Delaware
|
|
001-33622
|
|
94-3292913
|
(State or Other Jurisdiction
of Incorporation)
|
|
(Commission
File Number)
|
|
(IRS Employer
Identification Number)
|
3401 Hillview Avenue
|
Palo Alto
|
CA
|
|
94304
|
(Address of Principal Executive Offices)
|
|
(Zip code)
|
☐
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Class A common stock
|
|
VMW
|
|
New York Stock Exchange
|
Emerging growth company
|
☐
|
|
|
|
VMware, Inc.
|
|
|
|
|
|
|
|
|
Date: February 27, 2020
|
By:
|
|
/s/ Zane Rowe
|
|
|
|
Zane Rowe, Chief Financial Officer and Executive Vice President
|
|
|
|
|
•
|
Revenue for the fourth quarter was $3.07 billion, an increase of 11% from the fourth quarter of fiscal 2019.
|
•
|
The combination of subscription and SaaS and license revenue was $1.59 billion, an increase of 14% from the fourth quarter of fiscal 2019.
|
•
|
Subscription and SaaS revenue for the fourth quarter was $556 million, an increase of 52% year-over-year.
|
•
|
GAAP net income for the fourth quarter was $321 million, or $0.76 per diluted share, compared to $496 million, or $1.17 per diluted share, for the fourth quarter of fiscal 2019. Non-GAAP net income for the fourth quarter was $868 million, or $2.05 per diluted share, up 9% per diluted share compared to $795 million, or $1.87 per diluted share, for the fourth quarter of fiscal 2019.
|
•
|
GAAP operating income for the fourth quarter was $250 million, a decrease of 58% from the fourth quarter of fiscal 2019. Non-GAAP operating income for the fourth quarter was $1.05 billion, an increase of 12% from the fourth quarter of fiscal 2019.
|
•
|
Operating cash flow for the fourth quarter was $1.09 billion. Free cash flow for the fourth quarter was $1.02 billion.
|
•
|
Total revenue plus sequential change in total unearned revenue grew 11% year-over-year.
|
•
|
The combination of subscription and SaaS and license revenue plus sequential change in unearned subscription and SaaS and license revenue grew 17% year-over-year.
|
•
|
Revenue for fiscal year 2020 was $10.81 billion, an increase of 12% from fiscal 2019.
|
•
|
The combination of subscription and SaaS and license revenue for fiscal 2020 was $5.06 billion, an increase of 16% from fiscal year 2019.
|
•
|
Subscription and SaaS revenue for fiscal year 2020 was $1.88 billion, an increase of 44% from fiscal year 2019.
|
•
|
GAAP net income for fiscal year 2020 was $6.41 billion, or $15.08 per diluted share, compared to $1.65 billion, or $3.92 per diluted share, for fiscal 2019. Non-GAAP net income for fiscal year 2020 was $2.66 billion, or $6.24 per diluted share, up 4% per diluted share compared to $2.52 billion, or $5.98 per diluted share, for fiscal 2019.
|
•
|
GAAP operating income for fiscal year 2020 was $1.44 billion, a decrease of 20% from fiscal 2019. Non-GAAP operating income for fiscal year 2020 was $3.26 billion, an increase of 11% from fiscal 2019.
|
•
|
Operating cash flow for fiscal year 2020 was $3.87 billion. Free cash flow for fiscal year 2020 was $3.59 billion
|
•
|
Cash was $2.91 billion, and unearned revenue was $9.27 billion, as of January 31, 2020.
|
•
|
VMware completed the acquisition of Pivotal on December 30, 2019. The combination of Pivotal’s developer-centric offerings with VMware’s upstream Kubernetes run-time infrastructure and management tools will allow VMware to deliver a comprehensive enterprise solution that enables dramatic improvements in developer productivity in the creation of modern applications.
|
•
|
At the RSA Conference, VMware advanced its Intrinsic Security Strategy for the world’s digital infrastructure by announcing “VMware Advanced Security for Cloud Foundation,” a new security suite that enables customers to replace legacy security solutions and deliver unified protection across private and public clouds. Product update announcements also included enhancements to the VMware Carbon Black Cloud and VMware Secure State.
|
•
|
VMware showcased how communications service providers (CSPs) across the world—including Millicom, Singtel, Telecom Italia, Telia Company and TIM Brasil—are adopting VMware’s Telco Cloud platform to accelerate time to revenue, automate service lifecycle and simplify operations management. VMware also unveiled new capabilities across its Telco and Edge Cloud product portfolio, including innovations to its telco cloud core, edge and RAN offerings.
|
•
|
VMware acquired Nyansa, which enables VMware to deliver an end-to-end network visibility, monitoring and remediation solution within VMware SD-WAN by VeloCloud that can proactively predict client problems, optimize application and network performance and better assure the behavior of critical IoT devices.
|
•
|
In the fourth quarter, VMware received further recognition from leading industry analysts:
|
◦
|
VMware was positioned as a leader in The Forrester Wave™: Unified Endpoint Management, Q4 2019, which evaluated 13 unified endpoint management (UEM) vendors. VMware’s intelligence-driven digital
|
◦
|
VMware was positioned as a leader in three recent IDC MarketScape reports related to the End-User Computing (EUC) space.2
|
CONSOLIDATED BALANCE SHEETS
|
|||||||
(amounts in millions, except per share amounts, and shares in thousands)
|
|||||||
(unaudited)
|
|||||||
|
|
|
|
||||
|
January 31,
|
|
February 1,
|
||||
|
2020
|
|
2019(1)
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,915
|
|
|
$
|
3,532
|
|
Short-term investments
|
—
|
|
|
19
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $7 and $6(1)
|
1,883
|
|
|
1,723
|
|
||
Due from related parties, net
|
1,457
|
|
|
1,090
|
|
||
Other current assets
|
436
|
|
|
305
|
|
||
Total current assets
|
6,691
|
|
|
6,669
|
|
||
Property and equipment, net
|
1,280
|
|
|
1,162
|
|
||
Other assets
|
2,266
|
|
|
1,088
|
|
||
Deferred tax assets
|
5,556
|
|
|
290
|
|
||
Intangible assets, net
|
1,172
|
|
|
966
|
|
||
Goodwill
|
9,329
|
|
|
7,418
|
|
||
Total assets
|
$
|
26,294
|
|
|
$
|
17,593
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
208
|
|
|
$
|
153
|
|
Accrued expenses and other
|
2,151
|
|
|
1,664
|
|
||
Current portion of long-term debt and other borrowings
|
2,747
|
|
|
—
|
|
||
Unearned revenue
|
5,218
|
|
|
4,339
|
|
||
Total current liabilities
|
10,324
|
|
|
6,156
|
|
||
Note payable to Dell
|
270
|
|
|
270
|
|
||
Long-term debt
|
2,731
|
|
|
3,972
|
|
||
Unearned revenue
|
4,050
|
|
|
3,100
|
|
||
Income tax payable
|
817
|
|
|
889
|
|
||
Operating lease liabilities
|
746
|
|
|
—
|
|
||
Other liabilities
|
347
|
|
|
315
|
|
||
Total liabilities
|
19,285
|
|
|
14,702
|
|
||
Contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Class A common stock, par value $0.01; authorized 2,500,000 shares; issued and outstanding 110,484 and 110,715 shares
|
1
|
|
|
1
|
|
||
Class B convertible common stock, par value $0.01; authorized 1,000,000 shares; issued and outstanding 307,222 and 300,000 shares
