VMware 2009 Annual Report Download - page 27

Table of Contents
In addition, we review our amortizable intangible assets annually for impairment, or more frequently, when events or changes in
circumstances indicate the carrying value may not be recoverable, and we are required to test goodwill for impairment at least annually. We may
be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our goodwill or
amortizable intangible assets resulting from an acquisition or otherwise is determined, resulting in an adverse impact on our results of operations.
In addition to the risks commonly encountered in the acquisition of a business as described above, we may also experience risks relating to the
challenges and costs of closing a transaction. Further, the risks described above may be exacerbated as a result of managing multiple acquisitions
at the same time. We also seek to invest in businesses that offer complementary products, services or technologies. These investments are
accompanied by risks similar to those encountered in an acquisition of a business.
Operating in foreign countries subjects us to additional risks that may harm our ability to increase or maintain our international sales and
operations.
Revenues from customers outside the United States comprised approximately 49% of our total revenues in 2009 and 48% of our total
revenues in 2008. We have sales, administrative, research and development and technical support personnel in numerous countries worldwide.
We expect to continue to add personnel in additional countries. Our international operations subject us to a variety of risks, including:
As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage
these and other risks associated with our international operations. We expect a significant portion of our growth to occur in foreign countries
which can add to the difficulties in maintaining adequate management systems and internal controls over financial reporting and increase
challenges in managing an organization operating in various countries.
Our failure to manage any of these risks successfully could harm our international operations and reduce our international sales.
Our products are highly technical and may contain errors, which could cause harm to our reputation and adversely affect our business.
Our products are highly technical and complex and, when deployed, have contained and may contain errors, defects or security
vulnerabilities. Some errors in our products may only be discovered after a product has been installed and used by customers. Any errors, defects
or security vulnerabilities discovered in our products after commercial release could result in loss of revenues or delay in revenue recognition,
loss of customers and
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• the difficulty of managing and staffing international offices and the increased travel, infrastructure and legal compliance costs
associated with multiple international locations;
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increased exposure to foreign currency exchange rate risk;
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difficulties in enforcing contracts and collecting accounts receivable, and longer payment cycles, especially in emerging markets;
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difficulties in delivering support, training and documentation in certain foreign markets;
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tariffs and trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign
markets;
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economic or political instability and security concerns in countries that are important to our international sales and operations;
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the overlap of different tax structures or changes in international tax laws;
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reduced protection for intellectual property rights, including reduced protection from software piracy in some countries;
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difficulties in transferring funds from certain countries; and
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difficulties in maintaining appropriate controls relating to revenue recognition practices.