VMware 2009 Annual Report Download - page 44

Download and view the complete annual report

Please find page 44 of the 2009 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 125

  • 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

Table of Contents
41
Year Ended December 31,
2009
2008
2007
2006
2005
Cost of license revenues
Stock
-
based compensation
$
1,293
$
1,120
$
558
$
99
$
—
Employer payroll tax on employee stock transactions
17
28
—
—
—
Intangible amortization
11,669
11,278
21,172
21,840
23,357
Capitalized software development costs amortization
82,915
51,641
36,407
22,299
6,159
Cost of services revenues
Stock
-
based compensation
14,874
13,485
6,070
2,384
1,299
Employer payroll tax on employee stock transactions
182
224
—
—
—
Intangible amortization
266
—
—
—
—
Research and development
Stock
-
based compensation not capitalized
121,770
77,992
42,934
26,342
14,656
Employer payroll tax on employee stock transactions
1,684
2,814
—
—
—
Intangible amortization
107
—
—
—
—
In
-
process research and development
—
6,576
—
—
—
Total capitalized software development costs
(83,514
)
(113,649
)
(56,840
)
(43,012
)
(25,103
)
Stock
-
based compensation included in total
capitalized software development costs above
14,903
22,749
9,105
10,489
3,545
Sales and marketing
Stock
-
based compensation
58,610
49,762
26,288
12,020
5,341
Employer payroll tax on employee stock transactions
647
1,257
—
—
—
Intangible amortization
1,594
3,586
2,597
2,188
1,785
General and administrative
Stock
-
based compensation
34,909
24,157
16,556
10,381
5,775
Employer payroll tax on employee stock transactions
404
519
—
—
—
Intangible amortization
498
2,599
1,972
1,494
1,000
Acquisition related items
1,601
—
—
—
—
(2) In August 2007, we completed our IPO in which we sold 37,950,000 shares (including 4,950,000 shares pursuant to the underwriters’ full
exercise of their over-allotment option) of our Class A common stock at a price to the public of $29.00 per share. The net proceeds to us
were $1,035.2 million. Subsequent to receiving the proceeds, we purchased our new headquarters facilities from EMC for $132.6 million,
which is equal to the cost expended by EMC through the date of purchase. We also repaid $350.0 million of principal on the note payable
to EMC. Also in August 2007, we sold 9,500,000 shares of our Class A common stock to Intel Capital at $23.00 per share. The net
proceeds to us from that transaction were $218.3 million. See Note J to the consolidated financial statements for additional information.
(3)
In April 2007, we declared an $800.0 million dividend to EMC paid in the form of a note. This dividend was given retroactive effect as of
December 31, 2006. Subsequent to receiving the proceeds from the IPO in August 2007, we repaid $350.0 million of principal on the note.
See Note G to the consolidated financial statements for additional information. In 2005, we declared and paid a cash dividend of $190.0
million to EMC.
(4)
Free cash flows, a non
-
GAAP financial measure, is defined as net cash provided by operating activities plus the excess tax benefits from
stock-based compensation, less capital expenditures and capitalized software development costs. Each adjusting item is separately
presented on our consolidated statements of cash flows. See Item 7 of Part II, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations
—
Liquidity
—
Non
-
GAAP Financial Measures
”
for further information.