VMware 2014 Annual Report Download - page 56

Table of Contents
Net cash used in financing activities during 2013 increased compared to 2012 primarily as a result of the decrease in excess tax benefits
from stock-based compensation and a decrease in proceeds from issuance of common stock. These decreases were primarily due to changes in
the market value of our stock and the number of equity awards exercised, sold or vested.
Notes Payable to EMC
As of December 31, 2014 , $1,500 remained outstanding on notes payable to EMC, with interest payable quarterly in arrears.
In connection with our acquisition of AirWatch, we entered into a note exchange agreement with EMC on January 21, 2014 providing for
the issuance of three promissory notes in the aggregate principal amount of $1,500 . The total debt of $1,500 includes $450 that was exchanged
for the $450 promissory note issued to EMC in April 2007, as amended and restated in June 2011.
The three notes issued have the following principal amounts and maturity dates: $680 due May 1, 2018 , $550 due May 1, 2020 and $270
due December 1, 2022 .
The notes bear interest at the annual rate of 1.75% . Interest is payable quarterly in arrears. The notes may be prepaid without penalty or
premium. We drew down on all three notes in late January 2014.
Stock Repurchase Program
From time to time, we repurchase stock pursuant to open authorized stock repurchase programs 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 depends 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 additional purchases are not warranted. All shares repurchased under our
stock repurchase programs are retired. During the year ended December 31, 2014 , we repurchased 7,641,742 shares for an aggregate purchase
price of $700 . As of December 31, 2014 , the cumulative authorized amount remaining for repurchase under an authorized program was $960 .
Refer to Note M to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.
On January 27, 2015, our Board of Directors authorized the repurchase of up to an additional one billion dollars of our Class A common
stock through the end of 2017. Refer to Note M to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K
for further discussion. We are increasing our share buyback goal compared to recent years, and as a result, we expect to repurchase at least one
billion dollars of our Class A common stock in 2015.
Off-Balance Sheet Arrangements, Contractual Obligations, Contingent Liabilities and Commitments
Guarantees and Indemnification Obligations
We enter into agreements in the ordinary course of business with, among others, customers, distributors, resellers, system vendors and
systems integrators. Most of these agreements require us to indemnify the other party against third-party claims alleging that one of our products
infringes or misappropriates a patent, copyright, trademark, trade secret or other intellectual property right. Certain of these agreements require
us to indemnify the other party against certain claims relating to property damage, personal injury, or the acts or omissions by us and our
employees, agents or representatives.
We have agreements with certain vendors, financial institutions, lessors and service providers pursuant to which we have agreed to
indemnify the other party for specified matters, such as acts and omissions by us and our employees, agents, or representatives.
We have procurement or license agreements with respect to technology that we have obtained the right to use in our products and
agreements. Under some of these agreements, we have agreed to indemnify the supplier for certain claims that may be brought against such party
with respect to our acts or omissions relating to the supplied products or technologies.
We have agreed to indemnify our directors and executive 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 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.
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