VMware 2010 Annual Report Download - page 91

Table of Contents
VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table summarizes the net carrying values of the tangible and intangible assets and liabilities transferred to VMware and the
capital contribution from EMC, as of the transfer date, and exclude the subsequent contingent consideration paid referenced above (table in
thousands):
Fiscal Year 2009
On September 15, 2009, VMware acquired all of the remaining outstanding capital stock of SpringSource Global, Inc. (“SpringSource”),
under the terms of an Agreement and Plan of Merger entered into in August 2009. The SpringSource acquisition was accounted for as a business
combination.
The aggregate consideration transferred to acquire SpringSource was $389.2 million, which included cash of $373.0 million and the fair
value of stock options assumed attributed to pre-combination services of $16.2 million. In addition, the Company assumed stock options
attributed to post-combination services and issued restricted common stock with a total fair value of $44.6 million.
In accordance with the merger agreement, the number of VMware stock options into which assumed SpringSource stock options were
converted and the number of shares of restricted common stock that were issued were determined based on a ratio. The ratio was derived from
the per share merger consideration payable to holders of SpringSource capital stock and the ten-day trading average of VMware’s Class A
common stock two trading days immediately prior to September 15, 2009. The assumed vested and unvested stock options converted into
652,253 and 476,081, respectively, of VMware stock options to purchase Class A common stock with a weighted-average exercise price of
$4.87 per share. In addition, 572,492 shares of VMware Class A restricted common stock were issued to certain employees of SpringSource who
agreed to accept shares of VMware Class A common stock subject to vesting restrictions in lieu of a portion of their cash merger proceeds. The
shares are subject to vesting restrictions based upon continued employment with VMware. Subject to meeting the vesting requirements, the
holders of the shares will receive a guaranteed minimum value that is equivalent to the portion of their cash merger proceeds foregone to receive
the shares. To the extent that the fair value of the shares is less than the guaranteed minimum value, the difference will be paid in cash upon
vesting. At December 31, 2010, the fair value of shares exceeded the minimum value guarantee.
The Company included the fair value of the stock options assumed by VMware attributed to pre-combination services of $16.2 million in
the consideration transferred for the acquisition. The fair value of the stock options attributed to post-combination services and the fair value of
the restricted common stock of $44.6 million were not included in the consideration transferred and are being recognized as stock-based
88
Property and equipment
$
3,092
Other assets
1,383
Deferred tax asset
48,618
Intangible assets
37,029
Goodwill
275,260
Total tangible and intangible assets acquired
365,382
Unearned revenue
(17,990
)
Deferred tax liabilities
(2,888
)
Other liabilities
(1,638
)
Capital contribution from EMC
(167,866
)
Total liabilities assumed and capital received
(190,382
)
Tangible and intangible assets acquired and liabilities assumed, and capital received
$
175,000