Salesforce.com 2013 Annual Report Download

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2013 ANNUAL REPORT

Table of contents

  • Page 1
    2013 ANNUAL REPORT

  • Page 2
    FY13 HIGHLIGHTS "MOST INNOVATIVE COMPANY IN THE WORLD"* IPSSPVU ANNUAL REVENUE IPSSPVU BOOKED BUSINESS BACKLOG IPSSPVU DATA CENTER TRANSACTIONS *SOURCE: Forbes ranked salesforce.com as the world's most innovative company (2011 and 2012)

  • Page 3
    ...the fastest growing company among the top 10 software companies in the world. And with more than $5.3 billion of booked business on and off the balance sheet, we are well positioned for strong future growth. Salesforce.com was founded 14 years ago with the vision of transforming enterprise software...

  • Page 4
    Salesforce.com, inc. has included the certification required under Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 and Exchange Act Rule 13a-14 in its Annual Report on Form 10-K for the fiscal year ended January 31, 2013. Salesforce.com, inc. also submitted to the New York Stock ...

  • Page 5
    ... report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 001-32224 (Exact name of registrant as specified in its charter) salesforce.com, inc. The Landmark @ One Market, Suite 300 San Francisco, California 94105 (Address of principal executive offices...

  • Page 6
    ...Item 8. Consolidated Financial Statements and Supplementary Data ...Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . Item 9A. Controls and Procedures ...Item 9B. Other Information ...Item 5. PART III Item 10. Directors, Executive Officers and Corporate...

  • Page 7
    ... and enhanced features, through internal development and acquisitions. Our mission is to help our customers transform themselves into "customer companies" by empowering them to connect with their own customers, partners, employees and products in entirely new ways. With our four core services-Sales...

  • Page 8
    ...(including channel management and partner portals) and real-time customer and contact information. Service Cloud. The Service Cloud enables companies to connect with their customers and effectively address their service and support needs. Our customers use the Service Cloud to connect their customer...

  • Page 9
    ...programming interfaces ("APIs") that enable customers and independent software developers to both integrate our solution with existing third-party, custom, and legacy apps and write their own application services that integrate with our solutions. For example, many of our customers use our Force.com...

  • Page 10
    ...service globally. We plan to continue to aggressively market to customers worldwide by recruiting local sales and support professionals and by building partnerships that help us add customers in the largest enterprise software markets around the world. Encouraging the development of third-party apps...

  • Page 11
    ... on most major mobile device operating systems. We provide our services to our customers from third-party data center hosting facilities located in the United States and other countries. Customers We sell to businesses of all sizes. The number of paying subscriptions at each of our customers ranges...

  • Page 12
    ... support during regular business hours at no charge to customers who purchase any of our paying subscription editions. We also offer premier customer support for an additional fee, which includes services such as priority access to technical resources, developer support, and/or system administration...

  • Page 13
    ...of charge by contacting our Investor Relations department at our office address listed above. The public may read and copy any materials filed by the Company with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The public may obtain information on the...

  • Page 14
    ... business. We currently serve our customers from third-party data center hosting facilities located in the United States and other countries. Any damage to, or failure of, our systems generally could result in interruptions in our service. Interruptions in our service may reduce our revenue, cause...

  • Page 15
    ..., including our intellectual property and other confidential business information, or our IT systems. Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information in order to gain access...

  • Page 16
    ..., more subscriptions or enhanced editions of our service to our current customers. This may also require increasingly sophisticated and costly sales efforts that are targeted at senior management. Similarly, the rate at which our customers purchase new or enhanced services depends on a number of...

  • Page 17
    ...invoice timing and new business linearity; the number of new employees; changes in our pricing policies and terms of contracts, whether initiated by us or as a result of competition; the cost, timing and management effort for the introduction of new features to our service; the costs associated with...

  • Page 18
    ...' purchasing decision, or reduce the value of new subscription contracts, or affect renewal rates; timing of additional investments in our enterprise cloud computing application and platform services and in our consulting service; regulatory compliance costs; the timing of customer payments and...

  • Page 19
    ... may develop toolsets and products that allow customers to build new applications that run on the customers' current infrastructure or as hosted services. Our current competitors include enterprise software application vendors; cloud computing application service providers; software companies that...

