VMware 2007 Annual Report Download - page 54

Table of Contents
Cash provided (used) by financing activities was $906.3 in 2007 and ($190.0) in 2005. We had no financing activities in 2006. Cash
provided by financing activities in 2007 were primarily due to the completion of our IPO and sale of 37,950,000 shares of our Class A common
stock. The net proceeds of the IPO to us were $1,035.2 after deducting underwriters’
discounts and offering expenses. Also in 2007, Intel Capital
purchased 9.5 million shares of our Class A common stock at twenty-three dollars per share for a net purchase price of $218.3, net of issuance
costs. Subsequent to our IPO in August 2007, we used a portion of the proceeds from the IPO to repay $350.0 of principal on the intercompany
note payable owed to EMC. Cash used in financing activities in 2005 resulted from dividends we paid to EMC.
Our cash and cash equivalents balance was $1,231.2 in 2007, $176.1 in 2006 and $38.7 in 2005. Based on our current operating and capital
expenditure forecasts, we believe that the combination of funds currently available and funds to be generated from operations will be adequate to
finance our ongoing operations for at least the next twelve months.
To date, inflation has not had a material impact on our financial results.
Off-Balance Sheet Arrangements, Contractual Obligations, Contingent Liabilities and Commitments
Guarantees and Indemnification Obligations
We enter into agreements in the ordinary course of business with, among others, distributors, resellers, x86 system vendors and systems
integrators. Most of these agreements require us to indemnify the other party against third-party claims alleging that one of our products
infringes or misappropriates a patent, copyright, trademark, trade secret and/or other intellectual property right. Certain of these agreements
require us to indemnify the other party against certain claims relating to property damage, personal injury or the acts or omissions by us, our
employees, agents or representatives. In addition, from time to time we have made certain guarantees regarding the performance of our systems
to our customers.
Contractual Obligations
We have various contractual obligations impacting our liquidity. The following represents our contractual obligations as of December 31,
2007:
Our operating leases are primarily for office space around the world. While our purchase orders are generally cancelable without penalty,
certain vendor agreements provide for percentage-based cancellation fees or minimum restocking charges based on the nature of the product or
service.
50
Payments Due by Period
Total
Less than
1 year
1
-
3
years
(1)
3
-
5
years
(2)
More than
5 years
Note payable to EMC
(3)
$
450.0
$
—
$
—
$
450.0
$
—
Operating leases
394.8
26.5
52.6
35.6
280.1
Purchase orders
110.2
105.0
5.2
—
—
FIN No. 48
(4)
18.3
—
—
—
—
Total
$
973.3
$
131.5
$
57.8
$
485.6
$
280.1
(1)
Includes payments from January 1, 2009 through December 31, 2010.
(2)
Includes payments from January 1, 2011 through December 31, 2012.
(3) The note is due and payable in full on or before April 16, 2012, however, we can pay down the note at an earlier date in full or in part at
our election.
(4) As of December 31, 2007, we had $18.3 of non-current net unrecognized tax benefits under FIN No. 48. We are not able to provide a
reasonably reliable estimate of the timing of future payments relating to these obligations.