Salesforce.com 2013 Annual Report Download - page 85

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The following table sets forth the components of identifiable intangible assets acquired and their estimated
useful lives as of the date of acquisition:
(in thousands) Fair value Useful Life
Developed technology ............................ $65,210 5 years
Customer relationships ............................ 11,030 5 years
Trade name and trademark ......................... 2,100 5 years
Total intangible assets subject to amortization ..... $78,340
Developed technology represents the estimated fair value of Buddy’s social media marketing platform.
Customer relationships represent the fair values of the underlying relationships and agreements with Buddy
customers. The trade name and trademark represents the fair value of the brand and name recognition associated
with the marketing of Buddy’s service offerings. The goodwill balance is primarily attributed to the assembled
workforce and expanded market opportunities when integrating Buddy’s social media marketing platform with
the Company’s other social media marketing offerings. The goodwill balance is not deductible for U.S. income
tax purposes.
The Company assumed unvested options and restricted stock awards with a fair value of $67.4 million. Of
the total consideration, $36.1 million was allocated to the purchase consideration and $31.3 million was allocated
to future services and will be expensed over the remaining service periods on a straight-line basis.
The amounts of revenue and earnings of Buddy included in the Company’s consolidated statement of
operations from the acquisition date of August 13, 2012 to the period ending January 31, 2013 are as follows:
(in thousands)
Total revenues ............................................. $19,646
Loss ..................................................... $(28,998)
This loss includes approximately $21.0 million of stock-based expense.
The following pro forma financial information summarizes the combined results of operations for the
Company and Buddy, which was significant for the purposes of unaudited pro forma financial information
disclosure, as though the companies were combined as of the beginning of the Company’s fiscal years presented.
The unaudited pro forma financial information was as follows:
Fiscal Year Ended
January 31,
(in thousands) 2013 2012
Total revenues ............................... $3,071,286 $2,293,236
Loss ....................................... $ (297,657) $ (58,207)
The pro forma financial information for all periods presented has been calculated after adjusting the results
of Buddy to reflect the business combination accounting effects resulting from this acquisition including the
amortization expenses from acquired intangible assets, the stock-based compensation expense for unvested stock
options and restricted stock awards assumed and the related tax effects as though the acquisition occurred as of
the beginning of the Company’s fiscal years 2013 and 2012. The pro forma financial information is for
informational purposes only and is not indicative of the results of operations that would have been achieved if the
acquisition had taken place at the beginning of the Company’s fiscal 2012.
The pro forma financial information for the years ended January 31, 2013 and 2012 combined the historical
results of the Company for the fiscal years ended January 31, 2013 and 2012, the adjusted historical results of
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