þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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94-3292913
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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3401 Hillview Avenue
Palo Alto, CA
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94304
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth company
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o
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Page
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PART I – FINANCIAL INFORMATION
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II – OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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||||||||||||
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Three Months Ended
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Nine Months Ended
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||||||||||||
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November 2,
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November 3,
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November 2,
|
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November 3,
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||||||||
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2018
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|
2017
(1)
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2018
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2017
(1)
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||||||||
Net income
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$
|
334
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$
|
395
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$
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1,920
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$
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1,045
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Other comprehensive income (loss):
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||||||||
Changes in market value of available-for-sale securities:
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||||||||
Unrealized
gains (losses)
, net of
tax provision (benefit)
of ($1), ($3), ($4) and $5
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(2
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)
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(6
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)
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(11
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)
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9
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||||
Reclassification of (gains)
losses
realized during the period, net of tax (provision)
benefit
of $—, $—, $— and $2
|
—
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|
—
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—
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3
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||||
Net change in market value of available-for-sale securities
|
(2
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)
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(6
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)
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(11
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)
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12
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||||
Changes in market value of effective foreign currency forward contracts:
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|
|
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||||||||
Unrealized
gains (losses)
, net of tax
provision (benefit)
of $— for all periods
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(4
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)
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(1
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)
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(9
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)
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|
3
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||||
Reclassification of
(gains) losses
realized during the period, net of tax
(provision)
benefit
of $—, $3, $—, and $—
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5
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(1
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)
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(1
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)
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(2
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)
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||||
Net change in market value of effective foreign currency forward contracts
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1
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(2
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)
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(10
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)
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1
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Total other comprehensive income (loss)
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(1
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)
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(8
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)
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(21
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)
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13
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||||
Total comprehensive income, net of taxes
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$
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333
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$
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387
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$
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1,899
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$
|
1,058
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__________
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||||||||
(1)
Adjusted to reflect the retrospective adoption of Topic 606.
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November 2,
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February 2,
|
||||
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2018
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2018
(1)
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||||
ASSETS
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|
||||
Current assets:
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|
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|
||||
Cash and cash equivalents
|
$
|
9,189
|
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$
|
5,971
|
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Short-term investments
|
4,338
|
|
|
5,682
|
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Accounts receivable, net of allowance for doubtful accounts of $5 and $2
|
1,101
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|
1,394
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Due from related parties, net
|
542
|
|
|
532
|
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||
Other current assets
|
248
|
|
|
257
|
|
||
Total current assets
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15,418
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13,836
|
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Property and equipment, net
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1,128
|
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|
1,074
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Other assets
|
1,810
|
|
|
924
|
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||
Deferred tax assets
|
59
|
|
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227
|
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||
Intangible assets, net
|
558
|
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|
548
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Goodwill
|
4,989
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4,597
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Total assets
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$
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23,962
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$
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21,206
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$
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158
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$
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15
|
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Accrued expenses and other
|
1,328
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1,357
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Unearned revenue
|
3,584
|
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|
3,438
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Total current liabilities
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5,070
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|
4,810
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Notes payable to Dell
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270
|
|
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270
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Long-term debt
|
3,970
|
|
|
3,964
|
|
||
Unearned revenue
|
2,617
|
|
|
2,401
|
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||
Income tax payable
|
878
|
|
|
954
|
|
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Other liabilities
|
246
|
|
|
183
|
|
||
Total liabilities
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13,051
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12,582
|
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Contingencies (refer to Note K)
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|
||||
Stockholders’ equity:
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Class A common stock, par value $0.01; authorized 2,500,000 shares; issued and outstanding 109,843 and 103,776 shares
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1
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1
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Class B convertible common stock, par value $0.01; authorized 1,000,000 shares; issued and outstanding 300,000 shares
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3
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3
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Additional paid-in capital
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1,268
|
|
|
844
|
|
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Accumulated other comprehensive loss
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(51
|
)
|
|
(15
|
)
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Retained earnings
|
9,690
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7,791
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Total stockholders’ equity
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10,911
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8,624
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Total liabilities and stockholders’ equity
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$
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23,962
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$
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21,206
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__________
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|
||||
(1)
Adjusted to reflect the retrospective adoption of Topic 606.
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Nine Months Ended
|
||||||
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November 2,
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November 3,
|
||||
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2018
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2017
(1)
|
||||
Operating activities:
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|
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Net income
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$
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1,920
|
|
|
$
|
1,045
|
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Adjustments to reconcile net income to net cash provided by operating activities:
|
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|
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Depreciation and amortization
|
465
|
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|
419
|
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Stock-based compensation
|
531
|
|
|
513
|
|
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Deferred income taxes, net
|
163
|
|
|
119
|
|
||
Unrealized (gain) loss on equity securities, net
|
(837
|
)
|
|
—
|
|
||
Loss on disposition
|
6
|
|
|
94
|
|
||
(Gain) loss on disposition of assets, revaluation and impairment, net
|
1
|
|
|
(32
|
)
|
||
Gain on extinguishment of debt
|
—
|
|
|
(6
|
)
|
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Loss on Dell stock purchase
|
—
|
|
|
2
|
|
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Other
|
4
|
|
|
2
|
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable
|
297
|
|
|
284
|
|
||
Other current assets and other assets
|
(264
|
)
|
|
(240
|
)
|
||
Due to/from related parties, net
|
(10
|
)
|
|
(162
|
)
|
||
Accounts payable
|
125
|
|
|
39
|
|
||
Accrued expenses and other liabilities
|
(117
|
)
|
|
11
|
|
||
Income taxes payable
|
10
|
|
|
(63
|
)
|
||
Unearned revenue
|
357
|
|
|
342
|
|
||
Net cash provided by operating activities
|
2,651
|
|
|
2,367
|
|
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Investing activities:
|
|
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|
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Additions to property and equipment
|
(178
|
)
|
|
(164
|
)
|
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Purchases of available-for-sale securities
|
(781
|
)
|
|
(3,339
|
)
|
||
Sales of available-for-sale securities
|
186
|
|
|
1,745
|
|
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Maturities of available-for-sale securities
|
1,905
|
|
|
1,207
|
|
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Purchases of strategic investments
|
(3
|
)
|
|
(33
|
)
|
||
Proceeds from disposition of assets
|
35
|
|
|
6
|
|
||
Business combinations, net of cash acquired, and purchases of intangible assets
|
(519
|
)
|
|
(236
|
)
|
||
Net cash paid on disposition of a business
|
(11
|
)
|
|
(47
|
)
|
||
Net cash provided by (used in) investing activities
|
634
|
|
|
(861
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock
|
181
|
|
|
104
|
|
||
Net proceeds from issuance of long-term debt
|
—
|
|
|
3,961
|
|
||
Repayment of notes payable to Dell
|
—
|
|
|
(1,225
|
)
|
||
Repurchase of common stock
|
—
|
|
|
(1,280
|
)
|
||
Shares repurchased for tax withholdings on vesting of restricted stock
|
(228
|
)
|
|
(271
|
)
|
||
Payment for common control transaction with Dell
|
(8
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
(55
|
)
|
|
1,289
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
3,230
|
|
|
2,795
|
|
||
Cash, cash equivalents and restricted cash at beginning of the period
|
6,003
|
|
|
3,239
|
|
||
Cash, cash equivalents and restricted cash at end of the period
|
$
|
9,233
|
|
|
$
|
6,034
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
126
|
|
|
$
|
19
|
|
Cash paid for taxes, net
|
206
|
|
|
87
|
|
||
Non-cash items:
|
|
|
|
||||
Changes in capital additions, accrued but not paid
|
$
|
16
|
|
|
$
|
19
|
|
__________
|
|
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|
||||
(1)
Adjusted to reflect the retrospective adoption of Topic 606 and Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The adoption of Topic 606 had no impact to net cash provided by or used in operating, investing and financing activities.