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
2,000
|
|
|
2,959
|
|
||
Accumulated other comprehensive loss
|
(4
|
)
|
|
(2
|
)
|
||
Retained earnings (Accumulated deficit)
|
5,009
|
|
|
(1,096
|
)
|
||
Total VMware, Inc. stockholders’ equity
|
7,009
|
|
|
1,865
|
|
||
Non-controlling interests
|
—
|
|
|
1,026
|
|
||
Total stockholders’ equity
|
7,009
|
|
|
2,891
|
|
||
Total liabilities and stockholders’ equity
|
$
|
26,294
|
|
|
$
|
17,593
|
|
__________
|
|
|
|
||||
(1) Adjusted to reflect the recast of prior period information due to the Pivotal acquisition, which was accounted for as a transaction between entities under common control.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||||||||||
(in millions)
|
|||||||||||||||
(unaudited)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
January 31,
|
|
February 1,
|
|
January 31,
|
|
February 1,
|
||||||||
|
2020
|
|
2019(1)
|
|
2020
|
|
2019(1)
|
||||||||
Operating activities:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
315
|
|
|
$
|
479
|
|
|
$
|
6,356
|
|
|
$
|
1,590
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
247
|
|
|
189
|
|
|
873
|
|
|
727
|
|
||||
Stock-based compensation
|
312
|
|
|
220
|
|
|
1,017
|
|
|
800
|
|
||||
Deferred income taxes, net
|
(146
|
)
|
|
(52
|
)
|
|
(5,284
|
)
|
|
(110
|
)
|
||||
Unrealized (gain) loss on equity securities, net
|
(1
|
)
|
|
—
|
|
|
(31
|
)
|
|
14
|
|
||||
Loss on disposition
|
—
|
|
|
1
|
|
|
—
|
|
|
7
|
|
||||
(Gain) loss on disposition of assets, revaluation and impairment, net
|
—
|
|
|
5
|
|
|
(4
|
)
|
|
2
|
|
||||
Other
|
6
|
|
|
3
|
|
|
9
|
|
|
11
|
|
||||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
(283
|
)
|
|
(506
|
)
|
|
(119
|
)
|
|
(214
|
)
|
||||
Other current assets and other assets
|
(224
|
)
|
|
(99
|
)
|
|
(668
|
)
|
|
(347
|
)
|
||||
Due to/from related parties, net
|
(673
|
)
|
|
(503
|
)
|
|
(374
|
)
|
|
(480
|
)
|
||||
Accounts payable
|
21
|
|
|
(18
|
)
|
|
35
|
|
|
105
|
|
||||
Accrued expenses and other liabilities
|
499
|
|
|
411
|
|
|
417
|
|
|
290
|
|
||||
Income taxes payable
|
(38
|
)
|
|
(49
|
)
|
|
(23
|
)
|
|
(40
|
)
|
||||
Unearned revenue
|
1,050
|
|
|
939
|
|
|
1,668
|
|
|
1,302
|
|
||||
Net cash provided by operating activities
|
1,085
|
|
|
1,020
|
|
|
3,872
|
|
|
3,657
|
|
||||
Investing activities:
|
|
|
|
|
|
|
|
||||||||
Additions to property and equipment
|
(64
|
)
|
|
(68
|
)
|
|
(279
|
)
|
|
(254
|
)
|
||||
Purchases of available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(780
|
)
|
||||
Sales of available-for-sale securities
|
—
|
|
|
3,811
|
|
|
—
|
|
|
3,999
|
|
||||
Maturities of available-for-sale securities
|
—
|
|
|
488
|
|
|
—
|
|
|
2,393
|
|
||||
Purchases of strategic investments
|
(12
|
)
|
|
(5
|
)
|
|
(30
|
)
|
|
(8
|
)
|
||||
Proceeds from disposition of assets
|
—
|
|
|
3
|
|
|
22
|
|
|
41
|
|
||||
Business combinations, net of cash acquired, and purchases of intangible assets
|
—
|
|
|
(419
|
)
|
|
(2,437
|
)
|
|
(938
|
)
|
||||
Net cash paid on disposition of a business
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(11
|
)
|
||||
Net cash provided by (used in) investing activities
|
(76
|
)
|
|
3,810
|
|
|
(2,728
|
)
|
|
4,442
|
|
||||
Financing activities:
|
|
|
|
|
|
|
|
||||||||
Proceeds from the initial public offering of Pivotal, net of issuance costs paid
|
—
|
|
|
—
|
|
|
—
|
|
|
544
|
|
||||
Proceeds from issuance of common stock
|
14
|
|
|
36
|
|
|
308
|
|
|
259
|
|
||||
Borrowings under term loan, net of issuance costs
|
1,400
|
|
|
—
|
|
|
3,393
|
|
|
—
|
|
||||
Borrowings on credit facility, net of debt issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||
Repayment of term loan
|
(500
|
)
|
|
—
|
|
|
(1,900
|
)
|
|
—
|
|
||||
Repayments on credit facility
|
—
|
|
|
—
|
|
|
—
|
|
|
(35
|
)
|
||||
Repurchase of common stock
|
(55
|
)
|
|
(42
|
)
|
|
(1,334
|
)
|
|
(42
|
)
|
||||
Shares repurchased for tax withholdings on vesting of restricted stock
|
(141
|
)
|
|
(129
|
)
|
|
(534
|
)
|
|
(357
|
)
|
||||
Payment for Special Dividend
|
—
|
|
|
(11,000
|
)
|
|
—
|
|
|
(11,000
|
)
|
||||
Payment to acquire non-controlling interests
|
(1,666
|
)
|
|
—
|
|
|
(1,666
|
)
|
|
—
|
|
||||
Contribution from Dell
|
—
|
|
|
3
|
|
|
27
|
|
|
44
|
|
||||
Payment for common control transaction with Dell
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||||
Principal payments on finance lease obligations
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Net cash used in financing activities
|
(948
|
)
|
|
(11,132
|
)
|
|
(1,707
|
)
|
|
(10,580
|
)
|
||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
1
|
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
59
|
|
|
(6,302
|
)
|
|
(565
|
)
|
|
(2,480
|
)
|
||||
Cash, cash equivalents and restricted cash at beginning of the period
|
2,972
|
|
|
9,898
|
|
|
3,596
|
|
|
6,076
|
|
||||
Cash, cash equivalents and restricted cash at end of the period
|
$
|
3,031
|
|
|
$
|
3,596
|
|
|
$
|
3,031
|
|
|
$
|
3,596
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
||||||||
Issuance of VMware Class B common shares for Pivotal Class B common shares held by Dell
|
$
|
1,101
|
|
|
$
|
—
|
|
|
$
|
1,101
|
|
|
$
|
—
|
|
Cash paid for interest
|
3
|
|
|
3
|
|
|
134
|
|
|
129
|
|
||||
Cash paid for taxes, net
|
86
|
|
|
192
|
|
|
369
|
|
|
399
|
|
||||
Non-cash items:
|
|
|
|
|
|
|
|
||||||||
Changes in capital additions, accrued but not paid
|
$
|
13
|
|
|
$
|
(7
|
)
|
|
$
|
18
|
|
|
$
|
9
|
|
Changes in tax withholdings on vesting of restricted stock, accrued but not paid
|
(62
|
)
|
|
(44
|
)
|
|
(13
|
)
|
|
17
|
|
SUPPLEMENTAL UNEARNED REVENUE SCHEDULE
|
|||||||||||||||||||||||
(in millions)
|
|||||||||||||||||||||||
(unaudited)
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
January 31,
|
|
November 1,
|
|
August 2,
|
|
May 3,
|
|
February 1,
|
|
November 2,
|
||||||||||||
|
2020
|
|
2019(1)
|
|
2019(1)
|
|
2019(1)
|
|
2019(1)
|
|
2018(1)
|
||||||||||||
Unearned revenue as reported:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
License
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
15
|
|
|
$
|
17
|
|
Subscription and SaaS(2)
|
1,534
|
|
|
1,199
|
|
|
976
|
|
|
953
|
|
|
916
|
|
|
661
|
|
||||||
Services
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Software maintenance
|
6,700
|
|
|
6,106
|
|
|
6,042
|
|
|
5,754
|
|
|
5,741
|
|
|
5,161
|
|
||||||
Professional services
|
1,015
|
|
|
893
|
|
|
851
|
|
|
802
|
|
|
767
|
|
|
657
|
|
||||||
Total unearned revenue
|
$
|
9,268
|
|
|
$
|
8,217
|
|
|
$
|
7,888
|
|
|
$
|
7,528
|
|
|
$
|
7,439
|
|
|
$
|
6,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Adjusted to reflect the recast of prior period information due to the Pivotal acquisition, which was accounted for as a transaction between entities under common control.
