SEC Comment Letter for MICROSOFT CORP (MSFT) (CIK 0000789019) (MSFT) — Dec 15, 2009
MICROSOFT CORP (MSFT) (CIK 0000789019)
Date: Dec. 15, 2009 · CIK: 0000789019 · Accession: 0000000000-09-070527
AI Filing Summary & Sentiment
Reasoning
Letter
Mail Stop 4561 December 11, 2009 Mr. Steven A. Ballmer Director and Chief Executive Officer Microsoft Corporation One Microsoft Way, Redmond, Washingt on 98052-6399
Re: Microsoft Corporation Form 10-K for the Fiscal Year Ended June 30, 2009 Filed July 30, 2009 01-14278
Dear Mr. Ballmer:
We have reviewed the above-referenced filing and have the following comments. Please be as detailed as nece ssary in your explanation. Af ter reviewing this information, we may raise additional comments. Please understand that the purpose of our re view process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Form 10-K for the Fiscal Year Ended June 30, 2009
Item 7. Management’s Discussion and Analys is of Financial Condition and Results of Operations
Segment Product Revenue/Operating Income (Loss)
Online Services Business, page 25
1. We note that the operating loss for your Online Services Business increased by 102% and 84% in 2008 and 2009, respectively, and is a signific ant portion of your
Mr. Steven Ballmer Microsoft Corporation December 11, 2009 Page 2 consolidated operating income in 2009. Tell us whether these increasing losses are indicative of future results and th e consideration given to identifying and quantifying any related known trends, ev ents and uncertainties that would reasonably be expected to have a mate rial impact on your liquidity, capital resources and/or results of operations. Re fer to Item 303(A) (3) (ii) of Regulation S-K and Section III.B.3 of SEC Release 34-48960. Item 8. Financial Statements and Supplementary Data
Note 22. Segment Information and Geographic Data, page 77
2. Tell us what consideration you gave to re porting revenue from external customers for each of your products and services or each group of similar product and services in accordance w ith paragraph 37 of SFAS 131. 3. You indicate that your financial reporting systems provide more than one measure of segment profit and loss for management to operate the business, including internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Tell us what consideration you ga ve to reporting the segment information that is most consistent with that used in your consolidated financial statements. In this regard, we note that the segment information provided beginning on page 23 is presented in accordance with U.S. GAA P. Refer to paragraph 30 of SFAS 131. 4. We note your statement that segments are not designed to measure operating income or loss directly rela ted to the products included in each segment, due to your integrated business structure. Further explain this assertion and tell us what operating costs are excluded from each segment. In light of this apparent limitation of the data, indicate how the segment information presented is reliable and relevant to users of your financial statements. 5. You state that “inter-segment cost co mmissions are estimated by management and used to compensate or charge each segm ent for such shared costs and to incent shared efforts.” Clarify for us what is meant by these estimated inter-segment cost commissions and tell us what cons ideration you gave to describing in the note the basis of measuring this alloca tion. Also, clarify what is meant by allocating cost commission “to incent shared efforts.” Ex plain your basis for determining the appropriate amounts that will provide motivation and justify why management believes the allocation me thodology is reasonable. Refer to paragraphs 25(b) and 29 of SFAS 131.
* * * * * * *
Please respond to these comments within 10 business days or tell us when you will provide us with a response. Please submit all correspondence and supplemental
Mr. Steven Ballmer Microsoft Corporation December 11, 2009 Page 3 materials on EDGAR as required by Rule 101 of Regulation S-T. If you amend your filing, you may wish to provide us with marked copies of any amendment to expedite our review. Please furnish a cover letter th at keys your response to our comments and provides any requested information. Detailed co ver letters greatly faci litate our review. Please understand that we may have addi tional comments after reviewing any amendment and your response to our comments. We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under the Securities Exchange Act of 1934 and th at they have provided all information investors require for an informed invest ment decision. Since the company and its management are in possession of all facts re lating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in the filing; • staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and • the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all information you provide to the staff of the Divi sion of Corporation Fi nance in our review of your filing or in response to our comments on your filing.
