x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
94-3292913
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
|
|
3401 Hillview Avenue
Palo Alto, CA
|
94304
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Class A Common Stock, par value $0.01
|
|
New York Stock Exchange
|
Large accelerated filer
|
x
|
|
Accelerated filer
|
¨
|
|
|
|
|
|
Non-accelerated filer
|
o
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
Page
|
|
PART I
|
|
Item 1.
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
|
PART II
|
|
Item 5.
|
||
Item 6.
|
||
Item 7.
|
||
Item 7A.
|
||
Item 8.
|
||
Item 9.
|
||
Item 9A.
|
||
Item 9B.
|
||
|
|
|
|
PART III
|
|
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
|
||
|
|
|
|
PART IV
|
|
Item 15.
|
||
|
|
|
|
ITEM 1.
|
BUSINESS
|
•
|
SDDC or Software-Defined Data Center
|
•
|
Hybrid Cloud Computing
|
•
|
End-User Computing
|
•
|
Compute
|
•
|
Storage and Availability
|
•
|
Network and Security
|
•
|
Management and Automation
|
•
|
Virtual SAN—
clusters server disks to create radically simple shared storage designed for virtual machines.
|
•
|
vSphere Replication—
provides cost-efficient and simple way to manage replication.
|
•
|
vCenter Site Recovery Manager—
leverages vSphere and vSphere Replication to protect applications against site failures and to streamline planned migrations.
|
•
|
vRealize Operations—
provides performance, capacity and configuration management for virtual or physical infrastructure.
|
•
|
vRealize Automation—
enables customers to rapidly deploy and provision cloud services.
|
•
|
vRealize Business—
provides transparency and control over the costs and quality of IT services.
|
•
|
vSphere—
VMware’s industry-leading virtualization platform.
|
•
|
Disaster Recovery Automation with VMware vCenter Site Recovery Manager—
policy-based disaster recovery and testing for all virtualized applications.
|
•
|
VMware vRealize Operations—
intelligent performance, capacity, and configuration management for vSphere environments.
|
•
|
VMware
vRealize Automation—
self-service and policy-based infrastructure and application provisioning for vSphere environments.
|
•
|
VMware vRealize Business—
automated costing, usage metering, and service pricing of virtualized infrastructure for vSphere environments.
|
•
|
vSphere—
VMware’s industry-leading virtualization platform.
|
•
|
VMware vRealize Operations—
intelligent performance, capacity, and configuration management for vSphere environments.
|
•
|
vRealize Automation—
automated delivery of personalized infrastructure, applications and custom IT services.
|
•
|
vRealize Operations—
intelligent operations with predictive analytics driving proactive performance, capacity and configuration management.
|
•
|
vRealize Log Insight—
real time log management and log analysis.
|
•
|
vRealize Business—
provides insight into cost and utilization of infrastructure and services to help better manage demand, budget, capital expenditures and operating expenses.
|
•
|
Horizon 6—
delivers unified virtual desktops and application from a single solution.
|
•
|
Horizon Air (Desktop-as-a-Service)—
delivers virtual desktops and applications from a public cloud environment and public cloud service providers.
|
•
|
Horizon FLEX—
delivers local Windows desktops and applications to laptops, Macs, contractors and other mobile users while maintaining centralized management.
|
•
|
App Volumes—
delivers application workloads to end users and desktops in seconds, enabling IT to instantly provision applications at scale.
|
•
|
Fusion and Workstation—
provide personal desktop virtualization solutions for Macintosh and Windows.
|
•
|
Mobile Device Management
|
•
|
Mobile Application Management
|
•
|
Mobile Content Management
|
•
|
Mobile Email Management
|
•
|
Productivity Apps
|
•
|
Telecom Analytics
|
•
|
Independent Hardware Vendors (“IHVs”)
We have established relationships with large system vendors, including Cisco, Dell, Fujitsu, 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.
|
•
|
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.
|
•
|
VMware Service Providers
We have established partnerships with over 4,000 active service providers including AT&T, Bluelock, Colt, CSC, Dell, Fujitsu, OVH, Rackspace, Singapore Telecommunications, Softbank and T-Systems to enable them to host and deliver enterprise-class hybrid clouds as a way for enterprises to extend their data centers to external clouds, while preserving security, compliance and quality of service.
|
•
|
the level of reliability, interoperability and new functionality of product and service offerings;
|
•
|
the ability to provide comprehensive solutions, including management capabilities;
|
•
|
the ability to offer products and software-as-a-service that support multiple hardware platforms, operating systems, applications and application development frameworks;
|
•
|
the ability to deliver an intuitive end-user experience for accessing data, applications and services from a wide variety of end-user devices;
|
•
|
delivery of next-generation end-user computing capabilities that integrate with and work alongside existing, legacy capabilities;
|
•
|
the ability to drive down the marginal cost of operations and management for both new and existing assets;
|
•
|
a proven track record of formulating and delivering a roadmap of compelling software and service capabilities that align with industry trends;
|
•
|
pricing of products, individually and in bundles;
|
•
|
the ability to attract and preserve a large installed base of customers;
|
•
|
the ability to attract and maintain a large number of application developers for a given cloud ecosystem;
|
•
|
our market leadership in enterprise data center virtualization and presence in most enterprise IT environments;
|
•
|
the ability to embrace and integrate many open source technologies that are critical in private and public cloud computing architectures, including OpenStack and Docker;
|
•
|
the ability to create and maintain partnering opportunities with hardware vendors, software vendors and cloud service providers;
|
•
|
the ability to support newly emerging large-scale application development and deployment approaches;
|
•
|
the ability to deploy operational cloud solutions for customers in a timely manner and provide robust technical support;
|
•
|
the ability to develop robust indirect sales channels; and
|
•
|
the ability to attract and retain cloud, virtualization and systems experts as key employees.
|
•
|
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”);
|
•
|
announcements of investor conferences, speeches and events at which our executives talk about our products, services and competitive strategies;
|
•
|
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);
|
•
|
additional information on financial metrics, including reconciliations of non-GAAP financial measures discussed in our presentations to the nearest comparable GAAP measure;
|
•
|
press releases on quarterly earnings, product and service announcements, legal developments and international news;
|
•
|
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;
|
•
|
other news, blogs and announcements that we may post from time to time that investors might find useful or interesting; and
|
•
|
opportunities to sign up for email alerts and RSS feeds to have information pushed in real time.
|
ITEM 1A.
|
RISK FACTORS
|
•
|
improved products or product versions being offered by competitors in our markets;
|
•
|
competitive pricing pressures;
|
•
|
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;
|
•
|
failure to release new or enhanced versions of our server virtualization products on a timely basis, or at all;
|
•
|
technological change that we are unable to address with our server virtualization and private cloud products or that changes the way enterprises utilize our products; and
|
•
|
general economic conditions.
|
•
|
the level of reliability, security and new functionality of product offerings;
|
•
|
the ability to provide comprehensive and scalable solutions, including management and security capabilities;
|
•
|
the ability to offer products and services that support multiple hardware platforms, operating systems, applications and application development frameworks;
|
•
|
the ability to deliver an intuitive end-user experience for accessing data, applications and services from a wide variety of end-user devices;
|
•
|
the ability to effectively run traditional IT applications and emerging applications;
|
•
|
the proven track record of formulating and delivering a roadmap of virtualization and cloud computing capabilities;
|
•
|
the ability to attract and preserve a large installed base of customers;
|
•
|
pricing of products and services, individually and in bundles;
|
•
|
the ability to attract and preserve a large number of application developers to develop to a given cloud ecosystem;
|
•
|
the ability to create and maintain partnering opportunities with hardware vendors, infrastructure software vendors and cloud service providers;
|
•
|
the ability to develop robust indirect sales channels; and
|
•
|
the ability to attract and retain cloud, virtualization and systems experts as key employees.
|
•
|
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.
|
•
|
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.
|
•
|
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 services attractive to end users.
|
•
|
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.
|
•
|
Our increasing focus on developing and marketing IT management and automation and infrastructure-as-a-service (including software-defined networking and vCloud Air) 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.
|
•
|
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. Moreover, as customers transition to our hybrid cloud and SaaS products and services, our revenue growth rate may be adversely impacted, during the period of transition as we will recognize less revenue up-front than we would otherwise recognize as part of a multi-year license arrangement.
|
•
|
The success of vCloud Air will depend on the successful global implementation of the offering and building effective go-to-market strategies. We will need to build sales expertise and infrastructure to support the new offering that is capable of meeting customer requirements for security, reliability and regulatory compliance. This hybrid cloud offering involves significant capital investment as well as technology 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.
|
•
|
As we expand our IaaS and SaaS offerings globally, we may rely more upon joint ventures with established providers of IT products and services in particular regions, such as our joint venture with the Softbank Group to expand our vCloud Air hybrid cloud service to Japan. Joint ventures require close ongoing cooperation and commitments from the joint venture partners, and the willingness to devote adequate resources as required. If we are unable to continue our strategic alignment with joint venture partners or obtain the cooperation and commitments we are relying upon, our ability to successfully expand our IaaS and SaaS offerings globally will diminish.
|
•
|
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.
|
•
|
The virtualized end-user computing industry remains in an emerging stage of expansion. Other companies are entering, and are developing competing standards for, the end-user computing space, such as Microsoft, Google, Amazon and Citrix, and such companies are likely to introduce their own initiatives that may compete with or not be compatible with our 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.
|
•
|
The cloud computing industry is in early stages of expansion. Other companies are entering, and are developing competing standards for the cloud computing space, such as Microsoft, IBM, Cisco, Google and Amazon, as well as numerous vendor offerings based on the OpenStack project. These companies are likely to introduce their own initiatives that may compete with or not be compatible with our cloud initiatives, which could potentially limit the degree to which other vendors develop products and services around our offerings and end users adopt our platforms.
|
•
|
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.
|
•
|
Developing and launching new technologies in new areas, as we are continuing to do with our VMware NSX virtual networking, Virtual SAN virtual storage and vCloud Air initiatives, requires significant investments of resources and often entails greater risk than incremental investments in existing industries. If these investments are not successful, our rate of growth may decline or reverse and our operating results will be negatively affected.
|
•
|
In connection with some of our product initiatives, including our web-based services, mobile services and our vCloud Air offering, we expect that our customers may increasingly use our services to store and process personal information and other regulated data, increasing our potential exposure to cybersecurity breaches and data loss.
|
•
|
Marketing and selling new technologies to enterprises requires significant investment of time and resources in order to educate customers on the benefits of our new product offerings. These investments can be costly and the additional effort required to educate both customers and our own sales force can distract from their efforts to sell existing products and services.