|
|
Three Months Ended November 3, 2017
|
||||||||||
|
As Reported
|
|
Topic 606 Adjustments
|
|
As Adjusted
|
||||||
Selected Captions from the Condensed Consolidated Statements of Income
|
|
|
|
|
|
||||||
Revenue:
|
|
|
|
|
|
||||||
License
|
$
|
785
|
|
|
$
|
(27
|
)
|
|
$
|
758
|
|
Services
|
1,191
|
|
|
(11
|
)
|
|
1,180
|
|
|||
Total revenue
|
1,976
|
|
|
(38
|
)
|
|
1,938
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Sales and marketing
|
607
|
|
|
17
|
|
|
624
|
|
|||
Operating income
|
465
|
|
|
(55
|
)
|
|
410
|
|
|||
Income before income tax
|
468
|
|
|
(55
|
)
|
|
413
|
|
|||
Income tax provision
|
25
|
|
|
(7
|
)
|
|
18
|
|
|||
Net income
|
443
|
|
|
(48
|
)
|
|
395
|
|
|
Nine Months Ended November 3, 2017
|
||||||||||
|
As Reported
|
|
Topic 606 Adjustments
|
|
As Adjusted
|
||||||
Selected Captions from the Condensed Consolidated Statements of Income
|
|
|
|
|
|
||||||
Revenue:
|
|
|
|
|
|
||||||
License
|
$
|
2,127
|
|
|
$
|
55
|
|
|
$
|
2,182
|
|
Services
|
3,485
|
|
|
(31
|
)
|
|
3,454
|
|
|||
Total revenue
|
5,612
|
|
|
24
|
|
|
5,636
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Sales and marketing
|
1,862
|
|
|
(44
|
)
|
|
1,818
|
|
|||
Realignment and loss on disposition
|
88
|
|
|
13
|
|
|
101
|
|
|||
Operating income
|
1,041
|
|
|
55
|
|
|
1,096
|
|
|||
Income before income tax
|
1,133
|
|
|
55
|
|
|
1,188
|
|
|||
Income tax provision
|
124
|
|
|
19
|
|
|
143
|
|
|||
Net income
|
1,009
|
|
|
36
|
|
|
1,045
|
|
|
February 2, 2018
|
||||||||||
|
As Reported
|
|
Topic 606 Adjustments
|
|
As Adjusted
|
||||||
Selected Captions from the Condensed Consolidated Balance Sheets
|
|
|
|
|
|
||||||
Accounts receivable, net of allowance for doubtful accounts
|
$
|
1,312
|
|
|
$
|
82
|
|
|
$
|
1,394
|
|
Other current assets
|
237
|
|
|
20
|
|
|
257
|
|
|||
Other assets
|
323
|
|
|
601
|
|
|
924
|
|
|||
Deferred tax assets
|
346
|
|
|
(119
|
)
|
|
227
|
|
|||
Accrued expenses and other
|
1,241
|
|
|
116
|
|
|
1,357
|
|
|||
Unearned revenue
|
6,250
|
|
|
(411
|
)
|
|
5,839
|
|
|||
Other liabilities
|
152
|
|
|
31
|
|
|
183
|
|
|||
Retained earnings
|
6,943
|
|
|
848
|
|
|
7,791
|
|
•
|
Pursuant to OEM and reseller arrangements, Dell integrates or bundles VMware’s products and services with Dell’s products and sells them to end users. Dell also acts as a distributor, purchasing VMware’s standalone products and services for resale to end-user customers through VMware-authorized resellers. Revenue under these arrangements is presented net of related marketing development funds and rebates paid to Dell. In addition, VMware provides professional services to end users based upon contractual agreements with Dell.
|
•
|
Dell purchases products and services from VMware for its internal use.
|
•
|
From time to time, VMware and Dell enter into agreements to collaborate on technology projects, and Dell pays VMware for services that VMware provides to Dell in connection with such projects.
|
•
|
Pursuant to an ongoing distribution agreement, VMware acts as the selling agent for certain products and services of Pivotal Software, Inc. (“Pivotal”), a subsidiary of Dell, in exchange for an agency fee. Under this agreement, cash is collected from the end user by VMware and remitted to Pivotal, net of the contractual agency fee.
|
|
Revenue and Receipts
|
|
Unearned Revenue
|
||||||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|
As of
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
February 2,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2018
|
||||||||||||
Reseller revenue
|
$
|
544
|
|
|
$
|
313
|
|
|
$
|
1,435
|
|
|
$
|
867
|
|
|
$
|
1,803
|
|
|
$
|
1,236
|
|
Internal-use revenue
|
5
|
|
|
22
|
|
|
17
|
|
|
30
|
|
|
16
|
|
|
12
|
|
||||||
Collaborative technology project receipts
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
n/a
|
|
|
n/a
|
|
||||||
Agency fee revenue
|
—
|
|
|
—
|
|
|
4
|
|
|
1
|
|
|
—
|
|
|
—
|
|
•
|
VMware purchases and leases products and purchases services from Dell.
|
•
|
From time to time, VMware and Dell enter into agreements to collaborate on technology projects, and VMware pays Dell for services provided to VMware by Dell related to such projects.
|
•
|
In certain geographic regions where VMware does not have an established legal entity, VMware contracts with Dell subsidiaries for support services and support from Dell personnel who are managed by VMware. The costs incurred by Dell on VMware’s behalf related to these employees are charged to VMware with a mark-up intended to approximate costs that would have been incurred had VMware contracted for such services with an unrelated third party. These costs are included as expenses on VMware’s condensed consolidated statements of income and primarily include salaries, benefits, travel and occupancy expenses. Dell also incurs certain administrative costs on VMware’s behalf in the U.S. that are recorded as expenses on VMware’s condensed consolidated statements of income.
|
•
|
In certain geographic regions, Dell files a consolidated indirect tax return, which includes value added taxes and other indirect taxes collected by VMware from its customers. VMware remits the indirect taxes to Dell and Dell remits the tax payment to the foreign governments on VMware’s behalf.
