VMware 2014 Annual Report Download - page 99

Download and view the complete annual report

Please find page 99 of the 2014 VMware annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

Table of Contents VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The weighted-average grant date fair value of VMware stock options can fluctuate from period to period primarily due to higher valued
options assumed through business combinations with exercise prices lower than the fair market value of VMware’s stock on the date of grant.
For equity awards granted during the years ended December 31, 2014 , 2013 and 2012 , volatility was based on an analysis of historical
stock prices and implied volatilities of VMware’s Class A common stock or those of publicly-traded companies with similar characteristics, as
applicable. The expected term is based on historical exercise patterns and post-vesting termination behavior, the term of the purchase period for
grants made under the ESPP, or the weighted-average remaining term for options assumed in acquisitions. VMware’s expected dividend yield
input was zero as it has not historically paid, nor expects in the future to pay, cash dividends on its common stock. The risk-free interest rate was
based on a U.S. Treasury instrument whose term is consistent with the expected term of the stock options.
Accumulated Other Comprehensive Income
The changes in components of accumulated other comprehensive income during the years ended December 31, 2014 and 2013 were as
follows (table in millions):
Gains on VMware’s available-for-sale securities are reclassified to investment income on the consolidated statements of income in the same
period that they are realized.
The effective portion of gains (losses) resulting from changes in the fair value of forward contracts designated as cash flow hedging
instruments are reclassified to its related operating expense line item on the consolidated statements of income in the same period that the
underlying expenses are incurred. The amounts recorded to their related operating expense line items on the consolidated statements of income
during the years ended December 31, 2014 and 2013 , were not material.
N. Related Parties
The information provided below includes a summary of the transactions entered into with EMC and EMC’s consolidated subsidiaries
(collectively “EMC”), including VCE Company LLC (“VCE”) from the date EMC acquired its controlling interest in VCE through
December 31, 2014 .
94
For the Year Ended December 31,
VMware Employee Stock Purchase Plan 2014
2013
2012
Dividend yield
None
None
None
Expected volatility
32.3
%
32.9
%
37.8
%
Risk-free interest rate
0.1
%
0.1
%
0.1
%
Expected term (in years)
0.5
0.5
0.5
Weighted-average fair value at grant date
$
20.71
$
20.45
$
23.36
Unrealized Gains on
Available-for-Sale
Securities
Loss on
Cash Flow Hedges
Total
Balance, January 1, 2013
$
6
$
—
$
6
Amounts reclassified from accumulated other comprehensive
income to the consolidated statement of income, net of taxes
of $(1), $0 and $(1)
(2
)
—
(
2
)
Other comprehensive loss, net
(2
)
—
(
2
)
Balance, December 31, 2013
4
—
4
Unrealized gain (loss), net of taxes of $0
(1
)
(1
)
(2
)
Amounts reclassified from accumulated other comprehensive
income to the consolidated statement of income, net of taxes
of $(2), $0 and $(2)
(3
)
—
(
3
)
Other comprehensive loss, net
(4
)
(1
)
(5
)
Balance, December 31, 2014
$
—
$
(
1
)
$
(1
)