x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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94-3292913
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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3401 Hillview Avenue
Palo Alto, CA
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94304
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Class A Common Stock, par value $0.01
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New York Stock Exchange
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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ITEM 1.
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BUSINESS
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SDDC
or
Software-Defined Data Center
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End-User Computing
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Hybrid Cloud Computing
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Compute
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Storage and Availability
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Network and Security
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Management and Automation
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vSAN
– clusters server disks to create radically simple shared storage designed for virtual machines.
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vSphere Replication
– provides cost-efficient and simple way to manage replication.
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vCenter Site Recovery Manager
– leverages vSphere and vSphere Replication to protect applications against site failures and to streamline planned migrations.
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vCenter Operations Management
– provides performance, capacity and configuration management for virtual or physical infrastructure.
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vCloud Automation Center
– enables customers to rapidly deploy and provision cloud services.
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IT Business Management Suite
– provides transparency and control over the costs and quality of IT services.
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vSphere Enterprise Plus
– VMware's virtualization platform enabling server virtualization with its most robust feature set designed for policy-based automation.
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vCloud Director –
enables self-service access to logical pools of compute, network and storage resources with policy-driven controls and service-level agreements.
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vCloud Connector
– extends management to the hybrid cloud.
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vCloud Networking and Security
– provides advanced networking and security for applications and the perimeter of virtual datacenters, end-user computing and cloud environments.
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VMware vCenter Site Recovery Manager –
provides simplified, automated disaster recovery for virtualized environments.
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vCenter Operations Management
– provides performance, capacity and configuration management for virtual or physical infrastructure.
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vCloud Automation Center
– enables customers to rapidly deploy and provision cloud services in the vCloud Suite.
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Horizon View,
a virtual desktop infrastructure solution that increases control of desktops, applications, and data by delivering and managing them as centralized services.
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Horizon Mirage,
stores full desktop images and periodic endpoint snapshots enabling IT to recover partial or full desktops when needed.
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Horizon DaaS (Desktop-as-a-Service) Platform for Service Providers,
a platform for cloud delivery of Windows desktops and applications to individual users.
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Fusion and Workstation
, a set of personal desktop virtualization solutions for Macintosh and Windows.
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Independent Hardware Vendors (“IHVs”).
We have established relationships with large system vendors, including Cisco, Dell, Fujitsu, Fujitsu-Siemens, HP, IBM, Lenovo and NEC for joint certification and co-development. We also work closely with AMD, Intel and other IHVs to provide input on product development to enable them to deliver hardware advancements that benefit virtualization users. We coordinate with the leading storage and networking vendors to ensure joint interoperability and enable our software to access their differentiated functionality.
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Independent Software Vendors (“ISVs”).
We partner with leading systems management, infrastructure software and application software vendors - including healthcare, telecom, finance and retail market leaders – to deliver value-added products that integrate with our VMware products.
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VMware Service Providers.
We have established partnerships with over 11,500 service providers including AT&T, Bluelock, Colt, CSC, Dell, Fujitsu, Hitachi, Optus, OVH, Rackspace, Sing Tel, Softbank and T-Systems to enable them to host and deliver enterprise-class hybrid clouds as a way for enterprises to extend their datacenters to external clouds, while preserving security, compliance and quality of service.
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the level of reliability, interoperability and new functionality of product and service offerings;
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the ability to provide comprehensive solutions, including management capabilities;
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the ability to offer products that support multiple hardware platforms, operating systems, applications and application development frameworks;
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the ability to deliver an intuitive end-user experience for accessing data, applications and services from a wide variety of end-user devices;
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delivery of next-generation end-user computing capabilities that integrate with and work alongside existing, legacy capabilities;
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the ability to drive down the marginal cost of operations and management for both new and existing assets;
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a proven track record of formulating and delivering a roadmap of compelling software and service capabilities that align with industry trends;
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pricing of products, individually and in bundles;
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the ability to attract and preserve a large installed base of customers;
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the ability to attract and maintain a large number of application developers for a given cloud ecosystem;
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the ability to create and maintain partnering opportunities with hardware vendors, software vendors and cloud service providers;
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the ability to support newly emerging large-scale application development and deployment approaches;
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the ability to deploy operational cloud solutions for customers in a timely manner and provide robust technical support;
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the ability to develop robust indirect sales channels; and
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the ability to attract and retain cloud, virtualization and systems experts as key employees.
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our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission (“SEC”);
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announcements of investor conferences, speeches and events at which our executives talk about our products, services and competitive strategies;
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webcasts of our quarterly earnings calls and links to webcasts of investor conferences at which our executives appear (archives of these events are also available for a limited time);
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additional information on financial metrics, including reconciliations of non-GAAP financial measures discussed in our presentations to the nearest comparable GAAP measure;
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press releases on quarterly earnings, product and service announcements, legal developments and international news;
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corporate governance information including our certificate of incorporation, bylaws, corporate governance guidelines, board committee charters, business conduct guidelines (which constitutes our code of business conduct and ethics) and other governance-related policies;
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other news, blogs and announcements that we may post from time to time that investors might find useful or interesting; and
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opportunities to sign up for email alerts and RSS feeds to have information pushed in real time.
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ITEM 1A.
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RISK FACTORS
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improved products or product versions being offered by competitors in our markets;
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competitive pricing pressures;
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failure to timely execute and implement our product strategy, which could lead to quality issues, integration issues with ecosystem partners, and difficulties in creating and marketing suites of interoperable solutions;
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failure to release new or enhanced versions of our data center virtualization products on a timely basis, or at all;
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technological change that we are unable to address with our data center virtualization products or that changes the way enterprises utilize our products; and
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general economic conditions.
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These initiatives may present new and difficult technological challenges. Significant investments will be required to acquire and develop solutions to those challenges. Customers may choose not to adopt our new product or service offerings and we may be unable to recoup or realize a reasonable return on our investments.
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Some of our new initiatives are hosted by third parties whom we do not control but whose failure to prevent service disruptions, or other failures or breaches may require us to issue credits or refunds or indemnify or otherwise be liable to customers or third parties for damages that may occur. Any transition of our services from a third party hosting service to our own data centers would also entail a risk of service disruption during a transition. We may be subject to claims if customers of these service offerings experience service disruptions or failures, security breaches, data losses or other quality issues.
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The success of these new offerings depends upon the cooperation of hardware, software and cloud hosting vendors to ensure interoperability with our products and offer compatible products and services to end users. If we are unable to obtain such cooperation, it may be difficult and more costly for us to achieve functionality and service levels that would make our new products and services attractive to end users.
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We will need to develop and implement appropriate go-to-market strategies and train our sales force in order to effectively market offerings in product categories in which we may have less experience than our competitors. Accordingly, end users could choose competing products and services over ours, even if such offerings are less advanced than ours.
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Our increasing focus on developing and marketing IT management and automation and IaaS (including software-defined networking and vCloud Hybrid Services), offerings that enable customers to transform their IT systems will require a greater focus on marketing and selling product suites and more holistic solutions, rather than selling on a product-by-product basis. Consequently, we will need to develop new strategies for marketing and selling our offerings, our customers’ purchasing decisions may become more complex and require additional levels of approval and the duration of sales cycles for our offerings may increase.
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We will need to develop appropriate pricing strategies for our new product initiatives. For example, it has frequently been challenging for software companies to derive significant revenue streams from open source projects, such as certain of our offerings. Additionally, in some cases our new product initiatives are predicated on converting free and trial users to paying customers of the premium tiers of these services, and therefore we must maintain a sufficient conversion ratio for such services to be profitable. Also, certain of our new product initiatives have a subscription model. We may not be able to accurately predict subscription renewal rates or their impact on results, and because revenue is recognized for our services over the term of the subscription, downturns or upturns in sales may not be immediately reflected in our results.
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The success of vCloud Hybrid Service will be dependent on the final global implementation of the offering and building successful go-to-market strategies. We will need to build sales expertise and infrastructure to support the new offering. This hybrid cloud offering involves significant risk and may not be accepted by customers. Further, this offering may lead our team to reduce the time spent on selling our existing product portfolio, which could have a material negative impact on revenues.
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Our new products and services may compete with offerings from companies who are members of our developer and technology partner ecosystem. Consequently, we may find it more difficult to continue to work together productively on other projects, and the advantages we derive from our ecosystem could diminish.
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The cloud computing and virtualized end-user computing industries are in early stages of development. Other companies seeking to enter and develop competing standards for the cloud computing market, such as Microsoft, IBM, Oracle, Google, Amazon and Cisco, and the end-user computing market, such as Citrix and Microsoft, have introduced or are likely to introduce their own initiatives that may compete with or not be compatible with our cloud and end-user computing initiatives which could limit the degree to which other vendors develop products and services around our offerings and end users adopt our platforms.
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Emerging IT sectors, such as those within IaaS, are frequently subject to a “first mover” effect pursuant to which certain product and service offerings can rapidly capture a significant portion of market share and developer attention. Therefore, if competitive product and service offerings in these sectors gain broad adoption before ours, it may be difficult for us to displace such offerings regardless of the comparative technical merit, efficacy or cost of our products and services.
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Developing and launching new technologies in new markets, as we are doing with our VMware NSX virtual networking, vSAN virtual storage and vCloud Hybrid Service initiatives, requires significant investments of resources and often entails greater risk than incremental investments in existing markets. If these investments are not successful, our rate of growth may decline or reverse and our operating results will be negatively affected.
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the level of reliability, security and new functionality of product offerings;
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the ability to provide comprehensive and scalable solutions, including management and security capabilities;
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the ability to offer products and services that support multiple hardware platforms, operating systems, applications and application development frameworks;
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the ability to deliver an intuitive end-user experience for accessing data, applications and services from a wide variety of end-user devices;
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the ability to effectively run traditional IT applications and emerging applications;
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the proven track record of formulating and delivering a roadmap of virtualization and cloud computing capabilities;
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the ability to attract and preserve a large installed base of customers;
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pricing of products and services, individually and in bundles;
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the ability to attract and preserve a large number of application developers to develop to a given cloud ecosystem;
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the ability to create and maintain partnering opportunities with hardware vendors, infrastructure software vendors and cloud service providers;
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the ability to develop robust indirect sales channels; and
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the ability to attract and retain cloud, virtualization and systems experts as key employees.
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general economic conditions in our domestic and international markets and the effect that these conditions have on our customers’ capital budgets and the availability of funding for software purchases;
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fluctuations in demand, adoption rates, sales cycles and pricing levels for our products and services;
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fluctuations in foreign currency exchange rates;
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changes in customers’ budgets for information technology purchases and in the timing of their purchasing decisions;
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the timing of recognizing revenues in any given quarter, which, as a result of software revenue recognition policies, can be affected by a number of factors, including product announcements, beta programs and product promotions that can cause revenue recognition of certain orders to be deferred until future products to which customers are entitled become available;
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the sale of our products and services in the time frames we anticipate, including the number and size of orders in each quarter;
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our ability to develop, introduce and ship in a timely manner new products and services and enhancements that meet customer demand, certification requirements and technical requirements;
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the introduction of new pricing and packaging models for our product offerings;
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the timing of the announcement or release of upgrades or new products and services by us or by our competitors;
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our ability to maintain scalable internal systems for reporting, order processing, license fulfillment, product delivery, purchasing, billing and general accounting, among other functions;
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our ability to control costs, including our operating expenses;
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changes to our effective tax rate;
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the increasing scale of our business and its effect on our ability to maintain historical rates of growth;
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our ability to attract and retain highly skilled employees, particularly those with relevant experience in software development and sales;
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our ability to conform to emerging industry standards and to technological developments by our competitors and customers;
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renewal rates and the amounts of the renewals for ELAs as original ELA terms expire;
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the timing and amount of software development costs that may be capitalized beginning when technological feasibility has been established and ending when the product is available for general release;
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unplanned events that could affect market perception of the quality or cost-effectiveness of our products and solutions; and
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the recoverability of benefits from goodwill and acquired intangible assets, and the potential impairment of these assets.
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the tendency of customers to wait until late in a quarter to commit to a purchase in the hope of obtaining more favorable pricing;
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the fourth quarter influence of customers spending their remaining capital budget authorization prior to new budget constraints in the following year; and
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seasonal influences, such as holiday or vacation periods.
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managing the length of the development cycle for new products and services and product and service enhancements, which has frequently been longer than we originally expected;
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increasing complexity of our product offerings as we introduce product suites such as our vCloud Suite, which can significantly increase the development time and effort necessary to achieve the interoperability of product suite components while maintaining product quality;
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managing customers’ transitions to new products and services, which can result in delays in their purchasing decisions;
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adapting to emerging and evolving industry standards and to technological developments by our competitors and customers;
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entering into new or unproven markets with which we have limited experience;
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reacting to trends and predicting which technologies will be successful and develop into industry standards;
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tailoring our business and pricing models appropriately as we enter new markets and respond to competitive pressures and technological changes;
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incorporating and integrating acquired products and technologies; and
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developing or expanding efficient sales channels.
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sensitive data regarding our business, including intellectual property and other proprietary data, could be stolen;
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our electronic communications systems, including email and other methods, could be disrupted, and our ability to conduct our business operations could be seriously damaged until such systems can be restored and secured;
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our ability to process customer orders and electronically deliver products and services could be degraded, and our distribution channels could be disrupted, resulting in delays in revenue recognition;
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defects and security vulnerabilities could be exploited or introduced into our software products or our hybrid cloud offering, thereby damaging the reputation and perceived reliability and security of our products and services and potentially making the data systems of our customers vulnerable to further data loss and cyberincidents; and
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personally identifiable or confidential data of our customers, employees and business partners could be stolen or lost.
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the difficulty of managing and staffing international offices and the increased travel, infrastructure and legal compliance costs associated with multiple international locations;
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increased exposure to foreign currency exchange rate risk;
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difficulties in enforcing contracts and collecting accounts receivable, and longer payment cycles, especially in emerging markets;
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difficulties in delivering support, training and documentation in certain foreign markets;
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tariffs and trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products and services in certain foreign markets;
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economic or political instability and security concerns in countries that are important to our international sales and operations;
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macroeconomic disruptions, such as monetary and credit crises, that can threaten the stability of local and regional financial institutions and decrease the value of our international investments;
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the overlap of different tax structures or changes in international tax laws;
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reduced protection for intellectual property rights, including reduced protection from software piracy, in some countries;
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difficulties in transferring funds from certain countries; and
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difficulties in maintaining appropriate controls relating to revenue recognition practices.
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If open source software programmers, most of whom we do not employ, do not continue to develop and enhance open source technologies, our development expenses could be increased and our product release and upgrade schedules could be delayed.
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One of the characteristics of open source software is that anyone can modify the existing software or develop new software that competes with existing open source software. As a result, competition can develop without the degree of overhead and lead time required by traditional proprietary software companies. It is also possible for new competitors with greater resources than ours to develop their own open source solutions, potentially reducing the demand for, and putting price pressure on, our solutions.
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It is possible that a court could hold that the licenses under which our open source products and services are developed and licensed are not enforceable or that someone could assert a claim for proprietary rights in a program developed and distributed under them. Any ruling by a court that these licenses are not enforceable, or that open source components of our product or services offerings may not be liberally copied, modified or distributed, may have the effect of preventing us from distributing or developing all or a portion of our products or services. In addition, licensors of open source software employed in our offerings may, from time to time, modify the terms of their license agreements in such a manner that those license terms may no longer be compatible with other open source licenses in our offerings or our end-user license agreement or terms of service, and thus could, among other consequences, prevent us from continuing to distribute the software code subject to the modified license or terms of service.
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Actions to protect and maintain ownership and control over our intellectual property could adversely affect our standing in the open source community, which in turn could limit our ability to continue to rely on this community, upon which we are dependent, as a resource to help develop and improve our open source products and services.
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disrupting our ongoing operations, diverting management from day-to-day responsibilities, increasing our expenses, and adversely impacting our business, financial condition and results of operations;
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failure of the acquired business to further our business strategy;
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uncertainties in achieving the expected benefits of an acquisition, including enhanced revenues, technology, human resources, cost savings, operating efficiencies and other synergies;
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reducing cash available for operations, stock repurchase programs and other uses and resulting in potentially dilutive issuances of equity securities or the incurrence of debt;
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incurring amortization expense related to identifiable intangible assets acquired that could impact our operating results; Difficulty integrating the operations, systems, technologies, products and personnel of the acquired businesses effectively;
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retaining and motivating key personnel from acquired companies;
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assuming the liabilities of the acquired business, including acquired litigation-related liabilities, and potential litigation arising from a proposed or completed acquisition;
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maintaining good relationships with customers or business partners of the acquired business or our own customers as a result of any integration of operations;
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product liability, customer liability or intellectual property liability associated with the sale of the acquired business’s products;
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unidentified issues not discovered during the diligence process, including issues with the acquired business’s intellectual property, product quality, security, privacy practices, accounting practices or legal contingencies;
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maintaining or establishing acceptable standards, controls, procedures or policies with respect to the acquired business; and
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risks relating to the challenges and costs of closing a transaction.
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the composition of our board of directors and, through our board of directors, any determination with respect to our business plans and policies;
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any determinations with respect to mergers, acquisitions and other business combinations;
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our acquisition or disposition of assets;
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our financing activities;
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certain changes to our certificate of incorporation;
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changes to the agreements we entered into in connection with our transition to becoming a public company;
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corporate opportunities that may be suitable for us and EMC;
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determinations with respect to enforcement of rights we may have against third parties, including with respect to intellectual property rights;
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the payment of dividends on our common stock; and
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the number of shares available for issuance under our stock plans for our prospective and existing employees.
