SecProbe.io

Mail Stop 4561
June 30, 2009
 T. Kendall Hunt CEO & Chairman of the BOD VASCO Data Security International, Inc. 1901 South Meyers Road Suite 210 Oakbrook Terrance, IL. 60181
 Re: VASCO Data Security International, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2008
Filed March 13, 2009  Form 10-Q for the Quarterly Period Ended March 31, 2009 Filed May 8, 2009
  File No. 0-24389

Dear Mr. Hunt:
We have reviewed the above-referenced f ilings and have the following comments.
If indicated, we think you shoul d revise your document in response to these comments.  If
you disagree, we will consider your explanation as  to why our comment is inapplicable or a
revision is unnecessary.  Please be  as detailed as necessary in your explanation.  In some of
our comments, we may ask you to provide us with supplemental information so we may
better understand your disclosure.  After re viewing 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 December 31, 2008

 General

1. We note from disclosure on pages 16 and 32 that you conduct operations in the
Middle East and Africa.  Ira n and Syria, located in the Middle East and Sudan,
located in A
frica, are identified by the State Department as state sponsors of
terrorism, and are subject to U.S. economic sanctions and export controls.  We note

T. Kendall Hunt
VASCO Data Security International, Inc. June 30, 2009 Page 2
that your Form 10-K does not include disclosure regarding contacts with, Iran,
Syria, and Sudan.  Please describe to us th e nature and extent of your past, current,
and anticipated contacts with  the referenced countries, if any, whether through
subsidiaries, resellers, retailers, distributors,  or other direct or indirect arrangements.
Your response should describe any pr oducts, equipment, components, technology,
and services you have provided to those countries, and any agreements, commercial arrangements, or other c ontacts you have had with the governments of those
countries or entities controlled by those governments.
 2. It appears from various news  articles and from
  intern et websites that Arab Bank,
Abu Dhabi Commercial Bank and FVC, Inc.  are or were your customers and that
Arab Bank has operations in Syria and Sudan; Abu Dhabi Commercial Bank has operations in Iran, and FVC Inc. has operations  in Iran and Syria.  Please tell us
whether these companies use your solutions, pr oducts or services in their operations
in Iran, Sudan or Syria.
 Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of
Operations
 General, page 30

3. We note your disclosures on page 32 where you indicate that reve nues in fiscal 2008
were im
pacted by an increase in the numb er of hardware DIGIPASS units sold,
which was partially offset by a decline in the average price of such units. Tell us
how you considered discussing in quantifie d terms the extent to which material
changes in revenue were due to changes in volume versus changes in pricing.  Refer
to Item 303(a)(3)(iii) of Regulation S-K.
 4. There are many instances where two or more sources of a m
 aterial change have been
identified, but the dollar amounts for each sour ce that contributed to the change were
not disclosed (e.g. revenue, gross prof it, sales and marke ting, general and
administrative, etc.).  For instance, you lis t several factors that  contributed to the
increase in gross profits in fiscal 200 8; however, you do not quantify what impact
each factor had on your gross profit margin s.  Similarly, you indicate that the
increase in sales and marketing expense was due to an increase in average headcount, costs related to opening new offi ces, an increase in marketing programs
and an increase in travel expenses, ho wever, you do not quantify the increase for
each.  Tell us what consideration you have given to quantifying each source that contributed to a material change pursuant to Section III. D of SEC Release 33-6835.

T. Kendall Hunt
VASCO Data Security International, Inc. June 30, 2009 Page 3  5. We note that your quarterly earnings releases list the num
 ber of new bank and
enterprise security customers.  Please tell  us whether this is a key business metric
considered by your management, and what  consideration you ga ve to including a
qualitative and quantitativ e discussion of the impact of new customers.
 Contractual Obligations, page 41

 6. Tell us your consider ation to disclose the Com
 pany’s obligations for unrecognized
tax benefits in your table of contractual obligations or in  the footnotes thereto.  We
refer you to Item 303(A)(5) of Regulation S-K.
 Item 8.  Financial Statements and Supplemental Data

 Consolidated Statement of Operations, page F-5

 7. We note your disclosures on page 35 wher e you indicate that non-hardware product
revenue has increased to approxim
ately 25% of total revenue in 2008 and related
maintenance revenue will continue to increase  as a percentage of your total revenue.
Please tell us how you considered presen ting separate line items for product and
service revenues and the related cost of revenues pursuant to Ar ticle 5-03(b)(1) and
(2) of Regulation S-X.
 Note 1  Summary of Significant Accounting Policies

