VMware 2011 Annual Report Download - page 83

Table of Contents VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table summarizes the allocation of the consideration paid to the fair value of the tangible and intangible assets acquired and
liabilities assumed in the year ended December 31, 2010 (table in thousands):
Transfer of Net Assets Under Common Control
In April 2010, VMware acquired certain software product technology and expertise from EMC’s Ionix information technology (“IT”)
management business for cash consideration of $175.0 million . The acquired software product technology and expertise complemented
VMware’s existing development efforts and expanded its vCenter product family. EMC retained the Ionix brand and continues to offer
customers the products acquired by VMware, pursuant to the ongoing reseller agreement between EMC and VMware. Additionally, contingent
amounts totaling up to $25.0 million were payable to EMC by the end of the second anniversary of the transfer. These amounts were contingent
on EMC achieving certain revenue milestones. During the years ended December 31, 2011 and 2010 , contingent consideration of $14.4 million
and $10.6 million , respectively, was paid to EMC. These amounts were recorded as equity transactions and were offsets to the initial capital
contribution from EMC.
The net assets and expertise acquired from EMC constituted a business and were accounted for as a business combination between entities
under common control pursuant to generally accepted accounting principles. Accordingly, VMware included the carrying values of the
transferred assets and liabilities as of the date of transfer in its consolidated financial statements, as well as recorded the excess of the carrying
values over the cash consideration as an equity transaction. VMware did not revise its historical consolidated financial statements as the
historical impact of the acquired net assets was not material to the previously reported financial positions, results of operations, or cash flows.
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
Other current assets
$
6,328
Intangible assets
114,100
Goodwill
178,160
Deferred tax assets
48,323
Total tangible and intangible assets acquired
346,911
Unearned revenue
(21,425
)
Deferred tax liabilities
(30,103
)
Accrued liabilities and other
(2,413
)
Total liabilities assumed
(53,941
)
Fair value of tangible and intangible assets acquired and liabilities assumed
$
292,970
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