Salesforce.com 2011 Annual Report Download - page 94

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8. Commitments
Letters of Credit
As of January 31, 2011, the Company had a total of $8.9 million in letters of credit outstanding substantially
in favor of certain landlords for office space. These letters of credit renew annually and mature at various dates
through September 2021.
Leases
The Company leases office space and equipment under non-cancelable operating and capital leases with
various expiration dates.
As of January 31, 2011, the future minimum lease payments under non-cancelable operating and capital
leases are as follows (in thousands):
Capital
Leases
Operating
Leases
Fiscal Period:
Fiscal 2012 ..................................................... $11,503 $107,343
Fiscal 2013 ..................................................... 5,818 101,527
Fiscal 2014 ..................................................... 2,292 79,074
Fiscal 2015 ..................................................... 0 47,126
Fiscal 2016 ..................................................... 0 44,423
Thereafter ...................................................... 0 119,791
Total minimum lease payments ..................................... 19,613 $499,284
Less: amount representing interest ................................... (976)
Present value of capital lease obligation ............................... $18,637
The terms of the lease agreements provide for rental payments on a graduated basis. The Company
recognizes rent expense on the straight-line basis over the lease period and has accrued for rent expense incurred
but not paid. Of the total operating lease commitment balance of $499.3 million, $436.9 million is related to
facilities space. The remaining $62.3 million commitment is related to computer equipment and other leases.
The Company’s agreements for the facilities and certain services provide the Company with the option to
renew. The Company’s future contractual obligations would change if the Company exercised these options.
Rent expense for fiscal 2011, 2010 and 2009 was $52.8 million, $47.3 million and $36.0 million,
respectively.
9. Legal Proceedings
The Company is involved in various legal proceedings arising from the normal course of business activities,
including claims of alleged infringement of third-party patents and other intellectual property rights, commercial,
employment and other matters. The Company makes a provision for a liability related to legal proceedings when
it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements,
rulings, advice of legal counsel and other information and events pertaining to a particular case. In management’s
opinion, resolution of these matters is not expected to have a material adverse impact on the Company’s
consolidated results of operations, cash flows or financial position. However, depending on the nature and timing
of any such dispute, an unfavorable resolution of a matter could materially affect the Company’s future results of
operations or cash flows or both.
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