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Table of Contents
VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Contractual Maturities
The contractual maturities of investments held at December 31, 2010 consisted of the following (table in thousands):
D. Fair Value Measurements and Derivative Instruments
Fair Value Measurements
Generally accepted accounting principles provide that fair value is an exit price, representing the amount that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that
is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such
assumptions, generally accepted accounting principles established a three-
tier value hierarchy, which prioritizes the inputs used in measuring fair
value as follows: (Level 1) inputs are quoted prices in active markets for identical assets or liabilities; (Level 2) inputs other than the quoted
prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly; and (Level 3) unobservable inputs for
the assets or liabilities in which there is little or no market data, which requires VMware to develop its own assumptions.
VMware’s Level 1 classification of the fair value hierarchy includes money market funds, available-for-sale equity securities and certain
available-for-sale fixed income securities because these securities are valued using quoted prices in active markets for identical assets.
VMware’s Level 2 classification includes the remainder of the available-for-
sale fixed income securities because these securities are priced using
quoted market prices for similar instruments and non-binding market prices that are corroborated by observable market data.
The following table sets forth the fair value hierarchy of VMware’s money market funds and available-for-sale securities, including those
securities classified within cash and cash equivalents on the consolidated balance sheet, that were required to be measured at fair value as of
December 31, 2010 (table in thousands):
85
Amortized
Cost Basis
Aggregate
Fair Value
Due within one year
$
753,201
$
753,370
Due after 1 year through 5 years
776,933
776,635
Due after 5 years
112,870
112,870
Total
$
1,643,004
$
1,642,875
Level 1
Level 2
Total
Money
-
market funds
$
1,436,319
$
—
$
1,436,319
U.S. government and agency obligations
66,762
312,543
379,305
U.S. and foreign corporate debt securities
—
537,544
537,544
Foreign governments and multi
-
national agency obligations
—
63,161
63,161
Municipal obligations
—
659,487
659,487
Asset
-
backed securities
—
55,749
55,749
Equity securities
51,800
—
51,800
Total cash equivalents and investments
$
1,554,881
$
1,628,484
$
3,183,365