VMware 2010 Annual Report Download - page 95

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Table of Contents
VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F. Property and Equipment, Net
Property and equipment, net, as of December 31, 2010 and 2009 consisted of the following (table in thousands):
Depreciation expense was $114.2 million, $102.3 million and $89.5 million in the years ended December 31, 2010, 2009 and 2008,
respectively.
In conjunction with the completion of portions of its Washington data center facility, VMware increased the estimated useful lives of
certain fixed assets from 3 to 5 years during the second quarter of 2009. This change in estimate was prospectively applied beginning on April 1,
2009. In the year ended December 31, 2009, this change in estimate reduced depreciation expense by $10.7 million. After considering the tax
effect on the reduction in depreciation expense, there was a $0.02 impact on basic and diluted earnings per share in the year ended December 31,
2009. In the second quarter of 2008, VMware increased the estimated useful lives of computers and other related equipment from 2 years to 3
years to match the length of the related warranty contracts. In the year ended December 31, 2008, these changes in estimates reduced
depreciation expense by $10.4 million and increased both basic and diluted earnings per share by $0.02, from what would have been reported
otherwise in the year ended December 31, 2008. VMware reviewed and revised the useful lives of these fixed assets in 2009 and 2008 after
considering (i) the estimated future benefits the Company expects to receive from those assets, (ii) the pattern of consumption of those benefits
and (iii) the information available regarding those benefits.
G. Accrued Expenses and Other
Accrued expenses as of December 31, 2010 and 2009 consisted of the following (table in thousands):
Accrued partner liabilities relate to rebates and marketing development fund accruals for channel partners, system vendors and systems
integrators, as well as accrued royalties.
92
December 31,
2010
2009
Equipment and software
$
438,384
$
327,148
Buildings and improvements
270,786
256,758
Furniture and fixtures
52,613
48,075
Construction in progress
3,082
5,892
Total property and equipment
764,865
637,873
Accumulated depreciation
(345,800
)
(235,517
)
Total property and equipment, net
$
419,065
$
402,356
December 31,
2010
2009
Salaries, commissions, bonuses and benefits
$
242,180
$
174,207
Accrued partner liabilities
94,676
77,264
Other
122,957
83,052
Total accrued expenses
$
459,813
$
334,523