valuationof long-lived assets and intangible assets;

·     Goodwilland indefinite-lived intangible assets;

·     Share-basedcompensation;

·     Incometaxes.

We have reviewed our critical accounting estimatesand the related disclosures with our Audit Committee. Critical accounting estimates are described further in our Annual Reporton Form 10-K for the year ended June 30, 2011 in Item 7, “Management’s Discussion and Analysis of Financial Conditionand Results of Operations,” under the heading “Critical Accounting Estimates.”

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

Our Condensed Consolidated Statement of CashFlows summary is as follows:

Operating activities:

Net cash provided by operating activities forthe six months ended December 31, 2011 decreased approximately $18.4 million compared to the six months ended December 31, 2010.This decrease was primarily due to certain unfavorable changes in working capital in comparison to the same period last year, includinga longer collection period for our receivables. These unfavorable changes were partially offset by an increase in net income ofapproximately $11.6 million.

Investing activities:

Net cash used in investing activities for thesix months ended December 31, 2011 was approximately $17.2 million, reflecting approximately $4.4 million in cash utilized to purchaseinvestments, net of cash received from the sale of investments. We used approximately $12.2 million to purchase property, plantand equipment, and to develop software to be licensed to others.

Net cash provided by investing activities forthe six months ended December 31, 2010 was approximately $16.8 million, reflecting approximately $29.1 million we used to purchaseinvestments, net of cash received from the sale of investments (including approximately $6.4 million received from the redemptionof two of our auction rate securities.) We also used approximately $4.3 million related to acquisitions and an additional $8.1million to purchase property, plant and equipment, and to develop software to be licensed to others.

Financing activities:

Net cash used in financing activities for thesix months ended December 31, 2011 was approximately $44.1 million, reflecting approximately $48.4 million used to purchase ourstock, partially offset by proceeds from stock option exercises of approximately $3.1 million and realized tax benefits from stockoption exercises of approximately $1.3 million.

Net cash provided by financing activities forthe six months ended December 31, 2010 was approximately $11.9 million, principally reflecting proceeds from stock option exercisesof approximately $16.5 million and realized tax benefits from stock option exercises of approximately $4.9 million, partially offsetby approximately $6.4 million used to purchase our stock, debt repayment of approximately $2.7 million, and our purchase of stockof approximately $1.0 million following exercise of a put option held by former owners of a business we acquired.

Capital Resources

Our cash and cash equivalents and short-terminvestment balance of approximately $739.5 million at December 31, 2011 is a decrease of approximately $40.8 million from the June30, 2011 balance and an increase of approximately $77.0 million from the December 31, 2010 balance. At December 31, 2011, approximately$457.3 million of our cash and cash equivalents and short-term investment balance is held internationally. We currently have noplans to repatriate the funds held internationally to the United States, and we currently plan to permanently reinvest internationally.We would have to accrue and pay applicable taxes if those funds were repatriated. The amount of any taxes, which could be significant,and the application of any tax credits, would be determined based on the income tax laws at the time of such repatriation.

The favorable foreign exchange rate fluctuations,substantially for the Euro against the U.S. dollar as compared to June 30, 2011 decreased our cash and cash equivalents’balance at December 31, 2011 by approximately $37.3 million. All cash and cash equivalents and short-term investments are beingretained for the operation and expansion of the business, as well as for the repurchase of our common stock.

