Salesforce.com 2014 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    ... CRM PLATFORM (Source: Gartner, 1013) #1 MOST INNOVATIVE COMPANY IN THE WORLD (Source: Forbes, 1011, 1011, 1013) $4.1 BILLION IN REVENUE REVENUE GROWTH 33% 1.5 BILLION TRANSACTIONS averaged every business day >2,000 APPEXCHANGE APPS and >1 million installs >13,000 EMPLOYEES 580,000 HOURS...

  • Page 3
    ... software market share by revenue in 2013. Forbes Magazine has named salesforce.com as the World's Most Innovative Company three years in a row. Fortune Magazine has ranked us #7 among the World's Best Places to Work and the World's Most Admired Company in our industry. The Salesforce1 Platform...

  • Page 4

  • Page 5
    ... year ended January 31, 2014 OR ' Transition 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...

  • Page 6
    ... I Business ...Risk Factors ...Unresolved Staff Comments ...Properties ...Legal Proceedings ...Mine Safety Disclosures ...Executive Officers of the Registrant ... 3 10 26 26 26 27 27 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities...

  • Page 7
    ... cloud computing applications and platforms and to lead the industry shift to the "customer company," our service performance and security, the expenses associated with new data centers, additional data center capacity, real estate and office facilities space, our operating results, new features...

  • Page 8
    ..., track leads and progress, forecast opportunities and collaborate around closing a sale on any device. The Sales Cloud also encompasses partner relationship management functionality (including channel management and partner communities) and real-time customer and contact information. Service Cloud...

  • Page 9
    ... marketers to manage their digital marketing, including email, mobile, social, web, marketing automation and data analytics, from a single platform. With the Salesforce1 ExactTarget Marketing Cloud, customer data can be routed into the Sales Cloud and Service Cloud in the form of leads, contacts...

  • Page 10
    ... of use and the benefits of a multi-tenant platform. We provide the capability for business users to easily customize our applications to suit their specific needs, and also a variety of programming language support so developers can code complex apps spanning multiple business processes and deliver...

  • Page 11
    ...a highly scalable, multi-tenant app. We use commercially available hardware and a combination of proprietary and commercially available software to provide our service. We have optimized our service to run on specific databases and operating systems using the tools and platforms best suited to serve...

  • Page 12
    ... fee. We recognize subscription and support revenue ratably over the contract term, beginning on the commencement date of each contract. The majority of our professional services contracts are on a time and materials basis, for which we generally recognize revenue as the services are rendered...

  • Page 13
    ... 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. Seasonality Our fourth quarter...

  • Page 14
    ... free 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...

  • Page 15
    ... environment and all of our customers' data is currently replicated in near real-time in a facility located in the United States. Companies and products added through acquisition may be temporarily served through alternate facilities. We do not control the operation of any of these facilities, and...

  • Page 16
    ... periodically make investments in, or acquisitions of, complementary businesses, joint ventures, services and technologies and intellectual property rights, and we expect that we will continue to make such investments and acquisitions in the future. In July 2013, we acquired ExactTarget, our largest...

  • Page 17
    ... laws, regulations and interpretive positions may limit customers' use and adoption of our services and reduce overall demand for our services. For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or require...

  • Page 18
    ... 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 acquiring new...

  • Page 19
    ...service; expenses related to our real estate, our office leases and our data center capacity and expansion; changes in foreign currency exchange rates; changes in interest rates and our mix of investments, which would impact our return on our investments in cash and marketable securities; conditions...

  • Page 20
    ... changes in Internet-related hardware, software, communication, browser and database technologies. We may not be successful in either developing these modifications and enhancements or in bringing them to market timely. Furthermore, uncertainties about the timing and nature of new network platforms...

  • Page 21
    ... at senior management. Similarly, the rate at which our customers purchase new or enhanced services depends on a number of factors, including general economic conditions and that our customers do not react negatively to any price changes related to these additional features and services. If our...

  • Page 22
    ...and management controls, our reporting systems and procedures, and our utilization of real estate. The additional investments we are making will increase our cost base, which will make it more difficult for us to offset any future revenue shortfalls by reducing expenses in the short term. If we fail...

  • Page 23
    ... 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 24
    ... 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 25
    ...at any time. The loss of one or more of our key 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...

  • Page 26
    ...San Francisco, California, including entitlements and improvements associated with the land. We may not realize any benefits with respect to the purchase of such real estate. During the first quarter of fiscal 2013, we suspended preconstruction activity on the land. If we commence efforts to develop...

