VMware 2012 Annual Report Download - page 59

Table of Contents
or having been a director or officer. Our by-laws and charter also provide for indemnification of our directors and officers to the extent legally
permissible, against all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such
individual being or having been a director or executive officer. We also indemnify certain employees who provide service with respect to
employee benefits plans, including the members of the Administrative Committee of the VMware 401(k) Plan, and employees who serve as
directors or officers of our subsidiaries.
In connection with certain acquisitions, we have agreed to indemnify the former directors and officers of the acquired company in
accordance with the acquired company’s by-
laws and charter in effect immediately prior to the acquisition or in accordance with indemnification
or similar agreements entered into by the acquired company and such persons. We typically purchase a “tail” directors’ and officers’ insurance
policy, which should enable us to recover a portion of any future indemnification obligations related to the former officers and directors of an
acquired company.
It is not possible to determine the maximum potential amount under these indemnification agreements due to our limited history with prior
indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under
these agreements have not had a material effect on our consolidated financial position, results of operations or cash flows.
Contractual Obligations
We have various contractual obligations impacting our liquidity. The following represents our contractual obligations as of December 31,
2012:
Critical Accounting Policies
Our consolidated financial statements are based on the selection and application of accounting principles generally accepted in the United
States of America that require us to make estimates and assumptions about future events that affect the amounts reported in our financial
statements and the accompanying notes. Future events and their effects cannot be determined with certainty. Therefore, the determination of
estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to our
financial statements. We believe that the critical accounting policies set forth below may involve a higher degree of judgment and complexity in
their application than our other significant accounting policies and represent the critical accounting policies used in the preparation of our
financial statements. If different assumptions or conditions were to prevail, the results could be materially different from our reported results.
Our significant accounting policies are presented within Note A, “Overview and Basis of Presentation,” to our consolidated financial statements
appearing in this Annual Report on Form 10-K.
Revenue Recognition
We derive revenues from the licensing of software and related services. We recognize revenues when persuasive evidence of an
arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectibility is probable. Determining whether and when
some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount
of revenue we report.
56
Payments Due by Period
Total
Less than
1 year
1-3 years 3-5 years
More than
5 years
Note payable to EMC
(1)
$
450.0
$
—
$
450.0
$
—
$
—
Operating leases
(2)
757.1
54.6
90.0
65.3
547.2
Other agreements
(3)
67.1
17.7
25.6
7.1
16.7
Sub-Total
1,274.2
72.3
565.6
72.4
563.9
Uncertain tax positions
(4)
156.0
Total
$
1,430.2
(1)
The note is due and payable in full on April 16, 2015; however, we can pay down the note at an earlier date in full or in part at our election.
(2)
Our operating leases are primarily for office space and land around the world.
(3)
Consisting of various contractual agreements, which include commitments on the lease for our Washington data center facility.
(4) As of December 31, 2012, we had $156.0 of non-current net unrecognized tax benefits. We are not able to provide a reasonably reliable
estimate of the timing of future payments relating to these obligations.