Salesforce.com 2008 Annual Report Download - page 90

Download and view the complete annual report

Please find page 90 of the 2008 Salesforce.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

Table of Contents
salesforce.com, inc.
Notes to Consolidated Financial Statements—(Continued)
Management does not believe that it is reasonably possible that the estimates of unrecognized tax benefits will change significantly in the next twelve
months. However, an adverse resolution of one or more uncertain tax positions in any period could have a material impact on the results of operations for that
period.
8. Commitments and Contingencies
Letters of Credit
As of January 31, 2009, the Company had a total of $8.3 million in letters of credit outstanding substantially in favor of its landlords for office space in
San Francisco, California, New York City, Singapore, Sweden and Switzerland. These letters of credit renew annually and mature at various dates through
December 2016.
Leases
The Company leases office space and equipment under noncancelable operating and capital leases with various expiration dates.
As of January 31, 2009, the future minimum lease payments under noncancelable operating and capital leases are as follows (in thousands):
Capital
Leases
Operating
Leases
Fiscal Period:
Fiscal 2010 $ 2,599 $ 80,503
Fiscal 2011 2,599 61,655
Fiscal 2012 1,798 43,940
Fiscal 2013 — 35,566
Fiscal 2014 — 31,458
Thereafter — 59,514
Total minimum lease payments 6,996 $ 312,636
Less: amount representing interest (552)
Present value of capital lease obligations $ 6,444
The terms of the lease agreements provide for rental payments on a graduated basis. The Company recognizes rent expense on the straight-line basis
over the lease period and has accrued for rent expense incurred but not paid. Of the total operating lease commitment balance of $312.6 million, $257.2
million is related to facilities space. The remaining $55.4 million commitment is related to computer equipment and other leases.
Our agreements for the facilities and certain services provide us with the option to renew. Our future contractual obligations would change if we
exercised these options.
Rent expense for fiscal 2009, 2008 and 2007 was $36.0 million, $23.0 million and $16.8 million, respectively.
9. Legal Proceedings
The Company is involved in various legal proceedings arising from the normal course of business activities. In management's opinion, resolution of
these matters is not expected to have a material adverse impact on the
87