  • Page 27
    ...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 earthquake insurance for direct quake-related losses, and significant recovery time...

  • Page 28
    ... to make each of the required cash payments even if we have sufficient funds to make them. Furthermore, our ability to purchase the notes or to pay cash upon the conversion of the notes may be limited by law or regulatory authority. In addition, if we fail to purchase the notes, to pay interest...

  • Page 29
    ... restated certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the market price of our common stock. Our amended and restated certificate of incorporation and bylaws contain...

  • Page 30
    ... terms. ITEM 3. LEGAL PROCEEDINGS In the ordinary course of business, we are involved in various legal proceedings and claims related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour...

  • Page 31
    ... to enjoin our activities, lead to attempts by third parties to seek 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. In...

  • Page 32
    ... and a 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, representing clients in the enterprise software, telecommunications, semiconductor, life...

  • Page 33
    ... 31, 2014 there were 160 registered stockholders of record of our common stock, including The Depository Trust Company, which holds shares of salesforce.com common stock on behalf of an indeterminate number of beneficial owners. Securities Authorized for Issuance under Equity Compensation Plans The...

  • Page 34
    ... or the Securities Act of 1933, as amended. The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor's 500 Index and the Nasdaq Computer & Data Processing Index for each of the last five fiscal years ended January 31...

  • Page 35
    ... (1)(2): Subscription and support ...Professional services and other ...Total cost of revenues ...Gross profit ...Operating expenses (1)(2): Research and development ...Marketing and sales ...General and administrative ...Total operating expenses ...Income (loss) from operations ...Investment income...

  • Page 36
    ... include amortization of purchased intangibles from business combinations, as follows: Cost of revenues ...Marketing and sales ...(2) Amounts include stock-based expenses, as follows: Cost of revenues ...Research and development ...Marketing and sales ...General and administrative ... $109,356 37...

  • Page 37
    ... 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 quality technical support to our customers, encourage the development of third-party applications on our platforms and...

  • Page 38
    ... ExactTarget Marketing Cloud and Salesforce1 Platform service offerings and the additions to our global infrastructure to support our growth. We also regularly evaluate acquisitions or investment opportunities in complementary businesses, joint ventures, services and technologies and intellectual...

  • Page 39
    ... the subscription service period. Professional services and other revenues consist of fees associated with consulting and implementation services and training. Our consulting and implementation engagements are typically billed on a time and materials basis. We also offer a number of training classes...

  • Page 40
    ...all subscription and support invoices were issued with annual terms during fiscal 2014. Accordingly, the sequential quarterly changes in accounts receivable and the related deferred revenue during the first three quarters of our fiscal year are not necessarily indicative of the billing activity that...

  • Page 41
    ... cloud computing services. For example, we have invested in additional database software and we plan to open additional data centers and expand our current data centers in the future. Additionally, as we acquire new businesses and technologies, the amortization expense associated with this activity...

  • Page 42
    ... 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 43
    ... in relative selling prices, including both VSOE and 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...

  • Page 44
    ... date. Examples of critical estimates 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...

  • Page 45
    ... 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 ESPP share or stock purchase right is estimated on the date of grant using the Black-Scholes option pricing model. The estimated forfeiture rate applied...

  • Page 46
    ... 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 ...Loss from operations ...Investment...

  • Page 47
    ... and operating expenses include the following amounts related to stock-based awards (in thousands): Fiscal Year Ended January 31, 2014 2013 2012 Cost of revenues ...Research and development ...Marketing and sales ...General and administrative ...Revenues by geography were as follows (in thousands...

  • Page 48
    ...purchased intangibles: Cost of revenues ...Marketing and sales ... Fiscal Year Ended January 31, 2014 2013 2012 3% 1 3% 0 3% 0 Stock-based awards: Cost of revenues ...Research and development ...Marketing and sales ...General and administrative ... 1% 3 6 2 1% 3 7 2 1% 2 5 2 Fiscal Year Ended...

  • Page 49
    ...to a year ago. We have continued to invest in a variety of customer programs and initiatives, which, along with longer contract durations and increasing enterprise adoption, have helped reduce our attrition rates. The net price per user per month for our three primary offerings, Professional Edition...

  • Page 50
    ... of purchased intangible assets will increase as we acquire additional businesses and technologies. We also 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...