  • Page 20
    ... revenue; delays in customer purchases due to uncertainty related to any acquisition; the need to implement controls, procedures and policies at the acquired company; challenges caused by distance, language and cultural differences; in the case of foreign acquisitions, the challenges associated...

  • Page 21
    ... reduce our rate of growth. We periodically change and make adjustments to our sales organization in response to market opportunities, competitive threats, management changes, product introductions or enhancements, acquisitions, sales performance, increases in sales headcount, cost levels and other...

  • Page 22
    ... our activities, lead to attempts on the part of other parties to pursue similar claims and, in the case of intellectual property claims, require us to change our technology, change our business practices and/or pay monetary damages or enter into short- or long-term royalty or licensing agreements...

  • Page 23
    ...our exposure to risks associated with various claims, including the use of intellectual property, may be increased as a result of acquisitions of other companies. For example, we may have a lower level of visibility into the development process with respect to intellectual property or the care taken...

  • Page 24
    ... employees or groups could seriously harm our business. In the technology industry, there is substantial and continuous competition for engineers with high levels of experience in designing, developing and managing software and Internet-related services, as well as competition for sales executives...

  • Page 25
    ...customers, and could decrease demand for our services. The majority of our research and development activities, corporate headquarters, information technology systems, and other critical business operations, are located near major seismic faults in the San Francisco Bay Area. Because we do not carry...

  • Page 26
    ...; trading activity by a limited number of stockholders who together beneficially own a majority of our outstanding common stock; corporate actions, including our proposal to increase our authorized share capital to be voted upon by our stockholders in March 2013 and our related contingent stock...

  • Page 27
    ... be beneficial to investors. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES As of January 31, 2013, our executive offices and principal office for domestic marketing, sales, professional services and development occupy over 950,000 square feet in the San Francisco Bay Area. We also...

  • Page 28
    ...2012. Prior to salesforce.com, Mr. Crump was at Verizon Business, a provider of advanced IP communications and IT products and services, and served as its group president of worldwide sales and consulting services from 2008 to 2012 overseeing its enterprise, mid-tier, government, and education sales...

  • Page 29
    ... member of the office of the chairman at Expedia, Inc. Previously, Mr. Norton was a partner at the law firm of Wilson Sonsini Goodrich & Rosati P.C., where he practiced corporate and securities law for 11 years, representing clients in the enterprise software, telecommunications, semiconductor, life...

  • Page 30
    ..., including The Depository Trust Company, which holds shares of salesforce.com common stock on behalf of an indeterminate number of beneficial owners. Proposal to Increase Authorized Shares of Common Stock On February 11, 2013, we filed a proxy statement in connection with our special meeting of...

  • Page 31
    ... our common stock. Comparison of Cumulative Total Return of salesforce.com, inc. ...31/2012 1/31/2013 salesforce.com ...S&P ...2012, the Company issued 15,262 shares of Company common stock to former stockholders of Prior Knowledge, Inc., in a private transaction exempt from the registration requirements...

  • Page 32
    ... per share data) 2013 Fiscal Year Ended January 31, 2012 2011 2010 2009 Consolidated Statement of Operations Revenues: Subscription and support ...$2,868,808 $2,126,234 $1,551,145 $1,209,472 $ 984,574 Professional services and other ...181,387 140,305 105,994 96,111 92,195 Total revenues ...Cost of...

  • Page 33
    ...,591 1,479,822 20,106 25,842 671,784 (3) Long-term obligations excluding deferred revenue and noncontrolling interest includes the 0.75% convertible senior notes issued in January 2010. At January 31, 2013 and 2012, the notes were convertible and accordingly were classified as a current liability...

  • Page 34
    ...affect renewal rates. To address these factors, we will need to, among other things, continue to add substantial numbers of paying subscriptions, upgrade our customers to fully featured versions such as our Unlimited Edition or arrangements such as a Social Enterprise License Agreement, provide high...

  • Page 35
    ... all preconstruction activities related to the development of the land, including interest costs and property taxes since the November 2010 purchase. During the first quarter of fiscal 2013, we suspended pre-construction activity. The total carrying value of the land, building improvements and...

  • Page 36
    ...a company, a distinct business unit of a large corporation, a partnership, etc.) that has entered into a contract to access our enterprise cloud computing services. We define a "subscription" as a unique user account purchased by a customer for use by its employees or other customer-authorized users...