You may contact Melissa Wa lsh, Staff Accountant, at (202) 551-3224 if you have any questions regarding comments on the financ ial statements and related matters. If you need further assistance, you may contact me at (202) 551-3226 S i n c e r e l y , C r a i g D . W i l s o n Sr. Asst. Chief Accountant
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Mail Stop 4561 December 11, 2009 Mr. Steven A. Ballmer Director and Chief Executive Officer Microsoft Corporation One Microsoft Way, Redmond, Washingt on 98052-6399
Re: Microsoft Corporation
Form 10-K for the Fiscal Year Ended June 30, 2009
Filed July 30, 2009
01-14278
Dear Mr. Ballmer:
We have reviewed the above-referenced filing and have the following comments.
Please be as detailed as nece ssary in your explanation. Af ter reviewing this information,
we may raise additional comments.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall
disclosure in your filing. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Form 10-K for the Fiscal Year Ended June 30, 2009
Item 7. Management’s Discussion and Analys is of Financial Condition and Results of
Operations
Segment Product Revenue/Operating Income (Loss)
Online Services Business, page 25
1. We note that the operating loss for your Online Services Business increased by 102% and 84% in 2008 and 2009, respectively, and is a signific ant portion of your
Mr. Steven Ballmer
Microsoft Corporation
December 11, 2009 Page 2
consolidated operating income in 2009. Tell us whether these increasing losses
are indicative of future results and th e consideration given to identifying and
quantifying any related known trends, ev ents and uncertainties that would
reasonably be expected to have a mate rial impact on your liquidity, capital
resources and/or results of operations. Re fer to Item 303(A) (3) (ii) of Regulation
S-K and Section III.B.3 of SEC Release 34-48960.
Item 8. Financial Statements and Supplementary Data
Note 22. Segment Information and Geographic Data, page 77
2. Tell us what consideration you gave to re porting revenue from external customers
for each of your products and services or each group of similar product and services in accordance w ith paragraph 37 of SFAS 131.
3. You indicate that your financial reporting systems provide more than one measure
of segment profit and loss for management to operate the business, including
internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Tell us what consideration you ga ve to reporting the segment information
that is most consistent with that used in your consolidated financial statements. In
this regard, we note that the segment information provided beginning on page 23
is presented in accordance with U.S. GAA P. Refer to paragraph 30 of SFAS 131.
4. We note your statement that segments are not designed to measure operating
income or loss directly rela ted to the products included in each segment, due to
your integrated business structure. Further explain this assertion and tell us what
operating costs are excluded from each segment. In light of this apparent limitation of the data, indicate how the segment information presented is reliable and relevant to users of your financial statements.
5. You state that “inter-segment cost co mmissions are estimated by management and
used to compensate or charge each segm ent for such shared costs and to incent
shared efforts.” Clarify for us what is meant by these estimated inter-segment
cost commissions and tell us what cons ideration you gave to describing in the
note the basis of measuring this alloca tion. Also, clarify what is meant by
allocating cost commission “to incent shared efforts.” Ex plain your basis for
determining the appropriate amounts that will provide motivation and justify why
management believes the allocation me thodology is reasonable. Refer to
paragraphs 25(b) and 29 of SFAS 131.
* * * * * * *
Please respond to these comments within 10 business days or tell us when you
will provide us with a response. Please submit all correspondence and supplemental
Mr. Steven Ballmer
Microsoft Corporation December 11, 2009 Page 3 materials on EDGAR as required by Rule 101 of Regulation S-T. If you amend your
filing, you may wish to provide us with marked copies of any amendment to expedite our
review. Please furnish a cover letter th at keys your response to our comments and
provides any requested information. Detailed co ver letters greatly faci litate our review.
Please understand that we may have addi tional comments after reviewing any
amendment and your response to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision. Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide, in writing, a
statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in the
filing;
• staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United
States.
In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.
You may contact Melissa Wa lsh, Staff Accountant, at (202) 551-3224 if you have
any questions regarding comments on the financ ial statements and related matters. If you
need further assistance, you may contact me at (202) 551-3226
S i n c e r e l y , C r a i g D . W i l s o n
Sr. Asst. Chief Accountant