  • Page 51
    ... associated with this software agreement to increase in future fiscal years. We expect that research and development expenses will increase in absolute dollars and may increase as a percentage of revenues in future periods as we continue to invest in additional employees and technology to support...

  • Page 52
    ...25% convertible senior notes, the $300.0 million term loan that was entered into in connection with the acquisition of ExactTarget and the large capital lease agreement for software which we entered into in June 2013. Benefit from (provision for) Income Taxes. Fiscal Year Ended January 31, 2014 2013...

  • Page 53
    ...invest in a variety of customer programs and initiatives which, along with longer contract durations and increasing enterprise adoption, have helped improve our renewal rates. The price per user per month for our three primary offerings, Professional Edition, Enterprise Edition and Unlimited Edition...

  • Page 54
    ... and increasing penetration within our existing customer base. Some of the increase in headcount was due to acquired businesses. General and Administrative. Fiscal Year Ended January 31, (in thousands) 2013 2012 Variance Dollars General and administrative ...Percent of total revenues ... $433,821...

  • Page 55
    ...quarter of fiscal 2013, we suspended pre-construction activity, which includes capitalized interest costs, on the undeveloped real estate in San Francisco, California resulting in an increase in interest expense as compared to fiscal 2012. Benefit from (provision for) income taxes. Fiscal Year Ended...

  • Page 56
    ...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. Our working capital accounts...

  • Page 57
    ... in investing activities during fiscal 2014 primarily related to the acquisition of EdgeSpring, Inc. ("EdgeSpring") in June 2013, the acquisition of ExactTarget in July 2013, capital expenditures, including new office build-outs and a new intellectual property licensing agreement, investment of cash...

  • Page 58
    ... days ended January 31, 2014, our common stock did not trade at a price exceeding 130% of the conversion price of $66.44 per share applicable to the 0.25% Senior Notes. Accordingly, the 0.25% Senior Notes will not be convertible at the holders' option for the quarter ending April 30, 2014, and...

  • Page 59
    ... acquire or invest in complementary businesses or joint ventures, services and technologies, and intellectual property rights. We may be required to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all. We believe our existing cash, cash...

  • Page 60
    ...items not directly related to the current fiscal year's ordinary operating results. Examples of such tax items include, but are not limited to, changes in the valuation allowance related to deferred tax assets, certain acquisition-related costs and unusual or infrequently occurring items. Management...

  • Page 61
    ...loss per share" for the years ended January 31, 2014, 2013 and 2012 are as follows (in thousands, except for share numbers): Non-GAAP gross profit For the Year Ended January 31, 2014 2013 2012 GAAP gross profit ...Plus: Amortization of purchased intangibles ...Stock-based expenses ...Non-GAAP gross...

  • Page 62
    ...(in thousands): For the Year Ended January 31, 2014 2013 2012 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 awards ...Adjusted weighted...

  • Page 63
    ... debt securities with credit ratings of at least triple BBB or better. The cash, cash equivalents and short-term marketable securities are held for general corporate purposes including possible acquisitions of, or investments in, complementary businesses, services or technologies, working capital...

  • Page 64
    ... LIBOR rate as defined in the Credit Agreement plus a spread of 1.50% to 2.00%. The Company entered into the Term Loan for purposes of partially funding the acquisition of ExactTarget. Interest is due and payable in arrears quarterly for the loan bearing interest as described above at the end of...

  • Page 65
    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 66
    ... 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 over financial reporting as of January 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by...

  • Page 67
    ... assets and consolidated net assets, excluding acquisition method fair value adjustments as of January 31, 2014, and less than five percent of consolidated total revenues for the year then ended. Our audit of internal control over financial reporting of salesforce.com, inc. also did not include an...

  • Page 68
    salesforce.com, inc. Consolidated Balance Sheets (in thousands, except per share data) January 31, 2014 January 31, 2013 Assets Current assets: Cash and cash equivalents ...Short-term marketable securities ...Accounts receivable, net of allowance for doubtful accounts of $4,769 and $1,853 at ...

  • Page 69
    ... revenues (1)(2): Subscription and support ...Professional services and other ...Total cost of revenues ...Gross profit ...Operating expenses (1)(2): Research and development ...Marketing and sales ...General and administrative ...Total operating expenses ...Loss from operations ...Investment income...