|
•
|
From time to time, VMware invoices end users on behalf of Dell for certain services rendered by Dell. Cash related to these services is collected from the end user by VMware and remitted to Dell.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Purchases and leases of products and purchases of services
(1)
|
$
|
38
|
|
|
$
|
34
|
|
|
$
|
129
|
|
|
$
|
103
|
|
Dell subsidiary support and administrative costs
|
25
|
|
|
30
|
|
|
79
|
|
|
92
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Payments from VMware to Dell, net
|
$
|
100
|
|
|
$
|
—
|
|
|
$
|
103
|
|
|
$
|
12
|
|
|
November 2,
|
|
February 2,
|
||||
|
2018
|
|
2018
|
||||
Due to related parties
|
$
|
129
|
|
|
$
|
106
|
|
Due from related parties
|
671
|
|
|
638
|
|
||
Due from related parties, net
|
$
|
542
|
|
|
$
|
532
|
|
|
|
|
|
||||
Income tax due to related parties
|
$
|
787
|
|
|
$
|
781
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
November 3,
|
|
November 3,
|
||||
|
2017
|
|
2017
|
||||
Aggregate purchase price
|
$
|
855
|
|
|
$
|
1,280
|
|
Class A common shares repurchased
(1)
|
7,771
|
|
|
12,598
|
|
||
Weighted-average price per share
|
$
|
110.00
|
|
|
$
|
101.59
|
|
|
November 2, 2018
|
||||||||||||
|
Weighted-Average Useful Lives
(in years) |
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||
Purchased technology
|
6.3
|
|
$
|
770
|
|
|
$
|
(479
|
)
|
|
$
|
291
|
|
Leasehold interest
|
34.9
|
|
149
|
|
|
(32
|
)
|
|
117
|
|
|||
Customer relationships and customer lists
|
7.6
|
|
192
|
|
|
(89
|
)
|
|
103
|
|
|||
Trademarks and tradenames
|
7.9
|
|
80
|
|
|
(38
|
)
|
|
42
|
|
|||
Other
|
3.9
|
|
7
|
|
|
(2
|
)
|
|
5
|
|
|||
Total definite-lived intangible assets
|
|
|
$
|
1,198
|
|
|
$
|
(640
|
)
|
|
$
|
558
|
|
|
February 2, 2018
|
||||||||||||
|
Weighted-Average Useful Lives
(in years) |
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||
Purchased technology
|
6.4
|
|
$
|
750
|
|
|
$
|
(466
|
)
|
|
$
|
284
|
|
Leasehold interest
|
34.9
|
|
149
|
|
|
(29
|
)
|
|
120
|
|
|||
Customer relationships and customer lists
|
7.8
|
|
177
|
|
|
(74
|
)
|
|
103
|
|
|||
Trademarks and tradenames
|
8.4
|
|
70
|
|
|
(31
|
)
|
|
39
|
|
|||
Other
|
5.7
|
|
5
|
|
|
(3
|
)
|
|
2
|
|
|||
Total definite-lived intangible assets
|
|
|
$
|
1,151
|
|
|
$
|
(603
|
)
|
|
$
|
548
|
|
Remainder of 2019
|
$
|
43
|
|
2020
|
150
|
|
|
2021
|
93
|
|
|
2022
|
78
|
|
|
2023
|
55
|
|
|
Thereafter
|
139
|
|
|
Total
|
$
|
558
|
|
Balance, February 2, 2018
|
$
|
4,597
|
|
Increase in goodwill related to business combinations
|
392
|
|
|
Balance, November 2, 2018
|
$
|
4,989
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
334
|
|
|
$
|
395
|
|
|
$
|
1,920
|
|
|
$
|
1,045
|
|
Weighted-average shares, basic for Classes A and B
|
408,708
|
|
|
406,733
|
|
|
406,929
|
|
|
407,856
|
|
||||
Effect of other dilutive securities
|
5,769
|
|
|
6,280
|
|
|
6,449
|
|
|
6,101
|
|
||||
Weighted-average shares, diluted for Classes A and B
|
414,477
|
|
|
413,013
|
|
|
413,378
|
|
|
413,957
|
|
||||
Net income per weighted-average share, basic for Classes A and B
|
$
|
0.82
|
|
|
$
|
0.97
|
|
|
$
|
4.72
|
|
|
$
|
2.56
|
|
Net income per weighted-average share, diluted for Classes A and B
|
$
|
0.81
|
|
|
$
|
0.96
|
|
|
$
|
4.64
|
|
|
$
|
2.53
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Anti-dilutive securities:
|
|
|
|
|
|
|
|
||||
Employee stock options
|
50
|
|
|
—
|
|
|
20
|
|
|
585
|
|
Restricted stock units
|
219
|
|
|
—
|
|
|
2,045
|
|
|
109
|
|
Total
|
269
|
|
|
—
|
|
|
2,065
|
|
|
694
|
|
|
November 2, 2018
|
||||||||||||||
|
Cost or Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Aggregate Fair Value
|
||||||||
Cash
|
$
|
390
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
390
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money-market funds
|
$
|
8,766
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,766
|
|
Demand deposits
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||
Total cash equivalents
|
$
|
8,799
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,799
|
|
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
U.S. Government and agency obligations
|
$
|
634
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
626
|
|
U.S. and foreign corporate debt securities
|
3,581
|
|
|
—
|
|
|
(45
|
)
|
|
3,536
|
|
||||
Foreign governments and multi-national agency obligations
|
75
|
|
|
—
|
|
|
(1
|
)
|
|
74
|
|
||||
Mortgage-backed securities
|
86
|
|
|
—
|
|
|
(3
|
)
|
|
83
|
|
||||
Total short-term investments
(1)
|
$
|
4,376
|
|
|
$
|
—
|
|
|
$
|
(57
|
)
|
|
$
|
4,319
|
|
|
February 2, 2018
|
||||||||||||||
|
Cost or Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Aggregate Fair Value
|
||||||||
Cash
|
$
|
423
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
423
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money-market funds
|
$
|
5,460
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,460
|
|
U.S. and foreign corporate debt securities
|
88
|
|
|
—
|
|
|
—
|
|
|
88
|
|
||||
Total cash equivalents
|
$
|
5,548
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,548
|
|
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
U.S. Government and agency obligations
|
$
|
965
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
957
|
|
U.S. and foreign corporate debt securities
|
4,503
|
|
|
1
|
|
|
(31
|
)
|
|
4,473
|
|
||||
Foreign governments and multi-national agency obligations
|
99
|
|
|
—
|
|
|
(1
|
)
|
|
98
|
|
||||
Mortgage-backed securities
|
123
|
|
|
—
|
|
|
(2
|
)
|
|
121
|
|
||||
Marketable available-for-sale equity securities
|
15
|
|
|
18
|
|
|
—
|
|
|
33
|
|
||||
Total short-term investments
|
$
|
5,705
|
|
|
$
|
19
|
|
|
$
|
(42
|
)
|
|
$
|
5,682
|
|
|
November 2, 2018
|
|
February 2, 2018
|
||||||||||||
|
Fair Value
|
|
Unrealized
Losses |
|
Fair Value
|
|
Unrealized
Losses |
||||||||
U.S. and foreign corporate debt securities
|
$
|
1,566
|
|
|
$
|
(21
|
)
|
|
$
|
3,100
|
|
|
$
|
(22
|
)
|
|
November 2, 2018
|
|
February 2, 2018
|
||||||||||||
|
Fair Value
|
|
Unrealized
Losses |
|
Fair Value
|
|
Unrealized
Losses |
||||||||
U.S. and foreign corporate debt securities
|
$
|
1,594
|
|
|
$
|
(24
|
)
|
|
$
|
693
|
|
|
$
|
(9
|
)
|
|
Amortized
Cost Basis
|
|
Aggregate
Fair Value
|
||||
Due within one year
|
$
|
2,327
|
|
|
$
|
2,315
|
|
Due after 1 year through 5 years
|
1,926
|
|
|
1,885
|
|
||
Due after 5 years through 10 years
|
65
|
|
|
63
|
|
||
Due after 10 years
|
58
|
|
|
56
|
|
||
Total fixed income securities
|
$
|
4,376
|
|
|
$
|
4,319
|
|
|
November 2,
|
|
February 2,
|
||||
|
2018
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
9,189
|
|
|
$
|
5,971
|
|
Restricted cash within other current assets
|
32
|
|
|
22
|
|
||
Restricted cash within other assets
|
12
|
|
|
10
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
9,233
|
|
|
$
|
6,003
|
|
|
November 2,
|
|
February 2,
|
|
Effective Interest Rate
|
||||
|
2018
|
|
2018
|
|
|||||
Long-term debt:
|
|
|
|
|
|
||||
2.30% Senior Note Due August 21, 2020
|
$
|
1,250
|
|
|
$
|
1,250
|
|
|
2.56%
|
2.95% Senior Note Due August 21, 2022
|
1,500
|
|
|
1,500
|
|
|
3.17%
|
||
3.90% Senior Note Due August 21, 2027
|
1,250
|
|
|
1,250
|
|
|
4.05%
|
||
Total principal amount
|
4,000
|
|
|
4,000
|
|
|
|
||
Less: unamortized discount
|
(7
|
)
|
|
(8
|
)
|
|
|
||
Less: unamortized debt issuance costs
|
(23
|
)
|
|
(28
|
)
|
|
|
||
Net carrying amount
|
$
|
3,970
|
|
|
$
|
3,964
|
|
|
|
•
|
Level 1 - Quoted prices in active markets for identical assets or liabilities;
|
•
|
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 as being 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; and
|
•
|
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.