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consolidate or merge with any other entity;
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acquire the stock or assets of another entity in excess of $100 million;
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issue any stock or securities except to our subsidiaries or pursuant to our employee benefit plans;
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establish the aggregate annual amount of shares we may issue in equity awards;
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dissolve, liquidate or wind us up;
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declare dividends on our stock;
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enter into any exclusive or exclusionary arrangement with a third party involving, in whole or in part, products or services that are similar to EMC’s; and
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amend, terminate or adopt any provision inconsistent with certain provisions of our certificate of incorporation or bylaws.
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successfully integrating technology from both us and EMC;
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creating offerings for which there is suitable demand in the marketplace;
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developing an effective go-to-market strategy;
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successfully competing and differentiating its offerings from those of its competitors; and
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having access to adequate financial resources to fund its operations.
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labor, tax, employee benefit, indemnification and other matters arising from our separation from EMC;
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our reseller arrangements with EMC;
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employee retention and recruiting;
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business combinations involving us;
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our ability to engage in activities with certain channel, technology or other marketing partners;
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sales or dispositions by EMC of all or any portion of its ownership interest in us;
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the nature, quality and pricing of services EMC has agreed to provide us or we have agreed to provide to EMC;
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arrangements with third parties that are exclusionary to EMC;
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arrangements with EMC for collaborative product or technology development, marketing and sales activities involving our technology, employees and other resources;
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business opportunities that may be attractive to both EMC and us; and
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product or technology development or marketing activities or customer agreements which may require the consent of EMC.
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that a majority of our board of directors consists of independent directors;
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that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;
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that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
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for an annual performance evaluation of the nominating and governance committee and compensation committee.
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the division of our board of directors into three classes, with each class serving for a staggered three-year term, which prevents stockholders from electing an entirely new board of directors at any annual meeting;
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the right of the board of directors to elect a director to fill a vacancy created by the expansion of the board of directors;
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following a 355 distribution of Class B common stock by EMC to its stockholders, the restriction that a beneficial owner of 10% or more of our Class B common stock may not vote in any election of directors unless such person or group also owns at least an equivalent percentage of Class A common stock or obtains approval of our board of directors prior to acquiring beneficial ownership of at least 5% of Class B common stock;
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the prohibition of cumulative voting in the election of directors or any other matters, which would otherwise allow less than a majority of stockholders to elect director candidates;
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the requirement for advance notice for nominations for election to the board of directors or for proposing matters that can be acted upon at a stockholders’ meeting;
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the ability of the board of directors to issue, without stockholder approval, up to 100,000,000 shares of preferred stock with terms set by the board of directors, which rights could be senior to those of common stock; and
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in the event that EMC or its successor-in-interest no longer owns shares of our common stock representing at least a majority of the votes entitled to be cast in the election of directors, stockholders may not act by written consent and may not call special meetings of the stockholders.
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amend certain provisions of our bylaws or certificate of incorporation;
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make certain acquisitions or dispositions;
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declare dividends, or undertake a recapitalization or liquidation;
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adopt any stockholder rights plan, “poison pill” or other similar arrangement;
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approve any transactions that would involve a merger, consolidation, restructuring, sale of substantially all of our assets or any of our subsidiaries or otherwise result in any person or entity obtaining control of us or any of our subsidiaries; or
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undertake certain other actions.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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Location
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Approximate
Sq. Ft.
(1)
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Principal Use(s)
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Palo Alto, CA
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owned:
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1,410,316
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|
(2)
|
|
Executive and administrative offices, sales and marketing, R&D and data center
|
leased:
|
103,201
|
|
|
||||
North and Latin American region (excluding Palo Alto, CA)
|
leased:
|
|
653,319
|
|
(3)
|
|
Administrative offices, sales and marketing, R&D and data center
|
Asia Pacific region
|
leased:
|
|
1,083,496
|
|
|
|
Administrative offices, sales and marketing, R&D and data center
|
Europe, Middle East and Africa region
|
leased:
|
|
389,191
|
|
|
|
Administrative offices, sales and marketing, R&D and data center
|
(1)
|
Of the total square feet owned or leased, approximately 786,000 square feet were under construction as of
December 31, 2013
.
|
(2)
|
Represents all of the right, title and interest purchased in a ground lease, which expires in 2046, covering the property and improvements located at VMware’s Palo Alto, California campus.
|
(3)
|
Includes leased space for a Washington data center facility, for which VMware is considered to be the owner for accounting purposes.
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
Name
|
|
Age
|
|
Position(s)
|
Patrick P. Gelsinger
|
|
52
|
|
Chief Executive Officer and Director
|
Carl M. Eschenbach
|
|
47
|
|
President and Chief Operating Officer
|
Jonathan C. Chadwick
|
|
48
|
|
Chief Financial Officer and Executive Vice President
|
Sanjay Poonen
|
|
44
|
|
Executive Vice President and General Manager, End-User Computing
|
Rangarajan (Raghu) Raghuram
|
|
51
|
|
Executive Vice President, Cloud Infrastructure and Management
|
S. Dawn Smith
|
|
50
|
|
Senior Vice President, General Counsel, Chief Compliance Officer and Secretary
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
Market Prices
|
||||||
|
High
|
|
Low
|
||||
Year ended December 31, 2013
|
|
|
|
||||
First Quarter
|
$
|
99.10
|
|
|
$
|
70.05
|
|
Second Quarter
|
79.71
|
|
|
64.86
|
|
||
Third Quarter
|
90.60
|
|
|
65.02
|
|
||
Fourth Quarter
|
90.91
|
|
|
76.51
|
|
||
Year ended December 31, 2012
|
|
|
|
||||
First Quarter
|
$
|
113.76
|
|
|
$
|
80.16
|
|
Second Quarter
|
118.79
|
|
|
82.56
|
|
||
Third Quarter
|
103.02
|
|
|
79.46
|
|
||
Fourth Quarter
|
99.55
|
|
|
81.50
|
|
|
Total Number of Shares Purchased (1)(2)
|
|
Average Price Paid Per Share
(1)(2)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(2)
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plans or Programs
(2)(3)
|
||||||
October 1 – October 31, 2013
|
314,992
|
|
|
$
|
81.21
|
|
|
314,992
|
|
|
$
|
750,142,995
|
|
November 1 – November 30, 2013
|
624,792
|
|
|
80.21
|
|
|
624,792
|
|
|
700,029,965
|
|
||
December 1 – December 31, 2013
|
479,554
|
|
|
85.35
|
|
|
467,928
|
|
|
660,039,408
|
|
||
|
1,419,338
|
|
|
82.17
|
|
|
1,407,712
|
|
|
660,039,408
|
|
(1)
|
Includes 11,626 shares repurchased and retired to satisfy tax withholding obligations that arose on the vesting of shares of restricted stock.
|
(2)
|
In November 2012, VMware’s Board of Directors authorized the repurchase of up to $250 million of VMware’s Class A common stock through the end of 2014. Purchases under the November 2012 authorization were completed in the quarter ended December 31, 2013. In August 2013, VMware’s Board of Directors authorized the repurchase of up to an additional
|
(3)
|
Represents the amounts remaining in the VMware stock repurchase authorizations.
|
|
Base
Period
12/31/2008
|
|
12/31/2009
|
|
12/31/2010
|
|
12/31/2011
|
|
12/31/2012
|
|
12/31/2013
|
||||||||||||
VMware, Inc.
|
$
|
100.00
|
|
|
$
|
178.89
|
|
|
$
|
375.31
|
|
|
$
|
351.16
|
|
|
$
|
397.38
|
|
|
$
|
378.68
|
|
S&P 500 Index
|
100.00
|
|
|
126.46
|
|
|
145.51
|
|
|
148.59
|
|
|
172.37
|
|
|
228.19
|
|
||||||
S&P 500 Systems Software Index
|
100.00
|
|
|
151.07
|
|
|
158.32
|
|
|
142.57
|
|
|
164.28
|
|
|
218.32
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
For the Year Ended December 31,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Summary of Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
License
|
$
|
2,270
|
|
|
$
|
2,087
|
|
|
$
|
1,841
|
|
|
$
|
1,401
|
|
|
$
|
1,029
|
|
Services
|
2,937
|
|
|
2,518
|
|
|
1,926
|
|
|
1,456
|
|
|
994
|
|
|||||
Total revenues
|
$
|
5,207
|
|
|
$
|
4,605
|
|
|
$
|
3,767
|
|
|
$
|
2,857
|
|
|
$
|
2,023
|
|
Operating income
|
1,093
|
|
|
872
|
|
|
735
|
|
|
428
|
|
|
219
|
|
|||||
Net income
|
1,014
|
|
|
746
|
|
|
724
|
|
|
357
|
|
|
197
|
|
|||||
Net income per weighted average share, basic, for Class A and Class B
|
$
|
2.36
|
|
|
$
|
1.75
|
|
|
$
|
1.72
|
|
|
$
|
0.87
|
|
|
$
|
0.50
|
|
Net income per weighted average share, diluted, for Class A and Class B
|
$
|
2.34
|
|
|
$
|
1.72
|
|
|
$
|
1.68
|
|
|
$
|
0.84
|
|
|
$
|
0.49
|
|
Weighted average shares, basic, for Class A and Class B
|
429,093
|
|
|
426,658
|
|
|
421,188
|
|
|
409,805
|
|
|
394,269
|
|
|||||
Weighted average shares, diluted, for Class A and Class B
|
433,415
|
|
|
433,974
|
|
|
431,750
|
|
|
423,446
|
|
|
399,776
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
December 31,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and short-term investments
(1)
|
$
|
6,175
|
|
|
$
|
4,631
|
|
|
$
|
4,512
|
|
|
$
|
3,324
|
|
|
$
|
2,514
|
|
Working capital
(1)
|
4,388
|
|
|
3,160
|
|
|
3,276
|
|
|
2,509
|
|
|
1,888
|
|
|||||
Total assets
|
12,327
|
|
|
10,596
|
|
|
8,681
|
|
|
6,797
|
|
|
5,067
|
|
|||||
Total unearned revenues
|
4,092
|
|
|
3,461
|
|
|
2,708
|
|
|
1,860
|
|
|
1,325
|
|
|||||
Long-term obligations
(2)
|
450
|
|
|
450
|
|
|
450
|
|
|
450
|
|
|
450
|
|
|||||
Stockholders’ equity
|
6,816
|
|
|
5,740
|
|
|
4,770
|
|
|
3,808
|
|
|
2,743
|
|
|||||
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
2,535
|
|
|
$
|
1,897
|
|
|
$
|
2,026
|
|
|
$
|
1,174
|
|
|
$
|
986
|
|
(1)
|
In 2012, VMware acquired all of the outstanding capital stock of Nicira, Inc. (“Nicira”) for $1,100 million, net of cash acquired, consisting of $1,083 million in cash and $17 million for the fair value of assumed equity attributed to pre-combination services. See Note B to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.
|
(2)
|
On
January 21, 2014
, in connection with our agreement to acquire A.W.S. Holding, LLC (“AirWatch Holding”), the sole member and equity holder of AirWatch LLC (“AirWatch”), we and EMC entered into a note exchange agreement providing for the issuance of
three
promissory notes in the aggregate principal amount of
$1,500
. See Note R to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
SDDC or
Software
-Defined Data Center
|
•
|
End-User Computing
|
•
|
Hybrid Cloud Computing
|
|
For the Year Ended December 31,
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
License
|
$
|
2,270
|
|
|
$
|
2,087
|
|
|
$
|
1,841
|
|
|
$
|
183
|
|
|
9
|
%
|
|
$
|
246
|
|
|
13
|
%
|
Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Software maintenance
|
2,563
|
|
|
2,153
|
|
|
1,640
|
|
|
410
|
|
|
19
|
|
|
513
|
|
|
31
|
|
|||||
Professional services
|
374
|
|
|
365
|
|
|
286
|
|
|
9
|
|
|
2
|
|
|
80
|
|
|
28
|
|
|||||
Total services
|
2,937
|
|
|
2,518
|
|
|
1,926
|
|
|
419
|
|
|
17
|
|
|
592
|
|
|
31
|
|
|||||
Total revenues
|
$
|
5,207
|
|
|
$
|
4,605
|
|
|
$
|
3,767
|
|
|
$
|
602
|
|
|
13
|
|
|
$
|
838
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
$
|
2,485
|
|
|
$
|
2,229
|
|
|
$
|
1,824
|
|
|
$
|
256
|
|
|
11
|
%
|
|
$
|
404
|
|
|
22
|
%
|
International
|
2,722
|
|
|
2,376
|
|
|
1,943
|
|
|
345
|
|
|
15
|
|
|
434
|
|
|
22
|
|
|||||
Total revenues
|
$
|
5,207
|
|
|
$
|
4,605
|
|
|
$
|
3,767
|
|
|
$
|
602
|
|
|
13
|
|
|
$
|
838
|
|
|
22
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Unearned license revenues
|
$
|
465
|
|
|
$
|
463
|
|
Unearned software maintenance revenues
|
3,304
|
|
|
2,755
|
|
||
Unearned professional services revenues
|
323
|
|
|
243
|
|
||
Total unearned revenues
|
$
|
4,092
|
|
|
$
|
3,461
|
|
|
For the Year Ended December 31,
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Cost of license revenues
|
$
|
208
|
|
|
$
|
235
|
|
|
$
|
205
|
|
|
$
|
(27
|
)
|
|
(11
|
)%
|
|
$
|
29
|
|
|
14
|
%
|
Stock-based compensation
|
2
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total expenses
|
$
|
210
|
|
|
$
|
237
|
|
|
$
|
207
|
|
|
$
|
(27
|
)
|
|
(11
|
)
|
|
$
|
30
|
|
|
14
|
|
% of Total revenues
|
4
|
%
|
|
5
|
%
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Cost of services revenues
|
$
|
491
|
|
|
$
|
456
|
|
|
$
|
392
|
|
|
$
|
35
|
|
|
8
|
%
|
|
$
|
65
|
|
|
17
|
%
|
Stock-based compensation
|
29
|
|
|
28
|
|
|
23
|
|
|
1
|
|
|
4
|
|
|
5
|
|
|
21
|
|
|||||
Total expenses
|
$
|
520
|
|
|
$
|
484
|
|
|
$
|
415
|
|
|
$
|
36
|
|
|
7
|
|
|
$
|
70
|
|
|
17
|
|
% of Total revenues
|
10
|
%
|
|
11
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Research and development
|
$
|
855
|
|
|
$
|
789
|
|
|
$
|
601
|
|
|
$
|
66
|
|
|
8
|
%
|
|
$
|
188
|
|
|
31
|
%
|
Stock-based compensation
|
227
|
|
|
210
|
|
|
174
|
|
|
17
|
|
|
8
|
|
|
36
|
|
|
21
|
|
|||||
Total expenses
|
$
|
1,082
|
|
|
$
|
999
|
|
|
$
|
775
|
|
|
$
|
82
|
|
|
8
|
|
|
$
|
224
|
|
|
29
|
|
% of Total revenues
|
21
|
%
|
|
22
|
%
|
|
21
|
%
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Sales and marketing
|
$
|
1,671
|
|
|
$
|
1,495
|
|
|
$
|
1,238
|
|
|
$
|
177
|
|
|
12
|
%
|
|
$
|
256
|
|
|
21
|
%
|
Stock-based compensation
|
144
|
|
|
150
|
|
|
96
|
|
|
(7
|
)
|
|
(5
|
)
|
|
54
|
|
|
57
|
|
|||||
Total expenses
|
$
|
1,815
|
|
|
$
|
1,645
|
|
|
$
|
1,334
|
|
|
$
|
170
|
|
|
10
|
|
|
$
|
311
|
|
|
23
|
|
% of Total revenues
|
35
|
%
|
|
36
|
%
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
General and administrative
|
$
|
363
|
|
|
$
|
320
|
|
|
$
|
261
|
|
|
$
|
43
|
|
|
14
|
%
|
|
$
|
59
|
|
|
23
|
%
|
Stock-based compensation
|
56
|
|
|
48
|
|
|
40
|
|
|
9
|
|
|
18
|
|
|
8
|
|
|
20
|
|
|||||
Total expenses
|
$
|
419
|
|
|
$
|
368
|
|
|
$
|
301
|
|
|
$
|
52
|
|
|
14
|
|
|
$
|
67
|
|
|
22
|
|
% of Total revenues
|
8
|
%
|
|
8
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
•
|
Pursuant to an ongoing reseller arrangement with EMC, EMC bundles our products and services with EMC's products and sells them to end-users.
|
•
|
EMC purchases products and services from us for internal use.
|
•
|
We recognize revenues for professional services based upon such contractual agreements with EMC.
|
•
|
From time to time, we and EMC enter into agreements to collaborate on technology projects, and EMC pays us for services we provide to EMC in connection with such projects.