|
|||||||||||||||||||||||
(2) Unearned subscription and SaaS revenue was allocated between unearned license revenue and unearned software maintenance revenue in prior periods and has been reclassified to conform with current period presentation.
|
RECONCILIATION OF GAAP TO NON-GAAP DATA
|
|||||||||||||||||||||||||||||||||||
For the Three Months Ended January 31, 2020
|
|||||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands)
|
|||||||||||||||||||||||||||||||||||
(unaudited)
|
|||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
GAAP
|
|
Stock-Based
Compensation |
|
Employer
Payroll Taxes on Employee Stock Transactions |
|
Intangible
Amortization |
|
Realignment
Charges |
|
Acquisition, Disposition
and Other Items |
|
Certain Litigation and Other Contingencies
|
|
Tax
Adjustment(1) |
|
Non-GAAP
As Adjusted(2) |
||||||||||||||||||
Operating expenses(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Cost of license revenue
|
$
|
50
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
23
|
|
|||||||
Cost of subscription and SaaS revenue
|
$
|
106
|
|
|
(3
|
)
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
79
|
|
|||||||
Cost of services revenue
|
$
|
317
|
|
|
(24
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
291
|
|
|||||||
Research and development
|
$
|
676
|
|
|
(130
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
543
|
|
|||||||
Sales and marketing
|
$
|
1,003
|
|
|
(91
|
)
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
881
|
|
|||||||
General and administrative
|
$
|
592
|
|
|
(64
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
|
(237
|
)
|
|
—
|
|
|
$
|
202
|
|
|||||||
Realignment and loss on disposition
|
$
|
79
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(79
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|||||||
Operating income
|
$
|
250
|
|
|
312
|
|
|
7
|
|
|
86
|
|
|
79
|
|
|
84
|
|
|
237
|
|
|
—
|
|
|
$
|
1,054
|
|
|||||||
Operating margin(2)
|
8.1
|
%
|
|
10.1
|
%
|
|
0.2
|
%
|
|
2.8
|
%
|
|
2.6
|
%
|
|
2.7
|
%
|
|
7.7
|
%
|
|
—
|
|
|
34.3
|
%
|
|||||||||
Other income (expense), net(4)
|
$
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
$
|
10
|
|
|||||||
Income before income tax
|
$
|
239
|
|
|
312
|
|
|
7
|
|
|
86
|
|
|
79
|
|
|
83
|
|
|
237
|
|
|
—
|
|
|
$
|
1,043
|
|
|||||||
Income tax provision (benefit)
|
$
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
242
|
|
|
$
|
166
|
|
|||||||||||||
Tax rate(2)
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.0
|
%
|
||||||||||||||||
Net income
|
$
|
315
|
|
|
312
|
|
|
7
|
|
|
86
|
|
|
79
|
|
|
83
|
|
|
237
|
|
|
(242
|
)
|
|
$
|
877
|
|
|||||||
Less: Net income (loss) attributable to non-controlling interests
|
$
|
(6
|
)
|
|
23
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
(15
|
)
|
|
$
|
9
|
|
|||||||
Net income attributable to VMware, Inc.
|
$
|
321
|
|
|
289
|
|
|
7
|
|
|
79
|
|
|
79
|
|
|
82
|
|
|
237
|
|
|
(227
|
)
|
|
$
|
868
|
|
|||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(2)(5)
|
$
|
0.76
|
|
|
$
|
0.68
|
|
|
$
|
0.02
|
|
|
$
|
0.19
|
|
|
$
|
0.19
|
|
|
$
|
0.19
|
|
|
$
|
0.56
|
|
|
$
|
(0.53
|
)
|
|
$
|
2.05
|
|
(1)
|
Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.
|
(2)
|
Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data.
|
(4)
|
Non-GAAP adjustment to other income (expense), net includes gains or losses on equity investments, whether realized or unrealized.
|
(5)
|
Calculated based upon 424,007 diluted weighted-average shares for Classes A and B.
|
RECONCILIATION OF GAAP TO NON-GAAP DATA
|
|||||||||||||||||||||||||||
For the Three Months Ended February 1, 2019
|
|||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands)
|
|||||||||||||||||||||||||||
(unaudited)
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
GAAP(1)
|
|
Stock-Based
Compensation(1) |
|
Employer
Payroll Taxes on Employee Stock Transactions(1) |
|
Intangible
Amortization(1) |
|
Acquisition, Disposition
and Other Items(1) |
|
Tax
Adjustment(1)(2) |
|
Non-GAAP
As Adjusted(1)(3) |
||||||||||||||
Operating expenses(4):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of license revenue
|
$
|
40
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
$
|
20
|
|
|||||
Cost of subscription and SaaS revenue
|
$
|
86
|
|
|
(2
|
)
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
$
|
58
|
|
|||||
Cost of services revenue
|
$
|
292
|
|
|
(16
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
$
|
274
|
|
|||||
Research and development
|
$
|
596
|
|
|
(105
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
$
|
490
|
|
|||||
Sales and marketing
|
$
|
889
|
|
|
(63
|
)
|
|
(1
|
)
|
|
(17
|
)
|
|
(1
|
)
|
|
—
|
|
|
$
|
808
|
|
|||||
General and administrative
|
$
|
258
|
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
(55
|
)
|
|
—
|
|
|
$
|
169
|
|
|||||
Realignment and loss on disposition
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|||||
Operating income
|
$
|
598
|
|
|
220
|
|
|
1
|
|
|
63
|
|
|
58
|
|
|
—
|
|
|
$
|
940
|
|
|||||
Operating margin(3)
|
21.7
|
%
|
|
8.0
|
%
|
|
—
|
%
|
|
2.3
|
%
|
|
2.1
|
%
|
|
—
|
|
|
34.1
|
%
|
|||||||
Investment income (loss)
|
$
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
$
|
39
|
|
|||||
Other income (expense), net(5)
|
$
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
$
|
11
|
|
|||||
Income before income tax
|
$
|
566
|
|
|
220
|
|
|
1
|
|
|
63
|
|
|
106
|
|
|
—
|
|
|
$
|
956
|
|
|||||
Income tax provision
|
$
|
87
|
|
|
|
|
|
|
|
|
|
|
67
|
|
|
$
|
154
|
|
|||||||||
Tax rate(3)
|
15.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
16.0
|
%
|
||||||||||||
Net income
|
$
|
479
|
|
|
220
|
|
|
1
|
|
|
63
|
|
|
106
|
|
|
(67
|
)
|
|
$
|
802
|
|
|||||
Less: Net income (loss) attributable to non-controlling interests
|
$
|
(17
|
)
|
|
20
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
(3
|
)
|
|
$
|
7
|
|
|||||
Net income attributable to VMware, Inc.
|
$
|
496
|
|
|
200
|
|
|
1
|
|
|
56
|
|
|
106
|
|
|
(64
|
)
|
|
$
|
795
|
|
|||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(3)(6)
|
$
|
1.17
|
|
|
$
|
0.47
|
|
|
$
|
—
|
|
|
$
|
0.13
|
|
|
$
|
0.25
|
|
|
$
|
(0.15
|
)
|
|
$
|
1.87
|
|
(2)
|
Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments, such as adjustments resulting from the U.S. Tax Cuts and Jobs Act enacted on December 22, 2017 (the "2017 Tax Act"). Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.
|
(3)
|
Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data.
|
(5)
|
Non-GAAP adjustment to other income (expense), net includes gains or losses on equity investments, whether realized or unrealized.
|
(6)
|
Calculated based upon 424,630 diluted weighted-average shares for Classes A and B.
