Salesforce.com 2014 Annual Report Download - page 98

Download and view the complete annual report

Please find page 98 of the 2014 Salesforce.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

Warrants
Date
Proceeds
(in thousands) Shares
Strike
Price
0.75% Warrants ...................... January 2010 $59,300 26,943,812 $29.88
0.25% Warrants ...................... March 2013 $84,800 17,308,880 $90.40
Separately, in January 2010 and March 2013, the Company also entered into warrant transactions (the
“0.75% Warrants” and the “0.25% Warrants”, respectively) (collectively, the “Warrants”), whereby the Company
sold warrants to acquire, subject to anti-dilution adjustments, shares of the Company’s common stock. As the
average market value per share of the Company’s common stock for the reporting period, as measured under the
0.75% Warrants, exceeds the strike price of the 0.75% Warrants, the 0.75% Warrants would have a dilutive
effect on the Company’s earnings/loss per share if the Company were to report net income for fiscal 2014. The
Warrants were anti-dilutive for the periods presented. The Warrants are separate transactions, entered into by the
Company and are not part of the terms of the Notes or Note Hedges. Holders of the Notes and Note Hedges will
not have any rights with respect to the Warrants.
Term Loan
On July 11, 2013, the Company entered into a credit agreement (the “Credit Agreement”) with Bank of
America, N.A. and certain other lenders. The Credit Agreement provides for a $300.0 million term loan (the
“Term Loan”) maturing on July 11, 2016 (the “Maturity Date”) and bears interest at the Company’s option at
either a base rate plus a spread of 0.50% to 1.00% or an adjusted LIBOR rate as defined in 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 period in the case of the loan bearing interest at the adjusted LIBOR rate. The Term Loan is payable in
quarterly installments equal to $7.5 million beginning on September 30, 2013, with the remaining outstanding
principal amount of the term loan being due and payable on the Maturity Date. The Company may prepay the
Term Loan, in whole or in part at any time during the term of the Term Loan. Amounts repaid or prepaid may not
be reborrowed under the terms of the Credit Agreement. The Term Loan is secured by a pledge of 100 percent of
the equity securities of the Company’s direct domestic subsidiaries and 65 percent of the equity securities of the
Company’s foreign subsidiaries.
The Credit Agreement contains certain customary affirmative and negative covenants, including a
consolidated leverage ratio covenant, a consolidated interest coverage ratio covenant, a limit on the Company’s
ability to incur additional indebtedness, issue preferred stock or pay dividends, and certain other restrictions on
the Company’s activities each defined specifically in the Credit Agreement. The Company was in compliance
with the Credit Agreement’s covenants as of January 31, 2014.
The weighted average interest rate on the Term Loan was 2.0% for fiscal 2014. As of January 31, 2014, the
current portion outstanding under the Term Loan was $30.0 million and the noncurrent outstanding portion was
$255.0 million. Future principal payments on the Term Loan are payable as follows: $30.0 million during fiscal
2015; $30.0 million during fiscal 2016; and $235.0 million during fiscal 2017.
94