VMware 2009 Annual Report Download - page 91

Table of Contents
VMWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The components of the current and non-current deferred tax assets and liabilities are as follows (table in thousands):
VMware has federal net operating loss carryforwards of $65.6 million from acquisitions made in 2009, 2008, 2007 and 2006. These
carryforwards expire at different periods through 2029. Portions of these carryforwards are subject to annual limitations. VMware expects to be
able to fully use these net operating losses against future income. Also, resulting from 2009, 2008, 2007 and 2006 acquisitions, VMware has
state net operating loss carryforwards of $36.9 million expiring at different periods through 2029. A valuation allowance was recorded to reduce
gross deferred tax assets to an amount VMware believes is more likely than not to be realized. The valuation allowance is attributable to the
uncertainty regarding the realization of state tax credit carryforward benefits. VMware has non-U.S. net operating losses of $12.1 million. These
net operating losses have an unlimited carryforward period. VMware expects to be able to fully use these net operating losses against future non-
U.S. income. Also resulting from an acquisition in 2009, VMware has non-U.S. net operating losses of $15.5 million that are subject to a full
valuation allowance as VMware believes it is more likely than not that no tax benefit will be realized from these losses. If any portion of the
resulting $4.4 million deferred tax asset is recognized within the measurement period, the tax benefit of the related valuation allowance will be
allocated to reduce goodwill in accordance with generally accepted accounting principles.
U.S. income taxes have not been provided on certain undistributed earnings of non-U.S. subsidiaries of approximately $620.6 million and
$426.9 million at December 31, 2009 and 2008, respectively, because such earnings are considered to be reinvested indefinitely outside of the
U.S., and it is not practicable to estimate the amount of tax that may be payable upon distribution.
At December 31, 2009, VMware had an income tax receivable due from EMC for $3.0 million as a result of comparing the state tax
provision for fiscal year ended December 31, 2008 to the final tax return. At December 31, 2008, VMware had an income tax receivable from
EMC of $111.1 million. The receivable was primarily due to the Company’s stand-alone taxable loss for the year ended December 31, 2008,
which was primarily attributable to tax deductions arising from both non-
qualified stock option exercises and from the vesting of restricted stock.
Under the tax sharing agreement with EMC, EMC is obligated to pay VMware an
88
December 31,
2009
2008
Deferred Tax
Asset
Deferred Tax
Liability
Deferred Tax
Asset
Deferred Tax
Liability
Current:
Accruals and allowances
$
20,990
$
—
$
18,169
$
—
Deferred revenue
52,507
—
29,451
—
Net operating loss carryforwards
—
—
2,888
—
Valuation allowance
(10,137
)
—
(
5,935
)
—
Total current
63,360
—
44,573
—
Non
-
current:
Property, plant and equipment, net
—
(
19,665
)
—
(
16,927
)
Intangible and other, net
—
(
40,635
)
—
(
30,898
)
Stock
-
based compensation
49,135
—
34,756
—
Deferred revenue
19,785
—
17,116
—
Tax credit and net operating loss carryforwards
52,324
—
25,867
—
Valuation allowance
(18,715
)
—
(
9,459
)
—
Total non
-
current
102,529
(60,300
)
68,280
(47,825
)
Total deferred tax assets and liabilities
$
165,889
$
(60,300
)
$
112,853
$
(47,825
)