|
•
|
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;
|
•
|
fluctuations in demand, adoption rates, sales cycles and pricing levels for our products and services;
|
•
|
fluctuations in foreign currency exchange rates;
|
•
|
changes in customers’ budgets for information technology purchases and in the timing of their purchasing decisions;
|
•
|
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;
|
•
|
the sale of our products and services in the time frames we anticipate, including the number and size of orders in each quarter;
|
•
|
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;
|
•
|
the introduction of new pricing and packaging models for our product offerings;
|
•
|
the timing of the announcement or release of upgrades or new products and services by us or by our competitors;
|
•
|
our ability to maintain scalable internal systems for reporting, order processing, license fulfillment, product delivery, purchasing, billing and general accounting, among other functions;
|
•
|
our ability to control costs, including our operating expenses;
|
•
|
changes to our effective tax rate;
|
•
|
the increasing scale of our business and its effect on our ability to maintain historical rates of growth;
|
•
|
our ability to attract and retain highly skilled employees, particularly those with relevant experience in software development and sales;
|
•
|
our ability to conform to emerging industry standards and to technological developments by our competitors and customers;
|
•
|
renewal rates and the amounts of the renewals for ELAs as original ELA terms expire;
|
•
|
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;
|
•
|
unplanned events that could affect market perception of the quality or cost-effectiveness of our products and solutions; and
|
•
|
the recoverability of benefits from goodwill and acquired intangible assets, and the potential impairment of these assets.
|
•
|
the tendency of customers to wait until late in a quarter to commit to a purchase in the hope of obtaining more favorable pricing;
|
•
|
the fourth quarter influence of customers spending their remaining capital budget authorization prior to new budget constraints in the following year; and
|
•
|
seasonal influences, such as holiday or vacation periods.
|
•
|
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;
|
•
|
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;
|
•
|
growth rates of our emerging products and services may be negatively impacted despite their technical merit by the need to package such products and services in more complex product suite offerings that require more time for customer evaluation and purchase decisions;
|
•
|
managing customers’ transitions to new products and services, which can result in delays in their purchasing decisions;
|
•
|
adapting to emerging and evolving industry standards and to technological developments by our competitors and customers;
|
•
|
entering into new or unproven markets with which we have limited experience;
|
•
|
reacting to trends and predicting which technologies will be successful and develop into industry standards;
|
•
|
tailoring our business and pricing models appropriately as we enter new markets and respond to competitive pressures and technological changes;
|
•
|
incorporating and integrating acquired products and technologies; and
|
•
|
developing or expanding efficient sales channels.
|
•
|
sensitive data regarding our business, including intellectual property and other proprietary data, could be stolen;
|
•
|
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;
|
•
|
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;
|
•
|
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 cyber incidents; and
|
•
|
personally identifiable or confidential data of our customers, employees and business partners could be stolen or lost.
|
•
|
the difficulty of managing and staffing international offices and the increased travel, infrastructure and legal compliance costs associated with multiple international locations;
|
•
|
increased exposure to foreign currency exchange rate risk;
|
•
|
difficulties in enforcing contracts and collecting accounts receivable, and longer payment cycles, especially in emerging markets;
|
•
|
difficulties in delivering support, training and documentation in certain foreign markets;
|
•
|
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;
|
•
|
economic or political instability and security concerns in countries that are important to our international sales and operations;
|
•
|
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;
|
•
|
the overlap of different tax structures or changes in international tax laws;
|
•
|
reduced protection for intellectual property rights, including reduced protection from software piracy, in some countries;
|
•
|
difficulties in transferring funds from certain countries; and
|
•
|
difficulties in maintaining appropriate controls relating to revenue recognition practices.
|
•
|
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.
|
•
|
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.
|
•
|
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.
|
•
|
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.
|
•
|
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;
|
•
|
failure of the acquired business to further our business strategy;
|
•
|
uncertainties in achieving the expected benefits of an acquisition, including enhanced revenues, technology, human resources, cost savings, operating efficiencies and other synergies;
|
•
|
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;
|
•
|
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;
|
•
|
retaining and motivating key personnel from acquired companies;
|
•
|
assuming the liabilities of the acquired business, including acquired litigation-related liabilities, and potential litigation arising from a proposed or completed acquisition;
|
•
|
maintaining good relationships with customers or business partners of the acquired business or our own customers as a result of any integration of operations;
|
•
|
product liability, customer liability or intellectual property liability associated with the sale of the acquired business’s products;
|
•
|
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;
|
•
|
maintaining or establishing acceptable standards, controls, procedures or policies with respect to the acquired business; and
|
•
|
risks relating to the challenges and costs of closing a transaction.
|
•
|
the composition of our board of directors and, through our board of directors, any determination with respect to our business plans and policies;
|
•
|
any determinations with respect to mergers, acquisitions and other business combinations;
|
•
|
our acquisition or disposition of assets;
|
•
|
our financing activities;
|
•
|
certain changes to our certificate of incorporation;
|
•
|
changes to the agreements we entered into in connection with our transition to becoming a public company;
|
•
|
corporate opportunities that may be suitable for us and EMC;
|
•
|
determinations with respect to enforcement of rights we may have against third parties, including with respect to intellectual property rights;
|
•
|
the payment of dividends on our common stock; and
|
•
|
the number of shares available for issuance under our stock plans for our prospective and existing employees.
|
•
|
consolidate or merge with any other entity;
|
•
|
acquire the stock or assets of another entity in excess of $100 million;
|
•
|
issue any stock or securities except to our subsidiaries or pursuant to our employee benefit plans;
|
•
|
establish the aggregate annual amount of shares we may issue in equity awards;
|
•
|
dissolve, liquidate or wind us up;
|
•
|
declare dividends on our stock;
|
•
|
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
|
•
|
amend, terminate or adopt any provision inconsistent with certain provisions of our certificate of incorporation or bylaws.
|
•
|
successfully integrating technology from both us and EMC;
|
•
|
creating offerings for which there is suitable demand in the marketplace;
|
•
|
developing an effective go-to-market strategy;
|
•
|
successfully competing and differentiating its offerings from those of its competitors; and
|
•
|
having access to adequate financial resources to fund its operations.
|
•
|
labor, tax, employee benefit, indemnification and other matters arising from our separation from EMC;
|
•
|
our reseller arrangements with EMC;
|
•
|
employee retention and recruiting;
|
•
|
business combinations involving us;
|
•
|
our ability to engage in activities with certain channel, technology or other marketing partners;
|
•
|
sales or dispositions by EMC of all or any portion of its ownership interest in us;
|
•
|
the nature, quality and pricing of services EMC has agreed to provide us or we have agreed to provide to EMC;
|
•
|
arrangements with third parties that are exclusionary to EMC;
|
•
|
arrangements with EMC for collaborative product or technology development, marketing and sales activities involving our technology, employees and other resources;
|
•
|
business opportunities that may be attractive to both EMC and us; and
|
•
|
product or technology development or marketing activities or customer agreements which may require the consent of EMC.
|
•
|
that a majority of our board of directors consists of independent directors;
|
•
|
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;
|
•
|
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
|
•
|
for an annual performance evaluation of the nominating and governance committee and compensation committee.
|
•
|
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;
|
•
|
the right of the board of directors to elect a director to fill a vacancy created by the expansion of the board of directors;
|
•
|
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;
|
•
|
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;
|
•
|
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;
|
•
|
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
|
•
|
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.
|
•
|
amend certain provisions of our bylaws or certificate of incorporation;
|
•
|
make certain acquisitions or dispositions;
|
•
|
declare dividends, or undertake a recapitalization or liquidation;
|
•
|
adopt any stockholder rights plan, “poison pill” or other similar arrangement;
|
•
|
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
|
•
|
undertake certain other actions.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
Location
|
|
|
Approximate
Sq. Ft.
(1)
|
|
|
Principal Use(s)
|
|
Palo Alto, CA
|
owned:
|
|
1,499,836
|
|
(2)
|
|
Executive and administrative offices, sales and marketing, R&D and data center
|
leased:
|
18,200
|
|
|
||||
North and Latin American region (excluding Palo Alto, CA)
|
leased:
|
|
1,051,553
|
|
(3)
|
|
Administrative offices, sales and marketing, R&D and data center
|
Asia Pacific region
|
leased:
|
|
1,217,560
|
|
|
|
Administrative offices, sales and marketing, R&D and data center
|
Europe, Middle East and Africa region
|
leased:
|
|
568,133
|
|
|
|
Administrative offices, sales and marketing, R&D and data center
|
(1)
|
Of the total square feet owned or leased, approximately 655,000 square feet were under construction as of December 31, 2014.
|
(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
|
|
53
|
|
Chief Executive Officer and Director
|
Carl M. Eschenbach
|
|
48
|
|
President and Chief Operating Officer
|
Jonathan C. Chadwick
|
|
49
|
|
Chief Financial Officer, Chief Operating Officer and Executive Vice President
|
Sanjay Poonen
|
|
45
|
|
Executive Vice President and General Manager, End-User Computing
|
Rangarajan (Raghu) Raghuram
|
|
52
|
|
Executive Vice President, Software-Defined Data Center Division
|
S. Dawn Smith
|
|
51
|
|
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, 2014
|
|
|
|
||||
First Quarter
|
$
|
111.45
|
|
|
$
|
86.88
|
|
Second Quarter
|
112.89
|
|
|
88.64
|
|
||
Third Quarter
|
103.86
|
|
|
92.25
|
|
||
Fourth Quarter
|
95.00
|
|
|
75.85
|
|
||
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
|
|
|
Total Number of Shares Purchased (1)
|
|
Average Price Paid Per Share
(1)(2)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(1)
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plans or Programs
(1)(3)
|
||||||
October 1 – October 31, 2014
|
476,657
|
|
|
$
|
83.83
|
|
|
476,657
|
|
|
$
|
1,169,939,797
|
|
November 1 – November 30, 2014
|
2,305,766
|
|
|
84.64
|
|
|
2,305,766
|
|
|
974,772,451
|
|
||
December 1 – December 31, 2014
|
167,996
|
|
|
86.99
|
|
|
167,996
|
|
|
960,158,636
|
|
||
|
2,950,419
|
|
|
$
|
84.65
|
|
|
2,950,419
|
|
|
960,158,636
|
|
(1)
|
In August 2014, VMware’s Board of Directors authorized the repurchase of up to an additional one billion dollars of VMware’s Class A common stock through the end of 2016. VMware’s Class A common stock has been, and may in the future be, purchased pursuant to our stock repurchase authorizations, from time to time, in the open market or through private transactions, subject to market conditions. We are not obligated to purchase any shares under our stock repurchase program. Subject to applicable laws, repurchases under our stock repurchase program may be made at such times and in such amounts as we deem appropriate. The timing of any repurchases and the actual number of shares repurchased will
|
(2)
|
The average price paid per share excludes commissions.
|
(3)
|
Represents the amounts remaining in the VMware stock repurchase authorizations.
|
|
Base
Period
12/31/2009
|
|
12/31/2010
|
|
12/31/2011
|
|
12/31/2012
|
|
12/31/2013
|
|
12/31/2014
|
||||||||||||
VMware, Inc.
