VMware 2012 Annual Report Download - page 56

Table of Contents
increase was primarily due to increased sales and related cash collections that outpaced our growth in operating expenses. Additionally, we
benefited from the net receipt of $302.3 from EMC under the tax sharing agreement in 2011.
Investing Activities
Cash used in investing activities is generally attributable to the purchase of fixed income securities, business acquisitions, and capital
expenditures. Cash provided by investing activities is primarily attributable to the sales or maturities of fixed income securities.
Total fixed income securities of $3,188.7 , $2,667.9 and $2,101.9 were purchased in 2012 , 2011 and 2010 , respectively. All purchases of
fixed income securities were classified as cash outflows from investing activities. We classified these investments as short-term investments on
our consolidated balance sheets based upon the nature of the security and their availability for use in current operations or for other purposes,
such as business acquisitions and strategic investments. These cash outflows were partially offset by cash inflows of $2,782.3 , $1,790.8 and
$516.3 in 2012 , 2011 and 2010 , respectively, as a result of the sales and maturities of fixed income securities. Activity in the fixed income
portfolio increased each year primarily from increased cash and cash equivalent and short-term investment balances available for investment,
including a reallocation of funds from cash equivalents to fixed income securities.
We did not capitalize any development costs for software to be sold, leased, or otherwise marketed in 2012 as compared to $74.0 and $64.1
of costs capitalized in 2011 and 2010 , respectively. Following the release of vSphere 5 and the comprehensive suite of cloud infrastructure
technologies in the third quarter of 2011, we determined that our go-to-market strategy had changed from single solutions to product suite
solutions. As a result of this change in strategy, and the related increased importance of interoperability between our products, the length of time
between achieving technological feasibility and general release to customers significantly decreased.
In 2012 , 2011 and 2010 , we paid $1,344.2 , $303.6 and $293.0 , respectively, for business acquisitions. The increase in 2012 is primarily
related to the acquisition of Nicira which was completed in the third quarter of 2012 and included $1,083.0 of cash consideration. Refer to Note
B to the consolidated financial statements for further information. Business acquisitions are an important element of our strategy and we expect
to continue to consider additional strategic business acquisitions in the future.
In 2011, we closed an agreement to purchase all of the right, title and interest in a ground lease covering the property and improvements
located adjacent to our existing Palo Alto, California campus for $225.0. Based upon the respective fair values, $73.9 of the purchase price was
included within additions to property and equipment, and the remaining $151.1 paid and attributed to the intangible assets was separately
disclosed within net cash used in investing activities on the consolidated statement of cash flows. Refer to Note G to the consolidated financial
statements for further information. Our renovation of the new property will be a multi-year project with capital investment extending into future
periods.
In the second quarter of 2011, we sold our investment in Terremark Worldwide, Inc. for $76.0.
Financing Activities
Proceeds from the issuance of our Class A common stock from the exercise of stock options and the purchase of shares under the VMware
Employee Stock Purchase Plan (“ESPP”) were $253.2 , $337.6 and $431.3 in 2012 , 2011 and 2010 , respectively.
In 2012 , 2011 and 2010 , as part of our share repurchase programs, we repurchased and retired shares of our Class A common stock as
shown below (table in millions, except per share amounts):
From time-to-time, stock repurchases may be made pursuant to the stock repurchase authorizations in open market transactions or privately
negotiated transactions as permitted by securities laws and other legal requirements. We are not obligated to purchase any shares under our stock
repurchase programs. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including
our stock price, cash requirements for operations and business combinations, corporate and regulatory requirements and other market and
economic conditions. Purchases can be discontinued at any time that we feel that additional purchases are not warranted. As of December 31,
2012 , the authorized amount remaining available for repurchase was $467.9 . This amount is authorized for repurchases through the end of
2014.
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For the Years Ended December 31,
2012
2011 2010
Aggregate purchase price
$
467.5
$
526.2
$
338.5
Class A common shares repurchased
5.1
6.0
4.9
Weighted-average price per share
$
91.10
$
88.37
$
68.96