VMware 2010 Annual Report Download - page 105

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Table of Contents
VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The VMware restricted stock unit awards are valued based on the VMware stock price on the date of grant. Shares underlying restricted
stock unit awards are not issued until the restricted stock units vest. The majority of VMware’s restricted stock unit awards have pro rata vesting
over three or four years.
VMware Shares Repurchased for Tax Withholdings
During the years ended December 31, 2010, 2009 and 2008, VMware repurchased or withheld and retired 1,257,967 shares, 1,029,581
shares and 826,731 shares of Class A common stock for $87.1 million, $31.5 million and $44.5 million, respectively, to cover tax withholding
obligations. As of December 31, 2010, $0.9 million of tax withholding obligations were recorded as a liability on the consolidated balance sheet.
Pursuant to the respective agreements, these shares were repurchased or withheld in conjunction with the net share settlement upon the vesting of
restricted stock and restricted stock units during the period. The amount of repurchased or withheld shares, including restricted stock units, was
classified as a reduction to additional paid-in capital as of December 31, 2010, 2009 and 2008, respectively.
Stock
-Based Compensation Expense
The following table summarizes the components of total stock-based compensation expense included in VMware’
s consolidated statements
of income for the years ended December 31, 2010, 2009 and 2008 (table in thousands):
For the years ended December 31, 2010, 2009 and 2008, VMware capitalized $10.9 million, $14.9 million and $22.7 million, respectively,
of stock-based compensation expense associated with capitalized software development.
As of December 31, 2010, the total unrecognized compensation cost for stock options and restricted stock was $595.8 million. This non-
cash expense will be recognized through 2015 with a weighted-average remaining period of 1.3 years.
102
For the Year Ended December 31,
2010
2009
2008
Cost of license revenues
$
1,653
$
1,293
$
1,120
Cost of services revenues
18,478
14,874
13,485
Research and development
164,435
121,770
77,992
Sales and marketing
73,146
58,610
49,762
General and administrative
33,979
34,909
24,157
Stock
-
based compensation expense
291,691
231,456
166,516
Income tax benefit
94,110
43,170
33,020
Total stock
-
based compensation expense, net of tax
$
197,581
$
188,286
$
133,496