|
|
Revenues and Receipts from EMC
|
|
Unearned Revenues from EMC
|
||||||||||||||||
|
For the Year Ended December 31,
|
|
As of December 31,
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
||||||||||
Reseller revenues
|
$
|
141
|
|
|
$
|
141
|
|
|
$
|
72
|
|
|
$
|
188
|
|
|
$
|
149
|
|
Professional services revenues
|
72
|
|
|
82
|
|
|
66
|
|
|
12
|
|
|
3
|
|
|||||
Internal-use revenues
|
32
|
|
|
9
|
|
|
3
|
|
|
20
|
|
|
28
|
|
|||||
Collaborative technology project receipts
|
7
|
|
|
7
|
|
|
2
|
|
|
n/a
|
|
|
n/a
|
|
•
|
We and EMC have ongoing arrangements pursuant to which we purchase products and services for internal use from EMC.
|
•
|
From time to time, we and EMC enter into agreements to collaborate on technology projects, and we pay EMC for services provided to us by EMC related to such projects.
|
•
|
In certain geographic regions where we do not have an established legal entity, we contract with EMC subsidiaries for support services and EMC personnel who are managed by us. The costs incurred by EMC on our behalf related to these employees are passed on to us and we are charged a mark-up intended to approximate costs that would have been charged had we contracted for such services with an unrelated third party. These costs are included as expenses in our consolidated statements of income and primarily include salaries, benefits, travel and rent. EMC also incurs certain administrative costs on our behalf in the U.S. that are recorded as expenses in our consolidated statements of income.
|
•
|
We incur interest expense on our note payable with EMC. See Note K and R to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Purchases of products and services
|
$
|
56
|
|
|
$
|
42
|
|
|
$
|
24
|
|
Collaborative technology project costs
|
13
|
|
|
n/a
|
|
|
n/a
|
|
|||
EMC subsidiary support and administrative costs
|
128
|
|
|
106
|
|
|
83
|
|
|||
Interest expense on note payable
|
4
|
|
|
5
|
|
|
4
|
|
|
As of December 31,
|
||||||
|
2013
|
|
2012
|
||||
Due to EMC
|
$
|
(92
|
)
|
|
$
|
(44
|
)
|
Due from EMC
|
93
|
|
|
112
|
|
||
Due to Pivotal
|
(22
|
)
|
|
n/a
|
|
||
Due from Pivotal
|
3
|
|
|
n/a
|
|
||
Due from (to) related parties, net
|
$
|
(18
|
)
|
|
$
|
68
|
|
|
|
|
|
||||
Income tax payable due to EMC
|
$
|
(22
|
)
|
|
$
|
(32
|
)
|
|
December 31,
|
||||||
2013
|
|
2012
|
|||||
Cash and cash equivalents
|
$
|
2,305
|
|
|
$
|
1,609
|
|
Short-term investments
|
3,870
|
|
|
3,022
|
|
||
Total cash, cash equivalents and short-term investments
|
$
|
6,175
|
|
|
$
|
4,631
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
2,535
|
|
|
$
|
1,897
|
|
|
$
|
2,026
|
|
Investing activities
|
(1,472
|
)
|
|
(2,035
|
)
|
|
(1,611
|
)
|
|||
Financing activities
|
(367
|
)
|
|
(209
|
)
|
|
(88
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
696
|
|
|
$
|
(347
|
)
|
|
$
|
327
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
||||||||||
Note payable to EMC
(1)
|
$
|
450
|
|
|
$
|
—
|
|
|
$
|
450
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating leases
(2)
|
786
|
|
|
58
|
|
|
96
|
|
|
68
|
|
|
564
|
|
|||||
Other agreements
(3)
|
87
|
|
|
36
|
|
|
26
|
|
|
11
|
|
|
14
|
|
|||||
Sub-Total
|
1,323
|
|
|
94
|
|
|
572
|
|
|
79
|
|
|
578
|
|
|||||
Uncertain tax positions
(4)
|
176
|
|
|
|
|
|
|
|
|
|
|||||||||
Total
|
$
|
1,499
|
|
|
|
|
|
|
|
|
|
(1)
|
See “Liquidity and Capital Resources” for a discussion of the
$1,500
note agreement we entered into with EMC on January 21, 2014, in connection with our agreement to acquire AirWatch Holding, the sole member and equity holder of AirWatch.
|
(2)
|
Our operating leases are primarily for facility space and land around the world.
|
(3)
|
Consisting of various contractual agreements, which include commitments on the lease for our Washington data center facility.
|
(4)
|
As of December 31, 2013, we had
$176
of non-current net unrecognized tax benefits. The timing of future payments relating to these obligations are highly uncertain. Given this uncertainty, unrecognized tax benefits as of December 31, 2013 could be reduced by approximately $4 in the next 12 months.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Schedule:
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Revenues:
|
|
|
|
|
|
||||||
License
|
$
|
2,270
|
|
|
$
|
2,087
|
|
|
$
|
1,841
|
|
Services
|
2,937
|
|
|
2,518
|
|
|
1,926
|
|
|||
Total revenues
|
5,207
|
|
|
4,605
|
|
|
3,767
|
|
|||
Operating expenses (1):
|
|
|
|
|
|
||||||
Cost of license revenues
|
210
|
|
|
237
|
|
|
207
|
|
|||
Cost of services revenues
|
520
|
|
|
484
|
|
|
415
|
|
|||
Research and development
|
1,082
|
|
|
999
|
|
|
775
|
|
|||
Sales and marketing
|
1,815
|
|
|
1,645
|
|
|
1,334
|
|
|||
General and administrative
|
419
|
|
|
368
|
|
|
301
|
|
|||
Realignment charges
|
68
|
|
|
—
|
|
|
—
|
|
|||
Operating income
|
1,093
|
|
|
872
|
|
|
735
|
|
|||
Investment income
|
30
|
|
|
27
|
|
|
16
|
|
|||
Interest expense with EMC
|
(4
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|||
Other income (expense), net
|
28
|
|
|
(1
|
)
|
|
47
|
|
|||
Income before income taxes
|
1,147
|
|
|
893
|
|
|
794
|
|
|||
Income tax provision
|
133
|
|
|
147
|
|
|
70
|
|
|||
Net income
|
$
|
1,014
|
|
|
$
|
746
|
|
|
$
|
724
|
|
Net income per weighted-average share, basic for Class A and Class B
|
$
|
2.36
|
|
|
$
|
1.75
|
|
|
$
|
1.72
|
|
Net income per weighted-average share, diluted for Class A and Class B
|
$
|
2.34
|
|
|
$
|
1.72
|
|
|
$
|
1.68
|
|
Weighted-average shares, basic for Class A and Class B
|
429,093
|
|
|
426,658
|
|
|
421,188
|
|
|||
Weighted-average shares, diluted for Class A and Class B
|
433,415
|
|
|
433,974
|
|
|
431,750
|
|
|||
__________
|
|
|
|
|
|
||||||
(1) Includes stock-based compensation as follows:
|
|
|
|
|
|
||||||
Cost of license revenues
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Cost of services revenues
|
29
|
|
|
28
|
|
|
23
|
|
|||
Research and development
|
227
|
|
|
210
|
|
|
174
|
|
|||
Sales and marketing
|
144
|
|
|
150
|
|
|
96
|
|
|||
General and administrative
|
56
|
|
|
48
|
|
|
40
|
|
|||
Realignment charges
|
6
|
|
|
—
|
|
|
—
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net income
|
$
|
1,014
|
|
|
$
|
746
|
|
|
$
|
724
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Changes in market value of available-for-sale securities:
|
|
|
|
|
|
||||||
Unrealized gains, net of taxes of $0, $3, and $1
|
—
|
|
|
5
|
|
|
2
|
|
|||
Reclassification of (gains) realized during the period, net of taxes of $(1), $0, and $(12)
|
(2
|
)
|
|
—
|
|
|
(20
|
)
|
|||
Total other comprehensive income (loss)
|
(2
|
)
|
|
5
|
|
|
(18
|
)
|
|||
Total comprehensive income, net of taxes
|
$
|
1,012
|
|
|
$
|
751
|
|
|
$
|
706
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,305
|
|
|
$
|
1,609
|
|
Short-term investments
|
3,870
|
|
|
3,022
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $2 and $4
|
1,220
|
|
|
1,151
|
|
||
Due from related parties, net
|
—
|
|
|
68
|
|
||
Deferred tax assets
|
190
|
|
|
179
|
|
||
Other current assets
|
96
|
|
|
91
|
|
||
Total current assets
|
7,681
|
|
|
6,120
|
|
||
Property and equipment, net
|
845
|
|
|
665
|
|
||
Other assets, net
|
107
|
|
|
128
|
|
||
Deferred tax assets
|
60
|
|
|
103
|
|
||
Intangible assets, net
|
607
|
|
|
732
|
|
||
Goodwill
|
3,027
|
|
|
2,848
|
|
||
Total assets
|
$
|
12,327
|
|
|
$
|
10,596
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
109
|
|
|
$
|
90
|
|
Accrued expenses and other
|
608
|
|
|
644
|
|
||
Due to related parties, net
|
18
|
|
|
—
|
|
||
Unearned revenues
|
2,558
|
|
|
2,196
|
|
||
Total current liabilities
|
3,293
|
|
|
2,930
|
|
||
Note payable to EMC
|
450
|
|
|
450
|
|
||
Unearned revenues
|
1,534
|
|
|
1,265
|
|
||
Other liabilities
|
234
|
|
|
211
|
|
||
Total liabilities
|
5,511
|
|
|
4,856
|
|
||
Commitments and contingencies (see Note M)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Class A common stock, par value $.01; authorized 2,500,000 shares; issued and outstanding 130,349 and 128,688 shares
|
1
|
|
|
1
|
|
||
Class B convertible common stock, par value $.01; authorized 1,000,000 shares; issued and outstanding 300,000 shares
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
3,496
|
|
|
3,432
|
|
||
Accumulated other comprehensive income
|
4
|
|
|
6
|
|
||
Retained earnings
|
3,312
|
|
|
2,298
|
|
||
Total stockholders’ equity
|
6,816
|
|
|
5,740
|
|
||
Total liabilities and stockholders’ equity
|
$
|
12,327
|
|
|
$
|
10,596
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
1,014
|
|
|
$
|
746
|
|
|
$
|
724
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
337
|
|
|
355
|
|
|
316
|
|
|||
Stock-based compensation
|
454
|
|
|
426
|
|
|
335
|
|
|||
Excess tax benefits from stock-based compensation
|
(70
|
)
|
|
(138
|
)
|
|
(224
|
)
|
|||
Deferred income taxes, net
|
56
|
|
|
(74
|
)
|
|
(20
|
)
|
|||
Non-cash realignment charges
|
15
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of Terremark investment
|
—
|
|
|
—
|
|
|
(56
|
)
|
|||
Gain on disposition of certain lines of business and other, net
|
(31
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
7
|
|
|
2
|
|
|
21
|
|
|||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(71
|
)
|
|
(268
|
)
|
|
(263
|
)
|
|||
Other assets
|
(59
|
)
|
|
(112
|
)
|
|
(76
|
)
|
|||
Due to/from related parties, net
|
60
|
|
|
6
|
|
|
(18
|
)
|
|||
Accounts payable
|
30
|
|
|
24
|
|
|
(16
|
)
|
|||
Accrued expenses
|
1
|
|
|
22
|
|
|
115
|
|
|||
Income taxes receivable from EMC
|
17
|
|
|
19
|
|
|
269
|
|
|||
Income taxes payable
|
19
|
|
|
138
|
|
|
79
|
|
|||
Unearned revenues
|
756
|
|
|
751
|
|
|
840
|
|
|||
Net cash provided by operating activities
|
2,535
|
|
|
1,897
|
|
|
2,026
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Additions to property and equipment
|
(345
|
)
|
|
(234
|
)
|
|
(230
|
)
|
|||
Purchase of leasehold interest (see Note H)
|
—
|
|
|
—
|
|
|
(151
|
)
|
|||
Capitalized software development costs
|
—
|
|
|
—
|
|
|
(74
|
)
|
|||
Purchases of available-for-sale securities
|
(3,181
|
)
|
|
(3,189
|
)
|
|
(2,668
|
)
|
|||
Sales of available-for-sale securities
|
1,599
|
|
|
1,880
|
|
|
816
|
|
|||
Maturities of available-for-sale securities
|
717
|
|
|
902
|
|
|
974
|
|
|||
Proceeds from disposition of certain lines of business
|
37
|
|
|
—
|
|
|
—
|
|
|||
Sale of strategic investments
|
—
|
|
|
—
|
|
|
79
|
|
|||
Business acquisitions, net of cash acquired
|
(289
|
)
|
|
(1,344
|
)
|
|
(304
|
)
|
|||
Transfer of net assets under common control
|
—
|
|
|
—
|
|
|
(22
|
)
|
|||
Other investing
|
(10
|
)
|
|
(50
|
)
|
|
(31
|
)
|
|||
Net cash used in investing activities
|
(1,472
|
)
|
|
(2,035
|
)
|
|
(1,611
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock
|
197
|
|
|
253
|
|
|
338
|
|
|||
Repurchase of common stock
|
(508
|
)
|
|
(467
|
)
|
|
(526
|
)
|
|||
Excess tax benefits from stock-based compensation
|
70
|
|
|
138
|
|
|
224
|
|
|||
Shares repurchased for tax withholdings on vesting of restricted stock
|
(126
|
)
|
|
(133
|
)
|
|
(124
|
)
|
|||
Net cash used in financing activities
|
(367
|
)
|
|
(209
|
)
|
|
(88
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
696
|
|
|
(347
|
)
|
|
327
|
|
|||
Cash and cash equivalents at beginning of the period
|
1,609
|
|
|
1,956
|
|
|
1,629
|
|
|||
Cash and cash equivalents at end of the period
|
$
|
2,305
|
|
|
$
|
1,609
|
|
|
$
|
1,956
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
6
|
|
|
$
|
7
|
|
|
$
|
6
|
|
Cash paid (refunded) for taxes, net
|
35
|
|
|
56
|
|
|
(269
|
)
|
|||
Non-cash items:
|
|
|
|
|
|
||||||
Changes in capital additions, accrued but not paid
|
$
|
(16
|
)
|
|
$
|
37
|
|
|
$
|
12
|
|
|
Class A
Common Stock
|
|
Class B
Convertible
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Stockholders’
Equity
|
||||||||||||||||||
Shares
|
|
Par Value
|
|
Shares
|
|
Par Value
|
|
||||||||||||||||||||||
Balance, January 1, 2011
|
117
|
|
|
$
|
1
|
|
|
300
|
|
|
$
|
3
|
|
|
$
|
2,956
|
|
|
$
|
828
|
|
|
$
|
19
|
|
|
$
|
3,807
|
|
Proceeds from issuance of common stock
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
338
|
|
|
—
|
|
|
—
|
|
|
338
|
|
||||||
Repurchase and retirement of common stock
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(526
|
)
|
|
—
|
|
|
—
|
|
|
(526
|
)
|
||||||
Issuance of restricted stock, net of cancellations
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares repurchased and retired or withheld for tax withholdings on vesting of restricted stock
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(122
|
)
|
|
—
|
|
|
—
|
|
|
(122
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
344
|
|
|
—
|
|
|
—
|
|
|
344
|
|
||||||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
223
|
|
|
—
|
|
|
—
|
|
|
223
|
|
||||||
Credit from tax sharing arrangement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Total other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(18
|
)
|
||||||
Capital distribution to EMC, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
724
|
|
|
—
|
|
|
724
|
|
||||||
Balance, December 31, 2011
|
125
|
|
|
1
|
|
|
300
|
|
|
3
|
|
|
3,213
|
|
|
1,552
|
|
|
1
|
|
|
4,770
|
|
||||||
Proceeds from issuance of common stock
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
253
|
|
|
—
|
|
|
—
|
|
|
253
|
|
||||||
Issuance of stock options in acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||||
Repurchase and retirement of common stock
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(467