|
RECONCILIATION OF GAAP TO NON-GAAP DATA
|
|||||||||||||||||||||||||||||||||||
For the Twelve Months Ended January 31, 2020
|
|||||||||||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands)
|
|||||||||||||||||||||||||||||||||||
(unaudited)
|
|||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
GAAP
|
|
Stock-Based
Compensation |
|
Employer
Payroll Taxes on Employee Stock Transactions |
|
Intangible
Amortization |
|
Realignment
Charges |
|
Acquisition, Disposition
and Other Items |
|
Certain Litigation and Other Contingencies
|
|
Tax
Adjustment(1) |
|
Non-GAAP
As Adjusted(2) |
||||||||||||||||||
Operating expenses(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Cost of license revenue
|
$
|
166
|
|
|
(1
|
)
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
76
|
|
|||||||
Cost of subscription and SaaS revenue
|
$
|
400
|
|
|
(13
|
)
|
|
—
|
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
285
|
|
|||||||
Cost of services revenue
|
$
|
1,233
|
|
|
(83
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
1,147
|
|
|||||||
Research and development
|
$
|
2,522
|
|
|
(459
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
2,058
|
|
|||||||
Sales and marketing
|
$
|
3,677
|
|
|
(293
|
)
|
|
(6
|
)
|
|
(105
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
3,273
|
|
|||||||
General and administrative
|
$
|
1,293
|
|
|
(168
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(173
|
)
|
|
(237
|
)
|
|
—
|
|
|
$
|
711
|
|
|||||||
Realignment and loss on disposition
|
$
|
79
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(79
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|||||||
Operating income
|
$
|
1,441
|
|
|
1,017
|
|
|
14
|
|
|
300
|
|
|
79
|
|
|
173
|
|
|
237
|
|
|
—
|
|
|
$
|
3,261
|
|
|||||||
Operating margin(2)
|
13.3
|
%
|
|
9.4
|
%
|
|
0.1
|
%
|
|
2.8
|
%
|
|
0.7
|
%
|
|
1.6
|
%
|
|
2.2
|
%
|
|
—
|
|
|
30.2
|
%
|
|||||||||
Other income (expense), net(4)
|
$
|
86
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35
|
)
|
|
—
|
|
|
—
|
|
|
$
|
50
|
|
|||||||
Income before income tax
|
$
|
1,438
|
|
|
1,017
|
|
|
14
|
|
|
300
|
|
|
79
|
|
|
138
|
|
|
237
|
|
|
—
|
|
|
$
|
3,222
|
|
|||||||
Income tax provision (benefit)
|
$
|
(4,918
|
)
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
5,432
|
|
|
$
|
514
|
|
|||||||||||||
Tax rate(2)
|
N/M
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.0
|
%
|
||||||||||||||||
Net income
|
$
|
6,356
|
|
|
1,017
|
|
|
14
|
|
|
300
|
|
|
79
|
|
|
138
|
|
|
237
|
|
|
(5,432
|
)
|
|
$
|
2,708
|
|
|||||||
Less: Net income (loss) attributable to non-controlling interests
|
$
|
(56
|
)
|
|
97
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
(24
|
)
|
|
$
|
53
|
|
|||||||
Net income attributable to VMware, Inc.
|
$
|
6,412
|
|
|
920
|
|
|
14
|
|
|
267
|
|
|
79
|
|
|
135
|
|
|
237
|
|
|
(5,408
|
)
|
|
$
|
2,655
|
|
|||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(2)(5)
|
$
|
15.08
|
|
|
$
|
2.16
|
|
|
$
|
0.03
|
|
|
$
|
0.63
|
|
|
$
|
0.19
|
|
|
$
|
0.32
|
|
|
$
|
0.56
|
|
|
$
|
(12.72
|
)
|
|
$
|
6.24
|
|
(1)
|
Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.
|
(2)
|
Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data.
|
(4)
|
Non-GAAP adjustment to other income (expense), net includes gains or losses on equity investments, whether realized or unrealized.
|
(5)
|
Calculated based upon 425,235 diluted weighted-average shares for Classes A and B.
|
(6)
|
During the second quarter of fiscal 2020, we completed an intra-group transfer of certain of our intellectual property rights to our Irish subsidiary, where our international business is headquartered. A discrete tax benefit of $4.9 billion was recorded as a deferred tax asset. Due to the impact of the discrete tax benefit of $4.9 billion, the tax rate calculated on a GAAP basis is not considered meaningful.
|
RECONCILIATION OF GAAP TO NON-GAAP DATA
|
|||||||||||||||||||||||||||
For the Twelve Months Ended February 1, 2019
|
|||||||||||||||||||||||||||
(amounts in millions, except per share amounts, and shares in thousands)
|
|||||||||||||||||||||||||||
(unaudited)
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
GAAP(1)
|
|
Stock-Based
Compensation(1) |
|
Employer
Payroll Taxes on Employee Stock Transactions(1) |
|
Intangible
Amortization(1) |
|
Acquisition, Disposition
and Other Items(1) |
|
Tax
Adjustment(1)(2) |
|
Non-GAAP
As Adjusted(1)(3) |
||||||||||||||
Operating expenses(4):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of license revenue
|
$
|
150
|
|
|
(1
|
)
|
|
—
|
|
|
(85
|
)
|
|
—
|
|
|
—
|
|
|
$
|
64
|
|
|||||
Cost of subscription and SaaS revenue
|
$
|
280
|
|
|
(7
|
)
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
—
|
|
|
$
|
184
|
|
|||||
Cost of services revenue
|
$
|
1,122
|
|
|
(58
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
—
|
|
|
$
|
1,058
|
|
|||||
Research and development
|
$
|
2,173
|
|
|
(391
|
)
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
$
|
1,778
|
|
|||||
Sales and marketing
|
$
|
3,230
|
|
|
(226
|
)
|
|
(4
|
)
|
|
(64
|
)
|
|
(1
|
)
|
|
—
|
|
|
$
|
2,935
|
|
|||||
General and administrative
|
$
|
846
|
|
|
(117
|
)
|
|
(1
|
)
|
|
—
|
|
|
(82
|
)
|
|
—
|
|
|
$
|
646
|
|
|||||
Realignment and loss on disposition
|
$
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
$
|
—
|
|
|||||
Operating income
|
$
|
1,803
|
|
|
800
|
|
|
7
|
|
|
241
|
|
|
97
|
|
|
—
|
|
|
$
|
2,948
|
|
|||||
Operating margin(3)
|
18.8
|
%
|
|
8.3
|
%
|
|
0.1
|
%
|
|
2.5
|
%
|
|
1.0
|
%
|
|
—
|
|
|
30.7
|
%
|
|||||||
Investment income (loss)
|
$
|
161
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
$
|
207
|
|
|||||
Other income (expense), net(5)
|
$
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
$
|
9
|
|
|||||
Income before income tax
|
$
|
1,829
|
|
|
800
|
|
|
7
|
|
|
241
|
|
|
153
|
|
|
—
|
|
|
$
|
3,030
|
|
|||||
Income tax provision
|
$
|
239
|
|
|
|
|
|
|
|
|
|
|
247
|
|
|
$
|
486
|
|
|||||||||
Tax rate(3)
|
13.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
16.0
|
%
|
||||||||||||
Net income
|
$
|
1,590
|
|
|
800
|
|
|
7
|
|
|
241
|
|
|
153
|
|
|
(247
|
)
|
|
$
|
2,544
|
|
|||||
Less: Net income (loss) attributable to non-controlling interests
|
$
|
(60
|
)
|
|
69
|
|
|
—
|
|
|
24
|
|
|
(1
|
)
|
|
(6
|
)
|
|
$
|
26
|
|
|||||
Net income attributable to VMware, Inc.
|
$
|
1,650
|
|
|
731
|
|
|
7
|
|
|
217
|
|
|
154
|
|
|
(241
|
)
|
|
$
|
2,518
|
|
|||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(3)(6)
|
$
|
3.92
|
|
|
$
|
1.74
|
|
|
$
|
0.02
|
|
|
$
|
0.51
|
|
|
$
|
0.37
|
|
|
$
|
(0.57
|
)
|
|
$
|
5.98
|
|
(2)
|
Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments, such as adjustments resulting from the 2017 Tax Act. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.
|
(3)
|
Totals may not sum, due to rounding. Operating margin, tax rate and net income per weighted average share information are calculated based upon the respective underlying, non-rounded data.
|
(5)
|
Non-GAAP adjustment to other income (expense), net includes gains or losses on equity investments, whether realized or unrealized.
|
(6)
|
Calculated based upon 421,131 diluted weighted-average shares for Classes A and B.