|
$
|
100.00
|
|
|
$
|
209.79
|
|
|
$
|
196.30
|
|
|
$
|
222.13
|
|
|
$
|
211.68
|
|
|
$
|
194.71
|
|
S&P 500 Index
|
100.00
|
|
|
115.06
|
|
|
117.49
|
|
|
136.30
|
|
|
180.44
|
|
|
205.14
|
|
||||||
S&P 500 Systems Software Index
|
100.00
|
|
|
104.80
|
|
|
94.37
|
|
|
108.74
|
|
|
144.51
|
|
|
177.76
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
For the Year Ended December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Summary of Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
License
|
$
|
2,591
|
|
|
$
|
2,270
|
|
|
$
|
2,087
|
|
|
$
|
1,841
|
|
|
$
|
1,401
|
|
Services
|
3,444
|
|
|
2,937
|
|
|
2,518
|
|
|
1,926
|
|
|
1,456
|
|
|||||
Total revenues
|
$
|
6,035
|
|
|
$
|
5,207
|
|
|
$
|
4,605
|
|
|
$
|
3,767
|
|
|
$
|
2,857
|
|
Operating income
|
1,027
|
|
|
1,093
|
|
|
872
|
|
|
735
|
|
|
428
|
|
|||||
Net income
|
886
|
|
|
1,014
|
|
|
746
|
|
|
724
|
|
|
357
|
|
|||||
Net income per weighted average share, basic, for Class A and Class B
|
$
|
2.06
|
|
|
$
|
2.36
|
|
|
$
|
1.75
|
|
|
$
|
1.72
|
|
|
$
|
0.87
|
|
Net income per weighted average share, diluted, for Class A and Class B
|
$
|
2.04
|
|
|
$
|
2.34
|
|
|
$
|
1.72
|
|
|
$
|
1.68
|
|
|
$
|
0.84
|
|
Weighted average shares, basic, for Class A and Class B
|
430,355
|
|
|
429,093
|
|
|
426,658
|
|
|
421,188
|
|
|
409,805
|
|
|||||
Weighted average shares, diluted, for Class A and Class B
|
434,513
|
|
|
433,415
|
|
|
433,974
|
|
|
431,750
|
|
|
423,446
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and short-term investments
(1)
|
$
|
7,075
|
|
|
$
|
6,175
|
|
|
$
|
4,631
|
|
|
$
|
4,512
|
|
|
$
|
3,324
|
|
Working capital
(1)
|
5,134
|
|
|
4,388
|
|
|
3,160
|
|
|
3,276
|
|
|
2,509
|
|
|||||
Total assets
|
15,216
|
|
|
12,327
|
|
|
10,596
|
|
|
8,681
|
|
|
6,797
|
|
|||||
Total unearned revenues
|
4,833
|
|
|
4,092
|
|
|
3,461
|
|
|
2,708
|
|
|
1,860
|
|
|||||
Long-term obligations
(2)
|
1,500
|
|
|
450
|
|
|
450
|
|
|
450
|
|
|
450
|
|
|||||
Total stockholders’ equity
|
7,586
|
|
|
6,816
|
|
|
5,740
|
|
|
4,770
|
|
|
3,808
|
|
|||||
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
2,180
|
|
|
$
|
2,535
|
|
|
$
|
1,897
|
|
|
$
|
2,026
|
|
|
$
|
1,174
|
|
(1)
|
In 2012, we 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. Refer to 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 million. The total debt of $1,500 million includes $450 million that was exchanged for the $450 million promissory note outstanding in prior years. Refer to Note N 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
|
•
|
Hybrid Cloud Computing
|
•
|
End-User Computing
|
|
For the Year Ended December 31,
|
|
2014 vs. 2013
|
|
2013 vs. 2012
|
||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
License
|
$
|
2,591
|
|
|
$
|
2,270
|
|
|
$
|
2,087
|
|
|
$
|
321
|
|
|
14
|
%
|
|
$
|
183
|
|
|
9
|
%
|
Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Software maintenance
|
3,022
|
|
|
2,563
|
|
|
2,153
|
|
|
459
|
|
|
18
|
|
|
410
|
|
|
19
|
|
|||||
Professional services
|
422
|
|
|
374
|
|
|
365
|
|
|
49
|
|
|
13
|
|
|
9
|
|
|
2
|
|
|||||
Total services
|
3,444
|
|
|
2,937
|
|
|
2,518
|
|
|
508
|
|
|
17
|
|
|
419
|
|
|
17
|
|
|||||
Total revenues
|
$
|
6,035
|
|
|
$
|
5,207
|
|
|
$
|
4,605
|
|
|
$
|
829
|
|
|
16
|
|
|
$
|
602
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
United States
|
$
|
2,912
|
|
|
$
|
2,485
|
|
|
$
|
2,229
|
|
|
$
|
427
|
|
|
17
|
%
|
|
$
|
256
|
|
|
11
|
%
|
International
|
3,123
|
|
|
2,722
|
|
|
2,376
|
|
|
401
|
|
|
15
|
|
|
345
|
|
|
15
|
|
|||||
Total revenues
|
$
|
6,035
|
|
|
$
|
5,207
|
|
|
$
|
4,605
|
|
|
$
|
829
|
|
|
16
|
|
|
$
|
602
|
|
|
13
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||
Unearned license revenues
|
$
|
488
|
|
|
$
|
465
|
|
Unearned software maintenance revenues
|
3,905
|
|
|
3,304
|
|
||
Unearned professional services revenues
|
440
|
|
|
323
|
|
||
Total unearned revenues
|
$
|
4,833
|
|
|
$
|
4,092
|
|
|
For the Year Ended December 31,
|
|
2014 vs. 2013
|
|
2013 vs. 2012
|
||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Cost of license revenues
|
$
|
190
|
|
|
$
|
208
|
|
|
$
|
235
|
|
|
$
|
(18
|
)
|
|
(9
|
)%
|
|
$
|
(27
|
)
|
|
(11
|
)%
|
Stock-based compensation
|
2
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total expenses
|
$
|
192
|
|
|
$
|
210
|
|
|
$
|
237
|
|
|
$
|
(18
|
)
|
|
(9
|
)
|
|
$
|
(27
|
)
|
|
(11
|
)
|
% of License revenues
|
7
|
%
|
|
9
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
2014 vs. 2013
|
|
2013 vs. 2012
|
||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Cost of services revenues
|
$
|
683
|
|
|
$
|
491
|
|
|
$
|
456
|
|
|
$
|
192
|
|
|
39
|
%
|
|
$
|
35
|
|
|
8
|
%
|
Stock-based compensation
|
42
|
|
|
29
|
|
|
28
|
|
|
13
|
|
|
43
|
|
|
1
|
|
|
4
|
|
|||||
Total expenses
|
$
|
725
|
|
|
$
|
520
|
|
|
$
|
484
|
|
|
$
|
204
|
|
|
39
|
|
|
$
|
36
|
|
|
7
|
|
% of Services revenues
|
21
|
%
|
|
18
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
2014 vs. 2013
|
|
2013 vs. 2012
|
||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Research and development
|
$
|
995
|
|
|
$
|
855
|
|
|
$
|
789
|
|
|
$
|
141
|
|
|
16
|
%
|
|
$
|
66
|
|
|
8
|
%
|
Stock-based compensation
|
244
|
|
|
227
|
|
|
210
|
|
|
17
|
|
|
7
|
|
|
17
|
|
|
8
|
|
|||||
Total expenses
|
$
|
1,239
|
|
|
$
|
1,082
|
|
|
$
|
999
|
|
|
$
|
157
|
|
|
15
|
|
|
$
|
82
|
|
|
8
|
|
% of Total revenues
|
21
|
%
|
|
21
|
%
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
2014 vs. 2013
|
|
2013 vs. 2012
|
||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Sales and marketing
|
$
|
1,969
|
|
|
$
|
1,671
|
|
|
$
|
1,495
|
|
|
$
|
298
|
|
|
18
|
%
|
|
$
|
177
|
|
|
12
|
%
|
Stock-based compensation
|
172
|
|
|
144
|
|
|
150
|
|
|
29
|
|
|
20
|
|
|
(7
|
)
|
|
(5
|
)
|
|||||
Total expenses
|
$
|
2,141
|
|
|
$
|
1,815
|
|
|
$
|
1,645
|
|
|
$
|
327
|
|
|
18
|
|
|
$
|
170
|
|
|
10
|
|
% of Total revenues
|
35
|
%
|
|
35
|
%
|
|
36
|
%
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
2014 vs. 2013
|
|
2013 vs. 2012
|
||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
General and administrative
|
$
|
626
|
|
|
$
|
363
|
|
|
$
|
320
|
|
|
$
|
263
|
|
|
72
|
%
|
|
$
|
43
|
|
|
14
|
%
|
Stock-based compensation
|
69
|
|
|
56
|
|
|
48
|
|
|
12
|
|
|
22
|
|
|
9
|
|
|
18
|
|
|||||
Total expenses
|
$
|
695
|
|
|
$
|
419
|
|
|
$
|
368
|
|
|
$
|
276
|
|
|
66
|
|
|
$
|
52
|
|
|
14
|
|
% of Total revenues
|
12
|
%
|
|
8
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
For the Year Ended
|
|
|
|
|
|||||||||
|
December 31,
|
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
Realignment charges
|
$
|
16
|
|
|
$
|
62
|
|
|
$
|
(47
|
)
|
|
(75
|
)%
|
Stock-based compensation
|
—
|
|
|
6
|
|
|
(6
|
)
|
|
(100
|
)
|
|||
Total expenses
|
$
|
16
|
|
|
$
|
68
|
|
|
$
|
(53
|
)
|
|
(77
|
)
|
|
For the Year Ended December 31,
|
|
2014 vs. 2013
|
|
2013 vs. 2012
|
||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
$ Change
|
|
$ Change
|
||||||||||
Other income (expense), net
|
$
|
7
|
|
|
$
|
28
|
|
|
$
|
(1
|
)
|
|
$
|
(21
|
)
|
|
$
|
29
|
|
•
|
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 that we provide to EMC in connection with such projects.
|
•
|
Pursuant to an ongoing distribution agreement, we act as the selling agent for certain products and services in exchange for a customary agency fee.
|
•
|
We recognize revenues for various transition services provided to Pivotal. Support costs incurred by us are reimbursed to us and are recorded as a reduction to the costs incurred by us.
|
|
Revenues and Receipts from EMC
|
|
Unearned Revenues from EMC
|
||||||||||||||||
|
For the Year Ended December 31,
|
|
As of December 31,
|
||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
||||||||||
Reseller revenues
|
$
|
205
|
|
|
$
|
141
|
|
|
$
|
141
|
|
|
$
|
290
|
|
|
$
|
188
|
|
Professional services revenues
|
85
|
|
|
72
|
|
|
82
|
|
|
9
|
|
|
12
|
|
|||||
Internal-use revenues
|
21
|
|
|
32
|
|
|
9
|
|
|
18
|
|
|
20
|
|
|||||
Collaborative technology project receipts
|
—
|
|
|
7
|
|
|
7
|
|
|
n/a
|
|
|
n/a
|
|
|||||
Agency fee revenues
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Reimbursement for transition services
|
2
|
|
|
12
|
|
|
—
|
|
|
n/a
|
|
|
n/a
|
|
•
|
We purchase and lease products and purchase 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 notes payable with EMC.
