VMware 2009 Annual Report Download - page 101

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Table of Contents
VMWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Stock-Based Compensation Expense
The following table summarizes the components of total stock-based compensation expense included in VMware’
s consolidated statements
of income for the years ended December 31, 2009, 2008 and 2007 (table in thousands):
For the years ended December 31, 2009, 2008 and 2007, VMware capitalized $14.9 million, $22.7 million and $9.1 million, respectively,
of stock-based compensation expense associated with capitalized software development.
As of December 31, 2009, the total unrecognized compensation cost for both VMware stock options and restricted stock and EMC stock
options and restricted stock was $525.6 million. This non-cash expense will be recognized through 2013 with a weighted-average remaining
period of 1.2 years.
Fair Value of VMware Options
The fair value of each option to acquire VMware Class A common stock granted during the years ended December 31, 2009, 2008 and
2007 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
98
For the Year Ended December 31,
2009
2008
2007
Cost of license revenues
$
1,293
$
1,120
$
558
Cost of services revenues
14,874
13,485
6,070
Research and development
121,770
77,992
42,934
Sales and marketing
58,610
49,762
26,288
General and administrative
34,909
24,157
16,556
Stock
-
based compensation expense
231,456
166,516
92,406
Income tax benefit
43,170
33,020
21,227
Total stock
-
based compensation expense, net of tax
$
188,286
$
133,496
$
71,179
For the Year Ended
December 31,
VMware Stock Options
2009
2008
2007
Dividend yield
None
None
None
Expected volatility
36.1
%
39.4
%
39.2
%
Risk
-
free interest rate
1.9
%
2.5
%
4.9
%
Expected term (in years)
3.7
3.4
3.4
Weighted
-
average fair value at grant date
$
12.18
$
17.88
$
27.88
For the Year Ended
December 31,
VMware Employee Stock Purchase Plan
2009
2008
2007
Dividend yield
None
None
None
Expected volatility
50.9
%
39.3
%
34.8
%
Risk
-
free interest rate
0.3
%
2.7
%
4.8
%
Expected term (in years)
0.5
0.5
0.4
Weighted
-
average fair value at grant date
$
7.79
$
18.06
$
6.99