  • Page 70
    ...) Fiscal Year Ended January 31, 2014 2013 2012 Net loss ...$(232,175) $(270,445) $(11,572) Other comprehensive income, before tax and net of reclassification adjustments: Foreign currency translation and other gains (losses) ...(4,930) 4,783 9,512 Unrealized gains (losses) on investments ...8,120...

  • Page 71
    ...of stock options and stock grants to board members for board services ...20,237 Vested restricted stock units converted to shares ...6,564 Shares issued related to business combinations ...7,727 Shares issued under employee stock plans ...2,953 Tax benefits from employee stock plans ...0 Stock-based...

  • Page 72
    ... from employee stock plans ...Contingent consideration payment related to prior business combinations ...Payments on convertible senior notes ...Principal payments on capital lease obligations ...Principal payments on term loan ...Net cash provided by financing activities ...Effect of exchange rate...

  • Page 73
    ... valuation of current and deferred income taxes, the recognition and measurement of loss contingencies, the estimate of real estate sublease rental rates and market conditions, the fair value of the convertible notes, the fair value of stock awards issued and related forfeiture rates, the valuation...

  • Page 74
    ... risk consist primarily of cash and cash equivalents, marketable securities and trade accounts receivable. Although the Company deposits its cash with multiple financial institutions, its deposits, at times, may exceed federally insured limits. Collateral is not required for accounts receivable. The...

  • Page 75
    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. "Other revenue" consists primarily of training fees. The ...

  • Page 76
    ... in relative selling prices, including both VSOE and BESP. 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...

  • Page 77
    .... 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 78
    ... recognizes stock-based expenses related to shares issued pursuant to its 2004 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. The estimated forfeiture rate applied...

  • Page 79
    ... Black-Scholes option pricing model with the following assumptions and fair value per share: Stock Options 2014 Fiscal Year Ended January 31, 2013 2012 Volatility ...Estimated life ...Risk-free interest rate ...Weighted-average fair value per share of grants ...ESPP 37 - 43% 3.4 years 0.48 - 1.21...

  • Page 80
    ... test is not required. The Company adopted ASU 2012-02 in fiscal 2014. The adoption did not have a material effect on the consolidated financial statements. In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit...

  • Page 81
    ... requires companies to assess whether to net the unrecognized tax benefit with a deferred tax asset as of the reporting date. The Company adopted ASU 2013-11 in fiscal 2014 and the adoption did not have a material effect on the consolidated financial statements. 2. Investments Marketable Securities...

  • Page 82
    ... 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 observable market inputs. During fiscal 2014, the Company transferred certain...

  • Page 83
    ... Prices in Significant Other Significant Active Markets Observable Unobservable Balances as of for Identical Assets Inputs Inputs January 31, (Level 1) (Level 2) (Level 3) 2014 Description Cash equivalents (1): Time deposits ...Money market mutual funds ...Marketable securities: Corporate notes...

  • Page 84
    ... Prices in Significant Other Significant Active Markets Observable Unobservable Balances as of for Identical Assets Inputs Inputs January 31, (Level 1) (Level 2) (Level 3) 2013 Description Cash equivalents (1): Time deposits ...Money market mutual funds ...Marketable securities: Corporate notes...

  • Page 85
    ... Fiscal Year Ended January 31, Location 2014 2013 2012 Foreign currency derivative contracts ... Other expense $108 $16,591 $6,221 Strategic Investments The Company has three investments in marketable equity securities measured using quoted prices in their respective active markets and certain...

  • Page 86
    ... contractual term of six years and a renewal option of three years. The capitalized portion will be depreciated over the estimated useful life of the software, which is nine years. In November 2010, the Company purchased approximately 14 acres of undeveloped real estate in San Francisco, California...

  • Page 87
    ...the real estate holdings, or suspending pre-construction activity for several more years. In December 2012, the Company entered into a lease agreement for approximately 445,000 rentable square feet of office space in San Francisco, California. The space rented is for the total office space available...

  • Page 88
    ... and liabilities assumed as of the date of acquisition (in thousands): Fair Value Cash, cash equivalents and marketable securities ...Accounts receivable ...Other current assets ...Customer contract asset, current and noncurrent ...Property and equipment ...Other noncurrent assets ...Intangible...

  • Page 89
    ... results of ExactTarget for the six month period ended June 30, 2013. EdgeSpring On June 12, 2013, the Company acquired for cash and the Company's common stock the outstanding stock of EdgeSpring, Inc. ("EdgeSpring"), a provider of an end-to-end business intelligence exploration platform used to...

