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Table of Contents
VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
H. Note Payable to EMC
In April 2007, VMware declared an $800.0 million dividend to EMC paid in the form of a note payable, of which $450.0 million remained
outstanding as of December 31, 2010. The note matures in April 2012, with interest payable quarterly in arrears commencing June 30, 2007. The
interest rate resets quarterly and bears an interest rate of the 90-day LIBOR plus 55 basis points. In the years ended December 31, 2010, 2009
and 2008, $4.1 million, $6.5 million and $18.6 million, respectively, of interest expense was recorded related to the note payable. The note may
be repaid, without penalty, at any time commencing July 2007. No repayments of principal were made during 2010 and 2009.
I. Income Taxes
The domestic and foreign components of income before provisions for income taxes were as follows (table in thousands):
VMware’s provision for income taxes consisted of the following (table in thousands):
A reconciliation of VMware’s income tax rate to the statutory federal tax rate is as follows:
93
For the Year Ended December 31,
2010
2009
2008
Domestic
$
127,293
$
31,690
$
63,588
International
289,082
191,759
255,697
Total
$
416,375
$
223,449
$
319,285
For the Year Ended December 31,
2010
2009
2008
Federal:
Current
$
65,796
$
41,114
$
(27,524
)
Deferred
(42,158
)
(35,908
)
38,348
23,638
5,206
10,824
State:
Current
15,496
6,070
(824
)
Deferred
(9,055
)
(3,630
)
4,044
6,441
2,440
3,220
Foreign:
Current
34,592
19,643
18,592
Deferred
(5,735
)
(938
)
(3,484
)
28,857
18,705
15,108
Total provision for income taxes
$
58,936
$
26,351
$
29,152
For the Year Ended
December 31,
2010
2009
2008
Statutory federal tax rate
35.0
%
35.0
%
35.0
%
State taxes, net of federal benefit
1.5
%
1.1
%
1.0
%
Tax rate differential for international jurisdictions
(17.3
%)
(21.5
%)
(23.3
%)
U.S. tax credits
(8.6
%)
(8.5
%)
(6.7
%)
Permanent items and other
3.6
%
5.7
%
3.1
%
Effective tax rate
14.2
%
11.8
%
9.1
%