Share-Based Compensation

12 Months Ended

Jun. 30, 2011

Share-Based Compensation

Share-Based Compensation

3.   Share-based compensation:

      The Company has incentive and non-qualified stock options outstanding that were granted to directors, officers, and other employees pursuant to authorization by the Board of Directors.  With respect to directors, the Company's policy and practice during fiscal years 2011, 2010 and 2009 were that only those directors who are employees to the Company were eligible to receive options.  The exercise price per share of each option equals the market value of a share of the Company's common stock on the date of the grant.  Substantially all of the options granted become exercisable in equal increments on the first three anniversaries of the date of grant.  All outstanding options expire ten years from the date of grant.  Since its inception in 1991, the Company has authorized approximately 37.6 million shares for issuance upon exercise of options, of which approximately 9.8 million shares were available for issuance; approximately 6.3 million shares of which have been granted and remain outstanding and approximately 3.5 million shares have not been granted as of June 30, 2011 and remain in the Company's 1991 Stock Option Plan to be granted.

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

	Fiscal Year Ended June 30,
(in thousands, except per share data)	2011	2010	2009
Selling, general and administrative	$ 11,747	$ 11,717	$12,857
Research and development	596	511	792
Cost of sales	105	137	251
Total non-cash share-based compensation expense	12,448	12,365	13,900
Income tax benefit	(4,426)	(4,283)	(4,100)
Total non-cash share-based compensation expense, net of tax benefit	$8,022	$8,082	$ 9,800
Impact on diluted net income per share attributable to MICROS Systems, Inc. common shareholders	$0.10	$0.10	$0.12

The non-cash share-based compensation expense for the fiscal years 2011, 2010 and 2009 included approximately $2.5 million, $1.7 million and $0.8 million, respectively, related to grants of options to the Company's Chairman, President, and Chief Executive Officer, A. L. Giannopoulos.  In accordance with the terms of the Company's option plan, as he is over the retirement age of 62, any options that he holds that have not yet vested will vest immediately upon his retirement.  Although Mr. Giannopoulos had not retired, the Company expensed 100% of the share-based compensation expense related to his option grants on the grant date because he was over the age of 62 at the time he received the options.

      No non-cash share-based compensation expense has been capitalized for fiscal years 2011, 2010 and 2009 as stock options were not granted to employees whose labor cost was capitalized as software development costs or inventory.

Estimates of fair values of options granted were made on the date of grant using the following assumptions:

	Fiscal Year Ended June 30,
	2011	2010	2009
Weighted-average expected volatility	41%	42%	39%
Expected volatility	39% - 41%	41% - 42%	35% - 42%
Expected term	4.9– 5.5 years	5.0– 5.2 years	4.9– 5.3 years
Expected dividend yield	0%	0%	0%
Risk-free interest rate	1.4% - 1.9%	1.7% - 2.0%	1.7% - 2.8%

The following is a summary of option activity during fiscal year 2011:

(in thousands, except per share data and number of years)	Number of Shares	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at June 30, 2010	6,574	$24.06	6.8	$   51,353
Granted	1,231	$45.35
Exercised	(1,471)	$19.11
Forfeited or expired	(56)	$22.75
Outstanding at June 30, 2011	6,278	$29.40	6.9	$127,482
Exercisable at June 30, 2011	4,285	$26.15	5.9	$100,944

      The weighted-average grant-date estimated fair value per share of options granted during the fiscal years 2011, 2010 and 2009 was $17.19, $11.70 and $5.93, respectively.  The total intrinsic value, which is the difference between the exercise price and the market price on the date of exercise, of options exercised during the fiscal years 2011, 2010 and 2009 was approximately $34.9 million, $18.1 million and $3.8 million, respectively. 

      As of June 30, 2011, there was approximately $20.6 million (net of estimated forfeitures) in non-cash share-based compensation costs related to non-vested award that are expected to be recognized in the Company's consolidated statements of operations over a weighted-average period of 1.91 years.

      Cash received from options exercised during the fiscal years 2011, 2010 and 2009 was approximately $28.1 million, $23.3 million and $2.9 million, respectively.