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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001193125-09-178033.txt : 20091019
<SEC-HEADER>0001193125-09-178033.hdr.sgml : 20091019
<ACCEPTANCE-DATETIME>20090819122429
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-09-178033
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20090819

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			VASCO DATA SECURITY INTERNATIONAL INC
		CENTRAL INDEX KEY:			0001044777
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
		IRS NUMBER:				364169320
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		1901 SOUTH MYERS ROAD
		STREET 2:		SUITE 210
		CITY:			OAKBROOK TERRACE
		STATE:			IL
		ZIP:			60181
		BUSINESS PHONE:		6309328844

	MAIL ADDRESS:	
		STREET 1:		1919 S HIGHLAND AVE
		STREET 2:		STE 118 C
		CITY:			LOMBARD
		STATE:			IL
		ZIP:			60148
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
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<TITLE>Correspondence</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>VASCO Data Security International, Inc. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>1901 S. Meyers Road, Ste. 210 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Oakbrook Terrace, IL 60181 </B></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B><U>VIA EDGAR </U></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">August&nbsp;19, 2009 </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Kathleen Collins </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Division of Corporate Finance </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mail Stop 4561 </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">100 F Street, N.E. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Washington, D.C. 20549 </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Re:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>VASCO Data Security International, Inc.</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Form
10-K for the Fiscal Year Ended December&nbsp;31, 2008</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Filed March&nbsp;13, 2009</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT
FACE="Times New Roman" SIZE="2"><B>File No. 0-24389</B></FONT></P></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Dear Ms.&nbsp;Collins: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">Set forth below are the responses of VASCO Data Security International, Inc. (referred to herein using the words &#147;VASCO&#148;, &#147;Company&#148;, &#147;we&#148;, &#147;our&#148; and &#147;us&#148;) to your
letter of comment dated August&nbsp;10, 2009 (the &#147;Letter&#148;) relating to the above-referenced Form 10-K (the &#147;Form 10-K&#148;). The comments from the Letter are repeated below, and, for convenience of reference, the number beside each
of the following comments corresponds to the paragraph numbering indicated in the Letter. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Form 10-K for the Fiscal Year Ended December&nbsp;31, 2008
</U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Item&nbsp;13. Certain Relationships and Related Transactions, and Director Independence, page 49 (Incorporated by Reference From Definitive Proxy
Statement Filed April&nbsp;30, 2009) </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Transactions With Related Persons, page 42 </U></FONT></P> <P
STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><I></I>1.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>We note your response to prior comment 17. Please include information similar to that provided in your response in this section of future filings. </I></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2"><U><B>Response</B></U>: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">The Staff is advised that our future filings on Form 10-K will include information similar to that provided in our response to prior comment 17 on July&nbsp;14, 2009. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">August 19, 2009 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"> Page

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Consolidated Statement of Operations, page F-5 </U></FONT></P> <P
STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">2.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>We note your response to our prior comment 7 where you indicate non-hardware items include service deliverables such as maintenance and support and charges for the development of
custom logos, lens colors, boxes, etc. While we note that &#147;individually&#148; none of the non-hardware items account for more than 4% of the Company&#146;s consolidated revenues, please clarify whether collectively the non-hardware service
deliverables account for more than 10% of the company&#146;s total revenues. If so, tell us how you considered presenting such revenues and related cost of revenues separately pursuant to Rule 5-03(b) (1)&nbsp;and (2)&nbsp;of Regulation S-X.</I>
</FONT></TD></TR></TABLE> <P STYLE="margin-top:18px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2"><B><U>Response</U>:</B> </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">Non-hardware service deliverables were less than 10% in each year. Collectively, non-hardware service deliverables were approximately 5% of revenue in 2008 and 4% of revenue in 2007. </FONT></P> <P
STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Note 1 Summary of Significant Accounting Policies </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">3.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>We note your response to prior comment 10 where you indicate that the Company uses the residual method for determining the amount of revenue to recognize for token and software
licenses if you have VSOE of fair value for all of the undelivered elements in the arrangement. We also note your disclosures on page F-9 where you indicate that when discounts are given in a multiple-element arrangement, a proportionate amount of
the discount is applied to each element based on each element&#146;s fair value without regard to the discount. For arrangements in which the Company uses the residual method, tell us how you considered paragraph 11 of SOP 97-2 and why you believe
it is appropriate to allocate the discount proportionately to each element rather than applying the entire discount to the delivered elements.</I> </FONT></TD></TR></TABLE> <P STYLE="margin-top:18px;margin-bottom:0px; margin-left:4%"><FONT
FACE="Times New Roman" SIZE="2"><B><U>Response</U>:</B> </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The disclosures you referenced on page F-9 were intended to refer
to our volume-pricing strategy described later in the disclosures on page F-9, whereby we provide lower per-unit prices for large-volume purchases; &#147;The per unit prices for large-volume transactions are generally lower than transactions for
smaller quantities and the price differences are commonly referred to as volume-purchase discounts.&#148; For those large-volume transactions, the per-unit prices for each of the elements in the transaction (e.g., token, host system software, post
contract support or PCS) and the resulting per-unit fair value of each of the elements, as obtained through VSOE as described in our disclosure on page F-9, are generally proportionately lower than comparable per-unit fair values for smaller-volume
transactions. In our typical transactions, the only undelivered element is PCS. As noted in our response to Question 9 of our response letter dated July&nbsp;14, 2009, we establish VSOE of PCS based on a percentage of the user license fee. In
transactions in which pricing varies based on the size of the transaction, PCS as a percentage of the license fee charged to the customer remains consistent with the established VSOE percentage regardless of the amount of volume-purchase discount
provided on the individual transaction. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">August 19, 2009 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"> Page