  • Page 37
    ...fluctuations, the timing of when unbilled deferred revenue is to be recognized as revenue, and changes in customer financial circumstances. For multi-year subscription agreements billed annually, the associated unbilled deferred revenue is typically high at the beginning of the contract period, zero...

  • Page 38
    ... and Administrative. General and administrative expenses consist of salaries and related expenses, including stock-based expenses, for finance and accounting, legal, internal audit, human resources and management information systems personnel, legal costs, professional fees, other corporate expenses...

  • Page 39
    ... our enterprise cloud computing services and from customers purchasing additional support beyond the standard support that is included in the basic subscription fee; and (2) related professional services such as process mapping, project management, implementation services and other revenue. "Other...

  • Page 40
    ...31, 2012. As of January 31, 2013, the deferred professional services revenue and deferred costs under the previous accounting guidance are $9.3 million and approximately $3.9 million, respectively, which will continue to be recognized over the related remaining subscription period. Under the updated...

  • Page 41
    ...BESP. Deferred Revenue. The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription service described...

  • Page 42
    ... in valuing certain of the intangible assets and goodwill we have acquired include but are not limited to future expected cash flows from subscription and support contracts, professional services contracts, other customer contracts and acquired developed technologies and patents; expected costs to...

  • Page 43
    ... four years for stock options and restricted stock awards and one year for shares issued pursuant to our Employee Stock Purchase Plan ("ESPP"). The fair value of each option or award is estimated on the date of grant using the Black-Scholes option pricing model. The estimated forfeiture rate applied...

  • Page 44
    ... 140,305 105,994 Total revenues ...Cost of revenues: Subscription and support ...Professional services and other ...Total cost of revenues ...Gross profit ...Operating expenses: Research and development ...Marketing and sales ...General and administrative ...Total operating expenses ...Income (loss...

  • Page 45
    ... 7,250 $15,459 4,209 Cost of revenues and operating expenses include the following amounts related to stock-based awards: Fiscal Year Ended January 31, 2013 2012 2011 Cost of revenues ...Research and development ...Marketing and sales ...General and administrative ...Revenues by geography were as...

  • Page 46
    ..., 2013 2012 2011 Revenues: Subscription and support ...Professional services and other ...Total revenues ...Cost of revenues: Subscription and support ...Professional services and other ...Total cost of revenues ...Gross profit ...Operating expenses: Research and development ...Marketing and sales...

  • Page 47
    ... and development ...Marketing and sales ...General and administrative ...Fiscal Years Ended January 31, 2013 and 2012 Revenues. (In thousands) 1% 3 7 2 1% 2 5 2 1% 1 3 2 Fiscal Year Ended January 31, 2013 2012 Variance Dollars Percent Subscription and support ...Professional services and...

  • Page 48
    ... plan to add additional employees in our professional services group to facilitate the adoption of our services. The timing of these expenses will affect our cost of revenues, both in terms of absolute dollars and as a percentage of revenues in future periods. Research and Development. Fiscal Year...

  • Page 49
    ... in employee-related costs and an increase of $19.8 million in stock-based expenses. Our general and administrative headcount increased by 15 percent since January 31, 2012 as we added personnel to support our growth. Loss from operations. Fiscal Year Ended January 31, 2013 2012 Variance Dollars...

  • Page 50
    ... costs related to capital projects. Capitalized interest during the same period a year ago was $14.6 million. During the first quarter of fiscal 2013, we suspended pre-construction activity, which includes capitalized interest costs, on the undeveloped real estate in San Francisco, California...

  • Page 51
    ...and improved renewal rates as compared to fiscal 2011. The price per user per month for our three primary offerings, Professional Edition, Enterprise Edition and Unlimited Edition, in fiscal 2012 has generally remained consistent relative to fiscal 2011. Professional services and other revenues were...

  • Page 52
    ... primarily due to increases of $57.5 million in employee-related costs, $17.3 million in stock-based expenses and $14.3 million in professional and outside service costs. Our general and administrative headcount increased by 46 percent in fiscal 2012 as we added personnel to support our growth. 48

  • Page 53
    ..., specifically costs related to our real estate holdings, which began during the fourth quarter of fiscal 2011, and our capitalized internal-use software development costs. Capitalized interest during fiscal 2011 was $4.0 million. Other expense. Fiscal Year Ended January 31, 2012 2011 Variance...

