Salesforce.com 2014 Annual Report Download - page 104
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voting rights, terms of redemption, liquidation preference, sinking fund terms, and number of shares constituting
any series or the designation of any series. The issuance of preferred stock could have the effect of restricting
dividends on the Company’s common stock, diluting the voting power of its common stock, impairing the
liquidation rights of its common stock, or delaying or preventing a change in control. The ability to issue
preferred stock could delay or impede a change in control. As of January 31, 2014 and 2013, no shares of
preferred stock were outstanding.
8. Income Taxes
Effective Tax Rate
The domestic and foreign components of loss before provision for (benefit from) income taxes consisted of
the following (in thousands):
Fiscal Year Ended January 31,
2014 2013 2012
Domestic ................................... $(326,392) $ (90,743) $(27,303)
Foreign .................................... (31,543) (37,051) (6,014)
$(357,935) $(127,794) $(33,317)
The provision for (benefit from) income taxes consisted of the following (in thousands):
Fiscal Year Ended January 31,
2014 2013 2012
Current:
Federal ................................. $ (10,431) $ 12,896 $ 9,344
State ................................... (245) 3,021 4,346
Foreign ................................. 39,784 30,261 15,709
Total ................................... 29,108 46,178 29,399
Deferred:
Federal ................................. (128,798) 72,656 (36,601)
State ................................... (22,012) 28,538 (10,603)
Foreign ................................. (4,058) (4,721) (3,940)
Total ................................... (154,868) 96,473 (51,144)
Provision for (benefit from) for income taxes . . . $(125,760) $142,651 $(21,745)
During fiscal 2013, the Company established a valuation allowance for a significant portion of its deferred
tax assets and recognized a tax expense of $186.8 million. During fiscal 2014, the Company recorded a partial
release of its valuation allowance primarily in connection with the acquisition of ExactTarget. Due to the
ExactTarget acquisition, a deferred tax liability was recorded for the book-tax basis difference related to
purchased intangibles. The net deferred tax liability from acquisitions provided an additional source of income to
support the realizability of the Company’s pre-existing deferred tax assets and as a result, the Company released
a portion of its valuation allowance and recorded a tax benefit of $143.1 million for fiscal 2014.
During fiscal 2014, 2013 and 2012, the Company recorded net tax benefits that resulted from allocating
certain tax effects related to exercises of stock options and vesting of restricted stocks directly to stockholders’
equity in the amount of $8.0 million, $7.2 million and $1.6 million, respectively.
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