|
|
November 2, 2018
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents:
|
|
|
|
|
|
|
|||||
Money-market funds
|
$
|
8,766
|
|
|
$
|
—
|
|
|
$
|
8,766
|
|
Demand deposits
|
—
|
|
|
33
|
|
|
33
|
|
|||
Total cash equivalents
|
$
|
8,766
|
|
|
$
|
33
|
|
|
$
|
8,799
|
|
Short-term investments:
|
|
|
|
|
|
||||||
U.S. Government and agency obligations
|
$
|
436
|
|
|
$
|
190
|
|
|
$
|
626
|
|
U.S. and foreign corporate debt securities
|
—
|
|
|
3,536
|
|
|
3,536
|
|
|||
Foreign governments and multi-national agency obligations
|
—
|
|
|
74
|
|
|
74
|
|
|||
Mortgage-backed securities
|
—
|
|
|
83
|
|
|
83
|
|
|||
Marketable equity securities
|
19
|
|
|
—
|
|
|
19
|
|
|||
Total short-term investments
|
$
|
455
|
|
|
$
|
3,883
|
|
|
$
|
4,338
|
|
|
February 2, 2018
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Money-market funds
|
$
|
5,460
|
|
|
$
|
—
|
|
|
$
|
5,460
|
|
U.S. and foreign corporate debt securities
|
—
|
|
|
88
|
|
|
88
|
|
|||
Total cash equivalents
|
$
|
5,460
|
|
|
$
|
88
|
|
|
$
|
5,548
|
|
Short-term investments:
|
|
|
|
|
|
||||||
U.S. Government and agency obligations
|
$
|
684
|
|
|
$
|
273
|
|
|
$
|
957
|
|
U.S. and foreign corporate debt securities
|
—
|
|
|
4,473
|
|
|
4,473
|
|
|||
Foreign governments and multi-national agency obligations
|
—
|
|
|
98
|
|
|
98
|
|
|||
Mortgage-backed securities
|
—
|
|
|
121
|
|
|
121
|
|
|||
Marketable available-for-sale equity securities
|
33
|
|
|
—
|
|
|
33
|
|
|||
Total short-term investments
|
$
|
717
|
|
|
$
|
4,965
|
|
|
$
|
5,682
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
August 3,
|
|
August 3,
|
||||
|
2018
|
|
2018
|
||||
Results of Operations Data:
|
|
|
|
||||
Revenue
|
$
|
164
|
|
|
$
|
320
|
|
Gross profit
|
103
|
|
|
200
|
|
||
Loss from operations
|
(35
|
)
|
|
(69
|
)
|
||
Net loss
|
(36
|
)
|
|
(68
|
)
|
||
Net loss attributable to Pivotal
|
(36
|
)
|
|
(68
|
)
|
|
August 3,
|
||
|
2018
|
||
Balance Sheet Data:
|
|
||
Current assets
|
$
|
857
|
|
Total assets
|
1,633
|
|
|
Current liabilities
|
328
|
|
|
Total liabilities
|
398
|
|
|
Non-controlling interest
|
1
|
|
|
November 2,
|
|
February 2,
|
||||
|
2018
|
|
2018
|
||||
Unearned license revenue
|
$
|
212
|
|
|
$
|
184
|
|
Unearned software maintenance revenue
|
5,345
|
|
|
5,082
|
|
||
Unearned professional services revenue
|
644
|
|
|
573
|
|
||
Total unearned revenue
|
$
|
6,201
|
|
|
$
|
5,839
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
November 3,
|
|
November 3,
|
||||
|
2017
|
|
2017
|
||||
Aggregate purchase price
(1)
|
$
|
855
|
|
|
$
|
1,280
|
|
Class A common shares repurchased
|
7,771
|
|
|
12,598
|
|
||
Weighted-average price per share
|
$
|
110.00
|
|
|
$
|
101.59
|
|
|
Number of Units
|
|
Weighted-Average Grant Date Fair Value
(per unit)
|
|||
Outstanding, February 3, 2018
|
17,360
|
|
|
$
|
78.62
|
|
Granted
|
5,658
|
|
|
145.19
|
|
|
Vested
|
(5,814
|
)
|
|
75.90
|
|
|
Forfeited
|
(1,291
|
)
|
|
84.95
|
|
|
Outstanding, November 2, 2018
|
15,913
|
|
|
102.89
|
|
|
Unrealized Gain (Loss) on
Available-for-Sale Securities |
|
Unrealized Gain (Loss) on
Forward Contracts |
|
Total
|
||||||
Balance, February 2, 2018
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
Adjustments related to adoption of ASU 2016-01 and 2018-02
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|||
Unrealized gains (losses), net of tax (benefit) of ($4), $—, and ($4)
|
(11
|
)
|
|
(9
|
)
|
|
(20
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income (loss) to the condensed consolidated statements of income, net of tax benefit of $—, $— and $—
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Other comprehensive income (loss), net
|
(11
|
)
|
|
(10
|
)
|
|
(21
|
)
|
|||
Balance, November 2, 2018
|
$
|
(41
|
)
|
|
$
|
(10
|
)
|
|
$
|
(51
|
)
|
|
Unrealized Gain (Loss) on
Available-for-Sale Securities |
|
Unrealized Gain (Loss) on
Forward Contracts |
|
Total
|
||||||
Balance, February 3, 2017
|
$
|
(6
|
)
|
|
$
|
2
|
|
|
$
|
(4
|
)
|
Unrealized gains (losses), net of tax provision of $5, $— and $5
|
9
|
|
|
3
|
|
|
12
|
|
|||
Amounts reclassified from accumulated other comprehensive income (loss) to the condensed consolidated statements of income, net of tax benefit of $2, $— and $2
|
3
|
|
|
(2
|
)
|
|
1
|
|
|||
Other comprehensive income (loss), net
|
12
|
|
|
1
|
|
|
13
|
|
|||
Balance, November 3, 2017
|
$
|
6
|
|
|
$
|
3
|
|
|
$
|
9
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
License
|
$
|
884
|
|
|
$
|
758
|
|
|
$
|
2,558
|
|
|
$
|
2,182
|
|
Services:
|
|
|
|
|
|
|
|
||||||||
Software maintenance
|
1,138
|
|
|
1,016
|
|
|
3,324
|
|
|
2,989
|
|
||||
Professional services
|
178
|
|
|
164
|
|
|
501
|
|
|
465
|
|
||||
Total services
|
1,316
|
|
|
1,180
|
|
|
3,825
|
|
|
3,454
|
|
||||
Total revenue
(1)
|
$
|
2,200
|
|
|
$
|
1,938
|
|
|
$
|
6,383
|
|
|
$
|
5,636
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
United States
|
$
|
1,052
|
|
|
$
|
970
|
|
|
$
|
3,053
|
|
|
$
|
2,825
|
|
International
|
1,148
|
|
|
968
|
|
|
3,330
|
|
|
2,811
|
|
||||
Total
|
$
|
2,200
|
|
|
$
|
1,938
|
|
|
$
|
6,383
|
|
|
$
|
5,636
|
|
|
November 2,
|
|
February 2,
|
||||
|
2018
|
|
2018
|
||||
United States
|
$
|
825
|
|
|
$
|
784
|
|
International
|
105
|
|
|
117
|
|
||
Total
|
$
|
930
|
|
|
$
|
901
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
|
|
|
||||||||||||||
|
2018
|
|
2017
(1)
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
(1)
|
|
$ Change
|
|
% Change
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
License
|
$
|