|
REVENUE BY TYPE
|
||||||||||||||||
(in millions)
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
|
January 31,
|
|
February 1,
|
|
January 31,
|
|
February 1,
|
||||||||
|
|
2020
|
|
2019(1)
|
|
2020
|
|
2019(1)
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||||||
License
|
|
$
|
1,034
|
|
|
$
|
1,027
|
|
|
$
|
3,181
|
|
|
$
|
3,042
|
|
Subscription and SaaS(2)
|
|
556
|
|
|
367
|
|
|
1,877
|
|
|
1,303
|
|
||||
Total license and subscription and SaaS
|
|
1,590
|
|
|
1,394
|
|
|
5,058
|
|
|
4,345
|
|
||||
Services:
|
|
|
|
|
|
|
|
|
||||||||
Software maintenance
|
|
1,235
|
|
|
1,133
|
|
|
4,754
|
|
|
4,351
|
|
||||
Professional services
|
|
248
|
|
|
232
|
|
|
999
|
|
|
917
|
|
||||
Total services
|
|
1,483
|
|
|
1,365
|
|
|
5,753
|
|
|
5,268
|
|
||||
Total revenue
|
|
$
|
3,073
|
|
|
$
|
2,759
|
|
|
$
|
10,811
|
|
|
$
|
9,613
|
|
Percentage of revenue:
|
|
|
|
|
|
|
|
|
||||||||
License
|
|
33.7
|
%
|
|
37.2
|
%
|
|
29.4
|
%
|
|
31.6
|
%
|
||||
Subscription and SaaS(2)
|
|
18.1
|
%
|
|
13.3
|
%
|
|
17.4
|
%
|
|
13.6
|
%
|
||||
Total license and subscription and SaaS
|
|
51.8
|
%
|
|
50.5
|
%
|
|
46.8
|
%
|
|
45.2
|
%
|
||||
Services:
|
|
|
|
|
|
|
|
|
||||||||
Software maintenance
|
|
40.2
|
%
|
|
41.1
|
%
|
|
44.0
|
%
|
|
45.3
|
%
|
||||
Professional services
|
|
8.0
|
%
|
|
8.4
|
%
|
|
9.2
|
%
|
|
9.5
|
%
|
||||
Total services
|
|
48.2
|
%
|
|
49.5
|
%
|
|
53.2
|
%
|
|
54.8
|
%
|
||||
Total revenue
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||||
__________
|
|
|
|
|
|
|
|
|
||||||||
(1) Adjusted to reflect the recast of prior period information due to the Pivotal acquisition, which was accounted for as a transaction between entities under common control.
|
||||||||||||||||
(2) Subscription and SaaS revenue was allocated between license revenue and services revenue in prior year and has been reclassified to conform with current period presentation.
|
REVENUE BY GEOGRAPHY
|
|||||||||||||||
(in millions)
|
|||||||||||||||
(unaudited)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
January 31,
|
|
February 1,
|
|
January 31,
|
|
February 1,
|
||||||||
|
2020
|
|
2019(1)
|
|
2020
|
|
2019(1)
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
1,569
|
|
|
$
|
1,280
|
|
|
$
|
5,405
|
|
|
$
|
4,696
|
|
International
|
1,504
|
|
|
1,479
|
|
|
5,406
|
|
|
4,917
|
|
||||
Total revenue
|
$
|
3,073
|
|
|
$
|
2,759
|
|
|
$
|
10,811
|
|
|
$
|
9,613
|
|
Percentage of revenue:
|
|
|
|
|
|
|
|
||||||||
United States
|
51.1
|
%
|
|
46.4
|
%
|
|
50.0
|
%
|
|
48.9
|
%
|
||||
International
|
48.9
|
%
|
|
53.6
|
%
|
|
50.0
|
%
|
|
51.1
|
%
|
||||
Total revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
(1) Adjusted to reflect the recast of prior period information due to the Pivotal acquisition, which was accounted for as a transaction between entities under common control.
|
RECONCILIATION OF GAAP CASH FLOWS FROM OPERATING ACTIVITIES
|
|||||||||||||||
TO FREE CASH FLOWS
|
|||||||||||||||
(A NON-GAAP FINANCIAL MEASURE)
|
|||||||||||||||
(in millions)
|
|||||||||||||||
(unaudited)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
January 31,
|
|
February 1,
|
|
January 31,
|
|
February 1,
|
||||||||
|
2020
|
|
2019(1)
|
|
2020
|
|
2019(1)
|
||||||||
GAAP cash flows from operating activities
|
$
|
1,085
|
|
|
$
|
1,020
|
|
|
$
|
3,872
|
|
|
$
|
3,657
|
|
Capital expenditures
|
(64
|
)
|
|
(68
|
)
|
|
(279
|
)
|
|
(254
|
)
|
||||
Free cash flows
|
$
|
1,021
|
|
|
$
|
952
|
|
|
$
|
3,593
|
|
|
$
|
3,403
|
|
SUPPLEMENTAL SCHEDULE OF FINANCIAL INFORMATION ADJUSTED FOR PIVOTAL ACQUISITION
|
||||||||
(amounts in millions, except per share amounts, and shares in thousands)
|
||||||||
(unaudited)
|
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||||||||||||||||||||||
|
November 1,
|
|
August 2,
|
|
May 3,
|
|
February 1,
|
|
November 2,
|
|
August 3,
|
|
May 4,
|
|
February 1,
|
|
February 2,
|
||||||||||||||||||
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
2018
|
|
2018
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
License
|
$
|
728
|
|
|
$
|
773
|
|
|
$
|
646
|
|
|
$
|
1,027
|
|
|
$
|
692
|
|
|
$
|
723
|
|
|
$
|
601
|
|
|
$
|
3,042
|
|
|
$
|
2,628
|
|
Subscription and SaaS
|
470
|
|
|
439
|
|
|
411
|
|
|
367
|
|
|
334
|
|
|
308
|
|
|
294
|
|
|
1,303
|
|
|
927
|
|
|||||||||
Services
|
1,458
|
|
|
1,420
|
|
|
1,393
|
|
|
1,365
|
|
|
1,337
|
|
|
1,301
|
|
|
1,264
|
|
|
5,268
|
|
|
4,781
|
|
|||||||||
Total revenue
|
2,656
|
|
|
2,632
|
|
|
2,450
|
|
|
2,759
|
|
|
2,363
|
|
|
2,332
|
|
|
2,159
|
|
|
9,613
|
|
|
8,336
|
|
|||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Cost of license revenue
|
42
|
|
|
38
|
|
|
36
|
|
|
40
|
|
|
37
|
|
|
37
|
|
|
36
|
|
|
150
|
|
|
135
|
|
|||||||||
Cost of subscription and SaaS revenue
|
103
|
|
|
97
|
|
|
94
|
|
|
86
|
|
|
72
|
|
|
65
|
|
|
62
|
|
|
280
|
|
|
200
|
|
|||||||||
Cost of services revenue
|
311
|
|
|
306
|
|
|
299
|
|
|
292
|
|
|
279
|
|
|
279
|
|
|
271
|
|
|
1,122
|
|
|
1,072
|
|
|||||||||
Research and development
|
642
|
|
|
614
|
|
|
590
|
|
|
596
|
|
|
551
|
|
|
528
|
|
|
498
|
|
|
2,173
|
|
|
1,917
|
|
|||||||||
Sales and marketing
|
918
|
|
|
888
|
|
|
868
|
|
|
889
|
|
|
786
|
|
|
772
|
|
|
782
|
|
|
3,230
|
|
|
2,723
|
|
|||||||||
General and administrative
|
269
|
|
|
223
|
|
|
209
|
|
|
258
|
|
|
199
|
|
|
203
|
|
|
185
|
|
|
846
|
|
|
722
|
|
|||||||||
Realignment and loss on disposition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
1
|
|
|
2
|
|
|
9
|
|
|
104
|
|
|||||||||
Operating income
|
371
|
|
|
466
|
|
|
354
|
|
|
598
|
|
|
433
|
|
|
447
|
|
|
323
|
|
|
1,803
|
|
|
1,463
|
|
|||||||||
Investment income (loss)
|
12
|
|
|
14
|
|
|
14
|
|
|
(7
|
)
|
|
63
|
|
|
57
|
|
|
48
|
|
|
161
|
|
|
120
|
|
|||||||||
Interest expense
|
(40
|
)
|
|
(34
|
)
|
|
(34
|
)
|
|
(34
|
)
|
|
(33
|
)
|
|
(34
|
)
|
|
(34
|
)
|
|
(134
|
)
|
|
(74
|
)
|
|||||||||
Other income (expense), net
|
17
|
|
|
41
|
|
|
17
|
|
|
9
|
|
|
(17
|
)
|
|
10
|
|
|
(1
|
)
|
|
(1
|
)
|
|
68
|
|
|||||||||
Income before income tax
|
360
|
|
|
487
|
|
|
351
|
|
|
566
|
|
|
446
|
|
|
480
|
|
|
336
|
|
|
1,829
|
|
|
1,577
|
|
|||||||||
Income tax provision (benefit)
|
(30
|
)
|
|
(4,798
|
)
|
|
(14
|
)
|
|
87
|
|
|
41
|
|
|
64
|
|
|
46
|
|
|
239
|
|
|
1,152
|
|
|||||||||
Net income
|
390
|
|
|
5,285
|
|
|
365
|
|
|
479
|
|
|
405
|
|
|
416
|
|
|
290
|
|
|
1,590
|
|
|
425
|
|
|||||||||
Less: Net loss attributable to non-controlling interests
|
(17
|
)
|
|
(18
|
)
|
|
(15
|
)
|
|
(17
|
)
|
|
(17
|
)
|
|
(17
|
)
|
|
(9
|
)
|
|
(60
|
)
|
|
(12
|
)
|
|||||||||
Net income attributable to VMware, Inc.