|
)
|
|
—
|
|
|
—
|
|
|
(467
|
)
|
||||||
Issuance of restricted stock, net of cancellations
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares repurchased and retired or withheld for tax withholdings on vesting of restricted stock
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(136
|
)
|
|
—
|
|
|
—
|
|
|
(136
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
420
|
|
|
—
|
|
|
—
|
|
|
420
|
|
||||||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
136
|
|
|
—
|
|
|
—
|
|
|
136
|
|
||||||
Amount due from tax sharing arrangement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||||
Total other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
746
|
|
|
—
|
|
|
746
|
|
||||||
Balance, December 31, 2012
|
129
|
|
|
1
|
|
|
300
|
|
|
3
|
|
|
3,432
|
|
|
2,298
|
|
|
6
|
|
|
5,740
|
|
||||||
Proceeds from issuance of common stock
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
197
|
|
|
—
|
|
|
—
|
|
|
197
|
|
||||||
Repurchase and retirement of common stock
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(508
|
)
|
|
—
|
|
|
—
|
|
|
(508
|
)
|
||||||
Issuance of restricted stock, net of cancellations
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares repurchased and retired or withheld for tax withholdings on vesting of restricted stock
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(126
|
)
|
|
—
|
|
|
—
|
|
|
(126
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
436
|
|
|
—
|
|
|
—
|
|
|
436
|
|
||||||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
48
|
|
||||||
Amount due from tax sharing arrangement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||||
Total other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||
Reduction in capital from EMC
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
||||||
Contribution to Pivotal
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||||
Reclassification of liability-classified awards to equity stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,014
|
|
|
—
|
|
|
1,014
|
|
||||||
Balance, December 31, 2013
|
130
|
|
|
$
|
1
|
|
|
300
|
|
|
$
|
3
|
|
|
$
|
3,496
|
|
|
$
|
3,312
|
|
|
$
|
4
|
|
|
$
|
6,816
|
|
Buildings
|
|
Term of underlying land lease
|
Land improvements
|
|
15 years
|
Furniture and fixtures
|
|
5 years
|
Equipment and software
|
|
2 years up to 5 years
|
Leasehold improvements
|
|
Lease term, not to exceed 20 years
|
Intangible assets
|
$
|
62
|
|
Goodwill
|
233
|
|
|
Deferred tax assets, net
|
4
|
|
|
Total assets acquired
|
299
|
|
|
Other assumed liabilities, net of other acquired assets
|
(10
|
)
|
|
Total net liabilities assumed
|
(10
|
)
|
|
Fair value of assets acquired and net liabilities assumed
|
$
|
289
|
|
|
Weighted-Average
Useful Lives
(in years)
|
|
Fair Value
Amount
|
||
Purchased technology
|
6
|
|
$
|
49
|
|
Vendor contracts
|
8
|
|
3
|
|
|
In-process research and development (“IPR&D”)
|
|
|
10
|
|
|
Total intangible assets, net, excluding goodwill
|
|
|
$
|
62
|
|
Intangible assets
|
$
|
335
|
|
Goodwill
|
893
|
|
|
Total intangible assets acquired
|
1,228
|
|
|
Deferred tax liabilities, net
|
(77
|
)
|
|
Income taxes payable
|
(50
|
)
|
|
Other assumed liabilities, net of other acquired assets
|
(1
|
)
|
|
Total net liabilities assumed
|
(128
|
)
|
|
Fair value of intangible assets acquired and net liabilities assumed
|
$
|
1,100
|
|
|
Weighted-Average
Useful Lives (in years) |
|
Fair Value
Amount |
||
Purchased technology
|
7
|
|
$
|
266
|
|
Trademarks and trade names
|
10
|
|
20
|
|
|
IPR&D
|
|
|
49
|
|
|
Total intangible assets acquired, net, excluding goodwill
|
|
|
$
|
335
|
|
|
For the Year
Ended December 31,
|
||||||
|
2012
|
|
2011
|
||||
Pro forma adjusted total revenue
|
$
|
4,607
|
|
|
$
|
3,770
|
|
Pro forma adjusted net income
|
687
|
|
|
611
|
|
||
Pro forma adjusted net income per weighted-average share, diluted for Class A and Class B
|
$
|
1.58
|
|
|
$
|
1.41
|
|
Intangible assets
|
$
|
88
|
|
Goodwill
|
187
|
|
|
Total intangible assets acquired
|
275
|
|
|
Deferred tax liabilities, net
|
(8
|
)
|
|
Other assumed liabilities, net of other acquired assets
|
(6
|
)
|
|
Total net liabilities assumed
|
(14
|
)
|
|
Fair value of intangible assets acquired and net liabilities assumed
|
$
|
261
|
|
Intangible assets
|
$
|
105
|
|
Goodwill
|
188
|
|
|
Deferred tax assets, net
|
23
|
|
|
Total assets acquired
|
316
|
|
|
Other assumed liabilities, net of acquired assets
|
(12
|
)
|
|
Total net liabilities assumed
|
(12
|
)
|
|
Fair value of assets acquired and net liabilities assumed
|
$
|
304
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Balance, beginning of the year
|
$
|
732
|
|
|
$
|
407
|
|
Additions to intangible assets related to business combinations
|
62
|
|
|
423
|
|
||
Disposition of certain business activities (See Note C)
|
(54
|
)
|
|
—
|
|
||
Contribution to Pivotal (see Note O)
|
(28
|
)
|
|
—
|
|
||
Change in accumulated amortization
|
(107
|
)
|
|
(96
|
)
|
||
Other adjustments
|
2
|
|
|
(2
|
)
|
||
Balance, end of the year
|
$
|
607
|
|
|
$
|
732
|
|
2013
|
Weighted-Average
Useful Lives
(in years)
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||
Purchased technology
|
6.6
|
|
$
|
580
|
|
|
$
|
(163
|
)
|
|
$
|
417
|
|
Leasehold interest
|
34.9
|
|
145
|
|
|
(11
|
)
|
|
134
|
|
|||
Customer relationships and customer lists
|
8.7
|
|
75
|
|
|
(37
|
)
|
|
38
|
|
|||
Trademarks and trade names
|
9.1
|
|
24
|
|
|
(7
|
)
|
|
17
|
|
|||
IPR&D
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
Total intangible assets, net, excluding goodwill
|
|
|
$
|
825
|
|
|
$
|
(218
|
)
|
|
$
|
607
|
|
2012
|
Weighted-Average
Useful Lives
(in years)
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||
Purchased technology
|
6.1
|
|
$
|
757
|
|
|
$
|
(274
|
)
|
|
$
|
483
|
|
Leasehold interest
|
34.9
|
|
145
|
|
|
(7
|
)
|
|
138
|
|
|||
Customer relationships and customer lists
|
7.3
|
|
146
|
|
|
(63
|
)
|
|
83
|
|
|||
Trademarks and trade names
|
8.0
|
|
45
|
|
|
(17
|
)
|
|
28
|
|
|||
Other
|
3.0
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|||
Total intangible assets, net, excluding goodwill
|
|
|
$
|
1,096
|
|
|
$
|
(364
|
)
|
|
$
|
732
|
|
2014
|
$
|
97
|
|
2015
|
95
|
|
|
2016
|
86
|
|
|
2017
|
81
|
|
|
2018
|
69
|
|
|
Thereafter
|
178
|
|
|
Total
|
$
|
606
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Balance, beginning of the year
|
$
|
2,848
|
|
|
$
|
1,759
|
|
Increase in goodwill related to business combination
|
233
|
|
|
1,092
|
|
||
Contribution to Pivotal (see Note O)
|
(28
|
)
|
|
—
|
|
||
Reduction related to disposition of certain business activities
|
(4
|
)
|
|
—
|
|
||
Deferred tax adjustments to purchase price allocations on acquisitions
|
(20
|
)
|
|
(4
|
)
|
||
Other adjustments to purchase price allocations on acquisitions
|
(2
|
)
|
|
1
|
|
||
Balance, end of the year
|
$
|
3,027
|
|
|
$
|
2,848
|
|
|
For the Year Ended December 31, 2013
|
||||||||||||||||||
|
Balance as of
January 1, 2013
|
|
Realignment
Charges
|
|
Utilization
|
|
Balance as of
December 31, 2013
|
|
Non-Cash Portion
of Utilization
|
||||||||||
Workforce reductions
|
$
|
—
|
|
|
$
|
54
|
|
|
$
|
(54
|
)
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
Asset impairments, exit of facilities and other exit costs
|
—
|
|
|
14
|
|
|
(11
|
)
|
|
3
|
|
|
(9
|
)
|
|||||
Total
|
$
|
—
|
|
|
$
|
68
|
|
|
$
|
(65
|
)
|
|
$
|
3
|
|
|
$
|
(15
|
)
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net income
|
$
|
1,014
|
|
|
$
|
746
|
|
|
$
|
724
|
|
Weighted-average shares, basic for Class A and Class B
|
429
|
|
|
427
|
|
|
421
|
|
|||
Effect of dilutive securities
|
4
|
|
|
7
|
|
|
11
|
|
|||
Weighted-average shares, diluted for Class A and Class B
|
433
|
|
|
434
|
|
|
432
|
|
|||
Net income per weighted-average share, basic for Class A and Class B
|
$
|
2.36
|
|
|
$
|
1.75
|
|
|
$
|
1.72
|
|
Net income per weighted-average share, diluted for Class A and Class B
|
$
|
2.34
|
|
|
$
|
1.72
|
|
|
$
|
1.68
|
|
|
December 31, 2013
|
||||||||||||||
|
Cost or Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Aggregate
Fair Value |
||||||||
U.S. Government and agency obligations
|
$
|
537
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
537
|
|
U.S. and foreign corporate debt securities
|
2,351
|
|
|
6
|
|
|
(3
|
)
|
|
2,354
|
|
||||
Foreign governments and multi-national agency obligations
|
37
|
|
|
—
|
|
|
—
|
|
|
37
|
|
||||
Municipal obligations
|
811
|
|
|
3
|
|
|
—
|
|
|
814
|
|
||||
Mortgage-backed securities
|
129
|
|
|
—
|
|
|
(1
|
)
|
|
128
|
|
||||
Total investments
|
$
|
3,865
|
|
|
$
|
9
|
|
|
$
|
(4
|
)
|
|
$
|
3,870
|
|
|
December 31, 2012
|
||||||||||||||
|
Cost or Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Aggregate
Fair Value
|
||||||||
U.S. Government and agency obligations
|
$
|
374
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
375
|
|
U.S. and foreign corporate debt securities
|
1,545
|
|
|
6
|
|
|
(1
|
)
|
|
1,550
|
|
||||
Foreign governments and multi-national agency obligations
|
41
|
|
|
—
|
|
|
—
|
|
|
41
|
|
||||
Municipal obligations
|
973
|
|
|
3
|
|
|
—
|
|
|
976
|
|
||||
Asset-backed securities
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Mortgage-backed securities
|
79
|
|
|
—
|
|
|
—
|
|
|
79
|
|
||||
Total investments
|
$
|
3,013
|
|
|
$
|
10
|
|
|
$
|
(1
|
)
|
|
$
|
3,022
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||
|
Fair Value
|
|
Unrealized Losses
|
|
Fair Value
|
|
Unrealized Losses
|
||||||||
U.S. and foreign corporate debt securities
|
$
|
750
|
|
|
$
|
(3
|
)
|
|
$
|
316
|
|
|
$
|
(1
|
)
|
Mortgage-backed securities
|
91
|
|
|
(1
|
)
|
|
28
|
|
|
—
|
|
||||
Total
|
$
|
841
|
|
|
$
|
(4
|
)
|
|
$
|
344
|
|
|
$
|
(1
|
)
|
|
Amortized
Cost Basis
|
|
Aggregate
Fair Value
|
||||
Due within one year
|
$
|
807
|
|
|
$
|
808
|
|
Due after 1 year through 5 years
|
2,864
|
|
|
2,869
|
|
||
Due after 5 years
|
194
|
|
|
193
|
|
||
Total investments
|
$
|
3,865
|
|
|
$
|
3,870
|
|
|
December 31, 2013
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Money-market funds
|
$
|
1,808
|
|
|
$
|
—
|
|
|
$
|
1,808
|
|
U.S. Government and agency obligations
|
385
|
|
|
152
|
|
|
537
|
|
|||
U.S. and foreign corporate debt securities
|
—
|
|
|
2,366
|
|
|
2,366
|
|
|||
Foreign governments and multi-national agency obligations
|
—
|
|
|
37
|
|
|
37
|
|
|||
Municipal obligations
|
—
|
|
|
816
|
|
|
816
|
|
|||
Asset-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|||
Mortgage-backed securities
|
—
|
|
|
128
|
|
|
128
|
|
|||
Total
|
$
|
2,193
|
|
|
$
|
3,499
|
|
|
$
|
5,692
|
|
|
December 31, 2012
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Money-market funds
|
$
|
1,125
|
|
|
$
|
—
|
|
|
$
|
1,125
|
|
U.S. Government and agency obligations
|
250
|
|
|
155
|
|
|
405
|
|
|||
U.S. and foreign corporate debt securities
|
—
|
|
|
1,567
|
|
|
1,567
|
|
|||
Foreign governments and multi-national agency obligations
|
—
|
|
|
41
|
|
|
41
|
|
|||
Municipal obligations
|
—
|
|
|
976
|
|
|
976
|
|
|||
Asset-backed securities
|
—
|
|
|
1
|
|
|
1
|
|
|||
Mortgage-backed securities
|
—
|
|
|
79
|
|
|
79
|
|
|||
Total
|
$
|
1,375
|
|
|
$
|
2,819
|
|
|
$
|
4,194
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Equipment and software
|
$
|
752
|
|
|
$
|
636
|
|
Buildings and improvements
|
584
|
|
|
438
|
|
||
Furniture and fixtures
|
77
|
|
|
67
|
|
||
Construction in progress
|
120
|
|
|
98
|
|
||
Total property and equipment
|
1,533
|
|
|
1,239
|
|
||
Accumulated depreciation
|
(688
|
)
|
|
(574
|
)
|
||
Total property and equipment, net
|
$
|
845
|
|
|
$
|
665
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Salaries, commissions, bonuses, and benefits
|
$
|
303
|
|
|
$
|
292
|
|
Accrued partner liabilities
|
135
|
|
|
129
|
|
||
Other
|
170
|
|
|
223
|
|
||
Total
|
$
|
608
|
|
|
$
|
644
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Unearned license revenues
|
$
|
465
|
|
|
$
|
463
|
|
Unearned software maintenance revenues
|
3,304
|
|
|
2,755
|
|
||
Unearned professional services revenues
|
323
|
|
|
243
|
|
||
Total unearned revenues
|
$
|
4,092
|
|
|
$
|
3,461
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Domestic
|
$
|
160
|
|
|
$
|
177
|
|
|
$
|
112
|
|
International
|
987
|
|
|
716
|
|
|
682
|
|
|||
Total
|
$
|
1,147
|
|
|
$
|
893
|
|
|
$
|
794
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Federal:
|
|
|
|
|
|
||||||
Current
|
$
|
1
|
|
|
$
|
161
|
|
|
$
|
43
|
|
Deferred
|
57
|
|
|
(71
|
)
|
|
(24
|
)
|
|||
|
58
|
|
|
90
|
|
|
19
|
|
|||
State:
|
|
|
|
|
|
||||||
Current
|
2
|
|
|
13
|
|
|
1
|
|
|||
Deferred
|
6
|
|
|
(7
|
)
|
|
11
|
|
|||
|
8
|
|
|
6
|
|
|
12
|
|
|||
Foreign:
|
|
|
|
|
|
||||||
Current
|
72
|
|
|
44
|
|
|
41
|
|
|||
Deferred
|
(5
|
)
|
|
7
|
|
|
(2
|
)
|
|||
|
67
|
|
|
51
|
|
|
39
|
|
|||
Total provision for income taxes
|
$
|
133
|
|
|
$
|
147
|
|
|
$
|
70
|
|
|
For the Year Ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Statutory federal tax rate
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
State taxes, net of federal benefit
|
1
|
%
|
|
1
|
%
|
|
2
|
%
|
Tax rate differential for international jurisdictions
|
(22
|
)%
|
|
(22
|
)%
|
|
(25
|
)%
|
U.S. tax credits
(1)
|
(7
|
)%
|
|
—
|
%
|
|
(6
|
)%
|
Permanent items and other
|
5
|
%
|
|
3
|
%
|
|
3
|
%
|
Effective tax rate
|
12
|
%
|
|
17
|
%
|
|
9
|
%
|
(1)
|
The federal research credit was enacted retroactively through December 31, 2013, which was passed by the United States Congress during January 2013.