  • Page 90
    ... ...Customer relationships ...Trade name and trademark ...Total intangible assets subject to amortization ... $31,030 560 710 $32,300 5-6 years 5 years 5 years Developed technology represents the estimated fair value of EdgeSpring's end-to-end business intelligence exploration technology. Customer...

  • Page 91
    ...statements from the date of acquisition, which have not been material to date. The acquisition date fair value of the consideration transferred for Rypple was approximately $50.6 million, which consisted of the following (in thousands): Cash ...Fair value of stock options assumed ...Total ...$50,166...

  • Page 92
    ... market opportunities when integrating Buddy's social media marketing platform with the Company's current offerings. The acquisition date fair value of the consideration transferred for Buddy was $735.8 million, which consisted of the following (in thousands, except share data): Cash ...Common stock...

  • Page 93
    ... from the date of acquisition, which have not been material to date. The acquisition date fair value of the consideration transferred for GoInstant was approximately $50.6 million, which consisted of the following (in thousands): Cash ...Fair value of stock options assumed ...Total ...$49,221...

  • Page 94
    ... annually during the fourth quarter. Goodwill consisted of the following (in thousands): Balance as of January 31, 2012 ...Rypple ...Buddy Media ...GoInstant ...Other acquisitions ...Finalization of acquisition date fair values ...Balance as of January 31, 2013 ...EdgeSpring ...ExactTarget ...Other...

  • Page 95
    ... resulting from business combinations were as follows as of January 31, 2013 (in thousands): Gross Fair Value Accumulated Amortization Net Book Value Weighted Average Remaining Useful Life Acquired developed technology ...Customer relationships ...Trade name and trademark ...Territory rights...

  • Page 96
    ...of the product of the sale price of the Company's common stock and the conversion rate; upon the occurrence of specified corporate transactions described under the Notes Indenture, such as a consolidation, merger or binding share exchange; or at any time on or after the convertible dates noted above...

  • Page 97
    ... closing price of the Company's common stock of $60.53 on January 31, 2014, the if-converted value of the 0.75% Senior Notes exceeded their principal amount by approximately $1.0 billion and the ifconverted value of the 0.25% Senior Notes was less than their principal amount. Through the filing of...

  • Page 98
    ... the Credit Agreement plus a spread of 1.50% to 2.00%. The Company entered into the Term Loan in conjunction with and for purposes of funding the acquisition of ExactTarget. Interest is due and payable in arrears quarterly for the loan bearing interest at the base rate and at the end of an interest...

  • Page 99
    ... contractually committed by ExactTarget's existing customers as of the acquisition date that will be billed in the next twelve months. As the Company bills these customers this balance will reduce and accounts receivable will increase. Capitalized Software, net Capitalized software consisted of the...

  • Page 100
    ... billings that are contractually committed by ExactTarget's existing customers as of the acquisition date. Purchased intangible assets amortization expense for fiscal 2014, 2013 and 2012 was $37.6 million, $10.9 million and $8.0 million, respectively. Acquired intellectual property amortization...

  • Page 101
    ... future services that are contractually committed by ExactTarget's existing customers but unbilled as of the acquisition date. In June 2013, the Company entered into a large capital lease agreement for software for a period of nine years, which consists of the contractual term of six years and...

  • Page 102
    ... Value Exercise Price (in thousands) Balance as of January 31, 2013 ...Increase in shares authorized: 2004 Equity Incentive Plan . . 2013 Equity Incentive Plan . . 2010 EdgeSpring Plan ...2004 ExactTarget Plan ...2008 ExactTarget Plan ...Options granted under all plans ...Restricted stock activity...

  • Page 103
    ... for future grant: 2013 Equity Incentive Plan ...2006 Inducement Equity Incentive Plan ...2004 Employee Stock Purchase Plan ...Convertible senior notes ...Warrants ...28,604,045 24,653,578 55,626,162 226,374 6,114,165 43,965,164 44,252,692 203,442,180 During fiscal years 2014, 2013 and 2012, certain...

  • Page 104
    ... a change in control. As of January 31, 2014 and 2013, no shares of preferred stock were outstanding. 8. Income Taxes Effective Tax Rate The domestic and foreign components of loss before provision for (benefit from) income taxes consisted of the following (in thousands): Fiscal Year Ended January...

  • Page 105
    ...Fiscal Year Ended January 31, 2014 2013 2012 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 expense/(benefit) from acquisitions ...Other...

