VMware 2010 Annual Report Download - page 62

Table of Contents
During 2010, we paid $293.0 for various business acquisitions as compared with $356.3 paid for SpringSource in 2009 and $138.6 for
various acquisitions in 2008. Business acquisitions are an important element in our industry and we expect to continue to consider additional
strategic acquisitions in the future.
Financing Activities
Proceeds from the issuance of our Class A common stock from the exercise of stock options and the purchase of shares under the VMware
Employee Stock Purchase Plan (“ESPP”), were $431.3, $227.7 and $190.1 in 2010, 2009 and 2008, respectively. In 2009, the timing of
purchases under our ESPP was amended and, as a result, we completed two ESPP purchases of shares in 2010 with aggregate proceeds of $45.1,
while in 2009 we completed one ESPP purchase with proceeds of $18.3.
In 2010, the cash inflows were partially offset by cash outflows of $338.5 in 2010 to repurchase shares of our Class A common stock as
part of our stock repurchase program. In March 2010, our Board of Directors approved a stock repurchase program, authorizing the purchase of
up to $400.0 of our Class A common stock through the end of 2011. From time-to-time, subject to market conditions, stock is purchased
pursuant to this program in the open market or through private transactions as permitted by securities laws and other legal requirements. In 2010,
we repurchased and retired 4.9 million shares of our Class A common stock at a weighted-average price of $68.96 per share under the stock
repurchase program that we announced in March 2010. As of December 31, 2010, authorized funds of $61.6 remained available under the stock
repurchase program.
There were additional cash outflows of $86.2, $31.5 and $44.5 in 2010, 2009 and 2008, respectively, to repurchase shares of our Class A
common stock to cover tax withholding obligations in conjunction with the net share settlement upon the vesting of restricted stock units and
restricted stock. Additionally, the excess tax benefit from stock-based compensation was $223.5, $26.2 and $85.8 in 2010, 2009 and 2008,
respectively, and is shown as a reduction to cash flows from operating activities and an increase to cash flows from financing activities. The
year
-over-year change in the repurchase of shares and the excess tax benefit from stock-based compensation in 2010 was primarily due to the
increase in the market value of our stock and the number of awards exercised, sold or vested. The year-over-year change in the repurchase of
shares and the excess tax benefit from stock-based compensation in 2009 was primarily due to the decline in the market value of our stock and
the number of awards exercised, sold, or vested.
Future cash proceeds from issuances of common stock and the excess tax benefit from stock-based compensation and future cash outflows
to repurchase our shares to cover tax withholding obligations will depend upon, and could fluctuate significantly from period-to-period based on
the market value of our stock, the number of awards exercised, sold or vested, the tax benefit realized and the tax-affected compensation
recognized.
To date, inflation has not had a material impact on our financial results.
Non-GAAP Financial Measures
Regulation S-K Item 10(e), “Use of Non-GAAP Financial Measures in Commission Filings,” defines and prescribes the conditions for use
of non-GAAP financial information. Our measures of core operating expenses, non-GAAP operating cash flows and free cash flows each meet
the definition of a non-GAAP financial measure.
Core Operating Expenses
Management uses the non-GAAP measure of core operating expenses to understand and compare operating results across accounting
periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, to calculate bonus payments and to evaluate
our financial performance, the performance of its individual functional groups and the ability of operations to generate cash. Management
believes that core
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