|
$
|
407
|
|
|
$
|
5,303
|
|
|
$
|
380
|
|
|
$
|
496
|
|
|
$
|
422
|
|
|
$
|
433
|
|
|
$
|
299
|
|
|
$
|
1,650
|
|
|
$
|
437
|
|
Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic for Classes A and B
|
$
|
0.98
|
|
|
$
|
12.72
|
|
|
$
|
0.91
|
|
|
$
|
1.19
|
|
|
$
|
1.01
|
|
|
$
|
1.04
|
|
|
$
|
0.73
|
|
|
$
|
3.99
|
|
|
$
|
1.07
|
|
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B
|
$
|
0.96
|
|
|
$
|
12.47
|
|
|
$
|
0.89
|
|
|
$
|
1.17
|
|
|
$
|
1.00
|
|
|
$
|
1.03
|
|
|
$
|
0.71
|
|
|
$
|
3.92
|
|
|
$
|
1.04
|
|
Weighted-average shares, basic for Classes A and B
|
416,387
|
|
|
416,983
|
|
|
417,636
|
|
|
417,499
|
|
|
415,930
|
|
|
414,334
|
|
|
409,266
|
|
|
413,769
|
|
|
410,315
|
|
|||||||||
Weighted-average shares, diluted for Classes A and B
|
423,035
|
|
|
425,091
|
|
|
426,697
|
|
|
424,630
|
|
|
422,629
|
|
|
421,421
|
|
|
418,836
|
|
|
421,131
|
|
|
420,887
|
|
|
Three Months Ended November 1, 2019
|
||||||||||||||||
|
GAAP
As Originally Reported |
|
Pivotal
Adjustments |
|
Combined
GAAP As Adjusted(6) |
|
Non-GAAP Adjustments
|
|
Non-GAAP
As Adjusted(6) |
||||||||
Operating income
|
$
|
431
|
|
|
(60
|
)
|
|
$
|
371
|
|
|
386
|
|
(1)
|
$
|
758
|
|
Income tax provision (benefit)
|
45
|
|
|
(75
|
)
|
|
(30
|
)
|
|
147
|
|
(2)
|
118
|
|
|||
Net income attributable to VMware, Inc.
|
$
|
621
|
|
|
(214
|
)
|
|
$
|
407
|
|
|
195
|
|
(3)
|
$
|
602
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(5)(6)
|
$
|
1.50
|
|
|
|
|
$
|
0.96
|
|
|
0.45
|
|
(4)
|
$
|
1.42
|
|
|
Three Months Ended August 2, 2019
|
||||||||||||||||
|
GAAP
As Originally Reported |
|
Pivotal
Adjustments |
|
Combined
GAAP As Adjusted(6) |
|
Non-GAAP Adjustments
|
|
Non-GAAP
As Adjusted(6) |
||||||||
Operating income
|
$
|
523
|
|
|
(57
|
)
|
|
$
|
466
|
|
|
330
|
|
(1)
|
$
|
795
|
|
Income tax provision (benefit)
|
(4,925
|
)
|
|
127
|
|
|
(4,798
|
)
|
|
4,925
|
|
(2)
|
127
|
|
|||
Net income attributable to VMware, Inc.
|
$
|
4,926
|
|
|
377
|
|
|
$
|
5,303
|
|
|
(4,652
|
)
|
(3)
|
$
|
650
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(5)(6)
|
$
|
11.83
|
|
|
|
|
$
|
12.47
|
|
|
(10.94
|
)
|
(4)
|
$
|
1.53
|
|
|
Three Months Ended May 3, 2019
|
||||||||||||||||
|
GAAP
As Originally Reported |
|
Pivotal
Adjustments |
|
Combined
GAAP As Adjusted(6) |
|
Non-GAAP Adjustments
|
|
Non-GAAP
As Adjusted(6) |
||||||||
Operating income
|
$
|
415
|
|
|
(61
|
)
|
|
$
|
354
|
|
|
300
|
|
(1)
|
$
|
654
|
|
Income tax provision (benefit)
|
35
|
|
|
(49
|
)
|
|
(14
|
)
|
|
118
|
|
(2)
|
104
|
|
|||
Net income attributable to VMware, Inc.
|
$
|
505
|
|
|
(125
|
)
|
|
$
|
380
|
|
|
155
|
|
(3)
|
$
|
535
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(5)(6)
|
$
|
1.21
|
|
|
|
|
$
|
0.89
|
|
|
0.35
|
|
(4)
|
$
|
1.25
|
|
|
Three Months Ended February 1, 2019
|
||||||||||||||||
|
GAAP
As Originally Reported |
|
Pivotal
Adjustments |
|
Combined
GAAP As Adjusted(6) |
|
Non-GAAP Adjustments
|
|
Non-GAAP
As Adjusted(6) |
||||||||
Operating income
|
$
|
664
|
|
|
(66
|
)
|
|
$
|
598
|
|
|
342
|
|
(1)
|
$
|
940
|
|
Income tax provision
|
89
|
|
|
(2
|
)
|
|
87
|
|
|
67
|
|
(2)
|
153
|
|
|||
Net income attributable to VMware, Inc.
|
$
|
502
|
|
|
(6
|
)
|
|
$
|
496
|
|
|
299
|
|
(3)
|
$
|
795
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(5)(6)
|
$
|
1.21
|
|
|
|
|
$
|
1.17
|
|
|
0.70
|
|
(4)
|
$
|
1.87
|
|
|
Three Months Ended November 2, 2018
|
||||||||||||||||
|
GAAP
As Originally Reported |
|
Pivotal
Adjustments |
|
Combined
GAAP As Adjusted(6) |
|
Non-GAAP Adjustments
|
|
Non-GAAP
As Adjusted(6) |
||||||||
Operating income
|
$
|
495
|
|
|
(62
|
)
|
|
$
|
433
|
|
|
287
|
|
(1)
|
$
|
720
|
|
Income tax provision
|
11
|
|
|
30
|
|
|
41
|
|
|
79
|
|
(2)
|
120
|
|
|||
Net income attributable to VMware, Inc.