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Purchases and leases of products and purchases of services
|
$
|
71
|
|
|
$
|
63
|
|
|
$
|
42
|
|
Collaborative technology project costs
|
12
|
|
|
13
|
|
|
n/a
|
|
|||
EMC subsidiary support and administrative costs
|
137
|
|
|
128
|
|
|
106
|
|
|||
Interest expense on notes payable
|
24
|
|
|
4
|
|
|
5
|
|
|
As of December 31,
|
||||||
|
2014
|
|
2013
|
||||
Due to EMC
|
$
|
(76
|
)
|
|
$
|
(114
|
)
|
Due from EMC
|
125
|
|
|
96
|
|
||
Due (to) from related parties, net
|
$
|
49
|
|
|
$
|
(18
|
)
|
|
|
|
|
||||
Income tax payable due to EMC
|
$
|
(40
|
)
|
|
$
|
(22
|
)
|
|
December 31,
|
||||||
2014
|
|
2013
|
|||||
Cash and cash equivalents
|
$
|
2,071
|
|
|
$
|
2,305
|
|
Short-term investments
|
5,004
|
|
|
3,870
|
|
||
Total cash, cash equivalents and short-term investments
|
$
|
7,075
|
|
|
$
|
6,175
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
2,180
|
|
|
$
|
2,535
|
|
|
$
|
1,897
|
|
Investing activities
|
(2,785
|
)
|
|
(1,472
|
)
|
|
(2,035
|
)
|
|||
Financing activities
|
371
|
|
|
(367
|
)
|
|
(209
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
$
|
(234
|
)
|
|
$
|
696
|
|
|
$
|
(347
|
)
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
||||||||||
Notes payable to EMC
(1)
|
$
|
1,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
680
|
|
|
$
|
820
|
|
Operating leases
(2)
|
898
|
|
|
81
|
|
|
132
|
|
|
83
|
|
|
602
|
|
|||||
Purchase obligations
|
95
|
|
|
47
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|||||
Other obligations
(3)
|
49
|
|
|
8
|
|
|
16
|
|
|
10
|
|
|
15
|
|
|||||
Sub-Total
|
2,542
|
|
|
136
|
|
|
196
|
|
|
773
|
|
|
1,437
|
|
|||||
Uncertain tax positions
(4)
|
206
|
|
|
|
|
|
|
|
|
|
|||||||||
Total
|
$
|
2,748
|
|
|
|
|
|
|
|
|
|
(1)
|
See “Liquidity and Capital Resources” for a discussion of the
$1,500
notes payable we entered into with EMC on January 21, 2014, in connection with our agreement to acquire AirWatch.
|
(2)
|
Our operating leases are primarily for facility space and land.
|
(3)
|
Consisting of various contractual agreements, which include commitments on the lease for our Washington data center facility and asset retirement obligations.
|
(4)
|
As of December 31, 2014, we had
$206
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, 2014 could be reduced by approximately
$14
in the next 12 months, as a result of tax audit resolutions. Refer to “Income Tax Provision” for a discussion of such tax audits.
|
•
|
future expected cash flows from sales, maintenance agreements and acquired developed technologies;
|
•
|
the acquired company’s trade name and customer relationships as well as assumptions about the period of time the acquired trade name and customer relationships will continue to be used in the combined company’s product portfolio;
|
•
|
discount rates used to determine the present value of estimated future cash flows.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Schedule:
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Revenues:
|
|
|
|
|
|
||||||
License
|
$
|
2,591
|
|
|
$
|
2,270
|
|
|
$
|
2,087
|
|
Services
|
3,444
|
|
|
2,937
|
|
|
2,518
|
|
|||
Total revenues
|
6,035
|
|
|
5,207
|
|
|
4,605
|
|
|||
Operating expenses (1):
|
|
|
|
|
|
||||||
Cost of license revenues
|
192
|
|
|
210
|
|
|
237
|
|
|||
Cost of services revenues
|
725
|
|
|
520
|
|
|
484
|
|
|||
Research and development
|
1,239
|
|
|
1,082
|
|
|
999
|
|
|||
Sales and marketing
|
2,141
|
|
|
1,815
|
|
|
1,645
|
|
|||
General and administrative
|
695
|
|
|
419
|
|
|
368
|
|
|||
Realignment charges
|
16
|
|
|
68
|
|
|
—
|
|
|||
Operating income
|
1,027
|
|
|
1,093
|
|
|
872
|
|
|||
Investment income
|
38
|
|
|
30
|
|
|
27
|
|
|||
Interest expense with EMC
|
(24
|
)
|
|
(4
|
)
|
|
(5
|
)
|
|||
Other income (expense), net
|
7
|
|
|
28
|
|
|
(1
|
)
|
|||
Income before income taxes
|
1,048
|
|
|
1,147
|
|
|
893
|
|
|||
Income tax provision
|
162
|
|
|
133
|
|
|
147
|
|
|||
Net income
|
$
|
886
|
|
|
$
|
1,014
|
|
|
$
|
746
|
|
Net income per weighted-average share, basic for Class A
and Class B
|
$
|
2.06
|
|
|
$
|
2.36
|
|
|
$
|
1.75
|
|
Net income per weighted-average share, diluted for Class A and Class B
|
$
|
2.04
|
|
|
$
|
2.34
|
|
|
$
|
1.72
|
|
Weighted-average shares, basic for Class A and Class B
|
430,355
|
|
|
429,093
|
|
|
426,658
|
|
|||
Weighted-average shares, diluted for Class A and Class B
|
434,513
|
|
|
433,415
|
|
|
433,974
|
|
|||
__________
|
|
|
|
|
|
||||||
(1) Includes stock-based compensation as follows:
|
|
|
|
|
|
||||||
Cost of license revenues
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Cost of services revenues
|
42
|
|
|
29
|
|
|
28
|
|
|||
Research and development
|
244
|
|
|
227
|
|
|
210
|
|
|||
Sales and marketing
|
172
|
|
|
144
|
|
|
150
|
|
|||
General and administrative
|
69
|
|
|
56
|
|
|
48
|
|
|||
Realignment charges
|
—
|
|
|
6
|
|
|
—
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net income
|
$
|
886
|
|
|
$
|
1,014
|
|
|
$
|
746
|
|
Other comprehensive income:
|
|
|
|
|
|
||||||
Changes in market value of available-for-sale securities:
|
|
|
|
|
|
||||||
Unrealized gains (losses), net of taxes of $0, $0, and $3
|
(1
|
)
|
|
—
|
|
|
5
|
|
|||
Reclassification of (gains) realized during the period, net of taxes of $(2), $(1), and $0
|
(3
|
)
|
|
(2
|
)
|
|
—
|
|
|||
Net change in market value of available-for-sale securities
|
(4
|
)
|
|
(2
|
)
|
|
5
|
|
|||
Changes in market value of effective foreign currency forward exchange contracts:
|
|
|
|
|
|
||||||
Unrealized (losses), net of $0 taxes for all periods
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Net change in market value of effective foreign currency forward exchange contracts
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Total other comprehensive income (loss)
|
(5
|
)
|
|
(2
|
)
|
|
5
|
|
|||
Total comprehensive income, net of taxes
|
$
|
881
|
|
|
$
|
1,012
|
|
|
$
|
751
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,071
|
|
|
$
|
2,305
|
|
Short-term investments
|
5,004
|
|
|
3,870
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $2 and $2
|
1,520
|
|
|
1,220
|
|
||
Due from related parties, net
|
49
|
|
|
—
|
|
||
Deferred tax assets
|
248
|
|
|
190
|
|
||
Other current assets
|
238
|
|
|
96
|
|
||
Total current assets
|
9,130
|
|
|
7,681
|
|
||
Property and equipment, net
|
1,035
|
|
|
845
|
|
||
Other assets, net
|
174
|
|
|
107
|
|
||
Deferred tax assets
|
165
|
|
|
60
|
|
||
Intangible assets, net
|
748
|
|
|
607
|
|
||
Goodwill
|
3,964
|
|
|
3,027
|
|
||
Total assets
|
$
|
15,216
|
|
|
$
|
12,327
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
203
|
|
|
$
|
109
|
|
Accrued expenses and other
|
811
|
|
|
608
|
|
||
Due to related parties, net
|
—
|
|
|
18
|
|
||
Unearned revenues
|
2,982
|
|
|
2,558
|
|
||
Total current liabilities
|
3,996
|
|
|
3,293
|
|
||
Notes payable to EMC
|
1,500
|
|
|
450
|
|
||
Unearned revenues
|
1,851
|
|
|
1,534
|
|
||
Other liabilities
|
283
|
|
|
234
|
|
||
Total liabilities
|
7,630
|
|
|
5,511
|
|
||
Commitments and Contingencies (refer to Note L)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Class A common stock, par value $.01; authorized 2,500,000 shares; issued and outstanding 129,359 and 130,349 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
|
3,380
|
|
|
3,496
|
|
||
Accumulated other comprehensive income (loss)
|
(1
|
)
|
|
4
|
|
||
Retained earnings
|
4,198
|
|
|
3,312
|
|
||
Total VMware, Inc.’s stockholders’ equity
|
7,581
|
|
|
6,816
|
|
||
Non-controlling interests
|
5
|
|
|
—
|
|
||
Total stockholders’ equity
|
7,586
|
|
|
6,816
|
|
||
Total liabilities and stockholders’ equity
|
$
|
15,216
|
|
|
$
|
12,327
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
886
|
|
|
$
|
1,014
|
|
|
$
|
746
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
345
|
|
|
337
|
|
|
355
|
|
|||
Stock-based compensation
|
529
|
|
|
454
|
|
|
426
|
|
|||
Excess tax benefits from stock-based compensation
|
(36
|
)
|
|
(70
|
)
|
|
(138
|
)
|
|||
Deferred income taxes, net
|
(128
|
)
|
|
56
|
|
|
(74
|
)
|
|||
Non-cash realignment charges
|
—
|
|
|
15
|
|
|
—
|
|
|||
Gain on disposition of certain lines of business and other, net
|
—
|
|
|
(31
|
)
|
|
—
|
|
|||
Gain on sales of strategic investments
|
(6
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
(1
|
)
|
|
7
|
|
|
2
|
|
|||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|||||
Accounts receivable
|
(267
|
)
|
|
(71
|
)
|
|
(268
|
)
|
|||
Other assets
|
(70
|
)
|
|
(59
|
)
|
|
(112
|
)
|
|||
Due to/from related parties, net
|
(46
|
)
|
|
60
|
|
|
6
|
|
|||
Accounts payable
|
69
|
|
|
30
|
