SEC Comment Letter for BLACKBAUD INC (BLKB) (CIK 0001280058) (BLKB) — Jul 29, 2011
BLACKBAUD INC (BLKB) (CIK 0001280058)
Date: July 29, 2011 · CIK: 0001280058 · Accession: 0000000000-11-046290
AI Filing Summary & Sentiment
File numbers found in text: 000-50600
Referenced dates: May 20, 2011
Letter
July 29, 2011 Via E-mail Marc E. Chardon Chief Executive Officer Blackbaud, Inc. 2000 Daniel Island Drive Charleston, South Carolina 29492 Re: Blackbaud, Inc. Form 10-K for the fiscal year ended December 31, 2010 Filed March 1, 2011 Form 10-Q for the quarterly period ended March 31, 2011 Filed May 10, 2011 File No. 000-50600
Dear Mr. Chardon: We have reviewed your letter dated J une 15, 2011 in connection with the above- referenced filings and have the following comm ents. In 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 may have addi tional comments. Unless otherwise noted, where prior comments are referred to they re fer to our letter dated May 20, 2011. Form 10-K for the fiscal year ended December 31, 2010
Consolidated Financial Statements
Note 1. Organization and Si gnificant Accounting Policies
Revenue Recognition, page F-7
1. We note your response to prior comment 5. Pl ease clarify why you believe the contract service period is the appropr iate period over which the customer benefits from the payment of the set-up fees in the hosting subscription arrangements. Explain how you
Marc E. Chardon Blackbaud, Inc. July 29, 2011 Page 2 determined that the customer is expected to recover the set-up fee within the contact service period. Describe in greater detail w hy you have limited consistent historical data on the subscription renewals. Tell us the amount of set-up fees for each period presented. Provide us with your analysis regarding the impact of incr easing the average recognition period to five years and explain how you determ ined the impact is not material to your financial results for the fiscal years ended in 2010, 2009 and 2008.
Compensation Discussion and Analysis (incorpora ted from the definitive proxy statement filed
on April 29, 2011) Employment Agreements
Messrs. Williams, Attanasi, Cumbaa and Mooney, page 38
2. We note your response to prior comment 3. Please supplementally provide us with copies of your employment agreements w ith Messrs. Williams, Attanasi, Cumbaa and Mooney for our review.
Form 10-Q for the quarterly period ended March 31, 2011
Consolidated Financial Statements Note 2. Summary of Significant Accounting Policies
Unaudited Interim Financial Statements, page 5
3. We note from your disclosures that you r ecorded an out-of-period adjustment that increased income from operations by $0.8 million, $0.5 million net of tax, for the recognition of net revenue and related commi ssion expense associated with subscription- based solutions for which revenue had not been properly recorded in prior periods. We further note that you have determined that th e impact of this out-of-period adjustment recorded in the three months ended March 31, 2011 is immaterial to the results of operations in all applicable prior annual pe riods. Please provide us with your detailed analysis of how you assessed materiality as it pertains to both the annual and quarterly periods. We refer you to SAB 99 and SAB 108.
Note 3. Business combinations, page 8
4. You disclose the primary reasons for the bus iness combination of PIDI as providing the company additional capabilities in the area of donor acquisition list analytics and enhanced database management services offeri ngs. If true, that your acquired software represents the value attributab le to these primary reasons, te ll us why your allocation of
Marc E. Chardon Blackbaud, Inc. July 29, 2011 Page 3 purchase price to acquired software of $1,720,000 represents only 20% of the intangibles allocation and 10% of total purchase consideration.
5. If you used the income approach in determining the fair value of the customer relationships tell us you cons idered the period of expected cash flows for purposes of determining the amortization period of 15 years. See ASC 350-30-35-3.