|
$
|
334
|
|
|
88
|
|
|
$
|
422
|
|
|
200
|
|
(3)
|
$
|
622
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(5)(6)
|
$
|
0.81
|
|
|
|
|
$
|
1.00
|
|
|
0.47
|
|
(4)
|
$
|
1.47
|
|
|
Three Months Ended August 3, 2018
|
||||||||||||||||
|
GAAP
As Originally Reported |
|
Pivotal
Adjustments |
|
Combined
GAAP As Adjusted(6) |
|
Non-GAAP Adjustments
|
|
Non-GAAP
As Adjusted(6) |
||||||||
Operating income
|
$
|
509
|
|
|
(62
|
)
|
|
$
|
447
|
|
|
267
|
|
(1)
|
$
|
714
|
|
Income tax provision
|
128
|
|
|
(64
|
)
|
|
64
|
|
|
54
|
|
(2)
|
118
|
|
|||
Net income attributable to VMware, Inc.
|
$
|
644
|
|
|
(211
|
)
|
|
$
|
433
|
|
|
180
|
|
(3)
|
$
|
613
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(5)(6)
|
$
|
1.56
|
|
|
|
|
$
|
1.03
|
|
|
0.42
|
|
(4)
|
$
|
1.45
|
|
|
Three Months Ended May 4, 2018
|
||||||||||||||||
|
GAAP
As Originally Reported |
|
Pivotal
Adjustments |
|
Combined
GAAP As Adjusted(6) |
|
Non-GAAP Adjustments
|
|
Non-GAAP
As Adjusted(6) |
||||||||
Operating income
|
$
|
382
|
|
|
(59
|
)
|
|
$
|
323
|
|
|
248
|
|
(1)
|
$
|
572
|
|
Income tax provision
|
233
|
|
|
(187
|
)
|
|
46
|
|
|
48
|
|
(2)
|
94
|
|
|||
Net income attributable to VMware, Inc.
|
$
|
942
|
|
|
(643
|
)
|
|
$
|
299
|
|
|
189
|
|
(3)
|
$
|
488
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(5)(6)
|
$
|
2.29
|
|
|
|
|
$
|
0.71
|
|
|
0.45
|
|
(4)
|
$
|
1.16
|
|
|
Twelve Months Ended February 1, 2019
|
||||||||||||||||
|
GAAP
As Originally Reported |
|
Pivotal
Adjustments |
|
Combined
GAAP As Adjusted(6) |
|
Non-GAAP Adjustments
|
|
Non-GAAP
As Adjusted(6) |
||||||||
Operating income
|
$
|
2,050
|
|
|
(247
|
)
|
|
$
|
1,803
|
|
|
1,145
|
|
(1)
|
$
|
2,948
|
|
Income tax provision
|
461
|
|
|
(222
|
)
|
|
239
|
|
|
247
|
|
(2)
|
486
|
|
|||
Net income attributable to VMware, Inc.
|
$
|
2,422
|
|
|
(772
|
)
|
|
$
|
1,650
|
|
|
868
|
|
(3)
|
$
|
2,518
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(5)(6)
|
$
|
5.85
|
|
|
|
|
$
|
3.92
|
|
|
2.07
|
|
(4)
|
$
|
5.98
|
|
|
Twelve Months Ended February 2, 2018
|
||||||||||||||||
|
GAAP
As Originally Reported |
|
Pivotal
Adjustments |
|
Combined
GAAP As Adjusted(6) |
|
Non-GAAP Adjustments
|
|
Non-GAAP
As Adjusted(6) |
||||||||
Operating income
|
$
|
1,702
|
|
|
(239
|
)
|
|
$
|
1,463
|
|
|
1,026
|
|
(1)
|
$
|
2,489
|
|
Income tax provision
|
1,155
|
|
|
(3
|
)
|
|
1,152
|
|
|
(627
|
)
|
(2)
|
525
|
|
|||
Net income attributable to VMware, Inc.
|
$
|
659
|
|
|
(222
|
)
|
|
$
|
437
|
|
|
1,578
|
|
(3)
|
$
|
2,016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B(5)(6)
|
$
|
1.59
|
|
|
|
|
$
|
1.04
|
|
|
3.74
|
|
(4)
|
$
|
4.79
|
|
|
February 1, 2019
|
|||||||||
|
GAAP
As Originally Reported
|
|
Pivotal
Adjustments
|
|
Combined
GAAP
As Adjusted
|
|||||
ASSETS
|
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
2,830
|
|
|
702
|
|
|
$
|
3,532
|
|
Short-term investments
|
19
|
|
|
—
|
|
|
19
|
|
||
Accounts receivable, net of allowance for doubtful accounts
|
1,576
|
|
|
147
|
|
|
1,723
|
|
||
Due from related parties, net
|
937
|
|
|
153
|
|
|
1,090
|
|
||
Other current assets
|
289
|
|
|
16
|
|
|
305
|
|
||
Total current assets
|
5,651
|
|
|
1,018
|
|
|
6,669
|
|
||
Property and equipment, net
|
1,133
|
|
|
29
|
|
|
1,162
|
|
||
Other assets
|
1,853
|
|
|
(765
|
)
|
|
1,088
|
|
||
Deferred tax assets
|
103
|
|
|
187
|
|
|
290
|
|
||
Intangible assets, net
|
541
|
|
|
425
|
|
|
966
|
|
||
Goodwill
|
5,381
|
|
|
2,037
|
|
|
7,418
|
|
||
Total assets
|
$
|
14,662
|
|
|
2,931
|
|
|
$
|
17,593
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|
|||||
Accounts payable
|
$
|
135
|
|
|
18
|
|
|
$
|
153
|
|
Accrued expenses and other
|
1,593
|
|
|
71
|
|
|
1,664
|
|
||
Unearned revenue
|
3,968
|
|
|
371
|
|
|
4,339
|
|
||
Total current liabilities
|
5,696
|
|
|
460
|
|
|
6,156
|
|
||
Note payable to Dell
|
270
|
|
|
—
|
|
|
270
|
|
||
Long-term debt
|
3,972
|
|
|
—
|
|
|
3,972
|
|
||
Unearned revenue
|
3,010
|
|
|
90
|
|
|
3,100
|
|
||
Income tax payable
|
889
|
|
|
—
|
|
|
889
|
|
||
Other liabilities
|
274
|
|
|
41
|
|
|
315
|
|
||
Total liabilities
|
14,111
|
|
|
591
|
|
|
14,702
|
|
||
Contingencies
|
|
|
|
|
|
|||||
Stockholders’ equity:
|
|
|
|
|
|
|||||
Class A common stock
|
1
|
|
|
—
|
|
|
1
|
|
||
Class B convertible common stock
|
3
|
|
|
—
|
|
|
3
|
|
||
Additional paid-in capital
|
531
|
|
|
2,428
|
|
|
2,959
|
|
||
Accumulated other comprehensive income (loss)
|
2
|
|
|
(4
|
)
|
|
(2
|
)
|
||
Retained earnings (Accumulated deficit)
|
14
|
|
|
(1,110
|
)
|
|
(1,096
|
)
|
||
Total VMware, Inc. stockholders’ equity
|
551
|
|
|
1,314
|
|
|
1,865
|
|
||
Non-controlling interests
|
—
|
|
|
1,026
|
|
|
1,026
|
|
||
Total stockholders’ equity
|
551
|
|
|
2,340
|
|
|
2,891
|
|
||
Total liabilities and stockholders’ equity
|
$
|
14,662
|
|
|
2,931
|
|
|
$
|
17,593
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||||||||||||||||||||||
|
November 1,
|
|
August 2,
|
|
May 3,
|
|
February 1,
|
|
November 2,
|
|
August 3,
|
|
May 4,
|
|
February 1,
|
|
February 2,
|
||||||||||||||||||
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
2018
|
|
2018
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||
GAAP cash flows from operating activities
|
$
|
751
|
|
|
$
|
641
|
|
|
$
|
1,395
|
|
|
$
|
1,020
|
|
|
$
|
733
|
|
|
$
|
805
|
|
|
$
|
1,101
|
|
|
$
|
3,657
|
|
|
$
|
3,101
|
|
Capital expenditures
|
(52
|
)
|
|
(91
|
)
|
|
(73
|
)
|
|
(68
|
)
|
|
(60
|
)
|
|
(63
|
)
|
|
(63
|
)
|
|
(254
|
)
|
|
(276
|
)
|
|||||||||
Free cash flows
|
$
|
699
|
|
|
$
|
550
|
|
|
$
|
1,322
|
|
|
$
|
952
|
|
|
$
|
673
|
|
|
$
|
742
|
|
|
$
|
1,038
|
|
|
$
|
3,403
|
|
|
$
|
2,825
|
|
|
Three Months Ended November 1, 2019
|
|||||||||
|
As Originally Reported
|
|
Pivotal
Adjustments |
|
Combined
As Adjusted |
|||||
GAAP cash flows from operating activities
|
$
|
810
|
|
|
(59
|
)
|
|
$
|
751
|
|
Capital expenditures
|
(50
|
)
|
|
(2
|
)
|
|
(52
|
)
|
||
Free cash flows
|
$
|
760
|
|
|
(61
|
)
|
|
$
|
699
|
|
|
Three Months Ended August 2, 2019
|
|||||||||
|
As Originally Reported
|
|
Pivotal
Adjustments |
|
Combined
As Adjusted |
|||||
GAAP cash flows from operating activities
|
$
|
699
|
|
|
(58
|
)
|
|
$
|
641
|
|
Capital expenditures
|
(88
|
)
|
|
(3
|
)
|
|
(91
|
)
|
||
Free cash flows
|
$
|
611
|
|
|
(61
|
)
|
|
$
|
550
|
|
|
Three Months Ended May 3, 2019
|
|||||||||
|
As Originally Reported
|
|
Pivotal
Adjustments |
|
Combined
As Adjusted |
|||||
GAAP cash flows from operating activities
|
$
|
1,273
|
|
|
122
|
|
|
$
|
1,395
|
|
Capital expenditures
|
(71
|
)
|
|
(2
|
)
|
|
(73
|
)
|
||
