Salesforce.com 2014 Annual Report Download - page 64

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the Notes are exposed to interest rate risk. Generally, the fair values of our fixed interest rate Notes will increase
as interest rates fall and decrease as interest rates rise. In addition, the fair values of our Notes is affected by our
stock price. The carrying value of our 0.75% Senior Notes was $542.2 million and the carrying value of our
0.25% Senior Notes was $1.0 billion as of January 31, 2014, which represents the liability components of the
$568.9 million principal balance and $1.15 billion principal balance, respectively. The total estimated fair values
of our 0.75% Senior Notes and 0.25% Senior Notes at January 31, 2014 were $1.6 billion and $1.3 billion,
respectively. The fair value was determined based on the closing trading price per $100 of the 0.75% Senior
Notes and 0.25% Senior Notes as of the last day of trading for the fourth quarter of fiscal 2014, which were
$283.78 and $115.29, respectively.
In July 2013, we entered into a $300.0 million term loan (the “Term Loan”) which matures in July 2016 and
bears interest at our option of either a base rate plus a spread of 0.50% to 1.00% or an adjusted LIBOR rate as
defined in the Credit Agreement plus a spread of 1.50% to 2.00%. The Company entered into the Term Loan for
purposes of partially funding the acquisition of ExactTarget. Interest is due and payable in arrears quarterly for
the loan bearing interest as described above at the end of an interest period. The Term Loan is payable in
quarterly installments equal to $7.5 million beginning in September 2013, with the remaining outstanding
principal amount of the term loan being due and payable at maturity.
By entering into the Term Loan, we have assumed risks associated with variable interest rates based upon a
variable base rate or LIBOR. The weighted average interest rate on the Term Loan was 2.0% for fiscal 2014.
Changes in the overall level of interest rates affect the interest expense that we recognize in our statements of
operations.
We have an investment portfolio that includes strategic investments in public and privately-held companies,
many of which are in the development stage. When our ownership interests are less than 20 percent and we do
not have the ability to exert significant influence, we account for investments in non-marketable equity and debt
securities of the privately-held companies using the cost method of accounting. Otherwise, we account for the
investments using the equity method of accounting. As of January 31, 2014 and January 31, 2013 the fair value
of our investments in privately-held companies was $77.0 million and $46.8 million, respectively.
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