SEC Comment Letter for MICROSOFT CORP (MSFT) (CIK 0000789019) (MSFT) — Dec 14, 2017
MICROSOFT CORP (MSFT) (CIK 0000789019)
Date: Dec. 14, 2017 · CIK: 0000789019 · Accession: 0000000000-17-043686
AI Filing Summary & Sentiment
Reasoning
Referenced dates: October 15, 2014
Letter
Mail Stop 4561 December 14, 2017 Frank H. Brod Corporate Vice President, Finance and Administration Microsoft Corporation One Microsoft Way Redmond, WA 98052 -6399
Re: Microsoft Corporation Form 10 -K for the Fiscal Year Ended June 30, 201 7 Filed August 2, 2017 Form 10 -Q for the Quarterly Period Ended September 30, 201 7 Filed October 26, 2017 File No. 001 -37845
Dear Mr. Brod:
We have reviewed your filings and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have additional comments.
Form 10 -K for the Fiscal Year Ended June 30, 2017
General
1. You told us in your letter dated October 15, 2014 that you provided certain software and services to Sudan and Syria. Sudan and Syria are designated by the State Department as state sponsors of terrorism an d are subject to U.S. economic sanctions and/or export controls. Your Form 10 -K does not include disclosure about any contacts with Sudan or Syria. Please describe to us the nature and extent of your past, current and anticipated contacts with Sudan and Syria, if any, whether through subsidiaries, joint ventures, customers or other direct or indirect arrangements, since your referenced letter. You should describe any products, software, technology or services you have provided to
Frank H. Brod Microsoft Corporation December 14, 2017 Page 2
Sudan or Syria, directly or indirectly , and any agreements, arrangements or other contacts you have had with the governments of those countries or entities they control.
Form 10 -Q for the Quarterly Period Ended September 30, 2017
Notes to Financial Statements (Unaudited)
Note 1 – Accounting Policies
Revenue
Revenue Recognition, page 8
2. Please help us better understand how and when you are recognizing revenue from Office 365. In this regard, please provide us with a specific and comprehensive analysis of how you concluded tha t the desktop applications and the cloud services are not distinct. Please clarify if customers take possession of the software license. In addition, please clarify your consideration of upgrades and technical support. Finally, we note your disclosure t hat revenue is recognized over time. Please tell us the method used and why such method provides a faithful depiction of the transfer of services. Separately discuss your considerations of consumer and commercial offerings, as applicable. Reference ASC 606-10-25-19 through 25 -21, 606 -10-50-12 and 606 -10-50-18.
3. We note your statement within your significant judgments disclosure that certain cloud services are accounted for together with the software license. Please tell us the cloud services, other than Office 365, to which this statement refers. In addition, please provide us with a specific and comprehensive analysis of how you determined these items are not distinct. Reference ASC 606 -10-25-19 through 25 -21 and 606 -10-50-12.
We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.
Frank H. Brod Microsoft Corporation December 14, 2017 Page 3
You may contact Melissa Walsh, Staff Accountant , at (202) 551 -3224 if you have questions regarding comments on the financial statements and related matters. If you have any other questions, please contact Bernard Nolan, Attorney -Adviser, at (202) 551 -6515 or Katherine Wray, Attorney -Adviser, at (202) 551 -3483 . If you require f urther assistance, do not hesitate to contact me at (202) 551 -3488 .
Sincerely,
/s/ Stephen Krikorian
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Mail Stop 4561 December 14, 2017 Frank H. Brod Corporate Vice President, Finance and Administration Microsoft Corporation One Microsoft Way Redmond, WA 98052 -6399 Re: Microsoft Corporation Form 10 -K for the Fiscal Year Ended June 30, 201 7 Filed August 2, 2017 Form 10 -Q for the Quarterly Period Ended September 30, 201 7 Filed October 26, 2017 File No. 001 -37845 Dear Mr. Brod: We have reviewed your filings and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Form 10 -K for the Fiscal Year Ended June 30, 2017 General 1. You told us in your letter dated October 15, 2014 that you provided certain software and services to Sudan and Syria. Sudan and Syria are designated by the State Department as state sponsors of terrorism an d are subject to U.S. economic sanctions and/or export controls. Your Form 10 -K does not include disclosure about any contacts with Sudan or Syria. Please describe to us the nature and extent of your past, current and anticipated contacts with Sudan and Syria, if any, whether through subsidiaries, joint ventures, customers or other direct or indirect arrangements, since your referenced letter. You should describe any products, software, technology or services you have provided to Frank H. Brod Microsoft Corporation December 14, 2017 Page 2 Sudan or Syria, directly or indirectly , and any agreements, arrangements or other contacts you have had with the governments of those countries or entities they control. Form 10 -Q for the Quarterly Period Ended September 30, 2017 Notes to Financial Statements (Unaudited) Note 1 – Accounting Policies Revenue Revenue Recognition, page 8 2. Please help us better understand how and when you are recognizing revenue from Office 365. In this regard, please provide us with a specific and comprehensive analysis of how you concluded tha t the desktop applications and the cloud services are not distinct. Please clarify if customers take possession of the software license. In addition, please clarify your consideration of upgrades and technical support. Finally, we note your disclosure t hat revenue is recognized over time. Please tell us the method used and why such method provides a faithful depiction of the transfer of services. Separately discuss your considerations of consumer and commercial offerings, as applicable. Reference ASC 606-10-25-19 through 25 -21, 606 -10-50-12 and 606 -10-50-18. 3. We note your statement within your significant judgments disclosure that certain cloud services are accounted for together with the software license. Please tell us the cloud services, other than Office 365, to which this statement refers. In addition, please provide us with a specific and comprehensive analysis of how you determined these items are not distinct. Reference ASC 606 -10-25-19 through 25 -21 and 606 -10-50-12. We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff. Frank H. Brod Microsoft Corporation December 14, 2017 Page 3 You may contact Melissa Walsh, Staff Accountant , at (202) 551 -3224 if you have questions regarding comments on the financial statements and related matters. If you have any other questions, please contact Bernard Nolan, Attorney -Adviser, at (202) 551 -6515 or Katherine Wray, Attorney -Adviser, at (202) 551 -3483 . If you require f urther assistance, do not hesitate to contact me at (202) 551 -3488 . Sincerely, /s/ Stephen Krikorian Stephen Krikorian Accounting Branch Chief Office of Information Technologies and Services