Salesforce.com 2009 Annual Report Download - page 84

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Table of Contents
salesforce.com, inc.
Notes to Consolidated Financial Statements—(Continued)
6. Acquisitions in fiscal year 2009
InStranet, Inc.
In August 2008, the Company acquired 100 percent of the outstanding stock of InStranet, Inc. ("InStranet"), a privately-held company with operations
in Paris, France, and Chicago, Illinois for $32.3 million in cash including $0.7 million in transaction costs. InStranet offers a knowledge management
application for business to consumer call centers. The Company acquired InStranet for its developed technology in order to expand its CRM customer service
and support offerings in the customer service and support market. The Company accounted for this as a business combination.
The valuation of acquired assets and liabilities is as follows (in thousands):
Net tangible assets $ 3,863
Developed technology 8,610
Customer relationships 5,950
Goodwill 19,976
Deferred income taxes (6,122)
Total purchase price consideration $ 32,277
Customer relationships and developed technologies have a useful life of 3 years. The goodwill balance is not deductible for tax purposes. This asset is
attributed to the premium paid for an established knowledge management application.
In performing the purchase price allocation, the Company considered, among other factors, its intention for future use of the acquired assets, analysis of
historical financial performance and estimates of future performance of InStranet's knowledge management application. The fair value of intangible assets
was primarily based on the income approach.
Salesforce Japan
In the third quarter of fiscal 2009, the Company acquired shares held by minority shareholders of its joint venture salesforce Japan and increased its
ownership to 72 percent for $21.6 million in cash. The Company accounted for this purchase as a step-acquisition.
The valuation of acquired assets and liabilities is as follows (in thousands):
Customer relationships $ 1,919
Territory rights 2,196
Goodwill 16,340
Deferred income taxes (1,679)
Noncontrolling interest adjustment 2,848
Total purchase price consideration $ 21,624
Customer relationships have a useful life of 3 years and territory rights have a useful life of 7 years. The goodwill balance is not deductible for tax
purposes. This asset is attributed to the premium paid for the territory rights and customer relationships.
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