|
|
24
|
|
|||
Accrued expenses
|
135
|
|
|
1
|
|
|
22
|
|
|||
Income taxes receivable from EMC
|
—
|
|
|
17
|
|
|
19
|
|
|||
Income taxes payable
|
77
|
|
|
19
|
|
|
138
|
|
|||
Unearned revenues
|
693
|
|
|
756
|
|
|
751
|
|
|||
Net cash provided by operating activities
|
2,180
|
|
|
2,535
|
|
|
1,897
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Additions to property and equipment
|
(352
|
)
|
|
(345
|
)
|
|
(234
|
)
|
|||
Purchases of available-for-sale securities
|
(3,937
|
)
|
|
(3,181
|
)
|
|
(3,189
|
)
|
|||
Sales of available-for-sale securities
|
2,076
|
|
|
1,599
|
|
|
1,880
|
|
|||
Maturities of available-for-sale securities
|
717
|
|
|
717
|
|
|
902
|
|
|||
Proceeds from disposition of certain lines of business
|
—
|
|
|
37
|
|
|
—
|
|
|||
Purchases of strategic investments
|
(52
|
)
|
|
(8
|
)
|
|
(51
|
)
|
|||
Sales of strategic investments
|
11
|
|
|
—
|
|
|
—
|
|
|||
Business acquisitions, net of cash acquired
|
(1,159
|
)
|
|
(289
|
)
|
|
(1,344
|
)
|
|||
Decrease (increase) in restricted cash
|
(78
|
)
|
|
(3
|
)
|
|
1
|
|
|||
Other investing
|
(11
|
)
|
|
1
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(2,785
|
)
|
|
(1,472
|
)
|
|
(2,035
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock
|
164
|
|
|
197
|
|
|
253
|
|
|||
Proceeds from issuance of notes payable to EMC
|
1,050
|
|
|
—
|
|
|
—
|
|
|||
Reduction in capital from EMC
|
(24
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from non-controlling interests
|
7
|
|
|
—
|
|
|
—
|
|
|||
Repurchase of common stock
|
(700
|
)
|
|
(508
|
)
|
|
(467
|
)
|
|||
Excess tax benefits from stock-based compensation
|
36
|
|
|
70
|
|
|
138
|
|
|||
Shares repurchased for tax withholdings on vesting of restricted stock
|
(162
|
)
|
|
(126
|
)
|
|
(133
|
)
|
|||
Net cash provided by (used in) financing activities
|
371
|
|
|
(367
|
)
|
|
(209
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
(234
|
)
|
|
696
|
|
|
(347
|
)
|
|||
Cash and cash equivalents at beginning of the period
|
2,305
|
|
|
1,609
|
|
|
1,956
|
|
|||
Cash and cash equivalents at end of the period
|
$
|
2,071
|
|
|
$
|
2,305
|
|
|
$
|
1,609
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
27
|
|
|
$
|
6
|
|
|
$
|
7
|
|
Cash paid for taxes, net
|
215
|
|
|
35
|
|
|
56
|
|
|||
Non-cash items:
|
|
|
|
|
|
||||||
Changes in capital additions, accrued but not paid
|
$
|
19
|
|
|
$
|
(16
|
)
|
|
$
|
37
|
|
Changes in tax withholdings on vesting of restricted stock, accrued but not paid
|
7
|
|
|
—
|
|
|
2
|
|
|||
Fair value of stock-based awards assumed in acquisition
|
24
|
|
|
—
|
|
|
17
|
|
|
Class A
Common Stock
|
|
Class B
Convertible
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Non-controlling Interests
|
|
Stockholders’
Equity
|
||||||||||||||||||||
Shares
|
|
Par Value
|
|
Shares
|
|
Par Value
|
|
||||||||||||||||||||||||||
Balance, January 1, 2012
|
125
|
|
|
$
|
1
|
|
|
300
|
|
|
$
|
3
|
|
|
$
|
3,213
|
|
|
$
|
1,552
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
4,770
|
|
Proceeds from issuance of common stock
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
253
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
253
|
|
|||||||
Issuance of stock-based awards in acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||||
Repurchase and retirement of common stock
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(467
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(467
|
)
|
|||||||
Issuance of restricted stock, net of cancellations
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Shares 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 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
|
|
|||||||
Proceeds from issuance of common stock
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|||||||
Issuance of stock-based awards in acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|||||||
Repurchase and retirement of common stock
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(700
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(700
|
)
|
|||||||
Issuance of restricted stock, net of cancellations
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Shares withheld for tax withholdings on vesting of restricted stock
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(162
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(162
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
516
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
516
|
|
|||||||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|||||||
Amount due from tax sharing arrangement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|||||||
Total other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||||
Activities with non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|||||||
Reclassification of liability-classified awards to equity stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
886
|
|
|
—
|
|
|
—
|
|
|
886
|
|
|||||||
Balance, December 31, 2014
|
129
|
|
|
$
|
1
|
|
|
300
|
|
|
$
|
3
|
|
|
$
|
3,380
|
|
|
$
|
4,198
|
|
|
$
|
(1
|
)
|
|
$
|
5
|
|
|
$
|
7,586
|
|
Buildings
|
|
Term of underlying land lease
|
Land improvements
|
|
15 years
|
Furniture and fixtures
|
|
5 years
|
Equipment
|
|
3 to 5 years
|
Software
|
|
2 to 3 years
|
Leasehold improvements
|
|
20 years, not to exceed the term of the underlying lease
|
Cash
|
$
|
36
|
|
Other current assets
|
61
|
|
|
Intangible assets
|
250
|
|
|
Goodwill
|
868
|
|
|
Other acquired assets
|
30
|
|
|
Total assets acquired
|
1,245
|
|
|
Unearned revenues
|
(45
|
)
|
|
Other assumed liabilities
|
(72
|
)
|
|
Total liabilities assumed
|
(117
|
)
|
|
Fair value of assets acquired and liabilities assumed
|
$
|
1,128
|
|
|
Useful Lives
(in years)
|
|
Weighted-Average
Useful Lives
(in years)
|
|
Fair Value
Amount
|
||
Purchased technology
|
2 – 6
|
|
5.9
|
|
$
|
118
|
|
Customer relationships and customer lists
|
2 – 8
|
|
7.9
|
|
78
|
|
|
Trademarks and tradenames
|
8
|
|
8
|
|
40
|
|
|
Other
|
2 – 8
|
|
3.2
|
|
14
|
|
|
Total identifiable intangible assets
|
|
|
|
|
$
|
250
|
|
|
For the Year
Ended December 31,
|
||||||
|
|||||||
|
2014
|
|
2013
|
||||
Pro forma adjusted net income
|
$
|
849
|
|
|
$
|
781
|
|
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 tradenames
|
10
|
|
20
|
|
|
IPR&D
|
|
|
49
|
|
|
Total intangible assets acquired, net, excluding goodwill
|
|
|
$
|
335
|
|
|
|
For the Year Ended
December 31, 2012
|
||
Pro forma adjusted total revenue
|
|
$
|
4,607
|
|
Pro forma adjusted net income
|
|
687
|
|
|
Pro forma adjusted net income per weighted-average share, diluted for Class A and Class B
|
|
$
|
1.58
|
|
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
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Balance, beginning of the year
|
$
|
607
|
|
|
$
|
732
|
|
Additions to intangible assets related to business combinations
|
278
|
|
|
62
|
|
||
Disposition of certain business activities (Refer to Note C)
|
—
|
|
|
(54
|
)
|
||
Contribution to Pivotal (Refer to Note N)
|
—
|
|
|
(28
|
)
|
||
Amortization Expense
|
(141
|
)
|
|
(107
|
)
|
||
Other adjustments
|
4
|
|
|
2
|
|
||
Balance, end of the year
|
$
|
748
|
|
|
$
|
607
|
|
|
December 31, 2014
|
||||||||||||
|
Weighted-Average
Useful Lives (in years) |
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||
Purchased technology
|
6.5
|
|
$
|
699
|
|
|
$
|
(252
|
)
|
|
$
|
447
|
|
Leasehold interest
|
34.9
|
|
149
|
|
|
(15
|
)
|
|
134
|
|
|||
Customer relationships and customer lists
|
8.2
|
|
157
|
|
|
(53
|
)
|
|
104
|
|
|||
Trademarks and tradenames
|
8.6
|
|
61
|
|
|
(9
|
)
|
|
52
|
|
|||
Other
|
2.7
|
|
18
|
|
|
(7
|
)
|
|
11
|
|
|||
Total definite-lived intangible assets
|
|
|
$
|
1,084
|
|
|
$
|
(336
|
)
|
|
$
|
748
|
|
|
December 31, 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 tradenames
|
9.1
|
|
24
|
|
|
(7
|
)
|
|
17
|
|
|||
IPR&D
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
Total definite-lived intangible assets
|
|
|
$
|
825
|
|
|
$
|
(218
|
)
|
|
$
|
607
|
|
2015
|
$
|
143
|
|
2016
|
126
|
|
|
2017
|
119
|
|
|
2018
|
107
|
|
|
2019
|
86
|
|
|
Thereafter
|
167
|
|
|
Total
|
$
|
748
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Balance, beginning of the year
|
$
|
3,027
|
|
|
$
|
2,848
|
|
Increase in goodwill related to business combinations
|
941
|
|
|
233
|
|
||
Contribution to Pivotal (see Note N)
|
—
|
|
|
(28
|
)
|
||
Reduction related to disposition of certain business activities
|
—
|
|
|
(4
|
)
|
||
Deferred tax adjustments to purchase price allocations on acquisitions
|
(4
|
)
|
|
(20
|
)
|
||
Other adjustments to purchase price allocations on acquisitions
|
—
|
|
|
(2
|
)
