Salesforce.com 2012 Annual Report Download - page 72

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Fair Value Measurement
The Company reports its financial and non-financial assets and liabilities that are re-measured and reported
at fair value at each reporting period. The Company uses a three-tier fair value hierarchy, which prioritizes the
inputs used in the valuation methodologies in measuring fair value:
Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2. Include other inputs that are directly or indirectly observable in the marketplace.
Level 3. Unobservable inputs which are supported by little or no market activity.
All of the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are
classified within Level 1 or Level 2 because the Company’s cash equivalents, marketable securities and foreign
currency derivative contracts are valued using quoted market prices or alternative pricing sources and models
utilizing market observable inputs. The Company’s contingent considerations related to acquisitions are
classified within Level 3 because the liabilities are valued using significant unobservable inputs.
The following table presents information about the Company’s assets and liabilities that are measured at fair
value as of January 31, 2012 and indicates the fair value hierarchy of the valuation (in thousands):
Description
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Balances as of
January 31, 2012
Cash equivalents (1):
Time deposits ..................... $ 26,513 $ 0 $0 $ 26,513
Money market mutual funds .......... 358,369 0 0 358,369
Marketable securities:
Corporate notes and obligations ....... 0 504,772 0 504,772
U.S. treasury securities .............. 79,358 0 0 79,358
Mortgage backed securities ........... 0 15,426 0 15,426
Government obligations ............. 3,210 0 0 3,210
Municipal securities ................ 0 8,789 0 8,789
Collateralized mortgage obligations .... 0 120,495 0 120,495
U.S. agency obligations ............. 0 107,840 0 107,840
Foreign currency derivative contracts (2) .... 0 621 0 621
Total Assets ........................... $467,450 $757,943 $0 $1,225,393
Liabilities
Foreign currency derivative contracts (3) .... $ 0 $ 2,551 $0 $ 2,551
Contingent considerations (related to
acquisitions, see Note 5) (3) ............ 0 0 0 0
Total Liabilities ........................ $ 0 $ 2,551 $0 $ 2,551
(1) Included in “cash and cash equivalents” in the accompanying Consolidated Balance Sheet as of January 31,
2012, in addition to $222.4 million of cash.
(2) Included in “prepaid expenses and other current assets” in the accompanying Consolidated Balance Sheet as
of January 31, 2012.
(3) Included in “accrued expenses and other current liabilities” in the accompanying Consolidated Balance
Sheet as of January 31, 2012.
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