Salesforce.com 2016 Annual Report Download - page 104

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party leases with other tenants in the building, and the proportionate share of building expenses for those leases
in other expense in the Company’s consolidated results of operations from the date of acquisition. These amounts
are recorded in other expense as this net rental income is not part of our core operations. These amounts were not
material for the periods presented.
Business Combinations Fiscal 2016
During fiscal 2016, the Company acquired several companies for an aggregate of $60.1 million in cash, net
of cash acquired, and has included the financial results of these companies in its consolidated financial
statements from the respective dates of acquisition. These transactions, individually and in aggregate, are not
material to the Company. The Company accounted for these transactions as business combinations. In allocating
the purchase consideration for each company based on estimated fair values, the Company recorded $68.7
million of goodwill. Some of the goodwill balance associated with these transactions is deductible for U.S.
income tax purposes.
Fiscal Year 2015
RelateIQ, Inc.
On August 1, 2014, the Company acquired the outstanding stock of RelateIQ, Inc. (“RelateIQ”), a
relationship intelligence platform company that uses data science and machine learning to automatically capture
data from email, calendars and smartphone calls and provide data science-driven insights in real time. The
Company acquired RelateIQ for the assembled workforce and expected synergies with the Company’s current
offerings. The Company has included the financial results of RelateIQ in the consolidated financial statements
from the date of acquisition, which have not been material to date. The acquisition date fair value of the
consideration transferred for RelateIQ was approximately $340.2 million, which consisted of the following (in
thousands, except share data):
Fair Value
Cash .................................................... $ 1,123
Common stock (6,320,735 shares) ............................. 338,033
Fair value of stock options and restricted stock awards assumed ..... 1,050
Total .................................................... $340,206
The fair value of the stock options assumed by the Company was determined using the Black-Scholes
option pricing model. The share conversion ratio of 0.12 was applied to convert RelateIQ’s outstanding equity
awards for RelateIQ’s common stock into equity awards for shares of the Company’s common stock.
The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the
date of acquisition (in thousands):
Fair Value
Cash ............................................ $ 39,194
Intangible assets ................................... 16,200
Goodwill ......................................... 289,857
Current and noncurrent liabilities ...................... (4,700)
Deferred tax liability ............................... (345)
Net assets acquired ................................. $340,206
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets
acquired was recorded as goodwill. The fair values assigned to tangible assets acquired, liabilities assumed and
identifiable intangible assets are based on management’s estimates and assumptions.
97