Salesforce.com 2012 Annual Report Download - page 95

Model Metrics, Inc.
On December 16, 2011, the Company acquired for cash the outstanding stock of Model Metrics, an
implementer of mobile applications. The Company acquired Model Metrics to, among other things, extend its
ability to provide the Company’s customers with implementation of mobile solutions. The Company has included
the financial results of Model Metrics in the consolidated financial statements from the date of acquisition, which
have not been material to date. The acquisition date fair value of the consideration transferred for Model Metrics
was approximately $66.7 million, which consisted of the following:
Fair value of consideration transferred (in thousands):
Cash ..................................................................... $61,424
Fair value of stock options assumed ............................................ 1,546
Fair value of pre-existing relationship ........................................... 3,774
Total ..................................................................... $66,744
The fair value of the stock options assumed by the Company was determined using the Black-Scholes
option pricing model and the share conversion ratio of 0.05 was applied to convert Model Metrics options to the
Company’s options.
The Company had a $0.8 million, or approximately six percent, noncontrolling equity investment in Model
Metrics prior to the acquisition. The acquisition date fair value of the Company’s previous equity interest was
$3.8 million and is included in the measurement of the consideration transferred. The Company recognized a
gain of $3.0 million as a result of remeasuring its prior equity interest in Model Metrics held before the business
combination. The gain has been recognized in other expense on the consolidated statement of operations.
The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the
date of acquisition:
(in thousands)
Net tangible assets .......................................................... $ 6,556
Deferred tax asset ........................................................... 636
Customer relationships ....................................................... 3,050
Goodwill .................................................................. 56,502
Net assets acquired .......................................................... $66,744
Customer relationships represent the fair values of the underlying relationships and agreements with Model
Metrics customers. The Company determined the useful life of the customer relationships to be less than one
year. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets
acquired was recorded as goodwill. The goodwill balance is primarily attributable to the assembled workforce
and expected synergies when integrating Model Metrics with the Company’s professional services group. The
fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed are based on
management’s estimates and assumptions. The estimated fair values of assets acquired and liabilities assumed are
considered preliminary and are based on the information that was available as of the date of the acquisition. The
Company believes that the information provides a reasonable basis for estimating the fair values of assets
acquired and liabilities assumed, but it is waiting for additional information, primarily related to current and
noncurrent income taxes payable and deferred taxes which are subject to change, pending the finalization of
certain tax returns. Thus the provisional measurements of fair value set forth above are subject to change. The
Company expects to finalize the valuation of the net tangible and intangible assets as soon as practicable, but not
later than one-year from the acquisition date. The goodwill balance is not deductible for tax purposes.
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