|
||
Balance, end of the year
|
$
|
3,964
|
|
|
$
|
3,027
|
|
|
For the Year Ended December 31, 2014
|
||||||||||||||||||
|
Balance as of
January 1, 2014
|
|
Realignment
Charges
|
|
Utilization
|
|
Balance as of
December 31, 2014
|
|
Non-Cash Portion
of Utilization
|
||||||||||
Workforce reductions
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
(10
|
)
|
|
$
|
8
|
|
|
$
|
—
|
|
Asset impairments, exit of facilities and other exit costs
|
3
|
|
|
(2
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
3
|
|
|
$
|
16
|
|
|
$
|
(11
|
)
|
|
$
|
8
|
|
|
$
|
—
|
|
|
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,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net income
|
$
|
886
|
|
|
$
|
1,014
|
|
|
$
|
746
|
|
Weighted-average shares, basic for Class A and Class B
|
430,355
|
|
|
429,093
|
|
|
426,658
|
|
|||
Effect of dilutive securities
|
4,158
|
|
|
4,322
|
|
|
7,316
|
|
|||
Weighted-average shares, diluted for Class A and Class B
|
434,513
|
|
|
433,415
|
|
|
433,974
|
|
|||
Net income per weighted-average share, basic for Class A and Class B
|
$
|
2.06
|
|
|
$
|
2.36
|
|
|
$
|
1.75
|
|
Net income per weighted-average share, diluted for Class A and Class B
|
$
|
2.04
|
|
|
$
|
2.34
|
|
|
$
|
1.72
|
|
|
For the Year Ended December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
Anti-dilutive securities:
|
|
|
|
|
|
|||
Employee stock options
|
1,440
|
|
|
1,023
|
|
|
388
|
|
Restricted stock units
|
16
|
|
|
167
|
|
|
2,338
|
|
Total
|
1,456
|
|
|
1,190
|
|
|
2,726
|
|
|
December 31, 2014
|
||||||||||||||
|
Cost or Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Aggregate
Fair Value |
||||||||
Cash
|
$
|
885
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
885
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money-market funds
|
1,130
|
|
|
—
|
|
|
—
|
|
|
1,130
|
|
||||
U.S. and foreign corporate debt securities
|
54
|
|
|
—
|
|
|
—
|
|
|
54
|
|
||||
Foreign governments and multi-national agency obligations
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Total cash equivalents
|
1,186
|
|
|
—
|
|
|
—
|
|
|
1,186
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
U.S. Government and agency obligations
|
542
|
|
|
—
|
|
|
—
|
|
|
542
|
|
||||
U.S. and foreign corporate debt securities
|
3,236
|
|
|
3
|
|
|
(5
|
)
|
|
3,234
|
|
||||
Foreign governments and multi-national agency obligations
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||
Municipal obligations
|
930
|
|
|
2
|
|
|
—
|
|
|
932
|
|
||||
Asset-backed securities
|
53
|
|
|
—
|
|
|
—
|
|
|
53
|
|
||||
Mortgage-backed securities
|
221
|
|
|
—
|
|
|
(1
|
)
|
|
220
|
|
||||
Total short-term investments
|
5,005
|
|
|
5
|
|
|
(6
|
)
|
|
5,004
|
|
||||
Total cash, cash equivalents and short-term investments
|
$
|
7,076
|
|
|
$
|
5
|
|
|
$
|
(6
|
)
|
|
$
|
7,075
|
|
|
December 31, 2013
|
||||||||||||||
|
Cost or Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Aggregate
Fair Value
|
||||||||
Cash
|
$
|
483
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
483
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money-market funds
|
1,808
|
|
|
—
|
|
|
—
|
|
|
1,808
|
|
||||
U.S. and foreign corporate debt securities
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
||||
Municipal obligations
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Total cash equivalents
|
1,822
|
|
|
—
|
|
|
—
|
|
|
1,822
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
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 short-term investments
|
3,865
|
|
|
9
|
|
|
(4
|
)
|
|
3,870
|
|
||||
Total cash, cash equivalents and short-term investments
|
$
|
6,170
|
|
|
$
|
9
|
|
|
$
|
(4
|
)
|
|
$
|
6,175
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||
|
Fair Value
|
|
Unrealized Losses
|
|
Fair Value
|
|
Unrealized Losses
|
||||||||
U.S. and foreign corporate debt securities
|
$
|
1,964
|
|
|
$
|
(5
|
)
|
|
$
|
750
|
|
|
$
|
(3
|
)
|
Mortgage-backed securities
|
107
|
|
|
(1
|
)
|
|
91
|
|
|
(1
|
)
|
||||
Total
|
$
|
2,071
|
|
|
$
|
(6
|
)
|
|
$
|
841
|
|
|
$
|
(4
|
)
|
|
Amortized
Cost Basis
|
|
Aggregate
Fair Value
|
||||
Due within one year
|
$
|
2,594
|
|
|
$
|
2,594
|
|
Due after 1 year through 5 years
|
3,361
|
|
|
3,360
|
|
||
Due after 5 years
|
236
|
|
|
236
|
|
||
Total cash equivalents and short-term investments
|
$
|
6,191
|
|
|
$
|
6,190
|
|
•
|
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are noted active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
|
•
|
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities
|
|
December 31, 2014
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents:
|
|
|
|
|
|
|
|||||
Money-market funds
|
$
|
1,130
|
|
|
$
|
—
|
|
|
$
|
1,130
|
|
U.S. and foreign corporate debt securities
|
—
|
|
|
54
|
|
|
54
|
|
|||
Foreign governments and multi-national agency obligations
|
—
|
|
|
2
|
|
|
2
|
|
|||
Total cash equivalents
|
1,130
|
|
|
56
|
|
|
1,186
|
|
|||
Short-term investments:
|
|
|
|
|
|
||||||
U.S. Government and agency obligations
|
353
|
|
|
189
|
|
|
542
|
|
|||
U.S. and foreign corporate debt securities
|
—
|
|
|
3,234
|
|
|
3,234
|
|
|||
Foreign governments and multi-national agency obligations
|
—
|
|
|
23
|
|
|
23
|
|
|||
Municipal obligations
|
—
|
|
|
932
|
|
|
932
|
|
|||
Asset-backed securities
|
—
|
|
|
53
|
|
|
53
|
|
|||
Mortgage-backed securities
|
—
|
|
|
220
|
|
|
220
|
|
|||
Total short-term investments
|
353
|
|
|
4,651
|
|
|
5,004
|
|
|||
Total cash equivalents and short-term investments
|
$
|
1,483
|
|
|
$
|
4,707
|
|
|
$
|
6,190
|
|
|
December 31, 2013
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Money-market funds
|
$
|
1,808
|
|
|
$
|
—
|
|
|
$
|
1,808
|
|
U.S. and foreign corporate debt securities
|
—
|
|
|
12
|
|
|
12
|
|
|||
Municipal obligations
|
—
|
|
|
2
|
|
|
2
|
|
|||
Total cash equivalents
|
1,808
|
|
|
14
|
|
|
1,822
|
|
|||
Short-term investments:
|
|
|
|
|
|
||||||
U.S. Government and agency obligations
|
385
|
|
|
152
|
|
|
537
|
|
|||
U.S. and foreign corporate debt securities
|
—
|
|
|
2,354
|
|
|
2,354
|
|
|||
Foreign governments and multi-national agency obligations
|
—
|
|
|
37
|
|
|
37
|
|
|||
Municipal obligations
|
—
|
|
|
814
|
|
|
814
|
|
|||
Mortgage-backed securities
|
—
|
|
|
128
|
|
|
128
|
|
|||
Total short-term investments
|
385
|
|
|
3,485
|
|
|
3,870
|
|
|||
Total cash equivalents and short-term investments
|
$
|
2,193
|
|
|
$
|
3,499
|
|
|
$
|
5,692
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Equipment and software
|
$
|
974
|
|
|
$
|
752
|
|
Buildings and improvements
|
753
|
|
|
584
|
|
||
Furniture and fixtures
|
92
|
|
|
77
|
|
||
Construction in progress
|
25
|
|
|
120
|
|
||
Total property and equipment
|
1,844
|
|
|
1,533
|
|
||
Accumulated depreciation
|
(809
|
)
|
|
(688
|
)
|
||
Total property and equipment, net
|
$
|
1,035
|
|
|
$
|
845
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Salaries, commissions, bonuses, and benefits
|
$
|
374
|
|
|
$
|
303
|
|
Accrued partner liabilities
|
148
|
|
|
135
|
|
||
Other
|
289
|
|
|
170
|
|
||
Total
|
$
|
811
|
|
|
$
|
608
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Unearned license revenues
|
$
|
488
|
|
|
$
|
465
|
|
Unearned software maintenance revenues
|
3,905
|
|
|
3,304
|
|
||
Unearned professional services revenues
|
440
|
|
|
323
|
|
||
Total unearned revenues
|
$
|
4,833
|
|
|
$
|
4,092
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Federal:
|
|
|
|
|
|
||||||
Current
|
$
|
188
|
|
|
$
|
1
|
|
|
$
|
161
|
|
Deferred
|
(116
|
)
|
|
57
|
|
|
(71
|
)
|
|||
|
72
|
|
|
58
|
|
|
90
|
|
|||
State:
|
|
|
|
|
|
||||||
Current
|
15
|
|
|
2
|
|
|
13
|
|
|||
Deferred
|
(12
|
)
|
|
6
|
|
|
(7
|
)
|
|||
|
3
|
|
|
8
|
|
|
6
|
|
|||
Foreign:
|
|
|
|
|
|
||||||
Current
|
87
|
|
|
72
|
|
|
44
|
|
|||
Deferred
|
—
|
|
|
(5
|
)
|
|
7
|
|
|||
|
87
|
|
|
67
|
|
|
51
|
|
|||
Total provision for income taxes
|
$
|
162
|
|
|
$
|
133
|
|
|
$
|
147
|
|
|
For the Year Ended December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
Statutory federal tax rate
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
State taxes, net of federal benefit
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Tax rate differential for international jurisdictions
|
(21
|
)%
|
|
(22
|
)%
|
|
(22
|
)%
|
U.S. tax credits
(1)
|
(3
|
)%
|
|
(7
|
)%
|
|
—
|
%
|
Permanent items and other
|
4
|
%
|
|
5
|
%
|
|
3
|
%
|
Effective tax rate
|
16
|
%
|
|
12
|
%
|
|
17
|
%
|
(1)
|
Amounts presented for 2013 include the federal research tax credit for 2012 as the credit was enacted retroactively through December 31, 2013, and passed by the United States Congress during January 2013.