|
|
December 31,
|
||||||
2013
|
|
2012
|
|||||
Deferred tax assets:
|
|
|
|
||||
Unearned revenue
|
$
|
224
|
|
|
$
|
211
|
|
Accruals and other
|
45
|
|
|
43
|
|
||
Stock-based compensation
|
68
|
|
|
65
|
|
||
Tax credit and net operating loss carryforwards
|
119
|
|
|
130
|
|
||
Other non-current assets
|
14
|
|
|
—
|
|
||
Basis difference in investment in business
|
20
|
|
|
—
|
|
||
Net deferred tax assets
|
490
|
|
|
449
|
|
||
Valuation allowance
|
(94
|
)
|
|
(64
|
)
|
||
Total deferred tax assets
|
396
|
|
|
385
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property, plant and equipment, net
|
(70
|
)
|
|
(51
|
)
|
||
Intangibles and other assets, net
|
(76
|
)
|
|
(55
|
)
|
||
Total deferred tax liabilities
|
(146
|
)
|
|
(106
|
)
|
||
Total deferred tax assets, net
|
$
|
250
|
|
|
$
|
279
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Payments from VMware to EMC
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
12
|
|
Payments from EMC to VMware
|
32
|
|
|
19
|
|
|
314
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Balance, beginning of the year
|
$
|
158
|
|
|
$
|
95
|
|
|
$
|
109
|
|
Tax positions related to current year:
|
|
|
|
|
|
||||||
Additions
|
32
|
|
|
12
|
|
|
19
|
|
|||
Reductions
|
—
|
|
|
(4
|
)
|
|
(2
|
)
|
|||
Tax positions related to prior years:
|
|
|
|
|
|
||||||
Additions related to acquisitions completed in 2012
|
—
|
|
|
60
|
|
|
—
|
|
|||
Additions
|
—
|
|
|
—
|
|
|
3
|
|
|||
Reductions
|
(12
|
)
|
|
—
|
|
|
(9
|
)
|
|||
Settlements
|
(2
|
)
|
|
—
|
|
|
(23
|
)
|
|||
Reductions resulting from a lapse of the statute of limitations
|
(8
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|||
Foreign currency effects
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|||
Balance, end of the year
|
$
|
167
|
|
|
$
|
158
|
|
|
$
|
95
|
|
2014
|
$
|
58
|
|
2015
|
53
|
|
|
2016
|
43
|
|
|
2017
|
36
|
|
|
2018
|
32
|
|
|
Thereafter
|
564
|
|
|
Total minimum lease payments
|
$
|
786
|
|
Authorization Date
|
|
Amount Authorized
|
|
Expiration Date
|
|
Status
|
August 2013
|
|
$700
|
|
End of 2015
|
|
Open
|
November 2012
|
|
250
|
|
End of 2014
|
|
Completed in Q4'13
|
February 2012
|
|
600
|
|
End of 2013
|
|
Completed in Q2'13
|
February 2011
|
|
550
|
|
End of 2012
|
|
Completed in Q2'12
|
March 2010
|
|
400
|
|
End of 2011
|
|
Completed in Q1'11
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Aggregate purchase price
|
$
|
508
|
|
|
$
|
467
|
|
|
$
|
526
|
|
Class A common shares repurchased
|
7
|
|
|
5
|
|
|
6
|
|
|||
Weighted-average price per share
|
$
|
76.58
|
|
|
$
|
91.10
|
|
|
$
|
88.37
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Cash proceeds
|
$
|
76
|
|
|
$
|
69
|
|
|
$
|
57
|
|
Class A common shares purchased
|
1
|
|
|
1
|
|
|
1
|
|
|||
Weighted-average price per share
|
$
|
65.97
|
|
|
$
|
77.34
|
|
|
$
|
69.81
|
|
|
VMware Stock Options
|
|
EMC Stock Options
|
||||||||||
|
Number of
Shares
|
|
Weighted-
Average
Exercise Price
(per share)
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise Price
(per share)
|
||||||
Outstanding, January 1, 2011
|
27
|
|
|
$
|
33.54
|
|
|
3
|
|
|
$
|
13.93
|
|
Options relating to employees transferred to/from EMC, net
|
—
|
|
|
—
|
|
|
2
|
|
|
13.53
|
|
||
Forfeited
|
(1
|
)
|
|
40.98
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
(10
|
)
|
|
28.64
|
|
|
(1
|
)
|
|
13.58
|
|
||
Outstanding, December 31, 2011
|
16
|
|
|
35.27
|
|
|
4
|
|
|
13.16
|
|
||
Granted
|
1
|
|
|
4.67
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(1
|
)
|
|
42.07
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
(6
|
)
|
|
30.44
|
|
|
(1
|
)
|
|
12.35
|
|
||
Outstanding, December 31, 2012
|
10
|
|
|
34.36
|
|
|
3
|
|
|
15.12
|
|
||
Granted
|
1
|
|
|
71.53
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
(5
|
)
|
|
28.12
|
|
|
(1
|
)
|
|
15.39
|
|
||
Outstanding, December 31, 2013
|
6
|
|
|
44.12
|
|
|
2
|
|
|
15.53
|
|
||
Exercisable, December 31, 2013
|
4
|
|
|
36.45
|
|
|
1
|
|
|
15.12
|
|
||
Vested and expected to vest, December 31, 2013
|
6
|
|
|
42.84
|
|
|
2
|
|
|
15.51
|
|
|
Number of Units
|
|
Weighted-
Average Grant
Date Fair
Value
(per unit)
|
|||
Outstanding, January 1, 2011
|
10
|
|
|
$
|
54.17
|
|
Granted
|
5
|
|
|
91.51
|
|
|
Vested
|
(4
|
)
|
|
48.47
|
|
|
Forfeited
|
(1
|
)
|
|
64.70
|
|
|
Outstanding, December 31, 2011
|
10
|
|
|
72.74
|
|
|
Granted
|
8
|
|
|
101.73
|
|
|
Vested
|
(4
|
)
|
|
69.01
|
|
|
Forfeited
|
(2
|
)
|
|
81.53
|
|
|
Outstanding, December 31, 2012
|
12
|
|
|
91.93
|
|
|
Granted
|
7
|
|
|
76.20
|
|
|
Vested
|
(4
|
)
|
|
83.21
|
|
|
Forfeited
|
(2
|
)
|
|
90.55
|
|
|
Outstanding, December 31, 2013
|
13
|
|
|
85.85
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Cost of license revenues
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Cost of services revenues
|
29
|
|
|
28
|
|
|
23
|
|
|||
Research and development
|
227
|
|
|
210
|
|
|
174
|
|
|||
Sales and marketing
|
144
|
|
|
150
|
|
|
96
|
|
|||
General and administrative
|
56
|
|
|
48
|
|
|
40
|
|
|||
Realignment
|
6
|
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation
|
464
|
|
|
438
|
|
|
335
|
|
|||
Income tax benefit
|
(136
|
)
|
|
(132
|
)
|
|
(98
|
)
|
|||
Total stock-based compensation, net of tax
|
$
|
328
|
|
|
$
|
306
|
|
|
$
|
237
|
|
|
For the Year Ended December 31,
|
||||||||||
VMware Stock Options
|
2013
|
|
2012
|
|
2011
|
||||||
Dividend yield
|
None
|
|
|
None
|
|
|
None
|
|
|||
Expected volatility
|
38.5
|
%
|
|
35.8
|
%
|
|
37.7
|
%
|
|||
Risk-free interest rate
|
0.9
|
%
|
|
0.3
|
%
|
|
1.0
|
%
|
|||
Expected term (in years)
|
3.6
|
|
|
2.7
|
|
|
3.0
|
|
|||
Weighted-average fair value at grant date
|
$
|
29.47
|
|
|
$
|
80.45
|
|
|
$
|
88.40
|
|
|
For the Year Ended December 31,
|
||||||||||
VMware Employee Stock Purchase Plan
|
2013
|
|
2012
|
|
2011
|
||||||
Dividend yield
|
None
|
|
|
None
|
|
|
None
|
|
|||
Expected volatility
|
32.9
|
%
|
|
37.8
|
%
|
|
34.9
|
%
|
|||
Risk-free interest rate
|
0.1
|
%
|
|
0.1
|
%
|
|
0.2
|
%
|
|||
Expected term (in years)
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|||
Weighted-average fair value at grant date
|
$
|
20.45
|
|
|
$
|
23.36
|
|
|
$
|
23.69
|
|
|
Unrealized Gains on
Available-for-Sale Securities |
|
Total
|
||||
Balance, January 1, 2013
|
$
|
6
|
|
|
$
|
6
|
|
Amounts reclassified from accumulated other comprehensive income to the consolidated statement of income, net of taxes of $(1)
|
(2
|
)
|
|
(2
|
)
|
||
Other comprehensive loss, net
|
(2
|
)
|
|
(2
|
)
|
||
Balance, December 31, 2013
|
$
|
4
|
|
|
$
|
4
|
|
•
|
Pursuant to an ongoing reseller arrangement with EMC, EMC bundles VMware's products and services with EMC's products and sells them to end-users.
|
•
|
EMC purchases products and services from VMware for internal use.
|
•
|
VMware recognizes revenues for professional services based upon such contractual agreements with EMC.
|
•
|
From time to time, VMware and EMC enter into agreements to collaborate on technology projects, and EMC pays VMware for services that VMware provides to EMC in connection with such projects.
|
|
Revenues and Receipts from EMC
|
|
Unearned Revenues from EMC
|
||||||||||||||||
|
For the Year Ended December 31,
|
|
As of December 31,
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
||||||||||
Reseller revenues
|
$
|
141
|
|
|
$
|
141
|
|
|
$
|
72
|
|
|
$
|
188
|
|
|
$
|
149
|
|
Professional services revenues
|
72
|
|
|
82
|
|
|
66
|
|
|
12
|
|
|
3
|
|
|||||
Internal-use revenues
|
32
|
|
|
9
|
|
|
3
|
|
|
20
|
|
|
28
|
|
|||||
Collaborative technology project receipts
|
7
|
|
|
7
|
|
|
2
|
|
|
n/a
|
|
|
n/a
|
|
•
|
VMware and EMC have ongoing arrangements pursuant to which VMware purchases products and services for internal use from EMC.
|
•
|
From time to time, VMware and EMC enter into agreements to collaborate on technology projects, and VMware pays EMC for services provided to VMware by EMC related to such projects.
|
•
|
In certain geographic regions where VMware does not have an established legal entity, VMware contracts with EMC subsidiaries for support services and EMC personnel who are managed by VMware. The costs incurred by EMC on VMware's behalf related to these employees are passed on to VMware and VMware is charged a mark-up intended to approximate costs that would have been charged had VMware contracted for such services with an unrelated third party. These costs are included as expenses in VMware's consolidated statements of income and primarily include salaries, benefits, travel and rent. EMC also incurs certain administrative costs on VMware's behalf in the U.S. that are recorded as expenses in VMware's consolidated statements of income.
|
•
|
VMware incurs interest expense on its note payable with EMC. See Note K and R to the consolidated financial statements for further information.
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Purchases of products and services
|
$
|
56
|
|
|
$
|
42
|
|
|
$
|
24
|
|
Collaborative technology project costs
|
13
|
|
|
n/a
|
|
|
n/a
|
|
|||
EMC subsidiary support and administrative costs
|
128
|
|
|
106
|
|
|
83
|
|
|||
Interest expense on note payable
|
4
|
|
|
5
|
|
|
4
|
|
Accounts receivable
|
$
|
4
|
|
Property and equipment, net
|
1
|
|
|
Intangible assets
|
28
|
|
|
Goodwill
|
28
|
|
|
Total assets
|
61
|
|
|
Accounts payable, accrued liabilities and other, net
|
(7
|
)
|
|
Unearned revenues
|
(71
|
)
|
|
Total liabilities
|
(78
|
)
|
|
Total liabilities, net assumed by Pivotal
|
$
|
(17
|
)
|
|
As of December 31,
|
||||||
|
2013
|
|
2012
|
||||
Due to EMC
|
$
|
(92
|
)
|
|
$
|
(44
|
)
|
Due from EMC
|
93
|
|
|
112
|
|
||
Due to Pivotal
|
(22
|
)
|
|
n/a
|
|
||
Due from Pivotal
|
3
|
|
|
n/a
|
|
||
Due from (to) related parties, net
|
$
|
(18
|
)
|
|
$
|
68
|
|
|
|
|
|
||||
Income tax payable due to EMC
|
$
|
(22
|
)
|
|
$
|
(32
|
)
|
•
|
SDDC
|
•
|
End-User Computing
|
•
|
Hybrid Cloud Computing
|
2013
|
Q1 2013
|
|
Q2 2013
|
|
Q3 2013
|
|
Q4 2013
|
||||||||
Revenues
|
$
|
1,191
|
|
|
$
|
1,243
|
|
|
$
|
1,289
|
|
|
$
|
1,483
|
|
Net income
|
174
|
|
|
244
|
|
|
261
|
|
|
335
|
|
||||
Net income per share, basic
|
$
|
0.41
|
|
|
$
|
0.57
|
|
|
$
|
0.61
|
|
|
$
|
0.78
|
|
Net income per share, diluted
|
$
|
0.40
|
|
|
$
|
0.57
|
|
|
$
|
0.60
|
|
|
$
|
0.77
|
|
2012
|
Q1 2012
|
|
Q2 2012
|
|
Q3 2012
|
|
Q4 2012
|
||||||||
Revenues
|
$
|
1,055
|
|
|
$
|
1,123
|
|
|
$
|
1,134
|
|
|
$
|
1,293
|
|
Net income
|
191
|
|
|
192
|
|
|
157
|
|
|
206
|
|
||||
Net income per share, basic
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
$
|
0.37
|
|
|
$
|
0.48
|
|
Net income per share, diluted
|
$
|
0.44
|
|
|
$
|
0.44
|
|
|
$
|
0.36
|
|
|
$
|
0.47
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form/
File No.
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
Amended and Restated Certificate of Incorporation
|
|
|
|
S-1/A-2
|
|
7/9/2007
|
3.2
|
|
|
Amended and Restated Bylaws
|
|
|
|
8-K
|
|
3/8/2011
|
4.1
|
|
|
Form of specimen common stock certificate
|
|
|
|
S-1/A-4
|
|
7/27/2007
|
10.1
|
|
|
Form of Master Transaction Agreement between VMware, Inc. and EMC Corporation
|
|
|
|
S-1/A-2
|
|
7/9/2007
|
10.2
|
|
|
Form of Administrative Services Agreement between VMware, Inc. and EMC Corporation
|
|
|
|
S-1/A-2
|
|
7/9/2007
|
10.3
|
|
|
Form of Tax Sharing Agreement between VMware, Inc. and EMC Corporation
|
|
|
|
S-1/A-2
|
|
7/9/2007
|
10.4
|
|
|
Form of Intellectual Property Agreement between VMware, Inc. and EMC Corporation
|
|
|
|
S-1/A-1
|
|
6/11/2007
|
10.5
|
|
|
Form of Employee Benefits Agreement between VMware, Inc. and EMC Corporation
|
|
|
|
S-1/A-2
|
|
7/9/2007
|
10.6
|
|
|
Form of Real Estate License Agreement between VMware, Inc. and EMC Corporation
|
|
|
|
S-1/A-2
|
|
7/9/2007
|
10.7+
|
|
|
Form of Indemnification Agreement for directors and executive officers
|
|
|
|
S-1/A-1
|
|
6/11/2007
|
10.8+
|
|
|
2007 Equity and Incentive Plan, as amended and restated May 29, 2013
|
|
|
|
S-8
|
|
6/20/2013
|
10.9
|
|
|
Amended and Restated Promissory Note between VMware, Inc. and EMC Corporation dated June 11, 2011
|
|
|
|
10-Q
|
|
8/3/2011
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form/
File No.
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
|
Form of Insurance Matters Agreement between VMware, Inc. and EMC Corporation
|
|
|
|
S-1/A-2
|
|
7/9/2007
|
10.11+
|
|
|
Form of Option Agreement, as amended June 13, 2013
|
|
|
|
10-Q
|
|
8/2/2013
|
10.12+
|
|
|
Form of Restricted Stock Unit Agreement, as amended June 13, 2013
|
|
|
|
10-Q
|
|
8/2/2013
|
10.13
|
|
|
2007 Employee Stock Purchase Plan, as amended and restated November 14, 2013
|
|
X
|
|
|
|
|
10.14
|
|
|
Form of Early Exercise Option Agreement
|
|
|
|
S-1/A-2
|
|
7/27/2007
|
10.17+
|
|
|
Letter Agreement between VMware, Inc. and Patrick Gelsinger dated September 14, 2012
|
|
|
|
10-K
|
|
2/27/2013
|
10.18+
|
|
|
Letter Agreement between VMware, Inc. and Dawn Smith dated September 16, 2009
|
|
|
|
10-K
|
|
3/1/2010
|
10.19
|
|
|
First Amendment to Tax Sharing Agreement between VMware, Inc. and EMC Corporation effective as of January 1, 2011
|
|
|
|
10-Q
|
|
5/4/2011
|
10.20+
|
|
|
Executive Bonus Program, as amended and restated August 14, 2013
|
|
|
|
10-Q
|
|
11/7/2013
|
10.21
|
|
|
Agreement of Purchase and Sale Agreement between Roche Palo Alto LLC and VMware, Inc. dated March 16, 2011
|
|
|
|
10-Q
|
|
8/3/2011
|
10.22
|
|
|
Amended and Restated Ground Lease between VMware, Inc. and the Board of Trustees of the Leland Stanford Junior University dated June 13, 2011 (3431 Hillview Campus)
|
|
|
|
10-Q
|
|
8/3/2011
|
10.23
|
|
|
Ground Lease between 3401 Hillview LLC. and the Board of Trustees of the Leland Stanford Junior University dated as of February 2, 2006,
|
|
|
|
10-Q
|
|
8/3/2011
|
10.24+
|
|
|
Letter Agreement between VMware, Inc. and Jonathan Chadwick dated October 12, 2012
|
|
|
|
10-K
|
|
2/27/2013
|
10.25+
|
|
|
Form of Performance Stock Unit Agreement, as amended August 14, 2013
|
|
|
|
10-Q
|
|
11/7/2013
|
10.26+
|
|
|
Non-Qualified Deferred Compensation Plan, effective as of January 1, 2014
|
|
X
|
|
|
|
|
10.27+
|
|
|
Non-Qualified Deferred Compensation Plan Adoption Agreement, effective as of January 1, 2014
|
|
X
|
|
|
|
|
10.28+
|
|
|
Letter Agreement between VMware, Inc. and Sanjay Poonen dated July 18, 2013
|
|
X
|
|
|
|
|
21.1
|
|
|
List of subsidiaries
|
|
X
|
|
|
|
|
23.1
|
|
|
Consent of PricewaterhouseCoopers LLP
|
|
X
|
|
|
|
|
31.1
|
|
|
Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
X
|
|
|
|
|
31.2
|
|
|
Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
X
|
|
|
|
|
32.1
|
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
X
|
|
|
|
|
32.2
|
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
X
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
X
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form/
File No.
