SEC Comment Letter for PROGRESS SOFTWARE (PRGS) — Apr 30, 2007
PROGRESS SOFTWARE CORP /MA
Date: April 30, 2007 · CIK: 0000876167 · Accession: 0000000000-07-021309
AI Filing Summary & Sentiment
File numbers found in text: 000-19417
Referenced dates: March 21, 2007
Letter
April 30, 2007 Room 4561 Mr. Joseph W. Alsop Chief Executive Officer Progress Software Corporation 14 Oak Park Bedford, MA 01730
Re: Progress Software Corporation Form 10-K for Fiscal Year Ended November 30, 2006 Filed February 13, 2007 Form 8-K Filed March 20, 2007 File No. 000-19417
Dear Mr. Alsop:
We have reviewed your response to our comment letter dated March 21, 2007 in connection with the above referenced filings and have the following comments. Please be as detailed as necessary in your explanat ion. In some of our comments, we may ask you to provide us with supplemental info rmation so we may better understand your disclosure. After reviewing this inform ation, we may or may not 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 FiscalYear Ended November 30, 2006
Item 7. Management’s Discussion and Analys is of Financial Condition and Results of Operations
Fiscal 2005 Compared to Fiscal 2004, page 20 1. Your response to prior comment number 1 indicates that you believe that volume is a key indicator. You furt her indicate that your disclo sures are consistent with the spirit of the disclosure requirement s of Section III.B.1 of SEC Release No. 33- 8350. Tell us why you do not believe th at further quantita tive disclosure regarding volume is required in order to comply with the release. Note that the release indicates that disclosure of key indicators that are used by management and would be material to investors is required.
Mr. Joseph W. Alsop Progress Software Corporation April 30, 2007 Page 2
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Note 1: Nature of Business and Summ ary of Significant Accounting Policies
Revenue Recognition, page 33 2. We have read your response to prior comment number 3 and recognize that your use of contract accounting is minimal. However, you should note that the accounting requirements of the proportional performance method are not the equivalent of the percentage-of-completion method as you indicate in your response. Although the application of the proportional performance model to service transactions frequently results in revenue recognition based on the percentage of completion of the service, it is not appropriate to recognize costs in the same manner. Please ensure that your accounting for these contracts reflects this distinction.
Form 8-K filed March 20, 2007
Exhibit 99.1 3. We believe the columnar format of the “Non-GAAP Condensed Consolidated Statements of Income” appearing in your earnings release furnished in Form 8-K may create the unwarranted impression to investors that this non-GAAP statement of income has been prepared under a co mprehensive set of accounting rules or principles while also conveying undue prominence to a statement based on non-GAAP measures. In addition, Section II.A.2 of SEC Release 33-8176 defines non-GAAP measures and does not contem plate including non-GAAP financial statements as a “measure.” Please remove that presenta tion, or explain to us in reasonable detail why its retention is jus tified in light of these concerns. As a substitute for this presentation form at, you may consider presenting only individual non-GAAP measures (i.e., line items, subtotal s, etc.) provided each one complies with Item 10 of Regulation S-K and the Division of Corporation Finance’s Frequently Asked Questions Regarding Use of Non-GAAP Financial Measures, Question 8.
* * * * *
Mr. Joseph W. Alsop Progress Software Corporation April 30, 2007 Page 3
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 materials on EDGAR as required by Rule 101 of Regulation S-T. If you amend your filing(s), you may wish to provide us with marked copies of any amendment to expedite our review. Please furnish a cover letter that keys your responses 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 responses to our comments.
You may contact David Edga r, Staff Accountant, at (202) 551-3459, or me at (202) 551-3451 if you have any questi ons regarding these comments.
Sincerely,
Mark Kronforst
Assistant Chief Accountant
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April 30, 2007 Room 4561 Mr. Joseph W. Alsop Chief Executive Officer Progress Software Corporation 14 Oak Park Bedford, MA 01730 Re: Progress Software Corporation Form 10-K for Fiscal Year Ended November 30, 2006 Filed February 13, 2007 Form 8-K Filed March 20, 2007 File No. 000-19417 Dear Mr. Alsop: We have reviewed your response to our comment letter dated March 21, 2007 in connection with the above referenced filings and have the following comments. Please be as detailed as necessary in your explanat ion. In some of our comments, we may ask you to provide us with supplemental info rmation so we may better understand your disclosure. After reviewing this inform ation, we may or may not 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 FiscalYear Ended November 30, 2006 Item 7. Management’s Discussion and Analys is of Financial Condition and Results of Operations Fiscal 2005 Compared to Fiscal 2004, page 20 1. Your response to prior comment number 1 indicates that you believe that volume is a key indicator. You furt her indicate that your disclo sures are consistent with the spirit of the disclosure requirement s of Section III.B.1 of SEC Release No. 33- 8350. Tell us why you do not believe th at further quantita tive disclosure regarding volume is required in order to comply with the release. Note that the release indicates that disclosure of key indicators that are used by management and would be material to investors is required. Mr. Joseph W. Alsop Progress Software Corporation April 30, 2007 Page 2 Consolidated Financial Statements Notes to Consolidated Financial Statements Note 1: Nature of Business and Summ ary of Significant Accounting Policies Revenue Recognition, page 33 2. We have read your response to prior comment number 3 and recognize that your use of contract accounting is minimal. However, you should note that the accounting requirements of the proportional performance method are not the equivalent of the percentage-of-completion method as you indicate in your response. Although the application of the proportional performance model to service transactions frequently results in revenue recognition based on the percentage of completion of the service, it is not appropriate to recognize costs in the same manner. Please ensure that your accounting for these contracts reflects this distinction. Form 8-K filed March 20, 2007 Exhibit 99.1 3. We believe the columnar format of the “Non-GAAP Condensed Consolidated Statements of Income” appearing in your earnings release furnished in Form 8-K may create the unwarranted impression to investors that this non-GAAP statement of income has been prepared under a co mprehensive set of accounting rules or principles while also conveying undue prominence to a statement based on non-GAAP measures. In addition, Section II.A.2 of SEC Release 33-8176 defines non-GAAP measures and does not contem plate including non-GAAP financial statements as a “measure.” Please remove that presenta tion, or explain to us in reasonable detail why its retention is jus tified in light of these concerns. As a substitute for this presentation form at, you may consider presenting only individual non-GAAP measures (i.e., line items, subtotal s, etc.) provided each one complies with Item 10 of Regulation S-K and the Division of Corporation Finance’s Frequently Asked Questions Regarding Use of Non-GAAP Financial Measures, Question 8. * * * * * Mr. Joseph W. Alsop Progress Software Corporation April 30, 2007 Page 3 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 materials on EDGAR as required by Rule 101 of Regulation S-T. If you amend your filing(s), you may wish to provide us with marked copies of any amendment to expedite our review. Please furnish a cover letter that keys your responses 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 responses to our comments. You may contact David Edga r, Staff Accountant, at (202) 551-3459, or me at (202) 551-3451 if you have any questi ons regarding these comments. Sincerely, Mark Kronforst Assistant Chief Accountant