|
|
December 31,
|
||||||
2014
|
|
2013
|
|||||
Deferred tax assets:
|
|
|
|
||||
Unearned revenue
|
$
|
296
|
|
|
$
|
224
|
|
Accruals and other
|
67
|
|
|
45
|
|
||
Stock-based compensation
|
90
|
|
|
68
|
|
||
Tax credit and net operating loss carryforwards
|
138
|
|
|
119
|
|
||
Other non-current assets
|
9
|
|
|
14
|
|
||
Basis difference in investment in business
|
20
|
|
|
20
|
|
||
Net deferred tax assets
|
620
|
|
|
490
|
|
||
Valuation allowance
|
(106
|
)
|
|
(94
|
)
|
||
Total deferred tax assets
|
514
|
|
|
396
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property, plant and equipment, net
|
(93
|
)
|
|
(70
|
)
|
||
Intangibles and other assets, net
|
(8
|
)
|
|
(76
|
)
|
||
Total deferred tax liabilities
|
(101
|
)
|
|
(146
|
)
|
||
Total deferred tax assets, net
|
$
|
413
|
|
|
$
|
250
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Payments from VMware to EMC
|
$
|
150
|
|
|
$
|
8
|
|
|
$
|
—
|
|
Payments from EMC to VMware
|
—
|
|
|
32
|
|
|
19
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Balance, beginning of the year
|
$
|
167
|
|
|
$
|
158
|
|
|
$
|
95
|
|
Tax positions related to current year:
|
|
|
|
|
|
||||||
Additions
|
32
|
|
|
32
|
|
|
12
|
|
|||
Reductions
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||
Tax positions related to prior years:
|
|
|
|
|
|
||||||
Additions related to acquisitions completed in 2012
|
—
|
|
|
—
|
|
|
60
|
|
|||
Additions
|
1
|
|
|
—
|
|
|
—
|
|
|||
Reductions
|
(3
|
)
|
|
(12
|
)
|
|
—
|
|
|||
Settlements
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|||
Reductions resulting from a lapse of the statute of limitations
|
(2
|
)
|
|
(8
|
)
|
|
(4
|
)
|
|||
Foreign currency effects
|
(4
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Balance, end of the year
|
$
|
190
|
|
|
$
|
167
|
|
|
$
|
158
|
|
|
Future Lease Commitments
|
|
Purchase Obligations
|
|
Other Contractual Commitments
(1)
|
|
Total
|
||||||||
2015
|
$
|
81
|
|
|
$
|
47
|
|
|
$
|
8
|
|
|
$
|
136
|
|
2016
|
72
|
|
|
48
|
|
|
9
|
|
|
129
|
|
||||
2017
|
60
|
|
|
—
|
|
|
7
|
|
|
67
|
|
||||
2018
|
46
|
|
|
—
|
|
|
7
|
|
|
53
|
|
||||
2019
|
37
|
|
|
—
|
|
|
3
|
|
|
40
|
|
||||
Thereafter
|
602
|
|
|
—
|
|
|
15
|
|
|
617
|
|
||||
Total minimum lease payments
|
$
|
898
|
|
|
$
|
95
|
|
|
$
|
49
|
|
|
$
|
1,042
|
|
Authorization Date
|
|
Amount Authorized
|
|
Expiration Date
|
|
Status
|
August 6, 2014
|
|
$1,000
|
|
December 31, 2016
|
|
Open
|
August 7, 2013
|
|
700
|
|
December 31, 2015
|
|
Completed in Q4'14
|
November 28, 2012
|
|
250
|
|
December 31, 2014
|
|
Completed in Q4'13
|
February 29, 2012
|
|
600
|
|
December 31, 2013
|
|
Completed in Q2'13
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Aggregate purchase price
|
$
|
700
|
|
|
$
|
508
|
|
|
$
|
467
|
|
Class A common shares repurchased
|
7,642
|
|
|
6,636
|
|
|
5,132
|
|
|||
Weighted-average price per share
|
$
|
91.61
|
|
|
$
|
76.58
|
|
|
$
|
91.10
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Cash proceeds
|
$
|
80
|
|
|
$
|
76
|
|
|
$
|
69
|
|
Class A common shares purchased
|
1,099
|
|
|
1,154
|
|
|
897
|
|
|||
Weighted-average price per share
|
$
|
73.21
|
|
|
$
|
65.97
|
|
|
$
|
77.34
|
|
|
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, 2012
|
16,174
|
|
|
$
|
35.27
|
|
|
3,628
|
|
|
$
|
13.16
|
|
Options relating to employees transferred (to) from EMC
|
—
|
|
|
—
|
|
|
(177
|
)
|
|
4.40
|
|
||
Granted
|
1,201
|
|
|
4.67
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(644
|
)
|
|
42.07
|
|
|
(36
|
)
|
|
14.96
|
|
||
Expired
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
12.67
|
|
||
Exercised
|
(6,598
|
)
|
|
30.44
|
|
|
(761
|
)
|
|
12.35
|
|
||
Outstanding, December 31, 2012
|
10,133
|
|
|
34.36
|
|
|
2,643
|
|
|
15.12
|
|
||
Options relating to employees transferred (to) from EMC
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
11.87
|
|
||
Granted
|
1,434
|
|
|
71.53
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(416
|
)
|
|
36.25
|
|
|
(46
|
)
|
|
16.09
|
|
||
Expired
|
(387
|
)
|
|
105.81
|
|
|
(29
|
)
|
|
12.99
|
|
||
Exercised
|
(5,009
|
)
|
|
28.12
|
|
|
(775
|
)
|
|
15.39
|
|
||
Outstanding, December 31, 2013
|
5,755
|
|
|
44.12
|
|
|
1,696
|
|
|
15.53
|
|
||
Options relating to employees transferred (to) from EMC
|
—
|
|
|
—
|
|
|
149
|
|
|
15.87
|
|
||
Granted
|
2,695
|
|
|
50.91
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(220
|
)
|
|
47.89
|
|
|
(2
|
)
|
|
19.10
|
|
||
Expired
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
14.14
|
|
||
Exercised
|
(2,361
|
)
|
|
35.58
|
|
|
(563
|
)
|
|
14.37
|
|
||
Outstanding, December 31, 2014
|
5,869
|
|
|
50.54
|
|
|
1,271
|
|
|
16.08
|
|
|
VMware Stock Options
|
|
EMC Stock Options
|
||||||||||||||||||||||
|
Outstanding Options
(in thousands)
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Term
(in years)
|
|
Aggregate Intrinsic Value
(1)
(in millions)
|
|
Outstanding Options
(in thousands)
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Term
(in years)
|
|
Aggregate Intrinsic Value
(2)
(in millions)
|
||||||||||
Exercisable, December 31, 2014
|
2,818
|
|
|
$
|
37.40
|
|
|
2.09
|
|
$
|
128
|
|
|
1,228
|
|
|
$
|
15.84
|
|
|
3.81
|
|
$
|
17
|
|
Vested and expected to vest, December 31, 2014
|
5,584
|
|
|
48.57
|
|
|
4.26
|
|
204
|
|
|
1,269
|
|
|
16.07
|
|
|
3.90
|
|
17
|
|
|
Number of Units
|
|
Weighted-
Average Grant
Date Fair
Value
(per unit)
|
|||
Outstanding, January 1, 2012
|
9,540
|
|
|
$
|
72.74
|
|
Granted
|
7,832
|
|
|
101.73
|
|
|
Vested
|
(3,751
|
)
|
|
69.01
|
|
|
Forfeited
|
(1,451
|
)
|
|
81.53
|
|
|
Outstanding, December 31, 2012
|
12,170
|
|
|
91.93
|
|
|
Granted
|
7,391
|
|
|
76.20
|
|
|
Vested
|
(4,399
|
)
|
|
83.21
|
|
|
Forfeited
|
(2,306
|
)
|
|
90.55
|
|
|
Outstanding, December 31, 2013
|
12,856
|
|
|
85.85
|
|
|
Granted
|
6,189
|
|
|
92.82
|
|
|
Vested
|
(5,166
|
)
|
|
86.27
|
|
|
Forfeited
|
(1,294
|
)
|
|
88.03
|
|
|
Outstanding, December 31, 2014
|
12,585
|
|
|
88.88
|
|
|
Number of Units
(in thousands)
|
|
Weighted Average Remaining Term (in years)
|
|
Aggregate Intrinsic Value
(1)
(in millions)
|
|||
Expected to vest, December 31, 2014
|
10,989
|
|
|
1.33
|
|
$
|
907
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Cost of license revenues
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Cost of services revenues
|
42
|
|
|
29
|
|
|
28
|
|
|||
Research and development
|
244
|
|
|
227
|
|
|
210
|
|
|||
Sales and marketing
|
172
|
|
|
144
|
|
|
150
|
|
|||
General and administrative
|
69
|
|
|
56
|
|
|
48
|
|
|||
Realignment
|
—
|
|
|
6
|
|
|
—
|
|
|||
Stock-based compensation
|
529
|
|
|
464
|
|
|
438
|
|
|||
Income tax benefit
|
(157
|
)
|
|
(136
|
)
|
|
(132
|
)
|
|||
Total stock-based compensation, net of tax
|
$
|
372
|
|
|
$
|
328
|
|
|
$
|
306
|
|
|
For the Year Ended December 31,
|
||||||||||
VMware Stock Options
|
2014
|
|
2013
|
|
2012
|
||||||
Dividend yield
|
None
|
|
|
None
|
|
|
None
|
|
|||
Expected volatility
|
36.2
|
%
|
|
38.5
|
%
|
|
35.8
|
%
|
|||
Risk-free interest rate
|
0.9
|
%
|
|
0.9
|
%
|
|
0.3
|
%
|
|||
Expected term (in years)
|
3.2
|
|
|
3.6
|
|
|
2.7
|
|
|||
Weighted-average fair value at grant date
|
$
|
48.47
|
|
|
$
|
29.47
|
|
|
$
|
80.45
|
|
|
For the Year Ended December 31,
|
||||||||||
VMware Employee Stock Purchase Plan
|
2014
|
|
2013
|
|
2012
|
||||||
Dividend yield
|
None
|
|
|
None
|
|
|
None
|
|
|||
Expected volatility
|
32.3
|
%
|
|
32.9
|
%
|
|
37.8
|
%
|
|||
Risk-free interest rate
|
0.1
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
|||
Expected term (in years)
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|||
Weighted-average fair value at grant date
|
$
|
20.71
|
|
|
$
|
20.45
|
|
|
$
|
23.36
|
|
|
Unrealized Gains on
Available-for-Sale Securities |
|
Loss on
Cash Flow Hedges |
|
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), $0 and $(1)
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Other comprehensive loss, net
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Balance, December 31, 2013
|
4
|
|
|
—
|
|
|
4
|
|
|||
Unrealized gain (loss), net of taxes of $0
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income to the consolidated statement of income, net of taxes of $(2), $0 and $(2)
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||
Other comprehensive loss, net
|
(4
|
)
|
|
(1
|
)
|
|
(5
|
)
|
|||
Balance, December 31, 2014
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
•
|
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.
|
•
|
Pursuant to an ongoing distribution agreement, VMware acts as the selling agent for certain products and services in exchange for a customary agency fee.
|
•
|
VMware recognizes revenues for various transition services provided to Pivotal. Support costs incurred by VMware are reimbursed to VMware and are recorded as a reduction to the costs incurred by VMware.
|
|
Revenues and Receipts from EMC
|
|
Unearned Revenues from EMC
|
||||||||||||||||
|
For the Year Ended December 31,
|
|
As of December 31,
|
||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
||||||||||
Reseller revenues
|
$
|
205
|
|
|
$
|
141
|
|
|
$
|
141
|
|
|
$
|
290
|
|
|
$
|
188
|
|
Professional services revenues
|
85
|
|
|
72
|
|
|
82
|
|
|
9
|
|
|
12
|
|
|||||
Internal-use revenues
|
21
|
|
|
32
|
|
|
9
|
|
|
18
|
|
|
20
|
|
|||||
Collaborative technology project receipts
|
—
|
|
|
7
|
|
|
7
|
|
|
n/a
|
|
|
n/a
|
|
|||||
Agency fee revenues
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Reimbursement for transition services
|
2
|
|
|
12
|
|
|
—
|
|
|
n/a
|
|
|
n/a
|
|
•
|
VMware purchases and leases products and purchases 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 notes payable with EMC.
|
|
For the Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Purchases and leases of products and purchases of services
|
$
|
71
|
|
|
$
|
63
|
|
|
$
|
42
|
|
Collaborative technology project costs
|
12
|
|
|
13
|
|
|
n/a
|
|
|||
EMC subsidiary support and administrative costs
|
137
|
|
|
128
|
|
|
106
|
|
|||
Interest expense on notes payable
|
24
|
|
|
4
|
|
|
5
|
|
|
As of December 31,
|
||||||
|
2014
|
|
2013
|
||||
Due to EMC
|
$
|
(76
|
)
|
|
$
|
(114
|
)
|
Due from EMC
|
125
|
|
|
96
|
|
||
Due (to) from related parties, net
|
$
|
49
|
|
|
$
|
(18
|
)
|
|
|
|
|
||||
Income tax payable due to EMC
|
$
|
(40
|
)
|
|
$
|
(22
|
)
|
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
|
)
|
•
|
SDDC
|
•
|
End-User Computing
|
•
|
Hybrid Cloud Computing
|
2014
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
Q4 2014
|
||||||||
Revenues
|
$
|
1,360
|
|
|
$
|
1,457
|
|
|
$
|
1,515
|
|
|
$
|
1,703
|
|
Net income
|
199
|
|
|
167
|
|
|
194
|
|
|
326
|
|
||||
Net income per share, basic
|
$
|
0.46
|
|
|
$
|
0.39
|
|
|
$
|
0.45
|
|
|
$
|
0.76
|
|
Net income per share, diluted
|
$
|
0.46
|
|
|
$
|
0.38
|
|
|
$
|
0.45
|
|
|
$
|
0.75
|
|
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
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
2.1
|
|
|
Agreement and Plan of Merger, by and among VMware, Inc., Aikman
Acquisition Corp., A.W.S. Holding, LLC and the Representative named therein, dated January 21, 2014*
|
|
|
|
8-K
|
|
2/24/2014
|
2.2
|
|
|
Amendment No. 1 to Agreement and Plan of Merger, by and among VMware, Inc., Aikman Acquisition Corp., A.W.S. Holding, LLC and the Representative named therein, dated February 24, 2014*
|
|
|
|
8-K
|
|
2/24/2014
|
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
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form/
File No.