  • Page 106
    ...2015 through fiscal 2034. Utilization of the Company's net operating loss carryforwards may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration...

  • Page 107
    ... is as follows (in thousands): Fiscal Year Ended January 31, 2014 2013 2012 Numerator: Net loss ...Denominator: Weighted-average shares outstanding for basic loss per share ...Effect of dilutive securities: Convertible senior notes ...Employee stock awards ...Warrants ...Adjusted weighted-average...

  • Page 108
    ...have been anti-dilutive (in thousands): Fiscal Year Ended January 31, 2014 2013 2012 Stock awards ...Convertible senior notes ...Warrants ...10. Commitments Letters ... obligations would change if the Company exercised these options. The terms of the lease agreements provide for rental payments on a ...

  • Page 109
    ... Foundation employees such as office space. The value of these items was approximately $997,000 for fiscal 2014. Additionally, the Company has donated subscriptions to the Company's service to other qualified non-profit organizations. The Company also allows an affiliate of the Foundation to resell...

  • Page 110
    ...date this Annual Report on Form 10-K was filed with the SEC. 15. Selected Quarterly Financial Data (Unaudited) Selected summarized quarterly financial information for fiscal 2014 and 2013 is as follows: 1st Quarter 2nd 3rd 4th Quarter Quarter Quarter (in thousands, except per share data) Fiscal Year...

  • Page 111
    ..., to allow timely decisions regarding required disclosures. (b) Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15...

  • Page 112
    ... 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 financial reporting that occurred during the quarter ended January 31, 2014 that has materially...

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    ... our executive officers required by this Item is incorporated by reference herein to the section of this Annual Report on Form 10-K in Part I, entitled "Executive Officers of the Registrant." We have adopted a code of ethics, our Code of Conduct, which applies to all employees, including our...

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    ...: The information concerning our financial statements, and Report of Independent Registered Public Accounting Firm required by this Item is incorporated by reference herein to the section of this Annual Report on Form 10-K in Item 8, entitled "Consolidated Financial Statements and Supplementary Data...

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    salesforce.com, inc. Schedule II Valuation and Qualifying Accounts Balance at Beginning of Year Deductions Write-offs Balance at End of Year Description Additions Fiscal year ended January 31, 2014 Allowance for doubtful accounts ...Fiscal year ended January 31, 2013 Allowance for doubtful ...

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    ... thereunto duly authorized. Dated: March 5, 2014 salesforce.com, inc. By: /S/ GRAHAM SMITH Graham Smith Chief Financial Officer Dated: March 5, 2014 salesforce.com, inc. By: JOE ALLANSON Joe Allanson Senior Vice President, Chief Accountant and Controller (Principal Accounting Officer) /S/ POWER OF...

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    Signature Title Date /s/ CRAIG RAMSEY Craig Ramsey JOHN ROOS John Roos Director March 5, 2014 /s/ Director March 5, 2014 /s/ SANFORD R. ROBERTSON Sanford R. Robertson LAWRENCE TOMLINSON Lawrence Tomlinson ROBIN WASHINGTON Robin Washington MAYNARD WEBB Maynard Webb Director March 5, 2014...

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    ... Form Incorporated by Reference SEC File No. Exhibit Filing Date 2.1 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 Acquisition Agreement dated as of June 3, 2013...

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    ... SEC File No. Exhibit Filing Date 10.12* 10.13* 10.14 Buddy Media, Inc. 2007 Equity Incentive Plan, as amended Goinstant, Inc. Stock Option Plan Resource Sharing Agreement dated as of January 29, 2009 between salesforce.com, inc., salesforce.com foundation, and salesforce.org Reseller Agreement...

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    ... Agreement and Release dated as of January 31, 2014, by and between salesforce.com, inc. and Blair Crump List of Subsidiaries Consent of Independent Registered Public Accounting Firm Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K) Certification...

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    ... by Reference SEC File No. Exhibit Filing Date 101.LAB†XBRL Taxonomy Extension Label Linkbase Document 101.PRE†XBRL Taxonomy Extension Presentation Linkbase Document * ** †Indicates a management contract or compensatory plan or arrangement. Confidential treatment has been requested for...

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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], +1-415-536-6150 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 Global Offices Latin America | +1-415-536-4606 Japan | +81-3-5785-8201 Asia/Pacific | +65-6302-5700 EMEA | +4121-6953700 www.salesforce.com /salesforce @salesforce Copyright ©...