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema
|
|
X
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
X
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
X
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
X
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
X
|
|
|
|
|
|
|
VMWARE, INC.
|
|
|
|
|
|
Dated:
|
February 25, 2014
|
By:
|
/s/ Patrick P. Gelsinger
|
|
|
|
Patrick P. Gelsinger
Chief Executive Officer
|
|
|
|
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Dated:
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February 25, 2014
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By:
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/s/ Kevan Krysler
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Kevan Krysler
Senior Vice President, Chief Accounting Officer
(Principal Accounting Officer)
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Date
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Signature
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Title
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February 25, 2014
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/s/ Patrick P. Gelsinger
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Chief Executive Officer and Director
(Principal Executive Officer)
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Patrick P. Gelsinger
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February 25, 2014
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/s/ Jonathan C. Chadwick
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Chief Financial Officer and
Executive Vice President
(Principal Financial Officer)
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Jonathan C. Chadwick
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February 25, 2014
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/s/ Joseph M. Tucci
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Chairman
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Joseph M. Tucci
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February 25, 2014
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/s/ Michael W. Brown
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Director
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Michael W. Brown
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February 25, 2014
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/s/ Pamela J. Craig
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Director
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Pamela J. Craig
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February 25, 2014
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/s/ John R. Egan
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Director
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John R. Egan
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February 25, 2014
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/s/ David I. Goulden
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Director
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David I. Goulden
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February 25, 2014
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/s/ Paul A. Maritz
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Director
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Paul A. Maritz
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February 25, 2014
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/s/ Dennis D. Powell
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Director
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Dennis D. Powell
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February 25, 2014
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/s/ David N. Strohm
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Director
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David N. Strohm
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Allowance for Bad Debts
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Balance at
Beginning
of Period
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Allowance for Bad
Debts Charged to
General
and Administrative
Expenses
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Charged to
Other Accounts
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Bad Debts
Write-Offs
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Balance at
End of
Period
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||||||||||
Year ended December 31, 2013 allowance for doubtful accounts
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$
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4
|
|
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$
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(2
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)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Year ended December 31, 2012 allowance for doubtful accounts
|
|
4
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
4
|
|
|||||
Year ended December 31, 2011 allowance for doubtful accounts
|
|
5
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
Tax Valuation Allowance
|
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Balance at
Beginning
of Period
|
|
Tax Valuation
Allowance
Charged to Income
Tax Provision
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Charged to
Other Accounts
|
|
Tax
Valuation
Allowance
Credited to
Income Tax
Provision
|
|
Balance
at End of
Period
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||||||||||
Year ended December 31, 2013
income tax valuation allowance
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$
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64
|
|
|
$
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32
|
|
|
$
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—
|
|
|
$
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(2
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)
|
|
$
|
94
|
|
Year ended December 31, 2012
income tax valuation allowance
|
|
57
|
|
|
7
|
|
|
—
|
|
|
—
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|
|
64
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|
|||||
Year ended December 31, 2011
income tax valuation allowance
|
|
36
|
|
|
23
|
|
|
—
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|
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(2
|
)
|
|
57
|
|
1.1
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Plan
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1.2
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Effective Dates
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2.1
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Account
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2.2
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Administrator
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2.3
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Adoption Agreement
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2.4
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Beneficiary
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2.5
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Board or Board of Directors
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2.6
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Bonus
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2.7
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Change in Control
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2.8
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Code
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2.9
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Compensation
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2.10
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Director
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2.11
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Disability
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2.12
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Eligible Employee
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2.13
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Employer
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2.14
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ERISA
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2.15
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Identification Date
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2.16
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Key Employee
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2.17
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Participant
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2.18
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Plan
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2.19
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Plan Sponsor
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2.20
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Plan Year
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2.21
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Related Employer
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2.22
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Retirement
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2.23
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Separation from Service
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2.24
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Unforeseeable Emergency
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2.25
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Valuation Date
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2.26
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Years of Service
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3.1
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Participation
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3.2
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Termination of Participation
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4.1
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Deferral Agreement
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4.2
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Amount of Deferral
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4.3
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Timing of Election to Defer
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4.4
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Election of Payment Schedule and Form of Payment
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5.1
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Matching Contributions
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5.2
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Other Contributions
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6.1
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Establishment of Account
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6.2
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Credits to Account
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7.1
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Investment Options
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7.2
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Adjustment of Accounts
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8.1
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Vesting
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8.2
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Death
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8.3
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Disability
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9.1
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Amount of Benefits
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9.2
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Method and Timing of Distributions
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9.3
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Unforeseeable Emergency
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9.4
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Payment Election Overrides
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9.5
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Cashouts of Amounts Not Exceeding Stated Limit
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9.6
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Required Delay in Payment to Key Employees
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9.7
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Change in Control
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9.8
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Permissible Delays in Payment
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9.9
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Permitted Acceleration of Payment
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10.1
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Amendment by Plan Sponsor
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10.2
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Plan Termination Following Change in Control or Corporate Dissolution
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10.3
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Other Plan Terminations
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11.1
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Establishment of Trust
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11.2
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Rabbi Trust
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11.3
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Investment of Trust Funds
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12.1
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Powers and Responsibilities of the Administrator
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12.2
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Claims and Review Procedures
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12.3
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Plan Administrative Costs
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13.1
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Unsecured General Creditor of the Employer
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13.2
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Employer’s Liability
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13.3
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Limitation of Rights
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13.4
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Anti-Assignment
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13.5
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Facility of Payment
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13.6
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Notices
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13.7
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Tax Withholding
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13.8
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Indemnification
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13.9
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Successors
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13.10
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Disclaimer
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13.11
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Governing Law
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1.1
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Plan.
The Plan will be referred to by the name specified in the Adoption Agreement.
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1.2
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Effective Dates.
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(a)
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Original Effective Date.
The Original Effective Date is the date as of which the Plan was initially adopted.
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(b)
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Amendment Effective Date.
The Amendment Effective Date is the date specified in the Adoption Agreement as of which the Plan is amended and restated. Except to the extent otherwise provided herein or in the Adoption Agreement, the Plan shall apply to amounts deferred and benefit payments made on or after the Amendment Effective Date.
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(c)
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Special Effective Date.
A Special Effective Date may apply to any given provision if so specified in Appendix A of the Adoption Agreement. A Special Effective Date will control over the Original Effective Date or Amendment Effective Date, whichever is applicable, with respect to such provision of the Plan.
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2.1
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“Account”
means an account established for the purpose of recording amounts credited on behalf of a Participant and any income, expenses, gains, losses or distributions included thereon. The Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant or to the Participant’s Beneficiary pursuant to the Plan.
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2.2
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“Administrator”
means the person or persons designated by the Plan Sponsor in Section 1.05 of the Adoption Agreement to be responsible for the administration of the Plan. If no Administrator is designated in the Adoption Agreement, the Administrator is the Plan Sponsor.
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2.3
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“Adoption Agreement”
means the agreement adopted by the Plan Sponsor that establishes the Plan.
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2.4
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“Beneficiary”
means the persons, trusts, estates or other entities entitled under Section 8.2 to receive benefits under the Plan upon the death of a Participant.
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2.5
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“Board” or “Board of Directors”
means the Board of Directors of the Plan Sponsor.
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2.6
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“Bonus”
means an amount of incentive remuneration payable by the Employer to a Participant.
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2.7
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“Change in Control”
means the occurrence of an event involving the Plan Sponsor that is described in Section 9.7.
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2.8
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“Code”
means the Internal Revenue Code of 1986, as amended.
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2.9
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“Compensation”
has the meaning specified in Section 3.01 of the Adoption Agreement.
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2.10
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“Director”
means a non-employee member of the Board who has been designated by the Employer as eligible to participate in the Plan.
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2.11
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“Disability”
means a determination by the Administrator that the Participant is either (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Employer. Additionally, a Participant will be considered to have incurred a Disability if he is determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board.
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2.12
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“Eligible Employee”
means an employee of the Employer who satisfies the requirements in Section 2.01 of the Adoption Agreement.
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2.13
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“Employer”
means the Plan Sponsor and any other entity which is authorized by the Plan Sponsor to participate in and, in fact, does adopt the Plan.
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2.14
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“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.
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2.15
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“Identification Date”
means the date as of which Key Employees are determined which is specified in Section 1.06 of the Adoption Agreement.
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2.16
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“Key Employee”
means an employee who satisfies the conditions set forth in Section 9.6.
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2.17
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“Participant”
means an Eligible Employee or Director who commences participation in the Plan in accordance with Article 3.
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2.18
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“Plan”
means the unfunded plan of deferred compensation set forth herein, including the Adoption Agreement and any trust agreement, as adopted by the Plan Sponsor and as amended from time to time.
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2.19
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“Plan Sponsor”
means the entity identified in Section 1.03 of the Adoption Agreement or any successor by merger, consolidation or otherwise.
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2.20
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“Plan Year”
means the period identified in Section 1.02 of the Adoption Agreement.
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2.21
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“Related Employer”
means the Employer and (a) any corporation that is a member of a controlled group of corporations as defined in Code Section 414(b) that includes the Employer and (b) any trade or business
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2.22
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“Retirement”
has the meaning specified in 6.01(f) of the Adoption Agreement.
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2.23
|
“Separation from Service”
means the date that the Participant dies, retires or otherwise has a termination of employment with respect to all entities comprising the Related Employer. A Separation from Service does not occur if the Participant is on military leave, sick leave or other bona fide leave of absence if the period of leave does not exceed six months or such longer period during which the Participant’s right to re-employment is provided by statute or contract. If the period of leave exceeds six months and the Participant’s right to re-employment is not provided either by statute or contract, a Separation from Service will be deemed to have occurred on the first day following the six-month period. If the period of leave is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where the impairment causes the Participant to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a 29 month period of absence may be substituted for the six month period.
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2.24
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“Unforeseeable Emergency”
means a severe financial hardship of the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to Code section 152(b)(1), (b)(2) and (d)(1)(B); loss of the Participant’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.
|
2.25
|
“Valuation Date”
means each business day of the Plan Year that the New York Stock Exchange is open.
|
2.26
|
“Years of Service”
means each one year period for which the Participant receives service credit in accordance with the provisions of Section 7.01(d) of the Adoption Agreement.
|
3.1
|
Participation.
The Participants in the Plan shall be those Directors and employees of the Employer who satisfy the requirements of Section 2.01 of the Adoption Agreement.
|
3.2
|
Termination of Participation.
The Administrator may terminate a Participant’s participation in the Plan in a manner consistent with Code Section 409A. If the Employer terminates a Participant’s participation before the Participant experiences a Separation from Service the Participant’s vested Accounts shall be paid in accordance with the provisions of Article 9.
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4.1
|
Deferral Agreement.
If permitted by the Plan Sponsor in accordance with Section 4.01 of the Adoption Agreement, each Eligible Employee and Director may elect to defer his Compensation within the meaning of Section 3.01 of the Adoption Agreement by executing in writing or electronically, a deferral agreement in accordance with rules and procedures established by the Administrator and the provisions of this Article 4.
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4.2
|
Amount of Deferral.
An Eligible Employee or Director may elect to defer Compensation in any amount permitted by Section 4.01(a) of the Adoption Agreement.
|
4.3
|
Timing of Election to Defer.
Each Eligible Employee or Director who desires to defer Compensation otherwise payable during a Plan Year must execute a deferral agreement within the period preceding the Plan Year specified by the Administrator. Each Eligible Employee who desires to defer Compensation that is a Bonus must execute a deferral agreement within the period preceding the Plan Year during which the Bonus is earned that is specified by the Administrator, except that if the Bonus can be treated as performance based compensation as described in Code Section 409A(a)(4)(B)(iii), the deferral agreement may be executed within the period specified by the Administrator, which period, in no event, shall end after the date which is six months prior to the end of the period during which the Bonus is earned, provided the Participant has performed services continuously from the later of the beginning of the performance period or the date the performance criteria are established through the date the Participant executed the deferral agreement and provided further that the compensation has not yet become ‘readily ascertainable’ within the meaning of Reg. Sec 1.409A-2(a)(8). In addition, if the Compensation qualifies as ‘fiscal year compensation’ within the meaning of Reg. Sec.
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4.4
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Election of Payment Schedule and Form of Payment.
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5.1
|
Matching Contributions.
If elected by the Plan Sponsor in Section 5.01(a) of the Adoption Agreement, the Employer will credit the Participant’s Account with a matching contribution determined in accordance with the formula specified in Section 5.01(a) of the Adoption Agreement. The matching contribution will be treated as allocated to the Participant’s Account at the time specified in Section 5.01(a)(iii) of the Adoption Agreement.
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5.2
|
Other Contributions.
If elected by the Plan Sponsor in Section 5.01(b) of the Adoption Agreement, the Employer will credit the Participant’s Account with a contribution determined in accordance with the formula or method specified in Section 5.01(b) of the Adoption Agreement. The contribution will be treated as allocated to the Participant’s Account at the time specified in Section 5.01(b)(iii) of the Adoption Agreement.
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6.1
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Establishment of Account.
For accounting and computational purposes only, the Administrator will establish and maintain an Account on behalf of each Participant which will reflect the credits made pursuant to Section 6.2, distributions or withdrawals, along with the earnings, expenses, gains and losses allocated thereto, attributable to the hypothetical investments made with the amounts in the Account as provided in Article 7. The Administrator will establish and maintain such other records and accounts, as it decides in its discretion to be reasonably required or appropriate to discharge its duties under the Plan.
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6.2
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Credits to Account.
A Participant’s Account will be credited for each Plan Year with the amount of his elective deferrals under Section 4.1 as soon as reasonably practicable following the time the amount subject to the deferral election would otherwise have been payable to the Participant and the amount of Employer contributions treated as allocated on his behalf under Article 5.
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7.1
|
Investment Options.
The amount credited to each Account shall be treated as invested in the investment options designated for this purpose by the Administrator.
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7.2
|
Adjustment of Accounts.
The amount credited to each Account shall be adjusted for hypothetical investment earnings, expenses, gains or losses in an amount equal to the earnings, expenses, gains or losses attributable to the investment options selected by the party designated in Section 9.01 of the Adoption Agreement from among the investment options provided in Section 7.1. If permitted by Section 9.01 of the Adoption Agreement, a Participant (or the Participant’s Beneficiary after the death of the Participant) may, in accordance with rules and procedures established by the Administrator, select the investments from among the options provided in Section 7.1 to be used for the purpose of calculating future hypothetical investment adjustments to the Account or to future credits to the Account under Section 6.2 effective as of the Valuation Date coincident with or next following notice to the Administrator. Each Account shall be adjusted as of each Valuation Date to reflect: (a) the hypothetical earnings, expenses, gains and losses described above; (b) amounts credited pursuant to Section 6.2; and (c) distributions or withdrawals. In addition, each Account may be adjusted for its allocable share of the hypothetical costs and expenses associated with the maintenance of the hypothetical investments provided in Section 7.1.
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8.1
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Vesting.
A Participant, at all times, has a 100% nonforfeitable interest in the amounts credited to his Account attributable to his elective deferrals made in accordance with Section 4.1.
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8.2
|
Death.
The Plan Sponsor may elect to accelerate vesting upon the death of the Participant in accordance with Section 7.01(c) of the Adoption Agreement and/or to accelerate distributions upon Death in accordance with Section 6.01(b) or Section 6.01(d) of the Adoption Agreement. If the Plan Sponsor does not elect to accelerate distributions upon death in accordance with Section 6.01(b) or Section 6.01(d) of the Adoption Agreement, the vested amount credited to the Participant’s Account will be paid in accordance with the provisions of Article 9.
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8.3
|
Disability.
If the Plan Sponsor has elected to accelerate vesting upon the occurrence of a Disability in accordance with Section 7.01(c) of the Adoption Agreement and/or to permit distributions upon Disability in accordance with Section 6.01(b) or Section 6.01(d) of the Adoption Agreement, the determination of whether a Participant has incurred a Disability shall be made by the Administrator in its sole discretion in a manner consistent with the requirements of Code Section 409A.
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9.1
|
Amount of Benefits.
The vested amount credited to a Participant’s Account as determined under Articles 6, 7 and 8 shall determine and constitute the basis for the value of benefits payable to the Participant under the Plan.
|
9.2
|
Method and Timing of Distributions.
Except as otherwise provided in this Article 9, distributions under the Plan shall be made in accordance with the elections made or deemed made by the Participant under Article 4. Subject to the provisions of Section 9.6 requiring a six month delay for certain distributions to Key Employees, distributions following a payment event shall commence at the time specified in Section 6.01(a) of the Adoption Agreement. If permitted by Section 6.01(g) of the Adoption Agreement, a Participant may elect, at least twelve months before a scheduled distribution event, to delay the payment date for a minimum period of sixty months from the originally scheduled date of payment, provided the election does not take effect for at least twelve months from the date on which the election is made. The distribution election change must be made in accordance with procedures and rules established by the Administrator. The Participant may, at the same time the date of payment is deferred, change the form of payment but such change in the form of payment may not effect an acceleration of payment in violation of Code Section 409A or the provisions of Reg. Sec. 1.409A-2(b). For purposes of this Section 9.2, a series of installment payments is always treated as a single payment and not as a series of separate payments.
|
9.3
|
Unforeseeable Emergency.
A Participant may request a distribution due to an Unforeseeable Emergency if the Plan Sponsor has elected to permit Unforeseeable Emergency withdrawals under Section 8.01(a) of the Adoption Agreement. The request must be in writing and must be submitted to the Administrator along with evidence that the circumstances constitute an Unforeseeable Emergency. The Administrator has the discretion to require whatever evidence it deems necessary to determine whether a distribution is warranted, and may require the Participant to certify that the need cannot be met from other sources reasonably available to the Participant. Whether a Participant has incurred an Unforeseeable Emergency will be determined by the Administrator on the basis of the relevant facts and circumstances in its sole discretion, but, in no event, will an Unforeseeable Emergency be deemed to exist if the hardship can be relieved: (a) through reimbursement or compensation by
|
9.4
|
Payment Election Overrides.