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">While not common in our typical transactions, if there are discounts other than those
related to our volume pricing strategies, such discounts are applied to the delivered elements in accordance with paragraph 11 of SOP 97-2 where we have VSOE of fair value for all of the undelivered items. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Staff is advised that we will modify our disclosures in future filings on Forms 10-Q and 10-K by deleting the sentence that describes
discounts related to large volume transactions and adding a sentence that confirms that discounts are applied to the delivered elements in accordance with SOP 97-2 as follows: </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><I>Multiple-Element Arrangements:</I> We allocate revenue to the various elements of the arrangements based on the estimated fair value of
each deliverable as required by SOP 97-2. The fair value for each element is based on the price charged when that element is sold separately, renewal rates and other methods, such as prices established by management. The estimated fair value of
undelivered elements is deferred and recorded as revenue when services are performed or products are delivered. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">When tokens
and software licenses are included in multiple element arrangements, they are generally delivered elements in such arrangements. When tokens and software are delivered elements, we use the Residual Method (SOP 98-9) for determining the amount of
revenue to recognize for token and software licenses if we have vendor specific objective evidence (VSOE) for all of the undelivered elements. Any discount provided to the customer is applied fully to the delivered elements in such an arrangement.
We defer the revenue for tokens and software in any multiple element arrangement where we do not have VSOE for any undelivered element. VSOE of fair value of PCS agreements is based on separate sales transactions on a worldwide basis. In sales
arrangements where VSOE of fair value has not been established, revenue for all elements is deferred and amortized over the life of the arrangement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">If you have any questions regarding the Company&#146;s responses or this letter, please contact Maryann A. Waryjas or the undersigned. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top" NOWRAP><FONT FACE="Times New Roman" SIZE="2">Maryann A. Waryjas</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Clifford K. Bown</FONT></TD></TR>
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<TD VALIGN="top" NOWRAP><FONT FACE="Times New Roman" SIZE="2">Katten Muchin Rosenman LLP</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">VASCO Data Security International, Inc.</FONT></TD></TR>
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<TD VALIGN="top" NOWRAP><FONT FACE="Times New Roman" SIZE="2">525 West Monroe Street</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">1901 South Meyers Road, Ste. 210</FONT></TD></TR>
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<TD VALIGN="top" NOWRAP><FONT FACE="Times New Roman" SIZE="2">Chicago, Illinois 60661</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Oakbrook Terrace, IL 60181</FONT></TD></TR>
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<TD VALIGN="top" NOWRAP><FONT FACE="Times New Roman" SIZE="2">Phone: 312 902-5461</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Phone U.S.: 630 932-8844 x304</FONT></TD></TR>
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<TD VALIGN="top" NOWRAP><FONT FACE="Times New Roman" SIZE="2">Fax: 312 577-8755</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Phone Switzerland: 41 43 813 35 06</FONT></TD></TR>
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<TD VALIGN="top" NOWRAP><FONT FACE="Times New Roman" SIZE="2">Email: <U>maryann.waryjas@kattenlaw.com</U></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Fax U.S.: 630 932-8852</FONT></TD></TR>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Email: <U>cbo@vasco.com</U></FONT></TD></TR>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">August 19, 2009 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"> Page

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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Sincerely,</FONT></TD></TR>
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<TD HEIGHT="16"></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Clifford K. Bown</FONT></P></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Clifford K. Bown</FONT></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)</FONT></TD></TR>
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