 Revenue Recognition, page F-8

 8. We note your disclosures on page F-9 where you indicate that the fair value of each
elem
ent in the multiple element arrangements is based on the price charged when
sold separately, renewal rates and othe r methods.  Please further explain your
reference to “other methods” in establishi ng the fair value of each element included
in your contracts.
 9. We also note from your response to our pr ior comment 9 in your letter dated June
17, 2005 that pricing for the renewal of PCS is  ba
sed on an established percentage of
the user license fee attributab le to the specific software as is applied “consistently to
all PCS arrangements.”  Please clarify whethe r your contracts include stated renewal
rate or whether VSOE of PCS is based on se parate sales transactions.  If the former
is the case, then tell us how you determined  such rates are substantive pursuant to
paragraph 57 of SOP 97-2.  In this regard, tell us the range of rates that you offer and what percentages of your customers ha ve actually renewed PCS at the stated
renewal rates.  If VSOE of PCS is based on separate sales, then  please describe the
process you use to evaluate the various factors that affect your VSOE including
customer type, geographic region, etc.  Furt her address the issue that if your VSOE

T. Kendall Hunt
VASCO Data Security International, Inc. June 30, 2009 Page 4
varies from customer to customer, how you can reasonably estimate fair value.  We
refer you to paragraphs 10 of SOP 97-2.
 10. Your response to prior comment 9 also indi c
 ates that the fair value for tokens is
based on standard price lists or based upon specific negotiated prices if quantities being sold are greater than t hose included in the price list.  You further state that the
fair value for software licenses are establ ished from standard pr ice lists.  Please
explain further your methodology for establ ishing VSOE of fair value for the
Company’s token and software licenses included in multiple element arrangements.  If the Company is relying sole ly on list prices for these pr oducts, then please explain
further how you determined this is an appr opriate measure of VSOE of fair value
pursuant to paragraph 16 of EITF 00 -21 and paragraph 10 of SOP 97-2, as
applicable.
 Cash and Cash Equivalents, page F-9

 11. We note that you consider investments with original m
 aturities of three months or
less to be cash equivalents.  Tell us  how you considered providing disclosures
pursuant to the requirements of paragra phs 32 to 35 of SFAS 157 related to your
cash equivalent investments.  In addition, pl ease tell us and in the future revise to
disclose the composition of your cash and cas h equivalents and the amounts held in
each type of instrument.
 Item 9A.  Controls and Procedures

 Evaluation of Disclosure Cont rols and Procedures, page 45

 12. You state that your disclosure  controls and procedures we re effective as designed to
ensure th
at information relating to the co mpany and its consolidated subsidiaries
would be accumulated and communicated to them, as appropriate, to allow timely “disclosures” regarding required disclo sures.  In addition to containing a
typographical error, your statement provides a more limited definition of disclosure
controls and procedures than that provid ed in Rule 13a-15(e) under the Exchange
Act.  Moreover, your conclusion as to the effectiveness of your disclosure controls
and procedures is given with respect to only part of the defi nition of disclosure
controls and procedures.  Please refer to prior comment 5 of our  letter dated May 26,
2005 and your June 17, 2005 response i ndicating that you would provide
conforming disclosure concerning your effectiveness conclusions.  Please confirm, if true, that your officers conc luded as of the end of the period covered by the report,
that your disclosure controls and proce dures were effective to ensure that
information required to be disclosed by the Company in reports filed or submitted under the Exchange Act was recorded, pro cessed, summarized and reported within
the time periods specified in the Securi ties and Exchange Commission’s rules, and
that information required to be disclosed in  the reports that y ou file or submit under

T. Kendall Hunt
VASCO Data Security International, Inc. June 30, 2009 Page 5
the Exchange Act is accumulated and co mmunicated to your management, including
your chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.  Please al so confirm that you will provide conforming
disclosure in future filings.  Note that this comment also applies to your quarterly report on Form 10-Q for the quarter ended March 31, 2009.
 13. We note your statement that “a control system
 , no matter how well designed and
implemented, can provide only reasonable, not  absolute, assurance that the control
system’s objectives will be met.”  Please confirm, if true, that your disclosure
controls and proce dures are designed to  provide reasonable assurance of achieving
their objectives and that your principal executive officer and principal financial
officer concluded that your disclosure contro ls and procedures were effective at that
reasonable assurance level.  Please conf irm that you will provide disclosure that
conforms to the rule requirements.  Pleas e note, alternatively, that you may remove
the reference to the level of assurance of your disclosure controls and procedures in
future filings.  Please refer to Section II.F.4 of Management’s Reports on Internal Control Over Financial Reporting and Certif ication of Disclosure in Exchange Act
Periodic Reports, SEC Release No. 33-8238, available on our website at
http://www.sec.gov/rules/final/33-8238.htm
.
 Changes in Internal Controls, page 45