We have two credit agreements (the “Credit Agreements”)that, through July 31, 2013, provide an aggregate $50.0 million multi-currency committed line of credit. As of December 31, 2011,we had no balance outstanding under the Credit Agreements and had applied approximately $0.5 million to guarantees. Wealso have a credit relationship with a European bank in the amount of EUR 1.0 million (approximately $1.3 million at the December31, 2011 exchange rate). As of December 31, 2011, there were no balances outstanding on this credit facility, but approximatelyEUR 0.6 million (approximately $0.8 million at the December 31, 2011 exchange rate) of the credit facility has been used for guarantees.As of December 31, 2011, we had borrowing capacity of approximately $50.0 million under the credit facilities described above.See Note 5 “Credit Agreements,” in the Notes to the Condensed Consolidated FinancialStatements included in this report for further information about our credit facilities. We do not currently invest in financialinstruments designed to protect against interest rate fluctuations, although we will continue to evaluate the need to do so inthe 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 workingcapital needs for the foreseeable future. Based on our expected operating cash flows and sources of cash, we do not believe thatany further limitations on liquidity of our auction rate securities will have a material impact on our overall ability to meetour liquidity needs. In light of current economic conditions generally and in light of the overall performance of the stock marketin recent periods, we cannot assume that funds would be available from other sources if we were required to fund significant acquisitionsor any unanticipated and substantial cash needs. We currently anticipate that our property, plant and equipment expenditures forfiscal year 2012 will be approximately $17 million.

The following table provides information regardingcertain financial indicators of our liquidity and capital resources:

(1)   Doesnot include approximately $40.0 million and $41.3 million invested in auction rate securities, classified as long-term investmentsin our Condensed Consolidated Balance Sheet as of December 31, 2011 and June 30, 2011, respectively.

(2)   Currentassets less current liabilities.

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

ITEM 3.         QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency exchange rate risk

We recorded foreign sales, including exportsfrom the United States, of approximately $296.4 million and $247.3 million during the six months ended December 31, 2011 and 2010,respectively, to customers located primarily in Europe, Asia and Latin America. See Note 9 “Segment Information” inthe Notes to Condensed Consolidated Financial Statements as well as Item 2 (Management’s Discussion and Analysis of FinancialCondition and Results of Operations) above for additional geographic data.

Our international business and presence exposeus to certain risks, such as currency, interest rate and political risks. With respect to currency risk, we transact business indifferent 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 40 currencies inthe six months ended December 31, 2011 and 2010. The relative currency mix for the three and six months ended December 31, 2011and 2010 was as follows:

(1)     Calculated using weightedaverage exchange rates for the fiscal period.

(2)     The “% of ReportedRevenue” for “All Other Currencies” is calculated based on the weighted average six month exchange rates forall other currencies. The “Exchange Rates to U.S. Dollar” for “All Other Currencies” represents the weightedaverage December 31, 2011 and June 30, 2011 exchange rates for the currencies. Weighting is based on the six month fiscal periodrevenue for each country or region whose currency is included in the “All Other Currencies” category. Revenues fromeach currency included in “All Other Currencies” were less than 1% of our total revenues for the relevant period.         

A 10% increase or decrease in the value of the Euro and BritishPound Sterling in relation to the U.S. dollar in the six months ended December 31, 2011 would have affected our total revenuesby approximately $16.1 million, or 3.1%. The sensitivity analysis assumes a weighted average 10% change in the exchange rate duringthe period with all other variables being held constant. This sensitivity analysis does not consider the effect of exchange ratechanges on cost of sales, operating expenses, or income taxes, and accordingly, is not necessarily an indicator of the effect ofpotential exchange rate changes on our net income attributable to MICROS Systems, Inc. common shareholders.

Interest rate risk

Ourcommitted lines of credit bear interest at a floating rate, which exposes us to interest rate risks. We manage our exposureto this risk by minimizing, to the extent feasible, overall borrowing and by monitoring available financing alternatives. At December31, 2011, we had no borrowings and had not entered into any instruments to hedge the resulting exposure to interest-rate risk.Our exposure to fluctuations in interest rates may change in the future with changes in the outstanding amount under the line ofcredit. As we did not have any borrowings as of December 31, 2011, a 1% change in interest rate would have no impact on our condensedconsolidated financial position, results of operations and cash flows. Our cash equivalents and ourportfolio 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 securitiesmay produce less income than expected if interest rates fall. Should interest rates fluctuate by 1%, the change in value of ourmarketable securities would not have been material as of December 31, 2011, but the change in our interest income for the six monthsended December 31, 2011 would be an increase or decrease (depending on the nature of the fluctuation) of approximately $3.7 millionbased on the cash, cash equivalents and short term investment balances as of December 31, 2011.

