SecProbe.io

Filing text and metadata
Intelligence Terminal Search Probe Scores Topics IPO Watchlist Monthly Activity About API

SEC Comment Letter for MICROSOFT CORP (MSFT) (CIK 0000789019) (MSFT) — Mar 1, 2011

MICROSOFT CORP (MSFT) (CIK 0000789019)
Date: March 1, 2011 · CIK: 0000789019 · Accession: 0000000000-11-013148

AI Filing Summary & Sentiment

Sentiment
Urgency
Document Type
Confidence
SEC Posture
Company Posture

Summary

Reasoning

File numbers found in text: 000-14278

Date
February 10, 2011
Author
Not clearly detected
Form
UPLOAD
Company
MICROSOFT CORP (MSFT) (CIK 0000789019)

Letter

February 10, 2011 Frank Brod Corporate Vice President, Finance and Administration Microsoft Corporation One Microsoft Way Redmond, Washingt on 98052-6399

Re: Microsoft Corporation Form 10-K for the Fiscal Year Ended June 30, 2010 Form 10-Q for the Quarterly P eriod Ended December 31, 2010 File No. 000-14278

Dear Mr. Brod: We have reviewed your filings and have th e following comments. Please note that we have limited our review to only your financial statements and related disclosures. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to this letter within ten business days by amending your filing, by providing the requested information, or by advi sing us when you will provide the requested response. If you do not believe our comments apply to your fact s and circumstances or do not believe an amendment is appropriate, pl ease tell us why in your response.

After reviewing any amendment to your filing and the information you provide in response to these comments, we ma y have additional comments. Form 10-K for the Fiscal Year Ended June 30, 2010

Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations

Income Taxes, page 33

1. We note from your income tax and segment disclosures in Notes 13 and 22 on pages 68 and 82, respectively, what appear s to be disproportionate relationships among domestic and foreign revenues, pre-tax income and ta x rates. From Note 22, “Other countries” revenues were 42%, 44% and 41% of fi scal 2010, 2009 and 2008 total revenues, yet appear to comprise 62%, 72% and 47% of fiscal 2010, 2009 and 2008 “International” income before income taxes from Note 13. From Note 13, “Foreign earnings taxed at lower rates” caused a reduction to the fiscal 2010 U.S. statutory rate to effective rate reconciliation of 12% or nearly one-third of the U.S. statut ory rate. The disproportionate

Frank Brod Microsoft Corporation February 10, 2011 Page 2 magnitude of your non-U.S. revenues to non-U.S. pre-tax earnings and related foreign tax rate effects appear to require expanded MD&A disclosures as to how income tax planning has historically impacted or is re asonably likely to impact future results of operations and financial position. We would e xpect that disclosure should explain in separate detail the foreign effective income tax rates and their importance in understanding U.S. and non-U.S. contributions to your results of operations. Also consider addressing the relationship between the mix of revenue generated in the U.S. and other countries and the U.S. and internat ional components of income before income taxes. Tell us how you would consider revisi on to MD&A to explai n the foregoing issues in future filings. We refer you to Item 303( a)(3)(i) of Regulation S-K, Section III.B of SEC Release No. 33-8350 and “In the Matter of Caterpillar, Inc.” SEC Release No. 34- 30532. Financial Condition, page 33

2. Tell us what consideration you gave to provi ding disclosures to discuss the potential impact on liquidity associated with the repatriation of undistributed earnings of foreign subsidiaries. In this regard, consider disc losing the amount of cash and investments that are currently held by your foreign subsidiaries and the tax impact of repatriating the undistributed earnings of foreign subsidiari es. We refer you to Item 303(a)(1) of Regulation S-K and Section IV of SEC Release 33-8350.

Notes to Financial Statements

Note 11 – Intangible Assets, page 65

3. Please consider including the weighted-avera ge amortization period of total intangible assets acquired in future filings pursu ant to ASC paragraph 350-30-50-1.a.3. Note 13 – Income Taxes, page 68

4. We note the caption in your effective income tax rate reconciliation for foreign earnings taxed at lower rates. Please clarify what this amount represents in each of the three years presented. As part of your res ponse, explain how the effect is determined in each fiscal year and identify the signifi cant components of this item. 5. Tell us what consideration you gave to incl uding a description of the tax years that remain subject to examination by major tax jurisdictions pursuant to ASC paragraph 740- 10-50-15.e.

Frank Brod Microsoft Corporation February 10, 2011 Page 3

Form 10-Q for the Quarterly Period Ended December 31, 2010

Notes to Financial Statements

Note 16 – Segment Information, page 25

6. You indicate that certain prior amounts have been recast. Please tell us what changes were made to the composition of your segmen ts and what consideration you gave to describing these changes in your disclosure. In this regard, reconcile the amounts for each segment in fiscal 2010 to the amounts in cluded in your Form 10-Q for the quarterly period ended December 31, 2009. We urge all persons who are responsible for th e accuracy and adequacy of the disclosure in the filing to be certain that the filing include s the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules requir e. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In responding to our comments, please provi de a written statement from the company acknowledging that: • the company is responsible for the adequacy an d accuracy of the disclo sure 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 federa l securities laws of the United States.

