VMware 2013 Annual Report Download - page 85

Table of Contents VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
M. Commitments and Contingencies
Litigation
VMware is subject to legal, administrative and regulatory proceedings, claims, demands and investigations in the ordinary course of business, including
claims with respect to commercial, product liability, intellectual property, employment, class action, whistleblower and other matters. In the ordinary course
of business, VMware also receives inquiries from and has ongoing discussions with government entities regarding the compliance of its contracting and sales
practices with laws and regulations. VMware accrues for a liability when and if a determination has been made that a loss is both probable of occurrence and
the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to
whether a loss is reasonably estimable. VMware considers the impact of negotiations, settlements, rulings, advice of legal counsel and other information and
events pertaining to a particular matter. As of December 31, 2013 and December 31, 2012, the amounts accrued were not material. To the extent there is a
reasonable possibility that the losses could exceed the amounts already accrued, management believes that the amount of any such additional loss would also
be immaterial to VMware’s consolidated financial position, results of operations and cash flows.
Operating Lease Commitments
VMware leases office facilities and equipment under various operating leases. Facility leases generally include renewal options. Rent expense for the
years ended December 31, 2013 , 2012 and 2011 was $67 million , $62 million and $56 million , respectively. VMware’s minimum future lease
commitments at December 31, 2013 were as follows (table in millions):
The amount of the future lease commitments after 2018 is primarily for the ground leases on VMware’s Palo Alto, California headquarter facilities,
which expire in 2046 . As several of VMware’s operating leases are payable in foreign currencies, the operating lease payments may fluctuate in response to
changes in the exchange rate between the U.S. dollar and the foreign currencies in which the commitments are payable.
Outstanding Obligations
At December 31, 2013 , VMware had various contractual commitments aggregating $87 million .
Guarantees and Indemnification Obligations
VMware enters into agreements in the ordinary course of business with, among others, customers, distributors, resellers, system vendors and systems
integrators. Most of these agreements require VMware to indemnify the other party against third-party claims alleging that a VMware product infringes or
misappropriates a patent, copyright, trademark, trade secret, and/or other intellectual property right. Certain of these agreements require VMware to
indemnify the other party against certain claims relating to property damage, personal injury, or the acts or omissions of VMware, its employees, agents, or
representatives.
VMware has agreements with certain vendors, financial institutions, lessors and service providers pursuant to which VMware has agreed to indemnify
the other party for specified matters, such as acts and omissions of VMware, its employees, agents, or representatives.
VMware has procurement or license agreements with respect to technology that it has obtained the right to use in VMware’s products and agreements.
Under some of these agreements, VMware has agreed to indemnify the supplier for certain claims that may be brought against such party with respect to
VMware’s acts or omissions relating to the supplied products or technologies.
VMware has agreed to indemnify the directors and executive officers of VMware, to the extent legally permissible, against all liabilities reasonably
incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or executive
officer. VMware’s by-laws and charter also provide for indemnification
82
2014
$
58
2015
53
2016
43
2017
36
2018
32
Thereafter
564
Total minimum lease payments
$
786