VMware 2009 Annual Report Download - page 62

Table of Contents
A limitation of non-GAAP operating cash flows and free cash flows is that they do not have a uniform definition. Our definitions will
likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Thus, our
measures of non-
GAAP operating cash flows and free cash flows should be considered in addition to, not as a substitute for, or in isolation from,
measures prepared in accordance with GAAP. Management encourages investors and others to review our financial information in its entirety
and not to rely on any single financial measure. The following is a reconciliation of non-GAAP operating cash flows and free cash flows to the
most comparable GAAP measure, “Net cash provided by operating activities,” for 2009, 2008, and 2007:
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, customers, 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 and our
employees, agents, or representatives.
We have agreements with certain vendors, financial institutions, lessors, and service providers pursuant to which we have agreed to
indemnify the other party for specified matters, such as acts and omissions by us and our employees, agents, or representatives.
We have procurement or license agreements with respect to technology that we have obtained the right to use in our products and
agreements. Under some of these agreements, we have agreed to indemnify the supplier for certain claims that may be brought against such party
with respect to our acts or omissions relating to the supplied products or technologies.
We have agreed to indemnify our directors and executive officers, to the extent legally permissible, against all liabilities reasonably
incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or
executive officer. Our by-laws and charter also provide for indemnification of our directors and officers to the extent legally permissible, against
all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or
having been a director or executive officer. We also indemnify certain employees who provide service with respect to employee benefits plans,
including the members of the VMware 401(k) Savings Plan Committee.
In connection with certain acquisitions, we have agreed to indemnify the former directors and officers of the acquired company in
accordance with the acquired company’s by-
laws and charter in effect immediately prior to the acquisition or in accordance with indemnification
or similar agreements entered into by the acquired company and such persons. We typically purchase a “tail” directors’ and officers’ insurance
policy, which should enable us to recover a portion of any future indemnification obligations related to the former officers and directors of an
acquired company.
59
For the Year Ended December 31,
2009
2008
2007
Net cash provided by operating activities
$
985.6
$
800.1
$
552.4
Capitalized software development costs
(68.6
)
(90.9
)
(47.7
)
Excess tax benefits from stock
-
based compensation
26.2
85.8
—
Non
-
GAAP operating cash flows
$
943.2
$
795.0
$
504.7
Capital expenditures
(103.4
)
(191.6
)
(269.0
)
Free cash flows
$
839.8
$
603.4
$
235.7