884
|
|
|
$
|
758
|
|
|
$
|
126
|
|
|
17
|
%
|
|
$
|
2,558
|
|
|
$
|
2,182
|
|
|
$
|
376
|
|
|
17
|
%
|
Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Software maintenance
|
1,138
|
|
|
1,016
|
|
|
122
|
|
|
12
|
|
|
3,324
|
|
|
2,989
|
|
|
335
|
|
|
11
|
|
||||||
Professional services
|
178
|
|
|
164
|
|
|
14
|
|
|
9
|
|
|
501
|
|
|
465
|
|
|
36
|
|
|
8
|
|
||||||
Total services
|
1,316
|
|
|
1,180
|
|
|
136
|
|
|
12
|
|
|
3,825
|
|
|
3,454
|
|
|
371
|
|
|
11
|
|
||||||
Total revenue
|
$
|
2,200
|
|
|
$
|
1,938
|
|
|
$
|
262
|
|
|
14
|
|
|
$
|
6,383
|
|
|
$
|
5,636
|
|
|
$
|
747
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
United States
|
$
|
1,052
|
|
|
$
|
970
|
|
|
$
|
82
|
|
|
8
|
%
|
|
$
|
3,053
|
|
|
$
|
2,825
|
|
|
$
|
228
|
|
|
8
|
%
|
International
|
1,148
|
|
|
968
|
|
|
180
|
|
|
19
|
|
|
3,330
|
|
|
2,811
|
|
|
519
|
|
|
18
|
|
||||||
Total revenue
|
$
|
2,200
|
|
|
$
|
1,938
|
|
|
$
|
262
|
|
|
14
|
|
|
$
|
6,383
|
|
|
$
|
5,636
|
|
|
$
|
747
|
|
|
13
|
|
|
November 2,
|
|
February 2,
|
||||
|
2018
|
|
2018
(1)
|
||||
Unearned license revenue
|
$
|
212
|
|
|
$
|
184
|
|
Unearned software maintenance revenue
|
5,345
|
|
|
5,082
|
|
||
Unearned professional services revenue
|
644
|
|
|
573
|
|
||
Total unearned revenue
|
$
|
6,201
|
|
|
$
|
5,839
|
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
Cost of license revenue
|
$
|
49
|
|
|
$
|
38
|
|
|
$
|
11
|
|
|
30
|
%
|
|
$
|
138
|
|
|
$
|
115
|
|
|
$
|
24
|
|
|
21
|
%
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
(44
|
)
|
|
1
|
|
|
1
|
|
|
(1
|
)
|
|
(56
|
)
|
||||||
Total expenses
|
$
|
49
|
|
|
$
|
38
|
|
|
$
|
11
|
|
|
29
|
|
|
$
|
139
|
|
|
$
|
116
|
|
|
$
|
23
|
|
|
20
|
|
% of License revenue
|
5
|
%
|
|
5
|
%
|
|
|
|
|
|
5
|
%
|
|
5
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
Cost of services revenue
|
$
|
253
|
|
|
$
|
227
|
|
|
$
|
26
|
|
|
12
|
%
|
|
$
|
740
|
|
|
$
|
683
|
|
|
$
|
58
|
|
|
8
|
%
|
Stock-based compensation
|
13
|
|
|
13
|
|
|
—
|
|
|
(1
|
)
|
|
37
|
|
|
38
|
|
|
(2
|
)
|
|
(5
|
)
|
||||||
Total expenses
|
$
|
266
|
|
|
$
|
240
|
|
|
$
|
26
|
|
|
11
|
|
|
$
|
777
|
|
|
$
|
721
|
|
|
$
|
56
|
|
|
8
|
|
% of Services revenue
|
20
|
%
|
|
20
|
%
|
|
|
|
|
|
20
|
%
|
|
21
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
Research and development
|
$
|
401
|
|
|
$
|
353
|
|
|
$
|
48
|
|
|
14
|
%
|
|
$
|
1,161
|
|
|
$
|
1,032
|
|
|
$
|
129
|
|
|
13
|
%
|
Stock-based compensation
|
98
|
|
|
96
|
|
|
2
|
|
|
2
|
|
|
272
|
|
|
266
|
|
|
6
|
|
|
2
|
|
||||||
Total expenses
|
$
|
499
|
|
|
$
|
449
|
|
|
$
|
50
|
|
|
11
|
|
|
$
|
1,433
|
|
|
$
|
1,298
|
|
|
$
|
135
|
|
|
10
|
|
% of Total revenue
|
23
|
%
|
|
23
|
%
|
|
|
|
|
|
22
|
%
|
|
23
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
|
|
|
||||||||||||||
|
2018
|
|
2017
(1)
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
(1)
|
|
$ Change
|
|
% Change
|
||||||||||||||
Sales and marketing
|
$
|
654
|
|
|
$
|
572
|
|
|
$
|
82
|
|
|
14
|
%
|
|
$
|
1,963
|
|
|
$
|
1,668
|
|
|
$
|
294
|
|
|
18
|
%
|
Stock-based compensation
|
53
|
|
|
52
|
|
|
2
|
|
|
4
|
|
|
147
|
|
|
150
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Total expenses
|
$
|
707
|
|
|
$
|
624
|
|
|
$
|
83
|
|
|
13
|
|
|
$
|
2,110
|
|
|
$
|
1,818
|
|
|
$
|
293
|
|
|
16
|
|
% of Total revenue
|
32
|
%
|
|
32
|
%
|
|
|
|
|
|
33
|
%
|
|
32
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
General and administrative
|
$
|
150
|
|
|
$
|
154
|
|
|
$
|
(4
|
)
|
|
(3
|
)%
|
|
$
|
455
|
|
|
$
|
428
|
|
|
$
|
28
|
|
|
7
|
%
|
Stock-based compensation
|
28
|
|
|
21
|
|
|
7
|
|
|
32
|
|
|
74
|
|
|
58
|
|
|
15
|
|
|
26
|
|
||||||
Total expenses
|
$
|
178
|
|
|
$
|
175
|
|
|
$
|
3
|
|
|
2
|
|
|
$
|
529
|
|
|
$
|
486
|
|
|
$
|
43
|
|
|
9
|
|
% of Total revenue
|
8
|
%
|
|
9
|
%
|
|
|
|
|
|
8
|
%
|
|
9
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
|
|
|
||||||||||||||
|
2018
|
|
2017
(1)
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
(1)
|
|
$ Change
|
|
% Change
|
||||||||||||||
Realignment and loss on disposition
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
191
|
%
|
|
$
|
9
|
|
|
$
|
101
|
|
|
$
|
(93
|
)
|
|
(92
|
)%
|
% of Total revenue
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
—
|
%
|
|
2
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
Investment income
|
$
|
63
|
|
|
$
|
33
|
|
|
$
|
29
|
|
|
87
|
%
|
|
$
|
168
|
|
|
$
|
82
|
|
|
$
|
86
|
|
|
106
|
%
|
% of Total revenue
|
3
|
%
|
|
2
|
%
|
|
|
|
|
|
3
|
%
|
|
1
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
Interest expense
|
$
|
33
|
|
|
$
|
28
|
|
|
$
|
5
|
|
|
18
|
%
|
|
$
|
101
|
|
|
$
|
41
|
|
|
$
|
59
|
|
|
144
|
%
|
% of Total revenue
|
2
|
%
|
|
1
|
%
|
|
|
|
|
|
2
|
%
|
|
1
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
Other income (expense), net
|
$
|
(180
|
)
|
|
$
|
(2
|
)
|
|
$
|
(178
|
)
|
|
(8,900
|
)%
|
|
$
|
839
|
|
|
$
|
51
|
|
|
$
|
786
|
|
|
1,541
|
%
|
% of Total revenue
|
8
|
%
|
|
—
|
%
|
|
|
|
|
|
13
|
%
|
|
1
|
%
|
|
|
|
|
•
|
Pursuant to OEM and reseller arrangements, Dell integrates or bundles our products and services with Dell’s products and sells them to end users. Dell also acts as a distributor, purchasing our standalone products and services for resale to end-user customers through VMware-authorized resellers. Revenue under these arrangements is presented net of related marketing development funds and rebates paid to Dell. In addition, we provide professional services to end users based upon contractual agreements with Dell.
