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Table of Contents
VMWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table sets forth the fair value hierarchy of VMware’s money market funds and available-for-sale securities that are required
to be measured at fair value as of December 31, 2009 (table in thousands):
Derivative Instruments
In conjunction with the general release of VMware vSphere in May of 2009, VMware started to invoice and collect in the Euro, the British
Pound, the Japanese Yen, and the Australian Dollar in their respective regions. In order to manage the Company’s exposure to foreign currency
fluctuations, VMware entered into forward contracts to economically hedge a portion of the Company’s net outstanding monetary asset and
liability positions in the third quarter of 2009. The gains and losses on the Company’s foreign currency forward contracts generally offset the
majority of the gains and losses associated with the underlying foreign-currency-
denominated assets and liabilities that the Company hedges, and
are reported in other income (expense), net in the consolidated statements of income. The Company does not enter into speculative foreign
exchange contracts for trading purposes.
VMware’s foreign currency forward contracts are traded monthly with a contractual term of one month. As of December 31, 2009,
VMware had outstanding forward contracts with a total notional value of $130.7 million. The fair value of these forward contracts was
immaterial as of December 31, 2009 and therefore excluded from the table above. The fair value was measured under Level 2 sources as
discussed above.
D. Business Acquisitions, Goodwill, and Intangible Assets, Net
Business Acquisitions
Fiscal Year 2009
On September 15, 2009, VMware acquired all of the remaining outstanding capital stock of SpringSource Global, Inc. (“SpringSource”),
under the terms of an Agreement and Plan of Merger entered into in August 2009. SpringSource was a private company based in San Mateo,
California, and a leader in enterprise and web application development and management. Through the acquisition of SpringSource, VMware
plans to deliver new solutions that enable companies to more efficiently build, run, and manage applications within both internal and external
cloud architectures that can host both existing and new applications. These solutions will extend VMware’s strategy to deliver solutions that can
be hosted at customer data centers or at service providers. SpringSource will also support VMware’s mission to simplify enterprise information
technology and make customer environments more efficient, scalable, and easier to manage.
The SpringSource acquisition was accounted for as a business combination. The results of operations of SpringSource since September 15,
2009 have been included in VMware’s consolidated financial statements since that date.
The aggregate consideration transferred to acquire SpringSource was $389.2 million, which includes cash of $373.0 million and the fair
value of stock options assumed attributed to pre-combination services of $16.2 million. In addition, the Company assumed stock options
attributed to post-combination services and issued restricted common stock with a total fair value of $44.6 million.
81
Fair Value
Measurement as of
December 31, 2009
Level 1
Assets:
Money market securities
$
2,388,278
Available
-
for
-
sale securities
27,360