Salesforce.com 2005 Annual Report Download - page 64

Table of Contents
salesforce.com, inc.
Notes to Consolidated Financial Statements—(Continued)
Concentrations of Credit Risk and Significant Customers and Suppliers
The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, marketable
securities, restricted cash, and trade accounts receivable. Although the Company deposits its cash with multiple financial institutions, its deposits, at times,
may exceed federally insured limits. Collateral is not required for accounts receivable. The Company maintains an allowance for doubtful accounts receivable
balances. The allowance is based upon historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss
associated with problem accounts.
The Company's accounts receivable and net revenues are derived from a large number of direct customers. No customer accounted for more than 5
percent of accounts receivable at January 31, 2006 and 2005. No single customer accounted for 5 percent or more of total revenue during fiscal 2006, 2005
and 2004.
As of January 31, 2006 and 2005, assets located outside the Americas were 6 percent and 8 percent of total assets, respectively. Revenues by
geographical region are as follows (in thousands):
Fiscal Year Ended January 31,
2006 2005 2004
Revenues by geography:
Americas $ 247,009 $ 140,871 $ 78,958
Europe 43,577 25,201 11,754
Asia Pacific 19,271 10,303 5,311
$ 309,857 $ 176,375 $ 96,023
As of January 31, 2006, the Company serves all of its customers and users from a single, third-party Web hosting facility located on the west coast of
the United States, operated by Equinix, Inc. As part of the Company's current disaster recovery arrangements, the existing production environment and all of
the customers' data is currently replicated in near real-time in a separate back-up Equinix facility located on the east coast. The Company does not control the
operation of any of these facilities, and they are vulnerable to damage or interruption. The Company also has an agreement with SunGard Data Systems, a
provider of availability services, to provide access to a geographically remote disaster recovery facility that would provide the Company with access to
hardware, software and Internet connectivity in the event the Web hosting facilities become unavailable. Even with the disaster recovery arrangements, the
Company's service could be interrupted.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash
equivalents, which primarily consist of cash on deposit with banks and money market funds, are stated at cost, which approximates fair value.
Marketable Securities
Management determines the appropriate classification of investments in marketable securities at the time of purchase in accordance with Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities and reevaluates such determination at each
balance sheet date. Securities, which are classified as available for sale at January 31, 2006 and 2005, are carried at fair value, with the unrealized gains and
losses, net of tax, reported as a separate component of stockholders' equity. Fair value is determined based on quoted market rates. Realized gains and losses
and declines in value judged to be other-than-temporary on securities available for sale are included as a component of interest income. The cost of securities
sold is based on the specific-identification method. Interest on securities classified as available for sale is also included as a component of interest income.
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