You may contact Melissa Wa lsh, Staff Accountant, at (202) 551-3224 if you have questions regarding comments on the financial statem ents and related matters. Please contact me at (202) 551-3226 with any other questions. Sincerely, /s/ Craig D. Wilson C r a i g D . W i l s o n Sr. Asst. Chief Accountant

Show Raw Text
February 10, 2011
 Frank Brod Corporate Vice President, Finance and Administration Microsoft Corporation One Microsoft Way  Redmond, Washingt on  98052-6399

Re: Microsoft Corporation
 Form 10-K for the Fiscal Year Ended June 30, 2010
Form 10-Q for the Quarterly P eriod Ended December 31, 2010
 File No. 000-14278

Dear Mr. Brod:
 We have reviewed your filings and have th e following comments.  Please note that we
have limited our review to only your financial statements and related disclosures.  In some of our
comments, we may ask you to provide us with  information so we may better understand your
disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advi sing us when you will provide the requested
response.  If you do not believe our comments apply to your fact s and circumstances or do not
believe an amendment is appropriate, pl ease tell us why in your response.

After reviewing any amendment to your filing and the information you provide in
response to these comments, we ma y have additional comments.
            Form 10-K for the Fiscal Year Ended June 30, 2010

 Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations

 Income Taxes, page 33

 1. We note from your income tax and segment disclosures in Notes 13 and 22 on pages 68
and 82, respectively, what appear s to be disproportionate relationships among domestic
and foreign revenues, pre-tax income and ta x rates.  From Note 22, “Other countries”
revenues were 42%, 44% and 41% of fi scal 2010, 2009 and 2008 total revenues, yet
appear to comprise 62%, 72% and 47% of  fiscal 2010, 2009 and 2008 “International”
income before income taxes from Note 13.  From Note 13, “Foreign earnings taxed at
lower rates” caused a reduction to the fiscal  2010 U.S. statutory rate  to effective rate
reconciliation of 12% or nearly  one-third of the U.S. statut ory rate.  The disproportionate

 Frank Brod Microsoft Corporation February 10, 2011 Page 2
 magnitude of your non-U.S. revenues to non-U.S.  pre-tax earnings and related foreign tax
rate effects appear to require expanded MD&A disclosures as to how income tax
planning has historically impacted or is re asonably likely to impact future results of
operations and financial position.  We would e xpect that disclosure should explain in
separate detail the foreign effective income tax rates and their importance in understanding U.S. and non-U.S. contributions  to your results of operations.  Also
consider addressing the relationship between the mix of revenue generated in the U.S.
and other countries and the U.S. and internat ional components of income before income
taxes.  Tell us how you would consider revisi on to MD&A to explai n the foregoing issues
in future filings.  We refer you to Item 303( a)(3)(i) of Regulation S-K, Section III.B of
SEC Release No. 33-8350 and “In the Matter of  Caterpillar, Inc.” SEC Release No. 34-
30532.
Financial Condition, page 33

 2. Tell us what consideration you gave to provi ding disclosures to discuss the potential
impact on liquidity associated with the repatriation of undistributed earnings of foreign
subsidiaries.  In this regard, consider disc losing the amount of cash and investments that
are currently held by your foreign subsidiaries and the tax impact of repatriating the
undistributed earnings of foreign subsidiari es.  We refer you to Item 303(a)(1) of
Regulation S-K and Section IV  of SEC Release 33-8350.

Notes to Financial Statements

 Note 11 – Intangible Assets, page 65

 3. Please consider including the weighted-avera ge amortization period of total intangible
assets acquired in future filings pursu ant to ASC paragraph 350-30-50-1.a.3.
 Note 13 – Income Taxes, page 68

 4. We note the caption in your effective income tax rate reconciliation for foreign earnings
taxed at lower rates.  Please clarify what this  amount represents in each of the three years
presented.  As part of your res ponse, explain how the effect is determined in each fiscal
year and identify the signifi cant components of this item.
 5. Tell us what consideration you gave to incl uding a description of  the tax years that
remain subject to examination by major tax jurisdictions pursuant to ASC paragraph 740-
10-50-15.e.

 Frank Brod Microsoft Corporation February 10, 2011 Page 3

Form 10-Q for the Quarterly Period Ended December 31, 2010

 Notes to Financial Statements

 Note 16 – Segment Information, page 25

 6. You indicate that certain prior amounts have been recast.  Please tell us what changes
were made to the composition of your segmen ts and what consideration you gave to
describing these changes in your disclosure.  In this regard, reconcile the amounts for
each segment in fiscal 2010 to the amounts in cluded in your Form 10-Q for the quarterly
period ended December 31, 2009.  We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e.  Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.
 In responding to our comments, please provi de a written statement from the company
acknowledging that:
• the company is responsible for the adequacy an d accuracy of the disclo sure 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 federa l securities laws of  the United States.

You may contact Melissa Wa lsh, Staff Accountant, at  (202) 551-3224 if you have
questions regarding comments on the financial statem ents and related matters.   Please contact me
at (202) 551-3226 with any other questions.
Sincerely,
       /s/ Craig D. Wilson        C r a i g  D .  W i l s o n
Sr. Asst. Chief Accountant