Salesforce.com 2005 Annual Report Download - page 50

Table of Contents
Net cash provided by financing activities was $15.8 million during the year ended January 31, 2006 and $118.9 million during the same period a year
ago. In June 2004, we completed the sale of 11.5 million shares of common stock during our initial public offering. The net proceeds from the initial public
offering were $113.8 million. During the year ended January 31, 2006, the $15.7 million of proceeds from the exercise of employee stock options and
warrants and the $727,000 of proceeds from the collection of notes receivable from shareholders were offset by principal payments on capital lease
obligations.
As of January 31, 2006, we have a total of $3.4 million in letters of credit outstanding in favor of our landlords for office space in San Francisco,
California, Switzerland and Singapore. None of these letters of credit are collateralized. To date, no amounts have been drawn against the letters of credit,
which renew annually and mature at various dates through December 2010.
We do not have any special purpose entities, and other than operating leases for office space and computer equipment, we do not engage in off-balance
sheet financing arrangements. Additionally, we currently do not have a bank line of credit.
Our principal commitments consist of obligations under leases for office space and co-location facilities for additional data center capacity and the new
development and test data center, and computer equipment and furniture and fixtures. We also have long-term liabilities related primarily to lease
abandonments. At January 31, 2006, the future minimum payments under these commitments as well as our long-term liability were as follows:
Payments Due by Period
Contractual Obligations
Total
Less than
1 Year
1-3
Years
3-5
Years
More than
5 Years
(in thousands)
Capital lease obligations $ 825 $ 638 $ 187 $ — $ —
Operating lease obligations:
Office space 76,603 20,522 23,624 19,155 13,302
Computer equipment and furniture and fixtures 49,250 20,758 28,362 130 —
Contractual commitments 350 350 — — —
Lease abandonment liabilities and other 1,341 186 762 393 —
Our lease agreements provide us with the option to renew. Our future operating lease obligations would change if we exercised these options and if we
entered into additional operating lease agreements as we expand our operations.
Purchase orders are not included in the table above. Our purchase orders represent authorizations to purchase rather than binding agreements. The
contractual commitment amounts in the table above are associated with agreements that are enforceable and legally binding and that specify all significant
terms, including: fixed or minimum services to be used; fixed, minimum or variable price provisions; and the approximate timing of the transaction.
Obligations under contracts that we can cancel without a significant penalty are not included in the table above.
We believe our existing cash, cash equivalents and short-term marketable securities and cash provided by operating activities will be sufficient to meet
our working capital and capital expenditure needs over the next 12 months. Our future capital requirements will depend on many factors, including our rate of
revenue growth, the expansion of our marketing and sales activities, the timing and extent of spending to support product development efforts and expansion
into new territories, the timing of introductions of new services and enhancements to existing services, the timing of capital expenditures and expenses
associated with Web hosting and the continuing market acceptance of our services. To the extent that available funds are insufficient to fund our future
activities, we may need to raise additional funds through public or private equity or debt financing.
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