|
•
|
Dell purchases products and services from us for its internal use.
|
•
|
From time to time, we and Dell enter into agreements to collaborate on technology projects, and Dell pays us for services that we provide to Dell in connection with such projects.
|
•
|
Pursuant to an ongoing distribution agreement, we act as the selling agent for certain products and services of Pivotal, a subsidiary of Dell, in exchange for an agency fee. Under this agreement, cash is collected from the end user by us and remitted to Pivotal, net of the contractual agency fee.
|
|
Revenue and Receipts
|
|
Unearned Revenue
|
||||||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|
As of
|
||||||||||||||||||
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
February 2,
|
||||||||||||
|
2018
|
|
2017
(1)
|
|
2018
|
|
2017
(1)
|
|
2018
|
|
2018
(1)
|
||||||||||||
Reseller revenue
|
$
|
544
|
|
|
$
|
313
|
|
|
$
|
1,435
|
|
|
$
|
867
|
|
|
$
|
1,803
|
|
|
$
|
1,236
|
|
Internal-use revenue
|
5
|
|
|
22
|
|
|
17
|
|
|
30
|
|
|
16
|
|
|
12
|
|
||||||
Collaborative technology project receipts
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
n/a
|
|
|
n/a
|
|
||||||
Agency fee revenue
|
—
|
|
|
—
|
|
|
4
|
|
|
1
|
|
|
—
|
|
|
—
|
|
•
|
We purchase and lease products and purchase services from Dell.
|
•
|
From time to time, we and Dell enter into agreements to collaborate on technology projects, and we pay Dell for services provided to us by Dell related to such projects.
|
•
|
In certain geographic regions where we do not have an established legal entity, we contract with Dell subsidiaries for support services and support from Dell personnel who are managed by us. The costs incurred by Dell on our behalf related to these employees are charged to us with a mark-up intended to approximate costs that would have been incurred had we contracted for such services with an unrelated third party. These costs are included as expenses on our condensed consolidated statements of income and primarily include salaries, benefits, travel and occupancy expenses. Dell also incurs certain administrative costs on our behalf in the U.S. that are recorded as expenses on our condensed consolidated statements of income.
|
•
|
In certain geographic regions, Dell files a consolidated indirect tax return, which includes value added taxes and other indirect taxes collected by us from our customers. We remit the indirect taxes to Dell and Dell remits the tax payment to the foreign governments on our behalf.
|
•
|
From time to time, we invoice end users on behalf of Dell for certain services rendered by Dell. Cash related to these services is collected from the end user by us and remitted to Dell.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Purchases and leases of products and purchases of services
(1)
|
$
|
38
|
|
|
$
|
34
|
|
|
$
|
129
|
|
|
$
|
103
|
|
Dell subsidiary support and administrative costs
|
25
|
|
|
30
|
|
|
79
|
|
|
92
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Payments from VMware to Dell, net
|
$
|
100
|
|
|
$
|
—
|
|
|
$
|
103
|
|
|
$
|
12
|
|
|
November 2,
|
|
February 2,
|
||||
|
2018
|
|
2018
|
||||
Due to related parties
|
$
|
129
|
|
|
$
|
106
|
|
Due from related parties
|
671
|
|
|
638
|
|
||
Due from related parties, net
|
$
|
542
|
|
|
$
|
532
|
|
|
|
|
|
||||
Income tax due to related parties
|
$
|
787
|
|
|
$
|
781
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
November 3,
|
|
November 3,
|
||||
|
2017
|
|
2017
|
||||
Aggregate purchase price
|
$
|
855
|
|
|
$
|
1,280
|
|
Class A common shares repurchased
(1)
|
7,771
|
|
|
12,598
|
|
||
Weighted-average price per share
|
$
|
110.00
|
|
|
$
|
101.59
|
|
|
November 2,
|
|
February 2,
|
||||
|
2018
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
9,189
|
|
|
$
|
5,971
|
|
Short-term investments
|
4,338
|
|
|
5,682
|
|
||
Total cash, cash equivalents and short-term investments
|
$
|
13,527
|
|
|
$
|
11,653
|
|
|
Nine Months Ended
|
||||||
|
November 2,
|
|
November 3,
|
||||
|
2018
|
|
2017
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
2,651
|
|
|
$
|
2,367
|
|
Investing activities
|
634
|
|
|
(861
|
)
|
||
Financing activities
|
(55
|
)
|
|
1,289
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
$
|
3,230
|
|
|
$
|
2,795
|
|
•
|
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 discuss 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 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
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 and SaaS offerings and impair or disrupt their availability, 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.
|
•
|
fluctuations in demand, adoption rates, sales cycles and pricing levels for our products and services;
|
•
|
changes in customers’ budgets for information technology purchases and in the timing of their purchasing decisions;
|
•
|
the timing of announcements or releases of new or upgraded products and services by us or by our competitors;
|
•
|
the timing and size of business realignment plans and restructuring charges;
|
•
|
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;
|
•
|
credit risks of our distributors, who account for a significant portion of product revenue and accounts receivable;
|
•
|
the timing of when sales orders are processed, which can cause fluctuations in our backlog and impact our bookings and timing of revenue recognition;
|
•
|
seasonal factors such as the end of fiscal period budget expenditures by our customers and the timing of holiday and vacation periods;
|
•
|
renewal rates and the amounts of the renewals for EAs as original EA terms expire;
|
•
|
the timing and amount of internally developed software development costs that may be capitalized;
|
•
|
unplanned events that could affect market perception of the quality or cost-effectiveness of our products and solutions;
|
•
|
fluctuations in the fair value of our investment in Pivotal, which are primarily based on Pivotal’s closing stock price on the last trading day of each fiscal quarter;
|
•
|
the impact of new accounting pronouncements, for example, the adoption of Accounting Standards Update (“ASU”) 2016-16, which could result in increased volatility in the provision for income taxes in periods in which transfers of intellectual property between our legal entities occur; and
|
•
|
our ability to accurately predict the degree to which customers will elect to purchase our subscription-based offerings in place of licenses to our on-premises offerings.
|
•
|
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, which could increase due to the current geopolitical climate, and other regulatory or contractual limitations on our ability to sell or develop our products and services in certain foreign markets;
|
•
|
changes and instability in government policies and international trade arrangements that could adversely affect the ability of U.S.-based companies to conduct business in non-U.S. markets;
|
•
|
economic or political instability and security concerns in countries that are important to our international sales and operations;
|
•
|
difficulties in transferring funds from certain countries;
|
•
|
increased compliance risks, particularly in emerging markets; and
|
•
|
difficulties in maintaining appropriate controls relating to revenue recognition practices.
|
•
|
requiring the dedication of a portion of our expected cash flow from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures and acquisitions; and
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business and our industry.
|
•
|
pay significant damages;
|
•
|
stop distributing our products that contain the open source software;
|
•
|
revise or modify our product code to remove alleged infringing code;
|
•
|
release the source code of our proprietary software; or
|
•
|
take other steps to avoid or remedy an alleged infringement.