If the Plan Sponsor has elected one or more payment election overrides in accordance with Section 6.01(d) of the Adoption Agreement, the following provisions apply. Upon the occurrence of the first event selected by the Plan Sponsor, the remaining vested amount credited to the Participant’s Account shall be paid in the form designated to the Participant or his Beneficiary regardless of whether the Participant had made different elections of time and /or form of payment or whether the Participant was receiving installment payments at the time of the event.
|
9.5
|
Cashouts Of Amounts Not Exceeding Stated Limit.
If the vested amount credited to the Participant’s Account does not exceed the limit established for this purpose by the Plan Sponsor in Section 6.01(e) of the Adoption Agreement at the time he incurs a Separation from Service for any reason, the Employer shall distribute such amount to the Participant at the time specified in Section 6.01(a) of the Adoption Agreement in a single lump sum cash payment following such Separation from Service regardless of whether the Participant had made different elections of time or form of payment as to the vested amount credited to his Account or whether the Participant was receiving installments at the time of such termination. A Participant’s Account, for purposes of this Section 9.5, shall include any amounts described in Section 1.3.
|
9.6
|
Required Delay in Payment to Key Employees
. Except as otherwise provided in this Section 9.6, a distribution made on account of Separation from Service (or Retirement, if applicable) to a Participant who is a Key Employee as of the date of his Separation from Service (or Retirement, if
|
9.7
|
Change in Control.
If the Plan Sponsor has elected to permit distributions upon a Change in Control, the following provisions shall apply. A distribution made upon a Change in Control will be made at the time specified in Section 6.01(a) of the Adoption Agreement in the form elected by the Participant in accordance with the procedures described in Article 4. Alternatively, if the Plan Sponsor has elected in accordance with Section 11.02 of the Adoption Agreement to require distributions upon a Change in Control, the Participant’s remaining vested Account shall be paid to the Participant or the Participant’s Beneficiary at the time specified in Section 6.01(a) of the Adoption Agreement as a single lump sum payment. A Change in Control, for purposes of the Plan, will occur upon a change in the ownership of the Plan Sponsor, a change in the effective control of the Plan Sponsor or a change in the ownership of a substantial portion of the assets of the Plan Sponsor, but only if elected by the Plan Sponsor in Section 11.03 of the Adoption Agreement. The Plan Sponsor, for this purpose, includes any corporation identified in this Section 9.7. All distributions made in accordance with this Section 9.7 are subject to the provisions of Section 9.6.
If a Participant continues to make deferrals in accordance with Article 4 after he has received a distribution due to a Change in Control, the residual amount payable to the Participant shall be paid at the time and in the form specified in the elections he makes in accordance with Article 4 or upon his death or Disability as provided in Article 8. Whether a Change in Control has occurred will be determined by the Administrator in accordance with the rules and definitions set forth in this Section 9.7. A distribution to the Participant will be treated as occurring upon a Change in Control if the Plan Sponsor terminates the Plan in accordance with Section 10.2 and distributes the Participant’s benefits within twelve months of a Change in Control as provided in Section 10.3. |
(a
|
Relevant Corporations.
To constitute a Change in Control for purposes of the Plan, the event must relate to (i) the corporation for whom the Participant is performing services at the time of the Change in Control, (ii) the corporation that is liable for the payment of the Participant’s benefits under the Plan (or all corporations liable if more than one corporation is liable) but only if either the deferred compensation is attributable to the performance of services by the Participant for such corporation (or corporations) or there is a bona fide business purpose for such corporation (or corporations) to be liable for such payment and, in either case, no significant purpose of making such corporation (or corporations) liable for such payment is the avoidance of federal income tax, or (iii) a corporation that is a
|
(b
|
Stock Ownership.
Code Section 318(a) applies for purposes of determining stock ownership. Stock underlying a vested option is considered owned by the individual who owns the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). If, however, a vested option is exercisable for stock that is not substantially vested (as defined by Treasury Regulation Section 1.83-3(b) and (j)) the stock underlying the option is not treated as owned by the individual who holds the option.
|
(c
|
Change in the Ownership of a Corporation.
A change in the ownership of a corporation occurs on the date that any one person or more than one person acting as a group, acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of such corporation. If any one person or more than one person acting as a group is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation as discussed below in Section 9.7(d)). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock. Section 9.7(c) applies only when there is a transfer of stock of a corporation (or issuance of stock of a corporation) and stock in such corporation remains outstanding after the transaction. For purposes of this Section 9.7(c), persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time or as a result of a public offering. Persons will, however, be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is
|
(d
|
Change in the effective control of a corporation.
A change in the effective control of a corporation occurs on the date that either (i) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing thirty percent (30%) or more of the total voting power of the stock of such corporation, or (ii) a majority of members of the corporation’s board of directors is replaced during any twelve month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors prior to the date of the appointment or election, provided that for purposes of this paragraph (ii), the term corporation refers solely to the relevant corporation identified in Section 9.7(a) for which no other corporation is a majority shareholder for purposes of Section 9.7(a). In the absence of an event described in Section 9.7(d)(i) or (ii), a change in the effective control of a corporation will not have occurred. A change in effective control may also occur in any transaction in which either of the two corporations involved in the transaction has a change in the ownership of such corporation as described in Section 9.7(c) or a change in the ownership of a substantial portion of the assets of such corporation as described in Section 9.7(e). If any one person, or more than one person acting as a group, is considered to effectively control a corporation within the meaning of this Section 9.7(d), the acquisition of additional control of the corporation by the same person or persons is not considered to cause a change in the effective control of the corporation or to cause a change in the ownership of the corporation within the meaning of Section 9.7(c). For purposes of this Section 9.7(d), persons will or will not be considered to be acting as a group in accordance with rules similar to those set forth in Section 9.7(c) with the following exception. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only with respect to the ownership in that corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.
|
(e
|
Change in the ownership of a substantial portion of a corporation’s assets.
A change in the ownership of a substantial portion of a corporation’s assets occurs on the date that any one person, or more than one person acting as a group (as determined in accordance with rules similar to those set forth in Section 9.7(d)), acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation or the value of the assets being disposed of determined without regard to any liabilities associated with such assets. There is no Change in Control event under this Section 9.7(e) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer. A transfer of assets by a corporation is not treated as a change in ownership of such assets if the assets are transferred to (i) a shareholder of the corporation (immediately before the asset transfer) in exchange for or with respect to its stock, (ii) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the corporation, (iii) a person, or more than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the corporation, or (iv) an entity, at least fifty (50%) of the total value or voting power of which is owned, directly or indirectly, by a person described in Section 9.7(e)(iii). For purposes of the foregoing, and except as otherwise provided, a person’s status is determined immediately after the transfer of assets.
|
9.8
|
Permissible Delays in Payment.
Distributions may be delayed beyond the date payment would otherwise occur in accordance with the provisions of Articles 8 and 9 in any of the following circumstances as long as the Employer treats all payments to similarly situated Participants on a reasonably consistent basis.
|
(a
|
The Employer may delay payment if it reasonably anticipates that its deduction with respect to such payment would be limited or eliminated by the application of Code Section 162(m). Payment must be made during the Participant’s first taxable year in which the Employer reasonably anticipates, or should reasonably anticipate, that if the payment is made during such year the deduction of such payment will not be barred by the application of Code Section 162
|
(b
|
The Employer may also delay payment if it reasonably anticipates that the making of the payment will violate federal securities laws or other applicable laws provided payment is made at the earliest date on which the Employer reasonably anticipates that the making of the payment will not cause such violation.
|
(c
|
The Employer reserves the right to amend the Plan to provide for a delay in payment upon such other events and conditions as the Secretary of the Treasury may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.
|
9.9
|
Permitted Acceleration of Payment
.
The Employer may permit acceleration of the time or schedule of any payment or amount scheduled to be paid pursuant to a payment under the Plan provided such acceleration would be permitted by the provisions of Reg. Sec. 1.409A-3(j)(4), including the following events:
|
(a)
|
Domestic Relations Order.
A payment may be accelerated if such payment is made to an alternate payee pursuant to and following the receipt and qualification of a domestic relations order as defined in Code Section 414(p).
|
(b)
|
Compliance with Ethics Agreements and Legal Requirements.
A payment may be accelerated as may be necessary to comply with ethics agreements with the Federal government or as may be reasonably necessary to avoid the violation of Federal, state, local or foreign ethics law or conflicts of laws, in accordance with the requirements of Code Section 409A.
|
(c)
|
[Reserved]
|
(d)
|
FICA Tax.
A payment may be accelerated to the extent required to pay the Federal Insurance Contributions Act tax imposed under Code Sections 3101, 3121(a) and 3121(v)(2) of the Code with respect to compensation deferred under the Plan (the “FICA Amount”). Additionally, a payment may be accelerated to pay the
|
(e)
|
Section 409A Additional Tax.
A payment may be accelerated if the Plan fails to meet the requirements of Code Section 409A; provided that such payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code Section 409A.
|
(f)
|
Offset.
A payment may be accelerated in the Employer’s discretion as satisfaction of a debt of the Participant to the Employer, where such debt is incurred in the ordinary course of the service relationship between the Participant and the Employer, the entire amount of the reduction in any of the Employer’s taxable years does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.
|
(g)
|
Other Events.
A payment may be accelerated in the Administrator’s discretion in connection with such other events and conditions as permitted by Code Section 409A.
|
10.1
|
Amendment by Plan Sponsor.
The Plan Sponsor reserves the right to amend the Plan (for itself and each Employer) through action of its Board of Directors (or the Board’s designee). No amendment can directly or indirectly deprive any current or former Participant or Beneficiary of all or any portion of his Account which had accrued and vested prior to the amendment.
|
10.2
|
Plan Termination Following Change in Control or Corporate Dissolution.
If so elected by the Plan Sponsor in 11.01 of the Adoption Agreement, the Plan Sponsor reserves the right to terminate the Plan and distribute all amounts credited to all Participant Accounts within the 30 days preceding or the twelve months following a Change in Control as determined in accordance with the rules set forth in Section 9.7. For this purpose, the Plan will be treated as terminated only if all agreements, methods, programs and other arrangements sponsored by the Related Employer immediately after the Change in Control which are treated as a single plan under Reg. Sec. 1.409A-1(c)(2) are also terminated so that all participants under the Plan and all similar arrangements are required to receive all amounts deferred under the terminated arrangements within twelve months of the date the Plan Sponsor irrevocably takes all necessary action to terminate the arrangements. In addition, the Plan Sponsor reserves the right to terminate the Plan within twelve months of a corporate dissolution taxed under Code Section 331 or with the approval of a bankruptcy court pursuant to 11 U. S. C. Section 503(b)(1)(A) provided that amounts deferred under the Plan are included in the gross incomes of Participants in the latest of (a) the calendar year in which the termination and liquidation occurs, (b) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture, or (c) the first calendar year in which payment is administratively practicable.
|
10.3
|
Other Plan Terminations.
The Plan Sponsor retains the discretion to terminate the Plan if (a) all arrangements sponsored by the Plan Sponsor that would be aggregated with any terminated arrangement under Code Section 409A and Reg. Sec. 1.409A-1(c)(2) are terminated, (b) no payments other than payments that would be payable under the terms of the arrangements if the termination had not occurred are made within twelve months of the termination of the arrangements, (c) all payments are made within twenty-four months of the date the Plan Sponsor takes all necessary action to irrevocably terminate and liquidate the arrangements, (d) the Plan Sponsor does not adopt a new arrangement that would be aggregated with any terminated arrangement under Code Section 409A and the regulations thereunder at any time within the three year period
|
11.1
|
Establishment of Trust.
The Plan Sponsor may but is not required to establish a trust to hold amounts which the Plan Sponsor may contribute from time to time to correspond to some or all amounts credited to Participants under Section 6.2. In the event that the Plan Sponsor wishes to establish a trust to provide a source of funds for the payment of Plan benefits, any such trust shall be constructed to constitute an unfunded arrangement that does not affect the status of the Plan as an unfunded plan for purposes of Title I of ERISA and the Code.
If the Plan Sponsor elects to establish a trust in accordance with Section 10.01 of the Adoption Agreement, the provisions of Sections 11.2 and 11.3 shall become operative.
|
11.2
|
Rabbi Trust.
Any trust established by the Plan Sponsor shall be between the Plan Sponsor and a trustee pursuant to a separate written agreement under which assets are held, administered and managed, subject to the claims of the Plan Sponsor’s creditors in the event of the Plan Sponsor’s insolvency. The trust is intended to be treated as a rabbi trust in accordance with existing guidance of the Internal Revenue Service, and the establishment of the trust shall not cause the Participant to realize current income on amounts contributed thereto. The Plan Sponsor must notify the trustee in the event of a bankruptcy or insolvency.
|
11.3
|
Investment of Trust Funds.
Any amounts contributed to the trust by the Plan Sponsor shall be invested by the trustee in accordance with the provisions of the trust and the instructions of the Administrator. Trust investments need not reflect the hypothetical investments selected by Participants under Section 7.1 for the purpose of adjusting Accounts and the earnings or investment results of the trust need not affect the hypothetical investment adjustments to Participant Accounts under the Plan.
|
12.1
|
Powers and Responsibilities of the Administrator.
The Administrator has the full power and the full responsibility to administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA. The Administrator’s powers and responsibilities include, but are not limited to, the following:
|
(a)
|
To make and enforce such rules and procedures as it deems necessary or proper for the efficient administration of the Plan;
|
(b)
|
To interpret the Plan, its interpretation thereof to be final, except as provided in Section 12.2, on all persons claiming benefits under the Plan;
|
(c)
|
To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;
|
(d)
|
To administer the claims and review procedures specified in Section 12.2;
|
(e)
|
To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan;
|
(f)
|
To determine the person or persons to whom such benefits will be paid;
|
(g)
|
To authorize the payment of benefits;
|
(h)
|
To comply with the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA;
|
(i)
|
To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan;
|
(j)
|
By written instrument, to allocate and delegate its responsibilities, including the formation of an Administrative Committee to administer the Plan.
|
12.2
|
Claims and Review Procedures.
|
(a)
|
Claims Procedure.
|
(b)
|
Review Procedure.
|
(c)
|
Exhaustion of Claims Procedures and Right to Bring Legal Claim
No action at law or equity shall be brought more than one (1) year after the Administrator’s affirmation of a denial of a claim, or, if earlier, more than four (4) years after the facts or events giving rising to the claimant’s allegation(s) or claim(s) first occurred. |
12.3
|
Plan Administrative Costs.
All reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Administrator in administering the Plan shall be paid by the Plan to the extent not paid by the Employer.
|
13.1
|
Unsecured General Creditor of the Employer.
Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of the Employer. For purposes of the payment of benefits under the Plan, any and all of the Employer’s assets shall be, and shall remain, the general, unpledged, unrestricted assets of the Employer. Each Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.
|
13.2
|
Employer’s Liability
.
Each Employer’s liability for the payment of benefits under the Plan shall be defined only by the Plan and by the deferral agreements entered into between a Participant and the Employer. An Employer shall have no obligation or liability to a Participant under the Plan except as provided by the Plan and a deferral agreement or agreements. An Employer shall have no liability to Participants employed by other Employers.
|
13.3
|
Limitation of Rights
.
Neither the establishment of the Plan, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to the Participant or any other person any legal or equitable right against the Employer, the Plan or the Administrator, except as provided herein; and in no event will the terms of employment or service of the Participant be modified or in any way affected hereby.
|
13.4
|
Anti-Assignment
.
Except as may be necessary to fulfill a domestic relations order within the meaning of Code Section 414(p), none of the benefits or rights of a Participant or any Beneficiary of a Participant shall be subject to the claim of any creditor. In particular, to the fullest extent permitted by law, all such benefits and rights shall be free from attachment, garnishment, or any other legal or equitable process available to any creditor of the Participant and his or her Beneficiary. Neither the Participant nor his or her Beneficiary shall have the right to alienate, anticipate, commute, pledge, encumber, or assign any of the payments which he or she may expect to receive, contingently or otherwise, under the Plan, except the right to designate a Beneficiary to receive death benefits provided hereunder. Notwithstanding the preceding, the benefit payable from a Participant’s Account may be reduced, at the discretion of the administrator, to satisfy any debt or liability to the Employer.
|
13.5
|
Facility of Payment
.
If the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of
|
13.6
|
Notices.
Any notice or other communication to the Employer or Administrator in connection with the Plan shall be deemed delivered in writing if addressed to the Plan Sponsor at the address specified in Section 1.03 of the Adoption Agreement and if either actually delivered at said address or, in the case or a letter, 5 business days shall have elapsed after the same shall have been deposited in the United States mails, first-class postage prepaid and registered or certified.
|
13.7
|
Tax Withholding
.
If the Employer concludes that tax is owing with respect to any deferral or payment hereunder, the Employer shall withhold such amounts from any payments due the Participant or from amounts deferred, as permitted by law, or otherwise make appropriate arrangements with the Participant or his Beneficiary for satisfaction of such obligation. Tax, for purposes of this Section 13.7 means any federal, state, local or any other governmental income tax, employment or payroll tax, excise tax, or any other tax or assessment owing with respect to amounts deferred, any earnings thereon, and any payments made to Participants under the Plan.
|
13.8
|
Indemnification.
