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:

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 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).

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)

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 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:

 Adidas (Germany and  Armani Exchange  Bostonian

USA)  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

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PRODUCTS AND SERVICES

Summary of Product Solutions (Software and Hardware):

Hotel Products Description

Software

Opera PMS PMS software product for hotel reservations, targeted to full service hotels

Opera Xpress PMS PMS software product for hotels, targeted to limited service hotels

Opera Lite PMS PMS software for hotels, targeted to smaller hotels

Operetta PMS PMS software and hardware bundle for hotels, targeted to smaller hotels

Fidelio Versions 7 and 8 PMS software products for hotel reservations

PMS

Opera Revenue Software that helps hotels develop and manage pricing strategies
Management System

Opera Central Software that manages hotel reservations for hotel chains or hotel groups
Reservation System

Opera Customer Software that manages customer information and loyalty programs
Information System

Opera Vacation Software that manages reservations for hotel condominiums and related condominium
Ownership System management

Opera Web Booking Suite Software that enables Opera PMS to receive Internet reservations
System

Opera Sales and Catering Software that helps hotels manage meeting needs (food, hotel rooms, meeting space,
and other customer needs)

Opera Sales Force Software that manages leads, meeting agendas, and contracting, and provides other
Automation (SFA) support to the national and regional sales teams for hotel chains

Opera 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
features

Opera Business Software that provides analytics for financial and operations analyses
Intelligence

myfidelio.net An Internet based hotel reservation service and network

Fidelio Cruise SPMS A suite of software products that manages reservations, POS and other activities for
Systems the cruise industry

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Materials Management Software that provides inventory control and costing for food production, mainly
marketed to hotel restaurants

Restaurant Products Description

Software

MICROS 9700 HMS POS software for large foodservice, leisure and entertainment venues

S i mphony Centrally-hosted POS for large foodservice, leisure and entertainment venues

MICROS 3700 POS POS software for table service and quick service restaurants

Restaurant Enterprise Series Suite of software products for 3700 POS

(RES)

Kitchen Display System Component of RES, providing additional reporting capabilities and information

RES Kiosk Component of RES, for self-ordering and customer information via kiosk or
other hardware

HSI 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 products

myhsi.net Suite of web based software products for HSI Profit Series

MICROS e7 POS POS product for small restaurants (only marketed in North and South America)

Hardware

MICROS Workstation 5A Terminal Windows CE POS and Windows Embedded POS terminal for restaurants

MICROS Workstation 4-LX Windows CE POS terminal for restaurants-enhanced version of Workstation 4
Terminal

MICROS 2010 PC Workstation PC based POS terminal for restaurants

MICROS Keyboard Workstation Windows CE POS terminal used in large complex foodservice, leisure and
Terminal entertainment venues

JTECH Paging Products Suite of paging products

MICROS Kitchen Display System Hardware for kitchen display systems

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Retail Products Description

Software

Store 21 Store Management POS retail software product targeted for specialty retailers
System

Tradewind Store Management POS retail software product targeted for stores with high volume transactions
System

Xstore Management System Java based POS retail software product

MICROS Enterprise Java based, centrally hosted merchandising application that manages inventory
Merchandising throughout a chain and provides reporting and analytical functions

Home Office Business Suite of software products that analyzes, manages and reports on business
Intelligence Suite 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 program

CWDirect Cross Channel Order Software that manages orders across multiple methods of ordering (phone, kiosk,
Management System Internet, etc.)

CWLocate Merchandise Software that enables a retailer to locate inventory across multiple locations
Location System

CWCollaborate Software that connects retailers with suppliers to efficiently manage inventory
and reorder levels

Open Commerce Platform Web site development, management, hosting and ecommerce applications

Creations Integrated life cycle and supply chain software for retail operations that
allows tracking 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.

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

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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 16,000 hotel 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.

Through our 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

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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.

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 S i mphony 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.

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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”), S i mphony , 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.

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)

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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

S i mphony is an enterprise-enabled POS product. S i mphony‟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 S i mphony database is supported either by Microsoft SQL Server or Oracle. The S i mphony 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, S i mphony enables customers to reduce
significantly the costs associated with a traditional multiple property POS solution when deployed as an enterprise
solution, The S i mphony 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

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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.

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

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  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.

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

12
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 dealers and 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.

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.

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R&D facilities

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

Location Products
Columbia, Maryland Restaurant POS software and hardware,
Internet-based restaurant applications
Sydney, Australia Additional restaurant POS software
development
Neuss, Germany Additional restaurant POS software
development; Fidelio Version 8.
Scottsdale, Arizona Restaurant POS software (HSI only)
Boca Raton, Florida Paging software and hardware
development
Naples, Florida Hotel PMS software and other modules,
also Internet-based hotel applications
Cleveland, Ohio Retail POS software development
Westborough, Massachusetts Retail Loss Prevention software
development, cross-channel software development

Omaha, Nebraska Retail web site development and

management services
Nottingham, England Retail life cycle management and supply
chain traceability products
Ann 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 2008

Total R&D incurred $ 44,672 $ 43,100 $ 42,048
Capitalized 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

14
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.