|
•
|
disrupting our ongoing operations, diverting management from day-to-day responsibilities, increasing our expenses, and adversely impacting our business, financial condition and operating results;
|
•
|
failure of an acquired business to further our business strategy;
|
•
|
uncertainties in achieving the expected benefits of an acquisition or disposition, including enhanced revenue, 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 acquired businesses effectively;
|
•
|
the need to provide transition services in connection with a disposition, such as the sale of vCloud Air, which may result in the diversion of resources and focus;
|
•
|
difficulty achieving expected business results due to a lack of experience in new markets, products or technologies or the initial dependence on unfamiliar distribution partners or vendors;
|
•
|
retaining and motivating key personnel from acquired companies;
|
•
|
declining employee morale and retention issues affecting employees of businesses that we acquire or dispose of, which may result from changes in compensation, or changes in management, reporting relationships, future prospects or the direction of the acquired or disposed business;
|
•
|
assuming the liabilities of an acquired business, including acquired litigation-related liabilities and regulatory compliance issues, and potential litigation or regulatory action arising from a proposed or completed acquisition;
|
•
|
lawsuits resulting from an acquisition or disposition;
|
•
|
maintaining good relationships with customers or business partners of an acquired business or our own customers as a result of any integration of operations or the divestiture of a business upon which our customers rely, such as our recent divestiture of our vCloud Air business;
|
•
|
unidentified issues not discovered during the diligence process, including issues with the acquired or divested business’s intellectual property, product quality, security, privacy practices, accounting practices, regulatory compliance or legal contingencies;
|
•
|
maintaining or establishing acceptable standards, controls, procedures or policies with respect to an acquired business;
|
•
|
risks relating to the challenges and costs of closing a transaction; and
|
•
|
the need to later divest acquired assets at a loss if an acquisition does not meet our expectations.
|
•
|
Dell is able to control matters requiring our stockholders’ approval, including the election of a majority of our directors and the other matters over which EMC formerly had control, as described in the risk factors below.
|
•
|
Dell could implement changes to our business, including changing our commercial relationship with Dell or taking other corporate actions that our other stockholders may not view as beneficial.
|
•
|
We have arrangements with a number of companies that compete with Dell, and our relationship with Dell could adversely affect our relationships with these companies or other customers, suppliers and partners.
|
•
|
Since the Dell Acquisition, the portion of our bookings that are realized through Dell sales channels has grown more rapidly than our sales through non-Dell resellers and distributors, and we expect this trend to continue. To the extent that we find ourselves relying more heavily upon Dell for our channel sales, Dell’s leverage over our sales and marketing efforts may increase and our ability to negotiate favorable go-to-market arrangements with Dell and with other channel partners may decline.
|
•
|
Dell has a right to approve certain matters under our certificate of incorporation, including acquisitions or investments in excess of $100 million, and Dell may choose not to consent to matters that our board of directors believes are in the best interests of VMware.
|
•
|
We anticipate certain synergies and benefits from the Dell Acquisition that may not be realized.
|
•
|
In connection with the Dell Acquisition, Dell issued a tracking stock to EMC shareholders, the Class V common stock, that is intended to reflect our economic performance as partial consideration to the EMC shareholders. The Class V common stock tracks the performance of an approximately 50% economic interest in our business. The Class V common stock, while not a VMware issued security, increases the supply of publicly traded securities that track VMware’s economic performance and may create the perception that the Class V common stock dilutes the holdings of our public stockholders, both of which may put downward pressure on our stock price. If the Dell Class V Transaction is approved by Dell stockholders and consummated, Dell will eliminate shares of Dell Class V common stock and exchange them for shares of Dell Class C common stock or cash. Such elimination of the Class V common
|
•
|
Dell is highly leveraged and commits a substantial portion of its cash flows to servicing its indebtedness. Dell’s significant debt could create the perception that Dell may exercise its control over us to limit our growth in favor of its other businesses or cause us to transfer cash to Dell. In addition, if Dell defaults, or appears in danger of defaulting, on its indebtedness, the trading price of the Class V common stock issued by Dell would be adversely affected, which could negatively impact the price of our Class A common stock, and uncertainty as to the impact of such a default on VMware could disrupt our business.
|
•
|
Investor perceptions of Dell’s performance, future plans and prospects could contribute to volatility in the price of our Class A common stock.
|
•
|
Some of our products compete directly with products sold or distributed by Dell, which could result in reduced sales.
|
•
|
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 Dell 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 Dell 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.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
|
10-Q
|
|
001-33622
|
|
3.1
|
|
6/9/17
|
|
3.2
|
|
|
|
8-K
|
|
001-33622
|
|
3.1
|
|
2/23/17
|
|
10.18+*
|
|
|
|
|
|
|
|
|
|
|
|
10.22+*
|
|
|
|
|
|
|
|
|
|
|
|
10.31+
|
|
|
|
8-K
|
|
001-33622
|
|
99.1
|
|
9/18/18
|
|
31.1*
|
|
|
|
|
|
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
|
|
|
|
|
|
32.1ǂ
|
|
|
|
|
|
|
|
|
|
|
|
32.2ǂ
|
|
|
|
|
|
|
|
|
|
|
|
101.INS*
|
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
101.SCH*
|
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
|
|
|
101.CAL*
|
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
|
|
|
|
101.DEF*
|
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
|
|
|
|
101.LAB*
|
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
|
|
|
|
101.PRE*
|
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
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VMWARE, INC.
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Dated:
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December 10, 2018
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By:
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/s/ Kevan Krysler
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Kevan Krysler
Senior Vice President, Chief Accounting Officer
(Principal Accounting Officer)
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(a)
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¨
adopts a new plan as of [month, day, year]
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(b)
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þ
amends and restates its existing plan as of
January 1, 2018
which is the Amendment Restatement Date. Except as otherwise provided in Appendix A, all amounts deferred under the Plan prior to the Amendment Restatement Date shall be governed by the terms of the Plan as in effect on the day before the Amendment Restatement Date.
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1.02
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PLAN
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1.03
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PLAN SPONSOR
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Name:
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VMware, Inc.
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Mailing Address:
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3401 Hillview Avenue, Palo Alto, CA 94304
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Physical Address:
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900 Arastradero Road, Building C, Palo Alto, CA 94304
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Phone # :
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650-427-4361
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EIN:
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94-3292913
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Fiscal Yr:
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Year ending December 31
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þ
Yes
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¨
No
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1.04
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EMPLOYER
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Yes
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No
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Nicira, Inc. (EIN: 26-0476880)
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¨
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þ
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1.05
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ADMINISTRATOR
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Name:
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Persons delegated authority by the Compensation & Corporate Governance Committee
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Address:
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Note
:
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The Administrator is the person or persons designated by the Plan Sponsor to be responsible for the administration of the Plan. Neither Fidelity Employer Services Company nor any other Fidelity affiliate can be the Administrator.
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1.06
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KEY EMPLOYEE DETERMINATION DATES
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2.01
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PARTICIPATION
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3.01
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COMPENSATION
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(a)
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þ
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Compensation is defined as:
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Base Salary, Employee Bonus Plan, Executive Bonus Plan and Commissions
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(b)
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¨
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Compensation as defined in
[insert name of qualified plan] without regard to the limitation in Section 401(a)(17) of the Code for such Plan Year.
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(c)
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¨
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Director Compensation is defined as:
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(d)
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¨
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Compensation shall, for all Plan purposes, be limited to $
.
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(e)
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¨
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Not Applicable.
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3.02
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BONUSES
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Type
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Will be treated as Performance
Based Compensation
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||||
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||||
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Yes
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No
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Employee Bonus Plan
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¨
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þ
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Executive Bonus Plan
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¨
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þ
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¨
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Not Applicable.
