Salesforce.com 2007 Annual Report Download - page 73

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Table of Contents
salesforce.com, inc.
Notes to Consolidated Financial Statements—(Continued)
Correspondingly, the Company increased the cost of the acquired technology by the amount of the deferred income tax liability. The total acquisition cost of
$8.7 million is being amortized on a straight-line basis to cost of revenues over 3 years.
Other Assets
Other assets consisted of the following (in thousands):
As of January 31,
2008 2007
Deferred professional services costs, noncurrent portion $ 4,546 $ 1,334
Long-term deposits 6,682 1,958
Purchased intangible assets, net of accumulated amortization of $678 and $184, respectively 1,509 3,283
Other 1,144 1,127
$ 13,881 $ 7,702
In December 2006, the Company acquired for $2,777,000 in cash shares held by a minority shareholder in Salesforce Japan, therefore, increasing its
interest in Salesforce Japan from 63 to 65 percent. This amount was reflected in the January 31, 2007 financial statements as a component of other assets. The
Company accounted for this purchase as a step acquisition. During fiscal 2008 the Company completed the purchase price allocation and reclassified
$1,851,000 from other assets to goodwill. After this reclassification from other assets the remaining purchase price was classified as purchased intangible
assets and are being amortized as follows: territory rights, 7 years and customer relationship and other, 3 years.
In September 2007, the Company sold its minority ownership interest in a privately held professional services corporation for cash proceeds of
$1,659,000. The Company realized a gain of $1,272,000 for the sale of its shares and this amount is recorded in gain on sale of investment in the consolidated
statements of operations. In addition certain amounts are held in an escrow account. If various contingencies are met, the Company will record additional cash
proceeds received as other non-operating income at the conclusion of the 18 month escrow period.
Goodwill
Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and tangible assets acquired. Goodwill
amounts are not amortized, but rather tested for impairment at least annually during the fourth quarter. There was no impairment of goodwill during fiscal
2008 and 2007.
Goodwill consists of the following (in thousands):
Total
Balance as of January 31, 2006 $ —
Sendia Corporation (See Note 6) 6,705
Balance as of January 31, 2007 6,705
Salesforce Japan (See Note 6) 1,851
Balance as of January 31, 2008 $8,556
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