  • Page 54
    ... tax benefits from employee stock plans to cash flows from financing activities; the timing of employee related costs including commissions and bonus payments; the timing of collections from our customers, which is our largest source of operating cash flows; and changes in working capital accounts...

  • Page 55
    ...the value of customer billings during the fourth quarter of fiscal 2013 contributed to a higher accounts receivable and deferred revenue balances as of January 31, 2013 than as of January 31, 2012. We generally invoice our customers for our subscription and services contracts in advance in annual or...

  • Page 56
    ...2013 as a result of continued office build-outs, other leasehold improvements and data center investments. In the future, we may enter into arrangements to acquire or invest in complementary businesses or joint ventures, services and technologies, and intellectual property rights. We may be required...

  • Page 57
    ... amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company's research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an...

  • Page 58
    ... limited to, changes in the valuation allowance related to deferred tax assets, certain acquisition-related costs and unusual or infrequently occurring items. Management believes the exclusion of these income tax adjustments provides investors with useful supplemental information about the Company...

  • Page 59
    ...salesforce.com ...$ 242,542 $ 193,610 $166,106 Non-GAAP diluted earnings per share(a) For the Year Ended January 31, 2013 2012 2011 GAAP diluted earnings (loss) per share ...$ Plus: Amortization of purchased intangibles ...Stock-based expenses ...Amortization of debt discount, net ...One-time tax...

  • Page 60
    ... Sharecount Information (in thousands): Fiscal Year Ended January 31, 2013 2012 2011 Weighted-average shares outstanding for GAAP basic earnings per share ...Effect of dilutive securities: Convertible senior notes ...Warrants associated with the convertible senior note hedges ...Employee stock...

  • Page 61
    .... For the three months ended January 31, 2013 the Notes were convertible at the option of the noteholder. For 20 trading days during the 30 consecutive trading days ended January 31, 2013, our common stock traded at a price exceeding 130% of the conversion price of $85.36 per share applicable to the...

  • Page 62
    ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS The following financial statements are filed as part of this Annual Report on Form 10-K: Page No. Reports of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets ......

  • Page 63
    ...in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), salesforce.com, inc.'s internal control...

  • Page 64
    ...COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of salesforce.com, inc. as of January 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive income...

  • Page 65
    ... allowance for doubtful accounts of $1,853 and $1,273 at January 31, 2013 and 2012, respectively ...Deferred commissions ...Deferred income taxes, net ...Prepaid expenses and other current assets ...Total current assets ...Marketable securities, noncurrent ...Property and equipment, net ...Deferred...

  • Page 66
    salesforce.com, inc. Consolidated Statements of Operations (in thousands, except per share data) Fiscal Year Ended January 31, 2013 2012 2011 Revenues: Subscription and support ...Professional services and other ...Total revenues ...Cost of revenues (1)(2): Subscription and support ...Professional ...

  • Page 67
    salesforce.com, inc. Consolidated Statements of Comprehensive Income (Loss) (in thousands) Fiscal Year Ended January 31, 2013 2012 2011 Net income (loss) attributable to salesforce.com ...Other comprehensive income (loss) attributable to salesforce.com, before tax and net of reclassification ...

  • Page 68
    ... to salesforce.com ...0 0 0 Balances at January 31, 2012 ...137,036,541 $137 $1,415,077 Exercise of stock options and stock grants to board members for board services ...5,059,245 5 279,003 Vested restricted stock units converted to shares ...1,640,885 2 0 Shares issued related to business...

  • Page 69
    ... ...Net cash used in investing activities ...Financing activities: Purchase of subsidiary stock ...Proceeds from employee stock plans ...Excess tax benefits from employee stock plans ...Contingent consideration payment related to prior business combinations ...Principal payments on capital lease...

  • Page 70
    ...Notes to Consolidated Financial Statements 1. Summary of Business and Significant Accounting Policies Description of Business Salesforce.com, inc. (the "Company") is a provider of enterprise cloud computing services. The Company is dedicated to helping customers of all sizes and industries worldwide...

  • Page 71
    ...the Company's enterprise cloud computing services and from customers purchasing additional support beyond the standard support that is included in the basic subscription fees; and (2) related professional services such as process mapping, project management, implementation services and other revenue...

  • Page 72
    ... adoption of this updated accounting guidance did not have a material impact on the Company's financial condition, results of operations or cash flows for the fiscal year ended January 31, 2012. As of January 31, 2013, the deferred professional services revenue and deferred costs under the previous...

