Salesforce.com 2011 Annual Report Download - page 79

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Notes are convertible at the holders’ option for the quarter ending April 30, 2011. Upon conversion of any Notes,
the Company will deliver cash up to the principal amount of the Notes and, with respect to any excess conversion
value greater than the principal amount of the Notes, shares of the Company’s common stock, cash, or a
combination of both. Therefore, for the quarter ending April 30, 2011, the Notes will be reclassified to a current
liability on the Company’s consolidated balance sheet. In addition to the Notes being reclassified to a current
liability as described above, a portion of the equity component of the Notes, as described in Note 2 of the
consolidated financial statements, will be reclassified from additional paid-in capital to temporary salesforce.com
stockholders’ equity on the consolidated balance sheet.
New Accounting Pronouncement
In September 2009, the FASB issued Update No. 2009-13, “Multiple-Deliverable Revenue Arrangements—
a consensus of the FASB Emerging Issues Task Force” (ASU 2009-13). It updates the existing multiple-element
revenue arrangements guidance currently included under ASC 605-25, which originated primarily from the
guidance in EITF Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables” (EITF 00-21). The
revised guidance primarily provides two significant changes: 1) eliminates the need for objective and reliable
evidence of the fair value for the undelivered element in order for a delivered item to be treated as a separate unit
of accounting, and 2) requires the use of the relative selling price method to allocate the entire arrangement
consideration. In addition, the guidance also expands the disclosure requirements for revenue recognition. ASU
2009-13 will be effective for the Company at the start of fiscal 2012. The Company believes the future impact of
this new accounting pronouncement will not be material to consolidated net income.
Reclassifications
Certain reclassifications to the fiscal 2010 and 2009 balances were made to conform to the current period
presentation. These reclassifications include deferred income taxes, strategic investments and income taxes payable.
2. Balance Sheet Accounts
Marketable Securities
At January 31, 2011, marketable securities consisted of the following (in thousands):
Investments classified as Marketable Securities
Amortized
Cost
Unrealized
Gains
Unrealized
Losses Fair Value
Corporate notes and obligations ........................... $701,047 $7,356 $ (790) $707,613
U.S. treasury securities .................................. 22,631 85 (10) 22,706
Mortgage backed securities ............................... 38,348 656 (118) 38,886
Government obligations ................................. 6,414 118 0 6,532
Municipal securities .................................... 23,121 79 (119) 23,081
Collateralized mortgage obligations ........................ 104,285 1,098 (344) 105,039
U.S. agency obligations .................................. 79,242 190 (24) 79,408
Total marketable securities ............................... $975,088 $9,582 $(1,405) $983,265
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