VMware 2009 Annual Report Download - page 87

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Table of Contents
VMWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
technology. The results of operations of all acquired companies have been included in VMware’s consolidated financial statements since their
respective acquisition dates. Acquired intangibles totaled $23.9 million, consisted primarily of purchased technology, and have a weighted-
average estimated useful life of 7.1 years. The excess of the purchase price over the fair value of the net assets acquired was $67.2 million and is
classified as goodwill on the consolidated balance sheet, which reflects adjustments made in 2009 to finalize the purchase price allocations.
The purchase prices for the companies acquired in 2008 were allocated to the final fair value of assets acquired and the liabilities assumed.
Pro forma results of operations have not been presented as the results of the acquired companies, either individually or in the aggregate,
were not material to the Company’s consolidated results of operations in the years ended December 31, 2009, 2008 and 2007.
Goodwill
In conjunction with the SpringSource acquisition in 2009, the excess of the consideration transferred and the fair value of the previously
held equity interest over the fair values assigned to the assets acquired and liabilities assumed was $350.0 million, which represents the goodwill
resulting from the acquisition, and was allocated to VMware’s one reporting unit. Management believes that the goodwill mainly represents the
synergies expected from combining the technologies of VMware and SpringSource. None of the goodwill is expected to be deductible for
income tax purposes. Goodwill is tested for impairment on an annual basis and between annual tests if the Company becomes aware of any
events occurring or changes in circumstances that would indicate a reduction in the fair value of the goodwill below its carrying amount.
Changes in the carrying amount of goodwill, including the effects of the SpringSource acquisition, for the years ended December 31, 2009
and 2008 consist of the following (table in thousands):
84
December 31,
2009
2008
Balance, beginning of the year
$
771,088
$
639,366
Goodwill acquired
350,036
126,393
Deferred tax adjustments to purchase price allocations on previous acquisitions
(3,752
)
(1,519
)
Other adjustments to purchase price allocations on previous acquisitions
(1,603
)
6,848
Balance, end of the year
$
1,115,769
$
771,088