Free cash flows
|
$
|
1,202
|
|
|
120
|
|
|
$
|
1,322
|
|
|
Three Months Ended February 1, 2019
|
|||||||||
|
As Originally Reported
|
|
Pivotal
Adjustments |
|
Combined
As Adjusted |
|||||
GAAP cash flows from operating activities
|
$
|
1,012
|
|
|
8
|
|
|
$
|
1,020
|
|
Capital expenditures
|
(66
|
)
|
|
(2
|
)
|
|
(68
|
)
|
||
Free cash flows
|
$
|
946
|
|
|
6
|
|
|
$
|
952
|
|
|
Three Months Ended November 2, 2018
|
|||||||||
|
As Originally Reported
|
|
Pivotal
Adjustments |
|
Combined
As Adjusted |
|||||
GAAP cash flows from operating activities
|
$
|
769
|
|
|
(36
|
)
|
|
$
|
733
|
|
Capital expenditures
|
(57
|
)
|
|
(3
|
)
|
|
(60
|
)
|
||
Free cash flows
|
$
|
712
|
|
|
(39
|
)
|
|
$
|
673
|
|
|
Three Months Ended August 3, 2018
|
|||||||||
|
As Originally Reported
|
|
Pivotal
Adjustments |
|
Combined
As Adjusted |
|||||
GAAP cash flows from operating activities
|
$
|
787
|
|
|
18
|
|
|
$
|
805
|
|
Capital expenditures
|
(61
|
)
|
|
(2
|
)
|
|
(63
|
)
|
||
Free cash flows
|
$
|
726
|
|
|
16
|
|
|
$
|
742
|
|
|
Three Months Ended May 4, 2018
|
|||||||||
|
As Originally Reported
|
|
Pivotal
Adjustments |
|
Combined
As Adjusted |
|||||
GAAP cash flows from operating activities
|
$
|
1,095
|
|
|
6
|
|
|
$
|
1,101
|
|
Capital expenditures
|
(61
|
)
|
|
(2
|
)
|
|
(63
|
)
|
||
Free cash flows
|
$
|
1,034
|
|
|
4
|
|
|
$
|
1,038
|
|
|
Twelve Months Ended February 1, 2019
|
|||||||||
|
As Originally Reported
|
|
Pivotal
Adjustments |
|
Combined
As Adjusted |
|||||
GAAP cash flows from operating activities
|
$
|
3,663
|
|
|
(6
|
)
|
|
$
|
3,657
|
|
Capital expenditures
|
(245
|
)
|
|
(9
|
)
|
|
(254
|
)
|
||
Free cash flows
|
$
|
3,418
|
|
|
(15
|
)
|
|
$
|
3,403
|
|
|
Twelve Months Ended February 2, 2018
|
|||||||||
|
As Originally Reported
|
|
Pivotal
Adjustments |
|
Combined
As Adjusted |
|||||
GAAP cash flows from operating activities
|
$
|
3,218
|
|
|
(117
|
)
|
|
$
|
3,101
|
|
Capital expenditures
|
(263
|
)
|
|
(13
|
)
|
|
(276
|
)
|
||
Free cash flows
|
$
|
2,955
|
|
|
(130
|
)
|
|
$
|
2,825
|
|
•
|
Stock-based compensation. Stock-based compensation is generally fixed at the time the stock-based instrument is granted and amortized over a period of several years. Although stock-based compensation is an important aspect of the compensation of VMware’s employees and executives, the expense for the fair value of the stock-based instruments VMware utilizes may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of VMware’s core business.
|
•
|
Employer payroll taxes on employee stock transactions. The amount of employer payroll taxes on stock-based compensation is dependent on VMware’s stock price and other factors that are beyond VMware’s control and do not correlate to the operation of the business.
|
•
|
Amortization of acquired intangible assets. A portion of the purchase price of VMware’s acquisitions is generally allocated to intangible assets, such as intellectual property, and is subject to amortization. However, VMware does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition’s purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition. Therefore, VMware believes that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods.
|
•
|
Realignment charges. Realignment charges include workforce reductions, asset impairments, losses on asset disposals and costs to exit facilities. VMware’s management believes it is useful to exclude these items, when significant, as they are not reflective of VMware’s core business and operating results.
|
•
|
Acquisition, disposition and other items. As VMware does not acquire or dispose of businesses on a predictable cycle and the terms of each transaction can vary significantly and are unique to each transaction, VMware believes it is useful to exclude acquisition, disposition and other items when looking for a consistent basis for comparison across accounting periods. These items include:
|
•
|
Direct costs of acquisitions and dispositions, such as transaction and advisory fees.
|
•
|
Costs associated with integrating acquired businesses.
|
•
|
Accruals for the portion of merger consideration payable in installments that may be paid in cash or VMware stock, at the option of VMware.
|
•
|
Gains or losses on equity investments, whether realized or unrealized.
|
•
|
Charges recognized for non-recoverable strategic investments or gains recognized on the disposition of strategic investments.
|
•
|
Gains or losses on sale or disposal of distinct lines of business or product offerings, or transactions with features similar to discontinued operations, including recoveries or charges recognized to adjust the fair value of assets that qualify as “held for sale.”
|
•
|
Certain litigation and other contingencies. VMware, from time to time, may incur charges or benefits that are outside of the ordinary course of VMware’s business related to litigation and other contingencies. VMware believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of VMware’s business and because of the singular nature of the claims underlying such matters.
|
•
|
Gain or loss on share repurchase. In December 2016, VMware entered into a stock purchase agreement with Dell and Dell’s wholly-owned subsidiary, EMC Equity Assets LLC, pursuant to which VMware agreed to purchase $500 million of VMware Class A common stock. The derivative asset was measured at fair value on a recurring basis and resulted in the recognition of gains and losses, which were recorded to other income (expense), net on the condensed consolidated statements of income. On February 15, 2017, the stock purchase agreement with Dell was completed. VMware’s management believes it is useful to exclude the mark-to-market adjustment on the derivative asset, as it is not reflective of VMware’s core business and operating results.
|
•
|
Tax adjustment. Non-GAAP financial information for the quarter is adjusted for a tax rate equal to VMware’s annual estimated tax rate on non-GAAP income. This rate is based on VMware’s estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating VMware’s non-GAAP income as well as significant tax adjustments. VMware’s estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that VMware management believes materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses, changes to our corporate structure and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to VMware’s estimated annual tax rates as described above, the estimated tax rate on non-GAAP income may differ from the GAAP tax rate and from VMware’s actual tax liabilities.
|