VMware 2013 Annual Report Download - page 52

Table of Contents
Liquidity and Capital Resources
At December 31, 2013 and 2012 , we held cash, cash equivalents and short-term investments as follows:
As of December 31, 2013 , we held a diversified portfolio of money market funds and fixed income securities totaling $5,692 . Our fixed income
securities are denominated in U.S. Dollars and consisted of highly liquid debt instruments of the U.S. government and its agencies, U.S. municipal
obligations, and U.S. and foreign corporate debt securities. We limit the amount of our domestic and international investments with any single issuer and any
single financial institution, and also monitor the diversity of the portfolio, thereby diversifying the credit risk. As of December 31, 2013 , our total cash, cash
equivalents and short-term investments were $6,175 , of which $4,146
was held outside the U.S. If these overseas funds were needed for our operations in the
U.S., we would be required to accrue and pay U.S. taxes on related undistributed earnings to repatriate these funds. However, our intent is to indefinitely
reinvest our non-U.S. earnings in our foreign operations and our current plans do not demonstrate a need to repatriate them to fund our U.S. operations.
We expect that cash generated by operations will be used as our primary source of liquidity. We also believe that existing cash and cash equivalents,
together with any cash generated from operations will be sufficient to meet normal operating requirements for at least the next twelve months. While we
believe our existing cash and cash equivalents and cash to be generated by operations will be sufficient to meet our normal operating requirements, our
overall level of cash needs may be impacted by the number and size of acquisitions and investments we consummate and the amount of stock we buy back in
2013. On January 21, 2014 , in connection with our agreement to acquire A.W.S. Holding, LLC (“AirWatch Holding”),
the sole member and equity holder of
AirWatch LLC (“AirWatch”), we and EMC entered into a note exchange agreement providing for the issuance of three promissory notes in the aggregate
principal amount of $1,500 . Please see below for further details regarding these promissory notes. Should we require additional liquidity, we may seek to
arrange debt financing or enter into credit facilities.
Our cash flows for years ended 2013 , 2012 and 2011 were as follows:
Operating Activities
Cash provided by operating activities increased by $638 in 2013 from 2012 primarily as a result of increased profitability. The net effect of non-cash
items was an increase of $197 primarily due to movements associated with excess tax benefits from stock-based compensation and deferred taxes, net.
Cash provided by operating activities decreased by $128 in 2012 from 2011 . The decrease was primarily driven by the timing of tax payments we
received from EMC under the tax sharing agreement. Under the tax sharing agreement, EMC is obligated to pay us an amount equal to the tax benefit
generated by us and we are obligated to pay EMC an amount equal to the tax expense generated by us that EMC may recognize in a given year on its
consolidated tax return. In 2012, we received $19 from EMC under the tax sharing agreement, but in 2011 we benefited from the net receipt of $302, which
included amounts primarily related to refunds received for both the 2011 and 2010 tax years.
Investing Activities
Cash used in investing activities is generally attributable to the purchase of fixed income securities, business acquisitions, and capital expenditures. Cash
provided by investing activities is also impacted by the timing of purchases, sales and maturities of our available-for-sale securities.
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December 31,
2013 2012
Cash and cash equivalents
$
2,305
$
1,609
Short-term investments
3,870
3,022
Total cash, cash equivalents and short-term investments
$
6,175
$
4,631
For the Year Ended December 31,
2013
2012 2011
Net cash provided by (used in):
Operating activities
$
2,535
$
1,897
$
2,026
Investing activities
(1,472
)
(2,035
)
(1,611
)
Financing activities
(367
)
(209
)
(88
)
Net increase (decrease) in cash and cash equivalents
$
696
$
(347
)
$
327