  • Page 73
    ... Deferred Revenue The deferred revenue balance does not represent the total contract value of annual or multi-year, noncancelable subscription agreements. Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services described above...

  • Page 74
    .... Capitalized Internal-Use Software Costs The Company capitalizes costs related to its enterprise cloud computing services and certain projects for internal use incurred during the application development stage. Costs related to preliminary project activities and post implementation activities are...

  • Page 75
    ... vesting term of four years. The Company recognizes stock-based expenses related to shares issued pursuant to its Employee Stock Purchase Plan ("ESPP") on a straight-line basis over the offering period, which is 12 months. Stock-based expenses are recognized net of estimated forfeiture activity. 71

  • Page 76
    ...and stock purchase right granted under the ESPP was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions and fair value per share: Stock Options 2013 Fiscal Year Ended January 31, 2012 2011 Volatility ...Estimated life ...Risk-free interest rate...

  • Page 77
    ... its products or services infringe a third-party's intellectual property rights. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements. The Company...

  • Page 78
    ... 2012 Recorded as follows: Short-term (due in one year or less) ...Long-term (due between one and 3 years) ... $ 120,376 890,664 $1,011,040 $170,582 669,308 $839,890 As of January 31, 2013, the following marketable securities were in an unrealized loss position (in thousands): Less than 12 Months...

  • Page 79
    ... valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. During fiscal 2013 the Company changed how it categorizes certain amounts within the fair value hierarchy. The $26.5 million of time deposits at January 31, 2012 are now reported as Level...

  • Page 80
    ... currency derivative contracts which are not designated as hedging instruments are used to reduce the exchange rate risk associated primarily with intercompany receivables and payables. The Company's program is not designated for trading or speculative purposes. As of January 31, 2013, the foreign...

  • Page 81
    ...Income Fiscal Year Ended January 31, Location 2013 2012 2011 Foreign currency derivative contracts ...Strategic Investments Other expense $16,591 $6,221 $(3,098) The Company has four investments in marketable equity securities measured using quoted prices in their respective active markets and...

  • Page 82
    ... to use the existing garage. The Company has capitalized pre-construction activities related to the development of the land, including interest costs and property taxes since the November 2010 purchase. During the first quarter of fiscal 2013, the Company suspended pre-construction activity. The...

  • Page 83
    4. Business Combinations Rypple On February 1, 2012, the Company acquired for cash the outstanding stock of 2Catalyze, Inc., ("Rypple"), a provider of social performance management applications. The Company acquired Rypple to, among other things, enable customers to engage and align their employees ...

  • Page 84
    ... be expensed over the remaining service periods on a straight-line basis. Buddy Media, Inc. On August 13, 2012, the Company acquired the outstanding stock of Buddy Media, Inc. ("Buddy"), a social media marketing platform. The Company acquired Buddy for the assembled workforce, expected synergies and...

  • Page 85
    ...-based compensation expense for unvested stock options and restricted stock awards assumed and the related tax effects as though the acquisition occurred as of the beginning of the Company's fiscal years 2013 and 2012. The pro forma financial information is for informational purposes only and is not...

  • Page 86
    ... years ended December 31, 2012 and 2011, due to differences in reporting periods and considering the date the Company acquired Buddy, and the effects of the pro forma adjustments listed above. GoInstant, Inc. On September 4, 2012, the Company acquired for cash the outstanding stock of GoInstant...

  • Page 87
    ... of the Company. Fiscal Year 2012 Radian6 Technologies Inc. In May 2011, the Company acquired for cash and the Company's common stock the outstanding stock of Radian6 Technologies, Inc. ("Radian6"), a cloud application vendor based in Canada that provides customers with social media monitoring...

  • Page 88
    ...trademark represents the fair value of brand and name recognition associated with the marketing of Radian6 service offerings. The goodwill balance is primarily attributed to the assembled workforce, expanded market opportunities and expected synergies when integrating Radian6's social solution media...

  • Page 89
    ...the date of acquisition: (in thousands) Fair value Useful Life Developed technology ...Customer relationships ...Total intangible assets subject to amortization ... $13,960 400 $14,360 3 years 2 years Developed technology represents the estimated fair value of Assistly's customer service solution...