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

15
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:

North Europe/Africa Asia/ Latin

By Geographical Region America Middle East Pacific America Total
Employees 2,427 1,478 512 229 4,646
As % 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:

Sales & Customer Product Admin./

By Functional Skills Marketing Support Development Finance Operations Total
Employees 2,438 1,195 590 324 99 4,646
As % of total 52.5% 25.7% 12.7% 7.0% 2.1% 100.0%

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 Position
A. L. Giannopoulos Chairman, President and Chief Executive Officer
Bernard Jammet Executive Vice President, Latin American Region
Jennifer Kurdle Executive Vice President, Chief Administrative Officer
Kaweh Niroomand Executive Vice President, Europe-Africa-Middle East region
Thomas L. Patz Executive Vice President, Strategic Initiatives, and General Counsel
Stefan Piringer Executive Vice President, Asia-Pacific region
Peter J. Rogers, Jr Executive Vice President, Investor Relations and Business Development
Cynthia 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

16
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 million during 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 million and $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.

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

17
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 Rates
Revenues by currency (1) : 2010 2009 2008 2010 2009 2008
United States Dollar 53% 53% 49% 1.0000 1.0000 1.0000
European Euro 21% 21% 22% 1.2229 1.4029 1.5744
British Pound Sterling 7% 7% 9% 1.4939 1.6454 1.9919
Singapore Dollar 2% 1% 1% 0.7146 0.6904 0.7350
Australian Dollar 2% 2% 2% 0.8416 0.8058 0.9587
Swiss Franc 1% 2% 2% 0.9279 0.9203 0.9788
Canadian Dollar 1% 1% 2% 0.9393 0.8597 0.9806
Mexican Peso 1% 1% 2% 0.0773 0.0759 0.0970
Sweden Krona 1% 1% 1% 0.1282 0.1296 0.1660
All Other Currencies (2) 11% 11% 10% 0.1469 0.1433 0.1645
Total 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.

18
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.

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

19
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.

 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. The
performance of our offices in these areas will be adversely affected if these regions become
subject to economic declines, political strife or episodes of terrorism.

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

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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.
 Our quarterly 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. The costs of the implementation and operation of an effective service
structure capable of addressing increasingly complex software systems in wildly diverse
locations is high and may require us to engage contractors, who generally have a higher cost
structure than that of our own employees. We incur additional costs due to the complexity of
open systems, which generally incorporate third party software products that may entail difficult
and costly support and service, as well as the difficulty in implementing, operating, maintaining
and supporting centrally hosted systems, such as central reservation systems, and centrally-
hosted property management systems and reporting systems.
 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.

 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

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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. To be able to continue to
offer competitive products and to meet our customers‟ requirements, we must continually
develop and update our products. Unexpected costs and delays in development and
implementation, and addressing our commitments to various customers, could adversely affect
our financial results.
 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.

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 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.

 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 i nternal 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.

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 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.)

Approximate
Size
Location (Square Feet) Use Expiration Date Additional Comments

Columbia, Maryland 247,624 Headquarters and other February 29, 2016 See above
functions (see above)

Hanover, Maryland 87,600 Warehouse, July 31, 2015

distribution, light
assembly,
configuration,
manufacturing, repair

Cleveland, Ohio 70,000 Sales, marketing, February 28, 2014 Cleveland is the
support, product headquarters for the
development MICROS Retail group

Neuss, Germany 42,000 Sales, marketing, December 31, 2015 Also serves as one of the
product development, hub offices for Europe,
and customer support Africa, and the Middle East

Ann Arbor, 35,748 Sales, marketing, Ranges from Ann Arbor is the
Michigan customer support, November 20, 2010 headquarters for the Fry,
product development to July 31, 2012 Inc. subsidiary
and product support

Westborough, 27,234 Sales, marketing, November 30, 2013 MICROS Retail maintains

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Massachusetts customer support, this office for its XBR loss
product development prevention products, as well
and product support as for its CommercialWare
products and services

Chevy Chase, 26,744 Sales, Web November 15, 2017 Headquarters of the TIG
Maryland development services Global subsidiary

Boca Raton, Florida 19,755 Sales, marketing, February 29, 2012 Boca Raton is the
product development, headquarters for the JTECH
customer support and subsidiary
light assembly

Naples, Florida 20,156 Software development December 31, 2016 Naples is the main site for
the development of the
Company‟s hotel products

Galway, Ireland 18,025 Customer support, May 31, 2022 (we Also serves as the regional
sales and marketing have early headquarters for Europe,
termination rights Africa, and the Middle East
in 2012 and 2017)

Nanterre, France 16,867 Sales, marketing, December 31, 2014

support (we have an early
termination right in
2010)

Buffalo, NY 16,821 Sales, marketing, September 15, 2015 We have subleased a

support portion of this property to
another company.

Chicago, Illinois 16,706 Sales, marketing, December 31, 2014 Fry, Inc. maintains this
product development, office for its hosting
and hosting services as well as for sales
and services.

Sydney, Australia 13,500 Sales, marketing, December 14, 2012

support, product
development

Scottsdale, Arizona 12,969 Sales, marketing, January 31, 2016 Scottsdale is the
support, product headquarters for the HSI
development division

Mexico City, 11,946 Sales, marketing, December 31, 2012

Mexico, DF customer support,
operations

Huntington Beach, 10,970 Sales, marketing, January 31, 2013

California support

Slough, England 25,000 Sales, marketing, Ranges from

(three sites) support September 29, 2013
to December 31,
2016

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Singapore 9,367 Sales, marketing, September 30, 2014
support

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.

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