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
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 Real Estate License Agreement between VMware, Inc. and EMC Corporation
|
|
|
|
S-1/A-2
|
|
7/9/2007
|
10.6+
|
|
|
2007 Equity and Incentive Plan, as amended and restated May 29, 2013
|
|
|
|
S-8
|
|
6/20/2013
|
10.7+
|
|
|
Form of Indemnification Agreement for VMware, Inc. Directors and Executive Officers, as approved March 4, 2014
|
|
|
|
10-Q
|
|
5/1/2014
|
10.8
|
|
|
Form of Insurance Matters Agreement between VMware, Inc. and EMC Corporation
|
|
|
|
S-1/A-2
|
|
7/9/2007
|
10.9+
|
|
|
Form of Option Agreement, as amended June 13, 2013
|
|
|
|
10-Q
|
|
8/2/2013
|
10.10+
|
|
|
Form of Restricted Stock Unit Agreement, as amended June 13, 2013
|
|
|
|
10-Q
|
|
8/2/2013
|
10.11
|
|
|
2007 Employee Stock Purchase Plan, as amended and restated November 14, 2013
|
|
|
|
10-K
|
|
2/25/2014
|
10.12+
|
|
|
Letter Agreement between VMware, Inc. and Patrick Gelsinger dated September 14, 2012
|
|
|
|
10-K
|
|
2/27/2013
|
10.13
|
|
|
First Amendment to Tax Sharing Agreement between VMware, Inc. and EMC Corporation effective as of January 1, 2011
|
|
|
|
10-Q
|
|
5/4/2011
|
10.14+
|
|
|
Executive Bonus Program, as amended and restated February 12, 2014
|
|
|
|
10-Q
|
|
5/1/2014
|
10.15
|
|
|
Agreement of Purchase and Sale Agreement between Roche Palo Alto LLC and VMware, Inc. dated March 16, 2011
|
|
|
|
10-Q
|
|
8/3/2011
|
10.16
|
|
|
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
|
10.17
|
|
|
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
|
10.18+
|
|
|
Letter Agreement between VMware, Inc. and Jonathan Chadwick dated October 12, 2012
|
|
|
|
10-K
|
|
2/27/2013
|
10.19+
|
|
|
Form of Performance Stock Unit Agreement, as amended August 14, 2013
|
|
|
|
10-Q
|
|
11/7/2013
|
10.20+
|
|
|
Non-Qualified Deferred Compensation Plan, effective as of January 1, 2014
|
|
|
|
10-K
|
|
2/25/2014
|
10.21+
|
|
|
Non-Qualified Deferred Compensation Plan Adoption Agreement, effective as of January 1, 2014
|
|
|
|
10-K
|
|
2/25/2014
|
10.22+
|
|
|
Letter Agreement between VMware, Inc. and Sanjay Poonen dated July 18, 2013
|
|
|
|
10-K
|
|
2/25/2014
|
10.23
|
|
|
Third Amendment to Ground Lease by and between the Board of Trustees of the Leland Stanford Junior University and 3401 Hillview LLC dated as of January 1, 2014
|
|
|
|
10-Q
|
|
5/1/2014
|
10.24
|
|
|
Note Exchange Agreement by and between VMware, Inc. and EMC Corporation, dated as of January 21, 2014
|
|
|
|
10-Q
|
|
5/1/2014
|
10.25
|
|
|
Promissory Note for $680 million due and payable on May 1, 2018, issued to EMC Corporation dated January 31, 2014
|
|
|
|
10-Q
|
|
5/1/2014
|
10.26
|
|
|
Promissory Note for $550 million due and payable on May 1, 2020, issued to EMC Corporation dated January 31, 2014
|
|
|
|
10-Q
|
|
5/1/2014
|
10.27
|
|
|
Promissory Note for $270 million due and payable on December 1, 2022, issued to EMC Corporation dated January 31, 2014
|
|
|
|
10-Q
|
|
5/1/2014
|
10.28+
|
|
|
Change in Control Retention Plan, adopted February 25, 2015
|
|
X
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form/
File No.
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
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 26, 2015
|
By:
|
/s/ Patrick P. Gelsinger
|
|
|
|
Patrick P. Gelsinger
Chief Executive Officer
|
|
|
|
|
Dated:
|
February 26, 2015
|
By:
|
/s/ Kevan Krysler
|
|
|
|
Kevan Krysler
Senior Vice President, Chief Accounting Officer
(Principal Accounting Officer)
|
Date
|
|
Signature
|
|
Title
|
|
|
|
|
|
February 26, 2015
|
|
/s/ Patrick P. Gelsinger
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
|
Patrick P. Gelsinger
|
|
|
|
|
|
|
|
February 26, 2015
|
|
/s/ Jonathan C. Chadwick
|
|
Chief Financial Officer, Chief Operating Officer and Executive Vice President
(Principal Financial Officer)
|
|
|
Jonathan C. Chadwick
|
|
|
|
|
|
|
|
February 26, 2015
|
|
/s/ Joseph M. Tucci
|
|
Chairman
|
|
|
Joseph M. Tucci
|
|
|
|
|
|
|
|
February 26, 2015
|
|
/s/ Michael W. Brown
|
|
Director
|
|
|
Michael W. Brown
|
|
|
|
|
|
|
|
February 26, 2015
|
|
/s/ Pamela J. Craig
|
|
Director
|
|
|
Pamela J. Craig
|
|
|
|
|
|
|
|
February 26, 2015
|
|
/s/ John R. Egan
|
|
Director
|
|
|
John R. Egan
|
|
|
|
|
|
|
|
February 26, 2015
|
|
/s/ Paul A. Maritz
|
|
Director
|
|
|
Paul A. Maritz
|
|
|
|
|
|
|
|
February 26, 2015
|
|
/s/ Paul Sagan
|
|
Director
|
|
|
Paul Sagan
|
|
|
|
|
|
|
|
February 26, 2015
|
|
/s/ Dennis D. Powell
|
|
Director
|
|
|
Dennis D. Powell
|
|
|
|
|
|
|
|
February 26, 2015
|
|
/s/ David N. Strohm
|
|
Director
|
|
|
David N. Strohm
|
|
Allowance for Bad Debts
|
|
Balance at
Beginning
of Period
|
|
Allowance for Bad
Debts Charged to
General
and Administrative
Expenses
|
|
Bad Debts
Write-Offs
|
|
Balance at
End of
Period
|
||||||||
Year ended December 31, 2014 allowance for doubtful accounts
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Year ended December 31, 2013 allowance for doubtful accounts
|
|
4
|
|
|
(2
|
)
|
|
—
|
|
|
2
|
|
||||
Year ended December 31, 2012 allowance for doubtful accounts
|
|
4
|
|
|
1
|
|
|
(1
|
)
|
|
4
|
|
Tax Valuation Allowance
|
|
Balance at
Beginning
of Period
|
|
Tax Valuation
Allowance
Charged to Income
Tax Provision
|
|
Tax
Valuation
Allowance
Credited to
Income Tax
Provision
|
|
Balance at End of
Period
|
||||||||
Year ended December 31, 2014
income tax valuation allowance
|
|
$
|
94
|
|
|
$
|
21
|
|
|
$
|
(9
|
)
|
|
$
|
106
|
|
Year ended December 31, 2013
income tax valuation allowance
|
|
64
|
|
|
32
|
|
|
(2
|
)
|
|
94
|
|
||||
Year ended December 31, 2012
income tax valuation allowance
|
|
57
|
|
|
7
|
|
|
—
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBSIDIARIES
|
|
STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION
|
|
3401 Hillview LLC
|
|
Delaware
|
|
A.W.S. Holding, LLC
|
|
Delaware
|
|
AirWatch (Australia) Pty, Ltd.
|
|
Australia
|
|
AirWatch LLC
|
|
Delaware
|
|
AirWatch Pte Ltd.
|
|
Singapore
|
|
AirWatch Technologies India Private Ltd.
|
|
India
|
|
AirWatch UK, Limited
|
|
United Kingdom
|
|
Nicira, 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 Korea Co., Ltd.
|
|
South Korea
|
|
VMware Malaysia SDN. BHD.
|
|
Malaysia
|
|
VMware Marketing Austria GmbH
|
|
Austria
|
|
VMware Middle East FZ-LLC
|
|
Dubai
|
|
VMware Netherlands B.V.
|
|
Netherlands
|
|
VMware Singapore Pte Ltd.
|
|
Singapore
|
|
VMware Software e Serviços Brasil Ltda.
|
|
Brazil
|
|
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 vCloud Service G.K.
|
|
Japan
|
|
VMware, K.K.
|
|
Japan
|
|
Wandering WiFi, LLC
|
|
Nevada
|
|
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 26, 2015
|
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 26, 2015
|
By:
|
|
/s/ Jonathan C. Chadwick
|
|
|
|
|
Jonathan C. Chadwick
Chief Financial Officer, Chief Operating Officer and Executive Vice President
(Principal Financial Officer)
|
Date:
|
February 26, 2015
|
By:
|
|
/s/ Patrick P. Gelsinger
|
|
|
|
|
Patrick P. Gelsinger
Chief Executive Officer
(Principal Executive Officer)
|
Date:
|
February 26, 2015
|
By:
|
|
/s/ Jonathan C. Chadwick
|
|
|
|
|
Jonathan C. Chadwick
Chief Financial Officer, Chief Operating Officer and Executive Vice President
(Principal Financial Officer)
|