To minimize our exposureto credit risk associated with financial instruments, we place our temporary cash investments with high-credit-quality institutions,generally with investment grade credit ratings. However, see Note 3 “Financial Instruments and Fair Value Measurements”in the Notes to Condensed Consolidated Financial Statements for a discussion regarding auction rate securities.

Finally, we are subject to, among others, thoseenvironmental and geopolitical risks, and economic, pricing, financial, and other risks described in Item 1A, “Risk Factors,”in our Annual Report on Form 10-K for the fiscal year ended June 30, 2011.

ITEM 4.         CONTROLSAND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of ourChief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as ofthe end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officerconcluded that our disclosure controls and procedures as of the end of the period covered by this report are effective to providereasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of1934 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 appropriateto allow timely decisions regarding disclosure.

Change in Internal Control over Financial Reporting

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

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Note 11 to the condensed consolidatedfinancial statements included in this report for information regarding pending legal proceedings.

ITEM 1A. RISK FACTORS.

In addition to other information presentedin this report, including the risk factors set forth below, you should consider carefully the factors discussed in Item 1A, “RiskFactors” in our Annual Report on Form 10-K for the year ended June 30, 2011.

Economic conditions that are beyond our control,including the recession in certain international jurisdictions and significant economic, fiscal, and political strains affectingcountries in the European Union, tightening of the credit markets, reductions in consumer spending, and fluctuations in exchangerates, may result in reduced demand for our products and services.

In the event of global financial turmoil affectingthe banking and financial markets, there could be a new or incremental tightening in the credit markets and low liquidity,which could result in insolvency or financial instability of our suppliers or their inability to obtain credit to finance theiroperation, resulting in product delays, and inability of our customers to obtain credit to finance purchases of our products.

Uncertainty about the sovereign debt issuesin many countries could result in significant instability in global banking system and significantly limit or delay our abilityto access and utilize our cash, cash equivalents and investments held in certain foreign countries or our ability to transfer fundsout of certain foreign countries.  If the sovereign debt issues significantly worsen, the banking system in certain foreigncountries could fail, which would adversely impact our ability to fully recover all of our cash, cash equivalents and investmentsheld in those foreign countries.

In addition, our primary customers –the hospitality, restaurant, and retail industries – are highly sensitive to economic, political, and environmental disturbancesand uncertainty, all of which are outside of our and our customers’ control.

Further, weakened consumer spending, coupledwith difficulties many businesses continue to encounter in obtaining credit, have negatively affected our customers’ operatingresults, which we believe may have an adverse impact on their ability to acquire or open new hospitality and retail venues, aswell as their ability to make significant capital expenditures on the systems that we sell. We believe these constraints may causeand in some cases may have already caused our customers to maintain their existing systems rather than purchase newer systems.

ITEM 2.        UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the period from fiscal year 2002 throughfiscal year 2011, the Board of Directors on several occasions authorized Company purchases of its common stock. In the aggregate,the Board has authorized the purchase of up to 16 million shares, to be purchased from time to time depending on market conditionsand other corporate considerations as determined by management. The Company has incurred an aggregate of approximately $0.3 millionin fees related to all stock purchases. During the second quarter of fiscal year 2012, our stock purchases were as follows:

Issuer Purchases of Equity Securities

(1)    Purchases of Company securities describedin the table were made under two repurchase authorizations, one announced on August 25, 2009, authorizing the repurchase of twomillion shares, and one announced on August 24, 2010, authorizing the repurchase of an additional two million shares.  Eachof those repurchase authorizations expires three years after the date they were announced.

ITEM 6.        EXHIBITS

SIGNATURES

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