Salesforce.com 2010 Annual Report Download - page 74

Table of Contents
Notes are convertible at the holders' option for the quarter ending April 30, 2011. Upon conversion of any Notes, the Company will deliver cash up to the
principal amount of the Notes and, with respect to any excess conversion value greater than the principal amount of the Notes, shares of the Company's
common stock, cash, or a combination of both. Therefore, for the quarter ending April 30, 2011, the Notes will be reclassified to a current liability on the
Company's consolidated balance sheet. In addition to the Notes being reclassified to a current liability as described above, a portion of the equity component
of the Notes, as described in Note 2 of the consolidated financial statements, will be reclassified from additional paid-in capital to temporary salesforce.com
stockholders' equity on the consolidated balance sheet.
New Accounting Pronouncement
In September 2009, the FASB issued Update No. 2009-13, "Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues
Task Force" (ASU 2009-13). It updates the existing multiple-element revenue arrangements guidance currently included under ASC 605-25, which originated
primarily from the guidance in EITF Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables" (EITF 00-21). The revised guidance primarily
provides two significant changes: 1) eliminates the need for objective and reliable evidence of the fair value for the undelivered element in order for a
delivered item to be treated as a separate unit of accounting, and 2) requires the use of the relative selling price method to allocate the entire arrangement
consideration. In addition, the guidance also expands the disclosure requirements for revenue recognition. ASU 2009-13 will be effective for the Company at
the start of fiscal 2012. The Company believes the future impact of this new accounting pronouncement will not be material to consolidated net income.
Reclassifications
Certain reclassifications to the fiscal 2010 and 2009 balances were made to conform to the current period presentation. These reclassifications include
deferred income taxes, strategic investments and income taxes payable.
2. Balance Sheet Accounts
Marketable Securities
At January 31, 2011, marketable securities consisted of the following (in thousands):
Investments classified as Marketable Securities
Amortized
Cost
Unrealized
Gains
Unrealized
Losses Fair Value
Corporate notes and obligations $ 701,047 $ 7,356 $ (790) $ 707,613
U.S. treasury securities 22,631 85 (10) 22,706
Mortgage backed securities 38,348 656 (118) 38,886
Government obligations 6,414 118 0 6,532
Municipal securities 23,121 79 (119) 23,081
Collateralized mortgage obligations 104,285 1,098 (344) 105,039
U.S. agency obligations 79,242 190 (24) 79,408
Total marketable securities $ 975,088 $ 9,582 $ (1,405) $ 983,265
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