VMware 2009 Annual Report Download - page 93

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Table of Contents
VMWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
There were no settlements during 2009. Due to the increased complexity in international operations, including judgments in determining
the appropriate tax jurisdictions for revenue and expense items, the Company’s unrecognized tax benefits will likely increase in 2010. The
Company cannot reasonably estimate the increase.
VMware is subject to U.S. federal income tax and various state, local, and international income taxes in numerous jurisdictions. VMware’
s
domestic and international tax liabilities are subject to the allocation of revenues and expenses in different jurisdictions and the timing of
recognizing revenues and expenses. Additionally, the amount of income taxes paid is subject to VMware’s interpretation of applicable tax laws
in the jurisdictions in which it files.
VMware’s 2005 and 2006 federal income tax audit concluded in 2009. The U.S. federal income tax audit for 2007 and 2008 commenced
during 2009 and is expected to conclude in 2011. VMware has income tax audits in progress in numerous state, local and international
jurisdictions in which it operates. In the VMware international jurisdictions that comprise a significant portion of its operations, the years that
may be examined vary, with the earliest year being 2004. Based on the outcome of examinations of VMware, the result of the expiration of
statutes of limitations for specific jurisdictions or the result of ruling requests from taxing authorities, it is reasonably possible that the related
unrecognized tax benefits could change from those recorded in the statement of financial position. It is possible that one or more of these audits
may be finalized within the next twelve months. However, based on the status of examinations, and the protocol of finalizing audits, it is not
possible to estimate the impact of such changes, if any, to the previously recorded uncertain tax positions.
I. Commitments and Contingencies
Litigation
VMware is named from time to time as a party to lawsuits in the normal course of its business. In such cases it is the Company’s policy to
defend against such claims, or if considered appropriate, negotiate a settlement on commercially reasonable terms. However, no assurance can be
given that the Company will be able to negotiate settlements on commercially reasonable terms, or at all, or that any litigation resulting from
such claims would not have a material adverse effect on the Company’s consolidated results of operations, financial position, and cash flows, or
consolidated financial statements taken as a whole.
Operating Lease Commitments
VMware leases office facilities and equipment under various operating leases. Facility leases generally include renewal options. Rent
expense for the years ended December 31, 2009, 2008 and 2007 was $41.2 million, $38.0 million and $20.2 million, respectively. VMware’s
future lease commitments at December 31, 2009 are as follows (table in thousands):
90
2010
$
31,646
2011
27,777
2012
19,881
2013
15,477
2014
15,179
Thereafter
278,688
Total minimum lease payments
$
388,648