SEC Comment Letter for Strategy (MSTR) — May 10, 2012
Strategy Inc
Date: May 10, 2012 · CIK: 0001050446 · Accession: 0000000000-12-024335
AI Filing Summary & Sentiment
Letter
May 9, 2012 Via E -mail Mr. Douglas K. Thede Executive Vice President, Finance & Chief Financial Officer MicroStrategy Incorporated 1850 Towers Crescent Plaza Tysons Corner, VA 22182
Re: MicroStrategy Incorporated Form 10-K for the Fiscal Year Ended December 31, 2011 Filed February 17, 2012 File No. 000 -24435
Dear Mr. Thede :
We have reviewed your filing an d 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 this letter within ten business days by amending your filing, by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response.
After reviewing any amendment to your filing and the information you provide in response to these comment s, we may have additional comments.
Form 10 -K for the Fiscal Year Ended December 31, 2011
Item 1A. Risk Factors, page 25
General
1. We note your disclosure in the definitive proxy statement filed April 10, 2012, that you qualify as a “controlled company” under Rule 5615(c)(2) of the Nasdaq Marketplace Rules, which exempts you from certain corporate governance requirements. Please include a risk factor in future filings regarding your reliance on the controlled company exemption or tell us why you believe that a risk factor is not warranted. We note in this regard your related risk factor on page 37 discussing certain risks presented by the company’s two classes of common stock and the control held by your Class B common stockholders.
Mr. Douglas K. Thede MicroStrategy Incorporated May 9, 2012 Page 2
Item 8. Financial Statements and Supplementary Data
Note 2 – Summary of Significant Accounting Policies
(d) Property and Equipment, page 76
2. We note that your corporate owned aircraft has a 70% salvage value which is consistent with the salvage value asse ssed when the aircraft was purchased. We further note your disclosure on page 84 which indicates that in February 2011 your corporate owned aircraft was damaged. Please tell us whether you reassessed the salvage value in light of the damage sustained by the aircraft.
(h) Revenue Recognition, page 77
3. We note your disclosure on page 79 indicating that you do not include price protection or similar rights in your standard license agreements. However, we further note your disclosure on page 11 which stat es that you provide financial incentives to your indirect channel partners to market and distribute your products. Please tell us how you reflect these incentives in your financial statements and quantify the amount of incentives provided for each year pr esented.
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 the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. 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 provide a written 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.
Mr. Douglas K. Thede MicroStrategy Incorporated May 9, 2012 Page 3
You may contact Jaime John, Staff Accountant , at (202) 551 -3446 if you have questions regarding comments on the financial statements and re lated matters. If you have any other questions, please contact Katherine Wray, Staff Attorney, at (202) 551 -3483 or Mark Shuman, Legal Branch Chief, at (202) 551 -3462. If you require further assistance, do not hesitate to contact me at (202) 551 -3406.
Sincerely,
/s/ Patrick Gilmore
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May 9, 2012 Via E -mail Mr. Douglas K. Thede Executive Vice President, Finance & Chief Financial Officer MicroStrategy Incorporated 1850 Towers Crescent Plaza Tysons Corner, VA 22182 Re: MicroStrategy Incorporated Form 10-K for the Fiscal Year Ended December 31, 2011 Filed February 17, 2012 File No. 000 -24435 Dear Mr. Thede : We have reviewed your filing an d 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 this letter within ten business days by amending your filing, by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response. After reviewing any amendment to your filing and the information you provide in response to these comment s, we may have additional comments. Form 10 -K for the Fiscal Year Ended December 31, 2011 Item 1A. Risk Factors, page 25 General 1. We note your disclosure in the definitive proxy statement filed April 10, 2012, that you qualify as a “controlled company” under Rule 5615(c)(2) of the Nasdaq Marketplace Rules, which exempts you from certain corporate governance requirements. Please include a risk factor in future filings regarding your reliance on the controlled company exemption or tell us why you believe that a risk factor is not warranted. We note in this regard your related risk factor on page 37 discussing certain risks presented by the company’s two classes of common stock and the control held by your Class B common stockholders. Mr. Douglas K. Thede MicroStrategy Incorporated May 9, 2012 Page 2 Item 8. Financial Statements and Supplementary Data Note 2 – Summary of Significant Accounting Policies (d) Property and Equipment, page 76 2. We note that your corporate owned aircraft has a 70% salvage value which is consistent with the salvage value asse ssed when the aircraft was purchased. We further note your disclosure on page 84 which indicates that in February 2011 your corporate owned aircraft was damaged. Please tell us whether you reassessed the salvage value in light of the damage sustained by the aircraft. (h) Revenue Recognition, page 77 3. We note your disclosure on page 79 indicating that you do not include price protection or similar rights in your standard license agreements. However, we further note your disclosure on page 11 which stat es that you provide financial incentives to your indirect channel partners to market and distribute your products. Please tell us how you reflect these incentives in your financial statements and quantify the amount of incentives provided for each year pr esented. 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 the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. 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 provide a written 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. Mr. Douglas K. Thede MicroStrategy Incorporated May 9, 2012 Page 3 You may contact Jaime John, Staff Accountant , at (202) 551 -3446 if you have questions regarding comments on the financial statements and re lated matters. If you have any other questions, please contact Katherine Wray, Staff Attorney, at (202) 551 -3483 or Mark Shuman, Legal Branch Chief, at (202) 551 -3462. If you require further assistance, do not hesitate to contact me at (202) 551 -3406. Sincerely, /s/ Patrick Gilmore Patrick Gilmore Accounting Branch Chief