  • Page 90
    ... service periods on a straight-line basis. Other Fiscal 2012 Business Combinations On February 1, 2011 the Company acquired the stock of Manymoon Corporation ("Manymoon") for $13.6 million in cash. The Company accounted for this transaction as a business combination. In allocating the purchase...

  • Page 91
    ... 31, 2011 ...Manymoon ...Radian6 ...Assistly ...Model Metrics ...Other acquisitions ...Finalization of acquisition date fair values ...Balance as of January 31, 2012 ...Rypple ...Buddy Media ...GoInstant ...Other acquisitions ...Finalization of acquisition date fair values ...Balance as of January...

  • Page 92
    ..., merger or binding share exchange; or at any time on or after October 15, 2014. • • • For 20 trading days during the 30 consecutive trading days ended October 31, 2012, the Company's common stock traded at a price exceeding 130% of the conversion price of $85.36 per share applicable to...

  • Page 93
    ... the term of the Notes. Interest costs of $1.6 million, $14.1 million and $3.7 million related to the buildings and improvements and $0.8 million, $0.5 million and $0.3 million related to the Company's capitalized internal-use software development efforts were capitalized in fiscal 2013, 2012 and...

  • Page 94
    ...Prepaid income taxes ...Prepaid expenses and other current assets ... $ 3,522 21,180 101,291 $10,399 12,785 57,135 $80,319 $125,993 Capitalized Software, net Capitalized software consisted of the following (in thousands): As of January 31, 2013 2012 Capitalized internal-use software development...

  • Page 95
    ...million for fiscal 2013, 2012 and 2011, respectively. During fiscal 2013, 2012 and 2011, the Company capitalized $3.4 million, $2.4 million and $2.6 million respectively, of stock-based expenses related to capitalized internal-use software development and deferred professional services. Other Assets...

  • Page 96
    ... have a term of 5 years. Stock activity excluding the ESPP is as follows: Shares Available for Grant Outstanding Stock Options Options Outstanding WeightedAggregate Average Intrinsic Value Exercise Price (in thousands) Balance as of January 31, 2012 ...Increase in shares authorized: 2004 Equity...

  • Page 97
    ... to one share of common stock for each share of restricted stock, has an exercise price of $0.001 per share, which is equal to the par value of the Company's common stock, and generally vest over 4 years. The weighted-average fair value of the restricted stock issued in fiscal 2013, 2012 and 2011...

  • Page 98
    ...Outside Directors Stock Plan. The expense related to these awards, which was expensed immediately at the time of the issuance, totaled $3.8 million, $4.9 million and $4.9 million for fiscal 2013, 2012 and 2011, respectively. Preferred Stock The Company's board of directors has the authority, without...

  • Page 99
    ...): Fiscal Year Ended January 31, 2013 2012 2011 U.S. federal taxes at statutory rate ...State, net of the federal benefit ...Foreign taxes in excess of the U.S. statutory rate ...Change in valuation allowance ...Tax credits ...Non-deductible expenses ...Tax benefit from acquisitions ...Other...

  • Page 100
    ... reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities were as follows (in thousands): As of January 31, 2013 2012 Deferred tax assets: Net operating loss carryforwards ...Deferred stock compensation ...Tax...

  • Page 101
    to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit carryforwards before utilization. Tax Benefits Related to Stock-Based Compensation The total ...

  • Page 102
    ... thousands): Fiscal Year Ended January 31, 2013 2012 2011 Numerator: Net income (loss) attributable to salesforce.com ...Denominator: Weighted-average shares outstanding for basic income (loss) per share ...Effect of dilutive securities: Convertible senior notes ...Employee stock awards ...Warrants...

  • Page 103
    ... commitment amount is related to computer equipment and other leases. Rent expense for fiscal 2013, 2012 and 2011 was $88.3 million, $70.3 million and $52.8 million, respectively. 11. Employee Benefit Plan The Company has a 401(k) plan covering all eligible employees in the United States. Since...

  • Page 104
    ... resell the Company's service to large non-profit organizations. The Company does not charge the affiliate for the subscriptions and plans to continue these programs. 14. Subsequent Events The Company evaluated subsequent events through the date this Annual Report on Form 10-K was filed with the SEC...

