VMware 2013 Annual Report Download - page 76

Table of Contents VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Goodwill
The following table summarizes the changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2012 (table in millions):
The deferred tax adjustments relate to the finalization of the fair value estimates for certain acquisitions.
C. Realignment Charges
Realignment Plan
In January 2013, VMware approved and initiated a business realignment plan to streamline its operations. As of the second quarter of 2013, the plan had
been substantially completed.
The realignment plan included the elimination of approximately 710 positions and personnel across all major functional groups and geographies. The
total cash and non-cash charge of $54 million for workforce reductions was recorded on the consolidated statements of income for the year ended
December 31, 2013 . In connection with the realignment plan, VMware also recognized other cash and non-cash costs of $14 million primarily associated
with asset impairments during the year ended December 31, 2013 . Substantially all of the cash-related expenses incurred in connection with the business
realignment plan have been paid as of December 31, 2013 .
The following table summarizes the activity for the accrued realignment charges for the year ended December 31, 2013 (table in millions):
Other Related Activities
In connection with VMware's business realignment plan, VMware recognized cumulative pre-tax gains of $44 million during the year ended
December 31, 2013 relating to the disposition of certain business activities that were no longer aligned with VMware's core business priorities. The gains
recognized in connection with these dispositions were recorded to other income (expense), net on the consolidated statements of income for the year ended
December 31, 2013 .
D. Earnings per Share
Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period.
Diluted net income per share is computed by dividing net income by the weighted-average number of common shares outstanding and potentially dilutive
securities outstanding during the period, as calculated using the treasury stock method. Potentially dilutive securities primarily include unvested restricted
stock units, stock options and purchase options under VMware’s employee stock purchase plan. Securities are excluded from the computations of diluted net
income per share if their effect would be anti-dilutive. VMware uses the two-class method to calculate earnings per share as both classes share the same
rights in dividends, therefore basic and diluted earnings per share are the same for both classes.
73
December 31,
2013
2012
Balance, beginning of the year
$
2,848
$
1,759
Increase in goodwill related to business combination
233
1,092
Contribution to Pivotal (see Note O)
(28
)
—
Reduction related to disposition of certain business activities
(4
)
—
Deferred tax adjustments to purchase price allocations on acquisitions
(20
)
(4
)
Other adjustments to purchase price allocations on acquisitions
(2
)
1
Balance, end of the year
$
3,027
$
2,848
For the Year Ended December 31, 2013
Balance as of
January 1, 2013
Realignment
Charges
Utilization
Balance as of
December 31, 2013
Non-Cash Portion
of Utilization
Workforce reductions
$
—
$
54
$
(54
)
$
—
$
(
6
)
Asset impairments, exit of facilities and other exit
costs
—
14
(11
)
3
(9
)
Total
$
—
$
68
$
(65
)
$
3
$
(15
)