Salesforce.com 2008 Annual Report Download - page 53

Table of Contents
Other income primarily consists of foreign currency translation adjustments. Other income decreased due to realized and unrealized gains and losses on
foreign currency translations for fiscal 2008 compared to fiscal 2007.
Provision for Income Taxes.
Fiscal Year Ended January 31, Variance
Dollars
(In thousands) 2008 2007
Provision for income taxes $ (23,385) $ (9,795) $ (13,590)
Effective tax rate 51% 78%
We recorded a provision for income taxes of $23.4 million during fiscal 2008, compared to a provision for income taxes of $9.8 million during fiscal
2007.
Our effective tax rate decreased to 51 percent for fiscal 2008 compared to 78 percent for fiscal 2007.
The fiscal 2008 provision as a percentage of income before provision for income taxes and minority interest was significantly lower than for fiscal 2007
primarily due to a reduced proportion of foreign losses for which no tax benefit could be realized. The total income tax benefit recognized in the
accompanying consolidated statement of operations related to SFAS 123R was $18.5 million for fiscal 2008. See Note 7 "Income Taxes" to the Notes to the
Consolidated Financial Statements for our reconciliation of income taxes at the statutory federal rate to the provision for income taxes.
Liquidity and Capital Resources
At January 31, 2009, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $882.6 million, and accounts
receivable of $266.6 million.
Net cash provided by operating activities was $229.6 million during fiscal 2009 and $204.3 million during the same period a year ago. The
improvement in cash flow was due primarily to the growth in our customer base and the associated increase in billings and collections. Cash provided by
operating activities has historically been affected by: the amount of net income; sales of subscriptions, support and professional services; changes in working
capital accounts, particularly increases and seasonality in accounts receivable and deferred revenue as described above; the timing of commission and bonus
payments; collections from large enterprise customers; add-backs of non-cash expense items such as depreciation and amortization; and, the expense
associated with stock-based awards.
Net cash used in investing activities was $121.0 million during fiscal 2009 and $102.7 million during the same period a year ago. The net cash used in
investing activities during fiscal 2009 primarily related to the acquisition of InStranet, Inc, and the purchase of shares of Salesforce Japan from the minority
shareholders. In addition, our investing activities included the investment of operating cash balances and capital expenditures in leasehold improvements, and
the purchase of software licenses, computer equipment and furniture and fixtures as we have expanded our infrastructure, number of offices around the world
and work force. We expanded one of our existing software license agreements to provide additional capacity in our business operations at a cost of $8.0
million. The Company during the year invested approximately $2.0 million in system integrators and software-as-a-service ISVs.
Net cash provided by financing activities was $96.9 million during fiscal 2009 and $92.7 million during the same period a year ago. Net cash provided
by financing activities during fiscal 2009 substantially consisted of $43.3 million of proceeds from the exercise of employee stock options and $54.6 million
of excess tax benefits from employee stock plans.
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