VMware 2011 Annual Report Download - page 55

Table of Contents
Investing Activities
Cash used in investing activities is primarily attributable to the purchase of fixed income securities, business acquisitions, capital
expenditures and capitalized software development costs. Cash provided by investing activities is primarily attributable to the sales or maturities
of fixed income securities.
In 2011, we closed an agreement to purchase all of the right, title and interest in a ground lease covering the property and improvements
located adjacent to our existing Palo Alto, California campus for $225.0 . Based upon the respective fair values, $73.9 of the purchase price was
included within additions to property and equipment, and the remaining $151.1 paid and attributed to the intangible assets was separately
disclosed within net cash used in investing activities on the consolidated statement of cash flows. Refer to Note G to the consolidated financial
statements for further information. Our renovation of the new property will be a multi-year project with capital investment extending into future
periods. We expect our capital spending for this project will be approximately $150 in 2012, and our total capital spending will be approximately
$325 to $350.
We began investing in fixed income securities during the second quarter of 2010 to achieve our objective of an appropriate investment
return consistent with the preservation of principal and management of risk. Total fixed income securities of $2,667.9 and $2,101.9 were
purchased in 2011 and 2010 , respectively. All purchases of fixed income securities were classified as cash outflows from investing activities.
We classified these investments as short-term investments on our consolidated balance sheets based upon the nature of the security and their
availability for use in current operations or for other purposes, such as business acquisitions and strategic investments. These cash outflows were
partially offset by cash inflows of $1,790.8 and $516.3 in 2011 and 2010 , respectively, as a result of the sales and maturities of fixed income
securities.
In 2011, we sold our investment in Terremark Worldwide, Inc., which was acquired by Verizon in a cash transaction, for $76.0.
In 2011 and 2010 , we paid $303.6 and $293.0 , respectively, for various business acquisitions as compared with $356.3 paid for
SpringSource in 2009. Business acquisitions are an important element in our industry and we expect to continue to consider additional strategic
business acquisitions in the future. Refer to Note F to the consolidated financial statements for further information.
In 2010 , we paid $175.0 to EMC to acquire certain software product technology and expertise from their Ionix IT management business.
The net assets and expertise acquired from EMC constituted a business and were accounted for as a business combination between entities under
common control. During 2011 and 2010 , we paid $14.4 and $10.6 to EMC to satisfy contingent obligations under the asset purchase agreement.
As of December 31, 2011, all contingent payments under the agreement had been made. Refer to Note O to the consolidated financial statements
for further information.
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 $337.6 , $431.3 and $227.7 in 2011 , 2010 and 2009 , respectively.
In 2011 , the cash inflows were offset by cash outflows of $526.2 , including commissions, to repurchase and retire 6.0 million shares of our
Class A common stock at a weighted-average price of $88.37 per share as part of our stock repurchase programs. In February 2011, a committee
of our Board of Directors authorized the repurchase of up to $550.0 of our Class A common stock through the end of 2012. From time-to-time,
stock repurchases may be made pursuant to the February 2011 authorization in open market transactions or privately negotiated transactions as
permitted by securities laws and other legal requirements. In 2010 , we paid $338.5 , including commissions, to repurchase and retire 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 approved in March
2010. Purchases under the March 2010 authorization were completed in March 2011. We are not obligated to purchase any shares under our
stock repurchase programs. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors,
including our stock price, corporate and regulatory requirements and other market and economic conditions. Purchases can be discontinued at
any time that we feel that additional purchases are not warranted. As of December 31, 2011 , the authorized amount remaining for repurchase
was $85.3 .
There were additional cash outflows of $123.8 , $86.2 and $31.5 in 2011 , 2010 and 2009
, respectively, 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 $224.5 , $223.4 and $26.2 in 2011 , 2010 and 2009 , 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 changes in the repurchase of shares and the
excess tax benefit from stock-based compensation in 2011 and 2010 were primarily due to the increases 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
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