You may contact Morgan Youngwood at (202) 551-3479, if you have questions regarding comments on the financia l statements and related matte rs. If you have any other questions, please contact Matthew Crispino, at (202) 551-3456 or Barbara Jacobs, Assistant Director at (202) 551-3730. If you require further assistance, do not hesitate to contact me at (202) 551-3730. Sincerely, /s/ Craig Wilson Craig Wilson Senior Assistant Chief Accountant
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July 29, 2011
Via E-mail
Marc E. Chardon Chief Executive Officer
Blackbaud, Inc.
2000 Daniel Island Drive Charleston, South Carolina 29492
Re: Blackbaud, Inc.
Form 10-K for the fiscal year ended December 31, 2010
Filed March 1, 2011 Form 10-Q for the quarterly period ended March 31, 2011
Filed May 10, 2011 File No. 000-50600
Dear Mr. Chardon:
We have reviewed your letter dated J une 15, 2011 in connection with the above-
referenced filings and have the following comm ents. In 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 may have addi tional comments. Unless otherwise noted, where
prior comments are referred to they re fer to our letter dated May 20, 2011.
Form 10-K for the fiscal year ended December 31, 2010
Consolidated Financial Statements
Note 1. Organization and Si gnificant Accounting Policies
Revenue Recognition, page F-7
1. We note your response to prior comment 5. Pl ease clarify why you believe the contract
service period is the appropr iate period over which the customer benefits from the
payment of the set-up fees in the hosting subscription arrangements. Explain how you
Marc E. Chardon Blackbaud, Inc. July 29, 2011 Page 2
determined that the customer is expected to recover the set-up fee within the contact
service period. Describe in greater detail w hy you have limited consistent historical data
on the subscription renewals. Tell us the amount of set-up fees for each period presented. Provide us with your analysis regarding the impact of incr easing the average recognition
period to five years and explain how you determ ined the impact is not material to your
financial results for the fiscal years ended in 2010, 2009 and 2008.
Compensation Discussion and Analysis (incorpora ted from the definitive proxy statement filed
on April 29, 2011)
Employment Agreements
Messrs. Williams, Attanasi, Cumbaa and Mooney, page 38
2. We note your response to prior comment 3. Please supplementally provide us with
copies of your employment agreements w ith Messrs. Williams, Attanasi, Cumbaa and
Mooney for our review.
Form 10-Q for the quarterly period ended March 31, 2011
Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Unaudited Interim Financial Statements, page 5
3. We note from your disclosures that you r ecorded an out-of-period adjustment that
increased income from operations by $0.8 million, $0.5 million net of tax, for the
recognition of net revenue and related commi ssion expense associated with subscription-
based solutions for which revenue had not been properly recorded in prior periods. We
further note that you have determined that th e impact of this out-of-period adjustment
recorded in the three months ended March 31, 2011 is immaterial to the results of
operations in all applicable prior annual pe riods. Please provide us with your detailed
analysis of how you assessed materiality as it pertains to both the annual and quarterly
periods. We refer you to SAB 99 and SAB 108.
Note 3. Business combinations, page 8
4. You disclose the primary reasons for the bus iness combination of PIDI as providing the
company additional capabilities in the area of donor acquisition list analytics and
enhanced database management services offeri ngs. If true, that your acquired software
represents the value attributab le to these primary reasons, te ll us why your allocation of
Marc E. Chardon Blackbaud, Inc. July 29, 2011 Page 3
purchase price to acquired software of $1,720,000 represents only 20% of the intangibles
allocation and 10% of total purchase consideration.
5. If you used the income approach in determining the fair value of the customer
relationships tell us you cons idered the period of expected cash flows for purposes of
determining the amortization period of 15 years. See ASC 350-30-35-3.
You may contact Morgan Youngwood at (202) 551-3479, if you have questions
regarding comments on the financia l statements and related matte rs. If you have any other
questions, please contact Matthew Crispino, at (202) 551-3456 or Barbara Jacobs, Assistant
Director at (202) 551-3730. If you require further assistance, do not hesitate to contact me at
(202) 551-3730.
Sincerely,
/s/ Craig Wilson
Craig Wilson Senior Assistant Chief Accountant