(a) Each Indemnitee (as defined in Section 13.8(e)) shall be indemnified and held harmless by the Employer for all actions taken by him and for all failures to take action (regardless of the date of any such action or failure to take action), to the fullest extent permitted by the law of the jurisdiction in which the Employer is incorporated, against all expense, liability, and loss (including, without limitation, attorneys' fees, judgments, fines, taxes, penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Indemnitee in connection with any Proceeding (as defined in Subsection (e)). No indemnification pursuant to this Section shall be made, however, in any case where (1) the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness or (2) there is a settlement to which the Employer does not consent.
|
13.9
|
Successors
.
The provisions of the Plan shall bind and inure to the benefit of the Plan Sponsor, the Employer and their successors and assigns and the Participant and the Participant’s designated Beneficiaries.
|
13.10
|
Disclaimer.
It is the Plan Sponsor’s intention that the Plan comply with the requirements of Code Section 409A. Neither the Plan Sponsor nor the Employer shall have any liability to any Participant should any provision of the Plan fail to satisfy the requirements of Code Section 409A.
|
13.11
|
Governing Law
.
The Plan will be construed, administered and enforced according to the laws of the State specified by the Plan Sponsor in Section 12.01 of the Adoption Agreement.
|
(a)
|
x
adopts a new plan as of
January 1, 2014
[month, day, year]
|
(b)
|
¨
amends and restates its existing plan as of
[month, day, year] which is the Amendment Restatement Date. Except as otherwise provided in Appendix A, all amounts deferred under the Plan prior to the Amendment Restatement Date shall be governed by the terms of the Plan as in effect on the day before the Amendment Restatement Date.
|
1.02
|
PLAN
|
1.03
|
PLAN SPONSOR
|
Name:
|
VMware, Inc.
|
Mailing Address:
|
3401 Hillview Avenue, Palo Alto, CA 94304
|
Physical Address:
|
900 Arastradero Road, Building C, Palo Alto, CA 94304
|
Phone # :
|
650-427-4361
|
EIN:
|
94-3292913
|
Fiscal Yr:
|
Year ending December 31
|
x
Yes
|
¨
No
|
1.04
|
EMPLOYER
|
|
|
Yes
|
|
No
|
Nicira, Inc.
|
|
¨
|
|
x
|
|
|
¨
|
|
¨
|
|
|
¨
|
|
¨
|
|
|
¨
|
|
¨
|
|
|
¨
|
|
¨
|
|
|
¨
|
|
¨
|
1.05
|
ADMINISTRATOR
|
Name:
|
Persons delegated authority by the Compensation & Corporate Governance Committee
|
Address:
|
|
Note
:
|
The Administrator is the person or persons designated by the Plan Sponsor to be responsible for the administration of the Plan. Neither Fidelity Employer Services Company nor any other Fidelity affiliate can be the Administrator.
|
1.06
|
KEY EMPLOYEE DETERMINATION DATES
|
2.01
|
PARTICIPATION
|
|
|
|
|
|
3.01
|
COMPENSATION
|
(a)
|
x
|
Compensation is defined as:
|
|
|
Base Salary, Semi-Annual Bonus and Commissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
¨
|
Compensation as defined in
[insert name of qualified plan] without regard to the limitation in Section 401(a)(17) of the Code for such Plan Year.
|
|
|
|
(c)
|
¨
|
Director Compensation is defined as:
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
¨
|
Compensation shall, for all Plan purposes, be limited to $
.
|
|
|
|
(e)
|
¨
|
Not Applicable.
|
3.02
|
BONUSES
|
Type
|
Will be treated as Performance
Based Compensation
|
||||
|
|
||||
|
|
Yes
|
|
No
|
|
Semi-Annual Bonus
|
|
¨
|
|
x
|
|
|
|
¨
|
|
¨
|
|
|
|
¨
|
|
¨
|
|
|
|
¨
|
|
¨
|
|
|
|
¨
|
|
¨
|
|
¨
|
Not Applicable.
|
4.01
|
PARTICIPANT CONTRIBUTIONS
|
(a)
|
Amount of Deferrals
|
(i)
|
Compensation Other than Bonuses [do not complete if you complete (iii)]
|
Type of Remuneration
|
Dollar Amount
|
% Amount
|
Increment
|
||
Min
|
Max
|
Min
|
Max
|
||
(a)
Base Salary
|
|
|
5%
|
75%
|
1%
|
(b)
Commissions
|
|
|
5%
|
100%
|
1%
|
(c)
|
|
|
|
|
|
(ii)
|
Bonuses [do not complete if you complete (iii)]
|
(iii)
|
Compensation [do not complete if you completed (i) and (ii)]
|
Dollar Amount
|
% Amount
|
Increment
|
||
Min
|
Max
|
Min
|
Max
|
|
|
|
|
|
|
(iv)
|
Director Compensation
|
Type of Compensation
|
Dollar Amount
|
% Amount
|
Increment
|
||
Min
|
Max
|
Min
|
Max
|
||
Annual Retainer
|
|
|
|
|
|
Meeting Fees
|
|
|
|
|
|
Other:
|
|
|
|
|
|
Other:
|
|
|
|
|
|
(b)
|
Election Period
|
(i)
|
Performance Based Compensation
|
¨
|
Does
|
|
x
|
Does Not
|
(ii)
|
Newly Eligible Participants
|
x
|
May
|
|
¨
|
May Not
|
(c)
|
Revocation of Deferral Agreement
|
x
|
Will
|
¨
|
Will Not
|
(d)
|
No Participant Contributions
|
5.01
|
EMPLOYER CONTRIBUTIONS
|
(a)
|
Matching Contributions
|
(i)
|
Amount
|
(A)
|
¨
[insert percentage] of the Compensation the Participant has elected to defer for the Plan Year
|
(B)
|
x
An amount determined by the Employer in its sole discretion
|
(C)
|
¨
Matching Contributions for each Participant shall be limited to $
and/or
% of Compensation.
|
(D)
|
¨
Other:
|
(E)
|
¨
Not Applicable [Proceed to Section 5.01(b)]
|
(ii)
|
Eligibility for Matching Contribution
|
(A)
¨
|
Describe requirements:
|
|
|
|
|
|
|
|
|
|
|
(B)
x
|
Is selected by the Employer in its sole discretion to receive an allocation of Matching Contributions
|
|
|
|
|
(C)
¨
|
No requirements
|
|
(iii)
|
Time of Allocation
|
(b)
|
Other Contributions
|
(i)
|
Amount
|
(A)
¨
|
An amount equal to
[insert number] % of the Participant’s Compensation
|
|
|
(B)
x
|
An amount determined by the Employer in its sole discretion
|
|
|
(C)
¨
|
Contributions for each Participant shall be limited to $
|
|
|
(D)
¨
|
Other:
|
|
|
|
|
|
|
(E)
¨
|
Not Applicable [Proceed to Section 6.01]
|
|
|
(ii)
|
Eligibility for Other Contributions
|
(A)
¨
|
Describe requirements:
|
|
|
|
|
|
|
(B)
x
|
Is selected by the Employer in its sole discretion to receive an allocation of other Employer contributions
|
|
|
(C)
¨
|
No requirements
|
(iii)
|
Time of Allocation
|
(c)
|
No Employer Contributions
|
6.01
|
DISTRIBUTIONS
|
(a)
|
Timing of Distributions
|
(b)
|
Distribution Events
|
¨
|
Monthly
|
¨
|
Quarterly
|
x
|
Annually
|
(c)
|
Specified Date and Specified Age elections may not extend beyond age
Not Applicable
[insert age or “Not Applicable” if no maximum age applies].
|
(d)
|
Payment Election Override
Payment of the remaining vested balance of the Participant’s Account will automatically occur at the time specified in Section 6.01(a) of the Adoption Agreement in the form indicated upon the earliest to occur of the following events [check each event that applies and for each event include only a single form of payment]: |
|
EVENTS
|
FORM OF PAYMENT
|
|||
¨
|
Separation from Service
|
|
Lump sum
|
|
Installments
|
¨
|
Separation from
Service before Retirement
|
|
Lump sum
|
|
Installments
|
x
|
Death
|
x
|
Lump sum
|
|
Installments
|
x
|
Disability
|
x
|
Lump sum
|
|
Installments
|
¨
|
Not Applicable
|
|
|
|
|
(e)
|
Involuntary Cashouts
|
x
|
If the Participant’s vested Account at the time of his Separation from Service does not exceed $
50,000
distribution of the vested Account shall automatically be made in the form of a single lump sum in accordance with Section 9.5 of the Plan.
|
¨
|
There are no involuntary cashouts.
|
(f)
|
Retirement
|
¨
|
Retirement shall be defined as a Separation from Service that occurs on or after the Participant [insert description of requirements]:
|
|
|
|
|
x
|
No special definition of Retirement applies.
|
(g)
|
Distribution Election Change
A Participant |
x
|
Shall
|
¨
|
Shall Not
|
(h)
|
Frequency of Elections
|
x
|
Has
|
¨
|
Has Not
|
7.01
|
VESTING
|
(a)
|
Matching Contributions
The Participant’s vested interest in the amount credited to his Account attributable to Matching Contributions shall be based on the following schedule: |
(b)
|
Other Employer Contributions
The Participant’s vested interest in the amount credited to his Account attributable to Employer contributions other than Matching Contributions shall be based on the following schedule: |
(c)
|
Acceleration of Vesting
|
(i)
¨
|
Death
|
|
|
(ii)
¨
|
Disability
|
|
|
(iii)
¨
|
Change in Control
|
|
|
(iv)
¨
|
Eligibility for Retirement
|
|
|
(v)
x
|
Other:
As determined by the Administrator
|
|
|
|
|
(vi)
¨
|
Not applicable.
|
(d)
|
Years of Service
|
(i)
|
A Participant’s Years of Service shall include all service performed for the Employer and
|
¨
|
Shall
|
x
|
Shall Not
|
(ii)
|
Years of Service shall also include service performed for the following entities:
|
|
|
|
|
|
(iii)
|
Years of Service shall be determined in accordance with (select one)
|
(A)
¨
|
The elapsed time method in Treas. Reg. Sec. 1.410(a)-7
|
|
|
(B)
¨
|
The general method in DOL Reg. Sec. 2530.200b-1 through b-4
|
|
|
(C)
¨
|
The Participant’s Years of Service credited under [insert name of plan]
|
|
|
(D)
x
|
Other:
As determined by the Administrator
|
|
|
|
|
(iv)
|
¨
Not applicable.
|
8.01
|
UNFORESEEABLE EMERGENCY
|
x
|
Will
|
¨
|
Will Not [if Unforeseeable Emergency withdrawals are not permitted, proceed to Section 9.01]
|
(b)
|
Upon a withdrawal due to an Unforeseeable Emergency, a Participant’s deferral election for the remainder of the Plan Year:
|
x
|
Will
|
¨
|
Will Not
|
9.01
|
INVESTMENT DECISIONS
|
(a)
x
|
The Participant or his Beneficiary
|
(b)
¨
|
The Employer
|
10.01
|
TRUST
|
x
|
Does
|
¨
|
Does Not
|
11.01
|
TERMINATION UPON CHANGE IN CONTROL
|
x
|
Reserves
|
¨
|
Does Not Reserve
|
11.02
|
AUTOMATIC DISTRIBUTION UPON CHANGE IN CONTROL
|
¨
|
Shall
|
x
|
Shall Not
|
11.03
|
CHANGE IN CONTROL
|
(a)
|
x
A change in the ownership of the Employer as described in Section 9.7(c) of the Plan.
|
(b)
|
x
A change in the effective control of the Employer as described in Section 9.7(d) of the Plan.
|
(c)
|
x
A change in the ownership of a substantial portion of the assets of the Employer as described in Section 9.7(e) of the Plan.
|
(d)
|
¨
Not Applicable.
|
12.01
|
GOVERNING STATE LAW
|
PLAN SPONSOR:
|
VMware, Inc.
|
By:
|
Denise Devlin
|
Title:
|
VP Total Rewards
|
·
|
Stock Option
. The number of stock options granted to you will be determined as follows: $4,000,000 divided by 0.3 times the average of the closing sale price per share of VMware Class A Common Stock for the 45 trading days ending on (and inclusive of) the last trading day of the month in which your employment commences.
Subject to the terms of the VMware 2007 Equity and Incentive Plan, this stock option will vest over four years, with 25% of the shares subject to the option vesting after 12 months, and the remaining shares vesting thereafter at 2.08% per month. The option exercise price will be equal to the fair market value of VMware Class A common stock on the date of the grant.
|
1.
|
The Company terminates your employment without Cause (as defined below) during the first twelve months after a Change in Control, or
|
2.
|
You terminate your employment for Good Reason (as defined below) during the first twelve months after a Change in Control.
|
1.
|
willful neglect, failure or refusal by you to perform your employment duties (except resulting from your incapacity due to illness) as reasonably directed by the Company;
|
2.
|
willful misconduct by you in the performance of your employment duties;
|
3.
|
your indictment for a felony (other than traffic related offense) or a misdemeanor involving moral turpitude; or
|
4.
|
your commission of an act involving personal dishonesty that results in financial, reputational, or other harm to the Company and its affiliates and subsidiaries, including, but not limited to, an act constituting misappropriation or embezzlement of property.
|
1.
|
Any Person is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes a Beneficial Owner in connection with subsection 2 below. For the avoidance of doubt, any change in the Persons who are the direct or indirect Beneficial Owners of the securities of Parent will not be deemed to constitute a change in the direct or indirect Beneficial Owners of the Company for purposes of this subsection (1);
|
2.
|
There is consummated a merger or consolidation of the Company with any other corporation or similar entity, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such
|
3.
|
The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company, or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than, following a “355 Distribution” (as defined below), a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.
|
1.
|
any materially adverse alteration in your role, reporting relationship or in the nature or status of your responsibilities relative to your role, reporting relationship or responsibilities at any time following the Change in Control, provided that none of the following will alone constitute Good Reason: (a) a mere change in title, (b) the fact that you no longer hold following a Change in Control the same position in a public company as you held before the transaction, or (c) the fact you are no longer designated a Section 16 Officer;
|
2.
|
a material diminution by the Company in your base salary (excluding a reduction that also is applied to all similarly situated employees of the Company and that reduces your base salary by a percentage reduction that is no greater than the lowest percentage reduction applied to any other such individual), or a material diminution by the Company in your target level of annual incentive bonus relative to your highest base salary and highest target level of annual incentive bonus, respectively, following a Change in Control, or ineligibility for a bonus program providing for a target level of annual incentive bonus;
|
3.
|
relocation of your principal place of employment to a location more than 50 miles from your principal place of employment at any time following a Change in Control (which may be your home); or
|
4.
|
a material breach of the Company’s obligations under this agreement
|
|
||
|
|
|
|
|
|
SUBSIDIARIES
|
|
STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION
|
3401 Hillview LLC
|
|
Delaware
|
Nicira, Inc.
|
|
Delaware
|
Desktone, Inc.
|
|
Delaware
|
VMware Australia Pty Ltd
|
|
Australia
|
VMware Bermuda Limited
|
|
Ireland
|
VMware Bulgaria EOOD
|
|
Bulgaria
|
VMware Canada Inc.
|
|
Canada
|
VMware Costa Rica Ltda.
|
|
Costa Rica
|
VMware Denmark ApS
|
|
Denmark
|
VMware Eastern Europe
|
|
Armenia
|
VMware France SAS
|
|
France
|
VMware Global, Inc.
|
|
Delaware
|
VMware Hong Kong Limited
|
|
Hong Kong
|
VMware Information Technology (China) Co. Ltd
|
|
China
|
VMware International Limited
|
|
Ireland
|
VMware International Marketing Limited
|
|
Ireland
|
VMware Israel Ltd.
|
|
Israel
|
VMware Italy S.r.l.
|
|
Italy
|
VMware Marketing Austria GmbH
|
|
Austria
|
VMware Middle East FZ-LLC
|
|
Dubai
|
VMware Netherlands B.V.
|
|
Netherlands
|
VMware Singapore Pte Ltd.
|
|
Singapore
|
VMware Software India Private Limited
|
|
India
|
VMware Spain S.L.
|
|
Spain
|
VMware Sweden AB
|
|
Sweden
|
VMware Switzerland S.a.r.l.
|
|
Switzerland
|
VMware UK Limited
|
|
United Kingdom
|
VMware, K.K.
|
|
Japan
|
Wanova Technologies Ltd.
|
|
Israel
|
1.
|
I have reviewed this annual report on Form 10-K of VMware, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 25, 2014
|
By:
|
|
/s/ Patrick P. Gelsinger
|
|
|
|
|
Patrick P. Gelsinger
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this annual report on Form 10-K of VMware, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 25, 2014
|
By:
|
|
/s/ Jonathan C. Chadwick
|
|
|
|
|
Jonathan C. Chadwick
Chief Financial Officer and Executive Vice President
(Principal Financial Officer)
|
Date:
|
February 25, 2014
|
By:
|
|
/s/ Patrick P. Gelsinger
|
|
|
|
|
Patrick P. Gelsinger
Chief Executive Officer
(Principal Executive Officer)
|
Date:
|
February 25, 2014
|
By:
|
|
/s/ Jonathan C. Chadwick
|
|
|
|
|
Jonathan C. Chadwick
Chief Financial Officer and Executive Vice President
(Principal Financial Officer) |