 14. We note your statement that there were no “significant” changes in the company’s
internal con
trol over financial reporti ng during the quarter ended December 31,
2008.  We also note that in your June 17, 2005 response to comment 6 of our letter
dated May 26, 2005, you stated: “In future fi lings, the Company will ensure that its
disclosures in this regard conform with It em 308(c).”  Item 308(c) of Regulation S-
K requires you to disclose any change in your internal c ontrol over financial
reporting identified in connection with th e evaluation required by paragraph (d) of
Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during your last fiscal quarter (the fourth fiscal quarter in the case of  an annual report) that has
materially affected, or is r easonably likely to materially affect, your internal control
over financial reporting.  In your suppleme ntal response, please advise us whether
there was any change in your internal control over financial repor ting that occurred
during the fourth quarter that has material ly affected, or is reasonably likely to
materially affect, your intern al control over financial repor ting.  In addition, please
confirm that you will address this in future filings.

T. Kendall Hunt
VASCO Data Security International, Inc. June 30, 2009 Page 6  Item 11.  Executive Compensation, page 49 (Inco rporated by Reference From Definitive
Proxy Statement Filed April 30, 2009)
 Executive Compensation

 Compensation Discussion and Analysis, page 22

 15. We note your disclosure on page 23 that the Compensation Comm
 ittee has the
option to reduce the annual incentive aw ard by up to 10 percent if the individual
executive’s performance did not meet his annual goals.  In future filings, please clarify whether or not your Compensati on Committee exercised this option, as well
as the extent to which it impacted each named executive officer’s awarded compensation for the prior fiscal year.
 16. In charts on page 26 you have disclosed salary and bonus inform
 ation for Mr.
Valcke in Euros.  In future filings, consistent with your other tabular disclosure, please list all compensation in  dollars, and use a footnote to disclose the amount in
Euros, the exchange rate utilized, and th e date of the exchange rate utilized.
 Item 13.  Certain Relationships and Related Tr ansactions, and Director  Independence, page
49 (Incorporated by Reference From Definitive Proxy Statement Filed April 30, 2009)
 Transactions With Related Persons, page 42

 17. We note your statement that because you have not engaged in
  related person
transactions reportable pursuant to Item  404(a) of Regulation S-K, you have not
adopted any formal policies or procedures for the review, approval or ratification of
related person transactions.  It does not appear that you may omit the disclosure
required by Item 404(b) of Regulation S-K on this basis.  In your response, please
explain how you determined that you do not have any related person transactions reportable pursuant to Item 404(a), given your  lack of formal re lated person policies
and procedures.  In addition, please tell us whether you have a ny plan to develop
policies and procedures and, if so, whether such policies and procedures will be in
writing.  Please refer to paragraph (b) of  Item 404 of Regulation S-K for further
guidance and examples regarding material f eatures of such policies and procedures.
  Item 15.  Exhibits and Financia l Statements Schedules, page 50

 18. We note your disclosure on page 13 that you use a lim
 ited number of
microprocessors, made by Samsung, for the various hardware products you produce,
and that the microprocessors are the only components of your  security authenticators
that are not commodity items readily available on the open market.  Please tell us whether you have an agreement with Samsung.  If you have an agreement with

T. Kendall Hunt
VASCO Data Security International, Inc. June 30, 2009 Page 7
Samsung, please provide us with your analysis  as to how you determined not to file
the agreement as an exhibit pursuant to Item 601(b)(10)(ii )(B) of Regulation S-K.
 Exhibits 31.1 and 31.2

 19. The certifications may not be changed in any respect from
  the language of Item
601(b)(31) of Regulation S-K, even if  the change would appear to be
inconsequential in nature .  See Section II.B.4 of SEC Release No. 34-46427.  We
note that you have included the title of th e certifying individual when identifying the
individual at the b