  • Page 105
    ...information for fiscal 2013 and 2012 is as follows: 1st Quarter 2nd 3rd 4th Quarter Quarter Quarter (in thousands, except per share data) Fiscal Year Fiscal 2013 Revenues...14) $ (0.07) $ (1.55) $ (0.14) $ (1.92) $504,364 $546,002 $ 401,298 425,092 (2,803) (15,748) 530 (4,268) $ 0.00 $ (0.03) $ $ 0.00...

  • Page 106
    ... January 31, 2013 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report which is included in Item 8 of this Annual Report on Form 10-K. (c) Changes in internal control over financial reporting There was no change in our internal control over...

  • Page 107
    ... because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. ITEM 9B. OTHER INFORMATION Not applicable. 103

  • Page 108
    ... Relations, salesforce.com, inc., The Landmark @ One Market, Suite 300, San Francisco, California 94105 or by calling (415) 901-7000. We plan to post on our website at the address described above any future amendments or waivers of our Code of Conduct. ITEM 11. EXECUTIVE COMPENSATION The information...

  • Page 109
    ... Accounts is filed as part of this Annual Report on Form 10-K and should be read in conjunction with the Consolidated Financial Statements and Notes thereto. The Financial Statement Schedules not listed have been omitted because they are not applicable or are not required or the information required...

  • Page 110
    salesforce.com, inc. Schedule II Valuation and Qualifying Accounts Balance at Beginning of Year Deduction s Write-offs Balance at End of Year Description Additions Fiscal year ended January 31, 2013 Allowance for doubtful accounts ...Fiscal year ended January 31, 2012 Allowance for doubtful ...

  • Page 111
    ... report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: March 8, 2013 salesforce.com, inc. GRAHAM SMITH Graham Smith Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) POWER OF ATTORNEY AND SIGNATURES KNOW ALL PERSONS BY THESE PRESENT...

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    Signature Title Date /S/ LAWRENCE TOMLINSON Lawrence Tomlinson /S/ MAYNARD WEBB Maynard Webb SHIRLEY YOUNG Shirley Young Director March 8, 2013 Director March 8, 2013 /S/ Director March 8, 2013 108

  • Page 113
    ...each of the Radian6 Technologies Inc. shareholders, and the shareholder representative Agreement and Plan of Merger dated June 3, 2012, by and among salesforce.com, inc., Bullseye Merger Corporation, Buddy Media, Inc., and Shareholder Representative Services LLC Restated Certificate of Incorporation...

  • Page 114
    ... Stock Plan Model Metrics, Inc. 2008 Stock Plan 2Catalyze, Inc. Second Amended 2008 Stock Option Plan and Form of Option Agreement thereunder Buddy Media, Inc. 2007 Equity Incentive Plan, as amended Goinstant, Inc. Stock Option Plan Master Service Agreement dated May 17, 2005 between salesforce.com...

  • Page 115
    ... Jacaranda No. 2932, LLC Agreement of Purchase and Sale and Joint Escrow Instructions dated as of October 21, 2010 by and between ARESan Francisco No. 19, LLC and Bay Jacaranda No. 2627, LLC List of Subsidiaries Consent of Independent Registered Public Accounting Firm Power of Attorney (incorporated...

  • Page 116
    ...a portion of this exhibit. The financial information contained in these XBRL documents is unaudited and these are not the official publicly filed financial statements of salesforce.com, inc. The purpose of submitting these XBRL documents is to test the related format and technology, and, as a result...

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    World Wide Corporate Headquarters salesforce.com inc. The Landmark @ One Market Suite 300 San Francisco, CA, 94105 U.S.A. EMEA Regional Headquarters salesforce.com SÃ rl route de la Longeraie 9 1110 Morges Switzerland APAC Regional Headquarters salesforce.com Singapore Pte. Ltd. 9 Temasek ...

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    ...Investor Relations Stock Listing [email protected], +1-415-536-6250 Salesforce.com trades on the New York Stock Exchange under the ticker symbol "CRM." Note on Forward-Looking Statements This annual report contains forward-looking statements within the meaning of the federal securities laws...

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    Corporate Headquarters The Landmark @ One Market Suite 300 San Francisco, CA 94105 United States 1-800-NO-SOFTWARE www.salesforce.com /salesforce @salesforce Global Offices Latin America Japan Asia/Pacific EMEA +1-415-536-4606 +81-3-5785-8201 +65-6302-5700 +4121-6953700 Copyright ©2013, ...