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Table of Contents
VMWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Based upon the Company’s historical experience and information known as of December 31, 2009, the Company believes its liability on
the above guarantees and indemnities at December 31, 2009 was not material.
J. Stockholders’ Equity
Initial Public Offering
In August 2007, VMware completed its IPO in which the Company sold 37,950,000 shares (including 4,950,000 shares pursuant to the
underwriters’ full exercise of their over-allotment option) of its Class A common stock at a price to the public of $29.00 per share. The net
proceeds of the IPO to the Company were $1,035.2 million after deducting the offering expenses and underwriters’ discounts. In August 2007,
VMware used a portion of the proceeds to repay $350.0 million of principal on the note payable owed to EMC. VMware also purchased its new
headquarters facilities from EMC for $132.6 million, which was equal to the cost expended by EMC in the construction of those facilities.
Intel and Cisco Ownership in VMware Class A Common Stock
In July 2007, VMware entered into a stock purchase agreement with Intel Corporation (“Intel”), pursuant to which Intel, through its
affiliate, Intel Capital Corporation (“Intel Capital”), purchased 9.5 million shares of VMware’
s Class A common stock at $23.00 per share for an
aggregate offering price of $218.5 million.
On October 22, 2009, Intel filed an amendment to its Schedule 13D with the Securities and Exchange Commission (“SEC”)
disclosing that
it had sold additional shares of VMware’s Class A common stock and was no longer a 5% shareholder of the Company’
s Class A common stock.
In July 2007, VMware was a party to a stock purchase agreement with Cisco Systems, Inc. (“Cisco”) and EMC, pursuant to which Cisco
purchased 6.0 million shares of VMware Class A common stock from EMC at $25.00 per share for an aggregate offering price of $150.0
million. VMware received no proceeds from this transaction. As of December 31, 2009, Cisco held 6.5 million shares of the Company’s Class A
common stock.
VMware Class B Common Stock Conversion Rights
Each share of Class B common stock is convertible while held by EMC or its successor-in-interest at the option of EMC or its successor-
in-interest into one share of Class A common stock. If VMware’s Class B common stock is distributed to security holders of EMC in a
transaction (including any distribution in exchange for shares of EMC’s or its successor-in-interest’s common stock or other securities) intended
to qualify as a distribution under Section 355 of the Code, or any corresponding provision of any successor statute, shares of VMware’s Class B
common stock will no longer be convertible into shares of Class A common stock. Prior to any such distribution, all shares of Class B common
stock will automatically be converted into shares of Class A common stock upon the transfer of such shares of Class B common stock by EMC
other than to any of EMC’
s successors or any of its subsidiaries (excluding VMware). If such a distribution has not occurred, each share of Class
B common stock will also automatically convert at such time as the number of shares of common stock owned by EMC or its successor-in-
interest falls below 20% of the outstanding shares of VMware’s common stock. Following any such distribution, VMware may submit to its
stockholders a proposal to convert all outstanding shares of Class B common stock into shares of Class A common stock, provided that VMware
has received a favorable private letter ruling from the Internal Revenue Service satisfactory to EMC to the effect that the conversion will not
affect the intended tax treatment of the distribution. In a meeting of VMware stockholders called for this purpose, the holders of VMware
Class A common stock and VMware Class B common stock will be entitled to one vote per share and, subject to applicable law, will vote
together as a single class, and neither class of common stock will be entitled to a separate class vote. All conversions will be effected on a share-
for-share basis.
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