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4.01
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PARTICIPANT CONTRIBUTIONS
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(a)
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Amount of Deferrals
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(i)
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Compensation Other than Bonuses [do not complete if you complete (iii)]
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Type of Remuneration
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Dollar Amount
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% Amount
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Increment
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Min
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Max
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Min
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Max
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(a)
Base Salary
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5%
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75%
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1%
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(b)
Commissions
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5%
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100%
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1%
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(ii)
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Bonuses [do not complete if you complete (iii)]
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Type of Bonus
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Dollar Amount
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% Amount
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Increment
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Min
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Max
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Min
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Max
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(a) Employee Bonus Plan
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5%
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100%
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1%
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(b) Executive Bonus Plan
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5%
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100%
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1%
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(iii)
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Compensation [do not complete if you completed (i) and (ii)]
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Dollar Amount
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% Amount
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Increment
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Min
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Max
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Min
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Max
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(iv)
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Director Compensation
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Type of Compensation
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Dollar Amount
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% Amount
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Increment
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Min
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Max
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Min
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Max
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Annual Retainer
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Meeting Fees
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Other:
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(b)
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Election Period
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(i)
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Performance Based Compensation
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¨
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Does
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þ
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Does Not
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þ
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May
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¨
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May Not
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(c)
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Revocation of Deferral Agreement
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þ
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Will
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¨
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Will Not
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(d)
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No Participant Contributions
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5.01
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EMPLOYER CONTRIBUTIONS
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(a)
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Matching Contributions
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(i)
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Amount
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(A)
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¨
[insert percentage] of the Compensation the Participant has elected to defer for the Plan Year
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(B)
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þ
An amount determined by the Employer in its sole discretion
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(C)
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¨
Matching Contributions for each Participant shall be limited to $
and/or
% of Compensation.
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(D)
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¨
Other:
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(E)
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¨
Not Applicable [Proceed to Section 5.01(b)]
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(ii)
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Eligibility for Matching Contribution
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(A)
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¨
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Describe requirements:
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(B)
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þ
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Is selected by the Employer in its sole discretion to receive an allocation of Matching Contributions
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(C)
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¨
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No requirements
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(iii)
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Time of Allocation
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(b)
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Other Contributions
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(i)
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Amount
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(A)
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¨
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An amount equal to
[insert number] % of the Participant’s Compensation
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(B)
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þ
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An amount determined by the Employer in its sole discretion
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(C)
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¨
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Contributions for each Participant shall be limited to $
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(D)
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¨
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Other:
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(E)
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¨
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Not Applicable [Proceed to Section 6.01]
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(ii)
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Eligibility for Other Contributions
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(A)
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¨
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Describe requirements:
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(B)
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þ
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Is selected by the Employer in its sole discretion to receive an allocation of other Employer contributions
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(C)
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¨
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No requirements
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(iii)
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Time of Allocation
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(c)
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No Employer Contributions
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6.01
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DISTRIBUTIONS
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(a)
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Timing of Distributions
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(b)
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Distribution Events
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¨
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Monthly
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¨
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Quarterly
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þ
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Annually
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(c)
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Specified Date and Specified Age elections may not extend beyond age
Not Applicable
[insert age or “Not Applicable” if no maximum age applies].
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(d)
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Payment Election Override
Payment of the remaining vested balance of the Participant’s Account will automatically occur at the time specified in Section 6.01(a) of the Adoption Agreement in the form indicated upon the earliest to occur of the following events [check each event that applies and for each event include only a single form of payment]: |
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EVENTS
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FORM OF PAYMENT
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¨
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Separation from Service
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Lump sum
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Installments
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¨
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Separation from
Service before Retirement
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Lump sum
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Installments
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þ
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Death
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x
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Lump sum
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Installments
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þ
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Disability
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x
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Lump sum
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Installments
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¨
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Not Applicable
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(e)
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Involuntary Cashouts
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þ
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If the Participant’s vested Account at the time of his Separation from Service does not exceed $
50,000
distribution of the vested Account shall automatically be made in the form of a single lump sum in accordance with Section 9.5 of the Plan.
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¨
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There are no involuntary cashouts.
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(f)
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Retirement
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¨
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Retirement shall be defined as a Separation from Service that occurs on or after the Participant [insert description of requirements]:
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þ
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No special definition of Retirement applies.
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(g)
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Distribution Election Change
A Participant |
þ
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Shall
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¨
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Shall Not
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(h)
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Frequency of Elections
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þ
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Has
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¨
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Has Not
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7.01
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VESTING
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(a)
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Matching Contributions
The Participant’s vested interest in the amount credited to his Account attributable to Matching Contributions shall be based on the following schedule: |
¨
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Years of Service
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Vesting %
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0
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(insert ‘100’ if there is immediate vesting)
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1
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2
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3
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4
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5
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6
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7
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8
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9
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þ
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Other:
As determined by the Administrator
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|||
¨
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Class year vesting applies.
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¨
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Not applicable.
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(b)
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Other Employer Contributions
The Participant’s vested interest in the amount credited to his Account attributable to Employer contributions other than Matching Contributions shall be based on the following schedule: |
(c)
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Acceleration of Vesting
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(i)
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¨
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Death
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(ii)
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¨
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Disability
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(iii)
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¨
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Change in Control
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(iv)
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¨
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Eligibility for Retirement
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(v)
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þ
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Other:
As determined by the Administrator
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(vi)
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¨
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Not applicable.
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(d)
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Years of Service
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¨
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Shall
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þ
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Shall Not
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(ii)
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Years of Service shall also include service performed for the following entities:
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(iii)
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Years of Service shall be determined in accordance with (select one)
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(A)
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¨
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The elapsed time method in Treas. Reg. Sec. 1.410(a)-7
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(B)
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¨
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The general method in DOL Reg. Sec. 2530.200b-1 through b-4
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(C)
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¨
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The Participant’s Years of Service credited under [insert name of plan]
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(D)
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þ
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Other:
As determined by the Administrator
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(iv)
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¨
Not applicable.
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8.01
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UNFORESEEABLE EMERGENCY
|
þ
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Will
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¨
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Will Not [if Unforeseeable Emergency withdrawals are not permitted, proceed to Section 9.01]
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(b)
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Upon a withdrawal due to an Unforeseeable Emergency, a Participant’s deferral election for the remainder of the Plan Year:
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þ
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Will
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¨
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Will Not
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9.01
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INVESTMENT DECISIONS
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(a)
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þ
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The Participant or his Beneficiary
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(b)
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¨
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The Employer
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10.01
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TRUST
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þ
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Does
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¨
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Does Not
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11.01
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TERMINATION UPON CHANGE IN CONTROL
|
þ
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Reserves
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¨
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Does Not Reserve
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11.02
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AUTOMATIC DISTRIBUTION UPON CHANGE IN CONTROL
|
¨
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Shall
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þ
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Shall Not
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11.03
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CHANGE IN CONTROL
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(a)
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þ
A change in the ownership of the Employer as described in Section 9.7(c) of the Plan.
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(b)
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þ
A change in the effective control of the Employer as described in Section 9.7(d) of the Plan.
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(c)
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þ
A change in the ownership of a substantial portion of the assets of the Employer as described in Section 9.7(e) of the Plan.
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(d)
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¨
Not Applicable.
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12.01
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GOVERNING STATE LAW
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PLAN SPONSOR:
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VMware, Inc.
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By:
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/s/ Shannon Daly
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Title:
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Sr. Director, Global Benefits
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1.
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2016 Performance Stock Unit Awards
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2.
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Shares issuable pursuant to the FY 2018 annual performance tranche of the FY 2018 Transformation Performance Stock Unit Awards
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3.
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FY 2018 Sales Performance Stock Unit Award
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1.
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I have reviewed this quarterly report on Form 10-Q of VMware, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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Date:
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December 10, 2018
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By:
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/s/ Patrick Gelsinger
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Patrick Gelsinger
Chief Executive Officer
(Principal Executive Officer)
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1.
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I have reviewed this quarterly report on Form 10-Q of VMware, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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Date:
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December 10, 2018
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By:
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/s/ Zane Rowe
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Zane Rowe
Chief Financial Officer and Executive Vice President
(Principal Financial Officer)
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Date:
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December 10, 2018
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By:
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/s/ Patrick Gelsinger
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|
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Patrick Gelsinger
Chief Executive Officer
(Principal Executive Officer)
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Date:
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December 10, 2018
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By:
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/s/ Zane Rowe
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|
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|
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Zane Rowe
Chief Financial Officer and Executive Vice President
(Principal Financial Officer)
|